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TMI Blog2024 (4) TMI 1035X X X X Extracts X X X X X X X X Extracts X X X X ..... rinciple governing subordinate legislation is slightly different in as much as the operation of a subordinate legislation is determined by the empowerment of the parent act. The legislative authorization enabling the executive to make rules prospectively or retrospectively is crucial. Without a statutory empowerment, subordinate legislation will always commence to operate only from the date of its issuance and at the same time, cease to exist from the date of its deletion or withdrawal. The reason for this distinction is in the supremacy of the Parliament and its control of executive action, being an important subject of administrative law. The regulatory process requires the Government to deal with the problem of diversion and unlawful sale of foreign liquor and also provide an appropriate penalty and punishment. The process of identifying a crime and prescribing an appropriate punishment is a complex and delicate subject that the State has to handle while making rules and enforcing them. The gravity of the offence, its impact on society and human vulnerability are taken into account to provide the required measure of deterrence and reform - depending on the nature of offence, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred to as the Act for manufacture, import and sale of Foreign Liquor, regulated under the Madhya Pradesh Foreign Liquor Rules, 1996 Hereinafter referred to as the 1996 Rules . 3.1 Sub-licensees importing Foreign Liquor are granted transit permits in which the origin, quality, quantity and point of delivery of the imported liquor are recorded. At the point of destination, the consignment is verified for quality and quantity, and a certificate under Rule 13 is granted. Rule 16 prescribes the permissible limits of loss of liquor in transit due to leakage, evaporation, wastage etc. The purpose and object of this Rule is to prevent illegal diversion of liquor for unlawful sale and also to prevent evasion of excise duty. Relevant portion of Rule 16 is as follows:- Rule 16. Permissible limits of losses . - (1) An allowance shall be made for the actual loss of spirit by leakage, evaporation etc., and of bottled foreign liquor by breakage caused by loading, unloading, handling etc. in transit, at the rate mentioned hereinafter. The total quantity of bottled foreign liquor transported or exported shall be the basis for computation of permissible losses. (2) Wastage allowances on the spirit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made under the Act, or the orders issued by the Excise Commissioner. 4. Facts reveal that no action was initiated during the license year of 2009-2010. 5. On 29.03.2011, Rule 19 was substituted by an amendment. The relevant portion of substituted provision is as follows: Rule 19. Penalties Hereinafter, the substituted Rule (1) (2) On all deficiencies in excess of the limits allowed under rule 16 and rule 17, the F.L.-9, F.L-9-A, F.L.-10-B Licensee shall be liable to pay penalty at a rate not exceeding the duty payable on foreign liquor at that time, as may be imposed by the Excise Commissioner or any officer authorized by him: Provided that if it be proved to the satisfaction of the Excise Commissioner or the authorized officer that such excess deficiency or loss was due to some unavoidable causes like fire or accident and its First Information Report was lodged in concerned Police Station, he may waive the penalty imposable under this sub-rule. ( emphasis supplied ) 6. As is evident, the above referred substituted Rule 19 reduces penalty from four times the maximum duty payable to an amount not exceeding the duty payable on foreign liquor. 7. Eight months after the amendment, a de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ituted provision. He would further submit that even for incidents which took place when the old Rule was in force, it is the substituted Rule that would be applicable, and therefore, the demand notice dated 22.11.2011 seeking payment of penalties under old Rule is illegal. 12. There is no difficulty in accepting the argument of Mr. Pratap Venugopal on principle. In Koteswar Vittal Kamath v. K. Rangappa Baliga Co. (1969) 1 SCC 255 , this Court brought out the distinction between supersession of a rule and substitution of a rule, and held that the process of substitution consists of two steps first, the old rule is repealed, and next, a new rule is brought into existence in its place: 8. On that analogy, it was argued that, if we hold that the Prohibition Order of 1950, was invalid, the previous Prohibition Order of 1119, cannot be held to be revived. This argument ignores the distinction between supersession of a rule, and substitution of a rule. In the case of Firm A.T.B. Mehtab Majid Co., the new Rule 16 was substituted for the old Rule 16. The process of substitution consists of two steps. First, the old rule it made to cease to exist and, next, the new rule is brought into exist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in Gottumukkala Venkata Krishamraju v. Union of India, (2019) 17 SCC 590 where this Court held that: 18. Ordinarily wherever the word substitute or substitution is used by the legislature, it has the effect of deleting the old provision and make the new provision operative. The process of substitution consists of two steps : first, the old rule is made to cease to exist and, next, the new rule is brought into existence in its place. The rule is that when a subsequent Act amends an earlier one in such a way as to incorporate itself, or a part of itself, into the earlier, then the earlier Act must thereafter be read and construed as if the altered words had been written into the earlier Act with pen and ink and the old words scored out so that thereafter there is no need to refer to the amending Act at all. No doubt, in certain situations, the Court having regard to the purport and object sought to be achieved by the legislature may construe the word substitution as an amendment having a prospective effect. Therefore, we do not think that it is a universal rule that the word substitution necessarily or always connotes two severable steps, that is to say, one of repeal and another o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion if the State Government considers that they should be brought into force at once. 16. Section 62 does not enable the executive to continue the application of a repealed rule to events that have commenced during the subsistence of the Rule. However, Section 63 is of some importance. It enables the executive to operate the Rule from a date as may be specified in that behalf. Section 63 is reproduced as below:- 63. Publication of rules and notifications. All rules made and notifications issued under this Act shall be published in the Official Gazette, and shall have effect from the date of such publication or from such other date as may be specified in that behalf. 