l

1070

A

ATLAS CYCLE INDUSTRIES LTD. AND ORS.

v.

STATE OF HARYANA

October

4, 1978

B

[S. MURTAZA FAZAL ALI, JASWANT SINGH AND P. S. KAILASAM, JJ.]

c

D

E

F

Essential Commodities Act 1955 (Act

10 of 1955)-Smion 3(6)-Re­

quirement as to laying before both Iiouses of Parlia1nent-Dirrctory not

niandatory-Non-lying

of notification fixing the maxitnum selling prices of variousi categories of controlfr:d commodities before both Houses of Parlia­

ment-Whether results in nullification of the notification.

Delegated Legislation-Provisions relating to laying of delegafl':'d legisla­

tion

of subordinate law making authorities and orders passed by subordinate

executive instrumentalities before both Tfouses of

Parlian1ent-"Layi11g

clause~"-Examined and discussed.

The appellants were prosecut.ed for the offence of acquiring a controlled

commodity

at a

rate higher than the maximum statutory price fixed for such

commodity by

the Iron &

Steel Controller under Cl. 15 ( 1 ) of the Iron &

Steel Control Order, 1956. In the course of proceedings before the trial

court the appellants made an application u/s 251A & 288 Cr.P.C. raising

various objections

to their prosecution including, that the notification fixing

maximum selling prices of various categories of Iron

&

Steel including the

commodity in question was not placed before the Pnrliament and as such

was not valid. Observing that the laying of the notification before the Parlia­

ment could be proved by contemporaneous record and that it was not

possible

to hold that congnizance of the offence was taken on an invalid

report and the order framing the charge

was a nullity the trial Court dismissed

the application.

In its writ petition filed under Arts. 226 and 227 of the Constitution, the

appellants challenged their prosecution

on the ground that the control order and

the notification did not have the force

of law as they had not been laid before

the Houses of

Parlian1ent '"'ithin a reasonable time as required by the Essential

Commodities Act. The High Court dismissed the "\Vrit petition.

On the question, whether the notification fixing the maximum selling price

G of the commodity was void, for not having been laid before both Houses of

Parliament.

H

Dismissing the appeal. the Court

HELD :

1. Non-laying of the notification fixing the maximum selling

prices of various categories of iron and steel including the commcxlity in

question before both Houses

of Parliament cannot result in nullification o.f

the notification. The legislature never intended that non-compliance with the

requirement of laying

as envisaged by section 3(6) of the Act should

render

the order void. [1088 C, Bl

I --

1

I

'

•

'

•

•

ATLAS CYCLE LTD. V. HARYANA 1071

·2. Though section 3 ( 6) of the Act provides that every order made by A

the Central Government or by any officer or authority of the Central Govern-

ment shall be laid before both Houses of Parliament as soon as may be

after it is made, the important point to be c.onsidered in the absence of a

provision prescribing the conditions, the period and the legal effect of the

laying of the order before the Parliament is whether the provision is direc-

tory or mandatory. The use of the word 'shall' is 11ot conclusive and decisive

of the matter and the Court has to ascertain the true intention of the legisla-B

ture, which is the determining factor, and that must be done by looking

,carefully to the whole scope~ nature and design of the statute. 11078 C-EJ

State of U.P. v. Monbodhan Lal Srfrastava, [1958] S.C.R. 533, The State

<>f Uttar Pradesh and Ors. v. Baba Ram Upadhya, [1961] 2 S.C.R. 679 re­

:ferred to.

Craies Statute Law 5th Edn. p. 242.

3. Two considerations for regarding a prov1s1on as directory are : ( 1)

absence

of any provision for

the contingency of a particular provision not

been complied with or followed and (2) serious general inconvenience and

prejudice that would result to the general public if the act of the government

or an instrumentality is declared invnlid for non-compliance with the parti­

cuJar provision. [1079 CJ

4. The policy and object underlying the prov1s1ons relating to laying

the de1ega·ted legislation made by the subordinate law making authorities or

orders ·passed by subordinate executive instrumentalities before both Houses

of Parliament, being to keep supervision and control' over the aforesaid

authorities and instrumentalities, the "laying clauses" assume different forms

depending

on the degree of control which the. Legislature may like to exercise.

The three kinds

of laying which are generally used by the Legislature are

{i) laying without fu1ther procedure (ii) laying subject to negative resolu­

tion,

(iii) laying subject to affirmative resolution. Each case must depend

.on its own circumstances or the wording of the :.;tatute under which the

rules are made. r1079 D, E; 1081 Dr

Hukam Chand etc. v. Union of !ndia ond ()rs. [1973] J S.C.R. 986 referred

Craies Statute

Law 7th

Ectn. pp. 305~307.

