Avinder Singh Vs. State of Punjab
& ANR  INSC 183 (19 September 1978)
CITATION: 1979 AIR 321 1979 SCR (1) 845 1979
SCC (1) 137
R 1979 SC1550 (13) R 1979 SC1803 (12) RF 1980
SC 738 (9) F 1983 SC 762 (19) R 1991 SC2096 (30)
Constitution of India-Articles 14, 265-Vice
of excessive delegation-Absence of guidelines-What can be delegated-Imposing
flat rate of taxation-Choice of classification in taxing statute.
Punjab Municipalities Act, 1976-Sec. 90
Punjab Municipal Act, 1911-Sec. 62A-Double taxation if prohibited by Art. 265.
The Municipalities of Punjab are governed by
two enactments. The numerous little ones are statutory bodies created and
controlled by the Punjab Municipal Act, 1911 and few large ones by the Punjab
Municipal Corporation Act, 1976. For the purpose of the present petitions the
provisions run on identical terms. The State of Punjab in April, 1977 required
the various municipal bodies in the State to impose tax on the sale of Indian
made foreign liquor @ Re. 1/- per bottle w.e.f. 20-5-1977. The Municipal
authorities having failed to take action pursuant to the directive the State of
Punjab directly issued a notification under sec. 90(5) of the Punjab Municipal
Corporation Act, 1976 and similar provision of the Municipal Act, 1911.
The petitioner challenged the constitutional
validity of the said statutes and levy on the following grounds:
1. Section 90(2)(b) of the Act suffers from
the vice of excessive delegation or legislative abdication.
2. There are no guidelines for the exercise
of the wide fiscal power of the Corporation or Government which make it too
unreasonable to be salvaged by Art. 19(5) and too arbitrary to be equal under
3. The order imposing the tax itself is
(a) It seeks to impose the tax which is
already imposed and, therefore, violates section 90 (4);
(b) There is double taxation;
(c) It levies too heavy taxation;
(d) Picking out from the broad spectrum of
luxury goods or intoxicants the Indian made foreign liquor amounts to
(e) No opportunity of being heard was given;
(f) Unequals are being treated equally by
imposing Re. 1/- per bottle irrespective of the type of liquor taxed, price of
the liquor and alcoholic content.
Dismissing the appeal.
HELD: (1) There is nothing in Art. 265 of the
Constitution prohibiting double taxation. [850 D] 846 Cantonment Board Poona v.
Western India Theatres Ltd., AIR 1954 Bom. 261 approved.
(b) The plea that flat rate of Re. 1/- per
bottle be it on brandy or other stronger beverage or be it Rs. 50/- or Rs.
500/- per bottle cannot be seriously pressed. In the field of taxation many
complex factors enter the fixation and flexibility is necessary for the taxing
authority. [850E-F] Moopil Nair (K.T.) v. State of Kerala,  3 SCR 77;
East India Tobacco Co. v. State of A.P.,
 1 SCR 404 at 406; A. Hajee Abdul Shakoor & Co. v. State of Madras.
 8 SCR 217 at 230 referred to.
(2) If the Municipal body proposed to impose
a tax it is required to offer an opportunity to the residents of area. No such
procedural fetter is to be found under sec.
90(5) if the levy is imposed by the State
Government. It is impossible for the Court to imply invitation of objections.
'No taxation without representation' is not
applicable to a Government controlled by an elected legislature exercising its
power of taxation. [852B, C, D] (3) Sec. 90(4) talks of tax not already
imposed. The Sales Tax imposed by the state legislature under the Punjab
General Sales Tax Act 1948 is no bar to the present levy.
Section 90 deals with the levy of taxes for
Municipal Corporation. The injunction is confined to repetition of the taxes
which the Municipality has already imposed. If the Corporation has not already
imposed the tax. the embargo is absent. It is of no moment that some other
body, including the State Legislature has already entered the field. The
question is has the Municipal Committee or Corporation under this Act already exacted
a similar tax ? [852F, H, 853BC] (4) The Founding Document of the nation has
created the three great instrumentalities and entrusted them with certain basic
powers-legislative, judicative and executive.
Abdication of these powers by the concerned instrumentalities,
amounts to betrayal of the constitution and it is intolerable in law. The
legislature cannot delegate the essential legislative functions. The
legislature is responsible to the people and its representative, the delegate
may not be and this is why excessive delegation have been frowned upon by
constitutional law. However, the complexities of modern administration are so
bafflingly intricate and bristle with details, urgencies difficulties and the
need for flexibility is such that our legislature may not get off to a start if
they must directly and comprehensively handle legislative business in all their
plenitude and particularisation.
Delegation of some part of legislative power
becomes a compulsive necessity for viability. Of course, every delegate is
subject to the authority and control of the principal and exercise of delegated
power can always be directed or cancelled by the Principal. Therefore, even if
there be delegation, parliamentary control over delegated legislation should be
a living continuity as a constitutional necessity. [853GH, 854A, B, C, D, E]
Devi Das Gopal Krishnan & Ors. v. State of Punjab & Ors.,  3 SCR
557 at 565; P. N. Kaushal etc. v. v. Union of India & Ors.  1 SCR
122; Corp. of Calcutta & Anr. v. Liberty Cinema,  2 SCR 477 referred
The taxes levied under the Act can be
utilised only for the purpose of the Act. There is a clear purpose contained in
the provisions about the purpose and limit of the tax.
What is needed for the purpose of the Act by
way of financial resources may be levied by the Corporation. Beyond that not.
Moreover the 847 items on which taxes may be imposed are also specified. Thus
the legislature has fixed the purpose of the taxation, objects of the taxation
and limits of the taxation. [856A-B] It is too late in the day to contend that
the jurisprudence of delegation of legislative power does not sanction parting
with the power to fix the rate of taxation, given indication of the legislative
policy with sufficient clarity. [860 B] When the Government is imposing taxes
for the Municipality the Government is bound to know what ought to have been
done by the Municipality. The whole scheme of the statute shows that Government
has an important role to play in the running of the municipalities. The
financial control over the corporation is with the State Government. [865E] As
between the two interpretations that which sustains the validity of law must be
preferred. [864E] M. K. Papiah & Sons v. The Excise Commr. & Anr., 
3 SCR 607; Sita Ram Bishambhar Dayal v. State of U.P.,  2 SCR 141
ORIGINAL JURISDICTION: Writ Petitions Nos.
4038, 4147, 4148, 4149, 4150, 4202, 4204, 4207, 4213, 4215, 4222, 4224, 4227,
4232, 4236, 4246, 4249, 4251, 4259, 4311, 4343 & 4347 of 1978.
(Under Article 32 of the Constitution).
V. M. Tarkunde, P. H. Parekh, C. B. Singh and
Mukul Mudgar for the Petitioners in W.P. Nos. 4038 and 4244/78.
Yogeshwar Prasad, Mrs. Rani Chhabra and Miss
M. Bali for the Petitioners in W.P. Nos. 4147-4150, 4207, 4232 and 4343/78.
B. R. Kapur and S. K. Sabharwal for the
Petitioners in W.P. Nos. 4213, 4215, 4246, 4249, 4311, 4224 and 4227/78.
