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TMI Blog2002 (1) TMI 1285X X X X Extracts X X X X X X X X Extracts X X X X ..... ntitled to levy market fee. The Division Bench however without entering into the aforesaid controversy, came to the conclusion that no clear notice appears to have been given to the company to produce the records for the purpose of satisfying the Market Committee that the tobacco leaves in question were either not processed or exported from the market area and, therefore, the company must be given a fresh opportunity of adducing all the relevant documents before the Market Committee to escape the presumption arising out of proviso to Section 27 of the Act. The High Court having remitted the matter to the Market Committee for passing a fresh assessment order, the company has approached this Court, which is the subject matter in Civil Appeal No. 6453 of 2001 arising out of SLP(Civil) No. 12374/84. When the Special Leave Petition was listed before a Bench of this Court in February, 1987, the judgment of this Court in I.T.C. Ltd. etc. vs. State of Karnataka, reported in 1985 Supp.(1) S.C.R. 145 had been placed. The Bench tentatively being of the view that the decision of this Court requires reconsideration directed that the matter be placed before a Constitution Bench of five Judges an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r respective fields and there is no repugnancy if both the Acts are considered in the light of their respective true nature and character. The majority view relied upon the decisions of this Court in State of Orissa vs. M.A. Tulloch and Co., 1964(4) S.C.R. 461 and Baij Nath Kedia vs. State of Bihar and Ors., 1969(3) S.C.C. 838. The other matter, arising out of the judgment of Patna High Court is one filed by Agricultural Produce Market Committee, against a similar order as in Civil Appeal No. 6453 of 2001, remanding the matter for making a fresh assessment order, after issuing notice to the ITC. So far as Civil Appeals arising out of the judgment of Allahabad High Court is concerned, the Division Bench of Allahabad High Court followed the judgment of this Court in ITC vs. The State of Karnataka 1985 (Suppl.) Supreme Court Cases, 476, and held that Mandi Samiti cannot charge a market fee on sale and purchase of Tobacco, and consequently Krishi Utpadan Mandi Samiti has preferred the appeals in question. Civil Appeal No. 3872 of 1990 also arises out of a judgment of Allahabad High Court and the Tobacco Merchants' Association and Ors., are the appellants. The Full Bench of Allah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the State Act, the High Court held the M.P. Krishi Utpadan Mandi Adhiniyam 1972 as amended by M.P. Krishi Utpadan Mandi Sanshodhan Adhiniyam, 1986 to be valid. Mr. Shanti Bhushan, learned senior counsel appeared for ITC, and argued, that the majority view in the decision of ITC case is correct and once Parliament has made a law relating to tobacco industry, which provides for the manner and place of sale as well as levy of fee on the sale, the Market Committee Act enacted by the State Legislature, providing levy of fee for sale of the tobacco within the market area will be repugnant to the Central law, and therefore, the State Act, so far as it deals with tobacco, must be held to be ultra vires. Mr. Rakesh Dwivedi, the learned senior counsel, appearing for the State of Bihar, on the other hand contended, that the majority decision in ITC case must be held to be contrary to several Constitution Bench decisions of this Court starting from Tika Ramji vs. State of U.P. (1956) SCR 393, and the word 'industry' in Entry 52 of List I must be given a limited meaning. So construed, according to Mr. Dwivedi, the Parliament cannot be said to have legislative competence to ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the judgment of this Court in ITC case. Ordinarily, this Court does not embark upon an enquiry on the constitutionality of the legislation if that had not been assailed. But taking into account the procedure, that had already been adopted, and noticing all the Advocate Generals and the Attorney General, in view of the amplitude of arguments advanced by the counsel for the parties, we do not think it appropriate to dispose of this batch of cases without examining the constitutional validity of the Tobacco Board Act, enacted by the Parliament under Entry 52 of List I. In fact the main thrust of the rival contention centers round the same. Mr. Shanti Bhushan, learned senior counsel appearing for the ITC Ltd. Contended, that Entry 52 of List I of the VIIth Schedule of the Constitution requires the Parliament to make a declaration by law identifying an industry, the control of which is expedient to be taken over by the Union in the public interest. Once such a declaration is made by the Parliament, the entire gamut would be within the legislative competence of Parliament to make law, and the very industry having been made the subject of legislation, the Parliament gets exclusive po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to Mr. Shanti Bhushan, in the Constitution Bench decision of this Court in Harakchand (supra) while construing the expression 'industry' in Entry 52 of List I the wider definition of the Industry in the Webster's Dictionary has been approved and, therefore, there is no justification in giving the expression any restrictive meaning. The learned counsel also urged that in the very same case, construing Entry 27 of List II, the Court observed that the Entry Indusry is a special Entry while Entry 27 dealing with production, supply and distribution of goods is a general Entry. Mr. Shanti Bhushan contends that the word 'industry', if has been held to be a special Entry, whether in Entry 24 of the List II or Entry 7 and Entry 52 of List I, law made under that Entry must prevail over any law which could be referrable to a general Entry. According to Mr. Shanti Bhushan, applying the ratio in Harakchand (supra), it must be held that the majority view in the ITC case is correct. Mr. Shanti Bhushan further urged, a particular industry, in respect of which a declaration is made by the Parliament in terms of Entry 52 of List I, the industry itself having become a subject o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... slation, though purporting to deal with a subject in one list, touches also on a subject in another list, and the different provisions of the enactment may be so closely interwined that blind adherence 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 approved the same and held that it was a correct method of interpreting the various items in different lists. Mr. Shanti Bhushan also pointed out that in the aforesaid judgment the Constitution Bench followed the earlier observation of Hon'ble Hidaytullah, J. in the case of State of Rajasthan vs. G. Chawla (AIR 1959 SC 544) to the effect ; It is equally well settled that the power to legislate on a topic of legislation carries with it the power to legislate on an ancillary matter which can be said to be reasonably included in the power given . According to the learned counsel, it would be within the competence of the Central Legislature to provide for matters which may otherwise fall within the competence of the State legislature if they are necessarily incidental to effective legisl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so urged, that Entry 27 of the State List relating to production, supply and distribution of goods cannot be held to be a special Entry so as to be excluded from the purview of Entry 52 of List I. According to him the two entries do not form the part of the same genus so as to apply in the same field, and if the ratio in the judgment in Harakchand(supra) case is applied then Entry 27 cannot be held to be a special Entry. He also relied upon the Constitution Bench judgment in Waverly Jute Mills Case (1963) 3 SCR 209, where the Court was required to examine the competence of the Parliament to enact Forward Contract Regulation Act, 1952 , and whether it encroached upon the subject matter falling under Entry 26 and Entry 28 of List II. The Court upheld the validity of the law by holding that the Parliament has legislative competence under Entry 48 of List I relating to stock exchanges and future markets, and in fact it has the exclusive competence. Mr. Shanti Bhushan contended, that apart from the fact that in Tikaramji (supra), in Calcutta Gas (supra), in Mcdowell (supra) the competence of the Parliament to make law had not been assailed, and on the other hand, what was under consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a restricted meaning, being given to the expression 'industry' in Entry 7 and 52 of List I or Entry 24 of List I will have disastrous consequences, inasmuch as the Parliament would declare by law a particular industry to be necessary for the purposes of defence or for the prosecution of war under Entry 7, and yet in such law, cannot make any provision in respect of raw-materials or growth of any item, which may be absolutely necessary for the industry in question. According to Mr. Shanti Bhushan, the learned senior counsel, the majority judgment in ITC case, no doubt, relied upon the decisions of this Court in State of Orissa vs. M.A. Tulloch (1964) 4 SCR 461 and Baijnath Kedia vs. State of Bihar - (1969) 3 SCC 838, for the proposition that, when the Central Government takes over an industry under Entry 52 of List I and passes an Act to regulate the legislation, the State Legislature ceases to have the jurisdiction to legislate in that field, and if it does so, then it would be ultra vires of the powers of the State Legislature as the entire field is occupied by the Central Legislation. The case of Tulloch (supra) as well as the case of Baijnath (supra) deal with the la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken as if in respect of any matter relating to Tobacco, all other acts whether consistent or inconsistent with the Tobacco Act will cease to prevail. In other words, if there is any field which is not covered by the Tobacco Board Act, and if there was some other valid provision, then the Tobacco Board Act would not come in the way. In support of this contention Mr. Shanti Bhushan relied upon the decision in M. Karunanidhi vs. Union of India (1979) 3 SCC 431, wherein in paragraph 57 this Court in unequivocal terms expressed the intention that the State Act which was undoubtedly the dominant legislation would only be in addition to and not in derogation of any other law for the time being in force, which manifestly includes the Central Acts, namely the Indian Penal Code, the Corruption Act and the Criminal Law (Amendment) Act. In analysing the provisions of the Tobacco Board Act, the counsel contends, that the intention of the Parliament is to cover the field of trade in Tobacco. Relying upon the Constitution Bench decision in Belsund Sugar Company (1999) 9 SCC 620, the learned counsel contends that if a special Act deals with regulating trade in an Article, it has to go out of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Entry 24 of List II. Entry 24 of List II being subject to Entry 52 of List I, when Parliament makes a law in respect of an industry in exercise of its power referable to Entry 52 of List I then that expression cannot be wider than the word 'industry' in Entry 24 of List 2. It would, therefore, be given a restricted meaning to the expression 'industry', as was done by this Court in Tikaramji's case, which was followed in Calcutta Gas, Kannan Devan Hills and Ganga Sugar Corporation. According to Mr. Dwivedi, even in the case of B. Viswanathaiah Co. vs. State of Karnataka (1991) 3 SCC 358, a three Judge Bench of this Court construed the declaration made in terms of Entry 52 of List I in relation to silk industry and held that taking over the control of raw silk industry must be restricted to the aspect of production and manufacture of silk yarn or silk and did not take in the earlier stages of the industry, namely the supply of raw-materials. According to Mr. Dwivedi, in the aforesaid case the Court unequivocally held that the declaration in Section 2, which is under Entry 52 of List I, do not in any way, limit the powers of the State Legislature to legislate in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to regulate growing of raw-tobacco, must be held to be beyond the competence of Parliament, and on the other hand, is within the exclusive domain of the State Legislature. State Legislature having provided for a market where alone the trade and commerce in and the production supply and distribution of tobacco can take place, the Tobacco Board Act would cease to operate and it is the State law which would prevail. With reference to the judgments in M.A. Tulloch and Baij Nath Kedia relied upon in the majority judgment of ITC's case, Mr. Dwivedi contends that those decisions will have no application, inasmuch as a comparison of Entry 23 of List II and Entry 54 of List I would indicate that the head of the Legislation is one and the same, and Entry 23 of List II itself is subject to Entry 54 of List I. Necessarily, therefore, the entire field, which was there available for the State Legislature to make law under Entry 23 of List II, once assumed by the Parliament under Entry 54 of List I, then the State Legislature is denuded of its power. Question of giving