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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 ..... rea. 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 Constitution. The Assembly thereafter passed the Pondicherry General Sales Tax Act, 10 of 1965 (hereinafter referred to as the Principal Act), which was published on June 3, 1965, after receiving the President's assent on May 25, 1965. Section 1(2) of that Act provided that the Act would come into force on such date as the Government may by notification appoint. Section 2(1) provided that: "The Madras General Sales Tax Act, 1959 (No. 1 of 1959) (herein- after referred to as the Act) as in force in the State of Madras immediately before the commencement of this Act shall extend to and come into force in the Union Territory of Pondicherry subject to the following modifications and adaptations,............" Then follow certain modifications and adaptations which are not relevant for our purposes except that clause (ix) of section 2(1) substituted section 30 of the Madras Act and provided for an Appellate Tribunal. The substituted section laid down that the Government shall appoint a judicial Officer who is otherwise qualified to be appointed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorisation to select and apply future Provincial laws was not invalid. To ascertain the principle deducible from that conclusion, it becomes necessary to examine the observations made by the five learned Judges. But before we do that it is also necessary to remind oneself of the principles governing the exercise of legislative power. In what has come to be known as the Referendum case [1919] A.C. 935., Lord Haldane dealing with section 92 of the British North America Act, 1867, observed that that section entrusted the legislative power in a Province to its Legislature and to such Legislature only but added that a body with a power of legislation on the subjects entrusted to it so amply as that enjoyed by a Provincial Legislature in Canada could, while preserving its own capacity intact, seek the assistance of subordinate agencies as had been laid down in Hodge v. The Queen [1883] 9 App. Cas. 117. where the Legislature of Ontario was held entitled to entrust to the Board of Commissioners the authority to enact regulations relating to taverns. But it did not follow that it could create and endow with its own capacity a new legislative power not created by the Act to which it owed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the legislative sway of the centre. The variations occur in the type of laws which the executive authority was authorised to select and in the modifications which it was empowered to make in them. The variations were as follows: (1) Where the executive authority was permitted at its discretion, to apply without modification (save incidental changes such as name and place), the whole of any Central Act already in existence in any part of India under the legislative sway of the Centre to the new area; (2) Where the executive authority was allowed to select and apply a Provincial Act in similar circumstances; (3) Where the executive authority was permitted to select future Central laws and apply them in a similar way." The learned Attorney-General had canvassed the proposition that a plenary legislative power included in it the power of delegation. The divergence of opinion on that question was (1) as to whether the British theory of "supremacy within limits" could apply after the Constitution came into force; (2) whether the impugned legislation was delegated or conditional legislation; and (3) if it was delegated legislation whether such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 preserving its own capacity intact create a new legislative power not constituted by the Act under which it is set up. He was also of the view that the Impugned legislation could be supported as an instance of conditional legislation as held In Queen v. Burah (1878) 5 I.A. 178., Fazl Ali, J., on the other hand, was of the view that the Legislature itself must formally discharge its primary function and not through others but that it can utilise outside agency to any extent it finds necessary to do things which it is not able to do itself or finds It inconvenient to do. He upheld the validity of the impugned laws on the ground that the delegation was not of legislative but of ministerial power. He did not accept the contention that there was inherent in the legislative power the power to delegate the legislative function. Mukherjea, J., took up an intermediate posture holding that essential legislative function consists in determination of legislative policy or of formally enacting that policy into a binding rule of conduct. This policy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 same way as it did in the Burah's case (1878) 5 I.A. 178., basing its decision on the theory of supremacy within limits and that that theory was presumably recognised by the Consititution-makers. In view of the intense divergence of opinion except for their conclusion partially to uphold the validity of the said laws it is difficult to deduce any general principle which on the principle of stare decisis can be taken as binding for future cases. It is trite to say that a decision is binding not because of its conclusion but in regard to its ratio and the principle laid down therein. The utmost therefore that can be said of this decision is that the minimum on which there appears to be consensus was- (1) that Legislatures in India both before and after the Constitution had plenary power within their respective fields; (2) that they were never the delegates of the British Parliament; (3) that they had power to delegate within certain limits not by reason of such a power being inherent in the legislative power but becau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ituted 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 to have one in the near future, it seemed to the legislature to be quite fit and proper that the laws validly passed and in force in other parts of India should be applied to such area, subject to such restrictions and modifications as might be necessary to make the law suitable to the local conditions." He too held that the impugned Acts contained a policy with sufficient precision as to