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TMI Blog1967 (2) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... ive that which was void ab initio was frustrated and such an Act could have no efficacy. - W.P. No. 123 of 1966 - - - Dated:- 20-2-1967 - SUBBA RAO K., SHAH J.C., SHELAT J.M., BHARGAVA V. AND MITTER G.K. JJ. S.T. Desai, Senior Advocate (K. Narayanaswamy and B. Dutta and J.B. Dadachanji, O.C. Mathur and Ravinder Narain of J.B. Dadachanji and Co. with him), for the petitioner. M.C. Setalvad and B. Sen, Senior Advocates (R.N. Sachthey with them), for the respondent. -------------------------------------------------- The judgment of SUBBA RAO, C.J., SHELAT and MITTER, JJ., was delivered by SHELAT, J. The judgment of SHAH and BHARGAVA, JJ., was delivered by BHARGAVA, J. SHELAT, J.- On August 16, 1962, the administration of Pondicherry became vested in the Government of India by virtue of de jure transfer. The Pondicherry Administration Act, 42 of 1962, constituted that territory as a separate centrally-administered unit and under the Union Territories Act, 20 of 1963, a legislative Assembly was set up for that area. The Assembly under that Act acquired the power of enacting laws in respect of items in Lists II and III of the Seventh Schedule to the Const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Act was void and was a still-born legislation by reason of the Pondicherry Legislature having abdicated its legislative function in favour of the Madras State Legislature, that such abdication resulted from the wholesale adoption of the Madras Act as in force In the State of Madras immediately before the commencement of the Principal Act and that section 2(1) read with section 1(2) meant that the Legislature adopted not only the Madras Act as it was when it enacted the Principal Act but also such amendment or amendments in that Act which might be passed by the Madras Legislature up to the time of the commencement of the Act, i.e., up to April 1, 1966. Mr. Setalvad, on the other hand, relied on the majority decision in In re Delhi Laws Act, 1912, etc. case [1951] S.C.R. 747., and in particular on the summary by Bose, J., in Raj Narain Singh's case [1955] 1 S.C.R. 290. of the diverse views expressed by the learned judges in that decision. As heading (4) in the said summary shows the learned judges inter alia held by a majority of 5 to 2 that authorisation to select and apply future Provincial laws was not invalid. To ascertain the principle deducible from that conclusion, it becom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it can make any laws on those subjects. It would not mean that it can shirk its duty by making a law that it shall not operate on that field but somebody else will operate on its behalf. There was no dispute in the Delhi Laws Act case [1951] S.C.R. 747., about this principle. The questions on which divergence of opinion arose were as to whether the impugned laws were delegated legislation, and if they were, whether the Legislature could delegate its legislative power and if so to what extent. The reference in that case arose because of the decision in Jatindra Nath Gupta v. Province of Bihar [1949-50] F.C.R. 595. where section 1(3), proviso, of Bihar Act 5 of 1947 was held invalid on the ground that there was delegation of legislative power to the executive. As summarised by Bose, J., in Raj Narain Singh's case [1955] 1 S.C.R. 290., the reference raised the following problems: "In each case, the Central Legislature had empowered an executive authority under its legislative control to apply, at its discretion, laws to an area which was also under the legislative sway of the centre. The variations occur in the type of laws which the executive authority was authorised to select and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... constitutional limitation on the delegation of legislative power to a subordinate unit was to be found in the Constitution Acts from 1861 to 1935 or the present Constitution and therefore it was competent for the Indian Legislature to make a law delegating legislative power both quantitatively and qualitatively, as it was for the British Parliament to do so, so long as it acted within its field. Das, J., held that the principle of non-delegation of legislative powers founded either on the doctrine of separation of powers or the theory of agency has no application to the British Parliament or the Legislature constituted by an Act of British Parliament, that the operation of the Act performed under delegated power is directly and immediately under and by virtue of the law by which the power is delegated and its efficacy is referable to that antecedent law, that if the Legislature acts within its pre- scribed sphere there is no limit to its power of delegation, it being for the Legislature to determine how far it should seek the aid of subordinate agencies. The only limitation to such power is that the Legislature may not abdicate or efface itself, that is, it may not, without preser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht that on the one hand the Constitution- makers had the experience before them of the aforesaid British theory and on the other the experiences of the American and other federal constitutions. On this reasoning he upheld the validity to adopt