narrow meaning or wider meaning to the legislative Entry does not arise for consideration in those cases. Accordingly the maj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt light on the subject. By referring to Articles 249, 250, 252 and 253, the learned counsel urged that they are special provisions which provide that in the national interest, during proclamation of emergency with the consent of two or more states Parliament can make law with respect of any of the matters coming within the State List. In fact in the Constituent Assembly there was a heated debate in relation to Article 249 and there was a strong objection to wide power being given by that Article for legislation in the national interest with respect to the State List. The Founding Fathers apprehended that in the name of national interest the federal character of the Indian polity could be completely destroyed and India could be converted into a unitary state, therefore, Article 249 was re- tailored and was provided for a shorter duration of operation of parliamentary law so made. Mr. Dwivedi urged that the term 'industry' in Entry 7 of List I as well as Entry 52 of List I should be confined to the process of manufacture of the industries which are declared to be necessary for the purposes of defence or for prosecution of war. According to Mr. Dwivedi there is no necessity o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, the Court should avoid giving a wider meaning to the expression 'industry' Entry 7 and Entry 52 of List I as well as Entry 24 of List II. With reference to different Articles of the Constitution, Mr Dwivedi contends that the State Legislatures have exclusive power to make laws with respect to Entries in the State List and only in specified contingencies Parliament can legislate with respect to them. In this view of the matter counsel contends, entries in List I ought not to be construed very widely as construed by this Court in ITC case. The counsel says that in the State of Bihar, Market Act in relation to tobacco is relatable to Entries 26 and 27 of List II whereas Tobacco Board Act, enacted by the Parliament includes within its fold the entire process of growing, curing and marketing of tobacco and unlike the sugar industry and purchase of sugar cane by it which was dealt with by the Constitution Bench in the case of Tika Ram ji the tobacco industry cannot be split up with reference to the raw-material. According to learned counsel growing of tobacco, its curing and marketing being one integrated industrial process the same would be embedded into Tobacco Industry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not set up any auction platform or any kind of market centre in Bihar and in fact several relevant provisions like Section 13, 13A and 14 have not been enforced in the State of Bihar. If the provision of the Tobacco Board Act is construed in its wide meaning then the Parliament must be held to have no competence to make laws in respect of anything prior to the curing of tobacco. According to the learned counsel, when this Court in ITC case held the State Act to be invalid, it so held on the conclusion that the entire field is covered by the Central Legislation. But no steps having been taken by the Tobacco Board in the State of Bihar under Sections 8, 20 and 20A and other provisions not having been applied, it is difficult to subscribe that the entire field is covered by the Tobacco Act. Mr. Dwivedi also very seriously contended that the Parliament by enacting the law under Entry 52 of List I in relation to the Tobacco Industry and having enacted Tobacco Board Act included the provisions of Section 31, which unequivocally indicates that the Act is in addition and not in derogation of any other law for the time being in force. This being the position, the Market Act must be allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... List I and List II, it would be wholly inappropriate to refer to the meaning of the word given in Encyclopaedia of Britannica, as was held by this Court in Tikaramji. It is also urged that the scope of Constitutional Entry in the 7th Schedule can never be left to be determined on a case to case basis depending upon how much field the Parliament deems fit to cover. The scope of the word 'industry' in Entry 52 of List I will not expand or restrict depending upon what the Parliament does in its legislation. The competence of Parliamentary law can never be adjudged with reference to the nature of the law which is being enacted. The scope of the Entries in List II also cannot be determined with respect to Parliamentary enactment made from time to time. On the other hand, the scope of entries have to be determined by reference to each other and by modifying one with respect to the other on the basis of the context without making any of the entries otiose. It was so held by this Court in the case of McDowell (1996) 3 SCC 709. Since a law made by a legislature, be it Parliament or be it the State, has to be tested on the anvil of the entries in the 7th Schedule of the Constitution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied that the manufacture of gold ornaments by the Goldsmith is a process of systematic production for trade or manufacture and, would therefore fall within the connotation of the word 'industry' in the appropriate legislative entries. Thus Harakchand also follows the ratio in Tikaramji and not departed from the view taken in Tikaramji. In HR Banthia, the Supreme Court rejected the submission to adopt the definition of 'industry', as given in the Industrial Disputes Act. According to Mr. Dwivedi, the observations of this Court in Harakchand and Banthia cannot be utilised for the purposes of the agricultural raw-material and its production within the word 'industry' in Entry 52 of List I, how so ever wide the same word may be construed. With reference to the judgment of this Court in Ishwari Khaitan Mr. Dwivedi contends that the enunciation of law made therein would indicate that the Court was examining to find out by virtue of law made under Entry 52 of List I to what extent there has been denudation of the State Legislature's power to legislate under Entry 24 of List II. The Court did find that the extent of erosion is not absolute but only to the extent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the relevant decisions and has come to the right conclusion. According to Mr. Dwivedi, Tikaramji principles enunciated therein having been approved in the subsequent cases, and even in Ganga Sugar case Hon'ble Krishna Iyer, J. having negatived a similar contention, as was urged in the present appeal as a desperate plea and Belsund's case have approved Tikaramji, irresistible conclusion would be that the majority view in ITC judgment is incorrect and necessarily, therefore, the Parliament did not have the legislative competence while enacting the Tobacco Board Act after declaring Tobacco industry to be taken over as a controlled industry to make any provision therein relating to growing of tobacco or sale of tobacco within the market area prior to its curing or any subsequent process of manufacturing. Dr. A.M. Singhvi, appearing for the Agricultural Produce Market Committee, Munger, on an analysis of different entries made in List I, List II and List III of the Seventh Schedule submitted that there are as many as nine entries in List II out of 66 entries which are specifically made subject to List I. 3 of the entries in List II are subject to list III. Entry 24 of list II ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h reference to entries in List III. Consequently, neither Entry 14 nor Entry 28 being subject to any of the entries in List I, the Bihar Legislature was fully competent to enact the Agriculture Produce Markets Act and once in exercise of the provisions contained in the Act, tobacco is notified to be one of the agricultural produce, then the power to levy fee for sale or purchase of tobacco within the market area cannot be whittled down by the Central Legislation. According to Dr. Singhvi, the Central Legislation to that extent must be held to be invalid. The learned counsel further urged that in case of a seeming conflict of entries of two lists, the entries should be read together without giving a narrow or restrictive sense to either of them and every attempt should be made to see whether the two entries can be reconciled or harmonized . This approach to the interpretation is necessary to uphold and promote the Federal Structure of the Constitution which is a basic structure, as held by this Court in S.R. Bommai vs. Union of India, 1994(3) SCC 1. The fundamental feature of federalism being that within each list each legislature is supreme. There can be no repugnancy between the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided by it on the principle of quid pro quo. It is in this connection, he placed reliance on the decision in Synthetics and Chemicals JT 1989(4)SC 467. According to Dr. Singhvi, the expression industry both under Entry 24 of List II and Entry 52 of List I would not cover subject matters which are mentioned sui generis in different entries and separately from Entry 24 of List II. If a wide meaning to the expression is given, it would run counter to the scheme of distribution of powers and the structural inter-relationship between Entry 52 of List I and Entries 24, 26 and 27 of List II and Entry 33 of List III and would make the State List redundant qua that industry. In this view of the matter, the counsel urged that the decisions relating to mines and minerals would not be relevant because of inter- relationship of Entry 23 of List II and Entry 54 of List I. Once the declaration is made by Parliament in terms of Entry 54 of List I, then both mines and its product minerals get extracted from the State list and get submerged in the Entry 54 of List I but that would not be the case when the power under Entry 52 of List I and Entry 24 of List II as well as other relevant entry in Lis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the existing or even non-enforced provisions of the Tobacco Board Act. In this view of the matter, according to Mr. Sanghi, the minority view in ITC case must be held to be correct and both the Central Act and the State Act should be permitted to operate in their own sphere. Mr. A.K. Ganguli, the learned senior counsel, appearing for the Tamil Nadu Agricultural Marketing Board, analysed the provisions of Article 246(3) of the Constitution and contended that the expression subject to appearing in Article 246(3) has reference to those entries in List II which provides that the subject matter of said entries are subject to the provisions contained in certain specified entries appearing in either List I or List III as for example Entry 2 in List II provides Police (including railways and village police) subject to the provisions of Entry 2A of List I. Similar provisions are found in several entries. In List II like Entry 17, 22, 24, 26, 27, 32, 33, 37, 54, 57 and 63 but only three entries in List II namely Entries 13, 23 and 50 do not specify any entry in List I or List III subject to which the said entries would remain operative but restrict the scope of these entries by a ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing conflict between the law made under any of the entries in List I and II, then the principle of federal supremacy could be invoked in view of the opening words in Article 246(1). So far as the meaning of the expression industry in Entry 52 of List I , the counsel urged that the said word must have the same meaning as would be ascribed to the word in Entry 24 of List II. So far as the raw materials are concerned, it has been held to be goods and would fall within the subject matter comprised in Entry 27 of List II. The products of the industry would also be comprised in Entry 27 of List II except that in the case of controlled industry, they would fall under Entry 33 of List III and only the process of manufacture and production would fall under Entry 24 of List II and if the concerned industry is a declared industry, then the process of manufacture and production would fall under Entry 52 of List I. It is, therefore, logical to hold that the activities relating to production and manufacture which would otherwise come within the purview of the expression industry in Entry 24 of List II becomes a subject matter of legislation under Entry 52 of List I, where the industry is a d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, only then the law made by the Parliament would prevail. But that would apply only when the law made by the Parliament and State Legislature are both in respect of the same subject matter, enumerated in the concurrent list, as was held in Hoechest Pharmaceuticals 1983(4) SCC 45. Even in Deep Chand's case the two sets of laws made by the State Legislature and the Parliament with respect to the same subject matter enumerated in Entry 35 of List III, was under consideration and the Court was examining the question of repugnancy. But that will have no application to the question involved in the present case inasmuch as the State Act falls within the subject matter comprised under Entry 28 of List II in respect of which the State Legislature enjoys the exclusive power to make laws. On an analysis of the provisions of Tobacco Board Act and Section 31 thereof, Mr. Ganguli