O. P. Sharma for the Petitioners in W.P. Nos.
Pramod Swarup for the Petitioner in W.P.
Shreepal Singh for the Petitioner in W.P.
M. P. Jha for the Petitioner in W.P. 4251/78.
M. C. Bhandare (In W.P. 4204 and 4227/78
only) Mrs. S. Bhandare, A. N. Karkhanis and Miss Malini Poduval for R. 3 (In
W.P. 4204, 4227/78) and for R. 3 in 4215 and for R. 3-4 in 4249/78.
G. L. Sanghi (In W.P. 4038/78 only) S. K.
Mehta, K. R. Nagaraja, P. N. Puri and G. Lal for Municipality (rr) in W.P.
4038, 4207, 4215, 4249, 4227.
Hardev Singh and R. S. Sodhi for the State of
Punjab in (W.P. 4038/78).
Bishamber Lal for the State of Punjab in (W.
848 Naunit Lal for Municipal Committee (R.6)
in W.P. 4249 and for r. 4 in 4227/78.
The Judgment of the Court was delivered by
KRISHNA IYER, J.-This heavy bunch of writ petitions impeaching the validity of
a tax on foreign liquor raises a few familiar legal riddles. A rupee per bottle
sold within every municipal town or city is the impugned levy, meant, according
to the Punjab Government, to serve the twin purposes of replenishing the
resources of municipal bodies reduced by house tax exemptions and of weaning
drinkers from overly consuming foreign liquor as a prohibitionist gesture.
To pick the pocket of every spirituous bibber
of the higher brackets by a tiny tax may be but a feeble homage to Art. 47 of
the Constitution, and to finance welfare projects with this tainted tax may be
queer Gandhiana. The will to enforce 'dry' sobriety in society and to abolish
massive human squaller by fleecing the fat few, is made of sterner stuff,
maybe. But matters of means and ends, of police and morality, are largely for
the legislature and validity is the province of the court. We let slip the
observation only because, from a certain angle, these dual grounds make odd
companions and add to the credibility gap, although our focus is solely on the
legality of the levy.
It is better to begin with the story of the
tax under challenge. The petitioners are all licensees to trade in foreign
liquor including Indian made foreign liquor. They are either wholesalers or
retailers and pay excise duty and other fees and taxes including sales tax
under the general sales tax law which imposes a levy of 10 per cent, on sales
of foreign liquor. There are also octroi levies of 10 per cent, and educational
tax of 2 per cent, and these add up to a considerable burden; but the commodity
taxed is foreign liquor, Indian made or other, whose consumer usually belongs
to the well to do sectors.
The municipalities of Punjab are governed by
two enactments. The numerous little ones are statutory bodies created and
controlled by the Punjab Municipal Act, 1911 and the few large ones by the
Punjab Municipal Corporation Act, 1976 (the Act, for brevity, hereafter). For
our purposes, the provisions run on identical terms and so we will take up the
latter statute which compresses into one section a plurality of sections in the
former, and set out the common scheme to study the critical issues raised.
Arguments have been addressed only on this basis.
The immediate facts which have launched the
litigative rocket need to be narrated now to get a hang of the core questions
in their correct perspective. The State of Punjab, in April 1977, under its
statutory 849 power [s. 90(4)] required the various municipal bodies in the
State to impose a tax on the sale et al, of foreign liquor at the rate of Re.
1/- per bottle with effect from May 20, 1977. The municipal authorities having
tarried too long or totally failed to take action pursuant to this directive,
the State directly entered the fiscal arena and issued a Notification under s.
90(5) dated May 31, 1977, which reads thus:
"Whereas the Government of Punjab, in
exercise of the powers conferred by sub-section (4) of section 90 of the Punjab
Municipal Corporation Act, 1063-A-PSLG- 77/12170, dated 11th April, 1977,
required of the Municipal Corporation of Ludhiana in Punjab to impose tax on
the sale of "Indian made Foreign Liquor" at the rate of rupee one per
bottle, by the 20th May, 1977.
2. And Whereas, the Municipal Corporation of
Ludhiana has failed to carry out the aforesaid order of the Punjab Government
within the stipulated period.
3. Now, therefore, in exercise of the powers
conferred by sub-section (5) of section 90 of the Punjab Municipal Corporation
Act, 1976, the President of India is pleased to impose/modify the tax on the
sale of "Indian made Foreign Liquor" within the Municipal Corporation
of Ludhiana at the rate of rupee one per bottle. The tax shall come into force
with effect from 1st June, 1977.
L.S. BINDRA Joint Secretary to Govt. Punjab
Local Government Department" This notification, issued under s. 90(5) read
with s. 90(2)(b) of the Act, was later modified marginally but survives
substantially. The petitioners (licensees) challenge its vires both as contrary
to the statutory provision (s. 90) and as violative of the Constitution. The
triple shapes of the fatal constitutional pathology are that (a) s. 90 (2)(b)
of the Act suffers from the vice of excessive delegation or legislative
abdication; (b) there are no guidelines for the exercise of the vagariously
wide fiscal power of the corporation or Government which make it too
unreasonable to be salvaged by Art. 19(5) and too arbitrary to be 'equal' under
Art. 14; and (c) the order itself is vitiated by multiple infirmities. The
principal invalidatory charge, based on the Act, is that s. 90(4) interdicts
any tax 'already imposed'. The present tax is on sales and there is, under the
general sales tax law, already a like levy on sales of foreign liquor in the
State, and so the second fiscal venture is beyond Government's power. We have
to consider these grounds of attack on the notification which are the emphatic
submissions of 850 Shri Tarkunde who led the arguments. There are more
subsidiary submissions urged by other counsel on a lower key, though, but we
have to deal with them too in due course. Briefly, they are (a) that in picking
out for taxation, from the broad spectrum of luxury goods or intoxicants,
foreign liquor alone, discrimination has been practised, (b) that even assuming
that Government can exercise the power of the municipal body, it may not do so
without adhering to the procedural fairness implied in the Explanation to s.
90(2) applicable to municipal bodies and (c) that unequals are being treated
equally because the tax of Re. 1/- bottle at a flat rate disregards germane
considerations like the price of the liquor or the degree of alcoholic content.
A feeble plea that the tax is bad because of the vice of double taxation and is
unreasonable because there are heavy prior levies was also voiced. Some of
these contentions hardly merit consideration, but have been mentioned out of
courtesy to counsel. The last one, for instance, deserves the least attention.
There is nothing in Art. 265 of the Constitution from which one can spin out
the constitutional vice called double taxation. (Bad economics may be good law
and vice versa). Dealing with a somewhat similar argument, the Bombay High
Court gave short shrift to it in Western India Theatres(1). Some undeserving
contentions die hard, rather survive after death. The only epitaph we may
inscribe is: Rest in peace and don't be re- born ! If on the same
subject-matter the legislature chooses to levy tax twice over there is no
inherent invalidity in the fiscal adventure save where other prohibitions
Likewise, the plea that a flat rate of Re.
1/- per bottle, be it brandy or other stronger beverage or be it Rs. 50/- or
Rs. 500/- per bottle, cannot be seriously pressed.
