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TMI Blog1968 (2) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... electricity levied by the Municipal Corporation of Delhi (hereinafter referred to as the Corporation) from July 1, 1959 to March 31, 1966. The facts are not in dispute and may be briefly narrated. On February 9, 1959, the Corporation passed a resolution purporting to be under sub-section (1) of s. 150 of the Delhi Municipal Corporation Act, No. 66 of 1957. (hereinafter referred to as this Act) for levy of three taxes, including a tax on the consumption or sale of electricity. Section 113 of the Act which confers powers on the Corporation to impose taxes has divided them into two kinds, namely, obligatory taxes, which the Corporation must impose [s. 113(1), and optional taxes which the Corporation may impose section 113(2)1Further s. 150(1) of the Act provides that maximum rate of tax to be levied in the case of optional taxes will be specified by resolution of the Corporation. After the maximum rate has thus been specified, the resolution has to be submitted to the Central Government for sanction under s. 150(2), and if sanctioned by Government, the rate comes into force on and from such date as may be specified in the, Order of sanction. Under subsection (3) of s. 150 the Corporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... electricity. These rates were higher than the rates fixed by the resolution of February 9, 1959. This resolution was submitted to Government and was sanctioned on December 8, 1965. Thereafter the Corporation passed the second resolution under s. 150(3) of the Act resolving that the maximum rates should be adopted as the actual rates for the levy of tax. This resolution was passed on December 27, 1965. Then followed two writ petitions by the respondent. By the first writ petition it challenged the levy of tax by resolutions of February 17 and December 27, 1965, and by the second writ petition the appellant challenged the vires of the Validation Act. We may now refer to the grounds of the challenge. So far s the Validation Act is concerned, it is contended that the Validation Act has failed in its object inasmuch as it did not provide for the levy of tax and merely validated the rates fixed by the resolution of June 24, 1959. Other grounds were also stressed in this connection but it is unnecessary to refer to them as they have not been pressed before us. As to the attack on the resolutions dated February 17, 1965 and December 27, 1965, the main contention is that S. 150 is uncons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e scavenging, removal and disposal of filth, the construction or purchase, maintenance, extension, management and conduct of (i) any undertaking for the generation or supply and distribution of electricity to the public, and (ii) any undertaking for providing road transport services by mechanically propelled vehicles, the establishment and maintenance of hospitals, dispensaries and maternity and child welfare centres and carrying out of other measures necessary for public medical relief, the construction and maintenance of municipal markets and slaughter houses and regulation thereof, the construction, maintenance,, alteration and improvements of public streets, brides, culverts, causeways and the like, the lighting, watering and cleansing of public streets and other public places, the establishment, maintenance of, and aid to, schools for primary education and the maintenance of a fire-brigade and the protection of life and property in case of fire. Section 43 provides for optional functions of the Corporation which it may in its discretion provide and a large number of such functions are enumerated therein. Some of these optional functions are : the establishment and maintenan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... poration may, at a meeting, pass a resolution for the levy of any of the taxes specified in sub-section (2) of section 113, defining the maximum rate of the tax to be levied, the class or classes of persons or the description or descriptions of articles and properties to be taxed, the system of assessment to be, adopted and the exemptions, if any, to be granted. (2) Any resolution passed under subsection (1) shall be submitted to the Central Government for its sanction, and if sanctioned by that Government, shall come into force on and from such date as may be specified in the order of sanction. (3) After a resolution has come into force under subsection (2), the Corporation may, subject to the maximum rate, pass a second resolution determining the actual rates at which the tax shall be leviable; and the tax shall come into force on the first day of the quarter of the year next following the date on which such second resolution is passed. (4) After a tax has been levied in accordance with the fore going provisions of this section, the provisions of sub-section (2) of section 109, shall apply in relation to such tax as they apply in relation to any tax imposed under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the law as laid down by this Court is not in doubt now. Considering the complexity of modern life it is recognised on all hands that legislature cannot possibly have time to legislate in every minute detail. That is why it has been recognised that it is open to the legislature to delegate to subordinate authorities the power to make ancillary rules for the purpose of carrying out the intention of the legislature indicated in the law which gives power to frame such ancillary rules. The matter came before this Court for the first time In The Delhi Laws Act, 1912([1951] S.C.R. 747), and it was held in that case that it could not be said that an unlimited right of delegation was inherent in the legislative power itself. This was not warranted by the provisions of the Constitution, which vested the power of legislation either in Parliament or State legislatures and the legitimacy of delegation depended upon its being used as an ancillary measure which the legislature considered to be necessary for the purpose of exercising its legislative powers effectively and completely. The legislature must retain in its own hands the essential legislative function. Exactly what constituted essent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciple and that principle was the maintenance or increase in supply of essential commodities and of securing equitable distribution and availability at fair prices. It was further held that this sufficiently formulated the legislative policy and the ambit and tile character of that Act Was such that the details of that policy could only be worked out by delegating that power to a subordinate authority within the frame-work of that policy. The Court therefore held that s. 3 of the impugned Act was not ultra vires the legislature on the ground of excessive delegation of legislative power. In the Western India Theatres Limited v. Municipal Corpo- ration of the City of Poonia([1959] Suppl. 