I.T.C.
Limited Vs. Tchoemmaigtrtieceul & Tuorrasl. Produce Market [2002] Insc 37 (24 January 2002)
Y.K.
Sabharwal
[With
Civil Appeal Nos.540/87, 541/87, 3872/90, 3024/88,3023/88, 1535/88, 1194/88,
1394/88, 1536/88, 1980/88, 1981/88, 3715/88, 2464/88, 6619/97, 2088-89/99,
Civil Appeal Nos......................../2002 (@SLP (C) Nos.892/85,
27568-27570/95) and Writ Petition (C) No.8614/82]
Y.K. Sabharwal,
J.
The
issue in these matters is about the validity and applicability of Bihar
Agricultural Produce Markets Act, 1960 and the Karnataka Agricultural Produce
Marketing (Regulation) Act, 1966, to the extent these State legislations deal
with sale of tobacco in market areas with particular reference to the levy
thereupon of market fee, after enactment of Tobacco Board Act, 1975 ? a
parliamentary legislation.
The
same is the issue in respect of similar State legislations passed by State
Legislatures of Uttar Pradesh and Madhya Pradesh. These issues were subject
matter of decision in ITC Ltd. & Ors. v. State of Karnataka & Ors. [1985 Supp. SCC 476].
We are
required to determine whether ITC's case is correctly decided or not. That is a
decision rendered by a three Judge Bench.
The
majority decided in favour of ITC. Later a Bench of two Judges expressed
tentative view that the decision in ITC's case requires reconsideration. Thus,
these matters are before this Bench.
The
arguments on behalf of the appellants contending that ITC has been correctly
decided have been led by Mr. Shanti Bhushan followed and supported by other
learned counsel appearing for Union of India and the Tobacco Board. On behalf
of the State of Bihar and other parties contending that
ITC has not been correctly decided, the arguments were led by Mr R.K. Dwivedi
followed and supported by other learned counsel appearing for other States and
Market Committees.
The
answer to the question ? Whether ITC is correctly decided or not depends upon
the scope of Entry 52 in Union List of the Seventh Schedule of the Constitution
of India with particular reference to the meaning of the expression
`Industries' in the said entry as also in Entry 24 of the State List of the
Seventh Schedule of the Constitution.
In
ITC's case the majority held that the provisions of the Karnataka Agricultural
Produce Marketing (Regulation) Act, 1966 are repugnant to the parliamentary
legislation, the Tobacco Board Act, 1975 and, therefore, tobacco is liable to
be removed from the Schedule of that enactment. Expressing the minority view, Sabyasachi
Mukharji, J held that the State legislation and the Tobacco Board Act, 1975 can
co-exist.
The
first question to be determined is can State legislations and Tobacco Board Act
co-exist in respect of sale of tobacco in the market areas within the framework
of Agricultural Produce Marketing Acts - the State legislations under
consideration? If our answer to this question is that the two legislations can
co-exist, in that event it may not be necessary to go into the aspect of
legislative competence.
If,
however, our answer is that the State legislations and the parliamentary
legislation are incapable of reconciliation and the two cannot co-exist, in
that case, the next question that would require determination will be about the
validity of the State legislations.
In the
proposed judgment, Hon'ble Mr.Justice Pattanaik has come to the conclusion that
the Agricultural Produce Markets Act and the Tobacco Board Act are in direct
collision with each other and cannot be allowed to be operated simultaneously.
The
State legislations and parliamentary legislations cannot co- exist is apparent
from various provisions of the two legislations. To illustrate in this regard,
reference may be made on one hand to Section 4(2) of Bihar Act and similar
provision in other State legislations and on the other to the provisions of
Section 13 of the Tobacco Board Act in States wherein this section has been
enforced and also to Section 8(2)(cc). Reference can also be made to Rule 32 of
the Tobacco Board Rules, 1976 framed in exercise of the powers conferred by
Section 32 of the Tobacco Board Act regarding purchase of Virginia tobacco in
comparison to Section 15 of Bihar Act requiring the agricultural produce, which
tobacco is, to be brought to the market yard and sold by means of an auction or
tender to the highest bidder. The power of the Tobacco Board to purchase from
growers as provided in Rule 32 cannot co-exist with sale by auction or tender.
Even in regard the price and manner of payment, licencing and auction procedure
under two legislations and Rules made thereunder show that they cannot
co-exist. In this regard reference can also be made to the Tobacco Board
(Auction) Rules, 1984 and Tobacco Board (Auction) Regulation, 1984. It is
evident that the compliance with the provisions of one would involve
non-compliance of the provisions of the other. The provisions of the two
legislations have been referred to in the judgment of Brother Pattanaik, J. I
am in respectful agreement with the opinion of Justice Pattanaik that the two
cannot operate and co-exist simultaneously. In this view, the question about
the legislative competence of the State Legislature will have to be examined.
In
ITC's case, two learned judges have held the State legislation to be invalid.
The power of State Legislature per se to legislate in respect of sale of
tobacco in market areas and levy of market fee, in view of Article 246(3) read
with Entries 14, 28 and 66 of the State List, is not in dispute. The dispute
has, however, arisen as according to ITC, on declaration as contemplated by
Entry 52 of the Union List having been made by the Parliament in Section 2 of
the Tobacco Board Act, 1975, and as a result of various provisions in that Act,
the field of sale of tobacco which is said to be integral part of tobacco
industry has been transferred from Entry 24 of the State List to Entry 52 of
the Union List ?
Entry
24 being subject to the provisions of Entries 7 and 52 of the Union List. The
contention is that in this view, the State Legislature is deprived of
competence to legislate in the field of sale of tobacco in market area and levy
market fee. Under these circumstances, the competence of the State Legislature
to legislate in regard to sale of tobacco would depend upon the answer to the
question whether under Entry 52 of the Union List, the Parliament is competent
or not to legislate in respect of sale of raw tobacco. If the answer to the
question is that the Parliament is competent, in that eventuality, the State
legislation will have to be invalidated for want of legislative competence. The
answer to the question would, however, depend upon the scope of the expression
`Industries' as deployed in Entry 52 of the Union List and Entry 24 of the
State List. If we find that the expression `Industries' is wide enough to
include the raw material of the industry and the Parliament is, thus, competent
to enact law under Entry 52 of the Union List, in respect of raw material, the
Parliament having supremacy as provided in Article 246(1), the parliamentary
legislation, namely, the Tobacco Board Act would hold the field and the State
legislation invalidated. The dispute in this case is not about parliamentary
supremacy as none has doubted it in view of Article 246(1) of the Constitution
but is whether Parliament has competence at all to legislate in respect of raw
tobacco or it falls within the competence of State. If we hold that while
legislating in the field of industry as provided in Entry 52 of the Union List,
the Parliament is not competent to legislate in respect of the field anterior
to industry, i.e. its raw material and can legislate only in respect of the
process of manufacture or production, in that eventuality, the State
legislation will have to be held to be constitutional, intra vires and
applicable.
In the
proposed judgment, Justice Pattanaik has held that the word `industry' in Entry
52 of the Union List cannot be given restricted meaning so as to exclude from
its purview the subject of legislation coming within Entry 27 or Entry 14 of
List II and, thus, the parliamentary legislation, namely, the Tobacco Board
Act, 1975 is constitutionally valid and, consequently, the State legislations
entitling the Market Committee to levy fee for sale and purchase of raw tobacco
within the market area will not be operative so far as the produce of tobacco
is concerned and that the majority judgment in the ITC's case is correctly
decided. I express my respectful dissent with the view expressed by Justice Pattanaik
on this aspect and thus this separate judgment.
The
Parliament and Assemblies draw power to legislate from the provisions of the
Constitution of India. We are concerned here with Article 246. Article 246(1)
of the Constitution provides that notwithstanding anything in clauses (2) and
(3), Parliament has exclusive power to make laws with respect to any of the
matters enumerated in List I in the Seventh Schedule. The said List is referred
to in the Constitution as the `Union List'.
Entry
52 in the Union List is `Industries, the control of which by the Union is
declared by Parliament by law to be expedient in the public interest'. In
respect of field covered by this Entry, the Parliament has enacted the Tobacco
Board Act, 1975. Section 2 of the Tobacco Board Act contains the declaration
that it is expedient in the public interest that the Union should take under its control the Tobacco industry.
Article
246(2) provides that notwithstanding anything in clause (3), Parliament and,
subject to clause (1), the Legislature of any State also, have power to make
laws with respect to any of the matters enumerated in List III in the Seventh
Schedule. The said List is referred to in the Constitution as the
"Concurrent List".
Article
246(3) provides that subject to clauses (1) and (2), the Legislature of any
State has exclusive power to make laws for such State or any part thereof with
respect to any of the matters enumerated in List II in the Seventh Schedule.
The said List is referred to in the Constitution as the "State List".
In
exercise of power under Article 246(3), various State Legislatures have enacted
Agricultural Produce Marketing Acts for regulating sale and purchase of the
agricultural produce and levying market fee within the framework of those Acts
which, inter alia, permit levy and collection of market fee. The tobacco under
the Acts in question has been notified as an agricultural produce.
In
ITC's case, by majority, it was held that the Tobacco industry having been
taken over by the Central Government under Entry 52 of the Union List by
enactment of Tobacco Board Act, the State Legislature ceases to have any
jurisdiction to legislate for that field and, therefore, the provisions of the
Karnataka Agricultural Produce and Marketing Act entitling the market committee
to levy market fee in respect of sale and purchase of Tobacco within the market
area collide with Tobacco Board Act. Thus, the State Act so far as it relates
to Tobacco was struck down. The minority view was that both the State and the
Central Act can operate in their respective fields and there is no repugnancy
if both the acts are considered in the light of their respective true nature
and character.
The
majority judgment in ITC's case for the view that it took principally relied
upon the two Constitution Bench decisions of this Court in State of Orissa v.
M.A. Tulloch & Co. [(1964) 4 SCR 461] and Baijnath Kadio v. State of Bihar
& Ors. [(1969) 3 SCC 838].
