Lachmi Narain Vs. Union of India &
Ors  INSC 288 (25 November 1975)
SARKARIA, RANJIT SINGH SARKARIA, RANJIT SINGH
CITATION: 1976 AIR 714 1976 SCR (2) 785 1976
SCC (2) 953
CITATOR INFO :
D 1980 SC1866 (11) D 1990 SC 560 (31,32,33)
RF 1991 SC1117 (11)
Union Territories (Laws) Act, 1950, s.
2-Bengal Finance (Sales Tax) Act, 1941, extended to Delhi with certain
modification by 1951-Notification-Notification more than 6 Years later
inserting further modification of the Bengal Act in the 1951
Notification-Validity-Section 6(2) of the Bengal Act requiring 3 months notice
before withdrawing exemption from tax-If mandatory-If period of notice could be
curtailed by Central Government by Notification-Legislation by reference, when
can be inferred-Government, if can take advantage of its lapse-General Clauses
Act (10 of 1897), s. 21, applicability.
Section 2 of the Part States (Laws) Act,
1950, empowered the Central Government to extend by notification in the
official gazette, to any Part C State, or to any part of it, with such
restrictions and modifications as it thinks fit, any enactment in force in a
Part A State. In 1951, the Central Government, in exercise of this power,
extended by a Notification the Bengal Finance (Sales Tax) Act, 1941, to the
then Part State of Delhi with certain modifications in s. 6. The section, after
such extension with modifications, provided:
6(1) No tax shall be payable under this Act
on the sale of goods specified in the first column of the Schedule subject to
the conditions etc: and (2) The State Government [Amended as Central Government
in 1956] after giving by notification in the official gazette not less than 3
months notice of its intention to do so, may by like notification add to or
omit from or otherwise amend the Schedule and thereupon the Schedule shall he
amended accordingly A modified Schedule of goods exempted from tax under s.
6 was also substituted for the original
Schedule in the Bengal Act, by the Notification.
After the passing of the States
Reorganisation Act, 1956, the Part States (Laws) Act became Union Territories (Laws)
Act, 1950. with necessary adaptations.
In 1957, the Central Government issued a
Notification in purported exercise of the powers under s. 2 of the 1950- Act,
amending the 1951-Notification. By the 1957- Notification an additional
modification of s. 6 of the Bengal Act was introduced in the 1951-Notification,
namely the words "such previous notice as it considers reasonable"
were substituted for the words "not less than 3 months' notice" in s.
In 1959, Parliament passed the Bengal (Sales
Tax) (Delhi Amendment) Act, 1959, making some amendments in various sections of
the Bengal Act but left s. 6 untouched.
By various notifications, exemption from
sales tax was granted to several commodities. but subsequently, the exemption
was withdrawn by other notifications after giving notice of less than 3 months.
Dealers in those commodities, who were
aggrieved by the withdrawal of the exemption, challenged the validity of' the
withdrawal. The High Court dismissed their petitions. On the main ground that
Parliament, while enacting the Amending Act of 1959, had put its seal of
approval to the curtailed period of notice in s. 6(2) and as such, it should be
taken to have keen provided by Parliament itself in the Bengal Act.
786 Allowing the appeals to this Court,
HELD: The 1957-Notification purporting to
substitute the words "such previous notice as it considers
reasonable" for the words 'not less than 3 months' notice" in s. 6(2)
of the Bengal Act, is beyond the powers of the Central Government, conferred on
it, by s. 2 of the Union Territories (Laws) Act, 1950; and in consequence, the
various notifications, in so far as they withdrew exemptions from tax with
respect to the several commodities, are invalid and ineffective, as the
exemption was withdrawn without complying with the mandatory requirement of not
less than 3 months' notice enjoined by the section. [808-D-E] (1) (a) The
primary power bestowed by s. 2 of the Union Territories
(Laws) Act, 1950, on the Central Government is one of extension, that is,
bringing into operation and effect, in a Union Territory, an enactment already
in force in a State. The discretion conferred by the section to make
"restrictions and modifications" in the enactment sought to be
extended, is not a separate and independent power, which can be exercised apart
from the power of extension, but is an integral constituent of the power of
extension. This is made clear by the use of the preposition "with"
one meaning of which (which accords with the context) is "part of the same
whole". [801 E-F] (b) There are 3 limits on the power given by s. 2. (i)
The power exhausts itself on extension of the enactment. It can be exercised
only once, simultaneously with the extension of the enactment, but cannot be
exercised repeatedly or subsequently to such extension. (ii) The power cannot
be used for a purpose other than that of extension.
In the exercise of the power, only such
restrictions and modifications can be validly engrafted in the enactment sought
to be extended, which are necessary to bring it into operation and effect in
the Union Territory. Modifications which are not necessary for, or ancillary
and subservient to the purpose of extension, are not permissible. And. Only
such modifications can be legitimately necessary for such purpose, as are
required to adjust, adapt, and make the enactment suitable to the peculiar
local conditions of the Union Territory for carrying it into operation and
(iii) The words "restrictions and
modifications" do not cover such alterations as involve a change in any
essential feature of the enactment or the legislative policy built into it.
[801G-H, 802A] (c) If the words "such restrictions and modifications as it
thinks fit" are given the wide construction of giving an unfettered power
of amending and modifying the enactment sought to be extended, as contended by
the respondent, the validity of the section itself becomes vulnerable on
account of the vice of excessive delegation. Moreover. such a construction
would be repugnant to the context and content of the section, read as a whole.
[802 B-C] Rajnarain Singh v. The Chairman Patna Administration Committee Patna
 1 S.C.R. 291 and Re: Delhi Laws Act,  S.C.R. 747, referred to.
(2) The 1957-Notification transgresses these
limits in two respects :
(a) The power has not been exercised
contemporaneously with the extension or for the purposes of the extension of
the Bengal Act to Delhi but 6.6 years thereafter. The power of extension with
restrictions and modifications had exhausted itself when the Bengal Act was
extended to Delhi with some alterations by the 1951-Notification. [802D-E] The
power given under s. 2 of the 1950-Act, cannot be equated to the "Henry
VIII clause" of the Acts of the British Parliament because while the power
under s. 2 can be exercised only once when the Act is extended, the power under
a "Henry VIII clause" can be invoked, if there is nothing contrary in
the clause, more than once on the arising of a difficulty when the Act is
operative [802F-H] Observations of Fazal Ali, J. at p. 850 in Re: Delhi Laws
Act case explained.
787 (b) The alteration sought to be
introduced in s. 6(2) by the 1957-Notification goes beyond the scope of the
"restrictions and modifications" permissible under s. 2 of the
1950-Act, because, it purports to change the essential features of s. 6(2) and
the legislative policy inherent therein. [803F] Section 6(2) before the issue
of the 1957-Notification, requiring the Government to give "not less than
3 months' notice" of its intention to add to or omit from or otherwise
amend the Schedule to the 1950-Act, embodies a determination of legislative
policy and its formulation as an absolute rule of' conduct could be diluted,
changed or amended only by the legislature, in the exercise of its essential
legislative function, which could not be delegated to the Government.
