9911796707
TMI Blog1975 (9) TMI 171X X X X Extracts X X X X X X X X Extracts X X X X ..... to provide, in the interest of the general public for the control of the production, supply and distribution of, and trade and commerce in, certain articles. Section 2(a) of the Act defines "essential articles" as meaning any article (not being an essential commodity as defined in the Essential Commidities Act, 1955) which may be declared by the Government by notified order to be an essential article. Section 3 enables the Government, if of opinion that it is necessary or expedient so to do for maintaining or increasing the supplies of any essential article or for securing their equitable distribution and availability at fair prices, to make notified orders providing for: (a) regulating by licences, permits or otherwise the production or manufacture of any esential article: (b) controlling the price at which any essential article may be bought or sold; (c) regulating by licences, permits, or otherwise the storage, distribution, transport, disposal, acquisition, use or consumption of any essential article; (d) prohibiting the withholding from sale of any essential article ordinarily kept for sale; (e) requiring any person holding in stock any essential article to sel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the respondent in Civil Appeal No. 2557 of 1969, the legislation is repugnant to the Electricity Act, 1910 and the Electricity (Supply) Act, 1948, in particular the latter, which falls within Entries 43 and 44 of List I. According to Mr. B. Sen, who appeared for the respondents in Civil Appeal No. 20 of 1970, the Act trenches upon the field occupied by the Electricity (Supply) Act, 1948 which falls partly under Entry 43 of List I and partly under Entry 38 of List III. According to Mr. G. B. Pai, who appeared for the 1st respondent in Civil No. 1733 of 1972 the 1948 Act falls within Entry 44 of List I and the Kerala Act impinges upon that field. On the contrary, the Solicitor General appearing on behalf of the Kerala State Electricity Board contends that the Kerala Act falls under Entries 26 and 27 of List II of the Seventh Schedule to the Constitution. There is, in the arguments on behalf of the respondents, a certain amount of confusion. The question of repugnance arises only in case both the legislations fall within the same List III. There can, therefore, be no question of repugnance between the Electricity Act and the Electricity (Supply) Act on the one hand and the Kerala A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also on the principle that the `special' excludes the `general' and the general entry in List II is subject to the special entry in List I. For instance, though house accommodation and rent control might fall within either the State List or the Concurrent List, Entry 3 in List I of Seventh Schedule carves out the subject of rent control and house accommodation in cantonments from the general subject of house accommodation and rent control (see Indu Bhusan v. Sundari Devi(1). Furthermore, the word `notwithstanding' in clause (1) also means that if it is not possible to reconcile the two entries the entry in List I will prevail. But before that happens attempt should be made to decide in which list a particular legislation falls. For deciding under which entry a particular legislation falls the theory of "pith and substance" has been evolved by the Courts. If in pith and substance a legislation falls within one List or the other but some portion of the subject matter of that legislation incidentally trenches upon and might come to fall under another List, the Act as a whole would be valid notwithstanding such incidental trenching. These principles have been l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of s.100(1), which give an exclusive power to the Federal Legislature to legislate with respect to the matters enumerated in List I, the Federal Legislative List. Hence, though Parliament has no doubt done its best to enact two lists of mutually exclusive powers, it has also provided, ex-majori cautela, that if the two sets of legislative powers should be found to overlap, then the federal legislation is to prevail. And the reason for this is clear. However carefully and precisely lists of legislative subjects are defined, it is practically impossible to ensure that they never overlap; and an absurd situation would result if two inconsistent laws, each of equal validity, could exist side by side within the same territory." In the same case Sulaiman, J. observed : "On a very strict interpretation of s.100, it would necessarily follow that from all matters in List II which are exclusively assigned to Provinicial Legislatures, all portions which fall in List I or List III, must be excluded. Similarly, from all matters falling in List III, all portions which fall in List I must be excluded. The section would then mean that the Federal Legislature has full and exclus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also on a subject in another list, and the different provisions of the enactment may be so closely intertwined that blind observance to a strictly verbal interpretation would result in a large number of statutes being declared invalid because the legislature enacting them may appear to have legislated in a forbidden sphere. Hence the rule which has been evolved by the Judicial Committee, whereby the impugned statute