Bhubaneshwar
Singh Vs. Union of India [1994] INSC 371 (14 July 1994)
Singh
N.P. (J) Singh N.P. (J) Kuldip Singh (J) Sawant, P.B.
CITATION:
1994 SCC (6) 77 JT 1994 (5) 83 1994 SCALE (3)334
ACT:
HEAD NOTE:
The
Judgment of the Court was delivered by N.P. SINGH, J.- This writ application
has been filed on behalf of the petitioners, questioning the validity of the
Coal Mines Nationalisation Laws (Amendment) Ordinance, 1986, primarily on the
ground that it purports to nullify the judgment of this Court in the case of
Central Coal Fields Ltd. v. Bhubaneswar Singh1. The Ordinance has been replaced
by the Coal Mines Nationalisation Laws (Amendment) Act, 1986.
2. In
order to appreciate the controversy involved in this case, it is proper to
refer to the background in which the aforesaid amending Act was passed. The
Coking Coal Mines (Emergency Provisions) Ordinance was promulgated in the year
1971, which was replaced by the Coking Coal Mines (Emergency Provisions) Act,
1971. In view of Section 3 of the aforesaid Ordinance/Act, management of all
the Coking Coal Mines vested in the Central Government on and from 17-10- 1971,
being the appointed date. The Central Government appointed Custodians to take
over the management of the Coking Coal Mines. Such Coking Coal Mines remained
under the management of the Central Government through the Custodian during the
period from 17-10-1971 to 30-4-1972.
The
Coking Coal Mines (Nationalisation) Act, 1972 came into force w.e.f. 1-5-1972, the appointed date. In terms of Section 4 of the
said Act, on and from the appointed date the right, title and interest of the
owner-, in relation to the Coking Coal Mines specified in the First Schedule
stood transferred to and vested absolutely in the Central Government free from
all encumbrances. The provisions of the Coking Coal Mines (Nationalisation)
Act, 1972 as amended by the Coal Mines Nationalisation Laws (Amendment) Act,
1986 were challenged before this Court in the case of Tara Prasad Singh v.
Union of India2. A Constitution Bench upheld the validity of the said Act.
3.
Petitioner 1 (hereinafter referred to as 'the petitioner') was the owner of Turiyo
Colliery, a Coking Coal Mine, listed under Serial No. 7 in the First Schedule
of the Nationalisation Act. Along with other Coking Coal Mines, the management
of the aforesaid Coking Coal Mine had been taken over by the Central Government
on 17-10-1971 and it remained under the
management of the Central Government up to 30-4-1972. During the period aforesaid, the
ownership of the said Coking Coal Mine continued to remain with the petitioner.
As such the Central Government and/or its Custodian 1 (1984) 4 SCC 429 : (1985)
1 SCR 618 2 (1980) 4 SCC 179 :(1980) 3 SCR 1042 80 were to account to the
petitioner, profit and loss during the aforesaid period while it was under the
management of the Custodian.
4. The
petitioner filed an application under Article 226 of the Constitution before
the High Court, making a grievance that the Custodian had debited the expenses
for raising the coal while the Coking Coal Mine was under the management of the
Custodian but had not credited the price for the quantity of coal raised, which
was lying in stock on the date prior to the date the said Coal Mine vested
under the Central Government. The High Court allowed the said application
holding that the petitioner was the owner of the said coal mine and was
entitled to credit for the stock of coal lying unsold as on 30-4-1972. A
direction was given that account be recast and payment be made to the
petitioner.
5. The
Central Coal Fields Ltd., one of the respondents of that application, filed an
application under Article 136 of the Constitution, before this Court. Leave to
appeal was granted. But ultimately the appeal was dismissed on 23-8- 1984. This
Court said: (SCC p. 433, para 11) "Admittedly the amount claimed from the
owner represents the cost of extraction of the coal from the mine. The
appellants had conceded before the High Court and Mr Sinha appearing for them
before us accepted the position that if the extracted coal had been sold before
the appointed day, the owner would have been entitled to the price. The mere
fact that the extracted coal remained in stock at the commencement of the
appointed date can make no difference to the position. The expenses were to be
set off against the sale price of the stock to be received at the time of
disposal.
Therefore,
the stock of coal had to be taken into account for balancing the position.
Reliance
on the definition of 'mine' and Section 10 of the Nationalisation Act to counteract
this conclusion cannot avail the appellants. Indeed, the submission advanced on
behalf of the appellants is so much opposed to common sense logic of the matter
that in the absence of a legislative mandate we have no hesitation in rejecting
it." This Court was of the view that the sale price of the stock of
extracted coal lying at the commencement of the appointed date had to be taken
into account for determining the profit and loss during the period of
management of the mine by the Custodian.