[803G-804E, F, G] (i) The language of the sub-section as it stood is
emphatically prohibitive and it commands the Government in unambiguous negative
terms that the period of the requisite notice must not be less than 3 months,
showing that the provision was mandatory and not directory. [804-A-B] (ii) The
scheme of the Bengal Act is that the tax is to be quantified and assessed on
the quarterly turnover. and the period of not less than 3 months, notice
conforms to the scheme and ensures that the imposition of a new tax of
exemption does not cause dislocation or inconvenience either to the dealer or
the Revenue. [804B] (iii) By fixing the period at not less than 3 months,
purchasers on whom the incidence of tax really falls have adequate notice of
taxable items. [804-C] (iv) Dealers and others likely to be affected by an
amendment of the Schedule get sufficient time to make representations and
adjust their affairs. [804-D] The span of notice was thus the essence of the legislative
mandate. The necessity of notice and the span of notice both are integral to
the scheme of the provision and it cannot be split up into essential and
non-essential components, the whole of it being mandatory. [804-E-F] Raza
Buland Sugar Co. Ltd. v. Municipal Board, Rampur,  1 S.C.R. 970,
(3)(a) Pt. Benarsi Das Bhanot v. State of
Madhya Pradesh  2 S.C.R. 427 does not assist the respondent.
That was a case where the contention that 5.
6(2) of the C.P. & Bihar Sales Tax Act, 1947, was invalid on the ground of
excessive delegation, was rejected, by the Court. In the present case, it is
the validity of a Notification purported to be issued under s. 2 of the
1950-Act that is impeached as beyond the powers of modification conferred by
[804H, 805A] (b) In the present case, the
Central Government did not directly amend s. 6(2). More than 6 years after the
extension of the Act by the 1951-Notification, it amended the sub-section
indirectly by amending the 1951- Notification. But on the extension of the Act
to Delhi, the 1951-Notification had exhausted its purpose, and the purported
amendment, through the medium of such a "dead" Notification is an
exercise in utility. Further, an amendment which was not directly permissible
could not be done indirectly. [805-B, C] (4) The High Court was in error in
holding that Parliament had validated or re-enacted referentially, with
retroactive effect, what was sought to be done by the 1957- Notification when
it passed the Amending Act, 1959. [807C] The Amending Act leaves s. 6(2)
untouched. It does not even indirectly refer to the 1957-Notification or the
amendment purportedly made by it in s. 6(2). Nor does it re- enact or validate
what was sought to be achieved by that notification. No indication of
referential incorporation or validation of the 1957-Notification or the
amendment sought to be made by it, is available either in the Preamble or in
any other provision of the Amending Act. Parliament despite its presumed
awareness of the 1957-Notification, has said nothing in the Amending Act
indicating that it has in any manner incorporated, re-enacted or 788 validated
the 1957-Notification or the amendment sought to be made thereby, while passing
the Amending Act, 1959. [805- E-F, 807-B-C] Krishna Chandra v. Union of India,
A.I.R. 1975 S.C. 1389, referred to, (5) A mere amendment of an Act by a
competent legislature does not amount to re-enactment of the parent Act. [807D]
Venkatarao Esajirao Limberkar's case  1 S.C.R.
(6) The respondent cannot contend that if the
withdrawal of exemption without giving 3 months" notice was illegal, then
the grant of exemption without giving 3 months' notice was also void. [808-A]
(a) Some of the goods were granted exemption by the 1951-Notification itself
and, hence, there is no question of giving notice for giving those exemptions.
[807-G] (b) The validity of the notifications granting exemptions after the
extension of the Act to Delhi is not in issue in the writ petitions. and whether
or not the requisite notice was given before granting exemption is a question
of fact depending on evidence. [807G] (c) To allow the respondent to take such
a plea would be violative of the fundamental principle of natural justice,
according to which a party cannot be allowed to take advantage of his own lapse
or wrong. [807--H] (7) The respondent cannot also rely on s. 21 of the General
Clauses Act, because, the source of the power to amend the Schedule to the
1950-Act. is s. 6(2) of the Bengal Act and not s. 21 of the General Clauses
Act, and the power has to be exercised within the limits of s. 6(2) and for the
purpose for which it we conferred. [808-B] Gopichand v. Delhi Administration,
 Suppl. 2 S.C.R. 87, referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeals
Nos. 2221- 2225, and 2524 of 1972.
From the Judgment and orders dated the
18-11-71, 29-3- 1972 and 5-2-1972 of the Delhi High Court in L.P. No. 53/71 and
Civil Writ Petitions Nos. 612, 640, 643 and 649/71, 281/72 and 1052 of 1971 respectively.
A.K. Sen, Sarjoo Prasad Balram Senghal and C.
P. Lal for the Appellants in CAs 2221-2225/72 B. Sen, S.P. Nayar and M.N.
Shroff for Respondents 2-3, (In CAs. 2221-2225/72) for Respondents 1-4 in. C.A.
S.V. Gupte, Mrs. Leila Sait and U. K. Kaithan
for Interveners (In CAs. 2221-2225/72) and Appellants (In CAs.
M. C. Bhandare, Sardar Bahadur Saharya, B. N.
Kirpal and V. B. Saharya for the Appellant in CA 1801/72.
The Judgment of the Court was delivered by
SARKARIA, J. Whether the Notification No. SRO-2908, dated December 7, 1957
issued by the Central Government in purported exercise of its powers under s. 2
of the Union Territories (Laws) 789 Act, 1950, is ultra vires the Central
Government is the principal question that arises in these appeals which will be
disposed of by a common judgment.
The question has arisen in these
Section 2 of the Part States (Laws) Act,
1950, empowered the Central Government to extend by notification in the
official Gazette to any Part State, or to any part of such State, with such
restrictions and modifications as it thinks fit, any enactment which is in
force in a Part A State. In exercise of this power, the Central Government by a
Notification No. SRO 615 dated the 28th April 1951, extended to the then Part
State of Delhi, the Bengal Finance (Sales-Tax) Act, 1941 (for short, the Bengal
Act), with, inter alia, these modifications:
"In sub-section (2) of Section 6,- (a) .
(b) for the words "add to the
Schedule", the words "add to or omit or otherwise amend the
Schedule" shall be substituted " For the Schedule of the Bengal Act,
this Notification substituted a modified Schedule of goods exempted under s. 6.
The relevant items in the modified Schedule were as follows:
"8. Fruits, fresh and dried (except when
sold in sealed containers).
11. Pepper, tamarind and chillies.
17. Cloth of such description as may from
time to time be specified by notification in the Gazette costing less per yard
than Rs. 3/- or such other sum as may be specified. .
21A. Knitting wool." Section 6 of the
Bengal Act after its extension to Delhi, as modified by the said Notification,
reads thus :
"6(1)No tax shall be payable under this
Act on the sale of goods specified in the first column of the Schedule subject
to the conditions and exceptions if any set out in the corresponding entry in
the second column thereof.
(2) The State Government after giving by
Notification in the official Gazette not less than 3 months' notice of its intention
so to do may by like notification 790 add to or omit from or otherwise amend
the Schedule and thereupon the Schedule shall be deemed to be amended
accordingly." (emphasis supplied) By a Notification, dated 1-1-1951, in
sub-section (1) of s. 6, the words "the first column of" were omitted
and for the words "in the corresponding entry in the second column
thereof" the word "therein" was substituted.
By a notification country liquor was included
in the Schedule as item No. 40 of exempted goods with effect from 19 1 1952.
On 1-11-1956, as a result of the coming into
force of the States Reorganization Act, 1956, and the Constitution (Seventh
Amendment) Act, 1956, Part States were abolished.