Referring
to these two decisions, the opinion expressed was that these cases are direct
authority on the question at issue, viz., if the Central Act and the State Act
collide, the inevitable consequence would have to be that the Central Act will
prevail over the State Act and later will have to yield and that the provisions
of the Karnataka Agricultural Produce Marketing (Regulation) Act, 1966 are
repugnant to the Tobacco Board Act, 1975 and, therefore, tobacco is liable to
be removed from the schedule of the said Act.
The
minority view, however, was that there is nothing in the State Act or in the
Rules which indicate that it is inconsistent with or cannot be operated along
with the marketing regulations and both the Acts can operate in their
respective fields and there is no repugnancy if both the Acts are considered in
the light of their true nature and character.
In
ITC's case the challenge was to the constitutional validity of the Karnataka
Agricultural Produce Marketing (Regulation) (Amendment) Act, 1980. By the
amending Act, tobacco was enumerated as an agricultural produce for the
purposes of the Karnataka Agricultural Produce Marketing (Regulation) Act,
1966.
The
High Court was of the view that the Tobacco Board Act did not cover the
marketing of tobacco in its entirety but only covered a part of the area of the
topic of marketing of tobacco and that the two legislations, namely, the
Tobacco Board Act, 1975 and the Karnataka Agricultural Produce Marketing (Regulation)
Act, can co-exist and operate cumulatively. The further view expressed by the
High Court was that any intention of the superior legislature to cover the
whole field to make a comprehensive law with regard to marketing of tobacco was
not manifest in the legislation.
The
contention canvassed before this Court in ITC's case was that in view of the
Central Act, the State Legislature was not competent to bring into fold of the
State Act, the tobacco, the matter being covered by Entry 52 of the Union List
of the Seventh Schedule of the Constitution of India. The precise question in
ITC's case was as to whether in respect of marketing of tobacco, the State
Government was entitled to legislate or whether in view of the fact that there
was a declaration under Entry 52 of the Union List, the State Legislature had
no competence to legislate on tobacco and as such the impugned legislation was
ultra vires.
In the
minority opinion, Mukharji, J. noticed that the Karnataka Agricultural Produce
Marketing (Regulation) Act, 1966 deals with the subject of market in Entry 28
read with Entry 66 of List II and that it had to be borne in mind that Entry 28
is not subject to withdrawal to List I by Parliament. The State Act is not on a
subject in List III nor is the Central Act a law relating to any subject in
List III. It was concluded that, therefore, there cannot be any question of
repugnancy. The nature and character of the Acts, namely, Karnataka
Agricultural Produce Marketing (Regulation) Act, 1966 and the Central Act was
noticed and it was held that it is fully manifest that both the Acts can
operate in their respective fields. Further in the minority opinion it was
observed that while giving due weight to Centre's supremacy in the matter of
legislation, the States' legitimate sphere of legislation should not be
unnecessarily whittled down because that would be unwarranted by the spirit and
basic purpose of the constitutional division of powers ? not merely allocation
of power by the Constitution but invasion by parliamentary legislations. While
it is true that in the spheres very carefully delineated the Parliament has
supremacy over State Legislatures, supremacy in the sense that in those fields,
parliamentary legislation would hold the field and not the State legislation ? but
to denude the State Legislature of its power to legislate where the legislation
in question in pith and substance i.e. in its true nature and character,
belongs to the State field, one should be chary to denude the State of its
powers to legislate and mobilize resources ? because that would be destructive
of the spirit and purpose of India being a
Union of States.
States
must have power to raise and mobilize resources in their exclusive fields. The
Marketing Act is essentially an Act to regulate the marketing of agricultural
produce. Justice Mukharji said that "it must, therefore, be held that the
State Act should prevail. One should avoid corroding the State's ambit of
powers of legislation which will ultimately lead to erosion of India being a Union of States.".
The
majority opinion was expressed by Justice S.Murtaza Fazal Ali with whom Justice
A. Varadarajan concurred. In the majority opinion after noticing the crucial
point for determination i.e. whether the Karnataka State had any jurisdiction
to encroach upon the limits of Entry 52 of the Union List, relying inter alia
upon the decisions in the cases of Tulloch, Baijnath Kadio, it was concluded
that once the Centre takes over an industry under Entry 52 of List I of the
Seventh Schedule and passes an Act to regulate the legislation, the State
Legislature ceases to have any jurisdiction to legislate in that field and if
it does so, that legislation would be ultra vires the powers of the State
Legislature. It was further observed that acceptance of the minority opinion
would rob the Central Act of its entire content and essential import by handing
over the power of legislation to the State Government which per se had been
taken over by the Parliament under Article 246 by enacting the Tobacco Board Act,
1975. In the majority opinion reliance was placed on the following passage of Baijnath
Kadio's case as extracted at page 174 as under:
"It
is open to Parliament to declare that it is expedient in the public interest
that the control should rest in Central Government.
To
what extent such a declaration can go is for Parliament to determine and this
must be commensurate with public interest. Once this declaration is made and
the extent laid down, the subject of legislation to the extent laid down
becomes an exclusive subject for legislation by Parliament. Any legislation by
the State after such declaration and trenching upon the field disclosed in the
declaration must necessary be unconstitutional because that field is abstracted
from the legislative competence of the State Legislature. This proposition is
also self-evident that no attempt was rightly made to contradict it." The
majority opinion has not noticed the Constitution Bench's decision in the case
of Ch. Tika Ramji & Ors. etc. v. The State of Uttar Pradesh &
Ors.[(1956) SCR 393] and other decisions on the scope of Entry 52 but relying
upon M.A. Tulloch and Baijnath Kadio held that when declaration under Entry 52
of List I in respect of public interest is made and the extent laid down the
subject of legislation to the extent laid down becomes an exclusive subject of
legislation by the Parliament and any legislation by the State after such
declaration trenching upon the field disclosed in the declaration must
necessarily be unconstitutional because that field is abstracted from the
legislative competence of the State Legislature. Thus it was held that the
Government of Karnataka had no jurisdiction to levy any market fee on tobacco
because the State Act to that extent collides with the Central Act of 1975.
The
decisions in the cases of Baijnath Kadio and Tulloch have also been relied upon
by Mr.Shanti Bhushan. Reliance has also been placed by learned counsel on The Hingir-Rampur
Coal Co. Ltd. & Ors. v. State of Orissa & Ors. [(1961) 2 SCR 537]. It was contended by Mr.Shanti Bhushan
that in law and in principle there would be no difference in respect of a case
dealing with the scope of Entry 52 of the Union List or a case dealing with the
scope of Entry 54 of that List. The submission of learned counsel is that for
the purpose of interpretation both these entries have been equated by this
Court and reliance in this regard is placed on Ishwari Khetan Sugar Mills (P)
Ltd. & Ors. v. State of Uttar Pradesh
& Ors. [(1980) 4 SCC 136].
On
behalf of the State Governments and the Agricultural Produce Marketing
Committees strong reliance has been placed on Tika Ramji's case. What is the
ratio of these decisions, we will now examine.
Before
considering the aforenoted decisions, it would be appropriate to make it clear that
in these matters it has to be kept in view that this Court is not examining a
case where the field of legislation is on concurrent list to which Article
246(2) applies. This Court is also not considering the case of an incidental
trenching of field by one or the other legislature. The Court is concerned with
the question of legislative competence. We are examining a case where what has
been questioned is the legality of legislation in respect of a field on the
State List to which Article 246(3) applies. The validity and applicability of
the State legislations in respect of a field of legislation on State List has
come under a cloud on account of a legislation passed by the Parliament in
respect of field of legislation under Entry 52 of the Union List, namely, the
Tobacco Board Act, 1975. It is on account of this legislation containing
declaration as contemplated by Entry 52 of the Union List that doubts have
arisen about the validity and applicability of State legislation about the sale
of agricultural produce of tobacco in market areas and levy thereupon of market
fee which aspects are on field of legislation on the State List (Entries 14,
27, 28 and 66). Entry 24 of the State List is subject to Entries 7 and 52 of
List I. We are not concerned in these matter with Entry 7. The question here is
as to the effect of transfer of field of legislation under Entry 24 of the
State List to the Union List (Entry 52), on other fields in the State List,
namely, fields of legislation under Entries 14, 27, 28 and 66 and what in fact
can be transferred.
Baijnath
Kadio was a case which considered the validity of the State legislation on the
ground of being beyond the State legislative power in view of the declaration
by the Parliament in Mines and Minerals (Regulation and Development) Act, 1957
as contemplated by Entry 54 of List I of the Seventh Schedule to the
Constitution.
Section
2 of the Central legislation declared that it is expedient in the public
interest that the Union should take under its control the
Regulation of mines and the development of minerals to the extent provided
therein.
Entry
54 of the Union List speaks both of regulation of mines and minerals
development and Entry 23 of the State List is subject to Entry 54. It was held
that it was open to the Parliament to declare that it is expedient in the
public interest that the control should rest with the Central Government. To
what extent such a declaration can go is for the Parliament to determine and
this must be commensurate with public interest. Once this declaration is made
and that extent laid down the subject of legislation to the extent laid down
becomes an exclusive subject for the legislation by the Parliament. Any
legislation by the State after such declaration trenching upon the field
disclosed in the declaration must necessarily be unconstitutional because that
field is abstracted from the legislative competence of the State Legislature.
For its view the Constitution Bench followed earlier Constitution Bench
decisions in the cases of Hingir and Tulloch. These two cases also dealt with
the scope of Entry 54 of List I viz-a-viz Entry 23 of List II. The majority
opinion in ITC as already noticed, followed Baijnath Kadio and extracted in its
judgment the passage as aforesaid.
A
significant aspect to take note of is that Tika Ramji's case has not been
considered in Hingir's case. The reason for it seems to be that one set of
cases consider the scope of Entry 54 viz-a-viz Entry 23 and to that category
belong the cases of Hingir, Tulloch and Baijnath Kadio. The other set of cases
consider the scope of Entry 52 of Union List viz-a-viz Entry 24 of the State
List and to that category belong the cases of Tika Ramji and other cases
following Tika Ramji.