2. S.C.R. 71), a question arose with respect to the Bombay District Municipal Act, 1901, which gave power to the municipality to levy any other tax to the nature and object of which the approval of the Governor in Council shall have been obtained prior to the selection contemplated in sub-cl. (i) of cl. (a) of section 60 . This provision was attacked as unconstitutional on the ground that the legislature had completely abdicated its function and delegated essential legislative power to the municip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;he legislation was skeletal or that very detail of the applicaion of law to a particular case, was not laid down in L6Sup.C.I/68-4 the enactment itself or the fact that a discretion was left to those entrusted with administering the law, afforded no basis either for the contention that there had been an excessive delegation of legislative power so as. to amount to an abdication of its functions, or that the discretion vested was uncanalised and unguided so as to amount to a carte blanche to discriminate. The last case to which reference may be made is Devi Das Gopal Krishnan v. State of Punjab(A.I.R. [1967] S.C. 1895). There the law on the subject of excessive delegation on was summarised thus at p. 1901: The Constitution confers a power and imposes a duty on the legislature to make laws. The essential legislative function is the determination of the legislative policy and its formulation as a rule of conduct. Ob- viously it cannot abdicate its functions in favour of another. But in view of the multifarious activities of a welfare State, it cannot presumably work out all the details to suit the varying aspects of a complex situation. It must necessarily delegate the work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is observation to show that the delegation in s. 150 of the Act cannot be said to be excessive as the rates of tax cannot be said to be an essential feature of the law relating to taxation. On the other hand learned, counsel for the respondent contends that this observation is much too wide if it means that it is open to the legislature to delegate without any guidance whatsoever the power to fix the rate of tax. In particular, it is urged on behalf of the respondents that the cases which have been referred to in support of this conclusion in Pt. Banarsi Das case(1) do not support the proposition laid down there if it is to be read as giving unqualified power to fix the rate without any guidance, control or safeguard. With respect, it seems to us that if this observation means that it is open to the legislature to delegate the power to fix the rate, of tax to another authority without any qualification, guidance, control or safeguard, it is too widely stated and does not appear to be supported by the authorities on which it is based, though those authorities do indicate that in certain cases it is open to the legislature to give power to another authority to fix rates under proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and decreases in rates of duty as were found necessary to equalise the cost of production. The limit of such change was also fixed upto 50 per centum of the rates specified in the law. This case does not support the proposition that rates of tax can be delegated to a subordinate authority without any guidance, though it is an authority for the proposition that this can be done if guidance s given for the purpose. The observation in Banarsi Das's case([1959] S.C.R. 427) the rates of tax are not essential features of legislation therefore seems, with respect, to be too broadly steed, though it may be admitted that rates of taxation also can in certain circumstances be delegated to a subordinate authority with proper guidance and subject to safeguards and limitations in that behalf. The next case to which reference may be made is Corporation of Calcutta and Another v. The Liberty Cinema() [1965] 2 S.C.R. 477.) where the majority upheld the fixation of a tax on cinema shows, even though the Calcutta Municipal Act of 1951 prescribed no limits to which the tax could go. In that case the majority referred to the view taken in Pandit Banarasi Das's case([1959] S.C.R. 427) and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that in the matter of local taxation, like taxation by municipal boards, district boards and bodies of that character,there was pre-eminently a case for delegating the fixation of the rate of tax to the local body, the reason for this being that problems of different municipalities might be different and one municipality might require one kind of tax at a particular rate at a particular time while another municipality might need another kind of tax at another rate at some other time. It was further observed that the legislature can in the case of taxation by local bodies delegate even the authority to fix the rate to the local body provided it has taken care to specify the safeguards for the purpose. The difference between the majority and the minority only was that the majority thought that the conclusive presumption raised by one of the provision was valid while the minority thought that by reason of the conclusive presumption all the safeguards were wiped out at one stroke and therefore it became a case of excessive delegation. The last case to which reference may be made is Devi Das Gopal Krishnan(A.I.R. 1967 S.C. 1895). This was not a case of municipal taxation. In. thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laid down, the courts should not interfere. What guidance should be given and to what extent and whether guidance has been given in a particular case at all depends on a consideration of the provisions of the particular Act with which the Court has to deal including its preamble. Further it appears to us that the nature of the body to which delegation is made is also a factor to be taken into consideration in determining whether there is sufficient guidance in the matter of delegation. What form the guidance should take is again a matter which cannot be stated in general terms. It will depend upon the circumstances of each statute under consideration; in some cases guidance in broad general terms may be enough; in other cases more detailed guidance may be necessary. As we