Part State of Delhi became a Union Territory
and the Delhi Legislative Assembly, was also abolished. In 1956, Part State
(Laws) Act, 1950 (hereinafter referred to as Laws Act) also became me Union
Territories (Laws) Act, 1950, with necessary adaptations.
On 1-12-1956, Parliament passed the Bengal
Finance (Sales-Tax) (Delhi Amendment) Act 1956 which introduced amendments in
different sections of the Bengal Act as applicable to Delhi. It made only two
changes in s. 6 Firstly, the word 'Schedule', wherever it occurred, was
replaced by the words "Second Schedule". Secondly the words
"Central Government" were substituted for the words "State
On December 7, 1951, in the Gazette of India
Extraordinary there appeared a notifications which reads as below:
"S.R.O.. 3908-In exercise of the powers
conferred by section 2 of the Union Territories (Laws) Act, 1950 (30 of 1950),
the Central Government hereby makes the following amendment in the notification
of the Government of India in the Ministry of Home Affairs No.
S.R.O.. 615, dated the 28th April, 1951
(extending to the Union Territory of Delhi and the Bengal Finance (Sales Tax)
Act, 1941, subject to certain modifications) namely :- In the said
notification, in the modifications to the Bengal Act aforesaid, in item 6
(relating to sub- section (2) of section (6), after sub-item (a), the following
sub-item shall be inserted, namely :- "(aa) for the words "not less
than three months' notice," the words "such previous notice as it
considers reasonable" shall be substituted".
The vires of this notification dated
7-12-1957, is me subject of primary challenge in these appeals (hereinafter it
will be referred to as the impugned notification).
791 Item 17 in the Second Schedule of the
Bengal Act was amended with effect from December 14, 1957 by Notification No.
SRO 3958, as under :
"17. All varieties of cotton, woollen,
rayon or artificial silk fabric but not including real silk fabrics".
"Conditions subject to which tax shall
not be payable:
In respect of tobacco-cotton fabrics, rayon
or artificial silk fabrics and woollen fabrics as defined in item 9, 12, 12A,
12B at the First Schedule to the Central Excises and Salt Act, 1944 (I of 1944)
included in entries (a) and (c) above, no tax under the Bengal Finance (Sales
Tax) Act 1941, shall be payable in the Union Territory of Delhi only if
additional duties of excise have been levied on them under the Additional
Duties of Excise (Goods of Special Importance) Act 1957".
The aforesaid condition was withdrawn by
Notification No. GSR 203, dated 1-4-1958.
By Notification No. GSR 202, dated 1-4-1958,
the Central Government withdrew the exemption of country liquor from tax by
omitting item No. 40 from the Second Schedule.
By Notification No. GSR 1076 dated 19-9-1959,
the Central Government withdrew the exemption from tax of Items, 8, 11, 14 and
21A by omitting them from the Second Schedule with effect from 1-10-1959.
On 1-10-1959, the Bengal. (Sales-Tax Delhi
Amendment) Act, 1959 (Act XX of 1959) came into force whereby Parliament made
some amendments in different sections of the Bengal Act but left s. 6
By a Notification No. GSR 964 dated
16-6-1966, notice was given that item 17 of the Second Schedule would be
substituted with effect from 1-7-1966, as follows:
"Item-17-All varieties, cotton, woollen,
nylon, rayon, pure silk or artificial silk fabrics but excluding Durries,
Druggets and carpets".
The proposed amendment was given effect to
from 1-7- 1966, by Notification No. GSR 1061 dated 29-6-66. One result of this
amendment was that exemption of Durries from tax was withdrawn, while, such
exemption was among others, extended to 'pure-silk'.
By a Notification GSR 1038, dated 14-7-1970,
notice was given that item 17 in the Second Schedule would be substituted with
effect from 1-8-1970, as follows:
"17. All varieties of cotton fabrics,
rayon, or artificial silk fabrics and woollen fabrics but not including
Durries, Druggets and carpets".
792 Such substitution of item 17 was made
with effect from 1-8-70 by Notification GSR 1119 dated 31-7-1970. one result of
this notification was that the exemption of 'pure-silk' from tax was withdrawn.
The appellants in Civil Appeal No. 2221 of
1972 are dealers in durries. They feel aggrieved by the Notification GSR 1061
dated 29-6-1966 whereby exemption of Durries from sales-tax was withdrawn.
The appellants in Civil Appeals 2222, 2223
and 2225 of 1972 deal in knitting wool. Their cause of action arose when
exemption of knitting wool was withdrawn by Notification dated 19-9-1959,
w.e.f. 1-10-1959. The appellants in Civil Appeals 2524 of 1972 deal inter alia
in pure silk. They are aggrieved by Notification, dated 31-7-1970 by which
exemption of 'pure-silk' was withdrawn w.e.f. 1-8-1970.
The appellants in Civil Appeal No. 2224 of
1972 is a Kiryana dealer. He feels aggrieved by the Notification dated
19-9-1959 whereby items 8, 11 and 14 were deleted from the Second Schedule with
effect from 1-10-1959.
The appellants in Civil Appeal No. 1801 of
1972 are licensed vendors of country liquor. They feel adversely affected by
Notification GSR 1076, dated 19-9-1959 whereby exemption of country liquor from
tax was withdrawn with effect from 1-10-1959.
Several writ petitions were filed in the High
Court to question the validity of the Government action withdrawing the
exemptions with notice far less than three months. A learned Judge of the High
Court allowed eight of these petitions by a common judgment recorded in Civil
Writ 574-D of 1966, Lachmi Narain v. Union of India and others. Against that
judgment, the Revenue carried appeals under Clause 10 of the. Delhi High Court
Act, 1966, to a Bench of the High Court. In the meanwhile more writ petitions
(C. Ws. 593 to 652, 792 to 806 of 1971) were instituted in which the same
question was involved. The Division Bench, by a common judgment, allowed the
appeals and dismissed the writ petitions.
The writ petitioners have now come in appeal
to this Court on the basis of a certificate granted by the High Court under
Article 133 (1) (a) and (c) of the Constitution.
In the High Court the validity of the
withdrawal of the exemptions was challenged on these grounds :
(I) The power given by s. 2 of the Laws Act
to the Central Government to extend enactments in force in a State to a Union
Territory with such restrictions and modifications as it thinks fit, could be
exercised only to make such modifications in the enactment as were necessary in
view of the peculiar local conditions. The modification in s. 6(2) of the
BengaI Act made by SRO 3908, dated 793 7-10-1957, was not necessitated by this
reason. It was therefore, ultra vires s. 2 of the Laws Act;
(2) Such a modification could be made only
once when the Bengal Act was extended to Delhi in 1951. No modification could
be made after such extension.
(3) The modification could not change the
policy of the legislature reflected in the Bengal Act. The impugned
modification was contrary to it, and (4) The modifications giving notice to
withdraw the exemptions and the notifications issued pursuant thereto
withdrawing the exemptions from sales-tax with respect to Durries, Ghee, (and
other items relevant to these petitions) were void as the statutory notice of
not less than three months as required by s. 6(2) prior to its modification by
the impugned notification of 7th December, 1957 had not been given.