Relying
upon Ishwari Khetan's case Mr.Shanti Bhushan contends that Entry 52 has been
equated with Entry 54 of the Union List.
Both
sides have relied upon the case of Ishwari Khetan. Let us examine that case. In
Ishwari Khetan's case the contention urged was that the Parliament has made the
Industrial (Development and Regulation) Act, 1951 (for short, `the IDR Act') in
Entry 52 List I declaring control of sugar industry and that industry goes out
of Entry 24 of List II and, therefore, State Legislature is denuded of
legislative powers in respect of sugar industry and impugned legislation was
with respect to acquisition of sugar undertaking in sugar industry.
The
Attorney General had contended that the power to acquire property was derived
from Entry 42 of List III. Ishwari Khetan's case involved the determination or scope
of Entry 52 of List I and Entry 24 of List II only. The scope of these entries
with respect to Entries 26 and 27 of List II and Entry 33 of List III did not
fall for consideration. Further in paragraphs 7, 8 and 11 of Ishwari Khetan's
case the Constitution Bench repeatedly pointed out that a declaration in Entry
52 of List I denudes the power of State Legislature to legislate under Entry 24
List II only. It was noticed that the sugar was a declared industry. The
question posed was that "is it, however, correct to say that once a
declaration is made as envisaged by Entry 52 List I, that industry as a whole
is taken out of Entry 24 of List II"? The answer given by the
Constitutional Bench was that it is not correct to say that once a declaration
is made in respect of an industry that industry as a whole is taken out of
Entry 24 List II. It was said that the industry as a legislative head is found
itself placed in Entry 24 of List II. The State Legislature can be denied
legislative power under Entry 24 to the extent Parliament makes declaration
under Entry 52 and by such declaration, Parliament acquired power to legislate
only in respect of those industries in respect of which declaration is made and
to that extent as manifested by legislation incorporating the declaration and
not more. The Bench further said that the legislative power of the State under
Entry 24 List II is eroded only to the extent the control is assumed by the
Union pursuant to the declaration and the State Legislature which is otherwise
competent to deal with industry under Entry 24 List II can deal with that
industry in exercise of other powers enabling it to legislate under different
heads set out in List II and List III and this power cannot be denied to the
State. The extent of parliamentary legislation was seen only to determine how
much is taken out from Entry 24 List II and not for the purposes of laying down
any principle that the parliamentary legislation has to be seen to determine
the extent of control and the denudation of the power of the State Legislature
to the extent the control is laid down by the Parliament.
Further
it was held that despite the parliamentary legislation the State Legislature
can deal with industry in exercise of other powers in different entries in List
II and List III and that power cannot be denied to the State. In this case the
Court was examining whether the law of acquisition of sugar undertaking was
referable to Entry 24 List II or Entry 42 List III. It was concluded that the
acquisition of the property was referable to Entry 42 List III. The scope of
the industry did not fall for examination in Ishwari Khetan's case. There is no
discussion on the interpretation of expression `industry' and that probably is
the reason why Tika Ramji's case has not been referred to. The reliance on Baijnath
Kadio's case in Ishwari Khetan's case was to show the denudation of States'
power being limited to the extent of control. While Baijnath Kadio's case dealt
with Entry 23 List II, Ishwari Khetan's case dealt with Entry 24 List II. The
subject matter of the other entries was not in issue in this decision.
The
structure in Entry 54 of List I was not equated with that of Entry 52 List I as
contended by Mr.Shanti Bhushan. This decision does not adopt the mines and
minerals cases for the purposes of considering the scope of Entry 52 of List I.
In our view, the cases of mines and minerals are not of much assistance while
examining the scope of Entry 52 of List I.
In
State of A.P. & Ors. v. Mcdowell & Co.
& Ors. [(1996) 3 SCC 709] also it was held that the ambit and scope of a
constitutional entry cannot be determined with reference to a parliamentary
enactment. If it is otherwise, it would result in the Parliament enacting
and/or amending an enactment thereby controlling the ambit and scope of the
constitutional provision. That cannot be the law. The power to legislate with
which we are concerned is contained in Article 246. The fields are demarcated
in the various entries. On reading both, it has to be decided whether the concerned
legislature is competent to legislate when its validity is questioned. The
ambit and scope of an entry cannot be determined with reference to a
parliamentary enactment.
Tika Ramji's
case is required to be examined in some detail since that has been a bone of
serious and elaborate submissions. In that case, the challenge by the Sugarcane
growers hailing from several villages of State of U.P. was to the validity of the UP Sugarcane (Regulation
of Supply and Purchase) Act, 1953 and notifications issued thereunder. A short
history of legislation enacted by the Centre as well as the province of U.P. in regard to Sugar and Sugarcane was noticed.
It was
noticed that on 8th
April, 1932, the
Central Legislature passed the Sugarcane Industry (Protection) Act, 1932. As a
result of this Act, there was a rapid rise in number of sugar factories as also
a large expansion in the cultivation of sugarcane. To regulate the price at
which sugarcane intended to be used in the manufacture of sugar might be
purchased by or for the factories, the Central Legislature enacted on 1st May,
1934 the Sugarcane Act, 1934. The fixing of minimum price for the purchase of
sugarcane intended for use in any factory in any controlled area was left to
the Provincial Governments which were empowered to make rules for the purpose
of carrying into effect the objects of the Act including the organisation of
growers of sugarcane into Co-operative Societies for the sale of sugarcane to
factories.
With
the coming into operation of the Government of India Act, 1935, there was
distribution of legislative power between the Dominion Legislature and the
Provincial Legislatures and agriculture (Entry No.20), trade and commerce
within the Province (Entry No.27) and production, supply and distribution of
goods, development of industries subject to the provision in List I with
respect to development of certain industries under Dominion control (Entry
No.29) were included in List II, namely, the Provincial Legislative List.
Entry
No.34 in List I was "Development of industries where development under
Dominion control is declared to be in the public interest".
The
result of above distribution of legislative power was that the entire subject
matter of the Sugarcane Act, 1934 was left with the Provincial legislative list.
It was felt that this Act was not sufficiently comprehensive for dealing with
the problems of sugar industry.
Therefore,
it was found necessary to replace it so as to provide for better organisation
of cane supplies to sugar factories. The U.P. Legislature accordingly enacted
on 10th February, 1938, the U.P.
Sugar
Factories Control Act, 1938 to provide for licensing of the sugar factories and
for regulating the supply of sugarcane intended for use in such factories and
the price at which it may be purchased and for other incidental matters and
repealed the Sugarcane Act, 1934. The 1938 Act was to remain in force initially
upto 30th June, 1947 but the period was extended to 30th June, 1950 and then to 30th June, 1952.
On
intervention of Second World War, a proclamation of emergency was issued by the
Governor General under Section 102 of the Government of India Act, 1935. The
Dominion Legislature acquired the power to make laws for the Provinces with
respect to any of the matters enumerated in the Provincial Legislative List.
The proclamation of emergency was to operate until revoked by a subsequent
proclamation and the laws made by the Dominion Legislature were to have effect
until the expiration of period of six months after the proclamation had ceased to
operate. The Defence of India Act and the Rules made thereunder occupied the
field. Sugar was made a controlled commodity in the year 1942 and its
production and distribution as well as the fixation of sugar prices were
regulated by the Sugar Controller thereafter. The proclamation of emergency was
revoked on 1st April,
1946 and the laws made
by the Dominion Legislature in the field of the Provincial Legislative List
were to cease to have effect after 30th September, 1946. On 26th March, 1946, the British Parliament enacted the India (Central Government and
Legislature) Act, 1946, Section 2(1)(a) whereof provided that notwithstanding
anything in the Government of India Act, 1935, the Indian Legislature shall
during the period mentioned in Section 4 thereof have powers to make laws with
respect to the following matters :
"(a)
trade and commerce (whether or not within a Province) in, and the production,
supply and distribution of, cotton and woolen textiles, paper (including
newsprint), foodstuffs (including edible oil seeds and oils), petroleum and
petroleum products, spare parts of mechanically propelled vehicles, coal, iron,
steel and mica; ..." Acting under the power reserved to it under the
aforesaid Section 2(1)(a), the Central Legislature enacted on 19th November,
1946, the Essential Supplies (Temporary Powers) Act, 1946 to provide for the
continuance during the limited period of powers to control production, supply
and distribution of, and trade and commerce in, certain commodities. The
Governor General issued a Notification on 3rd March, 1947 the effect whereof was to continue
the Act till 31st
March, 1948. On 18th
July, 1947, however, Indian Independence Act was passed under which the
Governor General passed an order which substituted the words "Dominion
Legislature" for "Both Houses of Parliament" in the proviso to
Section 4 of India (Central Government and Legislature) Act, 1946 and also
introduced a new Section 4(a) by way of adoption providing that the powers of
the Dominion Legislature shall be exercised by the Constituent Assembly. By
passing of the Resolution by the Constituent Assembly, the life of the Act was
extended and later on Constitution coming into force, the Parliament was
invested with power under Article 369 for a period of five years to make laws
with respect to the following matters as if they were enumerated in the
Concurrent List :
"`(a)
trade and commerce within a State in, and the production, supply and
distribution of,....foodstuffs (including edible oil seeds and oil),......' The
life of the Act was accordingly extended from time to time upto 26th January, 1955 by Acts passed by Parliament."
Food crops under the aforesaid 1946 Act were defined as including crops of
sugarcane.
The
Central Government in exercise of powers conferred upon it by Section 3 of the
1946 Act, promulgated the Sugar and Gur Control Order, 1950, inter alia,
empowering it to prohibit or restrict the export of sugarcane from any area; to
direct that no gur or sugar shall be manufactured from sugarcane except under
and in accordance with the conditions specified in the licence issued in this
behalf.