In the field of taxation many complex factors
enter the fixation and flexibility is necessary for the taxing authority to
make a reasonably good job of it. Moopil Nair's case(2) does not discredit as
unconstitutional anathema all flat rates of taxation. Maybe, in marginal cases
where the virtual impact of irrationally uniform impost on the same subject is
glaringly discriminatory, expropriatory and beyond legislative competence,
different considerations may arise; but to condemn into invalidity a tax
because it is levied at a conveniently flat rate having regard to the commodity
or service which has a high range of prices and the minimal effect on the
overall price, its easy means of collection and a variety of other pragmatic
variables, is an absurdity, especially because in fiscal matters large
liberality must be extended to the Government having regard to the plurality of
criteria 851 which have to go into the fiscal success of the measure. Of
course, despite this forensic generosity, if there is patent discrimination in
the sense of treating dissimilar things similarly or vice-versa, the court may
treat the tax as suspect and scrutinise its vires more closely. In the present
case, intoxicating liquids falling in the well-known category of foreign
liquors form one class and a flat minimal rate of Re. 1/- per bottle has no
constitutional stigma of inequality. It is so easy to conceive of innumerable
taxes imposed in this manner in the daily governance of the country that
illustrations are unnecessary. As excisable articles go, foreign liquor is a
distinct category and absence of micro-classification within the broad genus
does not attract the argument of inequality.
Likewise, picking and choosing within limits
is inevitable in taxation. The correct law is found in East India Tobacco
Co.(1) "It is not in dispute that taxation laws must also pass the test of
Art 14. That has been laid down recently by this Court in Moopil Nair v. The
State of Kerala. But in deciding whether a taxation law is discriminatory or
not it is necessary to bear in mind that the State has a wide discretion in
selecting the persons or objects it will tax, and that a statute is not open to
attack on the ground that it taxes some persons or objects and not others. It
is only when within the range of its selection, the law operates unequally, and
that cannot be justified on the basis of any valid classification, that it
would be violative of Art. 14. The following statement of the law in Willis on
"Constitutional Law" page 587, would correctly represent the position
with reference to taxing statutes under our Constitution:- "A State does
not have to tax everything in order to tax something. It is allowed to pick and
choose districts, objects, persons, methods and even rates for taxation if it
does so reasonably........The Supreme Court has been practical and has permitted
a very wide latitude in classification for taxation." (See also Abdul
Shakoor & Co. case)(2). the foreign liquor levy does not fail on this
Shri Yogeshwar Prasad urged that s. 90(2)
obligated the municipal body to offer an opportunity to the residents of the
city to file objections to the tax proposed and consider them before finalising
852 the impost. This fair procedure must attach to the exercise of the power
even under s. 90(5); and since that has not been done the impugned notification
must fail. It is clear from s. 90 that the scheme is that if the municipal
corporation wishes to impose a tax under s. 90(2) it must go through the due
process indicated in the Proviso and secure Government's approval. But if
Government is to exercise its power under s. 90(5) no such procedural fetter is
found in the Section. Maybe, that power is different from procedure for its
exercise; but unless the statute insists, it is impossible for the court to
imply invitation of objections and consideration thereof from the residents.
For this simple reason, there is no merit in the submission. Whether the
failure to hear before fixing a tax has a lethal effect upon the fiscal power
of the Government under s. 90(5) also is of little moment although urged by the
same counsel. May be, it is desirable that the State acquaints itself with the
actual sentiments of the denizens of the local area before imposing tax on
them. But it is not inherent in the constitutional requirements for the
exercise of the State's power of taxation that objections should be called for
and considered. 'No taxation without representation' is a slogan with a
different dimension and has nothing to do with a levy by a government
controlled by an elected legislature exercising its power of taxation. We are
unable to accede to the contention that representations from the residents not
having been invited the taxation notification is bad in law.
What is wholesome is different from what is
Indeed, we are left with the two major
arguments addressed by Shri Tarkunde and echoed or endorsed by other counsel.
Even here, we may dispose of the submission based on the wording in s. 90(4),
namely, that taxing power under section can be exercised in respect of a
particular impost only if that species of tax is "not already
The power under s. 90(4) is permissible only
if the tax is new and not already imposed. The petitioner's argument is that
the tax is on sales and is clearly a sales tax. There is already a sales tax on
foreign liquor at the rate of 10 per cent, under the Punjab General Sales Tax
Act, 1948. So the present rupee tax is a second round in breach of the
forbiddance in s. 90(4). Simple enough, if the expression 'not already imposed'
in s. 90(4) is a ban on further tax whatever the statute; but if the taboo is
not on the topology of the tax but limited to the specific statute the
contention is specious. And it takes little reflection to hold the latter to
correct view. We must remember the statutory setting and the placement of the
provision. S. 90 occurs in Chapter VIII headed 'Taxation'. That Section primarily
empowers municipal corporations to levy taxes. S.
90(1) specifies a number of items many of
which are taxed also at State level, e.g. lands, vehicles. S. 90(2) is so
widely worded that many taxes covered by it would already have been occupied
field at the State or even Central level.
The municipal body may not have any index of
taxes already imposed by other bodies and they are many. S. 90 would then be a
precarious power, often an exercise in futility and frequently a litigative
trap. No. That is not the meaning of the prohibition `not already imposed'. The
Government exercises the power of the corporation under s. 90(5) and cannot
enter what is forbidden ground for the latter. And what is forbidden is that
the municipal body shall not repeat the same tax, if it has imposed that tax
earlier under that Act. The injunction is plain and is confined to repetition
of those taxes which the municipality has already imposed. If the Corporation
has not already imposed the tax proposed, the embargo is absent. It is of no
moment that some other body, including the State Legislature has already
entered the field. The question is : has the municipal committee or
corporation, under this Act, already exacted a similar tax? If it has, the
second exercise is anathema.
Nobody has a case that the corporation has
earlier taxed foreign liquor under this Act. Therefore, the submission has no
substance and we reject it.
The sole surviving ground of invalidation
pressed by the petitioners which deserves serious examination is what we have
outlined right at the outset, viz., that on the face of s. 90(2), (3), (4) and
(5) read together, unconstitutionality is writ large, in the sense of naked and
uncanalised power with every essential legislative function surrendered to the
humour and hubris of the State Executive.
If this charge be true the consequence is in
The vice of unreasonableness and
arbitrariness are manifestations of the same vice as has been pointed out in P.