contends that the provisions of Tobacco Act would operate only in addition to other laws and, therefore that Act cannot be pressed into service to give an over-riding effect over other legislation including the Agricultural Produce Markets Act, which has been enacted by the competent State Legislature. According t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecial Act and the Market and Fairs under Entry 28 being a general entry and Agriculture under Entry 14 of List II being a general entry, the special Act enacted by the parliament must prevail and there is no question of lack of competence of the Parliament to enact the law. In support of this contention reliance was placed on the Constitution Bench decision of this Curt in Belsund Sugar Company Limited 1999(9) SCC 620. Mr. Malhotra relied upon several decisions of the Federal Court and this Court and contended that entries in the schedule must be given its widest meaning and it would not be a correct approach to give a restricted meaning to the subject matter of legislation described in an Entry. In support of this contention, he placed reliance on the decision of the Federal Court in The United Provinces vs. Mst. Atiqa Begum Ors. - 1940(2) Federal Court Reports 110, The First Additional Income- Tax Officer, Mysore vs. H.N.S. Iyengar -1962 Supp. SCR 1, Chaturbhai M. Patel vs. The Union of India Ors. 1960(2) SCR 362, Navinchandra Mafatlal vs. The Commissioner of Income Tax, Bombay City - 1955(1) SCR 829 and Zaverbhai Amaidas vs. The State of Bombay - 1955(1) SCR 799. The lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the learned Additional Solicitor General, it was not necessary for the Court to examine the ambit of the expression industry in Entry 52 of List I. If the ordinary principle of construction of an entry in the legislative list is that the entry should be given wide meaning as has been held in several cases of this Court, there is no reason why on the basis of the said observations made in Tikaramji, the Court would give a limited meaning to the expression industry in Entry 24 of List II and Entry 52 of List I. With reference to the judgment of this Court in H.R. Banthia 1969(2) SCC 166, the learned Additional Solicitor General stated that for the purpose of that case, it was not necessary for the Court to make an attempt to define the expression industry . The Court was merely concerned with the question whether manufacture of gold ornaments would be a process of systematic product, so as to fall within the expression industry in the appropriate legislative entry. The Court did come to that conclusion. The learned Additional Solicitor General also contended the case of Harakchand 1971(2) SCC 779 is in consonance with the principle of interpretation of an entry and should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the federal scheme of the Constitution. But the Constitution Makers having found that the need for power sharing devices between the Central and the State must be subordinated to the imperatives of the State's security and stability propelled the thrust towards centralisation and by using non obstante clause under Article 246 the federal supermacy is achieved. Article 246 of the Constitution deals with the distribution of legislative powers as between the Union and the State Legislature, with reference to the different Lists in the 7th Schedule. The various entries in 3 Lists of the 7th Schedule are not powers of legislation but the fields of legislation. The entry in the List are legislative heads and are of enabling character. They are designed to define and limit the respective areas of legislative competence of the Union and the State Legislature. It is a well recognised principle that the language of Entry should be given a widest scope and each general word should be interpreted to extend to all ancillary or subsidiary matters which can fairly and reasonably be comprehended in it. The Entries in the Lists should be read together without giving a narrow or restricted mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then over that subject the Parliament gets exclusive power to make laws under Article 246(1) of the Constitution. The Tobacco Board Act having been enacted by the Parliament under Article 246(1) of the Constitution and the law in question being referable to Entry 52 of List I, the moot question that arises for adjudication is, what is the extent and ambit of the expression 'industry' used in Entry 52. As has been stated earlier, the expression 'industry' has been used in Entry 24 of List II and Entry 7 and Entry 52 of List I. In deciding the legislative competence of the Parliament in enacting Tobacco Board Act and in making provision therein in relation to the growing of tobacco as well as sale of tobacco in the places specified therein, and on terms and conditions mentioned therein, the moot question is whether the word 'industry' would be given a wide meaning so as to bring within its ambit all that is necessary for the industry, including the raw material as well as the growing of the raw material, as contended by Mr. Shanti Bhushan, or a restricted meaning would be given to the same on the basis of the observations made by this Court in Tikaramji' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity view proceeded on a finding that both Acts can be permitted to operate in their respective sphere. In the Constitution Bench decision of this Court in Harakchand Ratanchand Banthia ors. etc. vs. Union of India and Ors., 1970(1) S.C.R. 479, the legislative competence of the Parliament under Entry 52 of List I came up for consideration, while dealing with validity of the provisions of the Gold Control Act, which Act included within its ambit the gold ornaments. One of the contention that had been advanced was that the goldsmith's work was handicraft, requiring application of skills and the art of making gold ornaments was not an 'industry' within the meaning of Entry 52 of List I. It had been contended on behalf of the Union Government that the legislative entry must be construed in a large and liberal sense and goldsmith's craft was an industry within the meaning of Entry 24 of List II as well as Entry 52 of List I and therefore, Parliament was competent to legislate in regard to the manufacture of gold ornaments. Having considered the relevant entries namely Entry 52 of List I and Entry 24 and 27 of List II, the Constitution Bench had observed that - It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sense, then Entry 27 of List II will lose all meanings and contents, was not accepted by the Court. It is, thus clear that the Court did apply the theory that widest amplitude and meaning should be given to the entries in the legislative lists. Further the contention of the applicant that the legislation in fact is a legislation under Entry 27 of List II, dealing with Production, supply and distribution of goods and being a special entry, the contents of Entry should be excluded from the expression industry in Entry 52, was not accepted and rejected. In Chaturbhai M. Patel vs. Union of India, 1960(2) S.C.R. 362, a Constitution Bench of this Court was construing the Entries under the Government of India Act, 1935 and one of the contention raised in that case was Sections 6 and 8 of the Central Excise Salt Act, 1944 and the Rules made thereunder were beyond the legislative competence of the central legislature. The relevant entries which came up for consideration in that case were Entry 45 of List I and Entries 27 and 29 of the State List, which are as under:- 45. Duties of Excise on Tobacco and other goods manufactured or produced in India except:- (a)alcoholic liquo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers which may otherwise fall within the competence of the Provincial legislature if they are necessarily incidental to effective legislation by the Central legislature on a subject of legislation expressly within its power. This indicates that the Court has all along been construing a particular legislative Entry to give wide connotation possible and in that case, it was held while legislating upon an industry, Parliament would be entitled to legislate also on the raw materials of that industry which is an ancillary to the industry and there should not be any limitation in interpreting the expression industry to denude the power of the Parliament and thereby make the law ineffective. In the aforesaid judgment of this Court, it has been held: Looking at the scheme of the Act, its object and purpose, its true nature and character and the pith and substance the conclusion is inevitable that the Act was within the legislative competence of the Central legislature and although there may be certain matters otherwise within the legislative competence of the provincial legislature they are necessarily incidental to effective legislation by the Central legislature. The various pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in ITC case, Justice Mukherjee had observed: It is well settled that the cardinal rule of interpretation is that the words should be read in their ordinary natural and grammatical meaning. But words in a constitutional document conferring legislative powers should also be construed most liberally and in their widest amplitude. In view of the aforesaid rules of interpretation as well as the Constitution Bench decision referred to above, it is difficult for us to accept the contention of Mr. Dwivedi that the word industry in Entry 52 of List I should be given a restricted meaning, so as to exclude from its purview the subject of legislation coming within entry 27 or Entry 14 of List II. Bearing in mind the constitutional scheme of supremacy of Parliament, the normal rule of interpretation of an Entry in any of the list in the Seventh Schedule of the Constitution, the object of taking over the control of the tobacco industry by the Parliament, on making a declaration as required under Entry 52 of List I and on examining the different provisions of the Tobacco Board Act, we see no justification for giving a restricted meaning to the expression industry in Entry 52 of List ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f List I under which the Parliament makes a law, would not bring within its sweep the raw materials. The aforesaid observations had been made in connection with sugar industry and sugar-cane. According to Mr. Dwivedi, the majority decision in ITC case, cannot be sustained, since the earlier constitution Bench decision of this Court in Tikaramji, Calcutta Gas, Kanandevan and Ganga Sugar Corporation have not been noticed. Mr. Dwivedi's further contention is that a legislative Entry in any List should be so interpreted so as not to denude another entry in the same list or in any other list and, therefore, it is necessary to give a restricted meaning to the expression industry occurring in Entry 24 of List 2 as well as Entry 52 of List 1.According to Mr. Dwivedi, while examining the constitutionality of the Market Committee Act referable to Entries 26, 27 and 28 of List II vis- -vis the Sugar-cane Act referable to Entry 33 of List III in Belsund Sugar, this Court has held that the Market Committee Act should be subject to Sugarcane Act. Applying the same principle, it would be logical to hold that the raw tobacco, which would be a produce of agriculture and consequently a raw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry 24 of List II. In that case, the Court was not required to examine the content and scope of the expression industry in Entry 52 of List I and in fact the Court observed that it was concerned with as to whether the raw materials of an industry which form an integral part of the process are within the topic of industry which form the subject matter of Item 52 of List I. The Central legislation which was under consideration in that case as well as the notifications issued by the Central Government were held to have been enacted by the Parliament in exercise of the legislative power conferred upon it by Entry 33 of List III and was an exercise of concurrent jurisdiction and once the law is made by the Parliament in exercise of its concurrent jurisdiction, then it would not deprive the Provincial Legislatures of similar powers which they had under the Provincial Legislative List. It is important to notice the findings of the Court in that case : It follows as a necessary corollary that even though sugar industry was a controlled industry, none of these Acts enacted by the Centre was in exercise of its jurisdiction under Entry 52 of List I. Whatever observations the Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty view in ITC case is vitiated, as it had not noticed observations of the Constitution Bench decision in Tikaramji. In our opinion, it would be wholly inappropriate for this Court to apply the observations made in Tikaramji's case with regard to raw materials of industry . The Court in Tikaramji's case having not been called upon to determine the question whether the expression industry in Entry 52 of List I should be given a restricted meaning at all is contended by Mr. Dwivedi, it would be wholly inappropriate to import the observations in Tikaramji for construing the ambit and content of the subject head of legislation industry under Entry 52 of List I. Since the Court was examining the provisions of Industries (Development