Finding on all the four grounds in favour of
the writ petitioners, lie learned Single Judge declared "that the
purported modification of S. 6(2) of the Bengal Finance (Sales-Tax) Act 1941 by
the Government of India's notification No. SRO 3908, dated 7th December, 1957,
was ineffective and s. 6(2) continues to be the same as before as if it was not
so modified at all." In consequence he quashed the Government
notifications GSR 964, dated 16-6- 1966 and GSR 1061 dated 29-6-1966 because
they were not in compliance with the requirement of s. 6(2) of the Bengal Act.
The contentions canvassed before the learned
Single Judge were repeated before the appellate Bench of the High Court. The
Bench did not pointedly examine the scope of the power of modification given to
the Central Government by s. 2 of the Laws Act with specific reference to the
purpose for which it was conferred and its precise limitations. It did not
squarely dispel the reasoning of the learned Single Judge that the power of
modification is an integral part of the power of extension and "cannot
therefore be exercised except for the purpose of the extension". It
refused to accept that reasoning with the summary remark-"from the
extracts quoted by the learned Single Judge from the judgment of the Supreme
Court in Re: Delhi Laws Act and from the Judgment in Rajnarain Singh v. The
Chairman Patna Administration Committee Patna and Anr. the principle deduced by
the learned Judge does not appear to follow. We are therefore not inclined, as
at present advised to support the above observations". The Bench however
hastened to add :
"However, since the matter was not
argued at great length and the appellants' Counsel rested his submissions on
the other aspects of the case, we would not like to express 794 any definite
opinion on the question as to whether the power of making any modifications or
restrictions in the Act can only be exercised at the time of extending the Act
and that it cannot be done subsequently by the Central Government in exercise
of its power." Seeking support from the observations of this Court in Raza
Buland Sugar Co. Ltd. v. Municipal Board, Rampur,(1) the Bench held that what
is mandatory in s. 6(2) is the requirement as to the giving of reasonable
notice of the Government's intention t(! amend the second Schedule, for the
information of the public, and that "no special significance or sanctity
is attached to the span of time of three months provided in subsection (2) of
s. 6." The Bench found that since the withdrawals of the exemptions in
question, had been made after reasonable notice, the same were not invalid.
However, the main ground on which the
decision of the Bench rests is that the infirmity, if any, in the impugned
notification dated 7-12-1957, had been cured and rectified when
"Parliament while enacting the Amendment Act, 1959 (Act No. '70 of 1959)
put its seal of approval to the curtailed period of notice. As such the
curtailed period of notice shall be taken to have been provided by Parliament
on the ratio of Supreme Court's decision in Venkatrao Esajirao limberkar's
Apart from the grounds taken in their writ
petitions, the learned Counsel for the appellants have tried to raise before us
another ground under the garb of what they styled.
as merely an additional argument". They
now seek to challenge the vires of the Notification SRO 615, dated the 28th
April, 1951 in so far as it relates to the insertion in sub-section (2) of s. 6
of that Act, between the words "add to" and "the Schedule",
of the words "or omit or otherwise amend". It is argued that this
insertion was beyond the power of modification conferred on the Central
Government by s. 2 of the Laws Act. The point sought to be made out is that if
the insertion made by the Notification dated 28-4- 1951, in sec. 6(2) was
ineffective and non est in the eye of law, the Central Government would have no
power to "omit" anything from the exempted goods itemised in the
It is argued that under s. 6(2) sans this
insertion, the Central Government was empowered only to "add to" and
not "omit" from the exempted items enumerated in the Schedule, and
consequently, the withdrawal of the exemptions in question was ultra vires the
The entertainment of this Plea at this stage
is stoutly opposed by Shri B. Sen, learned Counsel for the Revenue.
We are not inclined to permit the appellants
to add to the list of impugned Notifications, now in section appeal.
In their writ petitions, the appellants did
not challenge the validity of the Notification dated 28-4-51. They never raised
this point before the learned 795 Single Judge. Of course, before the appellate
Bench, an argument was addressed on this point, but it does not appear to have
been pressed. The Bench noted:
"In the present appeal, the Bengal Act
as extended by SRO 615, dated the 28th April 1951, did not suffer from any
infirmity. It is conceded by the learned Counsel for the respondent that the
Central Government at the time it extended e the Bengal Act, was competent to
introduce such modification and restrictions as it thought fit." The
certificate under Art. 133 of the Constitution was neither sought, nor granted
on any ground touching the validity of the Notification, dated 28-4-1951. In
the face of all this, it is now too late for the appellants to commit a volte
face. Accordingly, we decline to entertain this new ground of challenge.
The learned Counsel for the parties have,
more or less, reiterated the same contentions which they had advanced in the
On behalf of the appellants, it is contended
that the power of modification conferred on the Central Government by s. 2 of
the Laws Act is not an unfettered power of delegated legislation but a
subsidiary power conferred for the limited purpose of extension and application
to a Union Territory, an enactment in force in a State. It is maintained that
only such modifications are permissible in the exercise of that power which are
necessary to adapt and adjust such enactment to local conditions.
According to Shri Ashok Sen, the power given
by s. 2 is a power of conditional legislation which is different from the power
of delegated legislation. It is submitted that it is not a recurring power; it
exhausts itself on extension, and in no case this power can be used to change
the basic scheme and structure of the enactment or the legislative policy
ingrained in it. The submission is that the impugned notification, dated 7-12-1957,
is bad because it has been issued more than 61 years after the extension of
Bengal Act, and it attempts to change the re- rquirement of s. 6(2) as to
"not less than three months notice" which P is the essence of the
Reference has been made to this Court's
opinion in Re:
Delhi Laws Act (supra) and the decision in
Raj Narain Singh case (supra).
Shri Ashok Sen further submits that by the
amending Act 20 of 1959, parliament did not put its seal of approval on the
impugned notification or the changes sought to be made by it in s. 6 of the
Bengal Act. It is stressed that the amending Act of 1959, did not touch s. 6 at
all and therefore it could not be said with any stretch of imagination, that
Parliament had referentially or impliedly incorporated or approved the
purported change made by the impugned notification, in the Bengal Act.
As against the above, Shri B. Sen, the
learned Counsel for the Revenue submits that the impugned notification does not
change the essential structure or the policy embodied in s. 6(2) of the Bengal
796 According to Counsel, the policy
underlying s. 6(2) is that reasonable notice of the Government's intention to
add to or omit anything from the Second Schedule must be given by publication
in the official Gazette. It is maintained that the requirement as to "not
less than three months' notice" in the section was not a matter of policy
but one of detail or expedience; it was only directory, and the modification
made by the impugned notification did not go beyond adjusting and adapting it
to the local conditions of Delhi.
Bengal, it is pointed out, is a big,
far-flung State while the Territory of Delhi is a small, compact area and
therefore, it would not be necessary or unreasonable to give a notice of less
than three months for every amendment of the Schedule. Reliance has been placed
on this Court's dictum in Raza Buland Sugar Co.'s case (supra). It is argued
that the power to add or omit from the Second Schedule conferred on the
Government is in consonance with the accepted practice of the Legislature; that
it is usual for the legislature to leave a discretion to the executive to
determine details relating to the working of taxation laws, such as the
selection of persons on whom the tax is to be levied or rates at which it is to
be charged in respect of different classes of goods and the like. Reference has
been made to the observations of this Court in Pt. Benarsi Das Bhanot v. State
of Madhya Pradesh in the context of s. 6(2) of the Central Provinces and Berar
Sales Tax Act 1947.