are concerned in the present case with the field of taxation, let us look at the nature of guidance necessary in this field. The guidance may take the form of providing maximum rates of tax upto which a local body may be given the discretion to make its choice, or it may take the form of providing for consultation with the people of the local area and then fixing the rates after such consultation. It may also t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for otherwise it cannot carry on the purposes for which it has been created. The funds may be provided as grants; but the general pattern has always been that power of local taxation is vested in a municipal body as an essential attribute for all the purposes of its existence. Thus in the United States of America, even though the power of taxation belongs exclusively to the legislative branch of the Government, it may be delegated by the legislature to municipal corporations : [See United States v. City of New Orleans(1)]. Though delegation as to municipal taxation is held to be permissible under the U. S. Constitution, it is so because of historical reasons peculiar to that country. The American example may not be an apt analogy but the history of municipal Acts in our country indicates that for nearly a century or more power of taxation has been delegated to municipal bodies. In some Acts all taxes delegated to the municipal bodies are compulsory; in other Acts all taxes so delegated are optional: (see U.P. Municipalities Act). In some cases some taxes are compulsory and some taxes are optional as is the case in the present Act. In some cases maximum limits are provided for s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be exercised and performed by such officer or authority as the Central Government may provide in this behalf. It is urged that when this happens the power of taxation goes in the hands of some officer or authority appointed by Government who is not accountable to the local electorate and who may exercise all the powers of taxation conferred on the elected Corporation by the Act. This however has not happened in the present case and we need not express any opinion on the question whether such officer or authority would be competent to increase the rates of taxes already fixed when the Corporation is superseded or can impose new taxes which were not there at the time of supersession. That is a matter which may have to be considered when such a situation arises; but so long as the power of taxation conferred by S. 150 is exercised by the elected body there will always be a check in the form of the members thereof having to face the electorate after every four years with the liability of being thrown out if they act unreasonably. This check which is inherent in an elected municipal body, must enter into the verdict whether the delegation to such a body, even though it is wide in exte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is a limit and guidelines provided by the Act beyond which the Corporation cannot go. Another limit and guideline is provided by the necessity of adopting budget estimates each year as laid down in s. 109 of the Act. That section provides for division of the budget of the Corporation into four parts i.e., general, electricity supply, transport, water and sewage disposal. The budget will show the revenue and expenditure and these must balance so that the limit of taxation cannot exceed the needs of the Corporation as shown in the budget to be prepared under the provisions of the Act. These four budgets are prepared by four Standing Committees of the Corporation and are presented to the Corporation where they are adopted after debate by the elected representatives of the local area. Preparation of budget estimates and their approval by the Corporation is therefore another limit and guideline within which the power of taxation has to be exercised. Even though the needs may be large, we have already indicated that they cannot be unlimited in the case of the Corporation, for its functions both obligatory and optional are well defined under the Act. Here again there is a limit to whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses like water, tax, scavenging tax or fire tax. In the case of optional taxes, however, greater freedom has been left to the Corporation to arrange its budgets and fix rates of taxation; but this freedom is circumscribed and guided and controlled under the various provisions of the Act which we have already referred to and which must be taken to limit the taxing power of the Corporation even though no specific maximum has been fixed in the Act for optional taxes. It seems to us therefore that considering that the power is en. trusted to the elected representatives of the local area who are liable to go for election before the local electorate every four. years, the nature of guide given by the Act is sufficient for the purpose of kepping the Corporation within limits. In such circumstances, considering the constitution and set up of the municipal corporation, its need for finance to carry out the functions entrusted to it, its elective character, its responsibility to the electors, the safe- guards and controls provided in the Act, procedural and otherwise, it is difficult to hold that the power of taxa- tion conferred on it is either uncanalised, arbitrary or without guidance or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consumption. The tax is thus on the consumption of electricity where it is generated by a person for his own consumption and not on the production of electricity. Then it is urged that the sanction by Government was not in accordance with the provisions of the Constitution and that in this case the sanction was given by the Deputy Secretary to Government who obviously had no authority to do so. We are of opinion that there is no force in this contention. The order conveying sanction specifically says that the Central Government hereby sanctions the resolution passed by the Municipal Corporation of Delhi under sub-section (1) of section 150. It is true that the order is signed by the Deputy Secretary but that does not mean F that it was the Deputy Secretary who sanctioned the rates. It is also true that the words by the order of the Central Government or by the order of the President are not there above the signature of the Deputy Secretary and the authentication therefore is no quite in accordance with the provisions of Art. 77 of the Constitution, but that deficiency has been made up by the affidavit filed on behalf of the Central Government in which it is stated that the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t