and Regulation) Act, which regulated the manufacturing process until Section 18-G was brought in amendment in the year 1953 and the Industries(Development and Regulation) Act did not purport to regulate the trade and commerce in the raw materials namely sugarcane and the Court in fact was scrutinizing whether the State Act enacted by the State Legislature could be held to be repugnant to the Central Legislation, it found that there exist no repu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hold that the effect was not the same thing as subject matter. In other words, the subject matter of industry under Entry 52 of List I really was not under consideration. In paragraph 29 of the said judgment, referring to the case of Baijnath Kedia vs. State of Bihar, where the Court had construed Entry 23 of List I and Entry 52 of List I, it was observed that the scope of Entry 52 of the Union List is slightly different and once it is declared by Parliament by law to be expedient in public interest to control an industry, Parliament can legislate on that particular industry and the States would lose their power to legislate on that industry. Necessarily, therefore, if the law made by the Parliament in relation to a controlled industry, the control of which has been taken over by a declaration in the law, then there cannot be any limitation on the power of the Parliament to make any provision having a reasonable and direct nexus with the industry. But at the same time, the Parliament cannot make a law, which would have no connection at all with the concerned industry. This, in our opinion is what has been expressed in paragraph 29 of the aforesaid judgment, but by no stretch of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same in the negative, following the observations of the earlier Constitution Bench decision in Tikaramji's case. Thus the extreme argument that the State Legislature is incompetent to make any law with regard to a controlled industry, the control of which has been taken over by the Union Government by making a declaration, was negatived and it is in that context, the observations on which Mr. Dwivedi relied upon had been made. We are unable to accept the submission of Mr. Dwivedi to hold that the decision of this Court in Ganga Sugar, can be pressed into service for a contention that the Parliament had no legislative competence to make a legislation in respect of a controlled industry like tobacco and enacting the Tobacco Act and making provision therein in relation to growing of tobacco as well as sale and purchase of raw tobacco. In our considered opinion, this decision is of no assistance to support the contention of Mr. Dwivedi, appearing for the State of Bihar that the expression industry in Entry 52 of List I must be given a narrow meaning so as to include only the process of manufacture or production and nothing further. We also reiterate that in none of these afores ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 991) 3 SCC 358 and Belsund Sugar (1999) 9 SCC 620. So far as Viswanathiah's case is concerned, Mr. Dwivedi relied upon the observations made in paragraph 8 of the said judgment wherein the Court had observed :- It is true that the Silk Board Act purports to control the raw silk industry in the territory of India. But, as pointed out by the High Court in the light of the earlier decisions of this Court therein referred to, the control of the industry vested in Parliament was only restricted to the aspect of production and manufacture of silk yarn or silk. It did not obviously take in the earlier stages of the industry, namely, the supply of raw materials. According to Mr. Dwivedi this decision lends support to his contention that the Industry in Entry 52 of List I will have to be given a restricted meaning, and as such, it would not cover either the growing of tobacco or dealing with sale and purchase of raw tobacco. As has been held by us earlier, the power of the State Legislature gets denuded to the extent the Central Legislation occupies the field in respect of the controlled industry, the control of which has been taken over by the Parliament on a declaration being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revail over the general Act for that commodity and by necessary implication will take the said commodity out of the sweep of the general Act.This decision, in our considered opinion is not an authority for the proposition that the expression 'industry' in Entry 52 of List I should be given a restricted meaning, as contended by Mr. Dwivedi. In that case also the extreme contention that there exists possibility of issuance of control order by the Central Government would denude the State Legislature of its authority to make a law in respect of any matter coming under any of the Entries in List II was not accepted. But at the same time it is difficult for us to construe the aforesaid decision of having laid down a ratio that in dealing with a Central Legislation in relation to a controlled industry, the control of which has been taken over by a declaration made by law, enacted by Parliament would not clothe the Central Legislature to make any law other than production or manufacture of the industry in question. Belsund Sugar (supra) by no stretch of imagination can be construed to have even remotely held that the word 'industry' ought to receive a restricted meaning.Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reliance on the Full Bench decision of Allahabad High Court in SIEL's case (supra), but in view of our conclusions already arrived at, the aforesaid Full Bench decision must be held not to have been correctly decided. It is also difficult for us to accept the submission of Dr. Singhvi, learned senior counsel appearing for the Market Committee of Monghyr, that if the subject head of legislation in List II is not subject to the corresponding Entry in List I then the power of State Legislature to legislate with regard to that matter is paramount and supreme, and therefore, the Market Committee Act being relatable to Entries 14 and 28 of List II, which are not subject to any of the Entries of List I, the Market Committee Act must be allowed to prevail. In our considered opinion, the aforesaid approach to consider the validity of a law made by the Parliament or a law made by the State legislature is not a correct approach. The Entries merely being the subject head of the legislation and the power to make law having emanated from Article 246, if a particular law made by Parliament comes within the legislative competence of the Parliament with reference to any of the Entries in List ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le the submission of Mr. Ganguli is devoid of any force. The elaborate submissions of Mr. Ganguli in relation to the decisions of this Court in Baij Nath Kedia, M.A. Tulloch, India Cement and Orissa Cement, all of which dealt with mining legislations are not necessary to be dealt with inasmuch as we have not relied upon the principles enunciated in those decisions, even though Mr. Shanti Bhushan pressed those decisions in support of his contention. In the aforesaid premises, we are of the considered opinion that the Tobacco Board Act enacted by the Parliament under Entry 52 of List I is constitutionally valid and all the provisions therein, including the provisions relating to growing of Tobacco and sale and purchase of tobacco are within the legislative competence of the Parliament. We are also further of the opinion that the word 'industry' in Entry 52 of List I cannot be given a restricted meaning, particularly when a conspectus of all the decisions interpreting Entry in any of the Lists of the Constitution including the minority view of Mukherjee, J. in ITC case is to the effect that the Entries in the List should be given liberal and generous construction and it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... over the growing of tobacco as well as on its sale and purchase, which alone would subserve the very purpose for which the control of the industry has been taken over by the Parliament. In this view of the matter, we hold that the Tobacco Board Act and the Agricultural Produce Markets Act, collide with each other and cannot be allowed to be operated simultaneously. Necessarily, therefore, the Tobacco Board Act would prevail and the Agricultural Produce Markets Act, so far as it relates to levy of fee for sale and purchase of tobacco within the market area must be held to go out of the purview of the said Act. Coming to the third question posed by us in view of the inconsistency and repugnancy between the two Acts, as already stated, it is the Central Act that would prevail and in our opinion, the majority judgment in the ITC case has been correctly decided, though the reasons for the same given by us may be slightly different than the reasons which persuaded the learned Judges to have the conclusion in the ITC case. In view of our conclusion on the three issues, the impugned judgment of the Patna High Court, remitting the matter to the Market Committee for passing a fresh as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ored. In case, ultimately if the respondents succeed then the amount collected will be refunded by the appellants along with the interest @ 12% per annum. In case the appellants succeed then the respondents undertake to pay the arrears of market-fee along with the interest @ 12% per annum from the date of the payment. Now that the judgment of the High Court is being upheld and the appeals are being dismissed, the question for consideration would be as to whether the said order of stay dated 27.2.1989 should be modified or the order should be allowed to operate and the collected market-fee would be required to be refunded with interest @ 12% per annum in accordance with the order dated 27.2.1989. Having regard to the facts and circumstances and the resources of the Market Committee, we think it appropriate to modify the said order dated 27.2.1989 and direct that the Market-fee already collected from the sale and purchase of tobacco within the market area by the Mandi Samiti, need not be refunded. But at the same time, the Market Committee will not be entitled to collect the same, even for any past period, if the same has not already been collected. Y.K Sabharwal, J. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arketing Acts - the State legislations under consideration? If our answer to this question is that the two legislations can co-exist, in that event it may not be necessary to go into the aspect of legislative competence. If, however, our answer is that the State legislations and the parliamentary legislation are incapable of reconciliation and the two cannot co-exist, in that case, the next question that would require determination will be about the validity of the State legislations. In the proposed judgment, Hon ble Mr. Justice Pattanaik has come to the conclusion that the Agricultural Produce Markets Act and the Tobacco Board Act are in direct collision with each other and cannot be allowed to be operated simultaneously. The State legislations and parliamentary legislations cannot co-exist is apparent from various provisions of the two legislations. To illustrate in this regard, reference may be made on one hand to Section 4(2) of Bihar Act and similar provision in other State legislations and on the other to the provisions of Section 13 of the Tobacco Board Act in States wherein this section has been enforced and also to Section 8(2)(cc). Reference can also be made to Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is competent or not to legislate in respect of sale of raw tobacco. If the answer to the question is that the Parliament is competent, in that eventually, the State legislation will have to be invalidated for want of legislative competence. The answer to the question would, however, depend upon the scope of the expression Industries as deployed in Entry 52 of the Union List and Entry 24 of the State List. If we find that the expression Industries is wide enough to include the raw material of the industry and the Parliament is, thus competent to enact law under Entry 52 of the Union List, in respect of raw material, the Parliament having supremacy as provided in Article 246(1), the parliamentary legislation, namely, the Tobacco Board Act would hold the field and the State legislation invalidated. The dispute in this case is not about parliamentary supremacy as none has doubted it in view of Article 246(1) of the Constitution but is whether Parliament has competence at all to legislate in respect of raw tobacco or it falls within the competence of State. If we hold that while legislating in the field of industry as provided in Entry 52 of the Union List, the Parliament is not co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect to any of the matters enumerated in List II in the Seventh Schedule. The said List is referred to in the Constitution as the State List . In exercise of power under Article 246(3), various State Legislature have enacted Agricultural Produce Marketing Acts for regulating sale and purchase of the agricultural produce and levying market fee within the framework of those Acts which, inter alia, permit levy and collection of market fee. The tobacco under the Acts in question has been notified as an agricultural produce. In ITC s case , by majority, it