Shri B. Sen further contends that the power
of modification given by s. 2 of the Laws Act, does not exhaust itself on first
exercise; it can be exercised even subsequently if through oversight or
otherwise, at the time of extension of the enactment the Central Government
fails to adapt or modify certain provisions of the extended enactment for
bringing it in accord with local conditions.
In this connection support has been sought
from the observations of Fazal Ali J. at p. 850 of the Report in Re:
Delhi Laws Act (supra). Our attention has
also been invited to s. 21 of the General Clauses Act which according to
Counsel, gives power to the Central Government to add to, amend, vary or
rescind any notification etc. if the power to do so does not run counter to the
policy of the legislature or affect any change in its essential features.
Learned Counsel has further tried to support
the reasoning of the appellate Bench of the High Court, that whatever infirmity
may have existed in the impugned notification and the modification made there
by in s. 6(2), it was rectified and cured by Parliament when it passed the
Amendment Act 20 of 1959. It is urged that the Bengal Act together with the
modifications made by notifications, dated 28-4-51, and 7-12-1957, must have
been before Parliament when it considered and passed the Amendment Act of 1959.
Our attention has been invited to its preamble which is to the effect: "An
Act further to amend the Bengal Finance (Sales- Tax) Act, 1941, as in force in
the Union Territory of Delhi," and also to the words "as in forever
in the Union Territory of Delhi" in s. 2 of the amending Act. :Reference
has been made to this Court's decisions in Venkatrao Esajirao's case (supra),
and Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd. The Assistant Commissioner of
Sales-tax and ors.
797 An alternative argument advanced by Shri
B. Sen is that if in s. 6(2) the requirement as to "not less than three
months' notice" was mandatory and a matter of legislative policy, then the
exemptions from tax granted to Durries, pure silk etc. after the issue o the
impugned notification must be treated non est and void ab initio, inasmuch as
the amendments of the Second Schedule whereby those exemptions were granted,
were made without complying with the requirement of not less than three months'
notice". It is argued that if this requirement was a sine qua non for
amendment of the Second Schedule, it could not be treated mandatory in one
situation and directory in another. If it was mandatory then compliance with it
would be absolutely necessary both for granting an exemption and withdrawing an
exemption from tax. In this view of the matter, according to Shri B. Sen, the
withdrawal of the exemption through the impugned notification was a mere formality;
the notifications simply declared the withdrawal of something which did not
exist in the eye of law. Appellants cannot therefore have any cause of
grievance if the invalid and still-born exemptions were withdrawn by the
In reply to this last argument, learned
Counsel for the appellants submit that this ground of defence was not pleaded
by the Revenue in its affidavit before the learned Single Judge. This,
according to the Counsel, was a question of fact which required evidence for
its determination, and was therefore required to be pleaded. Since the
Respondents did not do so, they should not have been allowed to take it for the
first time at the time of arguments. Even otherwise- proceeds the argument-the
Respondents are not competent to take this stand which is violative of the
basic canon of natural justice, according to which no party can be allowed to
take advantage of its own wrong. It is stressed that the object of the
requirement of not less than three months' notice, was to afford an opportunity
to persons likely to be adversely affected to raise objections against the
proposed withdrawal or curtailment of an exemption from tax. That being the
case, only the persons aggrieved could have the necessary locus standi to
complain of a non-compliance with this requirement.
In Re: Delhi Laws (supra) this Court inter
alia examined the constitutional validity of s. 2 of the Laws Act in the light
of general principles relating to the nature, scope and limits of delegated
Section 2 as it then stood, was as follows:
"The Central Government may, by
notification in the official Gazette, extend to any Part State (other than
Coorg and the Andaman and Nicobar Islands) or to any part of such State with
such restrictions and modifications as it thinks fit any enactment which is in
force in a Part A State at the date of the notification and provision may be
made in any enactment so extended for the repeal or amendments of any
corresponding law (other than a Central Act) which is for the time being
applicable to that Part State." The Court by a majority held that the
first part of this section which empowers the Central Government to extend to
any Part State or to any part of such State with such modifications and restrictions
as it 798 thinks fit any enactment which is in force in a Part A State, is
intra vires, and that the latter part of this section which empowers the
Central Government to make provision in any enactment extended to a Part State,
for repeal or amendment of any law (other than a Central Act) which is for the
time being applicable to that Part State, is ultra vires. Consequent upon this
opinion, the latter part of the section was deleted by s. 3 of the Repealing
and Amending Act, 195 (Act XLVIlI of 1952) with effect from 2-8-1951.
The majority opinion in upholding the
validity of the first portion of s. 2 of the Laws Act drew a good deal from the
observations of the Privy Council in Queen v. Burah wherein it was said:
"If what has been done is legislation within
the general scope of the affirmative words which give the power and if it
violates no express condition or restrictions by which that power is limited..
it is not for any court of justice to enquire
further or to enlarge constructively those conditions and restrictions".
x x x "Where plenary powers of
legislation exist as to particular subjects, whether in an Imperial or in a
Provincial Legislature, they may (in their Lordships judgment) be well
exercised, either absolutely or conditionally. Legislation conditional on the
use of particular powers, or on the exercise of a limited discretion, entrusted
by the legislature to persons in whom it places confidence, is not uncommon
thing; and, in any circumstances it may be highly convenient." (emphasis
supplies) Before proceeding further, it will be proper to say a few words in
regard to the argument that the power conferred by s. 2 of the Laws Act is a
power of conditional legislation and not a power of delegated legislation. In
our opinion, no useful purpose will be served to pursue this line of argument
because the distinction propounded between the two categories of legislative
powers makes no difference, in principle. In either case, the person to whom
the power is entrusted can do nothing beyond the limits which circumscribe the
power; he has to act-to use the words of Lord Selborne-"within the general
scope of the affirmative words which give the power" and without violating
any "express conditions or restrictions by which that power is
limited". There is no magic in a name. Whether you call it the power of
"conditional legislation" as Privy Council called it in Burah's case
(supra) or 'ancillary legislation' as the Federal Court termed it in Choitram
Commissioner of Income-tax, Bihar or
'subsidiary legislation' as Kania C.J. styled, it or whether you camouflage it
under the veiling name of 'administrative or quasi-legislative power'-as
Professor Cushman and other authorities have done it-necessary for 799 bringing
into operation and effect an enactment, the fact remains that it has a content,
howsoever small and restricted of the law making power itself. There is ample
authority in support of the proposition that the power to extend and carry into
operation an enactment with necessary modifications and adaptations is in truth
and reality in the nature of a power of delegated legislation. In Re: Delhi
Laws Act (supra) S.R. Das J. said that on strict analysis it was "nothing
but a delegation of a fractional legislative power". Anglin J. in Grays
case regarded this what is called conditional legislation' as "a very
common instance of limited delegation. More or less to the same effect is the
view taken by Evatt J. of Australia in Dignams case.
Prof. Kennedy (vide his treatise
'Constitution of Canada', 2nd Edn. p. 463), is also of opinion that
'conditional legislation' is "a form of delegation".
We do not want to multiply authorities nor
wish to carry this academic discussion to a final conclusion because it is not
necessary for solution of the problem in hand.
In the instant case, the precise question
with which we are faced is whether the purported substitution of the words
"such previous notice as is considers reasonable" for the words
"not less than three months notice" in s. 6(2) by the impugned notification
dated 7th December, 1957, was in excess of the power of 'modification'
conferred on the Central Government by s. 2 of the Laws Act.
