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TMI Blog1958 (4) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... Colliery" and it was worked by the First Party, namely, the petitioners, under the name and style of "The Oriental Mining and Trading Syndicate". The document then proceeds to state as follows: "Whereas it has been considered by the First Party for more efficient harnessing of the said property to take the help of Shri Amulya Kumar Goswami .... the Second Party .... It is hereby agreed by and between the parties ........". 2. According to the terms of this agreement, Go-swami had to instal pumping & haulage machinery and other machinery necessary for raising coal. He also advanced a loan of ₹ 6000/- to be utilised for the repayment of debts incurred by the colliery and cost of repair of its boiler etc. Goswami was also to work and develop the colliery, raise and sell its coal, employ staff and labour, accept all payments for any coal despatched out of the mines, open and operate accounts with any bank in the name of the Company. It was then laid down that Goswami would be entitled to purchase ....... machinery and structures", but if it was outside the sphere of legal necessity involving a cost exceeding one thousand rupees, or falling outside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particulars of the matters to be provided for in the Coal Mines Provident Fund Scheme. Clause 2 thereof provides for payment of contributions to the Fund by employers and by, or on behalf of, employees, the rate, time and manner of such payment and the manner in which such contributions may be recovered. 4. Pursuant to the powers granted under the Act, a scheme has been framed by the Government of India on or about the 11th December 1948. The preamble of this scheme states that it has been framed "in exercise of the powers conferred by Section 3 of the Coal Mines Provident Fund and Bonus Schemes Act 1948 (XLVI of 1948)". In the definition portion, the word "employer" is not to be found. Clause 33 of the Scheme deals with the mode of payment of contribution by the employer. Clause 38 deals with the submission of returns of qualified employees. It lays down that every employer shall send by registered post or through a messenger to the Commissioner within six weeks of the commencement of each quarter a return in duplicate, in the prescribed form, of the employees qualifying to become members of the Fund during the preceding quarter and shall send with the return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause 70 of the Scheme, constitute improper delegation, and the exercise of powers improperly delegated, and are therefore void under the Constitution. (2) The Scheme having been framed under Section 3 of the Act, it was not competent for the makers of the Scheme to include in Clause 70 provisions for panalties for transgressions I against the provisions of the Act and or the Scheme. (3) That the petitioners who have been convicted are not employers as defined by the Act and therefore the conviction and the sentence are bad. 7. With regard to the first point, it has been pointed out by Mr. Banerjee that the point of ultra vires was never raised in the Courts below. It is a I common fallacy to suppose that the lower Courts can never go into the question of ultra vires. In the case of Releigh Investment Co. Ltd. v. Governor-General in Council, AIR 1947 PC 78, the Judicial Committee pointed out that the Income-tax Act had the machinery which enabled an assessee effectively to raise tne question whether a particular provision of the Act bearing on the assessment made upon him was ultra vires or not, and there was no reason why he should not have agitated that question in the manner lai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and officers to make and promulgate rules, regulations, and orders on a specified subject, and providing that a violation of such rules or orders should constitute a misdemeanour, punishable as provided in the statute. However, the legislature cannot delegate to an administrative board the authority to fix the penalty for a violation of orders or regulations which the legislature authorized the board to make. The penalty must be fixed by the legislature itself". The above principles may be summarized thus: (1) The legislature may confer upon a non-legislative body or person the power to prescribe rules and regulations as ancillary to a statute. (2) Provided that the policy has been declared and a primary standard has been fixed, such delegation of power is valid. (3) The legislature can prescribe that when such rules and regulations have been promulgated, the violation of any such rule or regulation shall constitute an offence and attract a penalty. (4) In such a case, it is the legislature which must prescribe the penalty or prescribe the standard of penalty to be imposed. 8. In this connection it would be interesting to refer to two American cases. The first case is Unit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to the laws of the United States and the peace and dignity thereof ......." 