was held that the Tobacco industry having been taken over by the Central Government under Entry 52 of the Union List by enactment of Tobacco Board Act, the State Legislature ceases to have any jurisdiction to legislate for that filed and therefore, the provisions of the Karnataka Agricultural Produce and Marketing Act entitling the market committee to levy market fee in respect of sale and purchase of Tobacco within the market area collide with Tobacco Board Act. Thus, the State Act so far as it relates to Tobacco was struck down. The minority view was that both the State and the Central Act can operate in their respective fiel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dule of the Constitution of India. The precise question in ITC s case was as to whether in respect of marketing of tobacco, the State Government was entitled to legislate or whether in view of the fact that there was a declaration under Entry 52 of the Union List, the State Legislature had no competence to legislate on tobacco and as such the impugned legislation was ultra vires. In the minority opinion, Mukharji, J. noticed that the karnataka Agricultural Produce Marketing (Regulation) Act, 1966 deals with the subject of market in Entry 28 read with Entry 66 of List II and that it had to be borne in mind that Entry 28 is not subject to withdrawal to List I by Parliament. The State Act is not on a subject in List III nor is the Central Act a law relating to any subject in List III. It was concluded that, therefore, there cannot be any question of repugnancy. The nature and character of the Acts, namely, Karnataka Agricultural Produce Marketing (Regulation) Act, 1966 and the Central Act was noticed and it was held that it is fully manifest that both the Acts can operate in their respective fields. Further in the minority opinion it was observed that while giving due weight to Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iance was placed on the following passage of Baijnath Kadio s case as extracted at page 174 as under. It is open to Parliament to declare that it is expedient in the public interest that the control should rest in Central Government. To what extent such a declaration can go is for Parliament to determine and this must be commensurate with public interest. Once this declaration is made and the extent laid down, the subject of legislation to the extent laid down becomes an exclusive subject for legislation by Parliament. Any legislation by the State after such declaration and trenching upon the field disclosed in the declaration must necessary be unconstitutional because that field is abstracted from the legislative competence of the State Legislature. This proposition is also self-evident that no attempt was rightly made to contradict it. The majority opinion has not noticed the Constitution Bench s decision in the case of Ch. Tika Ramji and Ors. etc. v. The State of Uttar Pradesh and Ors. [(1956) SCR 393] and Ors. decisions on the scope o Entry 52 but relying upon M.A. Tulloch and Baijnath Kedio held that when declaration under Entry 52 of List I in respect of public intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation containing declaration as contemplated by Entry 52 of the Union List that doubts have arisen about the validity and applicability of State legislation about the sale of agricultural produce of tobacco in market areas and levy thereupon of market fee which aspect are on field of legislation on the State List (Entries 14, 27, 28 and 66). Entry 24 of the State List is subject to Entries 7 and 52 of List I. We are not concerned in these matter with Entry 7. The question here is as to the effect of transfer of field of legislation under Entry 24 of the State List to the Union List (Entry 52), on other fields in the State List, namely, fields of legislation under Entries 14, 27, 28 and 66 and what is fact can be transferred. Baijnath Kadio was a case which considered the validity of the State legislation on the ground of being beyond the State legislative power n view of the declaration by the Parliament in Mines and Minerals (Regulation and Development) Act. 1957 and contemplated by Entry 54 of List I of the Seventh Schedule to the Constitution. Section 2 of the Central legislation declared that it is expedient in the public interest that the Union should take under its control ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undertaking is sugar industry. The Attorney General and contended that the power to acquire property was derived from Entry 42 of List III. Ishwari Khetan s case involved the determination or scope of Entry 52 of List I and Entry 24 of List II only. The scope of these entries with respect to Entries 26 and 27 of List II and Entry 33 of List III did not fall for consideration. Further in paragraphs 7, 8 and 11 of Ishwari Khetan s case the Constitution Bench repeatedly pointed out that a declaration in Entry 52 of List I denudes the power of State Legislature to legislate under Entry 24 List II only. It was noticed that the sugar was a declared industry. The question posed was that is it, however, correct to say that once a declaration is made as envisaged by Entry 52 List I, that industry as a whole is taken out of Entry 24 of List II ? The answer given by the Constitutional Bench was that it is not correct to say that once a declaration is made in respect of an industry that industry as a whole is taken our of Entry 24 List II. It was said that the industry as a legislative head is found itself placed in Entry 24 of List II. The State Legislature can be denied legislative power u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r view, the cases of mines and minerals are not of much assistance while examining the scope of Entry 52 of List I. In State of A.P. and Ors. v. Mcdowell Co. and Ors. also it was held that the ambit and scope of a constitutional entry cannot be determined with reference to a parliamentary enactment. If it is otherwise, it would result in the Parliament enacting and/or amending an enactment thereby controlling the ambit and scope of the constitutional provision. That cannot be the law. The power to legislate with which we are concerned in contained in Article 246. The fields are demarcated in the various entries. On reading both, it has to be decided whether the concerned legislature is competent to legislate when its validity is questioned. The ambit and scope of an entry cannot be determined with reference to a parliamentary enactment. Tika Ramji s case is required to be examined in some detail since that has been a bone of serious and elaborate submissions. In that case, the challenge by the Sugarcane growers hailing from several villages of State of U.P. was to the validity of the UP Sugarcane (Regulation of Supply and Purchase) Act, 1953 and notifications issued thereun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct was to remain in force initially upto 30th June, 1947 but the period was extended to 30th June, 1952 and then to 30th June, 1952. On intervention of Section World War, a proclamation of emergency was issued by the Governor General under Section 102 of the Government of India Act, 1935. The Dominion Legislature acquired the power to make laws for the Provinces with respect to any of the matters enumerated in the Provincial Legislative List. The proclamation of emergency was to operate until revoked by a subsequent proclamation and the laws made by the Dominion Legislature were to have effect until the expiration of period of six months after the proclamation had ceased to operate. The Defence of India Act and the Rules made thereunder occupied the filed. Sugar was made a controlled commodity in the year 1942 and its production and distribution as well as the fixation of sugar prices were regulated by the Sugar Controller thereafter. The proclamation of emergency was revoked on 1st April, 1946 and the laws made by Dominion Legislature in the field of the Provincial Legislative List were to cease to have effect after 30th September, 1946. On 26th March, 1946, the British Parliam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alia, empowering it to prohibit or restrict the export of sugarcane from any area; to direct that no gur or sugar shall be manufactured from sugarcane except under and in accordance with the conditions specified in the licence issued in this behalf. There was also power to fix minimum price in exercise whereof the Central Government from time to time issued notifications fixing the minimum price to be paid by the producers of sugar for sugarcane purchased by them. On 31st October, 1951, Parliament enacted the Industries (Development and Regulation) Act, 1951 to provide for the development and regulation of certain industries. By Section 2 of the Act, it was declared that it was expedient in the public interest that the Union should take in its control the industries specified in the First Schedule. That Schedule included the industry engaged in the manufacture or production of Sugar. The U.P. Legislature enacted the impugned Act. The object of this enactment was stated to be as follows: With the promulgation of the Industries (Development and Regulation) Act, 1951 with effect from 8th May, 1952, the regulation of the sugar industry has become exclusively as Central subject. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... try being very wide to include in it raw material, i.e., sugarcane as well. Thus, the exclusive power of Parliament to legislate was urged as the main ground to seek invalidation of the State legislation -- the filed of sugarcane not being available to the State Legislature to legislate. In view of the controversy as aforesaid, the fact that the validity of the parliamentary legislation was not in issue in Tika Ramji s case, does not in any manner, affect the ratio of that decision. The point for determination in that case was substantially the same as in the present case, namely, the scope of the expression industries in Entry 52 of List I and Entry 24 of List II. There also the point was to adopt a narrow or wide interpretation of the expression industry . Further, the fact that it was a case of a manufacturing industry under IDR Act also does not affect the ratio of the case. The interpretation placed in Tika Ramji s case cannot be confined to industry falling under IDR Act alone. There is neither any express or implied indication in that decision to limit the interpretation nor there is any valid reason to so limit it. Like Tika Ramji s case, in these matters, the chal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction of sugar, within the legislative competence of the Central Legislature. The petitioners in Tika Ramji s case in support of the wide construction to be placed upon the expression industry also relied upon various decisions interpreting the said term in relation to the Industrial Disputes Act. Dealing with those cases in Tika Ramji s case this Court said: What we are concerned with here is not the wide construction to be put on the term industry as such but whether the raw materials of an industry which form an integral part of the process are within the topic of industry which forms the subject matter of item 52 of List I as ancillary or subsidiary matters which can fairly or reasonably be said to be comprehended in that topic and whether the Central Legislature while legislating upon sugar industry could, acting within the sphere of Entry 52 of List I, as well legislate upon sugarcane. This Court said that if the legislation with regard to sugarcane came within the exclusive province of the Central Legislature under Entry 52 of List I, the enactment passed by the Provincial Legislature would be ultra vires. It was said : If both the Central Legislature and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w material said to be an integral part of the industrial process, the Court repelled the plea of the State Act being ultra vires, the same being covered by the subject of sugar industry control whereof have been declared by the Parliament by law to be expedient in the public interest under the exclusive domain of Parliament. In The Calcutta Gas Company (Proprietary) Ltd. v. The State of West Bengal and Ors, the challenge was to the constitutional validity of the Oriental Gas Company Act, 1960. One of the ground of challenge was that the West Bengal Legislature was not competent to make a law regulating the gas industry in view of declaration as contemplated by Entry 52 of List I having being made by the Parliament in IDR Act -- Entry 24 being subject to the provisions of Entry 52 of List I. It was contended that Entry 25 of List II (Gas Gas Works) must be confined to matters other than those covered by Entry 24 of the same List. On the facts of the case and in view of the conclusions of the Constitution Bench on other aspect, it was not considered necessary to attempt to define the expression industry precisely or the State exhaustively all its ingredients but following Tika ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 14, 27, 28 and 66 subject to Entry 52 of the Union List. The acceptance of viewpoint propounded by Mr. Shanti Bhushan will have that effect. Therefore, the expression industries cannot be interpreted in the manner suggested. True, the parliamentary legislation has supremacy as provided under Article 246(1) and (2). This is of relevance