existing laws or the authority to alter even in essential features laws already in existence. (see observations at pages 1121 to 1124). Thus, amongst the five learned Judges who upheld the validity either wholly or partially, Fazl Ali, Mukherjea and Bose, JJ., who tipped the balance were not wholeheartedly with Patanjali Sastri and Das, JJ., who accepted the contention that power of delegation was inherent In legislative power. Even amongst these three learned judges there was considerable variance both of opinion and reasoning. Fazl Ali, J., was of the opinion that abdication was not permissible but authorisation short of it was permissible. The opinion of Mukherjea, J., was that delegation of essential legislative function was not permissible and that abdication need not be total but can be partial and even in regard to a particular matter, and Bose, J., founded his view on the fact that the Privy Council would have decided the case in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... secondly, that the matter should be entrusted to an authority which was expected to be familiar and could easily make itself familiar with the needs and conditions of the State or States for which the laws were to be made. Thus, everyone of the Acts so enacted, was a complete law, because it embodied a policy, defined a standard, and directed the authority chosen to act within certain prescribed limits and not to go beyond them. Each Act was a complete expression of the will of the Legislature to act in a particular way and of its command as to how its will should be carried out." This passage suggests that the impugned legislation was a conditional legislation as in Queen v. Burah (1878) 5 I.A. 178., and the power conferred on the Government was ministerial and not legislative. The following observations of Mukherjea, J., also indicate that he reached his conclusion from the same situation. At page 1001 of the report he observed: "The policy behind the Delhi Laws Act seems to be that in a small area like Delhi which was constituted a separate province only recently and which had neither any local legislature of its own nor was considered to be of sufficient size or importance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the Act applicable to its territory shall be the Act amended in future by the other Legislature, there is nothing for it to predicate what the amended Act would be. Such a case would be clearly one of non-application of mind and one of refusal to discharge the function entrusted to it by the Instrument constituting it. It is difficult to see how such a case is not one of abdication or effacement in favour of another Legislature at least in regard to that particular matter. But Mr. Setalvad contended that the validity of such legislation has been accepted in Delhi Laws Act case [1951] S.C.R. 747., and particularly in the matter of heading No. 4 as summarised by Bose, J., in Raj Narain Singh's case [1955] 1 S.C.R. 290. In respect of that heading the majority conclusion no doubt was that authorisation in favour of the executive to adopt laws passed by another Legislature or Legislatures including future laws would not be invalid. So far as that conclusion goes Mr. Setalvad is right. But as already stated, in arriving at that conclusion each learned judge adopted a different reasoning. Whereas Patanjali Sastri and Das, JJ., accepted the contention that the plenary legislative pow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith Mr. Desai that the Act was void or as is often said "still-born". It was however argued that the Act cannot be said to be still- born as it contained certain provisions independent of the Madras Act, viz., the section which provides for the Appellate Tribunal and the said Schedule. But the core of a taxing statute is in the charging section and the provisions levying such a tax and defining persons who are liable to pay such tax. If that core disappears the remaining provisions have no efficacy. In our view, Act 10 of 1965 was for the reasons aforesaid void and still-born. After the petitioner filed this writ petition the Pondicherry Legislature passed the Pondicherry General Sales Tax (Amendment) Act, 13 of 1966. It received the President's assent on November 2, 1966, and was published on November 7, 1966. This Act amended the Principal Act in several matters. The title of the Amendment Act is the Pondicherry Sales Tax (Amendment) Act, 1966, and was passed "further to amend the Pondicherry General Sales Tax Act, 1965." therein called the Principal Act. The Amendment Act altered section 1(2) of the Principal Act by section 2 so as to read as follows: "It shall come into f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion is can the Amendment Act be said to be an independent re-enactment of the Principal Act, and has the Pondicherry Legislature extended the Madras Act by this Act. If that was what the Legislature intended to do it would have either repealed the Principal Act or even without repealing it on the footing that it was void enacted the Amendment Act as an independent legislation extending the Madras Act retrospectively as from April 1, 1966. The Amendment Act, as is clear from its long title, was passed to amend the Principal Act. That can only be on the footing that it was a valid Act and