furnish guidance to the executive who was to implement them. The delegation of legislative power thus was not uncontrolled or unguided. At page 1121 Bose, J., remarked: "Had It not been for the fact that this sort of practice was blessed by the Privy Council as far back as 1878 and has been endorsed in a series of decisions ever since, and had it not been for the practical necessities of the case, I would have held all the three Acts ultra vires." Thus it would not be incorrect to say that three of the learned Judges out of five who held in favour of validity did so because of the necessity of the situation. One of them held that the legislatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on each learned judge adopted a different reasoning. Whereas Patanjali Sastri and Das, JJ., accepted the contention that the plenary legislative power includes power of delegation and held that since such a power means that the Legislature can make laws in the manner it liked if it delegates that power short of an abdication there can be no objection. On the other hand, Fazl Ali, J., upheld the laws on the ground that they contained a complete and precise policy and the legislation being thus conditional the question of excessive delegation did not arise. Mukherjea, J., held that abdication need not be total but can be partial and even in respect of a particular matter and if so the impugned legislation would be bad. Bose, J., expressed in frank language his displeasure at such legislation but accepted its validity on the ground of practice recognised ever since Burah's case (1878) 5 I.A. 178., and thought that that practice was accepted by the Constitution-makers and incorporated in the concept of legislative function. There was thus no unanimity as regards the principles upon which those laws were upheld. All of them however appear to agree on one principle, viz., that where ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 force on the 1st day of April, 1966." Section 2(1) of the Principal Act was likewise amended and instead of the words "commencement of this Act" the words "1st day of April, 1966" were substituted. Section 2(2) was also amended and so amended it reads as follows: "The Madras General Sales Tax Rules, 1959, and any other Rules made or issued under the said Act and similary in force in so far as their application is required for the purpose of effectively applying the provisions of the said Act shall also extend to and be in force in the Union territory of Pondicherry until such time rules are framed under section 53 of the said Act." Section 1(2) of the Amendment Act provides that the Amendment Act shall be deemed to have come into force on April 1, 1966, except certain clauses which were to come into force at once. Section 5 of the Amendment Act provides that all taxes levied or collected in pursuance of the Principal Act and all acts, proceedings or things done in connection with the levy or collection of such taxes shall, for all purposes, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 Act was passed. That being so it is as if the Pondicherry Legislature had extended the Madras Act together with such amend- ments which might be made in that Act up to April 1, 1966. Since the Amendment Act was thus passed on the footing that there was in existence a valid Act, viz., the said Principal Act, it is impossible to conceive that it was or intended to be an independent legislation extending thereunder the Madras Act. The Amendment Act was and was intended to be an amendment of the Principal Act and it would be stretching the language of the Amendment Act to a breaking point to construe it as an independent legislation whereby the Madras Act was retrospectively brought into operation as from April 1, 1966. That being so, and on the view that the Principal Act was still-born, the attempt to revive that which was void ab initio was frustrated and such an Act could have no efficacy. In that view, the petition is allowed with costs. One hearing fee only. BHARGAVA, J.-The petitioner, B. Shama Rao, is a merchant carrying on the business of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and shall be in force, in the Union Territory of Pondicherry". Section 3 of the Principal Act permitted the Government of Pondicherry to make provisions or give directions as may be necessary for removal of difficulty in giving effect to the provisions of the Madras Act in so far as the provisions made or the directions issued were not inconsistent with the provisions of the Madras Act or the Rules made thereunder. Under section 1(2) of the Principal Act, a notification was issued by the Government of Pondicherry on the 1st of March, 1966, direct- ing that the Principal Act shall come into force with effect from 1st April, 1966. Thereafter, various proceedings were sought to be taken under the Madras Act as applied to Pondicherry in respect of persons covered by the Principal Act, including the petitioner. The petitioner then moved this petition on 4th May, 1966. In the petition, the validity of the proceedings was challenged on the ground that the Principal Act was void because of excessive delegation of legislative functions by the Pondicherry Legislature to the Madras Legislature. In fact, it was urged that the Pondicherry Legislature had, by enacting the Principal Act in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1959, and any other rules made of 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, shall also extend to and be in force in the Union Territory of Pondicherry until such time rules are framed under section 53 of the said Act." By section 5 of Amending Act, provision was made for validating imposition of taxes, its collection and other proceedings taken in pursuance of the Principal Act which had been brought into force on 1st April, 1966, and it was laid down that all such action taken shall be deemed to be and to have always been, validly levied and collected, as if the Principal Act, as amended by the Amending Act, had been in force at all material times. Sub-section (2) of section 1 of the Amending Act further laid down that this Amending Act shall be deemed to have come into force on 1st April, 1996, with the exception of two sub-clauses of sub-section (1) of section 3 of the Amending Act which are not material to the present