6. Thereafter
the aforesaid Coal Mines Nationalisation Laws (Amendment) Ordinance, 1986 as
already mentioned above was promulgated, which was later replaced by the Coal
Mines Nationalisation Laws (Amendment) Act, 1986. By Section 4 of the Amending
Act aforesaid, sub-section (2) was introduced in Section 10 of the Coking Coal
Mines (Nationalisation) Act, 1972, which is as follows:
"(2)
For the removal of doubts, it is hereby declared that the amount specified in
the fifth column of the First Schedule against any coking coal mine or group of
coking coal mines specified in the second column of the said schedule and
required to be given by the Central Government to its owner under sub- section
(1) shall be deemed to include, and 81 deemed always to have included, the
amount required to be paid to such owner in respect of all coal in stock or
other assets referred to in clause (j) of Section 3 on the date immediately
before the appointed day and no further amount shall be payable to the owner in
respect of such coal or other assets."
7.
Section 19 of the Coal Mines Nationalisation Laws (Amendment) Act, 1986
contains a validating provision:
"19.
Validation.- Notwithstanding any judgment, decree, order or direction of any
court to the contrary (a) every amount paid to the owner of every coking coal
mine or group of coking coal mines under Section 10, or of every coke oven
plant under Section II, of the Coking Coal Act, or to the owner of every coal
mine or group of coal mines under Section 8 of the Coal Mines Act (hereafter in
either case referred to as the owner), shall be deemed to include and be deemed
always to have included the amounts required to be paid to the owner in respect
of coal in stock or other assets, coke in stock or other assets, referred to in
clause (j), or clause (b) of Section 3 of the Coking Coal Act or as the case
may be, coal in stock or other assets referred to in clause (h) of Section 2 of
the Coal Mines Act, on the date immediately before the appointed day as if the
provisions of Section 10, or Section II, of the Coking Coal Act or as the case
may be, Section 8 of the Coal Mines Act, as amended by this Act had been in
force at all material times, and no such payment shall be called in question in
any court on the ground that it had not included the value of such coal or coke
or other assets;
(b)
every statement of accounts or supplementary statement of accounts prepared by
the Central Government or the government company under Section 22 of the Coking
Coal Act or under Section 19 of the Coal Mines Act shall be deemed to have been
validly prepared as if the provisions of Section 22 of the Coking Coal Act or,
as the case may be, Section 19 of the Coal Mines Act, as amended by this Act
had been in force at all material times, and no such statement of accounts or
supplementary statement of accounts shall be called in question in any court on
the ground that it had not been prepared in accordance with the normal
commercial practice or that any item has or has not been included in such
statement;
and accordingly,
no suit or other legal proceeding shall be maintained or continued in any
court- (i) for the recovery of any sum on the ground that the amount paid to
the owner under Section IO or Section II of the Coking Coal Act or under
Section 8 of the Coal Mines Act, does not include the 82 amounts required to be
paid in respect of all coal or coke in stock or other assets referred to in
clause (a); or (ii) for the recovery of any sum as being the excess of receipts
over payments on the ground that the statement of accounts or supplementary
statement of accounts required to be prepared under Section 22 of the Coking
Coal Act or, as the case may be, Section 19 of the Coal Mines Act, had not been
prepared in accordance with the normal commercial practice or that any item has
or has not been included in such statement.
Explanation.-
In this section,- (a) 'appointed day' means,- (i) in relation to the Coking
Coal Act, the 1st day of May, 1972; and (ii) in relation to the Coal Mines Act,
the 1st day of May, 1973;
(b)
'receipts' and 'payments' mean receipts and payments in the statement of
accounts prepared under Section 22 of the Coking Coal Act or, as the case may
be, Section 19 of the Coal Mines Act."
8. As
sub-section (2) has been introduced in Section 10 of the Nationalisation Act
with retrospective effect, it shall be deemed to have been there since 1-5-1972, the day the Coking Coal Mines (Nationalisation)
Act, 1972 came into force. The said sub-section provides and declares that the
amount specified in the fifth column of the First Schedule against any coking
coal mine specified in the said schedule which was required to be given by the
Central Government to its owner under sub-section (1) shall be deemed to
include, and deemed always to have included "the amount required to be
paid to such owner in respect of all coke in stock or other assets referred to
in clause (b) of Section 3 on the date immediately before the appointed day and
no further amount shall be payable to the owner in respect of such coke or other
assets". It cannot be disputed that if sub-section (2) was in existence on
the date the writ application had been filed on behalf of the petitioner, there
would have been no occasion for the High Court or this Court to direct that the
account be taken also of the stock of coke lying on the date immediately before
the appointed day because the amount which is payable to the petitioner shall
be deemed to have included the payment even in respect of such coke.