when field of legislation is on concurrent list. While maintaining parliamentary supremacy, one cannot give go by to the federalism which has been held to be a basic feature of the Constitution (See S.R. Bommai v. Union of India. The Constitution of India deserves to be interpreted, language permitting, in a manner that it does not whittle down the powers of State Legislature and preserves the federalism while also upholding the central supremacy as contemplated by some of its articles. In this background, let us also briefly notice the constitutional history and structural inter-relationship in respect of relevant entries as they existed in Government of India Act, 1935 and as they now exist in the Seventh Schedule. Entries 27 and 29 on the State List in the Government of India Act, 1935 were as under: Item 27. Trade and commerce with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rarily place it, by fiction, in the concurrent list to enable Parliament to make laws. The expression industries in Entry 24, List II or Entry 52, List I, cannot be interpreted in a manner that would make other entries of List II of the Seventh Schedule subject to Union control, which in fact they are not. Wherever it was intended to be made subject to such control, whether of List I or that of List III, it was said so. A perusal of List II shows that whenever a particular entry was intended to be made subject to an entry in List III, it has been so stated specifically. Therefore, an interpretation which tends to have the effect of making a particular entry subject to any other entry, though not so stated in the entry, deserves to be avoided unless that be the only possible interpretation. We do not think that such an interpretation on the entries in question, namely, Entry 52 of the Union List and Entry 24 of the State List deserves to be placed. The principles of interpretation are well settled. There is no doubt that the entries in the lists in the Seventh Schedule do not provide competence or power to legislate on the legislature for which the source of power is contained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1953, The Coir Industry Act, 1953 and the Coconut Development Board Act, 1979 reference whereof was made by Mr. Shanti Bhushan need not be examined for purposes of considering the legislative competence of the impugned State legislations. The legislative competence of Parliament to legislate these statutes is not in issue before this Court and, therefore, we do not think it necessary to examine the question of legislative competence only from academic view point insofar as these legislations are concerned. However, prima facie, there is no substance in the apprehension expressed by Mr. Shanti Bhushan that narrow approach of the concept of industry would make these acts beyond the legislative competence of the Parliament and make them ultra vires. As, when and it these acts are challenged, the question of legislative competence would be examined. Further, it may be noted that two out of the aforesaid legislations, namely, the Coffee Act, 1942 and The Rubber Act, 1947 are pre-Constitution enactments made under the Government of India Act, 1935 where the entries were different. Item 29 of List II of the said Act has already been reproduced above. In respect of the Coir Industry A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. The Constitution Bench noticed the established principles that the widest aptitude should be taken of all the entries and the duty of the court to reconcile the entries and bring about a harmonious construction in case some entries in different list or in the same list may overlap or may appear to be in direct conflict with each other. In the present case, however, there is no question of any overlapping and in regard to conflict and harmonious construction, it is Mr. Shanti Bhushan s own submission that the two legislations to the extent this Court is concerned, cannot co-exist. Reliance has been placed by Mr. Shanti Bhushan on the following passage from Banthia s case: But we are satisfied in the present case that the manufacture of gold ornaments by goldsmiths in India is a process of systematic production for trade or manufacture and so falls within the connotation of the word industry in the appropriate legislative entries. It follows, therefore,that in enacting the impugned Act Parliament was validly exercising its legislative power in respect of matters covered by Entry 52 of List I and Entry 33 of List III. The contention of learned counsel is that in Harakchan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention accepted was that the manufacture of gold ornament was an industry within the meaning of Entry 52, List I. This decision is not of any assistance for determining whether sale of tobacco process can come within the of the tobacco industry so as to fall within the ambit of the word industry in Entry 52 of List I and Entry 24 of List II. The observation in Banthia s case that Entry 27 of List II was a general entry made in the context of manufacture of gold ornaments by goldsmiths falling within the ambit of the word industry as contained in Entry 24 of List II and Entry 52 of List I. Banthia s case does not express any opinion on the scope of the word industry in Entry 52 of List I and Tika Ramji s case still holds the field when it says that the expression industry would mean the process of manufacture or production and would not include any raw material used in an industry or the distribution of the products of industry. Mr. Shanti Bhushan has also placed reliance on another decision of the Constitution Bench in the case of Chaturbhai M. Patel v. The Union of India and Ors. in particular, to the observations made therein by Sir Maurice Gwyer, Chief Justice in S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ist I with respect to the development of certain industries under the Federal control. The question was whether the impugned Act in pith and substance relate to duties of excise on tobacco as contained in Item 45 or it falls within the boundaries of Items 27 and 29 of the Provincial List. Referring to the decision of the Federal Court, it was held that in the interpretation of the scope of these items, widest possible amplitude must be given to the words used and each general word must be held to extend to ancillary or subsidiary matters which can be fairly said to be comprehended in it. On examination of the provisions of the Central Excise Act, the Court came to the conclusion that various provisions of the Act and the Rules were essentially connected with the levying and collection of the excise duty and in its true nature and character the Act remains one that falls under Item 45 of List I and the incidental trenching upon the provisional field of Items 27 or 29 would not affect the constitutionality because the extent of invasion of the provisional field may be a circumstance to determine the true pith and substance but once that question is determined, the Act would fall on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act invades Entry 52, it must be repulsed by the Court. The Court, however, expressed surprise at the argument of invalidity of the Act despite the decision of the Constitution Bench in Tika Ramji s case. The Court said that the Constitution Bench decision must be accepted as final unless the subject be of such fundamental importance to national life or the reasoning is so plainly erroneous in the light of later thought that it is wiser to be ultimately right rather than to be consistently wrong. It said that the pronouncement by the Constitution Benches should not be treated so cavalierly as to be revised frequently. Recalling the words of Chief Justice Roberts of the U.S. Supreme Court in Smith v. Alwright [(321 US 649 at 669] that adjudications of the Court were rapidly gravitating into the same class as a restricted railroad ticket, good for this day and train only . That part of Tika Ramji s case was referred which dealt with the contention regarding the word industry being of wide import and included not merely manufacture but also the raw material for the industry and rejection of this contention. Paragraphs 31, 31a and 32 deal with Tika Ramji s case and rejection of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iament a situation of reductio ad absurdem may be reached. (emphasis supplied is ours) The effect of acceptance of the submission of Mr. Shanti Bhushan may also denude the State of its power to legislate even in respect of sales tax on tobacco. Such a contention was specifically rejected in Ganga Sugar Corporation s case. In the Kannan Devan Hills Produce v. The State of Kerala and Anr. challenge was laid to the constitutional validity of Kannan Devan Hills (Resumption of Lands) Act, 1971 for want of legislative competence of the State. The contention urged was that Sections 4 and 5 of the impugned Act are a law with respect of Entry 52 of List I of the Seventh Schedule as these provisions regulate the carrying on of tea industry, within the competence of the Parliament, by controlling the land for tea plantation. It was urged that if the effect of legislation is to control the working of the tea plantation, the legislation must be regarded as legislation with respect to Entry 52 List I. Tika Ramji s case was cited with approval. Repelling the contention, it was held that the State had legislative competence to legislate on Entry 18, List II and Entry 42, List III and thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustry. The control being vested in Parliament under Entry 52 of silk industry did not affect the control over these raw materials. It was held that the control, supply and distribution of the goods produced by the industry was the third aspect of industry which falls outside the purview of the control postulated under Entry 52. In other words, though the production and manufacture of raw silk cannot be legislated upon by the State Legislature in view of the provisions of the Central Act and the declaration in Section 2 thereof, that declaration does not in any way limit the powers of the State Legislature to legislate in respect of goods produced by the silk industry. This Court said that To interpret Entry 52 otherwise would render Entry 33 in List III of the Seventh Schedule to the Constitution otiose and meaningless . The same would be the position in the present case. The acceptance of the argument of Mr. Shanti Bhushan would make various Entries in the State List otiose and meaningless and subject to Entry 52 of List I despite the fact that the entries are not so worded. In Indian Aluminium Company Ltd. and Anr. v. Karnataka Electricity Board and Ors. challenging the amend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 and the other Entries of Lists II and III of the Seventh Schedule. Noticing various decisions of this Court, the High Court concluded as under: Applying the principles propounded by the apex Court in the cases mentioned above, it is apparent that the State Legislature is competent to make law in respect of the subject industries under Entry 24 of the List II subject to Entries 7 and 52 of List I of the Seventh Schedule and is further competent to enact law on the subject trade and commerce within the State and Production, supply and distribution of goods, under Entry 26 and Entry 27 of List II subject to Entry 33 of List III of Seventh Schedule of the Constitution. But on declaration under Entry 52 of List I by Parliament in respect of the industries the control of which by the Union is by law held to be expedient in the public interest, three consequences flow. Firstly, on declaration by Parliament in respect of controlled industries the power of State Legislature to legislate under Entry 24 of List II shifts of Entry 52 of List I to the extent of control provided in the Act. The second result which follows upon declaration is that the power to enact law by State Legislatu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itution. The Court, however, noticed that the Market Act dealt with supply and distribution of the goods as well as the trade and commerce therein as it seeks to regulate the sale and purchase of agricultural produce to be carried on in the specified markets under the Act. To that extent, the Court said, the provisions of Entry 33 of List III override the legislative powers of the State Legislature in connection with legislations dealing with trade and commerce in, and the production, supply and distribution of goods. Thus, to the extent to which the Market Act seeks to regulate the transactions of sale and purchase of sugarcane and sugar which are foodstuffs and trade and commerce therein, the Constitution Bench said that it has to be held that the Market Act being enacted under the topic of legislative powers under Entries 26, 27 and 28 of List II will be subject to any other legislation under Entry 33 of the Concurrent List. The contention of Mr. Dwivedi being that as admittedly the tobacco is not foodstuff and does not fall under Entry 33 of List III, like the amendment to the Constitution made in 1953, the Parliament by further amendment of the Constitution can, if so advised, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eral sweep of such a declaration. But it was noticed that the IDR Act was enacted under Entry 52. It was held that the scheme of