N. Kaushal etc.(1).
An examination of excessive delegation of
legislative power takes us to the scheme of the Act and insight into the
dynamics of municipal administration. Certain fundamentals must be remembered
in this context and then the text of the provision understood in the
constitutional perspective. The Founding Document of the nation has created the
three great instrumentalities and entrusted them with certain basic
powers-legislative, judicative and executive. Abdication of these powers by the
concerned instrumentalities, it is axiomatic, amounts to betrayal of the
Constitution itself and it is intolerable in law. This means that the
legislature cannot self-efface its 854 personality and make over, in terms
plenary, the essential legislative functions. The legislature is responsible
and responsive to the people and its representatives, the delegate may not be
and that is why excessive delegation and legislative hara kiri have been
frowned upon by constitutional law. This is a trite proposition but the
complexities of modern administration are so bafflingly intricate and bristle
with details, urgencies, difficulties and need for flexibility that our massive
legislatures may not get off to a start if they must directly and
comprehensively handle legislative business in all their plenitude,
proliferation and particularisation. Delegation of some part of legislative
power becomes a compulsive necessity for viability. If the 500-odd
parliamentarians are to focus on every minuscule of legislative detail leaving
nothing to subordinate agencies the annual output may be both unsatisfactory
and negligible. The Lawmaking is not a turnkey project, ready-made in all
detail and once this situation is grasped the dynamics of delegation easily
follow. Thus, we reach the second constitutional rule that the essentials of
legislative functions shall not be delegated but the inessentials, however
numerous and significant they be, may well be made over to appropriate
agencies. Of course, every delegate is subject to the authority and control of
the principal and exercise of delegated power can always be directed, corrected
or cancelled by the principal. Therefore, the third principle that emerges is
that even if there be delegation, parliamentary control over delegated
legislation should be a living continuity as a constitutional necessity. Within
these triple principles, Operation Delegation is at once expedient, exigent and
even essential if the legislative process is not to get stuck up or bogged down
or come to a grinding halt with a few complicated bills. It is apt to excerpt
here an oft-quoted observation from Vasantlal Maganbhai Sanjanwala affirmed in
Devi Das Gopal Krishnan & Ors(1) :
"The Constitution confers a power and
imposes a duty on the legislature to make laws. The essential legislative
function is the determination of the legislative policy and its formulation as
a rule of conduct. Obviously it cannot abdicate its functions in favour of
another. But in view of the multifarious activities of a welfare State, it
cannot presumably work out all the details to suit the varying aspects of a
complex situation. It must necessarily delegate the working out of details to
the executive or any other agency. But there is a danger inherent in such a
process of delegation. An over 855 burdened legislature or one controlled by a
powerful executive may unduly overstep the limits of delegation.
It may not lay down any policy at all; it may
declare its policy in vague and general terms; it may not set down any standard
for the guidance of the executive; it may confer an arbitrary power on the
executive to change or modify the policy laid down by it without reserving for
itself any control over subordinate legislation. This self effacement of
legislative power in favour of another agency either in whole or in part is
beyond the permissible limits of delegation. It is for a Court to hold on a
fair, generous and liberal construction of an impugned statute whether the
legislature exceeded such limits. But the said liberal construction should not
be carried by the Courts to the extent of always trying to discover a dormant
or latent legislative policy to sustain an arbitrary power conferred on
executive authorities. It is the duty of the Court to strike down without any
hesitation any arbitrary power conferred on the executive by the
legislature." Such being the basics, accepted by presidential profusion of
this Court, we have to examine whether any essential legislative function has
been transplanted into the hands of Government or corporation by the Act,
whether the delegation itself is an entrustment of overboard power, so unguided
that the delegate may run amok and do what is arbitrary, unreasonable and
violative of Articles 14 and 19 of the Constitution. Taxation is exaction and
even expropriation and, therefore, the right to property is in peril when a
fiscal measure is afoot. Article 10 comes into play when law is made for
purposes of taxation and that law must comply with Part III. Arbitrariness must
be excluded in the law, for, if power is arbitrary it is potential inequality
and Art. 14 is fatally allergic to inequality before the law.
These generalities take us to the
particularities of the present case. Shri Tarkunde turned the forensic fusillade
on the total absence of guidance and regulation anywhere in the statute,
expressly or implicitly, and on a true construction, according to him, a
blanket power has been vested by s. 90 on the corporation and, indubitably, on
The jurisprudence of delegation of
legislative power, as earlier mentioned, has been the subject matter of this
Court's pronouncements. In the absence of the rate of taxation being indicated
by the Legislature, Shri Tarkunde and other counsel appearing on either side
drew our attention to Liberty Cinema,(1) the land-mark case on the point. The
later decisions have affirmed the principle in Liberty Cinema. But 856 before
we enter into a fuller discussion we may concretize the specific contention
urged by counsel for the petitioners. Section 90(1) sets out certain items for
taxation by the corporation. The taxes so levied are to be utilised for the
purposes of the Act. Therefore, there is a clear directive contained in the
provision about the purpose and limit of the tax. What is needed for the
purposes of the Act by way of financial resources may be levied by the
corporation. Beyond that, no. If the corporation has a fancy for spending money
on purposes unconnected with the Act and seeks to levy a tax for the fulfillment
of such extra- statutory objects the mis-adventure must fail. Moreover, the
items on which taxes may be imposed are also specified.
Thus, the legislature has fixed the purpose
of the taxation, the objects of the taxation and the limits of the taxation.
In short, s. 90(1) is a textbook illustration
of valid delegation by the legislature.
The offending area is approached as we move
down to sub-section (2) (b) which enables the corporation "to levy any
other tax which the State Legislature has power to impose under the
Constitution". The fiscal area is obviously specious and so the question
directly arises whether this over-broad provision accords with or exceeds the
principles of delegation. Sub-section (3) leaves the rates of levy to be specified
by the Government and the legislature, argue petitioners' counsel, has given no
indication of the minima or the maxima of such rates. Can such non-fixation of
at least the maximum rate of taxation be upheld or does it enable the delegate
to usurp the essential functions of the legislature ? When we proceed further
to sub-section (5), the Government is clothed with the power to notify the tax
which the corporation shall levy and, in exercising this power, not even the
wholesome obligation of receiving representations could considering objections,
contained in the Proviso to s. 90(2), is present. Can such untrammeled power,
liberated from local pressures and intimate appreciation of municipal needs, be
sanctioned as within the deligible ambit ? These are the substantial grounds of
attack which we have to consider presently.
Back to the Liberty Cinema case (supra),
Sarkar, J. who spoke for the majority overruled the contention that the levy in
question was a fee and held that it was a tax and addressed himself to the
question of excessive delegation of legislative functions to the municipal
corporation "because it left it entirely to the latter to fix the amount
of the tax and provided no guidance for that purpose".
While what constitutes an essential feature
cannot be delineated in detail it certainly cannot include a change of policy.
The legislature is the master of legislative policy and if the delegate is free
to switch policy it may be usurpation of legislative power itself. So we have
857 to investigate whether the policy of legislation has been indicated
sufficiently or even change of policy has been left to the sweet will and
pleasure of the delegate in this case.
We are clearly of the view that there is
fixation of the policy of the legislation in the matter of taxation, as a close
study of s. 90 reveals; and exceeding that policy will invalidate the action of
the delegate. What is that policy ? The levy of the taxes shall be only for the
purposes of the Act. Diversion for other purposes is illegal. Exactions beyond
the requirements for the fulfillment of the purposes of the Act are also
Like in s. 90(1), s. 90(2) also contains the
words of limitation `for the purposes of this Act' and that limiting factor
governs sub-sections (3), (4) and (5). Sub-section (3) vests nothing new beyond
sub-sections (1) and (2). Sub- section (4) does not authorise the government to
direct the corporation to impose any tax falling outside sub-section (1) or
sub-section (2). Sub-section (5) also is subject to a similar circumscription
because the Government cannot issue an order to impose a tax outside the
limitation of sub- section (1) or sub-section (2). Thus, the impugned provision
contains a severe restriction that the taxation leviable by the corporation, or
by the Government acting for the corporation, shall be geared wholly to the
goals of the Act.