is examined to ascertain its `pith and substance,' or its `true nature and character,' for the purpose of determining whether it is legislation with respect to matters in this list or in that." They also held : "Thirdly, the extent of the invasion by the Provinces into subjects enumerated in the Federal List has to be considered. No doubt, it is an important matter, not, as their Lordships think, because the validity of an Act can be determined by discriminating between degrees of invasion, but for the purpose of determining what is the pith and substance of the impugned Act. Its provisions may advance so far into Federal territory as to show that its true nature is not concerned with Provincial matters, but the question is not, has it trespassed m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tled. In A. S. Krishna v. State of Madras after referring to section 107 of the Government of India Act, 1935, which is in terms similar to clause (1) of Article 254, this Court observed: "For this section to apply, two conditions must be fulfilled : (1) The provisions of the Provincial law and those of the Central legislation must both be in respect of a matter which is enumerated in the Concurrent List, and (2) they must be repugnant to each other. It is only when both these requirements are satisfied that the provincial law will, to the extent of the repugnancy, become void." To the similar effect is the decision in P. N. Kaul v. The State of J&K. The whole question of repugnancy is elaborately discussed in J & K State v. M. S. Farooqi. Let us now, therefore, consider what in its pith and substance is the subject matter of the Kerala Act. Is it an Act dealing with incorporation, regulation and winding up of trading corporations, including banking, insurance and any financial corporations but not including cooperative societies (Entry 43); or incorporation, regulation and winding up of corporations, whether trading or not, with objects not confined to one State, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts and Reasons of that Act does not help his contention. The coordinated development of electricity in India on a regional basis, for which the Government felt it necessary to bring in legislation which resulted in the Electricity (Supply) Act, 1948 cannot show that it deals with the incorporation and regulation of an inter-State corporation. The statement itself proceeds on the basis that the executive power will vest in the Provinces, which means that the legislation falls in the Concurrent List. The Statement of Objects and Reasons also mentions the necessity for the constitution of semi-autonomous bodies like Electricity Boards to administer the grid systems. The Electricity Boards, as already mentioned, are confined to the jurisdiction of States. The Statement of Objects and Reasons itself shows that what was contemplated was a legislation under the Entry in the Concurrent List. The Statement of Objects and Reasons, however, mentions Entry 33 of the Federal List of the Government of India Act, 1935 as the Entry under which the legislation was undertaken. That Entry corresponds to Entries 43 and 44 of List I of Seventh Schedule to the Constitution. Therefore, the Statement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inter-State agreement as contemplated in section 6. Section 8 provides for terms and conditions of appointment of the members of the Board. Section 9 relates to the qualifications of the members of the Board. Section 10 deals with removal or suspension of the members of the Board. Section 10A gives power to the State Government to declare void certain transactions in connection with which a member has been removed under the provisions of section 10 on 12 provides that the Board shall be a body corporate. Section 14 provides for the meetings of the Board. Section 15 deals with the appointment of the staff by the Board. Section 16 states that the State Government shall constitute a State Electricity Consultative Council for the State and provides for constitution of that body. Section 17 provides for the constitution of a Local Advisory Committee. Section 18 describes the general duties of the Board. Section 19 says that the Board may supply electricity to any licensee or person requring such supply in any area in which a schme sanctioned under Chapter V is in force. Section 20 provides for power of the Board to engage in certain undertakings. Section 21 concerns the power of the Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nown as the Grid Tariff shall, in accordance with any regulations made in this behalf, be fixed from time to time by the Board in respect of each area for which a scheme is in force, and tafiffs fixed under the section may, if the Board thinks fit, differ for different areas, and subsection (2) of that section provides that the Grid Tariff shall apply to sales of electricity by the Board to licensees in other so required under any of the first, second and third schedules and shall also be applicable to sales of electricity by the Board to licensees in other cases. Section 47 vests power in the Board to make alternative arrannements with licensees. Section 49 makes provision for sale of electricity by the Board to persons other than licensees. Section 50 says that the Board should not supply electricity in certain circumstances. Section 55 provides that licensees should comply with the directions of the