still on the statute book. Under section 2 what the Legislature purports to do is to amend section 1(2) of the Principal Act by substituting the words "It shall come into force on the 1st day of April, 1966" in place of the words "It shall come into force on such date as the Government may by notification in the official Gazette appoint". The only result is that instead of the Principal Act having been brought into force under the said notification, it is deemed to have come into force on April 1, 1966. This is done by a deeming provision as if the new clause was there from the beginning when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 of the Principal Act lays down that the Act shall come into force on such date as the Government may, by notification in the official Gazette, appoint. Under sub-section (1) of section 2 of the Principal Act, is was laid down that the Madras Act as in force In the State of Madras immediately before the commencement of the Principal Act shall extend to and come into force in the Union Territory of Pondicherry, subject to the modifications and adaptations enumerated therein. Amongst the modifications and adaptations laid down, two provisions contained in section 2(1)(ix) and section 2(1)(x) substituted a new section 30 for the original section 30 of the Madras Act and a new First Schedule for the First Schedule to the Madras Act respectively. Section 2(2) of the Principal Act laid down that "the Madras General Sales Tax Rules, 1959, and any other rules made or Issued under the said Act and similarly in force, in so far as their application is required for the purpose of effectively applying the provisions of the said Act, are also hereby applied to, and shall be in force, in the Union Territory of Pondicherry". Section 3 of the Principal Act permitted the Government of Pondicherry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as "the Amending Act") which received the assent of the President on 2nd November, 1966, and was published in the Gazette dated 9th November, 1966. By this Amending Act, a number of amendments were made in the Principal Act. Sub-section (2) of section 1 of the Principal Act was altered by section 2 of the Amending Act so as to read as follows: "(2) It shall come into force on the 1st day of April, 1966." A number of amendments were made in section 2 of the Principal Act also by section 3 of the Amending Act. One of the amendments was that for the words "commencement of this Act" in sub-section (1) of section 2 of the Principal Act, the words "1st day of April, 1966" were substituted. There were a few other amendments in sub- section (1) of section 2 by which various clauses were added, the effect of which was to make alterations in the provisions of the Madras Act as applied to Pondicherry by the Principal Act. A further amendment substituted the following for sub-section (2) of section 2 of the Principal Act: "(2) The Madras General Sales Tax Rules, 1959, and any other rules made of issued under the said Act and similarly in force, in so far as their application is required f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not quite correct. Under sub-section (2) of section 1 the delegation was to the Pondicherry Government to fix the commencement of the Act by specifying the date by a notification issued by it. The Pondicherry Government could always choose such a date for bringing into force the Principal Act that it should fall before any amendment in the Madras Act could be made by the Madras Legislature. If the Madras Legislature proposed any amendment in the Madras Act after the publication of the Principal Act, the Pondicherry Government would certainly come to know as soon as the Bill for the purpose of that amendment was Introduced in the Madras Legislature, and in such circumstances, the Pondicherry Government had the option of immediately issuing a notification commencing the operation of the Principal Act, where- upon the unamended Madras Act would have come into force. In the alternative, the Pondicherry Government could wait till the Madras Legislature passed the Act amending the Madras Act, in which case, by a subsequent notification, the Pondicherry Government could ensure that the Madras Act which came into force in Pondicherry would be as thus amended by the Madras Legislature. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... similar way: This was upheld by five to two. (4) Where the authorisation was to select future Provincial laws and apply them as above: This was also upheld by five to two. (5) Where the authorisation was to repeal laws already in force in the area and either substitute nothing in their places or substitute other laws, Central or Provincial, with or without modification: This was held to be ultra vires by a majority of four to three. (6) Where the authorisation was to apply existing laws, either Central or Provincial, with alterations and modifications; and (7) Where the authorisation was to apply future laws under the same conditions: The views of the various members of the Bench were not as clear- cut here as in the first five cases, so it will be necessary to analyse what each judge said." Mr. Setalvad relied on proposition No. (4) which was to the effect that where the authorisation to a Government was to select future