The fiscal policy of s. 90 is manifest. No
tax under guise of s. 90(2) (b) can be charged if the purposes of the Act do
not require or sanction it. The expression "purposes of this Act" is
pregnant with meaning. It sets a ceiling on the total quantum that may be
collected. It canalises the objects for which the fiscal levies may be spent.
It brings into focus the functions, obligatory or optional, of the municipal
bodies and the raising of resources necessary for discharging those
functions-nothing more, nothing else.
In Liberty Cinema (supra) it was contended
that the rate of tax was an essential feature of legislation and if the power
to fix it were abandoned it amounted to abdication of legislative power. After
an exhaustive examination of the judgments of this Court, Sarkar, J. reached
the conclusion that there was clear authority "that the fixing of rates
may be left to the non-legislative body". The matter does not end here,
since the delegate may under guise of this freedom tyrannies and exact
exorbitant sums which the legislature would hardly have intended. If this
possibility exists and there is no guideline given to the non-legislative body
in the matter of fixation of rates, the result may be a frustration of the
legislative object itself. For this reason, the Court in the Liberty Cinema
(supra) case observed as axiomatic :
"No doubt when the power to fix rates of
taxes is left to another body, the legislature must provide guidance for such
858 fixation. The question then is, was such guidance provided in the Act ? We
first wish to observe that the validity of the guidance cannot be tested by a
rigid uniform rule; that must depend on the object of the Act giving power to
fix the rate. It is said that the delegation of power to fix the rates of taxes
authorised for meeting the needs of the delegate to be valid, must provide the
maximum rate that can be fixed, or lay down rules indicating that maximum. We
are unable to see how the specification of the maximum rate supplies any
guidance as to how the amount of the tax which no doubt has to be below the
maximum, is to be fixed. Provision for such maximum only sets out a limit of
the rate to be imposed and a limit is only a limit and not a guidance.
It seems to us that there are various
decisions of this Court which support the proposition that for a statutory
provision for raising revenue for the purposes of the delegate, as the section
now under consideration is, the needs of the taxing body for carrying out its
functions under the statute for which alone the taxing power was conferred on
it, may afford sufficient guidance to make the power to fix the rate of tax
valid." (Pp. 493-494) In the Western India Theatres case (supra) the power
given to the corporation (of the city of Poona), in terms very wide, to levy
"any other tax" came to be considered from the point of view of
abdication of legislative function. The negation of this argument was based on
the key words of limitation contained therein, namely, "for the purposes
of the Act" and it was held "that this permits sufficient guidance
for the imposition of the tax." In Devi Das Gopal Krishnan & Ors.
(supra) this Court again considered a similar contention. The crucial passage
in the judgment of Sarkar, J. was there extracted with approval by Subba Rao,
"It (the Municipal Corporation) has to
perform various statutory functions. It is often given power to decide when and
in what manner the functions are to performed. For all this it needs money and
its needs will vary from time to time, with the prevailing exigencies. Its
power to collect tax, however, is necessarily limited by the expenses required
to discharge those functions. It has, therefore, where rates have not been
specified in the statute, to fix such rates as may be necessary to meet its
needs. That, we think, would be sufficient guidance to make the exercise of its
power to fix the rates valid."#R#(Pp.
562-563) 859 In the Municipal Corporation of
Delhi(1) case, the proposition that where the power conferred on the
corporation was not unguided, although widely worded, it could not be said to
amount to excessive delegation, was upheld. Delegation coupled with a policy
direction is good.
Counsel emphasised that the court had made a
significant distinction between the local body with limited functions like a
municipality and Government :
"The needs of the State are unlimited
and the purposes for which the State exists are also unlimited.
The result of making delegation of a tax like
sales tax to the State Government means a power to fix the tax without any
limit even if the needs and purposes of the State are to be taken into account.
On the other hand, in the case of a municipality, however large may be the
amount required by it for its purposes it cannot be unlimited, for the amount
that a municipality can spend is limited by the purposes for which it is
created. A municipality cannot spend anything for any purposes other than those
specified in the Act which creates it.
Therefore in the case of a municipal body,
however large may be its needs, there is a limit to those needs in view of the
provisions of the Act creating it. In such circumstances there is a clear
distinction between delegating a power to fix rates of tax, like the sales tax,
to the State Government and delegating a power to fix certain local taxes for
local needs to a municipal body.
A review of these authorities therefore leads
to the conclusion that so far as this Court is concerned the principle is well
established that essential legislative function consists of the determination
of the legislative policy and its formulation as a binding rule of conduct and
cannot be delegated by the legislature. Nor is there any unlimited right of delegation
inherent in the legislative power itself.
The legislature must retain in its own hands
the essential legislative functions and what can be delegated is the task of
subordinate legislation necessary for implementing the purposes and objects of
the Act. Where the legislative policy is enunciated with sufficient clearness
or a standard is laid down, the courts should not interfere. What guidance
should be given and to what extent and whether guidance has been given in a
particular case at all depends on a consideration of the provisions of the
particular Act with which the Court has to deal including its preamable.
Further it appears to us that the nature of the body to which delegation is
made is also a factor to be taken into consideration in determining whether
there is sufficient guidance in the matter of delegation."
It is too late in the day to contend that the
jurisprudence of delegation of legislative power does not sanction parting with
the power to fix the rate of taxation, given indication of the legislative
policy with sufficient clarity. In the case of a body like a municipality with
functions which are limited and the requisite resources also limited, the
guideline contained in the expression "for the purposes of the Act"
is sufficient, although in the case of the State or Central Government a mere
indication that taxation may be raised for the purposes of the State may be
giving a carte blanche containing no indicium of policy or purposeful limitation.
In a welfare State allowing in privations, the total financial needs may take
us to astronomical figures. Obviously that will be no guideline and so must be
bad in law. Something more precise is necessary; some policy orientation must
be particularised Shri Tarkunde relied on this differentiation in attacking s. 90(6)
of the Act. He argued that had the municipal corporation done the job there
would have been some guidance from the section. But when the Government did it,
it did not have any such restraint and could, therefore, run berserk.
We do not appreciate this contention as we
will explain at a later stage. Suffice it to say that flexibility in the form
the legislative guidance may take, is to be expected.
Wanchoo, C.J. explained :
"It will depend upon the circumstances
of each statute under consideration; in some cases guidance in broad general
terms may be enough; in other cases more detailed guidance may be necessary. As
we are concerned in the present case with the field of taxation, let us look at
the nature of guidance necessary in this field.