Board. Section 63 says that the State Government may make subventions to the Board for the purpose of the Act. Section 64 provides for loans by the State Government to the Board. Section 65 gives power to the Board to borrow. Section 66 provides for guaranteeing of loans raised by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Again several entries in List I relate to activities commercial in character. Entry 45 "Banking" Entry 46 "Bills of exchange, cheques, promissory notes and other like instruments; Entry 47 "Insurance"; Entry 48 "Stock exchanges and future markets", Entry 49 "Patents, inventions and designs." There are several entries relating to activities commercial as well as non-commercial in List II-Entry 21 "Fisheries", Entry "Industries .... "; Entry 25 "Gas and Gas works"; Entry 26 "Trade and commerce": Entry 30 "Money-lending and money-lenders"; Entry 31 "Inns and Inn-keeping"; Entry 33 "Theaters and dramatic performances, cinemas etc.";. We are unable to accede to the argument that the State Legislatures are competent to legislate in respect of the subject matter of those entries only when the commercial activities are carried on by individuals and not when they are carried on by corporations. Therefore the provisions in the 1948 Act regarding the Board's functions do not make it one falling under Entry 43 of List I. In Ramtanu Housing Society v. Maharashtra([1971] 1 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd development of industries in the State is within the State List of industries.. ...Acquisition or requisition of land falls under Entry 42 of the Concurrent List. In order to achieve growth of industries it is necessary not only to acquire land but also to implement the purposes of the Act. The Corporation is therefore established for carrying out the purposes of the Act. The pith and substance of the Act is establishment, growth and organisation of industries, acquisition of land in that behalf and carrying out the purposes of the Act by setting up the Corporation as one of the limbs or agencies of the Government. The powers and functions of the Corporation show in no uncertain terms that these are all in aid of the principal and predominant purpose of establishment, growth and establishment of industries. The Corporation is established for that purpose.. We, therefore, hold that the Act is a valid piece of legislation." In the present case the incorporation of the State Electricity Boards is merely for the rationalisation of the production and supply of electricity. for taking measures conducive to Electrical development and for all matters incidental thereto. The incorp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ike arms, ammunition, atomic minerals etc. as was argued by Mr. Sen. A legislature while legislating with respect to matters within its competence should be deemed to know its limits and its legislative authority and should not be deemed to be legislating beyond its jurisdiction. One thing that has always got to be kept clear in one's mind is that there may be more than one aspect with regard to a particular subject matter. "Essential articles' is a term which has acquired a definite connotation in Indian legislative practice and is not a vague or a general term. In the Government of India Act 1935 Entries 27 and 29 in List I correspond to Entries 26 and 27 of List II in the Constitution. There was no entry in that Act corresponding to Entry 33 of List III of the Constitution. Section 102 of that Act enabled the Federal Legislature to legislate in the State List during the emergency. During the World War the Defence of India Act 1939 enabled the Central Government to make such rules as appeared to it necessary or expedient for maintaining supplies and services essential to the life of the community. Rule 81 of the Defence of India Rules dealt with maintaining supplies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l article. The Act therefore in pith and substance is with respect to trade and commerce and production, supply and distribution. We agree that this is the correct view. It is not a permanent legislation with respect to electricity but a temporary one dealing with a temporary situation. There can be no doubt about the argument on behalf of the Board that the Surcharge order is necessary for its survival and existence without which there can be no production or supply of electricity. That is why it is a matter falling under Entries 26 and 27 of List II. It is no valid criticism of this view to say that the powers of the Board under the 1948 Act are overridden by the Surcharge order and the order is therefore repugnant to the 1948 Act. Indeed the Board is more than willing, it is anxious, for the Surcharge order to be made. It is not necessary to resort to section 59 for this purpose. This is a simple case of a contract being overridden in exercise of statutory powers. In the alternative it is argued as follows: The Kerala Act insofar as it deals with electricity can be deemed to be legislation under Entry 38 in List III. Though the Act itself has not declared any article as an essen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore right when he argues that the declaration of electricity as an essential article in 1965 did not in any way affect the rights of the respondents but only the Surcharge order of 1968 and that as the bills for enhanced charges for electricity were served on the