There
was also power to fix minimum price in exercise whereof the Central Government
from time to time issued notifications fixing the minimum price to be paid by
the producers of sugar for sugarcane purchased by them.
On 31st October, 1951, Parliament enacted the Industries
(Development and Regulation) Act, 1951 to provide for the development and
regulation of certain industries. By Section 2 of the Act, it was declared that
it was expedient in the public interest that the Union should take in its control the industries specified in the
First Schedule. That Schedule included the industry engaged in the manufacture
or production of sugar.
The
U.P. Legislature enacted the impugned Act. The object of this enactment was
stated to be as follows :
"With
the promulgation of the Industries (Development and Regulation)Act, 1951 with
effect from 8th May,
1952, the regulation
of the sugar industry has become exclusively a Central subject. The State
Governments are now only concerned with the supply of sugarcane to the sugar
factories. The Bill is being introduced in order to provide for a rational
distribution of sugarcane to factories, for its development on organized
scientific lines to protect the interests of the cane growers and of the
industry and to put the new Act permanently on the Statute Book." In
exercise of the rule making power conferred by the impugned Act, the U.P.
Government made rules and also promulgated the U.P.
Sugarcane
Supply and Purchase Order, 1954. All these related to the supplies and purchase
of sugarcane in U.P.
Challenging
vires of the State Act one of the submissions made in Tika Ramji's case before
the Constitution Bench was :
"(I)
That the State of U.P. had no power to enact the impugned Act as the Act is
with respect to the subject of industries the control of which by the Union is
declared by Parliament by law to be expedient in the public interest within the
meaning of Entry 52 of List I and is, therefore, within the exclusive province
of Parliament. The impugned Act is, therefore, ultra vires the powers of the
State Legislature and is a colourable exercise of legislative power by the
State." It was urged that the word `industry' was a word of very wide
import and included not only the process of manufacture or production but also
of things which were necessarily incidental to it, viz., the raw materials for
the industry as also the products of that industry and would, therefore,
include within its connotation the production, the supply and distribution of
raw materials for that industry which meant sugarcane in relation to sugar
industry and, therefore, insofar as the impugned Act purported to legislate in
regard to sugarcane which was a necessary ingredient in the production of
sugar, it was a colourable exercise of legislative power by the State,
ostensibly operating in its own field within Entry 27 of List II but really
trespassing upon the field of Entry 52 of List I.
True,
the challenge was to the vires of the State legislation and not to the
parliamentary legislation but at the same time the entire basis of challenge
was that in respect of the sugarcane, only Parliament had the power to
legislate on account of the field being covered under Entry 52 of List I, the
Sugar industry having been included in that Entry and the connotation of
industry being very wide to include in it raw material, i.e., sugarcane as
well. Thus, the exclusive power of Parliament to legislate was urged as the
main ground to seek invalidation of the State legislation ? the field of
sugarcane not being available to the State Legislature to legislate.
In
view of the controversy as aforesaid, the fact that the validity of the
parliamentary legislation was not in issue in Tika Ramji's case, does not in
any manner, affect the ratio of that decision. The point for determination in
that case was substantially the same as in the present case, namely, the scope
of the expression `industries' in Entry 52 of List I and Entry 24 of List II.
There also the point was to adopt a narrow or wide interpretation of the
expression `industry'.
Further,
the fact that it was a case of a manufacturing industry under IDR Act also does
not affect the ratio of the case. The interpretation placed in Tika Ramji's
case cannot be confined to industry falling under IDR Act alone. There is
neither any express or implied indication in that decision to limit the
interpretation nor there is any valid reason to so limit it.
Like Tika
Ramji's case, in these matters, the challenge is to the State legislations on
the ground that in view of Entry 52 of List I, on enactment of Tobacco Board
Act, 1975, the State Legislature loses competence to legislate in respect of
sale of tobacco and, therefore, the existing State legislations will have no
applicability and, thus, the legislations in respect of marketing under Entry
28 of List II would have no applicability insofar as it concerns the
agricultural produce `tobacco'.
The
opposite contention is that under Entry 14 of the State List the State is
competent to legislate in respect of agricultural produce and tobacco is an
agricultural produce; setting up of markets in respect of this produce under
Entry 28 and levying thereupon the fee under Entry 66 and subject to Entry 33
of List III production, supply and distribution of goods (Entry 27) are all
State subjects and that under Entry 52 of List I, the Parliament's competence
is only to legislate in respect of industry which would not include in its
ambit the raw material of the industry and that the process of sale of
agricultural produce of tobacco in markets and levying thereupon market fee can
never be part of industrial process which is only manufacture and production.
The contention of Mr.Dwivedi is that State's activity in question is not an
industrial activity and, therefore, it is outside the ambit of Entry 24 of
State List and Entry 52 of the Union List.
In Tika
Ramji's case, the precise argument to challenge the State enactment was that
the expression `industries' should be construed as including not only the
process of manufacture or production but also activities antecedents thereto
such as acquisition of raw material and subsequent thereto such as disposal of
the finished products of that industry. It was urged in that case that the
process of acquiring raw materials was an integral part of the industrial
process and was, therefore, included in the connotation of the word `industry'
and when the Central Legislature was invested with the power to legislate in
regard to sugar industry on account of declaration as postulated by Entry 52 of
List I, that legislative power included also the power to legislate in regard
to the raw material of the sugar industry, that is sugarcane, and the
production, supply and distribution of sugarcane was, by reason of its being
the necessary ingredient in the process of manufacture or production of sugar,
within the legislative competence of the Central Legislature.
The
petitioners in Tika Ramji's case in support of the wide construction to be
placed upon the expression `industry' also relied upon various decisions
interpreting the said term in relation to the Industrial Disputes Act. Dealing
with those cases in Tika Ramji's case this Court said:
"What
we are concerned with here is not the wide construction to be put on the term
`industry' as such but whether the raw materials of an industry which form an
integral part of the process are within the topic of `industry' which forms the
subject matter of Item 52 of List I as ancillary or subsidiary matters which
can fairly or reasonably be said to be comprehended in that topic and whether
the Central Legislature while legislating upon sugar industry could, acting
within the sphere of Entry 52 of List I, as well legislate upon
sugarcane." This Court said that if the legislation with regard to
sugarcane came within the exclusive province of the Central Legislature under
Entry 52 of List I, the enactment passed by the Provincial Legislature would be
ultra vires. It was said :
"If
both the Central Legislature and the Provincial Legislatures were entitled to
legislate in regard to this subject of production, supply and distribution of
sugarcane, there would arise no question of legislative competence of the
Provincial Legislature in the matter of having enacted the impugned Act. The
conflict, if any, arose by reason of the interpretation which was sought to be
put on the two Entries, Entry 52 of List I and Entry 27 of List II put in
juxtaposition with each other. It was suggested that Item 52 of List I comprised
not only legislation in regard to sugar industry but also in regard to
sugarcane which was an essential ingredient of the industrial process of the
manufacture or production of sugar and was, therefore, ancillary to it and was
covered within the topic. If legislation with regard to sugarcane thus came
within the exclusive province of the Central Legislature, the Provincial
Legislature was not entitled to legislate upon the same by having resort to
Entry 27 of List II and the impugned Act." Dealing with the argument of
wide import of the expression `industries' in Tika Ramji's case it was held
that `industry' in its wide sense of the term would be capable of comprising
three different aspects :
(1) raw
materials which are an integral part of the industrial process,
(2) the
process of manufacture or production, and
(3) the
distribution of the products of the industry.
After
noticing these different aspects of the term `industry', it was held that
"the raw materials would be goods which would be comprised in Entry 27 of
List II". In respect of the second category of process of manufacture or
production and the third aspect of distribution of the product of the industry,
the Court held :
"The
process of manufacture or production would be comprised in Entry 24 of List II
except where the industry was a controlled industry when it would fall within
Entry 52 of List I and the products of the industry would also be comprised in
Entry 27 of List II except where they were the products of the controlled
industries when they would fall within Entry 33 of List III." The Court
further held that "In no event could the legislation in regard to sugar
and sugarcane be thus included within Entry 52 of List I".
Thus,
rejecting the contention that the expression `industries' in Entry 52 of List I
is wide enough to take into its compass the power to legislate in respect of
raw material said to be an integral part of the industrial process, the Court
repelled the plea of the State Act being ultra vires, the same being covered by
the subject of sugar industry control whereof have been declared by the
Parliament by law to be expedient in the public interest under the exclusive
domain of Parliament.
In The
Calcutta Gas Company (Proprietary) Ltd. v. The State of West Bengal & Ors. [1962 Suppl.(3) SCR 1],
the challenge was to the constitutional validity of the Oriental Gas Company
Act, 1960. One of the ground of challenge was that the West Bengal Legislature
was not competent to make a law regulating the gas industry in view of declaration
as contemplated by Entry 52 of List I having being made by the Parliament in
IDR Act ? Entry 24 being subject to the provisions of Entry 52 of List I. It
was contended that Entry 25 of List II (Gas & Gas Works) must be confined
to matters other than those covered by Entry 24 of the same List.