The guidance may take the form of providing
maximum rate of tax upto which a local body may be given the discretion to make
its choice, or it may take the form of providing for consultation with the
people of the local area and then fixing the rates after such consultation. It
may also take the form of subjecting the rate to be fixed by the local body to
the approval of Government which acts as a watch-dog on the actions of the
local body in this matter on behalf of the legislature. There may be other ways
in which guidance may 861 be provided. But the purpose of guidance, whatsoever
may be the manner thereof, is to see that the local body fixes a reasonable
rate of taxation for the local area concerned. So long as the legislature has
made provision to achieve that reasonable rates of taxation are fixed by local
bodies, whatever may be the method employed for this purpose-provided it is
effective, it may be said that there is guidance for the purpose of fixation of
rates of taxation. The reasonableness of rates may be ensured by fixing a
maximum beyond which the local bodies may not go. It may be ensured by
providing safeguards laying down the procedure for consulting the wishes of the
local inhabitants. It may consist in the supervision by Government of the rate
of taxation by local bodies. So long as the law has provided a method by which
the local body can be controlled and there is provision to sec that reasonable
rates are fixed, it can be said that there is guidance in the matter of fixing
rates for local taxation. As we have already said there is pre- eminently a
case for delegating, the fixation of rates of tax to the local body and so long
as the legislature has provided a method for seeing that rates fixed are
reasonable, be it in one form or another, it may be said that there is guidance
for fixing rates of taxation and the power assigned to the local body for
fixing the rates is not uncontrolled and un canalised.
It is on the basis of these principles that
we have to consider the Act with which we are concerned.
(pp. 269-270) In the Municipal Corporation of
Delhi (supra) case it was significantly observed :
"According to our history also there is
a wide area of delegation in the matter of imposition of taxes to local bodies
subject to controls and safeguards of various kinds which partake of the nature
of guidance in the matter of fixing rates for local taxation. It is in this
historical background that we have to examine the provisions of the Act impugned
before us." (p. 271) Both the sides relied on certain important criteria
contained in the judgment of Wanchoo, C.J., especially because it is a Bench of
seven Judges and the ratio therein laid down has considerable authority and
binds us. Dealing with municipal bodies and the nature and 862 content in that
Municipal Act, the court observed what is instructive for us in the present
"This is in our opinion a great check on
the elected councillors acting unreasonably and fixing unreasonable rates of
taxation. This is a democratic method of bringing to book the elected
representatives who act unreasonably in such matters. It is however urged that
s. 490 of the Act provides for the supersession of the Corporation in case it
is not competent to perform or persistently makes default in the performance of
duties imposed upon it by or under the Act or any other law or exceeds or
abuses its power. In such a case the elected body may be superseded and all
powers and duties conferred and imposed upon the Corporation shall be exercised
and performed by such officer or authority as the Central Government may
provide in this behalf. It is urged that when this happens the power of
taxation goes in the hands of some officer or authority appointed by Government
who is not accountable to the local electorate and who may exercise all the
powers of taxation conferred on the elected Corporation by the Act. . . ."
"Another guide or control on the limit or taxation is to be found in the
purposes of the Act. The Corporation has been assigned certain obligatory
functions which it must perform and for which it must find money by taxation.
It has also been assigned certain discretionary functions. If it undertakes any
of them it must find money. Even though the money that has to be found may be
large, it is not, as we have already indicated, unlimited for it must be only
for the discharge of functions whether obligatory or optional assigned to the
Corporation. The limit to which the Corporation can tax is therefore circumscribed
by the need to finance the functions, obligatory or optional which it has to or
may undertake to perform. It will not be open to the Corporation by the use of
taxing power to collect more than it needs for the functions it
performs...." "Another limit and guideline is provided by the
necessity of adopting budget estimates each year as laid down in s. 109 of the
Act. That section provides for division of the budget of the Corporation into
four parts i.e. general, electricity supply, transport, water and sewage
disposal. The budget will show the revenue and expenditure and those 863 must
balance so that the limit of taxation cannot exceed the needs of the
Corporation as shown in the budget to be prepared under the provisions of the
These four budgets are prepared by four
Standing Committees of the Corporation and are presented to the Corporation
where they are adopted after debate by the elected representatives of the local
area. Preparation of budget estimates and their approval by the Corporation is
therefore another limit and guideline within which the power of taxation has to
Even though the needs may be large, we have
already indicated that they cannot be unlimited in the case of the Corporation,
for its functions both obligatory and optional are well defined under the Act.
Here again there is a limit to which the taxing power of the Corporation can be
exercised in the matter of optional taxes as well, even though there is no
maximum fixed as such in the Act." (Pp. 271-273) In the present case it
was the State Government, not the municipal corporation, which fixed the rate;
but the Government did only what the Corporation ought to have done.
It acted for the purposes of the
corporation's finances and functions and not to replenish its own coffers. In
the Municipal Corporation of Ahmedabad City,(1) a further point fell for
consideration which has some relevance to the present set of arguments. Shri
Tarkunde submitted that even if the provision requiring the sanction of the
Government for the rate fixed by the corporation were a guideline and a control
indicative of a legislative policy, that was absent in the impugned levy since
the Government directly acted.
Shelat, J. negatived a kindred submission:
".......It is impossible to say that
when a provision requiring sanction of the Government to the maximum rate fixed
by the Corporation is absent, the rest of the factors which exist in the Act
lose their efficacy and cease to be guidelines. Furthermore, if the Corporation
were to misuse the flexibility of the power given to it in fixing the rates,
the State legislature can at any moment withdraw that flexibility by fixing the
maximum limit up to which the Corporation can tax. Indeed, the State
Legislature has now done so by s. 4 of Gujarat Act, 8 of 1968. In view of the
decisions cited above it is not possible for us to agree with counsel's
contention 864 that the Act confers on the Corporation such arbitrary and
uncontrolled power as to render such conferment an excessive delegation."(1)
We have no hesitation in holding that the law is well- settled and none of the
canons governing delegation of legislative power have been breached in the
We will explain a little more in detail, with
specific reference to the scheme of the Act, why we hold that the tax is valid
and does not suffer from the infirmity of excessive delegation.
The thrust of Shri Tarkunde's argument is
that even if, in the light of Liberty Cinema (supra) and later rulings,
guidelines are found in s. 90 (2) of the Act, the notified impost being by the
State Government did not have the benefit of such guidelines. The local body
knew precisely the local needs and the cost of such local services. Like wise,
the local councillors would be responsive and to local lobbies and be
restrained from reckless taxes. None of these controls were operational when
Government acted or directed.
Moreover, the absence of the wholesome
obligation to receive and pay regard to objections [Proviso to s. 90(2)]
removed the procedural check envisaged by the Legislature. These criticisms
highlight the role of Government in the setting of s. 90(5) and its competence
to be acquainted with the needs of municipal denizens, the finances of the
local body and the like.
It must be remembered that as between two
interpretations that which sustains the validity of the law must be preferred.