9. The
question is as to whether by introduction of sub- section (2) in Section 10
with retrospective effect, i.e., w.e.f. 1-5-1972, the respondents are absolved
of their liability and are exonerated from the responsibility of complying with
the direction given by the High Court and this Court in the earlier writ
application filed on behalf of the petitioner. It is well settled that
Parliament and State Legislatures have plenary powers of legislation on the
subjects within their field. They can legislate on the said subjects
prospectively as well as retrospectively. If the intention of the legislature
is 83 clearly expressed that it purports to introduce the legislation or to
amend an existing legislation retrospectively, then subject to the legislative
competence and the exercise being not in violation of any of the provisions of
the Constitution, such power cannot be questioned. Sub-section (2) of Section 1
of the Coal Mines Nationalisation Laws (Amendment) Act, 1986 clearly and
specifically says that the said amendment to the Coking Coal Mines (Nationalisation)
Act, 1972 shall be deemed to have come into force on 1-5-1972. Sub-section (2) of Section 10 which has been
introduced with retrospective effect says that the amount which has been
mentioned in the schedule to be payable to the owner shall be deemed to include
and deemed always to have included the amount required to be paid to such owner
in respect of all coke in stock on the date immediately before the appointed
day. The amount which is to be paid as compensation for acquisition of right, title
and interest of the petitioner in the coking coal mine in question, shall
include the compensation for all coke in stock on the date immediately before
the appointed day. It can therefore be said that the amendments which have been
introduced retrospectively, have taken away the substratum of the claim made on
behalf of the petitioner, in respect of the price of the stock of coke lying on
the date immediately before the appointed day.
10.
The question which however still requires to be examined is as to whether by
this process which negatives the claim made on behalf of the petitioner, even
the effect of the judgment of the High Court and this Court has been nullified.
Section 19 of the Coal Mines Nationalisation Laws (Amendment) Act, 1986
referred to above says that notwithstanding any judgment, decree, order or
direction of any court to the contrary every amount paid to the owner of every
coking coal mine under Section IO shall be deemed to include and deemed always
to have included the amount required to be paid to the owner in respect of the
coke in stock on the date immediately before the appointed day, as if the
provisions of Section 10 as amended by the said Act had been in force at all
material times, and no such payment shall be called in question in any court on
the ground that it had not included the value of such coal or coke.
11.
From time to time controversy has arisen as to whether the effect of judicial
pronouncements of the High Court or the Supreme Court can be wiped out by
amending the legislation with retrospective effect. Many such Amending Acts are
called Validating Acts, validating the action taken under the particular
enactments by removing the defect in the statute retrospectively because of
which the statute or the part of it had been declared ultra vires. Such
exercise has been held by this Court as not to amount to encroachment on the
judicial power of the courts. The exercise of rendering ineffective the
judgments or orders of competent courts by changing the very basis by legislation
is a well-known device of validating legislation. This Court has repeatedly
pointed out that such validating legislation which removes the cause of the
invalidity cannot be considered to be an encroachment on judicial power. At the
same time, any action in exercise of the power under any enactment which has
been declared to be invalid by a court cannot be made valid by a Validating Act
by merely saying 84 so unless the defect which has been pointed out by the
court is removed with retrospective effect. The validating legislation must
remove the cause of invalidity. Till such defect or the lack of authority
pointed out by the court under a statute is removed by the subsequent enactment
with retrospective effect, the binding nature of the judgment of the court
cannot be ignored.
12.In
the case of Shri PC. Mills Ltd. v. Broach Borough Municipality3 Hidayatullah,
C.J. speaking for the Constitution Bench said: (SCC pp. 28687, para 4)
"When a legislature sets out to validate a tax declared by a court to be illegally
collected under an ineffective or an invalid law, the cause for ineffectiveness
or invalidity must be removed before validation can be said to take place
effectively. The most important condition, of course, is that the legislature
must possess the power to impose the tax, for, if it does not, the action must
ever remain ineffective and illegal. Granted legislative competence, it is not
sufficient to declare merely that the decision of the court shall not bind for
that is tantamount to reversing the decision in exercise of judicial power
which the legislature does not possess or exercise. A court's decision must
always bind unless the conditions on which it is based are so fundamentally
altered that the decision could not have been given in the altered
circumstances. Ordinarily, a court holds a tax to be invalidly imposed because
the power to tax is wanting or the statute or the rules or both are invalid or
do not sufficiently create the jurisdiction. Validation of a tax so declared
illegal may be done only if the grounds of illegality or invalidity are capable
of being removed and are in fact removed and the tax thus made legal.