case. The effect of this provision was that the amendments introduced by sections 2, 3 and 4 of the Amending Act (with the exception of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt could ensure that the Madras Act which came into force in Pondicherry would be as thus amended by the Madras Legislature. The choice as to the nature of the Madras Act which should come into force in Pondicherry was, therefore, at the option of the Pondicherry Govern- ment and not at the option of the Madras Legislature. It is thus clear that there was delegation of power by the Pondicherry Legislature to the Pondicherry Government to the extent that the latter could either bring into force the Madras Act as it stood when the Principal Act was published on 20th June, 1965, or could, at its option, enforce the Madras Act as subsequently amended by the Madras Legislature, which would amount to giving it the discretion to apply a future law to be passed by the Madras Legislature. In these circumstances, Mr. Setalvad, appearing on behalf of the respond- ent, relied on the views of this Court expressed in In re the Delhi Laws Act, 1912, the Ajmer-Merwara (Extension of Laws) Act, 1947, and the Part C States (Laws) Act, 1950 [1951] S.C.R. 747. In that case, the seven learned Judges of this Court constituting the Bench delivered separate opinions, but the effect of their opinions was su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 hold that the delegation of its legislative power, amounting to authorisation to the Pondicherry Government to choose whether the Madras Act should come into force in Pondicherry unamended or as subsequently amended, was valid. Apart from the fact that attempt was made to cast doubt on the correctness of this proposition relied upon by Mr. Setalvad, Mr. Desai on behalf of the petitioner referred to the decision of this Court in Vasantlal Maganbhai Sanjanwala v. The State of Bombay and Others (and Connected Appeal) [1961] 1 S.C.R. 341., and urged that the Principal Act should be held invalid on the principle laid down in that case on the ground that, in the case before us, the legislation passed by the Pondicherry Legislature amounted to complete abdication of its functions in favour of the Madras Legislature. It was further urged by Mr. Desai that in In re the Delhi Laws Act, 1912(2), at least two of the Judges, who enunciated the proposition relied upon by the respondent, had emphasised the aspect that delegation of power in the three Acts, which came up for co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ective operation of the Amending Act. On that date, section 1(2) of the Principal Act, because of the retrospective operation of the Amending Act, had to be read as if it laid down that that Act was to come into force on 1st April, 1966, as a result of the amendment of section 2(1) of that Act. It has not been urged before us and could not be urged on behalf of the petitioner that the Pondi- cherry Legislature did not have the power to legislate retrospectively. This retrospective legislation thus resulted in the notification Issued by the Pondicherry Government on 1st March, 1966, becoming ineffective and inoperative. After this legislation, it has to be held that the Principal Act came into force in Pondicherry not as a result of the notification, but as a result of the provision contained in that Act itself in section 1(2). Similarly, the effect of the retrospective amendment of section 2(1) of the Principal Act was that the Madras Act which was to be extended to Pondicherry was as it stood on 1st April, 1966, and this policy was laid down by the Pondicherry Legislature itself by passing the Amending Act subsequently in November, 1966. It is true that the Madras Act was in fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not, thereafter, have any effect on the Madras Act which had already been brought into force in Pondicherry with effect from 1st April, 1966. In this connection, Mr. Desai urged that the Principal Act being void on the ground of excessive delegation of powers, it should be treated as still-born and non-existent and, consequently, the Amending Act could not revive it and should also be held to be ineffective. This point raised by him fails on two grounds. One ground is that the effect of the Amending Act was to amend the Principal Act before that Principal Act could become void on the ground of excessive delegation of powers. It is true that that Act was published on 30th June, 1965, but it did not come into operation on that date. Its commencement was postponed and, consequently, it was brought into operation with effect from 1st April, 1966. By the time that it was brought into effect, the so-called defect of excessive delegation of powers was already removed because of the retrospective operation of the Amending Act. On 1st April, 1966, when the Principal Act came into force by virtue of the amendment made in section 1(2) by the Amending Act, the defect of excessive delegation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uted. Similarly, a new First Schedule was substituted for the First Schedule contained in the Madras Act by section 2(1)(x) of the Principal Act. The result was that, even if the Madras Legislature had made any amendments in section 30 and the First Schedule of the Madras Act, those amendments would not have been effective in Pondicherry, because, on the commencement of the Principal Act in Pondicherry, under the notification issued by the Pondicherry Government, section 30 and the First Schedule of the Madras Act, as extend- ed to Pondicherry, were to stand in the form laid down in the Principal Act itself and not either in the form in which they were originally contained in the Madras Act, or in the form in which they might have stood as a result of a subsequent amendment made by the Madras Legislature before the commencement of the Principal Act. Consequently, it must be held that at least the provisions contained in section 2(1)(ix) and section 2(1)(x) of the Principal Act did not contain any element of delegation of legislative power and must, therefore, be held to have been valid from the very beginning. If at least these provisions of the Principal Act were valid, the whole ..... X X X X Extracts X X X X X X X X Extracts X X X X
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