Report No. 188
The facts in the above case were as follows:
The Bombay Act of 1948 purported to create an additional Civil Court for Greater Bombay having jurisdiction to try, receive and dispose of all suits and proceedings of a civil nature not exceeding a certain value, subject to certain exceptions. The case related to a suit based on promissory notes and the question was whether in respect of such suits, the pecuniary jurisdiction of the Courts could be enhanced from Rs. 10,000/- to Rs. 25,000/- by the State Legislature?
It was contended on behalf of respondent that the Act was ultra-vires the powers of the Legislature of the State of Bombay, because it conferred jurisdiction not only in respect of matters which the Provincial legislature was competent to legislate upon under List II, schedule 7 but also in regard to matters in respect of which only the Central or Federal Legislature can legislate under List I (as for instance, "promissory notes", which was mentioned in Entry 28 of List I). Three issues arose in the case:
(1) Whether the Bombay Act was ultra-vires of State Legislature?
(2) Whether, in any event, section 4 of the Act was ultra vires of the State Legislature, and
(3) Whether the Bombay High Court had jurisdiction to try the suit?
It may be noted that section 4 of that Act authorised the Provincial Government to enhance the jurisdiction of the City Civil Court upto the limit of Rs. 25,000/-. The existing jurisdiction was otherwise Rs. 10,000/-. It is this enhancement by the State Legislature that was questioned as ultra vires of the powers of the State Legislature. The High Court held on issues 1 and 3 in favour of the State but on issue 2 it held that section 4 amounted to delegation of legislative powers and was void.
Entry II of List II of the Schedule in the Government of India Act used the words: "...administration of justice, constitution and organization of all Courts except the Federal Court".
But reliance was placed by the respondent, for contending that the State Legislature had no powers, on Entry 53 of List I, which used the words "jurisdiction and powers of all Courts except the Federal Court with respect to any matters in this List". Argument was that promissory notes fell under Entry 28 of List I and hence in suits or promissory notes, only the federal legislation must legislate.
In the Supreme Court, Fazl Ali J, with whom the other four Judges agreed, held that the words 'administration of justice' and 'constitution and organisation of Courts' in Entry 1 of List II of the 1935 Act conferred very wide and general legislative powers on the State legislatures (these words are now shifted to Entry 11A of list III from 3.1.77) to 'try suits and proceedings of a civil as well as criminal nature, irrespective of who the parties to the suit or proceedings or what its subject matter was'. These powers must necessarily include the 'power of defining, enlarging, amending and diminishing the jurisdiction of the Courts and defining their jurisdiction territorially and pecuniarily'.
As far as Entry 53 of List I on which the respondent relied, Fazl Ali J observed further that it was not permissible to read the words "with respect to any of the matters in this List" found in Entry 53 of List I, (or in Entry 2 of List II and Entry 15 of List III), into Entry 1 of List II, and contend that the words 'administration of justice' in Entry 1 of List II, if it concerns (say) promissory notes falling under Entry 28 of List I, only Parliament could legislate. Such an interpretation, it was held, was not correct. The Entries are independent.
Entry 1 of List II is wide as stated above. The purpose of Entry 53 of List I or (Entry 2 of List II or Entry 15 of List III) was different - they related to jurisdiction and powers of all Courts "with respect to any of the matters" in those Lists, thereby merely permitting to "add or bar" the jurisdiction of Courts, with regard to any of the subjects listed in those Lists. For example, in respect of Civil Courts, section 9 granted jurisdiction to all civil courts unless barred expressly or implicitly. Under Entry 53 of List I or Entry 2 of List II or Entry 15 of List III, additional jurisdiction on various subject matters referred to in these Lists could be conferred on the Civil Courts or barred from the Civil Court.
