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TMI Blog1997 (7) TMI 529X X X X Extracts X X X X X X X X Extracts X X X X ..... sed from Rs. 40 crores to Rs. 50 crores. 4. Mr. S.B. Mukherjee, the learned Counsel appearing on behalf of the petitioner in CO. No. 9120(W) of 1996 and Sudipta Sarkar, the learned Counsel appearing oh behalf of the petitioner in W.P. No. 1859 of 1996 raised the following contentions in support of the said application. By reason of section 641 of the Act an unguided and unbridled power had been conferred upon the Central Government enabling it to alter the regulations, rules, tables, forms and other provisions contained in the Schedules including Xth Schedule but excluding Schedules XI and XII and thus, the same is ultra vires the Constitution of India. In support of the said contention reliance has been placed on Debi Gopal Krishna v. State of Punjab AIR 1967 SC 1985. It was urged that by reason of the impugned amendment the amount validly paid by company the earlier becomes invalidated. In any event, according to the learned counsel, as no service is rendered by the respondents, the impugned increase in fee without showing any justification therefor must be held to be bad in law. In this connection learned counsels have also sought to draw a distinction between a licens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C 1133 and R.K. Garg v. Union of India AIR 1982 SC 133. It has been contended that paragraph 1.3 of the Xth Schedule is neither arbitrary, illegal, mala fide nor it is without jurisdic-tion. The learned counsels contended that by reason of section 641 of the Act, the Central Government is empowered to change or amend any of the provisions contained in paragraph 3 of Schedule X by issuing a notification thereof and, thus, the same does not violate Articles 14 and 19( l )( g ) of Constitution of India. 6. Mr. Sarkar, however, submitted that the word 'alteration' does not include 'amendment'. The learned counsel submits that the petitioner having not questioned the vires of section 641 cannot be permitted to question the amendment as admittedly in terms of the original provi- sions, the petitioners have deposited the requisite fees. Before dealing with the rival contentions as noticed hereinbefore, the relevant provisions of the Act may be noticed. 7. Section 2(10) of the Act defines a company as meaning a company defined in section 3, in terms whereof the company means a company formed and registered under the said Act or an existing company as defined in clause 11 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing amendments have been made: "1. Under Schedule X in paragraph 1.3, for the words 'the increased share capital and the fees payable on such date', the words 'the increased share capital and the fees paid on such date' shall be substituted." 12 . It has been submitted that the said amendment is discriminatory in nature as those companies who do not want to increase the authorised share capital would not be required to pay any further fees. The petitioners of CO. No. 9120(W) of 1996 submitted that had the amend-ments been not carried out they were required to pay a sum of Rs. 15 lakhs for increase in the share capital from Rs. 100 crores to Rs. 150 crores. The petitioner has already paid a sum of Rs. 30 lakhs 7 thousands towards authorised capital but for increasing the share capital to the extent of Rs. 50 crores it has to pay an additional sum of Rs. 45,07,000, whereas under the original Schedule they were required to pay a sum of Rs. 15 lakhs and, thus, in terms of the impugned amendment, they were required to pay an additional sum of Rs. 30,07,125. 13 . There cannot be any doubt that a delegation of power is permissible in law but the same is subject to certain restr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompanies (Amendment) Act, 1965 with effect from 15-10-1965. Sched-ule X deals with tables of fees to be paid to the Registrar in terms of section 574 and section 611. Section 574 deals with certificate of registra-tion of existing companies providing for certification by the Registrar that the company is incorporated under the Act in the event the re-quirements thereof are complied with and fees prescribed in clause 10 is paid. Section 611 again provides for payment of fees in respect of several matters mentioned in the said Schedule and subject to the limitations imposed thereby. Share capital of a company can also be increased in terms of section 94A. Clause 1.3 of the Xth Schedule provides for a nexus with the fees as regards increase in share capital and the original share capital. Thus, the fees payable by a company in terms of clauses 1 and 2 were to be taken into consideration in the event a notice is filed of any increase in the nominal share capital of a company. Clauses 1.1 and 1.2 of the said Schedule have not been amended. Clauses 1.1,1.2 and 1.3 must be read together. So read the fee sought to be levied for filing any notice of any increase in the nominal share capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nath JT 1997 (2) SC 530 held that a licence fee is a regulatory fee and not a compensatory fee. In the said decision, the Supreme Court noticed the decision in Liberty Cinema's case ( supra ) and other decisions following the same, namely, Vam Organic Chemical Industries v. CCE JT 1997 (1) SC 641 and Bihar Distillery v. Unionof India JT 1997 (2) SC 20 and held that the High Court was not right in proceeding on the assumption that every fee must necessarily satisfy the test of quid pro quo and in declaring the fees levied by sub-rules (3) and (4) of rule 3 framed by the State of Tripura under the Indian Forest Act, 1927 as bad in that basis. 