Entry 54 of the Union List read with Entry 23 of the State List was entirely different from the scheme of Entry 52 of List I read with Entry 24 of List II with which the Court was concerned in that case. On conjoint reading of these two entries, the ratio of the decision in Hingir-Rampur Coal Company s case, it was held, cannot be effectively pressed into service. As already noticed, the majority decision in ITC case for the view it took had placed reliance on Baijnath Kadio which followed Hingir-Rampur Coal Company s case. Further in Belsund Sugar Company, the Constitution Bench cited with approval the decision in SEIL case and reiterated that merely because industry is controlled by a declaration under Section 2 of the IDR Act enacted by Entry 52 of the Union List, the State Legislature would not be denied of its power to regulate the products of such an industry by exercise of its legislative power under the State List. It would be useful to extract para 119 of Belsund Sugar Company s case as under: However, so far as the IDR Act is concerned, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntry 52 of List I. For the industries falling in Entry 52 of List I, these subjects are carved out and expressly put in Entry 33 of List III. It was also held that since the Molasses (Control) Order of 1961 passed by the Central Government in exercise of powers conferred by Section 18-G was not extended at any point of time to the State of U.P. or the State of Bihar, the question of repugnancy between the Molasses Control Order, 1961 and the U.P. Sheera Niyantran Adhiniyam, 1964 does not arise. Consequently, it must be held that in the absence of a statutory order promulgated under Section 18-G of the IDR Act, it cannot be said that the field for regulation of sale and purchase of products of the flour industry like atta, maida, suji, bran, etc. would remain outside the domain of the State Legislature. (emphasis supplied is ours) The principles aforesaid would equally apply to Entries 14, 27, 28 and 66 of List II. It may further be noticed that in para 170 of Belsund Sugar Company s case , the Constitution Bench reiterates the view expressed in Tika Ramji s case as also in SIEL s case affirming Full Bench of the Allahabad High Court in M/s. Shriram Industrial Enterprises (su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it would not be necessary to go into those matters all again. The main question, however, which has been considered is as to whether the case ITC Ltd. versus State of Karnataka 1985 Supp. 1 S.C.R. 145 has been correctly decided or not. In the above cited case, it has been held that once Tobacco Industry, in the public interest, was declared as such under Entry 52 of List 1 of VIIth Schedule of the Constitution, the State Legislatures ceased to be competent to legislate on the subject viz. Tobacco Industry, in conflict with the laws made by the Parliament, namely, the Tobacco Board Act 1975. The State Act of Karnataka levying market fee on sale of tobacco in the market area was thus held to be invalid. The whole legislative field in relation to the subject of tobacco including its sale as an agricultural produce was held to have vested in the Parliament. While holding so reliance was placed on the decisions of this Court reported in State of Orissa versus M.A. Tullock Co. 1964 (4) SCR 461 and Baij Nath Kedia versus State of Bihar and others 1969 (3) SCC 838. Mr. Justice Mukherjee, however took a diffeerent view holding that both Acts namely the Tobacco Board Act 1975 and the Kar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduce, its sale and levy of market fee was not affected since it cannot be said to be covered by the expression industry in Entry 52 of List-I of the VIIth Schedule. The I.T.C. case (supra) has been held to be wrongly decided. It has however been held that the Tobacco Board Act 1975 and the State Act can simultaneously operate without offending each other. In case it may not be possible, the provisions of Markets Act and not the Tobacco Act would prevail. As noticed earlier the majority view in the ITC Case (supra) has been upheld in the judgment of Brother Pattanaik, on slightly different reasoning and the decisions of this Court in M.A. Tullock and Baij Nath Kedia (Supra) dealing with legislation on Mining and relied upon in the majority judgment of ITC case (supra) have been found to be not relevant for the decision. It is true, while legislating on any subject covered under an entry of any list, there can always be a possibility of entrenching upon or touching the field of legislation of another entry of the same List or another List for matters which may be incidental or ancillary thereto. In such eventuality, inter alia, broad and liberal interpretation of an entry in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating in detail the legislative subjects carefully distribute the areas of legislative authority between Parliament (List I) and the State (List II). The supremacy of Parliament has been provided for by the non obstante clause in Article 246 (1) and the words subject to in Art.246 (2) and (3). Therefore, under Article 246 (1) if any of the entries in the three Lists overlap, the entry in List I will prevail. Additionally some of the entries in the State List have been made expressly subject to the power of Parliament to legislate either under List I or under List III. Entries in the Lists of the Seventh Schedule have been liberally interpreted, nevertheless Courts have been wary of upsetting this balance by a process of interpretation so as to deprive any entry of its content and reduce it to useless lumber . The use of the word exclusive in Clause (3) denotes that within the legislative fields contained in List II, the State Legislatures exercise authority as plenary and ample as Parliament. The fact that under the scheme of our Constitution, greater power is conferred upon the Centre vis-\005-vis the States does not mean that States are mere appendages of the Centre. Wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. The State of Uttar Pradesh [1959] Supp. SCR 8]. The controversy, in this case, is to be resolved keeping these broad principles in mind. The immediate question before us is whether the Tobacco Board Act, 1975 debars the States from levying market fee in respect of tobacco. In the several matters argued and heard, the main protagonists were the tobacco traders and dealers on the one hand who argue that the States cannot levy market fee on tobacco, and the Market Committees on the other who contend to the contrary. The Union of India and the Tobacco Board have supported the former while the State Governments the latter. The details of the several matters which were heard by us have been noted in the opinion of Pattanaik, J. A galaxy of counsel have made submissions in support of the opposing camps. For the purpose of convenience and coherence, the diverse arguments have been clubbed together and those contending against the States competence are referred to compendiously as the appellants and their opponents as the respondents . One further clarification is necessary. As the order referring the issue to this Court was passed in an appeal relating to the Bihar Agricultural Mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocessing, storing, sale, manufacture, export and import. It had been initially argued by the appellants that once a declaration is made in terms of Entry 52 of the Union List, the industry in respect of which the declaration is made and the entire process relating thereto becomes part of the legislative head itself and within the exclusive domain of the Parliament, and the State legislature becomes incompetent to enact any provision with regard to that industry. The submission was somewhat watered down in the reply. It was conceded that the argument was an extreme one and that the true principle was that one has to examine the actual extent of coverage by the Central enactment. The next submission was that the word industry in Entry 52 of List I will have to be given a wide meaning. Passages from the Encyclopaedia Britannica were referred to, to contend that an industry could be primary, secondary or tertiary. Primary industries would include agriculture, forestry, fishing, mining and the extraction of minerals etc. A secondary industry would be a manufacturing industry where raw materials supplied by primary industries are processed to manufacture consumer and non- consumer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Markets Act and the Tobacco Act would not arise since Parliament was not competent to enact provisions in respect of a legislative field specifically provided for in List II. It was submitted that the legislative field under Entry 52 of List I was derived from Entry 24 of List II and Entry 24 did not cover the legislative fields otherwise specially provided for in List II. It was stated that Entry 28 could not be rendered redundant by the Central Government s legislation on commodities sold at markets and fairs by issuing a declaration under Entry 52 of List I. It was also submitted that there may be provisions in the Tobacco Act which may incidentally trench on the State s competence and as long as States have not legislated on that topic, the Tobacco Act may prevail. It was submitted that even if the Markets Act were enacted under Entries 26 and 27 of List II nevertheless this would not make the Market Act invalid as far as tobacco was concerned. It was further submitted that although Entries 26 and 27 in the State List were subject to the provisions of Entry 33 of the Concurrent List, there was no provision in Entry 33 of the Concurrent List which covered tobacco. It was su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the levy of fees on the marketing of tobacco. As the Tobacco Act covers a much larger field, a pronouncement on the validity of all the provisions dealing with a variety of activities under the Act would not be appropriate as it would perhaps pre-empt a decision on aspects other than the marketing of tobacco without hearing those who might be interested in the outcome of a decision on those provisions. The starting point in any controversy dealing with apparently conflicting legislative jurisdictions is to see whether the conflict can be fairly reconciled by reading the entries to which the legislations are referable, together and by interpreting and, where necessary, modifying the language of the one by that of the other . It is only when such resolution is not possible that the Courts should be called upon to decide the question of legislative competence. This principle has been stressed in a number of cases by the Privy Council, the Federal Court and more recently by this Court. [See: The Central Provinces and Berar Sales of Motor Spirit Lubricants Taxation Act, 1938 , Governor-General in Council v. Province of Madras , State of Bombay v. F.N. Balsara AIR 1951 SC 81 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be given the same meaning and that since ordinarily industry is in the field of State Legislation the word must be construed in the context of the other entries in List II in such a manner so that no entry in List II is deprived of its content. In other words, the meaning of the word industry is to be determined with reference to Entry 24 of List II where the power to legislate generally in respect of industries has been provided. Entries 7 and 52 are entries which specify particular industries out of this general pool. The meaning of the word industry in these two entries, therefore, must necessarily be derived from the meaning which may be ascribed to the word in Entry 24 of List II. The seminal decision on this process of interpretation for arriving at the definition of industry is Ch. Tika Ramji Others V. State of Uttar Pradesh Ors. in which a Constitution Bench unanimously held: Industry in the wide sense of the term would be capable of comprising three different aspects: (1) raw materials which are an integral part of the industrial process, (2) the process of manufacture or production, and (3) the distribution of the products of the industry. The raw materi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company and others V. State of Karnataka 1991 (3) SCC 358, writ petitions were filed challenging the validity of the provisions of the Mysore Silkworm Seed and Cocoon (Regulation of Production, Supply and Distribution) Act, 1959 (Act 5 of 1960). It was contended that the impugned provisions lacked legislative competence after the enactment by Parliament of the Central Silk Boards Act (Act 61 of 1948) which contained a declaration as contemplated under Entry 52 of List I. The Court held, following Tika Ramji, that the control of the industry vested in Parliament was only restricted to the aspect of production and manufacture of silk yarn or silk. It did not obviously take in the earlier stages of the industry, namely, the supply of raw materials . It was also held: though the production and manufacture of raw silk cannot be legislated upon by the State legislature in view of the provisions of the Central Act and the declaration in Section 2 thereof, that declaration and Entry 52 does not in any way limit the powers of the State legislature to legislate in respect of the goods produced by the silk industry. To interpret Entry 52 otherwise would render Entry 33 