It is necessary to refer to the observations of Fazl Ali J as to the meaning of the words 'administration of justice, constitution and organization of all Courts' in Entry 1 of List II. The learned Judge observed:
"The expression 'administration of justice' has a wide meaning and includes administration of civil as well as criminal justice, and in my opinion Entry 1 in List II which I have quoted, is a complete and selfcontained entry. In this entry, no reference is made to the jurisdiction and powers of Courts, because the expression "administration of justice" and "Constitution and organization of Courts', which have been used therein without any qualification or limitation, are wide enough to include the power and jurisdiction of Courts, for how can justice be administered if Court have no power and jurisdiction to administer it, and how can Courts function without any power or jurisdiction.
Once the fact is closely grasped, it follows that by virtue of the words used in Entry 1 of List II, the Provincial Legislature can invest the Courts constituted by it with power and jurisdiction to try every case or matter that can be dealt with by a Court of Civil or Criminal jurisdiction and that the expression 'administration of justice' must necessarily include the power to try suits and proceedings of a civil as well as criminal nature, irrespective of who the parties to the suit or proceedings or what its subject-matter may be".
It was held on that basis that the State Legislature could, under Entry 1 of List I (administration of justice; constitution and organization of Courts) raise the pecuniary limit to Rs. 25,000/- even in respect of promissory notes, even though promissory note' was covered by an entry in List I.
"This power (i.e. administration of justice) must necessarily include the power of defining, enlarging, altering, amending and diminishing the jurisdiction of the Courts and defining the jurisdiction territorially and pecuniarily."
Fazl Ali J thus clarified that the purpose of Entry 53 of List I, Entry 2 of List II and Entry 15 of List III was merely to provide for special power either to enlarge the jurisdiction of the Courts or to bar it, with reference to the subject-matter of any of the Entries in Lists I, II and III and that the words in these entries cannot be read as controlling the general jurisdiction permitted to be created by Entry 1 of List II; 'administration of justice: constitution and organization of the Courts'.
In O.N. Mohindroo vs. Bar Council, Delhi, AIR 1968 SC 888 the Supreme Court followed the above ruling as to the interpretation of the words 'constitution and organization of Courts' in Entries 77, 78 of List I and as to the meaning of the expression 'jurisdiction and powers of Court' in Entry 95 of List I or Entry 65 of List II or Entry 46 of List III. Incidentally, Entry 3 of List II which uses the words 'Administration of justice; constitution and organization of all Courts, except the Supreme Court and the High Court - officers and servants of the High Court; procedure in rent and revenue courts fees taken in all courts except Supreme Court, 'were interpreted'.
In Indu Bhushan vs. State of West Bengal: AIR 1986 SC 1783, the pecuniary jurisdiction of the city Civil Court in Calcutta was raised by amendment from Rs. 10,000/- to Rs. 50,000/- and later to Rs. 1 lakh. The Supreme Court referred to Entry 77, 78 of List I, Entry 3 of List II, Entry 65 of List III and Entry 46 of List I. It referred to State of Bombay vs. Narootamdas AIR 1951 SC 69 and held that the legislation was intra-vires of the West Bengal legislature - because of Entry 3 of List II which used the words 'Administration of justice, constitution and organization of all Courts except the Supreme Court and the High Court.
In State of T.N. vs. G.N. Venkataswamy AIR 1995 SC 21 , the Amendment of 1972 to the T.N. Revenue Recovery Act came up for consideration. The case also dealt with the 1974 Amendment. Though Entry 11A of List III was referred to in the judgment incidentally, the case did not come under the Constitution ( Forty-second Amendment) Act, 1976, which introduced Entry 11A in List III. The Amending Act of 1972, 1974 were governed by entries in List I, II, III as they stood before 1976. In this case too, the earlier judgment in State of Bombay vs. Narootamdas AIR 1951 SC 69 was followed. However Entry 11A was explained to be as wide as Entry 3 of List II before the Constitution (Forty-second Amendment) Act, 1976 and Entry 1 of List II of 1935 Act.
Interpretation of the words 'administration of justice' in Entry 3 of List II of the Constitution (upto 3.1.77) and in Entry 11A of List III w.e.f. 3.1.77, is to be based on the above interpretation of these words by the Supreme Court given in the context of Entry 1 of List II of Government of India Act, 1935.