On the
facts of the case and in view of the conclusions of the Constitution Bench on
other aspect, it was not considered necessary to attempt to define the
expression `industry' precisely or the State exhaustively all its ingredients
but following Tika Ramji's case , it was assumed that the expression `industry'
means only production or manufacture. In Calcutta Gas, which considers Entry 52
of List I and Entry 24 of List II, the Bench said that ordinarily `industry' is
in the field of the State legislation and in all the entries it must be given
the same meaning and cited with approval Tika Ramji's case in the following
words:
"In
Ch.Tika Ramji v. State of Uttar Pradesh,
the expression `industries' is defined to mean the process of manufacture or
production and does not include the raw materials used in the industry or the
distribution of the products of the industry. It was contended that the word
`industry' was a word of wide import and should be construed as including not
only the process of manufacture or production but also activities antecedent
thereto such as acquisition of raw materials and subsequent thereto such as
disposal of the finished products of that industry. But that contention was not
accepted." Mr.Shanti Bhushan, however, contends that once field is covered
by Entry 52 by issue of requisite declaration and the Parliament has actually
covered the field by enacting a legislation, with regard to that extent the
industry including all facets of such an industry ? whether it is the raw
materials or the products of that industry, the State Legislature will have no
power to legislate. The contention is that the expression `industries' in Entry
52 of the Union List comprises in it all its aspects commencing from
procurement of raw material and upto disposal of final product of that industry
and not only the process of manufacture or production. The submission of
learned counsel is that if the expression `industries' in the entries under
consideration is not given such interpretation, it would denude the Parliament
of real object of control of such industry in public interest which is of
paramount importance. As against this, the contention of the other side is that
the acceptance of the viewpoint propounded by Mr. Shanti Bhushan would mean
denuding the State Legislature the power to legislate in respect of fields
covered under various entries under the State List which are not made subject
to any other entry and that the acceptance of contention of Mr.Shanti Bhushan
would have the effect of rewriting the Constitution. I agree.
The
intention of the Constitution makers was not to make Entries 14, 27, 28 and 66
subject to Entry 52 of the Union List. The acceptance of viewpoint propounded
by Mr.Shanti Bhushan will have that effect.
Therefore,
the expression `industries' cannot be interpreted in the manner suggested.
True,
the parliamentary legislation has supremacy as provided under Article 246(1)
and (2). This is of relevance when field of legislation is on concurrent list.
While maintaining parliamentary supremacy, one cannot give go by to the
federalism which has been held to be a basic feature of the Constitution (See
S.R. Bommai v. Union of India [(1994) 3 SCC 1]).
The
Constitution of India deserves to be interpreted, language permitting, in a
manner that it does not whittle down the powers of State Legislature and
preserves the federalism while also upholding the central supremacy as
contemplated by some of its articles.
In
this background, let us also briefly notice the constitutional history and
structural inter-relationship in respect of relevant entries as they existed in
Government of India Act, 1935 and as they now exist in the Seventh Schedule.
Entries 27 and 29 on the State List in the Government of India Act, 1935 were
as under :
"Item
27. Trade and commerce within the province; markets and fairs; money lending
and money lenders.
Item
29. Production, supply and distribution of goods; development of industries,
subject to the provisions in List I with respect to the development of certain
industries under Federal control." Now, in Seventh Schedule part of Entry
27 is in Entry 26 of the State List; Markets and fairs is Entry 28 of List II;
Money lending and money lenders (Entry 30 List II); Production, supply and
distribution of goods subject to the provisions to Entry 33 of List III (Entry
27 List II);
Industries
subject to the provisions of Entries 7 and 52 of List I (Entry 24, List II). It
would, thus, be seen that under 1935 Act, both production, supply and
distribution of goods as well as development of industries were subject to the
provisions of List I as provided in Entry 29. Our Constitution makers, however,
bifurcated Entry 29 into two parts. Industries were put in Entry 24 of List II
subject to the provisions of Entries 7 and 52 of List I. The production, supply
and distribution of goods was put in Entry 27 of List II and made subject to
Entry 33 of List III. The acceptance of the argument of Mr. Shanti Bhushan
would mean that no object was sought to be achieved by such a bifurcation. It
is clear that two entries have been separated.
One
made subject to the provisions of Entry 33 of List III and the other subject to
the provisions of Entries 7 and 52 of List I.
Therefore,
to interpret the expression `industry' to include in it the aspect of raw
material would mean that by the same analogy the subject matter of production,
supply and distribution of goods should also be included therein and in fact
that was the argument of Mr. Shanti Bhushan. Would the acceptance of that
argument not negate the will of the Constitution makers. I think it would.
Therefore, the argument cannot be accepted. The same argument would equally
apply to Entry 14 of List II in respect of agriculture which is not subject to
any List. It would so become if we accept the contention of Mr. Shanti Bhushan.
Further, earlier when the Parliament felt the need to control raw material, it
included "raw jute and raw cotton" in Entry 33, List III by
Constitution Third Amendment Act, 1954. Even Article 369 indicates that
agricultural raw material is in the State List for it refers to raw cotton,
cotton seed and edible oil seeds and seeks to temporarily place it, by fiction,
in the concurrent list to enable Parliament to make laws. The expression
`industries' in Entry 24, List II or Entry 52, List I, cannot be interpreted in
a manner that would make other entries of List II of the Seventh Schedule
subject to Union control, which in fact they are not. Wherever it was intended
to be made subject to such control, whether of List I or that of List III, it
was said so. A perusal of List II shows that whenever a particular entry was
intended to be made subject to an entry in List I or III, it has been so stated
specifically. Therefore, an interpretation which tends to have the effect of
making a particular entry subject to any other entry, though not so stated in
the entry, deserves to be avoided unless that be the only possible
interpretation. We do not think that such an interpretation on the entries in
question, namely, Entry 52 of the Union List and Entry 24 of the State List deserves
to be placed.
The
principles of interpretation are well settled. There is no doubt that the
entries in the lists in the Seventh Schedule do not provide competence or power
to legislate on the legislature for which the source of power is contained in
Article 246 of the Constitution. In deciding question of legislative
competence, it has to be kept in view that the Constitution is not required to
be considered with a narrow or pedantic approach. It is not to be construed as
a mere law but as a machinery by which laws are made. The interpretation should
be broad and liberal. The entries only demarcate the legislative field of
respective legislature and do not confer legislative power as such and if it is
found that some of the entries overlap or in conflict with the other, an
attempt to reconcile such entries and bring about a harmonious construction is
the duty of the court. When, however, reconciliation is not possible, as here, then
the court will have to examine the entries in relation to legislative power in
the Constitution.
The
subject matter of the issue here is about the interpretation of Entry 52 in
List I of the Seventh Schedule. It requires the Parliament to make a
declaration by law identifying an industry, the control of which by the Union is expedient in the public interest.
Under
the said entry only an `industry' can be declared as an industry, the control
whereof by the Union is regarded as expedient in public interest.
It is, therefore, implicit that if an activity cannot be regarded as industry,
Entry 52 will have no applicability to that activity. The question is about the
concept of `industry' in Entry 52 of List I. As already stated, the entries in
the Legislative List have to be construed in the widest sense cannot be
disputed but it has also to be borne in mind that such construction should not
make other entries totally redundant. The meaning of the word `industry' in
various dictionaries reliance on which was placed by Mr. Shanti Bhushan, is not
of any assistance while considering the constitutional meaning of the said
term. There may not be any embargo or limitation on the power of the Parliament
to enact the law in respect of activities other than manufacturing activities
but that power is non-existent in Entry 52 of List I. It may be elsewhere.
Reference in this regard can be made to Entry 33 of List III including in its
ambit food stuff and certain raw materials. Tobacco, however, is admittedly not
a food stuff.
The
validity of certain other acts such as the Cardomom Act, 1965, The Central Silk
Board Act, 1958, The Coffee Act, 1942, The Rubber Act, 1947, The Tea Act, 1953,
The Coir Industry Act, 1953 and The Coconut Development Board Act, 1979
reference whereof was made by Mr. Shanti Bhushan need not be examined for
purposes of considering the legislative competence of the impugned State
legislations. The legislative competence of Parliament to legislate these
statutes is not in issue before this Court and, therefore, we do not think it
necessary to examine the question of legislative competence only from academic
view point insofar as these legislations are concerned. However, prima facie,
there is no substance in the apprehension expressed by Mr.Shanti Bhushan that
narrow approach of the concept of `industry' would make these acts beyond the
legislative competence of the Parliament and make them ultra vires. As, when
and if these acts are challenged, the question of legislative competence would
be examined. Further, it may be noted that two out of the aforesaid
legislations, namely, the Coffee Act, 1942 and The Rubber Act, 1947 are
pre-Constitution enactments made under the Government of India Act, 1935 where
the entries were different. Item 29 of List II of the said Act has already been
reproduced above. In respect of the Coir Industry Act, on examination of the
provisions contained therein, it may be possible to urge that the statute deals
with the process of manufacturing and does not seek to control plantation and
preservation of the coconut trees or the production of the coconut. The Central
Silk Board Act has been dealt with by this Court in the case of B. Vishwanathiah
& Co. & Ors. v. State of Karnataka & Ors. [(1991) 3 SCC 358] and I fail to appreciate how upholding
the validity of the Agricultural Produce Marketing Acts would effect the
validity of this enactment. In respect of Cardomom Act, it appears that the
said Act is being applied for export purposes and it does not cover soil
preparation of seed-lings. Regarding Coconut Development Act, it does not
envisage setting up of auction platform and controlling marketing as in the
present case. That enactment primarily deals with the field pertaining to
recommendation for improving marketing, providing financial assistance for
adoption of modern technology and for assisting growers to get incentive
prices. This Court, however, need not examine in detail the aspect of
legislative competence in regard to these enactments since, as already said,
that is not the matter in issue here and it would suffice to indicate, as
above, only the prima facie view to dispel the apprehension expressed by Mr. Shanti
Bhushan.
Harakchand
Ratanchand Banthia & Ors. v. Union
of India & Ors. [(1970) 1 SCR 479] has been strongly relied upon by Mr. Shanti
Bhushan to support the contention of wide interpretation of the expression
`industry'. The main question therein was about the legislative competence of
the Parliament to enact the Gold (Control) Act, 1968. The said Act defines Gold
to mean Gold, including its alloy (whether virgine, melted or re-melted,
wrought or unwrought), in any shape or form, of a purity of not less than nine
carats and including primary gold, article and ornament [Section 2(j)]. Clause
(r) of Section 2 defines `primary gold' to mean gold in any unfinished or
semi-finished form and includes ingots, bars, blocks, slabs, billets, shots,
pellets, rods, sheets, foils and wires. Challenging the constitutional validity
of the Gold (Control) Act, the contention urged was that the goldsmiths was a
handicraft requiring application of skill and the art of making ornament was
not an industry within the meaning of Entry 52 of List I of the Seventh
Schedule of the Constitution. The Constitution Bench noticed the established
principles that the widest aptitude should be taken of all the entries and the
duty of the court to reconcile the entries and bring about a harmonious
construction in case some entries in different list or in the same list may
overlap or may appear to be in direct conflict with each other. In the present
case, however, there is no question of any overlapping and in regard to
conflict and harmonious construction, it is Mr.Shanti Bhushan's own submission
that the two legislations to the extent this Court is concerned, cannot
co-exist.