in List III of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Entry 26, the type of buildings for gold shops and the kind of receipts for purchase or sale of precious metal. To multiply instances is easy, but the core of the matter is that where under its power Parliament has made a law which overrides an entry in the State List, that area is abstracted from the State List. Nothing more. It is unnecessary to multiply instances of the numerous decisions which have followed the logic of Tika Ramji and accepted its conclusion that for the purposes of Entry 24 of List II and consequently Entry 52 of List I, industry means manufacture or production and nothing more. It is sufficient to note that Tika Ramji s definition of industry has been affirmed and applied recently by a Constitution Bench in Belsund Sugar Company v. State of Bihar (supra) and is still good law. Harak Chand Banthia s case does not strike a discordant note. Harakchand Ratanchand Banthia Ors. v. Union Of India: 1970 1 SCR 479, has been cited by the appellants in support of the proposition that the negative test laid down in Tika Ramji and developed in Calcutta Gas does not apply to define the scope of Entry 52 of List I vis-a-viz Entry 27 of List II. The submiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereto such as acquisition of raw materials and subsequent thereto such as disposal of the finished products of that industry. But this contention was not accepted. It was contended by Mr. Daphtary that if the process of production was to constitute industry a process of machinery or mechanical contrivance was essential. But we see no reason why such a limitation should be imposed on the meaning of the word industry in the legislative lists. Similarly it was argued by Mr. Palkhivala that the manufacture of gold ornaments was not an industry because it required application of individual art and craftsmanship and aesthetic skill. But mere use of skill or art is not a decisive factor and will not take the manufacture of gold ornaments out of the ambit of the relevant legislative entries. It is well settled that the entries in the three lists are only legislative heads or fields of legislation and they demarcate the area over which the appropriate legislature can operate. The legislative entries must be given a large and liberal interpretation, the reason being that the allocation of subjects to the lists is not by way of scientific or logical definition but is a mere enumeration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trolled industry. Finally, it is clear from the passage quoted, that Banthia held that the Gold Act was legislatively competent under Entry 52 of List I because it dealt with the process of manufacture or production of gold i.e., it was within the sweep of industry as defined in Tika Ramji. The appellants submission that Tika Ramji narrowly construed the word because the decision was rendered in the context of the Industrial (Development Regulation) Act, 1951 proceeds on a mis-appreciation of the decision. Merely because Tika Ramji found that the particular Central enactment under consideration was under Entry 33 of List III and not Entry 52 of List I does not limit or detract from its authoritative pronouncement on the scope of Entry 52 of List I. The finding in fact formed the basis of the conclusion that the provisions of the Central Act in question did not fall within Entry 52 of List-I. What was construed was the ambit of Entry 52 of List I and the range of a declaration under that entry. That the declaration was contained in the Industries (Development and Regulation) Act, 1951 was inconsequential and could not colour the scope of the entry itself. It is significant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case it would follow that the word industry in Entry 24 of List II and consequently Entry 52 of List I does not and cannot be read to include Entries 28 and 66 of List II which have been expressly marked out as fields within the State s exclusive legislative powers. As noted earlier Entry 28 deals with markets and fairs and Entry 66 with the right to levy fees in respect of, in the present context, markets and fairs. Entry 52 of List I does not override Entry 28 in List II nor has Entry 28 in List II been made subject to Entry 52 unlike Entry 24 of List II. This Court in Belsund Sugar (supra ) has also accepted the argument that Entry 28 of List II operated in its own and cannot be affected by any legislation pertaining to industry as found in Entry 52 of List I. If industry does not include markets and fairs it is important to define what markets and fairs connote. Market may strictly be defined as the meeting or congregating together of people for the purchase and sale of provisions or livestock, publicly exposed, at a fixed time and place . A fair has been judicially defined as meaning a periodical concourse of buyers and sellers in a place generally for sale and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y virtue of the Markets Act become a matter of municipal concern namely, setting up of regulated markets for the marketing of agricultural produce. The provisions of the Markets Act are briefly noted. The Markets Act provides for the issuance of a notification under Section 3 by the State Government declaring its intention of regulating the purchase, sale, storage, processing of specified agricultural produce in that area. Agricultural produce has been defined in Section 2 (6) as: all produce whether processed or non-processed, manufactured or not, of Agriculture, Horticulture, Plantation, Animal Husbandry, Forest, Sericulture, Pisciculture, and includes livestocks or poultry as specified in the Schedule. Tobacco has been mentioned at Item XI in the Schedule. Under Section 4 the State Government declares the area specified as a market area for the purpose of the Markets Act. From the date of the declaration, under Section 4 no person or authority can establish or continue or be allowed to set up any place for the purchase, sale, stores or processing of any notified agricultural produce except in accordance with the provisions of the Markets Act. Under Section 5 the State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ets Act, in my view, are clearly relatable to Entry 28 of List II given the scope of the entry as discussed earlier. The State in the circumstances, was not incompetent to incidentally also legislate with regard to tobacco and the semantic sweep of Entry 52 did not come in the way of the State Legislature making laws on subjects within its sphere and not directly going to the heart of the industry itself . In my opinion therefore Sections 15 and 27 of the Markets Act in pith and substance are relatable to Entries 28 and 66 of List II and have been competently enacted by the State. Incidentally it is nobody s case that the fee charged under Section 27 does not represent a quid pro quo for the services rendered and facilities afforded in the market area. It follows that Parliament is incompetent to legislate for the setting up or regulation of markets and fairs within the meaning of the phrase in entry 28 of List II, even in respect of tobacco. It may of course incidentally trespass into the States legislative field, provided (1) the trespass is an inseparable part of the provisions validly passed and (2) the State has not already fully occupied its field with conflicting statutor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acco marketing in India and export of virginia tobacco having due regard to the interests of growers, manufacturers and dealers and the nation; (g) purchasing virginia tobacco from growers when the same is considered necessary or expedient for protecting the interests of the growers and disposal of the same in India or abroad as and when considered appropriate; ... Sections 10 to 15 are in Chapter III which deals with Regulation of Production and Disposal of Tobacco, for registration/licensing not only of the growers including nursery growers(Section 10, 10-A) but also curers (Section 11), processors and manufacturers (Section 11-A), graders and storers (11-B), and exporters, dealers, packers or auctioneers (Section 12). Of particular relevance are Sections 13 and 13A which provide for virginia tobacco to be sold at registered auction platforms or auction platforms established by the Board, and places a duty on registered dealers and exporters to purchase tobacco only at such auction platforms. However, in those States in which Section 13 is not in force, under Section 13B dealers purchasing virginia tobacco must pay the full price for the whole quantity and are restricted f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecially a demand for a commodity or service - in this case tobacco. The Tobacco Act is not concerned so much with the where but with the how , the tobacco is disposed of. Even when the Tobacco Act speaks of setting up of auction platforms it does not indeed it could not say where the auction platforms are to be set up. Since States are exclusively competent to decide on the location of markets, the authorities under the Tobacco Act would have to comply with the municipal laws and set up the auction platforms only within the permissible areas. If the facilities afforded under the Market Act are utilised, the facilities will have to be paid for and the authorities appointed to levy and collect fees for the purpose under the Markets Act would be competent to do so. If further facilities are offered at the Auction Platforms under the Tobacco Act, fees may be levied under Section 14-A of that Act. The right to levy fees under the two acts therefore may not necessarily conflict, the levy not being in the alternative but additional. Assuming this is not possible and there is any conflict, the provisions of the Markets Act and not the Tobacco Act would prevail. Even if Sections ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y conflicting provisions of the subservient statute. Either way, the express words in Section 31 coupled with the duty of Courts to reconcile and uphold legislation, if possible, can only result in upholding the constitutional validity of the Market fee imposed by the State. A further compelling circumstance to uphold the levy of market fee is the fact that several provisions of Chapter III of the Tobacco Act particularly those dealing with the setting up of auction platforms namely Sections 13 and 13A, and Section 14 A relating to the levy of fees on the sale of tobacco have not been brought into operation in any State in India except for the State of Karnataka. I have already stated the reasons why the provisions relating to sale of tobacco in the Tobacco Act do not come within the definition of industry and are not covered by the declaration under Entry 52 of List I. But granting for the sake of argument that the sale of tobacco comes within the definition of industry until the Central Government chooses to actually occupy the field by effective legislation, it would remain open for the State Legislature to cover that field under Entry 24 of List II. It is difficult to adop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Markets Act must prevail. It now remains for me to answer the question which was referred to this Bench, namely whether ITC Ltd. V. State of Karnataka (Supra) has been rightly decided. The majority opinion on the issue of legislative competence of the State Legislature was delivered by Fazal Ali, J. In striking down that part of the Karnataka Markets Act which provided for the power to levy market fee on tobacco and its products, the opinion was based on six premises, each of which do not appear to be in consonance with the law. First The Court proceeded on the basis that the Tobacco Act was wholly and solely relatable to Entry 52 of List 1. I have already given my reasons for holding that the Tobacco Act in so far as it deals with the disposal of tobacco is not within Entry 52 of List I. Second Article 246(4) was relied on to hold that Parliament had overriding power to legislate in exceptional cases in matters appearing in the State List . Article 246(4) has no manner of application to the present dispute. It reads : (4) Parliament has power to make laws with respect to any matter for any part of the territory of India not included in a State notwithstanding t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act 1980, was wholly incompetent. The view proceeds on a misinterpretation of Article 254(2), which in any event has no application to this case. Article 254(2) provides : (2) Where a law made by the Legislature of a State with respect to one of the matters 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. The language is clear. It only deals with the question of supremacy and not competence. In respect of conflicting legislation under the Concurrent List, if the State Legislation has received the assent of the President, it will prevail over the Central Legislation in that State. The Article does not provide that State Legislation without the assent of the President is incompetent. In the circumstances I would hold that ITC vs. State of Karnataka (Supra) was wrongly decided and would for the reasons discussed uphold the competence of the State Legislatures to levy market fee on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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