which found favour with the High Court was that the words of S. 2 only validated the levy and collection of tax for the year ending March 31, 1960 and no further, though the G section in terms refers to the period from July 1, 1959 to March 31, 1966. The contention, which was accepted by the High Court, was that though fixation of rate of tax was validated up to March 31, 1966, the levy of the tax was not validated for the whole period by S. 2 of the Validation Act. The same argument was raised before us in support of the contention that the Validation Act failed in its purpose so far as the period from April 1, 1960 to March 31, 1966 is concerned. We are of opinion that the High Court was in error in holding that the levy and collection was not validated for the period from April 1, 1960 to March 31, 1966 and that the Validation Act merely validated the fixation of rate of tax for that period. Section 2(1) which is said to have failed in validating the levy and collection of tax for the period from April 1, 1960 to March 31, 1966 is in two parts. In the first place it validates the resolution of the Corporation dated June 24, 1959 by which rates were fixed under s. 150(3) for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1959 to March 31, 1966. We cannot therefore agree with the High Court that only the rates of tax were validated and not levy and collection thereof for the period from April 1, 1960 to March 31, 1966 We may go fur- ther and say that as we read S. 2(1) and s. 2(2) together it seems to us that Parliament not only validated what was done but also itself imposed the rates deducible from the resolution of June 24, 1959 and authorised the levy and collection thereof for the entire period from July 1, 1959 to March 31, 1966 notwithstanding anything contained in any judgment, decree or order of any court to the contrary. We therefore allow the appeals, set aside the order of the High Court insofar as it is against the appellant and dismiss the writ petitions. No order as to costs throughout. Hidayatullah, J.-The Delhi Municipal Corporation in exercise of powers under its constituent Act has levied a tax on the consumption, sale or supply of electricity. This power is expressly conferred by the Delhi Municipal Corporation Act, 1957 (66 of 1957). Section 113(2)(d) and (3) reads : (2) In addition to taxes specified in sub- section (1) the corporation may, for the purposes of this Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Corporation (Validation of Electricity Tax) Act, purporting to validate the rate of tax. On February 17, 1965, the Municipal Corporation passed another resolution under S. 150(1) stating the maximum rate of tax. This resolution was approved by Government and a second resolution was then adopted under s. 150(3) naming the maximum rate as the actual rate. This was on December 27, 1965. Two writ petitions were filed by the respondent in the High Court of Delhi. The first questioned the imposition of the tax by the resolutions of February 17 and December 27, 1965 and the second questioned the legality of the Validation Act. These petitions succeeded and the present appeals followed. The learned Chief Justice in his judgment has upheld the validity of lie Validation Act. As we are of opinion that the earlier resolutions were also legal, we need say nothing about the Validation Act. We agree, however, that the Validation Act cannot be questioned. The learned Chief Justice has Adequately answered the objections and although we might have stated our reasons separately we do not find it necessary to do so. We agree that the relevant appeal must be allowed. On the other point we ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seem to carry the observations in that case to fields which, perhaps, were not in the minds of the Judges who gave the Advisory opinion. In those fields other considerations apply which unfortunately have been overlooked more particularly when the question is of investing a Municipal Corporation with the authority to levy taxes. The Delhi Laws Act(1) case was concerned with certain legislation which conferred a general power on the Executive Government to apply any Act in force in British India, to certain areas with such modifications, amendments, restrictions (involving repeal of laws already in force) as the Executive Government might consider expedient or necessary. The Executive Government was not contained in its discretion by any direction on the subject. This made it free to choose any law and to modify it as it thought fit before applying it and incidentally to repeal such laws as were already in force in those areas. The general observations in the case were that the proposed measures there considered in several respects amounted to the effacing of the legislature and the setting up of a parallel legislature. The issue obviously was a narrow and a special one. It conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present controversy by highlighting the provisions which indicate that there are safeguards , guidelines and limits in the Municipal Corporation Act. In reaching his conclusion the learned Chief Justice emphasises that there are 'safeguards sufficient' to enable the Municipal Corporation to validly impose the tax. If any such safeguards (as to which we do not consider it necessary to express an opinion here) were necessary, it is sufficient to point out that the scheme of the Municipal Act as a whole, the functions the Municipality is expected to perform, the resources it must have, the gradation of compulsory taxes, their limits, the control of Government and various other provisions, furnish a sufficient answer. They are safeguards enough to sustain the Act. But, in our opinion, this matter goes further. Whether a legislature can confer on a Municipal Corporation a power to levy a tax and how, is a very different question from that which was resolved in the Delhi Laws Act([1951] S.C.R. 747) case. It involves a consideration of what our Constitution enables to be done under the relevant legislative entry and the nature of the Municipal administration. It must be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titution) has played a great part. Montesquieu, of course, was not quite right in imagining that there was a complete separation of powers in England. The other theory, which has played a part flows from the maxim already quoted. In the Bonus case of Jalan Trading Co. Private Ltd. v. Mill Mazdoor Union([1967] 1 S.C.R. 15 at 59) we had the occasion to say that that theory was wrongly understood. We may recall here what we then said This doctrine, it