Sometimes
this is done by providing for jurisdiction where jurisdiction had not been
properly invested before. Sometimes this is done by reenacting retrospectively
a valid and legal taxing provision and then by fiction making the tax already
collected to stand under the reenacted law. Sometimes the legislature gives its
own meaning and interpretation of the law under which the tax was collected and
by legislative fiat makes the new meaning binding upon courts. The legislature
may follow any one method or all of them and while it does so it may neutralise
the effect of the earlier decision of the court which becomes ineffective after
the change of the law." The same view has been expressed in the cases of
West Ramnad Electric Distribution Co. Ltd. v. State of MadraS4, Udai Ram Sharma v. Union of
India5, Tirath Ram Rajindra Nath v. State of U.P6, Krishna Chandra Gangopadhyaya v. Union of India7, Hindustan Gum & Chemicals Ltd. v. 3
(1969) 2 SCC 283 : AIR 1970 SC 192: (1970) 1 SCR 388 4 AIR 1962 SC 1753: (1963)
2 SCR 747 5 AIR 1968 SC 11 38 (1968) 3 SCR 41 6 (1973) 3 SCC 585 1973 SCC (Tax)
300: AIR 1973 SC 405 7 (1975) 2 SCC 302: AIR 1975 SC 1389: 1975 Supp SCR 151 85
State of Haryana8 and Utkal Contractors and Joinery (P) Ltd. V. State of Orissa9.
13. In
the present case as already pointed out above, if sub-section (2) as introduced
by the Coal Mines Nationalisation Laws (Amendment) Act, 1986 in Section 10 had
existed since the very inception, there was no occasion for the High Court or
this Court to issue a direction for taking into account the price which was
payable for the stock of coke lying on the date before the appointed day. The
authority to introduce sub-section (2) in Section 10 of the aforesaid Act with
retrospective effect cannot be questioned. Once the amendment has been
introduced retrospectively, courts have to act on the basis that such provision
was there since the beginning. The role of the deeming provision need not be emphasised
in view of series of judgments of this Court. Hence reading sub-section (2) of
Section 10 along with Section 19, it has to be held that respondents are not
required to take into account the stock of coke lying on the date prior to the
appointed day, for the purpose of accounting during the period when the mine in
question was under the management of the Central Government, because it shall
be deemed that the compensation awarded to the petitioner included the price
for such coal lying in stock on the date prior to the appointed day. Neither
any compensation is to be paid for such stock of coal nor the price there of is
to be taken into account for the purpose of sub-section (1) of Section 22 of
the Coking Coal Mines (Nationalisation) Act, 1972. It need not be pointed out
that subsection (1) of Section 22 shall be applicable where the statement of
accounts is to be prepared in respect of each coking coal mine taking into
account the expenditure incurred in raising the coal and the price of the coal
raised during the period when such coking coal mine was under the management of
the Central Government or the government company. In view of the aforesaid
sub-section (2) introduced in Section 10 of the Coking Coal Mines (Nationalisation)
Act, 1972 and Section 19 of the Coal Mines Nationalisation Laws (Amendment)
Act, 1972, it shall be deemed that the Compensation has been paid even for the
stock of coal lying on the date prior to the appointed day.
14. On
behalf of the petitioner, reference was made to the case of D. Cawasji &
Co. v. State of Mysore1O. In that case, it was held that Section 3 of the Mysore
Sales Tax (Amendment) Act, 1969 was unreasonable insofar as it sought to
nullify the High Court judgment which had become final and binding on parties.
From a bare reference to the aforesaid judgment it shall appear that this Court
pointed out that the amendment did not proceed to sure the defect or to remove
the lacuna pointed out in the earlier judgment by bringing in an amendment. As
such it was not a Validating Act and it could not nullify the judgment of the
High Court, because the defect had not been removed by the said Act. In other
words, the Validating Act had not served its purpose.
In the
present case, the lacuna or defect has been removed by 8 (1985) 4 SCC 124: AIR
1985 SC 1683 : 1985 Supp (2) SCR 630 9 1987 Supp SCC 751 : AIR 1987 SC 2310:
(1988) 1 SCR 314 10 1984 Supp SCC 490: 1985 SCC (Tax) 63 : AIR 1984 SC 1780:
(1985) 1 SCR 825 86 introduction of sub-section (2) in Section 10 of the Act
with retrospective effect. Sub-section (2) of Section 10 as well as Section 19,
both have specified that the amount which is to be paid as compensation
mentioned in the schedule shall be deemed to include and deemed always to have
included, the amount required to be paid to such owner in respect of all coal
in stock on the date immediately before the appointed day. As such the earlier
judgment of this Court is of no help to the petitioner.
15.
Accordingly the writ application is dismissed. But in the facts and
circumstances of the case, there shall be no order as to costs.
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