This question has to be answered in the light
of the principles enunciated by this Court in Re: Delhi Laws Act relating to
the nature and scope of this power.
Out of the majority who upheld the validity
of this provision of s. 2 of the Laws Act, with which we are concerned, Fazal
Ali J. explained the scope of the words "much modifications as it thinks
fit" in s. 2, thus:
"These are not unfamiliar words and they
are often used by careful draftsmen to enable laws which are applicable to one
place or object to be so adapted as to apply to another. The power of
introducing necessary restrictions and modifications is incidental to the power
to apply or adapt the law, and in the context in which the provision as to
modification occurs it cannot bear the sinister sense attributed to it. The
modifications are to be made within the framework of the Act and they cannot be
such as to affect its identity or structure or the essential purposes to be
served by it. The power to modify certainly involves a discretion to make
suitable changes, but it would be useless to give an authority the power to
adapt a law without giving it the power to make suitable changes." Vivian
Bose J. also observed in a similar strain, at p. 1124;
800 "The power to "restrict and
modify" does not import the power to make essential changes. It is
confined to alterations of a minor character such as are necessary to make an
Act intended for one area applicable to another and to bring it into harmony
with laws already in being in the State, or to delete portions which are meant
solely for another area. To alter the essential character of an Act or to
change it in material particulars is to legislate, and that, namely, the power
to legislate, all authorities are agreed, cannot be delegated by a legislature
which is not unfettered." Mukherjea J. was of the view that the
"essential legislative function" which consists in the determination
or choosing of the legislative policy and of formally enacting that policy into
a "binding rule of conduct" cannot be delegated. Dealing with the
construction of the words "restrictions" and "modification"
in the Laws Act, the learned Judge said" at pages 1004-10O6:
"The word "restrictions" ..
connotes limitation imposed on a particular provision so as to restrain its
application or limit its scope, it does not by any means involve any change in
the principle. It seems to me that in the context and used alongwith the word
"restriction" the word "'modification" has been employed
also in a cognate sense, and it does not involve any material or substantial
alteration. The dictionary meaning of the expression "to modify" is
to "tone down" or to "soften true rigidity, of the thing"
or "to make partial changes without any radical alteration". It would
be quite reasonable to hold that the word "modification" in s. 7 of
the Delhi Laws Act (which is almost identical with the present s. 2, Laws Act)
means and signifies changes of such character as are necessary to make the
statute which is sought to be extended able to the local conditions of the
I do not think that the executive Government
is entitled to change the whole nature or policy underlying any particular Act
or to take different portions from different statutes and prepare what has been
described before us as "amalgam" of several laws.
these things would be beyond the scope of the
section itself." (emphasis supplied).
S.R. Das J. (as he then was) delineated the
scope of the power of "modification" given under s. 7 of the Delhi
Laws Act, 1912 (for short the Delhi Act) at p. 1089 as follows:
"It may well be argued that the
intention of section 7 of the Delhi Laws Act was that the permissible
modifications were to be such as would, after modification, leave the general
character of the enactment intact. One of the meanings of the word
"modify" is given in the oxford Dictionary Vol. I, page 1269 as
"to alter without radical transformation". If this meaning is given
to the word "modification" in section 7 of the Delhi Laws Act. then
the modifications contemplated 801 thereby were nothing more than adaptations
which were included in the expressions mutatis mutandis and the
"restrictions, limitations or proviso" mentioned in the several
instances of conditional legislation referred to by the Privy Council (in
Burah's case)." (emphasis supplied & parenthesis added) It is to be
noted that the language of s.7 of the Delhi Act was substantially the same as
that of the first portion of s. 2 of the Part C State Laws Act, as it then
stood. What Das J. said about the scope of "restrictions and
modifications" in the context of s. 7 of the Delhi Act substantially
applies to the ambit and meaning of these words occurring in s. 2 of the Laws
Again, in Rajnarainsingh's case (supra),
Vivian Bose J.
speaking for the Court, summed up the
majority view in regard to the nature and scope of delegated legislation in Re:
Delhi Laws (supra), thus:
"In our opinion the majority view was
that an executive authority can be authorised to modify either existing or future
laws but not in any essential feature.
Exactly what constitutes an essential feature
cannot be enunciated in general terms, and there was some divergence of view
about this in the former case, but this much is clear from the opinions set out
above: it cannot include a change of policy".
Bearing in mind the principles and the scope
and meaning of the expression "restrictions and modifications"
explained in Delhi Laws Act, let us now have a close look at s. 2. It will be
clear that the primary power bestowed by the section on the Central Government,
is one of extension, that is, bringing into operation and effect, in a Union
Territory, an enactment already in force in a State. The discretion conferred
by the Section to make 'restrictions and modifications' in the enactment sought
to be extended, is not a separate and independent power. It is an integral
constituent of the powers of extension. It cannot be exercised apart from the
power of extension. This is indubitably clear from the preposition
"with" which immediately precedes the phrase "such restrictions
and modifications" and conjoins it to the principal clause of the section
which gives the power of extension. According to the Shorter Oxford Dictionary,
one meaning of the word "with", (which accords here with the
context), is "part of the same whole".
The power given by s. 2 exhausts itself on
extension of the enactment; it cannot be exercised repeatedly or subsequently
to such extension. It can be exercised only once, simultaneously with the
extension of the enactment.
This is one dimension of the statutory limits
which circumscribe the power. The second is that the power cannot be used for a
purpose other than that of extension. In the exercise of this power, only such
"restrictions and modifications" can be validly engrafted in the
enactment sought to be extended, which are necessary to bring it into operation
and effect in the Union Territory. "Modifications" which are not
necessary for, or ancillary and subservient to the purpose 802 of extension,
are not permissible. And, only such "modifications" can be
legitimately necessary for such purpose as are required to adjust, adapt and
make the enactment suitable to the peculiar local conditions of the Union
Territory for carrying it into operation and effect.
In the context of the section, the words
"restrictions and modifications" do not cover such alterations as
involve a change in any essential feature, of the enactment or the legislative
policy built into it. This is the third dimension of the limits that
circumscribe the power.
It is true that the word "such
restrictions and modifications as it thinks fit", if construed literally
and in isolation, appear to give unfettered power of amending and modifying the
enactment sought to be extended. Such a wide construction must be eschewed lest
the very validity of the section becomes vulnerable on account of the vice of
excessive delegation. Moreover, such a construction would be repugnant to the
context and the content of the section, read as a whole, and the statutory
limits and conditions attaching to the exercise of the power. We must,
therefore, confine the scope of the words "restrictions and
modifications" to alterations of such a character which keep the inbuilt
policy, essence and substance of the enactment sought to be extended, intact,
and introduce only such peripheral or insubstantial changes which are
appropriate and necessary to adapt and adjust it to the local conditions of the
The impugned notification, dated 7-12-1957,
transgresses the limits which circumscribe the scope and exercise of the power
conferred by s. 2 of the Laws Act, at least, in two respects.
Firstly, the power has not been exercised contemporaneously
with the extension or for the purposes of the extension of the Bengal Act to
Delhi. The power given by s. 2 of the Laws Act had exhausted itself when the
Bengal Act was extended, with some alterations, to Delhi by Notification dated
28-4-1951. The impugned notification has been issued on 7-12-1957, more than 6
1/2-years after the extension.