17. It is clear that even Section 63 of the Act does not provide continuation of a repealed provision to rights and liabilities accrued during its subsistence. At the most, Section 63 of the M.P. Excise Act, 1915, only enables the government to issue subordinate legislation with effect from such a date as may be specified. We may mention at this very stage that Rule 19 which has been substituted on 29.03.2011 has not been notified to operate from any other date by the Government. 18. Faced with this situation, Mr. Saur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e day of the first publication of the assent to an Act in the Official Gazette there were substituted a reference to the day of the first publication of the Ordinance or the Regulation, as the case may be, in that Gazette; (b) to the construction of rules, regulations, bye-laws, orders, notifications, schemes or forms made or issued under a Madhya Pradesh Act. 21. By virtue of Section 31, the provisions of the Madhya Pradesh General Clauses Act, 1957 are made applicable to the construction of rules. By such application, the principle of a repeal of a provision not affecting any liability incurred thereunder is also extended to the operation of the subordinate legislations under the Act. It is, therefore, submitted that having incurred the liability of exceeding the prescribed limits of losses of liquor for the license period 2009-10, the liability is not affected by the subsequent substitution of Rule 19. 22. This submission was not raised before the Single Judge or the Division Bench. However, as law operates irrespective of the choices of parties or their counsels in raising and referring to it in a court of law, we have permitted him to argue this question of law. We will now ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s possible for the word to have a somewhat different meaning in different sections of the Act depending upon the subject or context 20. Great artistry on the bench as elsewhere is, therefore, needed before we accept, reject or modify any theory or principle. Law as creative response should be so interpreted to meet the different fact situations coming before the court. For, Acts of Parliament were not drafted with divine prescience and perfect clarity. It is not possible for the legislators to foresee the manifold sets of facts and controversies which may arise while giving effect to a particular provision. Indeed, the legislators do not deal with the specific controversies. When conflicting interests arise or defect appears from the language of the statute, the court by consideration of the legislative intent must supplement the written word with force and life . See, the observation of Lord Denning in Seaford Court Estate Ltd. v. Asher [(1949) 2 KB 481, 498]. 26. In Vanguard Fire and General Insurance Co. Ltd. v. Fraser and Ross (1960) 3 SCR 857 this Court held that: 6. That is why all definitions in statutes generally begin with the qualifying words similar to the words used in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations in the words used by the legislator, or by regarding the breadth or other obscurity of the express language as conferring a delegated legislative power to elaborate its meaning in accordance with public policy (including legal policy) and the purpose of the legislation. Whichever course is adopted, in accordance with the doctrine of precedent the court s operation influences the future legal meaning of the enactment by producing what may be called sub-rules, which are implied or expressed in the court s judgment. Halsbury s Laws, (5th edn, 2018), vol 96, para 694 28. Subordinate legislation, by its very nature, rests upon the executive s understanding of the primary legislation. When a Court is of the opinion that such an understanding is not in consonance with the statute, it sets it aside for being ultra-vires to the primary statute. 29. We will now examine if there is anything repugnant to the subject or context to disapply the mandate of Section 31 of M.P. General Clauses Act, 1957, to the construction of the 1996 Rules. If the subject and context guide us in coming to that conclusion, we will not extend the effect of repeal in Section 10 of the MP General Clauses Act, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to rights and liabilities that accrued during the subsistence of the Rule does not subserve the purpose and object of the amendment. 33. It is also submitted on behalf of the State that the substituted Rule cannot be given retrospective effect. We are not in agreement with this submission either. It is wrong to assume that the substituted Rule is given retrospective effect if its benefits are made available to pending proceedings or to those that have commenced after the substitution. Rule 19 which was substituted on 29.03.2011 is made applicable to proceedings that have commenced with the issuance of the demand notice in November, 2011. The Rule operates retroactively and thus saves it from arbitrarily classifying the offenders into two categories with no purpose to subserve. 34. The single Judge as well as the Division Bench have adopted two different approaches and we have not agreed with either of them. The single Judge was of the view that the amendment by way of substitution has the effect of repealing the law which existed as on the date of repeal. We have already explained the limitation in this approach. The Division Bench on the other hand, held that levy of penalty is s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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