A close look at the schematic provisions and administrative realities is very
revealing. Is Government innocent of the total needs of municipal bodies and
indifferent to the legitimate pressures of its denizens ? An overview of local
self-government may set the perspective. The statutory pattern of municipal
government is substantially the same all over the country. The relevant
legislation fabricates these local bodies, invests them with corporate
personality, breathes life into them, charges them with welfare functions, some
obligatory, some optional, regulates their composition through elected
representatives, provides for their finances by fees and taxes and heavily
controls their self-government status through a Department of the State
Government in various ways, including direction and correction, sanction and
supersession. Consequentially the law clothes the State Government with
considerable powers over almost every aspect of municipal working Local
self-government, realistically speaking, is a simulacrum of Art. 40 and
democratically speaking, a half- hearted euphemism, for in substance, these
elected species are talking phantoms with a hierarchy of State officials
hobbling their locomotion. Their exercises are strictly overseen by the State
Government, their resources are precariously dependent on the grace of the
latter and there, functions are fulfilled through a chief executive appointed
by the State Government. Floor-level democracy in India is a devalued rupee,
Art. 40 and the evocative opening words of the Constitution, notwithstanding.
Grass roots never sprout until decentralisation becomes a fighting creed, not a
pious chant. What happens to Panchayats applies to municipalities.
This description has critical relevance to
the cases on hand because one of the propositions underlying the major
arguments advanced before us is that while municipal bodies know their needs
and respond to local pressures and tailor their taxes accordingly, the distant
State Government is neither aware nor responsive and the impugned tax measure
is bad because the pragmatic and policy guidelines of (a) the local people's
welfare requirements vis-a-vis available municipal finances, and (b) people's
pressurising proximacy and municipality' correctional reaction to undue tax
burdens are absent when the power is exercised by a remote control board niched
in the State Secretariat. But if the picture is of a powerless talking shop of
elected councillors passing resolutions but all the do's and don'ts, sanctions
and approvals, countermands and even supersession of the Council itself reside
in the State Government, the effective voice, the meaningful responses, the
appreciation of budgetary needs and gaps and need for grants and a host of
other responsibilities can be traced to the Government. Such is the backdrop to
the discussion of the issues raised.
Now let us scan the Act from this angle.
Corporations are created for the purposes of carrying out the provisions of the
Act and they are charged with municipal administration (see s. 4). So,
corporations cannot do anything beyond the purposes set out in the statutory
provisions. This itself is a statutory restriction on action. The composition
of the body corporate is by periodically elected councillors (see s. 5) and
this feature ensures responsive action. The powers necessary for municipal
government are spelt out as also the obligatory and discretionary functions
(see Chapter III).
Now come certain other aspects of local self-
government. The entire executive power of the corporation vests in the
Commissioner who is appointed by Government.
This means that the Corporation Council takes
a back seat in the municipal administration see ss. 47, 866 52 et al. Section
54 brings the Government into the expenditure picture. The municipal staff also
is, in a way, under Government control (s. 71).
Money shall be spent by the municipality only
according to budget provisions and budget estimates shall be submitted to
Government for approval which has the power to modify them. Thus, the financial
control over the corporation by Government is a statutory fact.
Now we may consider the mode of raising tax
Any non-traditional tax (i.e. which falls
under s. 90(2) of the Act) has to be with the prior approval of Government.
Indeed, affirmative direction to impose taxes
may be issued by the Government to the local body and if the addressee is
indifferent the Government itself may impose the tax and the corporation shall
levy such tax. Sub-section (6) enables Government to make other tax payments to
Municipal borrowings require government
sanction, municipal accounts shall be audited by government auditors. Chapter
XXII provides for further government control upto even supersession of the
corporation itself. Even the resolutions of corporations may be suspended by
Government and its proceedings annulled or modified. There is a whole army of
governmental minions in the department of local self- government to sit upon,
check, oversee and control municipal doings that the elective element becomes a
This conspectus of provisions brings into
bold relief the anaemic nature of municipal autonomy. Full-blooded units of
self-government, reflecting full faith in decentralised democracy uninhibited
by a hierarchy of bureaucrats is the vision of Art. 40. While the Gandhian goal
is of a shining crescent on a starry sky the sorry reality is that our
municipalities vis-a-vis government are wan like a full moon at midday.
This study of the statutory scheme shows
that, in large measure, municipal councils reign, municipal commissioners rule;
local self government is an experiment in directed democracy by the
bureaucracy, Art. 40, notwithstanding.
State Governments master-mind municipal
administration in broad policies and even in smaller details and legally can
suspend resolutions and supersede the organ itself.
Municipal legislation sanctions this
Operation Mask. If pluralism and decentralisation are to strengthen our
democracy more authority and autonomy, at least experimentally, must be vested
in local bodies. To day, prompt elections when periods expire are rare;
councillors exist, debate, resolve, but power eludes them. Even so, municipal
maya also counts ceremonially and otherwise.
867 To set the record straight, we must state
that many municipal bodies do exercise their limited powers properly and serve
the public without nagging interference by Government officials. Municipalities
are realities, often precarious, though.
This statutorily sanctified comprehensive
oversight by Government weaken the assumption of Shri Tarkunde that State
Governments know little of the needs and respond remotely to the pressures of
the locality and that the guidelines stressed in the rulings cited above vanish
when Government directly operates under s. 90(5). The finances, budgetary
estimates and many aspects of the affairs of each municipal body, reach the
Government, channelled through its minions, and, by force of statute, are
approved, sanctioned, modified or reversed by the State Secretariat. So, there
is not much force in the submission that under s. 90(5) governmental action may
be a blind man's buff, not intelligent appreciation.
Secondly, under s. 90(5) Government acts to
augment municipal revenues and so will, understandably, inform itself of the
needs of the corporation and, on fiscal economics, 'of what the traffic will
bear'. The statutory strategy also ensures this. First, a directive is given,
obviously after considering relevant matters. Only if indifference or
intractability is displayed, the fiscal sword of s. 90(5) is unsheathed.
Moreover, there is overall control by the
legislature, sometimes, ineffective, sometimes meaningful. It is familiar
knowledge that there are a number of institutionalised means by which the
legislature exercises supervision and control over municipal matters. Broadly
speaking, they are: (a) through inter-relations, (b) by discussions and debates,
(c) by approval or otherwise of rules and orders, and (d) by financial control
when the budget is presented. A study of the legislative proceedings in the
various States of the country brings out many of these means of control (see
Indian Administrative System, edited by Ramesh K. Arora & Co. Chapter 17).
In a sense, the general municipal administration comes under fire in the House
on many occasions, including during the debate on the Governor's Address.
Financial control and supervision by the legislators come up when budget
proposals which contain allocation for municipal administration are presented
to the House and at the time of the Appropriations Bill. Moreover, the Public
Accounts Committee, the Estimates Committee and like other bodies also make
functional probes into municipal administration-fiscal and other. There may be
a big gap between the power of control and its actual exercise but it is also a
fact that in a general way the political echelons in Government and the
bureaucracy in turn are influenced in their policies by the criticisms 868 of
the municipal administration on the floor of the House and through other
representations. We cannot, therefore, dismiss the legal position that there is
control by the Legislature over Government in its supervision of municipal
administration therefore, delegated legislation cannot be said to be
uncontrolled or unchecked by the delegator.