Reliance
has been placed by Mr.Shanti Bhushan on the following passage from Banthia's
case:
"But
we are satisfied in the present case that the manufacture of gold ornaments by
goldsmiths in India is a `process of systematic production'
for trade or manufacture and so falls within the connotation of the word
`industry' in the appropriate legislative entries. It follows, therefore, that
in enacting the impugned Act Parliament was validly exercising its legislative
power in respect of matters covered by Entry 52 of List I and Entry 33 of List
III." The contention of learned counsel is that in Harakchand Ratanchand Banthia's
case, the process of systematic production for trade or manufacture has been
held to fall within the connotation of the word `industry' in the appropriate
Legislative Entry and the argument that if the word `industry' is construed in
the wide sense, Entry 27 of List II will lose all meaning and content was
rejected. The submission is that the same approach deserves to be adopted in
the present case as well. The above approach was adopted after finding the
activity to be manufacture or production and, therefore, falling within the
connotation of `industry'. In Banthia's case, the Constitution Bench, in fact,
cited with the approval Tika Ramji's case and referred thereto as under :
"In
Tika Ramji v. State of Uttar
Pradesh the
expression `industry' was defined to mean the process of manufacture or
production and did not include raw materials used in the industry or the
distribution of the products of the industry." In Banthia's case, the
Court was considering the validity of the Act, the object whereof was to
control production, manufacture, supply, distribution, use and possession of,
and business in, gold, ornaments and articles of gold and for matters connected
therewith or incidental thereto. There is no provision in the Gold (Control)
Act, 1968 regulating the manner in which the primary gold would be extracted
from the earth. The Act does not concern itself with the extraction of primary
gold. The question therein was as to whether the work of goldsmiths was a
handicraft requiring application of skill and whether the art of making gold
ornaments was not an `industry' within the meaning of Entry 52, List I. In that
case, the question was not whether dealing with the raw material of industry
would come or not, within the concept of `industry'. Further, the Court
observed that it is not necessary to attempt to define the expression
`industry' precisely or to state exhaustively all its different aspects. On the
facts of the case, the Constitution Bench held that the process or systematic
production of gold ornament by goldsmiths for trade or manufacture falls within
the connotation of the word `industry' in the appropriate Legislative Entry.
The decision in Tika Ramji's case was not departed from. In fact it was
referred to. An attempt to adopt the definition of the word `industry' in the
Industrial Disputes Act was repelled. The contention accepted was that the
manufacture of gold ornament was an `industry' within the meaning of Entry 52,
List I.
This
decision is not of any assistance for determining whether sale of tobacco
process can come within the of the tobacco industry so as to fall within the
ambit of the word `industry' in Entry 52 of List I and Entry 24 of List II. The
observation in Banthia's case that Entry 27 of List II was a general entry was
made in the context of manufacture of gold ornaments by goldsmiths falling
within the ambit of the word `industry' as contained in Entry 24 of List II and
Entry 52 of List I.
Banthia's
case does not express any opinion on the scope of the word `industry' in Entry
52 of List I and Tika Ramji's case still holds the field when it says that the
expression `industry' would mean the process of manufacture or production and
would not include any raw material used in an industry or the distribution of
the products of industry.
Mr. Shanti
Bhushan has also placed reliance on another decision of the Constitution Bench
in the case of Chaturbhai M. Patel v. The Union
of India & Ors. [(1960) 2 SCR 362], in particular, to the observations made
therein by Sir Maurice Gwyer, Chief Justice in Subramanyan Chettiar v. Muthuswamy
Goundan [1940 FCR 188] which have been cited in Patel's case. The said
observations read thus :
"It
must inevitably happen from time to time that legislation, though purporting to
deal with a subject in one list, touches also on a subject in another list, and
the different provisions of the enactment may be so closely intertwined that
blind adherence to a strictly verbal interpretation would result in a large
number of statutes being declared invalid because the Legislature enacting them
may appear to have legislated in a forbidden sphere." Reliance was also
placed on the observations of Justice Hidayatullah in State of Rajasthan v. G. Chawla & Anr. [AIR 1959
SC 544] as cited with approval in the case of Chaturbhai M. Patel.
Those
observations are :
"It
is equally well-settled that the power to legislate on a topic of legislation
carries with it the power to legislate on an ancillary matter which can be said
to be reasonably included in the power given." We have no difficulty in
accepting the aforesaid observations made by Sir Maurice Gwyer, Chief Justice
and Hidayatullah, J (as he then was) but it has to be borne in mind that the
question for determination in Chaturbhai M. Patel's case was regarding true
nature and character or the pith and substance of the impugned Act, namely,
Sections 6, 8, 9 and 10 of the Central Excuse and Salt Act, 1944 and Rules 140
to 148, 150, 171 to 181, 215 and 226 of the Central Excise Rules, the
constitutional validity whereof was under challenge. The Constitution Bench was
considering the constitutional validity of a fiscal measure to levy and realise
duty on tobacco. The contention was that Sections 6 and 8 of the impugned Act
and rules made thereunder were beyond the legislative competence of the Central
Legislature under the Government of India Act, 1935. The Court was examining
the question whether the impugned Act is a law with respect to matters
enumerated in Item 45 of List I under the 1935 Act or to the matters enumerated
in Items 27 and 29 of List II. Entries 27 and 29 have already been reproduced
above. They dealt with the power of the State to legislate in respect of trade
and commerce, markets and fairs, money lending and money-lenders. Item 29 dealt
with power to legislate in respect of production, supply and distribution of
goods, development of industries, subject to the provisions in List I with
respect to the development of certain industries under the Federal control. The
question was whether the impugned Act in pith and substance relate to duties of
excise on tobacco as contained in Item 45 or it falls within the boundaries of
Items 27 and 29 of the Provincial List. Referring to the decision of the
Federal Court, it was held that in the interpretation of the scope of these
items, widest possible amplitude must be given to the words used and each
general word must be held to extend to ancillary or subsidiary matters which
can be fairly said to be comprehended in it. On examination of the provisions
of the Central Excise Act, the Court came to the conclusion that various
provisions of the Act and the Rules were essentially connected with the levying
and collection of the excise duty and in its true nature and character the Act
remains one that falls under Item 45 of List I and the incidental trenching
upon the provisional field of Items 27 or 29 would not affect the
constitutionality because the extent of invasion of the provisional field may
be a circumstance to determine the true pith and substance but once that
question is determined, the Act would fall on the side of central field and not
that of the Provincial field. It is, thus, evident that since in pith and
substance the matter pertained to excise duty, it fell under Item 45 of List I
and the non-tax entries in Item 27 or 29 could not be invoked. In the
Constitution also, Entry 84 relates to duty of excise on tobacco and other goods
manufactured or produced in India.
Referring
to the argument of the petitioner based on Rule 181 which dealt with revocation
and suspension of licenses and empowered the licencing department to revoke or
suspend a licence under certain circumstances and the argument that it was the
field under the province of the provincial legislature, the Court said that
this rule may have an indirect effect of depriving an owner of a bonded
warehouse from the privilege of keeping such a warehouse but that does not mean
that the object of the Act is not imposition, collection or realization of duty
of excise. The rule was held to be "a mean of making the realization of
duty effective and necessarily incidental to effectual legislation for
collection of duties". In the present case, there is no question of any
incidental trenching. It cannot be said that the law relating to sale of
tobacco in market area is incidental to law regarding tobacco as enacted by
Tobacco Board Act. The decision in Chaturbhai M. Patel's case, in our opinion,
has no relevance for the present purpose and so also the decision in the case
of State Bank of India v. Yasangi Venkateswara Rao [(1999) 2 SCC 375]. The
question squarely involved here is about the interpretation of the expression
`industry' within the meaning of Entry 52 of List I and Entry 24 of List II.
In Ganga
Sugar Corporation Ltd. v. State of U.P. & Ors. [(1980) 1 SCC 223] the
constitutional validity of U.P. Sugarcane Purchase Act was challenged on the
ground that it invades Entry 52 of List I with respect to sugar industry which
is a controlled industry under the IDR Act, 1951. The question raised therein
was this : "Is the legislation ultra vires because the State enters the
forbidden ground by enacting on controlled industry"? It was undisputed
that sugar industry was a controlled industry within the meaning of Entry 52 of
List I of the Seventh Schedule and, therefore, the legislative power of
Parliament covered enactments with respect to industries having regard to
Article 246(1) of the Constitution. The Court said that if the impugned Act
invades Entry 52, it must be repulsed by the Court. The Court, however,
expressed surprise at the argument of invalidity of the Act despite the
decision of the Constitution Bench in Tika Ramji's case. The Court said that
the Constitution Bench decision must be accepted as final unless the subject be
of such fundamental importance to national life or the reasoning is so plainly
erroneous in the light of later thought that it is wiser to be ultimately right
rather than to be consistently wrong. It said that the pronouncement by the
Constitution Benches should not be treated so cavalierly as to be revised
frequently. Recalling the words of Chief Justice Roberts of the U.S. Supreme
Court in Smith v. Alwright [(321 US 649 at 669] "that adjudications of the
Court were rapidly gravitating `into the same class as a restricted railroad
ticket, good for this day and train only' ". That part of Tika Ramji's
case was referred which dealt with the contention regarding the word `industry'
being of wide import and included not merely manufacture but also the raw
material for the industry and rejection of this contention.