21. The Companies Act is a regulatory Act. However, although in terms of the provision of the Companies Act, as referred to hereinbefore, the Central Government is the appropriate authority for levying fees for the purpose of registration/incorporation of a company as also for other incidental matters, there cannot be any doubt whatsoever that the Central Government being not entitled to impose tax, in terms of Article 265 by reason of a delegated legislation, in which event it must exercise its powers within the purview of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom them in the light of the statutory standards and declaration of policy call for the exercise of judgment and formulation of subsidiary administrative policy within the statutory framework. See Yakus v. United States 88 Law ED 843 (848). 28. In Builders' Association of India v. State of Bihar and Orissa 1992 (1) PLJR 1 (FB), I had noticed: "Taking into consideration such a situation, can it be said that section 12 in exercise of which power the State is entitled to levy different rates of tax varying from 2% to 25% provides for the necessary guidelines so as to save the provision of section 25A of the Act from being declared unconstitutional? In my opinion, the answer has to be rendered in negative." (p. 21) 29. It was further noticed: 30. In Debi Das Gopal Krishna's case ( supra ) , Subba Rao, CJ, speaking for the Constitution Bench upon taking into consideration the decision of Liberty Cinema's case ( supra ) held as follows: "If this decision is an authority for the position that the Legislature can delegate its power to a statutory authority to levy taxes and fix the rates in regard thereto, is equally an authority for the position that the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owerful executive may unduly overstep the limits of delegation. It may not lay down any policy at all; it may declare its policy in vague and general terms; it may not set down any standard for the guidance of the executive, it may confer an arbitrary power on the executive to change or modify the policy laid down by it without reserving for itself any control over subordinate legislation. This self-effacement of legislative power in favour of another agency either in whole or in part is beyond the permissible limits of delegation. It is for a Court to hold on a fair, generous and liberal construction of an impugned statute whether the Legislature exceeded such limits. But the said liberal construction should not be carried by the Court to the extent of always trying to discover a dormant or latent legislative policy to sustain an arbitrary power conferred on executive authorities. It is the duty of the Court to strike down without any hesitation any arbitrary power conferred on the executive by the Legislature'." 34. It was further held: "While it is true that the tax cannot be realised without it being quantified, the non-quantification of the liability will not destroy the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te passed by Parliament, or the State Legislature to make rules) so much so that a reasonable fear could have arisen among the people that they were being ruled by the Bureaucracy. The reasons for giving delegated power to the Government to make rules are many, but the most prominent and dominant reasons are: ( i )The area for which powers are given to make delegated legislation may be technically complex, so much so, that it may not be possible and may even be difficult to set out all the permutations in the statute. ( ii )The executive may require time to experiment and to find out how the original legislation was operating and thereafter to fill up all other details. ( iii )It gives an advantage to the executive, in the sense that a Govern-ment with an onerous legislative time schedule may feel tempted to pass skeleton legislation with the details being provided by the making of Rules and Regulations." 37. The power of delegation is a constituent element of the legislative power as a whole under article 245 and other relative articles and when the Legislatures enact laws to meet the challenge of the complex socio- economic problems, they often find it convenient and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uct the scope of the Act or the policy laid down there under. It cannot, in the garb of making rules, legislate on the field covered by the Act and has to restrict itself to the mode of implementa- tion of the policy and purpose of the Act". 41. In Samijan Bawa v. Revenue Officer, Lalgola 90 CWN 396, B.P. Banerjee, J., while considering the question of vires of rule 23(3) of the West Bengal land Reforms Rules, noticed: "It was observed in Bernard Schwartz's Administrative Law at Page 151 that 'ultra vires doctrine is of particular importance in the field of rule-making Agency power to make rules extends no further than the authority given by the relevant statutory delegation. On review, the Court will determine whether the challenged rules are within the power conferred.............'At page 152 of the book it was observed that 'But even a rule which deals with the subject-matter within the Agency's delegated authority may be invalid if it is arbitrary or unreasonable. The validity of a regulation will be sustained only if it reasonably relates to the purpose of enabling legislation'. It is the Court to say whether or not there is a rational relationship between a part ..... X X X X Extracts X X X X X X X X Extracts X X X X
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