This discussion is of critical importance in
view of the argument put forward by Shri Tarkunde that when Government exercises
power under s. 90(6) it is a law unto itself, unbridled and uncontrolled by the
Legislature. We may now refer to a few decisions which have been brought to our
notice by counsel appearing for the municipal bodies and the State of Punjab to
make out that the needs of municipalities and the pressures of local people are
within the ken of the State Government and they also respond like municipal
bodies and guide themselves in the manner corporations do. More importantly,
excessive delegation stands negatived because of legislative control over
Government. Even in the Liberty Cinema case, (supra) the control by Government
over the municipal administration was relied upon as a policy guideline and it
is an a fortiori case if the Government itself takes action, responsible and
responsive as it is to the elected representatives of the House.
Great stress was laid on Papiah's case(1)
which dealt with subordinate legislation elaborately and upheld the validity of
a provision where, superficially viewed, too wide a power had been delegated.
Mathew, J. speaking for the court, gave considerable latitude to the
Legislature in delegating its power and referred to many prior rulings. He
quotes Subba Rao, C.J. to say:
"An over-burdened Legislature or one
controlled by a powerful executive may unduly overstep the limits of
delegation. It may not lay down any policy at all; It may declare its policy in
vague and general terms; it may not set down any standard for the guidance of
the executive; it may confer an arbitrary power on the executive to change or
modify the policy laid down by it, without reserving for itself any control
over subordinate legislation. This self-effacement of legislative power in
favour of another agency either in whole or in part is beyond the permissible
limits of delegation."(2) 869 Nevertheless, this observation was
neutralised by another made by Hegde, J. in Bishar Dayal (1):
"However much one might deplore the 'New
Despotism' of the executive, the very complexity of the modern society and the
demand it makes on its Government have set in motion forces which have made it
absolutely necessary for the Legislatures to entrust more and more powers to
the executive. Text book doctrines evolved in the 19th Century be come out of
date." Mathew, J. proceeded to cover English cases and reached the
"The legislature may also retain its
control over its delegate by exercising its power of repeal. This was the basis
on which the Privy Council in Cobb & Co.
v. Kropp(2) upheld the validity of delegation
of the power to fix rates to the Commissioner Transport in that case."
(P.613) The learned Judge quoted the Privy Council(3) which held that the
Legislature was entitled to use any agent or machinery that it considered for
carrying out the object and the purposes of the Acts and to use the
Commissioner for Transport as its instrument to fix and recover the licence and
permit fees, provided it preserved its own capacity intact and retained perfect
control over him; that as it could at any time repeal the legislation and
withdraw such authority and discretion as it had vested in him, it had not
assigned, transferred or abrogated its sovereign power to levy taxes, nor had
it renounced or abdicated its responsibilities in favour of a newly created legislative
authority and that, accordingly, the two Acts were valid, Lord Morris of
"What they (the legislature) created by
the passing of the Transport Acts could not reasonably be described as a new
legislative power or separate legislative body armed with general legislative
authority (see R. v. Burah, 1978) A.C. 889). Nor did the Queensland Legislatare
'create and endow' with its own capacity a new legislative power not created by
the Act to which it owes its own existence (see In re the Initiative and
Referendum Act (1919) A.C. 945 at 946)." 870 The point to be
emphasised-and this is rather crucial- is the statement of their Lordships that
the legislature preserved its capacity intact and retained perfect control over
the Commissioner for Transport inasmuch as it could at any time repeal the
legislation and with draw the authority and discretion it had vested in him,
and, therefore, the legislature did not abdicate its functions.
The proposition so stated is very wide and
sweeping. By that standard, there is nothing unconstitutional about s.
90(5) of the Act.
In the course of the argument certain
observations of this Court were read to the effect that there was always a
check by the courts on unconstitutional misuse of delegated power and that, in
itself without more, was good enough to make the delegation good. So stated,
the proposition may be perhaps too wide to be valid; for any naked delegation
may then be sustained by stating that the court is there as the watch-dog. We
do not have to go that far in the present case and so we make no final
pronouncement on this extension of delegations jurisprudence.
We must state, while concluding that Punjab
& Haryana High Court has overruled similar contentions on grounds which
have our approval [see AIR 1977 P&H 297 and 74 PLR (1972) P 149].
We are conscious that constitutional
legitimation of unlimited power of delegation to the Executive by the
Legislature may, on critical occasions, be subversive of responsible government
and erosive of democratic order. That peril prompts us to hint at certain
portents to our parliamentary system, not because they are likely new but
because society may have to pay the price some day.
As a back-drop to this train of thoughts a
few statements from a working paper presented by Prof. Upendra Baxi of the
Delhi University at a recent seminar may be excerpted:
"...law making remains the, more or
less, exclusive prerogative of a small cross-section of elites. This
necessarily affects both the quality of the law made as well its special
communication, acceptance and effectivity. It also reinforces the highly
centralised system of power. It is time that we considered the desirability and
feasibility of building into the law-making processes a substantial amount of
public participation." 871 "People's participation in the enforcement
and implementation of the law is also not actively sought, sponsored or
structured by the State....Equally now is the idea that there should be a
"social audit" of major legislations by the beneficiaries or, more
generally, the consumers of legal justice." "...The situation in
regard to delegated legislation the volume of which is immensely greater than
that of usual legislation, is even more alarming.
The Indian Parliament enacted from the period
1973 to 1977 a total of 302 laws; as against this the total number of statutory
orders and rules passed in the same period was approximately 25,414.
Corresponding figures for States and union territories are not just available
but the number of rules issued under the delegated legislation powers may well
be astronomical......" Plenary powers of law-making are entrusted to
elected representatives. But the political government instructed by the
bureaucracy, by and large, gets bills through with the aid of the three-line
whip. Even otherwise, legislators are sometimes innocent of legal skills; and
complex legislations call for considerable information and instruction. The
law-making sequence leaves much to subordinate legislation which, in practical
terms, means surrender to the surrogate, viz., the bureaucracy which occupies
commanding heights within the Secretariat. The technocracy and the bureaucracy
which mostly draft subordinate legislation are perhaps well-meaning and well-
informed but insulated from parliamentary audit, isolated from popular pressure
and paper-logged most of the time. And units of local self-government are
reduced to a para-babel mechanisms, what with a pyramid of officialdom above
The core of Shri Tarkunde's argument, even
though rejected in legal terms by force of precedents, has a realistic touch to
the effect that municipal administration in the matter of taxation, if taken
over by Government as under s. 90(5) of the Act, becomes administration by the
barrel of the Secretariat pen. The doctrine of delegation, in its extreme
positions, is fraught with democracy by proxy of a coterie, of which the
nation, in its naivete, may not be fully cognizant.
Therefore, the system of law-making and
performance auditing needs careful, yet radical, re-structuring, if
participative, pluralist Government by the People is not to be jettisoned. We
have laid down the law and obeyed the precedents but felt it necessary to lay
bare briefly the political portents implicit in the extent law, for action by
the national leadership betimes. Who owns and operates India, that is Bharat ? That disturbing interrogation becomes deeply relevant 872 as we
debate and decide the jurisprudence of delegation of power and vicarious
exercise and so we have pardonably ventured to make heuristic hints and to
project new perspectives.
The journey's end is in sight. The discussion
has come to a close. The notification suffers from no infirmity. The writ
petitions stand dismissed. Costs one set. (to the state) P.H.P. Petitions