has been accepted on all hands was originated by the glossators and got introduced into English Law by a misreading of Bracton as a doctrine of agency and was applied by Coke in decisions to prevent the exercise of judicial power by another agency and later received its present form in the United States. This theory has been discountenanced even in America where in spite of a somewhat rigid separation of powers delegated legislation is permitted in various fields. No doubt the Donoughmore Committee in England recommended that delegation should be put within bounds. But the example of the United States is to the contrary. The question was examined by the Moreland Commission, the Brownlow Committee and the Acheson Committee. They perm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut was held not to be an instance of excessive delegation. In Pandit Banarsidas Bhanot v. The State of Madhya Pradesh() [1959] S.C.R. 427), it was observed : Now the authorities are clear that it is not unconstitutional for the legislature to leave it to the executive to determine details relating to the working of taxation laws, such as the selection of persons on whom the tax is to be laid, the rates at which it is to be charged in respect of different classes of goods and the like. This was justified on the ground that in doing this the legislature could not be considered to have lost its perfect control since it retained the power to interpose its own authority. The principle was accepted on the basis of the decision of the Judicial Committee in Powell v. Apollo Candle Co. Ltd.( [1885] 10 A.C. 282). The learned Chief Justice has expressed that the case was wrongly read but with all due respects it has always been understood in this sense. Lastly in Liberty Cinema ([1952] 2 S.C.R. 477 ) case the rate of a tax was not considered a part of the essential legislative function. These cases in themselves cover the present matter. The principle now advocated that the legisla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch bodies to raise funds for their execution, unless such funds are otherwise provided. And the ordinary means in such cases is taxation. A municipality with- out the power of taxation would be a body without life, incapable of acting, and serving no useful purpose. It is argued that in America this is held to fall outside excessive delegation because of the history of the municipal corporations in that country. There is no essential difference between the United States and India in this respect. Municipal Corporations have a hoary past in our country also. The first Municipal Corporation was created in India by a Royal Charter in 1687 at Madras. In 1726 three Charters established Municipal Corporations at Bombay Calcutta and Madras. Since then scores of statutes have established municipalities all over India. The Conservancy Act X of 1842, which applied to Bengal, allowed municipalities to tax houses. The Act remained a dead letter. But in 1882 Lord Rippon's Government passed the well-known Resolution extending Local Self-Government in India and the municipalities have since been accepted as a limb of local self-government. Every Municipal Act (whether for a single municip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as we shall show presently, may be asked to intervene when the delegate exceeds its powers and functions. The observations and theories culled from Ameri- can cases cannot be applied in our country without reflection. Even in America the doctrine is much watered down especially when it is a question of investing municipalities with power-of such taxation. Parliament, when it confers such powers, cannot be said to abdicate or efface itself unless it can be said that it has lost its control over the action of the delegate. In the present case, in addition to prescribing the mode, it keeps a check by making Government, answerable to itself, the supervising authority. This is not a safeguard in the sense in which the matter has been accepted in the opinion of the learned Chief Justice, but is indicative of the exercise of the legislative Will by the legislature itself. The details of the tax are to be considered by the supervising authority and if the tax is not what the legislature intended should be imposed, the tax cannot be imposed. It is no use comparing compulsory taxes with optional taxes in the Municipal Corporation Act. Even in the compulsory taxes rsee for example s. 114( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf-governing bodies which they are intended to be. Government might as well collect the taxes and make them available to the municipalities. That is not a correct reading of the history of Municipal Corporations and other selfgoverning institutions in our country. The tax has not been challenged as unreasonable. If it had been it might have been necessary to consider it from another angle. The delegation to the Municipal Corporation of the power to levy taxes and fees is for the purpose of its own duties under the Act. The power must be reasonably exercised for attainment of those purposes. These purposes include supply of water, running of transport services, lighting of streets and their maintenance, conservancy, establishment of hospitals and so on. The interrelation of taxes with expenditure has to be maintained. This relation must be reasonable. Suppose it were to become unreasonable. Is there no remedy ? Now the rule regarding reasonableness of bye laws was laid down in Kruse v. Johnson([1898] 2 Q.B. 91). This rule has been universally accepted and applied in India and elsewhere. The same rule is applied to fees and taxes imposed by the Municipal bodies. Since illustrat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on advertisements other than advertisements published in the newspapers; (e) a duty on the transfer of property; and (f) a tax on buildings payable along with the application for sanction of the building plan. By sub-s. (2) the Corporation is authorised, in addition to the taxes specified in sub-s. (1), to levy for the purposes of the Act any of the following taxes, namely (a) an education cess; (b) a local rate on land revenues; (c) a tax on professions, trades, callings and employments; (d) a tax on the consumption, sale or supply of electricity; (e) a betterment tax on the increase in urban land values caused by the 'execution of any development or improvement work; (f) a tax on boats; and (g) tolls. By sub-s. (3) it is provided that the taxes specified in sub-s. (1) and sub-s. (2) shall be levied, assessed and collected in accordance with the provisions of the Act and the bye-laws made thereunder. The