Provincial laws and apply them to the Centrally-administered territory, the provision containing that authorisation was unheld by a majority of 5 Judges to 2. It was urged by him that this decision is binding on us and, on its basis, we should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of bringing into force in Pondicherry a valid Act, under which proceedings sought to be taken against the petitioner were fully justified. We proceed to give our reasons for this view. The Amending Act, as we have indicated earlier, was brought into operation retrospectively with effect from 1st April, 1966, except in respect of two sub-clauses of section 3(1). The two important amendments introduced in the Principal Act by the Amending Act were those in section 1(2) and section 2(1) of the Principal Act which had the effect that the Principal Act was to come into force in Pondicherry not by virtue of the notification issued by the Pondicherry Government, but by virtue of the terms contained in that Act itself. When the Pondicherry Government issued the notification on 1st March, 1966, laying down that the Principal Act was to come into force with effect from 1st April, 1966, that power did, in fact, vest in the Pondicherry Government under that Act as it stood at that time. However, on 1st April, 1966, the position completely changed as a result of the retrospective operation of the Amending Act. On that date, section 1(2) of the Principal Act, because of the retrospective ope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d subsequently in November, 1966. Our attention was also drawn to the Madras General Sales Tax (Second Amendment) Act, 1966 (No. 18 of 1966) which was passed by the Madras Legislature on 22nd November, 1966, under which a retrospective amendment was made in the Madras Act to take effect from 1st April, 1959. It was urged that this retrospective amendment made by the Madras Legislature would be effective In Pondicherry also, because the Madras Act, which was brought into force In Pondicherry by the Principal Act, must be deemed to have stood amended in accordance with this Act with effect from 1st April, 1959. We are unable to accept this contention. The Madras Act, which was extended to Pondicherry, was as it stood on 1st April, 1966, and the Pondicherry Legislature made it effective in Pondicherry by passing the retrospective Amending Act, which Act itself was published on 9th November, 1966. Any subsequent amendment made by the Madras Legislature, even if it purported to be retrospective could only apply to the Madras Act as it continued in force in Madras and could not, thereafter, have any effect on the Madras Act which had already been brought into force in Pondicherry with ef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wers by the Pondicherry Legislature to the Madras Legislature. There is nothing in the Constitution which prohibits the substitution of a defective law by a law which is not subject to any infirmity. The second ground is that, in any case, it cannot be held that the whole of the Principal Act was void even when it was published on 30th June, 1965, and was purported to be brought into force by the notification of the Pondicherry Government dated 1st March, 1966. Under the Principal Act, there was, no doubt, the general provision that the Madras Act was to be extended to Pondicherry as it stood immediately before the commencement of the Principal Act, but there were at least some provisions of the Madras Act which were to come into force in Pondicherry in the form laid down by the Pondicherry Legislature in the Principal Act itself, and any amendments made in those provisions by the Madras Legislature in the interregnum would have been totally ineffective. By section 2(1)(ix) of the Principal Act, for section 30 of the Madras Act, an entirely new section 30 was substituted. Similarly, a new First Schedule was substituted for the First Schedule contained in the Madras Act by secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as Rules are framed under section 53 of the "said Act". Reliance is placed on the expression "of the said Act", because the expression "said Act" under sub-section (1) of section 2 of the Principal Act is indicated as referring to the Madras General Sales Tax Act, 1959. We do not, however, think that this interpretation sought to be placed by Mr. Desai is correct. When the amended sub- section (2) of section 2 of the Principal Act refers to the Madras Act by using the expression "said Act" at the end of that provision, it is clear that the reference is to the Madras General Sales Tax Act, 1959, as extended to the territory of Pondicherry and, under section 2(1)(ii), the reference in the Madras Act as extended to Pondicherry to "Government" has to be construed as a reference to the "Administrator" appointed by the President under Article 239 of the Constitution of India for Pondicherry. The result is that, under the amended provisions of the Principal Act, the Rules are to be framed by the Administrator of the Territory of Pondicherry and not by the Madras Government. No such defect, as urged by learned counsel, thus remains after the enforcement of the Amending Act. The result is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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