Paragraphs
31, 31a and 32 deal with Tika Ramji's case and rejection of the argument as to
whether raw material of an industry which form an integral part of the process
are within the topic of `industry' which forms the subject matter of Item 52 of
List I. The Bench said :
"The
edifice of exclusive parliamentary jurisdiction so built stood on shifting sands.
The
semantic sweep of Entry 52 did not come in the way of the State legislature
making laws on subjects within its sphere and not directly going to the heart
of the industry itself." The submission of Mr. Shanti Bhushan, who
appeared in Ganga Sugar Corporation's case also, to reconsider Tika Ramji's case
was rejected. The Court said:
"Tika
Ramji notwithstanding, the contention was advanced by Shri Shanti Bhushan that
`industry' was a pervasive expression, ambient enough to embrace raw materials
used for the industry and so, sugar industry, as a topic of legislation, vested
in Parliament exclusive power to legislate on sugar-cane supplies to sugar
factories, and, pursuing this expansionist logic, any taxation on supplies of
cane to mills would be legislation on sugar industry. Ergo the Purchase Tax Act
was a usurpation by the U.P. legislature breaching the dykes of Article 246(1)
read with Entry 52 of List I. He expanded on the theme by urging that any
legislation which affected the sugar industry by taxing its raw materials was
one with respect to that industry. The Tika Ramji ratio is diametrically
opposed to this reasoning and a ruling which has stood the field so long has
been followed by another Constitution Bench as late as 1973 in the Kannan Devan
Hills Co. v. State of Kerala [(1973) 1 SCR 356] and its force of logic has our
deferential assent and cannot be brushed aside by a mere appeal for
reconsideration.
Shri Shanti
Bhushan candidly conceded that if Tika Ramji were good law, his submission was
still-born. We agree." The Court further held that :
"
`Industry' as a legislative topic is of large and liberal import; true. But
what peripherally affects cannot be confused with what goes to the heart. An
acquisition of land for sugar mills or of sugar mills may affect the industry
but is not an action in the legislative field forbidden for the States (See the
Kannan Devan Hills Produce Company Ltd. case).
Sales
Tax on raw materials going to a factory may affect the costing process of the
manufacture but is not legislation on industrial process or allied matters
affect topics reserved for Parliament a situation of reductio ad absurdem may
be reached." (emphasis supplied is ours) The effect of acceptance of the
submission of Mr. Shanti Bhushan may also denude the State of its power to
legislate even in respect of sales tax on tobacco. Such a contention was
specifically rejected in Ganga Sugar Corporation's case.
In The
Kannan Devan Hills Produce v. The State of Kerala & Anr. [(1972) 2 SCC 218]
challenge was laid to the constitutional validity of Kannan Devan Hills
(Resumption of Lands) Act, 1971 for want of legislative competence of the
State. The contention urged was that Sections 4 and 5 of the impugned Act are a
law with respect to Entry 52 of List I of the Seventh Schedule as these
provisions regulate the carrying on of tea industry, within the competence of
the Parliament, by controlling the land for tea plantation. It was urged that
if the effect of legislation is to control the working of the tea plantation,
the legislation must be regarded as legislation with respect to Entry 52 List
I. Tika Ramji's case was cited with approval. Repelling the contention, it was
held that the State had legislative competence to legislate on Entry 18, List
II and Entry 42, List III and this power cannot be denied on the ground that it
has some effect on industry controlled under Entry 52, List I. The Constitution
Bench further said that if a State Act, otherwise valid, has effect on a matter
in List I, it does not cease to be a legislation with respect to an Entry in
List II or List III. It said that effect is not the same thing as subject
matter. The object of Sections 4 and 5 seems to be to enable the State to
acquire all lands which do not fall within the categories (a), (b) and (c) of
Section 4(1). These provisions are really incidental to the exercise of the
power of acquisition. The State cannot be denied the power to ascertain what
land should be acquired by it in the public interest.
In B. Viswanathiah
& Co. & Ors. v. State of Karnataka & Ors. [(1991) 3 SCC 358] the challenge was to the validity of the
provisions of Mysore Silkworm Seed and Cocoon (Regulation of Production, Suply
and Distribution) Act, 1959 (Act 5 of 1960). The contention urged on behalf of
the petitioners in that case was that any legislation in respect of silk
industry can be enacted only by the Parliament and the State Legislature is
incompetent to legislate on the matter because Section 2 of the Central Silk
Board Act enacted a declaration in terms of Entry 52, List I. The effect of it
was to remove the silk industry from the purview of the State Legislature
powers thus, rendering the State Legislature incompetent to legislate on that
topic. The High Court repelled the challenge relying upon the decision of this
Court in Tika Ramji, Ganga Sugar Corporation Ltd., Harakchand Ratanchand Banthia
and Kannan Devan Hills Produce Company's cases. After noticing that the High
Court on the basis of series of decisions of this Court regarding scope of
Entry 52 of List I in the Seventh Schedule of the Constitution had repelled the
challenge, this Court expressed full agreement with the views of the High
Court. It was held that the control of industry vested in Parliament was
restricted to the aspect of production and manufacture of silk yarn or silk. It
did not obviously take in the earlier stage of industry, namely, the supply of
raw materials. For instance, even in regard to the silk industry, the reeling,
production, development and distribution of silkworm seeds and cocoons was
regulated by the State Act. These items can be perhaps legitimately described
as raw materials of the silk industry. The control being vested in Parliament
under Entry 52 of silk industry did not affect the control over these raw
materials. It was held that the control, supply and distribution of the goods
produced by the industry was the third aspect of industry which falls outside
the purview of the control postulated under Entry 52. In other words, though
the production and manufacture of raw silk cannot be legislated upon by the
State Legislature in view of the provisions of the Central Act and the
declaration in Section 2 thereof, that declaration does not in any way limit
the powers of the State Legislature to legislate in respect of goods produced
by the silk industry. This Court said that "To interpret Entry 52
otherwise would render Entry 33 in List III of the Seventh Schedule to the
Constitution otiose and meaningless". The same would be the position in
the present case.
The
acceptance of the argument of Mr. Shanti Bhushan would make various Entries in
the State List otiose and meaningless and subject to Entry 52 of List I despite
the fact that the entries are not so worded.
In
Indian Aluminium Company Ltd. & Anr. v. Karnataka Electricity Board &
Ors. [(1992) 3 SCC 580] challenging the amending Act by the State, the
contention urged before the High Court was that :
"Aluminium
industry is scheduled industry under the control of the Government of India as
declared by Industries Development and Regulation Act and hence falls under
Entry 52 of List I of VIIth Schedule of the Constitution. Therefore, the policy
of Government of India amounts to direction issued to the State Government
which they are bound to obey. Consequently the agreement of 1976 is an
agreement protected by a law coming under Entry 52 of List I, terms of which
cannot be varied by a law enacted by a State by virtue of the power conferred
by the Concurrent List (List III of VIIth Schedule). The amending Act should be
construed in such a way as not to impinge on or detract from the law, statutory
order or constitutional direction of the Central Government, otherwise the said
amending Act will lack legislative competence." The High Court relying
upon the decision in Tika Ramji's case, where the concept of industry as a
topic of legislation was explained, repelled the aforesaid contention. The
decision and reasoning given by the High Court upholding the vires of the
amending Act relating to the concept of industry as explained in Tika Ramji's
case were upheld by this Court.
In
M/s. Shriram Industrial Enterprises Ltd. v. The Union of India & Ors. [AIR 1996 All. 135] a Full Bench of Allahabad
High Court examined the validity of U.P. Sheera Niyantran Adhiniyam, 1964 (U.P.
Act No. XXIV of 1964) on the question of the competence of the State
Legislature. Its validity had been challenged by the Sugar Industry. It was
urged that by virtue of Section 18G of the IDR Act, the State Legislature stood
denuded of power to legislate regulating supply, distribution and supplies of
molasses a product of sugar industry and was consequently incompetent to enact
Sections 7, 8 and 10 of the aforesaid State Act. The Full Bench tracing the
history of legislation leading to framing of the Constitution held that if the
argument about denuding of power of State Legislature is accepted, most of the
entries in Lists II and III would be meaningless. Once the Parliament makes a
declaration under Entry 52 of List I, for instance, Entries 20, 21, 22, 23 and
24 would be redundant. The High Court said that neither it was the intention of
the framers of the Constitution nor the said contention is born out from the
perusal of Entry 52 and the other Entries of Lists II and III of the Seventh
Schedule. Noticing various decisions of this Court, the High Court concluded as
under:
"Applying
the principles propounded by the apex Court in the cases mentioned above, it is
apparent that the State Legislature is competent to make law in respect of the
subject industries under Entry 24 of the List II subject to Entries 7 and 52 of
List I of the Seventh Schedule and is further competent to enact law on the
subject "trade and commerce within the State and Production, supply and
distribution of goods," under Entry 26 and Entry 27 of List II subject to
Entry 33 of List III of Seventh Schedule of the Constitution. But on
declaration under Entry 52 of List I by Parliament in respect of the industries
the control of which by the Union is by law
held to be expedient in the public interest, three consequences flow. Firstly,
on declaration by Parliament in respect of controlled industries the power of
State Legislature to legislate under Entry 24 of List II shifts to Entry 52 of
List I to the extent of control provided in the Act. The second result which
follows upon declaration is that the power to enact law by State Legislature
under Entry 26 and Entry 27 of the List II of Seventh Schedule becomes part of
Entry 33 of List III which is a concurrent list. Third consequence that follows
on declaration is that the products of the controlled industries would fell
within Entry 33 of List III.
The
controversy before me, if examined seeing the constitutional debate, history of
legislation, structure and design of the relevant entries and also keeping in
view the basic structure of the Constitution, the only irresistible conclusion
is that Section 18G of the IDR Act is referable to Entry 33 of List III of the
Seventh Schedule. Since the power to enact in respect of production, supply and
distribution of the products of the controlled industries being a concurrent
subject, the U.P. Legislature is competent to enact the Adhiniyam of
1964." The structure and scope of Entry 54 of the Union List and Entry 23
of the State List and their inter-relationship is substantially different from
the scope and structure of Entry 24 of the State List and Entry 52 of the Union
List. The Entry relating to of mines and minerals has in it both the industry
of mines and its product minerals and, therefore, on a declaration both mines
and minerals get embedded in Entry 54 of the Union List. Therefore, it has been
consistently held by this Court, that by declaration under Entry 54, the
Parliament evinces an intention to occupy the whole field.