Act proceeds by ss. 114 to 149 to make detailed provisions in respect of the taxes set out in s. 113(1) about the levy and imposition of taxes, the system of assessment, and maximum rates or the standards to guide the determination of the rates of taxes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... general tax which is leviable in addition is to be not less than ten per cent and not more than twenty per cent of the rateable value of lands and buildings within the urban areas and such lower rates in the rural areas as may be determined by the Corporation. Sections 114 to 135 enact a complete code relating to the levy of property taxes. Schedules 3 to 6 to the Act set out the maximum rates which may be charged as tax on vehicles and animals, theatretax and taxes on advertisements and buildings, and by diverse provisions in Ch. VIII the persons or properties to be charged are specified and the mechanism of assessment is prescribed. The Act also prescribes the maximum rate of duty on transfer of property leviable in the form of a surcharge on the duty imposed by the Indian Stamp Act.' But in respect of optional taxes the Parliament has merely enumerated the taxes in sub-s. (2) of S. 113, and has provided by sub-s. (3) of s. 113 that the taxes specified in sub-s. (2) shall be levied, assessed and collected in accordance with the provisions of the Act and the bye-laws made thereunder. Section 109 deals with the adoption of the annual budget estimates of the Corporation. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rates specified in the said resolution in respect of tax on the consumption or sale of electricity shall be deemed to be, and to have, been, the actual rates of tax under the Act with effect on and from the 1st day of July, 1959 and upto and inclusive of the 31st day of March, 1966 . The non-obstante clause plainly governs both the parts of s. 2 ( 1 ). It is clear that it was the intention of the Parliament to declare that notwithstanding anything contained in s. 150(2) and s. 109(2) of Act 66 of 1957, the resolution dated June 24, 1959, purporting to be made under s. 150(3) shall be deemed to be in accordance with law insofar as it relates to the rates of electricity tax. The effect of the first part of sub-s. (1) of s. 2 is therefore to impose liability on the consumption or sale of electricity purported to be levied under the resolution of the Corporation under s. 150(3). The High Court has accepted that position. By the second part of sub-s. (1) of s. 2 liability is imposed for payment of tax for the period April 1, 1960 to March 31, 1966, at the same rate, that is the rate which was adopted by the resolution dated June 24, 1959. The function of both the parts is to, impos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , several years had elapsed and the tax was collected on the footing that the resolution dated June 24, 1959, and the resolutions subsequently passed were valid. If the Parliament intended to enact an Act only for validating the levy of tax under the resolution dated June 24, 1959, it was plainly unnecessary to enact the, second part of s. 2 (1 ). The decision of the High Court which necessitated the enactment of the Validating Act was undoubtedly the judgment of the Punjab High Court which related only to the. validity of the resolution levying tax for the year 1959-60, but that is not a round for implying that ,'lie Parliament was seeking to validate the levy of tax only for the year 1959-60. We may turn now to the second question on which the argument was mainly advanced. It was conceded by the AttorneyGeneral that under our Constitutional scheme, the Parliament cannot abdicate its essential legislative functions and set up another authority or body to perfom essential legislative functions either generally or in respect of a particular head of legislation or even in respect of a part of the subject-matter of that particular head. Again the power to enact subordinate or anci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gislature is to apply. Without capacity to give authorizations of that sort we should have the anomaly of a legislative power which in many circumstances calling for its exertion would be but a futility. But the constant recognition of the necessity and validity of such provisions, and the wide range of administrative authority which has been developed by Means of them, cannot be allowed to obscure the limitations of the authority to delegate, if our constitutional system is to be maintained. Again Chief Justice Hughes observed: (at p. 426) Applying that principle, authorizations given by Congress to selected instrumentalities for the purpose of ascertaining the existence of facts to which legislation is directed, have constantly been sustained. Moreover, the Congress may not only give such authorizations to determine specific facts but may establish primary standards, devolving upon others the duty to carry out the declared legislative policy, that is, as Chief Justice Marshall expressed it, to fill up the details under the general provisions made by the Legislature. The observations of the Judicial Committee of the Privy Council made in Archibald G. Hodge v. The Que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a proposed law to a body of voters totally distinct from the legislature of which he is the constitutional head and would render him powerless to prevent it from becoming an actual law if approved by those voters. The offending provisions of the Act being so interwoven with its scheme as not to be sever- able, the Colonial Laws Validity Act, 1865, could not be applied to validate any part of the Act. Opinion in this Court has with the passage of time become crystalized. In re The Delhi Laws Act, 1912(2) two views were broadly propounded. Patanjali Sastri, J., was of the view that the Indian Parliament acting within the limits circumscribing its legislative powers, intended to have plenary powers of legislation as large and of the same nature as those of the British Parliament, and no constitutional limitation on the delegation of legislative power to a subordinate unit was to be found in the Constitution Acts. The Indian Parliament is therefore competent to make a law delegating legislative power, both quantitatively and qualitatively as is the British Parliament, and in the absence of any constitutional inhibition, delegation of legislative power, however extensive, could be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no power to delegate the essential legislative functions to any other body and that abdication by a legislative body need not necessarily amount to