9. It was held that the delegation of power was constitutional. The next case cited is L. P. Stuart v. Chester Bowles, (1944) 88 Law Ed 1350. This case dealt with the Second War Powers Act 1942, whereby power was given to the President of the United States for defence of the country etc., to allocate the supply of any material in which there was a shortage, upon such condition and to such extent as it shall be deemed necessary and appropriate. The President delegated that power to the Office of the Price Administration, which promulgated a Ration Order. By this Order there was a control of fuel oil and other petroleum products in the eastern States due to war activity. There was a provision that for violation of the Order, a suspension order could be passed against a dealer by prohibiting him from receiving any transfers or deliveries of, or selling or using or otherwise disposing of, any fuel oil etc. This part of the order was challenged as unconstitutional. It was argued that power was delegated to an Administrative Officer to declare an offence and also to punish the same. Douglas J., stated as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of a distress warrant and may also be committed to the common jail of the city of Toronto, with or without hard labour for the period of 15 days unless the penalty was sooner paid. The appellant was the holder of a retail license and as he had allowed billiard to be played within the prohibited period he was convicted and fined and it was further ordered that if he did not pay the fine, he should be committed to jail with hard labour until he paid the fine. The regulation, together with the offences prescribed therein, as also the penalties, were challenged as contrary to law. The enactments and the regulations made thereunder were all upheld. Sir Barnes Peacock said as follows: "It is obvious that such an authority is ancillary to legislation, and without it an attempt to provide for varying details and machinery to carry them out might become oppressive, or absolutely fail. The very full and very elaborate judgment of the Court of Appeal contains abundance of precedents for this legislation, entrusting a limited discretionary authority to others, and has many illustrations of its necessity and convenience. It was argued at the bar that a legislature committing important r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by statute, no constitutional delegation of legislative power is involved in leaving to selected instrumentalities the making of subordinate rules within the prescribed limits and the determination of facts to which the legislation is to apply. It was enough if the legislature laid down an intelligent principle which can be implemented by the subordinate authorities for specific cases or classes of cases. 12. I must admit that so far as the decided cases are concerned, the present case is distinguishable only in one respect. In the cases quoted above, it has been laid down that if the statute authorises rules and regulations to be framed and lays down that a violation thereof would constitute an offence and then further lays down penalties for the offence, then all such actions would be constitutional. In this particular case, the matter goes a little further. The legislature has enabled rules and regulations to be made, it has laid down that violation thereof may constitute an offence, and also has prescribed the limit of the penalties that may be imposed. It has however given power to Government to determine as to whether the rules and regulations shall at all contain a penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laid down. In my opinion, therefore, the legislature has laid down the policy and is also in control of it Consequently the tests for declaring the validity of a subordinate legislation like this is easily passed. In my opinion, Section 9 is not ultra vires and Section 70 of the scheme is not an unconstitutional exercise of a delegated power. This point therefore fails. 13. The next point taken is that the scheme in its preamble states that it is being promulgated under Section 3 of the Act. It is argued that Section 3 has got nothing to do with the imposition of penalty. It is Section 9 which imposes the penalty and therefore in a scheme professedly framed under powers conferred by Section 3, there is no scope for the imposition of a penalty. In my opinion, there is no substance in this argument. The preamble merely recites the power under which a scheme could be made, and there can be no doubt that Section 3 is the appropriate section. Section 9 of the Act says that any scheme framed under the Act may provide for the imposition of a penalty. There is no doubt that so far as Section 70 of the Scheme is concerned, it does provide for penalty, but it was unnecessary to state that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement. He is to share the profits. Consequently he must be called an owner, because he continues to be the proprietor and enjoys the advantages of ownership and exercises the powers of a proprietor, although such powers and liabilities are now shared. Whether Goswami is to be convicted or not is not within the scope of this application. The question is whether the petitioners have been rightly convicted or not, I do not see why they cannot be called owners as defined in the Act and consequently why they should not be dubbed as "employer" within the mischief of Section 2(e) of the Act. Mr. Sen has argued that this would put his client in a very difficult position as Goswami is really conducting the mine and it would be impossible for the petitioners to deal with the provident fund of the employees. In my opinion, that is not a relevant consideration for this Court. Either the petitioners come within the definition of an "employor" as given in the Act, or they do not. If by do, then it is up to them to safeguard their own interests in the best way possible, but they cannot escape liability under the Act or the Scheme framed thereunder. This point therefore fails. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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