There is nothing in the opinion of this Court
rendered in Re: Delhi Laws Act (supra) to support Mr. B. Sen's contention that
the power given by s. 2 could be validly exercised within one year after the
extension. What appears in the opinion of Fazl Ali J. at page 850, is merely a
quotation from the report of the Committee on Minister's Powers which
considered the propriety of the legislative practice of inserting a
"Removal of Difficulty Clause" in Acts of British Parliament,
empowering the executive to modify the Act itself so far as necessary for
bringing it into operation. This device was adversely commented upon.
While some critics conceded that this device
is "partly a draftsman's insurance policy, in case he has overlooked
something" (e.g. Sir Thomas Carr, page 44 of his book "Concerning
English Administrative Law"), others frowned upon it, and nicknamed it as
"Henry VIII Clause" after the British Monarch who was a notorious
personification of absolute despotism. It was in this perspective that the
Committee on Minister's Powers examined this practice and recommended:
803 ".... first, that the adoption of
such a clause ought on each occasion when it is, on the initiative of the
Minister in charge of the Bill, proposed to Parliament to be justified by him
upto the essential.
It can only be essential for the limited
purpose of bringing an Act into operation and it should accordingly be in most
precise language restricted to those purely machinery arrangements vitally
requisite for that purpose; and the clause should always contain a maximum
time-limit of one year after which the power should lapse".
It may be seen that the time-limit of one
year within which the power under a Henry VIII Clause should be exercisable,
was only a recommendation, and is not an inherent attribute of such power. In
one sense, the power of extension-cum-modification given under s. 2 of the Laws
Act and the power of modification and adaptation conferred under a usual 'Henry
VIII Clause,' are kindred powers of fractional legislation, delegated by the
legislature within narrow circumscribed limits. But there is one significant
difference between the two. While the power under s. 2 can be exercised only
once when the Act is extended, that under a 'Henry VIII Clause' can be invoked,
if there is nothing to the contrary in the clause-more than once, on the
arising of a difficulty when the Act is operative. That is to say, the power under
such a Clause can be exercised whenever a difficulty arises in the working of
the Act after its enforcement, subject of course to the time-limit, if any, for
its exercise specified in the statute.
Thus, anything said in Re: Delhi Laws Act
(supra), in regard to the time-limit for the exercise of power under a 'Henry
VIII Clause', does not hold good in the case of the power given by s. 2 of the
Laws Act. Fazl Ali J., did not say anything indicating that the power in
question can be exercised within one year of the extension. On the contrary,
the learned Judge expressed in unequivocal terms, at page 849:
"Once the Act became operative any
defect in its provision cannot be removed until amending legislation is
passed." Secondly, the alteration sought to be introduced by this
Notification (7-12-1957) in s. 6(2), goes beyond the scope of the 'restrictions
and modifications' permissible under s. 2 of the Laws Act; it purports to
change the essential features of sub-s. (2) of s. 6. and the legislative policy
Section 6(2), as it stood immediately before
the impugned notification, requires the State Government to give by
Notification in the Official Gazette "not less than 3 months notice"
of its intention to add to or omit from or otherwise amend the Second Schedule.
The primary key to the problem whether a statutory provision is mandatory or
directory, is the intention of the law-maker as expressed in the law, itself.
The reason behind the provision may be a further aid to the ascertainment of that
intention. If the legislative intent is expressed clearly and strongly in
imperative words, such as the use of 'must' instead of "shall", that
will itself be sufficient to hold 804 the provision to be mandatory, and it
will not be necessary to pursue the enquiry further. If the provision is
couched in prohibitive or negative language, it can rarely be directory, the
use of peremptory language in a negative form is per se indicative of the
intent that the provision is to be mandatory (Crawford, the Construction of
523-24). Here the language of sub-section (2)
of s. 6 is emphatically prohibitive, it commands the Government in unambiguous
negative terms that the period of the requisite notice must not be less than
In fixing this period of notice in mandatory
terms, the legislature had, it seems taken into consideration several factors.
According to the scheme of the Bengal Act, the tax is quantified and assessed
on the quarterly turnover. The period of not less than three months notice
conforms to that scheme and is intended to ensure that imposition of a new
burden or exemption from tax causes least dislocation and inconvenience to the
dealer in collecting the tax for the Government, keeping accounts and filing a
proper return, and to the Revenue in assessing and collecting the same. Another
object of this provision is that the public at large and the purchasers on whom
the incidence of the tax really falls, should have adequate notice of taxable
items. The third object seems to be that the dealers and others likely to be
affected by an amendment of the Second Schedule may get sufficient time and
opportunity for making representations, objections or suggestions in respect of
the intended amendment. The dealers have also been ensured adequate time to
arrange their sales adjust their affairs and to get themselves registered or
get their licenses amended and brought in accord with the new imposition or
Taking into consideration all these matters,
the legislature has in its judgment solemnly incorporated in the statute, fixed
the period of the requisite notice as "not less than three months"
and willed this obligation to be absolute. The span of notice was thus the
essence of the legislative mandate. The necessity of notice and the span of
notice both are integral to the scheme of the provision. The sub-section cannot
therefore be split up into essential and non-essential components, the whole of
it being mandatory.
The rule in Raza Buland Sugar Co.'s case
(supra) has therefore no application.
Thus section 6(2) embodies a determination of
legislative policy and its formulation as an absolute rule of conduct which
could be diluted, changed or amended only by the legislature in the exercise of
its essential legislative function which could not, as held in Re: Delhi Laws
Act (supra) and Rajnarainsingh's case (supra) be delegated to the Government.
For these reasons we are of opinion that the
learned single Judge of the High Court was right in holding that the impugned
notification was outside the authority of the Central Government as a delegate
under s. 2 of the Laws Act.
Before proceeding further, we may mention
here in passing that the point for decision in Benarsi Das Bhanot's case
(supra) relied on by the Division Bench of the High Court, was different from
the one 805 before us. There, the constitutional validity of s. 6(2) of the
Central Provinces and Berar Sales Tax Act, 1947, was questioned on the ground
of excessive delegation. In the instant case the validity of s. 6(2) of the
Bengal Act, as such is not being impeached.
There is yet another facet of the matter. By
the impugned notification, the Central Government did not directly seek to
amend s. 6(2). Perhaps it was not sure of its competence to do so more than 6
1/2 years after the extension of Bengal Act to Delhi. It therefore chose to
amend s. 6(2) indirectly through the amendment of its earlier notification
dated 28-4-51, which was only a vehicle or instrument meant for extension of
the Bengal Act to Delhi. On such extension, the notification had exhausted its
purpose and had spent its force. It had lost its utility altogether as an
instrument for modification of the Bengal Act. Therefore, the issue of the
impugned notification which purported to amend s. 6(2) through the medium of a
"dead" notification, was an exercise in futility. In any case, an
amendment which was not directly permissible could not be indirectly smuggled
in through the back-door.
We now turn to the main ground on which the
judgment of the appellate Bench of the High Court rests. The question is, was
the invalidity from which the impugned notification, dated 7-12-1957, suffered
cured by the Amendment Act of 1959 ? The Bench seems to think that by passing
this Amendment Act, Parliament had put its seal of approval on the Bengal Act
as it stood extended and amended by the Notifications of 1957 and 1957.
We find no basis for this surmise. This
Amendment Act leaves s. 6(2) untouched; it does not even indirectly, refer to
the impugned notification or the amendment purportedly made by it in s. 6(2).