respondents in 1968 before the 1969 amendment of the Act the Surcharge order and the demands made were not cured of their repugnancy till the 1969 Amendment Act was assented to by the President assuming that there is such repugnancy. It there is such repugnancy by virtue of the Surcharge order the assent of the President can cure the repugnancy between the Kerala Act and the 1910 and 1948 Acts only if it is subsequent to the Surcharge order. It is the exercise of the power under section 3 of the Kerala Act that is alleged to have created the repugnancy. We do not pause to consider whether there is in fact any repugnancy between the Surcharge order and the 1948 Act. The question still remains whether when a declaration is made under section 2(a) of the Act declaring an article as an essential article or an order is made under section 3 such a declaration or order becomes part of the Act ? In England even where an Act decla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e scope of the power delegated. Whether the power delegated can be attacked on the ground of excessive delegation of the legislative powers or on the ground that in so conferring the legislative power on the executive authority the legislature has abdicated its function or the legislature itself could not have me such a law is' a different question. There is a slight difference between such a situation and the one where it is held that the declaration is beyond the scope of the Act. That electricity is an essential article and therefore the 1965 declaration under section 2(a) declaring electricity as an essential article is valid cannot be disputed. It is not disputed- that an article which is not in fact an essential article cannot be declared to be an essential article. The next question to be considered, therefore, is whether the declaration or the order can be said to be bad on the ground either that there was excessive delegation or that the legislature can be said to have abdicated its powers ? In The Queen v. Burah (5.L.R.178,194.) it was observed: "Their Lordships agree that the Governor-General in Council could not by any form of enactment, create in India, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nor (large as they undoubtedly are) as if, when they were exercised, the efficacy of the acts done under them would be due to any other legislative authority than that of the Governor General in Council. Their whole operation is, directly and immediately, under and by virtue of this Act (XXII of 1869) itself. The proper Legislature has exercised its judgment as to place, person, laws, powers; and the result of that judgment has been to legislate conditionally as to all these things. The conditions having been fulfilled, the legislation is now absolute. Where plenary powers of legislation exist as to particular subjects, whether in an imperial or in a provincial Legislature, they may (in their Lordships' judgment) be well exercised, either absolutely or Conditionally. Legislation, conditional on the use of particular powers, or on the exercise of a limited discretion, entrusted by the Legislature to persons in whom it places confidence, is no uncommon thing; and, in many circumstances, it may be highly convenient. The British Statute Book abounds with examples of it: and it cannot be sup posed that the Imperial Parliament did not, when constituting the Indian Legislature, contem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... machinery for determining the compensation payable to the owner of the movable property nor did it contain any guiding principles for determining the amount of compensation. But in the very same decision it was observed: 'Considering the complex nature of problems which have to be faced by a modern State, it is but inevitable that the matter of details should be left to the authorities acting under an enactment. Discretion has, therefore, to be given to the authorities concerned for the exercise of the powers vested in them under an enactment." This decision considered the relevant decisions on the subject and is not against the view which we have taken We must, however, refer to the decision of this Court in Gwalior Rayon Mills v. Asst. Commr. 5. T.( A.I.R 1974 S.C.1660.) relied upon by the respondents. In that case it was found that the Parliament had laid down legislative policy and had not abdicated its legislative function. It is necessary to refer to the view taken in that case by the majority judgment that it is not correct to say that if the legislature can repeal an enactment, it retains enough control over the authority making the subordinate legislation and, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd.( (1885)10App.Cas.282 P.C.) and it was pointed out that the Queensland Legislature preserved its own capacity insect and retained perfect control over the Commissioner for Transport. It was in that context that they added "inasmuch as it could at any time repeal the legislation and withdraw such authority and discretion as it had vested in him". This portion of the observations cannot be relied upon in every case where the question of excessive delegation arises to justify it merely on the ground that it is open to the legislature to repeal the legislation and withdraw the authority. This would be apparent from the extract from the judgment of Stable J. which immediately follows thereafter: "obviously Parliament cannot directly concern itself with all the multitudinous matters and considerations which necessarily arise for daily and hourly determination within the ramifications of a vast transport system in a great area in the fixing of and collection of licensing fees. So, as I see it on the face of the legislation, Parliament has lengthened its own arm by appointing a commissioner to attend to all these matters, including the fixing and gathering of the taxes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nction holder under section 28 of the Indian Electricity Act, 191 and as such a licensee within the meaning of that term n clause (6) of section 2 of the Electricity (SUPPLY) Act, 1948. The respondent has no objection to collecting the surcharge from those to whom it supplies electricity. The respondent's contention is a limited one that it need not pay surcharge on the electricity which it consumes. We consider this contention well founded and it is supported by the provisions of clause (3) and (8) of the Surcharge order which read together leave no room for doubt on that point. Clause (3) reads as follows: "3. Notwithstanding anything to the contrary contained in any agreement entered into with any consumer or the conditions of service agreed upon by the Kerala State Electricity Board; the Kerala State Electricity Board shall levy a surcharge in accordance with clause 5 on all supplies of electrical energy made by it either directly or through licensees: Provided that no surcharge under this order shall be levied on- (a) Bulk supplies of energy to the licensees; (b) Low Tension supplies of energy for domestic residential purposes; (c) Low Tension supplies of energy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g an essential commodity as defined in the Essential Commodities Act, 1955 which the Government by notified order might declare to be an essential article. The definition leaves it to State Government to decide what should be an essential article for the purpose of the Act. The Legislature is of course presumed to know the limits of its competence and assuming it is permissible to attribute similar knowledge to the Government as to the bounds of its authority under sec. 2(a), an essential article may be any article covered by any of the entries in List 11 or List III except the classes of commodities mentioned as essential commodity in the Essential Commodities Act. Until therefore, the Government issued a notification on December 10, 1965 under sec. 2(a) declaring electrical energy to be an essential article almost four years after the act came into force, it was not possible even to guess what the Act was about. Thus the Act as passed had no positive content, it was an empty husk and its in substantiality, if by itself not, an ill validating factor, exposes the want of a declared legislative policy in the Act. The Act does not give any indication as to the nature of the articles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enumerated in the Concurrent List contains any provision repugnant to the provisions of an earlier law made by Parliament or an existing law with respect to that matter, then, the law so made by the Legislature of such State shall, if it has been reserved for the consideration of the President and has received his assent, prevail in that State: Provided that nothing in this clause shall prevent Parliament from enacting at any time any law with respect to the same matter including a law adding to, amending, varying or repealing the law so made by the Legislature of the State." It appears that the President had given his assent to the principal Act of 1961 and also to the successive amending Acts extending the life of the principal Act. The Act as it was passed in 1961 does not appear to contain any provision which was repugnant to any Central Act or existing law, that being so, the assent given to it seems redundant and of no consequence. (obviously, Art. 254(2) contemplates an existing repugnancy and not possible future inconsistencies. in December 10, 1965 the State Government issued a notification declaring electrical energy to be an essential article under sec. 2(a) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ules made under the Act would have the effect "as if enacted in this Act." overruling the contention that the regulations became part of the Act in view of sub-sec. (4) of sec. 31 and that with the repeal of the Act the regulations also stood repealed as part of that Act, this Court observed at page 23 of the report: "The true position appears to be that the rules and regulations do not lose their character as rules and regulations even though they are to be of the same effect as it contained in the Act. They continue to be rules subordinate to the Act, and though for certain purposes, including the purpose of construction, they are to be treated as if contained in the Act, their true nature as subordinate rule is not lost. There is thus at least one decision of this Court which seems to support the view that the orders made by the State Government under sec. 2(a) and sec. 3(1) of the impugned Act could not be called part of the Act; this Act does not even say that such orders are to be treated as if enacted in the Act. This is an important aspect of the case, and I do not think it can be assumed or taken for granted without further consideration that these orders ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