The important change that came about under the Constitution (Fortysecond Amendment) Act, 1976, with effect from 3.1.1977, as already stated, was that the above words in Entry 3 of List II 'Administration of justice, constitution and organization of all Courts except the Supreme Court and the High Court' were deleted and transferred as Entry 11A of List III.
The effect of this change by the Constitution (Forty-second Amendment) Act, 1976 (w.e.f. 3.1.77) is that the general words in Entry 3 of List II in Schedule VII of the Constitution, "administration of justice" dealing with the power to enlarge the jurisdiction of the Courts in respect of subject matter of all items in Lists I, II and III and in respect of territorial or pecuniary jurisdiction got shifted to the Concurrent List III by insertion of Entry 11A;
the jurisdiction remains and may, however, be subjected to restriction or by way of addition in relation to matters in List I, II and III (under the entries which relate to 'jurisdiction and powers' of all Courts with respect to any of the matters in the respective Lists, Entry 95 of List I, Entry 65 of List II, Entry 46 of List III). (In Entry 11A of List III, the latter part which excludes the constitution and organization of High Court from List III, no doubt, precludes the Parliament and State Legislatures to legislate on that subject by virtue of List III but, as already stated, so far as the Parliament is concerned, the power to legislate on 'constitution and organization of High Courts' is already vested in it under Entry 78 of List I).
As stated earlier, by combining Entry 78 of List I and Entry 11A of List III, Parliament can w.e.f. 3.1.77 legislate on
"administration of justice and constitution and organization of High Court".
This situation is identical with what it was under Entry 1 of List II under the Government of India Act, 1935 which was interpreted by the Supreme Court in State of Bombay vs. Narootamdas: AIR 1951 SC 69 as conferring the widest powers on Parliament in relation to subject matter (be it in List I, II or III) and as to territorial and pecuniary jurisdiction.
This general power and jurisdiction which is wide is now vested in Parliament under Entry 11A of List III (and the State Legislatures). The said legislatures can however add to or reduce or bar the same under the special legislative powers of the corresponding legislature, in regard to the entries in each of Lists I, II or III. (e.g. promissory notes by law made by Parliament under List I).
Thus, in view of the width of the words in Entry 11A of List III; 'administration of justice' read with Entry 78 of List I which deals with 'constitution and organization of High Courts', the specification of a separate division in the High Court for 'commercial matters' above a particular pecuniary level, (say) Rs. 1 crore can be stipulated by Parliament and a 'fast track' original side procedure can be introduced by Parliament. Simultaneously, so far as pending appeals in the High Court before a Single Judge or a Division Bench are concerned, Parliament can provide that these can also be disposed of by the Commercial Division by 'fast-track' appellate procedures.
This need not be done necessarily by the High Court Rules or by resolution of full Court. In as much as Article 225 of the Constitution uses the words "subject to law by the appropriate legislature", this can be done by Parliament. Likewise, the power of allocation of Judges to this Division by the Chief Justice can also be specified in the statute to be made by Parliament.
From more than one point of view, there is, in our view, no doubt that, constitutionally, Parliament can make a law under Entry 78 of List I read with Entry 11A of List III of the Seventh Schedule to the Constitution creating a separate division as 'Commercial Division' in the High Court and prescribe pecuniary limits for pending and new cases of (say) Rs.1 crore or above on the original side with 'fast track' procedure and also permit the separate Division Bench to deal with pending appeals in the High Court, belonging to the pecuniary jurisdiction of (say) Rs.1 crore (or such higher figure as may be fixed by the High Court) and to enable the Chief Justice of the High Court to nominate Judges of the High Court to that Division from time to time.
It is also proposed that these Judges can also be Judges appointed under Article 224A of the Constitution of India - that is to say, they can be High Court Judges who have retired from that High Court or any other High Court. If there are Judges who have retired and have exceptional knowledge of commercial laws, they can be appointed in the same or any other High Court and nominated to the 'Commercial Division'. Other matters to be provided for have already been referred to the earlier Chapters and the actual constitution, jurisdiction and powers of Commercial Division will be dealt with in Chapter IX.