complete effacement. When in respect of a subject in the Legislative List the legislative body says in effect that it will not legislate but will leave it to another to legislate on that subject, there is abdication of legislative authority. Mukherjea, J., was of the opinion that the legislature must retain in its own hands the essential legislative functions which consist in declaring the legislative policy and laying down the standard which is to be enacted into a rule of law and what can be delegated is the task of subordinate legislation which by its very nature is ancillary to the statute which delegates the power to make it. Provided the legislative policy is enunciated with sufficient clearness or a standard is laid down, the Courts may not interfere with the discretion that undoubtedly rests with the legislature itself in determining the extent of delegation necessary in a particular case. Bose, J., without definitely committing himself to either view, observed that the Indian Parliament may legislate along the lines of the j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the framework of the case law so far developed, Ven- katarama Aiyar J., in Pandit Banarsi Das Bhanot v. The State of Madhya Pradesh Ors.( ) [1959] S.C.R. 427.) speaking for the majority observed ...... the authorities are clear that it is not unconstitutional for the legislature to leave it to the executive to determine details relating to the working of taxation laws, such as the selection of persons on whom the tax is to be laid, the rates at which it is to be charged in respect of different classes of goods, and the like. The learned Judge held that the power conferred on the State Government by s. 6(2) of the Central Provinces and Berar Sales Tax Act, 1947, to amend the Schedule relating to exemptions was in consonance with the accepted legislative practice relating to the topic and was not unconstitutional. In The Western India Theatres Ltd. v. Municipal Corporation of the City of Poona ([1959] Supp. 2 S.C.R. 71. ) it was held that by enacting in S. 59(1) (xi) of the Bombay District Municipal Act, 1901, that the Municipality may levy any other tax to the nature and object of which The approval of the Governor-in-Council shall have been obtained prior to the sel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive functions and had surrendered it in favour of another Legislature. In M/s. Devi Das Gopal Krishan v. State of Punjab and OrS.( A.I.R. 1967 S.C. 1895,1901), Subba Rao C.J. speaking for the Court observed in dealino, with a case under the Punjab General Sales Tax Act, 1948 The Constitution confers a power and imposes a duty on the legislature to make laws. The essential legislative function is the determination of the legislative policy and its formulation as a rule of conduct. Obvi- ously it cannot abdicate its functions in favour of another. But in view of the multifarious activities of a welfare State, it cannot presumably work out all the details to suit the varying aspects of a complex situation. It must necessarily delegate the working out of details to the executive or any other agency. But there is a danger inherent in such a process of delegation. An overburdened legislature or one controlled by a powerful 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 execu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the State in the matter of local government restricted to a particular area in which it functions. By investing a local authority with powers of legislation for administration of the Act relating to local government, sovereign power of the State is entrusted to the body for limited purpose : but the entrustment of power is as a delegate, and must in our view be within the limits of permissible entrustment consistent with the constitutional scheme. The power of the State to legislate in matters of taxation within the allotted field is plenary, but in entrusting that power to a local authority the legislature cannot confer unguided authority. In our judgment, the constitutional power to legislate in respect of a particular topic such as local government-in Entry 5 List II of the Seventh Schedule-does not carry with it the power to delegate the legislative functions of the State. Entry 5 List II. confers upon the State the authority to legislate in respect of local government that is to say, the constitution and powers of municipal corporations, improvement trusts, district boards, mining settlement authorities and other local authorities for the purpose of local self-government or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onferring that power disclose the policy, principles or standards which are to govern the delegate in the exercise of that power so as to set out a guidance. Any delegation which transgresses this limit infringes the constitutional scheme. It is necessary then to consider whether in the present case the Parliament has disclosed any policy, principles, standards or guidance in conferring authority upon the Corporation to fix the rates of tax selected by the Corporation out of the list contained in s. 113 (2), to select persons to be rendered liable to tax, the system of assessment to be adopted and the exemptions, if any, to be granted. The Act leaves it to the Corporation by resolution to define the maximum limits of tax to be levied, the class or classes of persons, or descriptions or descriptions of articles and properties to be taxed, the system of assessment to be adopted and the exemptions, if any, to be granted. The Act discloses by express enactment no standard, no principle and no policy laid down by the Parliament to guide the Corporation in levying and collecting the optional taxes. By providing in sub-s. (2) of s. 150 that the resolution will come into force on or fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orporation , and needs of the Corporation are of necessity an adequate guidance. Strong reliance in that behalf was placed upon the judgment of this Court in the Liberty Cinema's case(1), which we have already referred. Sarkar, J., speaking for the majority of the Court observed at p. 494 : It seems to us that there are various decisions of this Court which support the proposition that for a statutory provision for raising revenue for the purposes of the delegate, as the section now under consideration is, the needs of the taxing body for carrying out its functions under the statute for which alone the taxing power was conferred on it, may afford sufficient guidance to make the power to fix the rate of tax valid. The learned Judge proceeded to derive the principle stated by him from the decisions