Nor does it re-enact or validate what was sought to be achieved by the impugned
Notification. No indication of referential incorporation or validation of the
impugned notification or the amendment sought to be made by it, is available
either in the preamble or in any other provision of the Amendment Act.
In Krishna Chandra v. Union of India,(1)
relied upon by the learned Counsel for the Respondents, the central issue for
consideration was, whether R. 20(2) framed by the Bihar Government under s. 15
of the Mines and Minerals (Regulation and Development) Act, 1957 and the second
proviso to s.
10(2) of the Bihar Land Reforms Act, 1950
were constitutionally valid. By the combined operation of these statutory
provisions, the petitioners therein were called upon to pay certain rent and
royalties in respect of mining operations. Those demands were challenged in
Baijnath Kedia v. State of Bihar(2) wherein this Court held that the Bihar
legislature had no jurisdiction to enact the second proviso to s. 10(2) of the
Bihar Act because s. 15 of the Central Act, read with s. 2 thereof, had
appropriated the whole field relating to mining minerals for Parliamentary
legislation. The upshot of that decision was, that the action taken by the 806
Bihar Government in modifying the terms and conditions of the leases which were
in existence anterior to the Rules and the levy sought to be made on the
strength of the amended Bihar Act and Rule, were unsustainable. Thereupon the
State persuaded Parliament to enact the Validation Act of 1969 with a view to
remove the road-blocks which resulted in the decision in Kedia's case (supra).
Section 2 of the Validation Act runs thus:
"Validation of certain Bihar State laws
and action taken and things done connected therewith.
(1) The laws specified in the Schedule shall
be and shall be deemed always to have been, as valid as if the provisions
contained therein had been enacted by Parliament.
(2) Notwithstanding any judgment, decree or
order of any court, all actions taken, things done, rules made, notification
issued or purported to have been taken, done, made or issued and rents or
royalties realised under any such laws shall be deemed to have been validly
taken, done, made, issued or realised, as the case may be, as if this section
had been in force at all material times when such action was taken, things were
done, rules were made, notifications were issued, or rents or royalties were
realised, and no suit or other proceeding shall be maintained or continued in
any court for the refund of rents or royalties realised under any such laws.
(3) For the removal of doubts, it is hereby
declared that nothing in sub-section (2) shall be construed as preventing any
person from claiming refund of any rents or royalties paid by him in excess of
the amount due from him under any such laws." The precise question before
the Court was, whether a statute or a rule earlier declared by the Court to be
unconstitutional or otherwise invalid can be retroactive through fresh
validating legislation enacted by the competent legislature. Answering this
question in the affirmative, this Court, speaking through Krishna Iyer, J.
"where Parliament having power to enact
on a topic actually legislates within its competence but, as an abbreviation of
drafting, borrows into the statute by reference the words of a State Act not
qua State Act but as a convenient shorthand, as against a longhand writing of
all the sections into the Central Act, such legislation stands or falls on
Parliament's legislative power, vis-a-vis the subject viz., mines and minerals.
The distinction between the two legal lines
may sometimes be fine but always is real.
807 If Parliament has the power to
legislative on the topic, it can make an Act on the topic by any drafting
means, including by referential legislation." "Taking a total view of
the circumstances of the Validation Act Parliament did more than simply
validate an invalid law passed by the Bihar Legislature but did reenact it with
retrospective effect in its own right adding an amending Central Act to the
statute book." The position in the instant case is entirely different.
Here, Parliament despite its presumed
awareness of the impugned Notification, has said nothing in the Amending Act of
1959, indicating that it (Parliament) has by 'longhand' or 'shorthand' method
incorporated, re-enacted or validated the impugned notification or the
amendment sought to be made thereby, while passing the Amendment Act, 1959. The
appellate Bench was therefore in error in holding that Parliament had validated
or re-enacted referentially with retrospective effect what was sought to be
done by the impugned notification, when it passed the Amending Act, 1959.
The High Court has tried with the aid of this
Court's decision in Venkatrao v. State of Bombay (supra) to spell out the
proposition that mere amendment of an Act by a competent legislature, amounts
to re-enactment of the parent Act. We find nothing in this Court's decision in
Venkatrao's case which warrants the enunciation of such a sweeping rule.
All that was decided in Venkatrao's case was
that the assent given by the President to the Amending Act would be deemed to
be an assent accorded to the parent Act, also. The decision in Venkatrao's case
therefore does not advance the case of Shri B. Sen.
Shri B. Sen's alternative argument that the
notifications whereby the exemptions from tax have been withdrawn in regard to
Durries, pure silk, country liquor etc. are not assailable because those
exemptions were earlier granted without giving three months' notice, is
Firstly, so far as fruits, fresh and dried
(item 8), Pepper, tamarind and chillies (item 11), Turmeric (item 14), ghee
(item 16), and knitting wool, (item 21A) are concerned, they were exempted
goods in the Schedule of the Bengal Act, as modified and extended by the
Notification, dated 28-4- 1951, to Delhi. No question of giving notice for
granting these exemptions therefore arose. Secondly, the validity of the
notifications whereby exemptions were granted to pure silk, liquor etc. after
the extension of the Bengal Act to Delhi is not in issue. This plea was not set
up by the Respondents in their affidavits. Whether or not notice for the
requisite period was given before issuing the exemption notifications, was a
question of fact depending on evidence.
Thirdly, to allow the Respondents to take
their stand on such a plea would be violative of the fundamental principle of
natural justice, according to which, a party cannot be allowed to take
advantage of its own lapse or wrong. The statute 808 has imposed a peremptory
duty on the Government to issue notice of not less than three months, of its
intention to amend the Second Schedule. It therefore cannot be allowed to urge
that since it had disobeyed this mandate on an earlier occasion when it granted
the exemptions it can withdraw the exemptions in the same unlawful mode. Two
wrongs never make a right.
Nor could the Respondents derive any
authority or validity from s. 21 of the General Clauses Act, for the
notifications withdrawing the exemptions. The source from which the power to amend
the Second Schedule, comes is s.
6(2) of the Bengal Act and not s. 21 of the
General Clauses Act. Section 21, as pointed out by this Court in Gopichand v.
Delhi Administration(1) embodies only a rule of construction and the nature and
extent of its application must be governed by the relevant statute which
confers the power to issue the notification. The power therefore had to be
exercised within the limits circumscribed by s. 6(2) and for the purpose for
which it was conferred.
For all the foregoing reasons, we are of
opinion that the impugned notification, dated 7-12-1957, purporting to
substitute the words "such previous notice as it considers
reasonable" for the words "not less than three months notice" in
s. 6(2) of the Bengal Act is beyond the powers of the Central Government,
conferred on it by s. 2 of the Laws Act. In consequence, the notification dated
1-4-1958, 19-9- 1959, 29-6-1966 and 31-7-1970 in so far as they withdrew the
exemptions from tax in the case of Durries, pure silk, country liquor, kirayana
articles etc. were withdrawn without complying with the mandatory requirement
of not less than three months notice enjoined by s. 6(2) of the Bengal Act, are
also invalid and ineffective.
In the result we allow these appeals, set
aside the judgment of the appellate Bench of the High Court and declare the
Notification dated 7-12-1957, and the subsequent notifications in so far as
they withdrew the exemptions from tax, mentioned above, to be unconstitutional.
In the circumstances of the case, we leave the parties to bear their own costs.
V.P.S. Appeals allowed.