In my
view the Full Bench rightly held that the cases relating to mines and minerals
relied upon in support of the challenge to the State legislation were of no
assistance. The Full Bench decision was approved by this Court in SIEL Ltd.
& Ors. v. Union of India & Ors. [(1998) 7 SCC
26].
In Belsund
Sugar Co. Ltd. v. State of Bihar & Ors. [(1999) 9 SCC 620], the
Constitution Bench examined the question regarding the legality of levy of
market fee under the provisions of Bihar Agricultural Produce Markets Act, 1960
pertaining to various commodities including sugarcane, sugar and molasses,
wheat and tea. The Court first dealt with the transaction of purchase of
sugarcane by the sugar factories functioning in the market areas falling within
the jurisdiction of respective market committees constituted under the Market
Act. It noticed that the Market Act had been enacted by the Bihar Legislature
as per the legislative power vested in it by Entries 26, 27 and 28 of List II
of the Seventh Schedule of the Constitution. The Court, however, noticed that the
Market Act dealt with supply and distribution of the goods as well as the trade
and commerce therein as it seeks to regulate the sale and purchase of
agricultural produce to be carried on in the specified markets under the Act.
To that extent, the Court said, the provisions of Entry 33 of List III override
the legislative powers of the State Legislature in connection with legislations
dealing with trade and commerce in, and the production, supply and distribution
of goods.
Thus,
to the extent to which the Market Act seeks to regulate the transactions of
sale and purchase of sugarcane and sugar which are foodstuffs and trade and
commerce therein, the Constitution Bench said that it has to be held that the
Market Act being enacted under the topics of legislative powers under Entries
26, 27 and 28 of List II will be subject to any other legislation under Entry
33 of the Concurrent List. The contention of Mr. Dwivedi being that as
admittedly the tobacco is not foodstuff and does not fall under Entry 33 of List
III, like the amendment to the Constitution made in 1953, the Parliament by
further amendment of the Constitution can, if so advised, place tobacco raw
material of the industry - in Entry 33 of List III and, thus, confer on itself
the competence to legislate in respect to tobacco, need not be examined by this
Court as being unnecessary. We may, however, note that the Constitution Bench,
after noticing various provisions of the Act and the Rules, came to the
conclusion that the need for regulating the purchase, sales, storage and
processing of sugarcane, being an agricultural produce, is completely met by
the comprehensive machinery provided by the Sugarcane Act enacted by the same
very legislature which enacted the general Act being the Market Act.
In Belsund
Sugar Co. Ltd. one of the contentions urged was that under the IDR Act, in
public interest, Union of India had taken over the control of the wheat
industry as specified in the First Schedule to the Act and consequently any
transaction of purchase and sale of the product of that industry cannot be
regulated by the State Act. The Constitution Bench noticed that the Parliament
in exercise of its legislative power under Entry 52 of List I of the Seventh
Schedule had enacted the IDR Act and flour industry is listed as one of the
scheduled industries under the caption "Food- processing Industries".
The Bench said that the production of wheat as a raw material or its sale is
not covered by the said Act and, consequently, so far as wheat as `agricultural
produce' is concerned, it is outside the sweep of the IDR Act. The question
still remained whether the sale of flour or any other product out of wheat can
be said to be covered by the sweep of the IDR Act. It was noticed that the
Central Government had not promulgated any statutory order under Section 18G
covering the field. The Court rejected the contention that mere existence of a
statutory provision in the Act enabling the Central Government to issue such
order would be sufficient to occupy the field contemplated by the provision.
While examining the decision in Hingir-Rampur Coal Company's case on which
reliance was placed by the appellants, the Constitution Bench held that it has
to be kept in view that any legislation in exercise of legislative power under
Entry 54 of List I would enable the Parliament to regulate mines and the
minerals development by taking them under the control of the Union in public
interest. Thus, all aspects of the mining industry would be covered by the
general sweep of such a declaration. But it was noticed that the IDR Act was
enacted under Entry 52. It was held that the scheme of Entry 54 of the Union
List read with Entry 23 of the State List was entirely different from the
scheme of Entry 52 of List I read with Entry 24 of List II with which the Court
was concerned in that case. On conjoint reading of these two entries, the ratio
of the decision in Hingir-Rampur Coal Company's case, it was held, cannot be
effectively pressed into service.
As
already noticed, the majority decision in ITC case for the view it took had
placed reliance on Baijnath Kadio which followed Hingir-Rampur Coal Company's
case.
Further
in Belsund Sugar Company, the Constitution Bench cited with approval the
decision in SEIL case and reiterated that merely because industry is controlled
by a declaration under Section 2 of the IDR Act enacted by Entry 52 of the
Union List, the State Legislature would not be denied of its power to regulate
the products of such an industry by exercise of its legislative power under the
State List. It would be useful to extract para 119 of Belsund Sugar Company's
case as under :
"However,
so far as the IDR Act is concerned, it is enacted under Entry 52 of the First
Schedule which deals with industries in general. Simultaneously in the State
List itself there is Entry 24 which deals with industries subject to the
provisions of Entries 7 and 52 of List I. Consequently, the products of such
controlled industries would necessarily not be governed by the sweep of the
general legislation pertaining to such industries as per Entry 52 of the Union
List.
The
aforesaid Constitution Bench judgment was not concerned with any State
legislation enacted under Entry 24. On the contrary, it dealt with legislation
of the Union Parliament under Entry 54 of the Union List read with Entry 23 of
the State List. The scheme of the aforesaid legislative entries is entirely
different from the scheme of Entry 52 of List I read with Entry 24 of List II
with which we are concerned. On a conjoint reading of the aforesaid two
entries, therefore, the ratio of the decision of the Constitution Bench in the
aforesaid case cannot be effectively pressed into service by Shri Ranjit Kumar
for supporting his contention. In this contention, we may usefully refer to a
decision of this Court in SIEL Ltd. where one of us, Sujata V.Manohar J. was a
member. It has rightly distinguished the ratio of the Constitution Bench
decision in the case of Hingir Rampur Coal co. Ltd. and taken the view that
merely because an industry is controlled by a declaration under Section 2 of
the IDR Act enacted by Entry 52 of the Union List, the State Legislature would
not be denied of its powers to regulate the products of such an industry by
exercise of its legislative powers under Entry 24 of the State List. In that
case the question was whether the U.P. Sheera Niyantran Adhiniyam, 1964 could
be said to be repugnant to the Molasses (Control) Order issued by the Central
Government under Section 18-G of the IDR Act imposing restrictions on the sale
of molasses and fixing the maximum price of molasses. Answering the question in
the negative, it was held that the term `industry' in Entry 24 would not take
within its ambit trade and commerce or production, supply and distribution of
goods which are within the province of Entries 26 and 27 of List II. Similarly,
Entry 52 in List I which deals with industry also would not cover trade and
commerce in, or production, supply and distribution of, the products of those
industries which fall under Entry 52 of List I. For the industries falling in
Entry 52 of List I, these subjects are carved out and expressly put in Entry 33
of List III. It was also held that since the Molasses (Control) Order of 1961
passed by the Central Government in exercise of powers conferred by Section
18-G was not extended at any point of time to the State of U.P. or the State of
Bihar, the question of repugnancy between the Molasses Control Order, 1961 and
the U.P. Sheera Niyantran Adhiniyam, 1964 does not arise. Consequently, it must
be held that in the absence of a statutory order promulgated under Section 18-G
of the IDR Act, it cannot be said that the field for regulation of sale and
purchase of products of the flour industry like atta, maida, suji, bran, etc.
would remain outside the domain of the State Legislature." (emphasis
supplied is ours) The principles aforesaid would equally apply to Entries 14
27, 28 and 66 of List II. It may further be noticed that in para 170 of Belsund
Sugar Company's case, the Constitution Bench reiterates the view expressed in Tika
Ramji's case as also in SIEL's case affirming Full Bench of the Allahabad High
Court in M/s. Shriram Industrial Enterprises (supra).
In
view of the above, I see no compelling reason either on account of any binding
precedent in the form of a earlier Constitution Bench judgment, history and
background of the framing of the Constitution or the words used in various
Entries or the language of any Article in the Constitution of India, to take a
view which will result in denuding the power of State Legislatures to legislate
not in respect of field of legislation under Entry 24 but field of legislation
covered by other entries on State List on making of declaration under Entry 52
of the Union List. The Constitution Bench judgment in the case of Tika Ramji
and other decisions following it confine the field of legislation of industries
to `the process of manufacture or production' and not to `raw materials' which
may be integral part of industrial process or to the `distribution of the
product of the industry'.
In
view of the aforesaid, I conclude as under :
1. The
State legislations and the Tobacco Board Act, 1975 to the extent of sale of
tobacco in market area cannot co-exist.
2. The
State Legislatures are competent to enact legislations providing for sale of
agricultural produce of tobacco in market area and for levy and collection of
market fee on that produce.
3. The
Parliament is not competent to pass legislation in respect of goods enumerated
in aforesaid conclusion No.2 while legislating in the field of legislation
covered by Entry 52 of the Union List under which the Parliament can legislate
only in respect of industries, namely, `the process of manufacture or
production' as held in Tika Ramji's case. The activity regarding sale of raw
tobacco as provided in the Tobacco Board Act cannot be regarded as `industry'.
4.
ITC's case [1985 Supp. SCC 476] is not correctly decided.
Leave
in special leave petitions granted. For the aforesaid reasons, the State
legislations are held to be valid pieces of legislation. The appeals and the
writ petition are disposed of accordingly. Parties to bear their own costs.
..........................................J.
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