in The Western India Theatres Ltd v. Municipal Corporation of the City of Poona()[1965] 2 S.C.R. 477); Vasantlal Maganbhai Sajanwala v. The State of Bombay () [1961] S.C.R. 341) ; Union of India v. Bhana Mal Gulzari Mal(1); Harishankar Bagla v. The State of Madhya Pradesh([1959] Supp. 2 S.C.R. 71). But the cases cited did not make the needs of the taxing body a test for deter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be sanctioned by the Central Government before it becomes effective; and (2) that the act of levying tax together with all incidental matters is entrusted to a body of elected representatives of the people who are responsible to the electorate. We do not think that the existence of either of these controls warrants a departure from the rule against excessive delegation. They may probably operate as effective safeguards against abuse. But the Constitution has entrusted the power of legislation to the Parliament and has also imposed a restriction against delegation of its authority without setting out, guidance to the delegate; the Parliament cannot by providing against abuse of its functions by its delegate reduce the rigour of the rule against excessive delegation of' authority. The rule against excessive delegation of legislative,power is a restriction upon the power of Parliament : whether in a given instance the rule is violated must depend on the nature and the extent of delegation and not by the application of the test that delegation of authority to some other body may more ,effectively administer the Act. If the argument that by imposition of controls which ensure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t excessive delegation may be departed from. If that exception be true, the Parliament may justifiably delegate its power to enact laws to other bodies merely by the expedient of constituting those bodies from among the representative of the people. It may also be noticed that under s. 490 of the Delhi Municipal Corporation Act', 1957, in certain eventualities the Central Government may supersede the Corporation for such period as may be specified in the order. When the order of supersession is passed all councillors and aldermen vacate their offices and during the period of supersession of the Corporation, all powers and duties conferred and imposed upon the Corporation are exercisable and performable by such officer or authority as the Central Government may appoint in that behalf, and that would include power of taxation. Certainly during the period that the Corporation remains under supersession, the power to tax would be exercised' by a nominee of the Central Government and not by the represen- tatives of the people. The Parliament has undoubtedly at any given time power to, withdraw the delegated power in favour of the Corporation. But by retaining authority to wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary question which fell to be determined in that case related to the validity of s. 135(3) of the U.P. Municipalities Act 2 of 1916, which shut out all enquiry into the regularity of the procedure by which tax has been imposed after the sanction of the Government to a resolution of the Municipality selecting a tax for imposition had been obtained. It was held by the majority that the rule of conclusive evidence in s. 135 (3) did not shut out all enquiry by courts. The Court incidentally con- sidered the question whether the enactment of s. 135 (3) amounted to delegation of legislative power to tax insofar as the rate and incidence were concerned and in the minority judgment it was ,observed that the Legislature may delegate to a subordinate authority the power 'to fix rates under proper safeguards, and 'it is not necessary to specify all the situations under which this can be ,done. It was observed at p. 970 : But there can be no doubt that in the matter of local taxation like taxation by municipal boards, district boards and bodies of that character there is pre-eminertly a case for delegating the fixation of the rate of tax to the local body, be it a municipal board o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rates of tax to be levied, class or classes of persons, or the description or description of ,Articles and properties to be taxed, the system of assessment to be adopted and the exemptions if any to be granted are invalid. We hold that the Validating Act 35 of 1966 validly levies and imposes tax on consumption or sale of electricity till March 31, 1966. It will however be declared that S. 150(1) is void as permitting excessive delegation of legislative authority to the Corporation. Sikri, J. I have had the advantage of reading the judgments prepared by the learned Chief Justice Hidayatuilah, J., and Shah, J. I agree with the learned Chief Justice that the appeals be allowed and with the order regarding costs. I further agree with the reasons given by him for holding (a) that the tax was imposed on consumption of electricity (b) that the sanction by Government was in accordance with the provisions of the Constitution, and (c) that the Validation Act validated the levy and collection for the period April 1, 1960, to March, 1966. But as I hold different views as to the powers of legislatures in India, I would briefly indicate them. Apart from authority in my view Parliament has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 150 of the Act by ascertaining whether a guide or policy exists in the Act, I find adequate guide or policy in the expression purposes of the Act in s. 113. The Act has pointed out the objectives or the results to be achieved and taxation can be levied only for the purpose of achieving the objectives or the results. This, in my view, is sufficient guidance especially to a self-governing body like the Delhi Municipal Corporation. It is not necessary to rely on the-safeguards mentioned by the learned Chief Justice to sustain the delegation. There is no need to think that delegations of the present type will lead to arbitrary taxation or rules. First, we must have faith (1) 9 A.C 117. (2) 10 A.C. 282 (3) [1919] A.C. 935 in our representative bodies and secondly, I agree with the learned Chief Justice and Hidayatullah, J., that in suitable cases taxation in pursuance of delegated powers by a Municipal Corporation can be struck down as unreasonable by Courts. If Parliament chooses to delegate wide powers it runs the risk of the bye-laws or the rules framed under the delegated power being challenged as, unreasonable. ORDER In accordance with the opinion of the majority, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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