5. In the instant case, section 3 ( 6) of the Act merely provides that every

·order made under section 3 by the Central Government or by any officer

or authority of the Central Government', shall be laid before both Houses

.of Parliament, as soon as may be, after it is made. It does not provide that

it shall be subject

to the negative or the affirmative resolution by either

House

of

Parliament. It also does not provide that it shall be open to the

Parliament,

to approve or disapprove the order

made under section 3 of

the Act. It does not even say that it shall be subject to any modification

which either House

of

Parliament may in its wisdom think it necessary to

provide. It does not even specify the period for which the order is to be

laid before both Houses of Parliament nor does it provide any penalty for

non-observance of or non-complioo.ce with the direction as to the laying of

c

D

E

F

G

H

1072 SUPREME COURT REPORTS [1979] 1 s.c.R.

A • the order before both Houses of Parliament. The requirement as to the

laying

of the order before both Houses of Parliament is not a condition

pre~

cedent but subsequent to the making of the order. In other words, there

is no prohibition to the making of the orders without the approval of both

Houses

of Parliament. Therefore the requirement as to laying contained in

section

3(6) of the Act falls within the first category i.e.

"simple laying" and

B

'' directory and not mand&tory. [1081 E-1082 Al

Jan Moham1ned Noor Molia111111ed Bauban v. The State .of Gujarat and'

Anr., • [1966] 1 S.C.R. 505; relied on.

D. K. Krishnan v. Secrerary, Regional Transport Authority Chittor, A.I.R.

1956 AP. 129. State v. Karna (1973) 24 RLW 487.

C Mathura Prasad Yada1

1a v. Inspector General, Railway Protection Force,

D

E

F

Railway Board, New Delhi and Or·.v. (1974) 19 MPLJ. 373, Krishna Khanna

and Anr. v. State of Punjab, A.I.R. 1958, Punjab 32; approved.

'f\i'arendra Kun1ar and Ors. v. The Union of India and Ors., [1960J 2 S.C.R.

375; distinguished.

Express Newspapers (P) Ltd. and Anr. v. The Union of India and Ors.,

[1959] S.C.R. 12; In re. Kerala Education Bill 1957, 1959 S.C.R. 995; not appli­

cable.

Bailey v. Williamson 1873 LR VIII Q.B. 118. Storey v. Graham (1899)

Q.B. 406 refer!"'ed to.

CRIMINAL APPELLATE JlJRISDICT!ON : Criminal Appeal 24 of

I 976.

From the Judgment and .Order dated 31-9-1974 of the Punjab

and Haryana High Court in Criminal Writ No. 32 of 1970.

B. Sen. (for appellant No. 1), A. K. Sen (for Appellant No. 2),

J. C. Bhatt (for appellant No. 3), F. S. Nariman (for appellant No.

4), A. B. Diwan (for appellant No. 4), I. N. Shroff and H. S. Parihar

for the Appellants.

D. Mukherjee, E. C. Agrawala and R. N. Sachthey for the Res-

y

I

•

pondent. •

G The Judgment of the Court was delivered by

JASWANT SINGH, J .-During the course of on spot check carried out

by him on December 29, 1964 of B.P. sheets lying in ap.pellant No. rs

factory at Sonepat, the Development Officer (LMB-1) of the Directorate

General of Technical Development, New Delhi, discovered from an·

H examination of the said appellant's account books that it had during

the period intervening between January 1, 1964 and January 12,

1965, acquirt;d black plain iron sheets of prime quality weighing.

!

ATLAS CYCLE LTD. v. HARYANA (Jaswant Singh,!.) 1073

'60.03 metric tons from various parties at a rate higher than the maxi­

mum statutory price

fixed for such sheets by the Iron and

Steel

Controller · (hereinafter reCerred to as 'the Controller') in exercise

of the

powers vested in him under clause 15 ( 1) of the Iron and Steel (Control) Order, 1956 (here•nafter referred to as 'the Control

Order. After the Special Magistrate had framed the charges and

secuted

in the Court of the Special Magistrate, Ambala Cant!. for an offence under section 120-B of the Indian Penal Code 'read with

section 7

of the Essential Commodities Act, 1955 (Act No.

10 of

1955) (hereinafter referred to

as

·'the Act') as also for an offence

under section 7

of the Act read with clause 15 (3) of the Control Order. After the Special Magistrate had framed the charges and

examined sixteen prosecution witnesses, the appellants made an appli­

cation before

him on February 12,

1970 under section 251A (11)·

and 288 (I) of the Code of Criminal Procedure, 1898 praying that

in

view of the submissions made therein, the case against them be

not proceeded with and they be acquitted. The trial Magistrate

dismissed

the application vide his order dated June 4, 1970,

relevant portion whereof is extracted below for facility of re­

ference

:--

"lln the light of the above observations, I am prevented

from determining the case otherwise than by making an

A

B

c

D

order of

acquittal or conviction which I can pass only after E

recording further evidence both of prosecution and in

defence.

Regarding various objections raised by the learned

counsel for the accused

on the points that the notifications

were not placed before the

Parliament and within a reason­

able time and also on the points of formation of opinion

and delegation

of powers I may submit that the

prose­

cution cannot be prevented from adducing evidence regard­

ing the formation of opinion and laying

of the notifications

before the

Parliament which can be proved by the con­

temporaneous record. Regarding the non-pTosecution of

the sellers

of the black iron sheets it does not lie in the

mouth of the accused to

~ay that such and such person has

not

been prosecuted. I need not to give my observations

on merits on the points regarding subsequent exemption

of control mens-rea, formation

of opinion and delegation

of powers in laying notifications before

the Parliament and

also need not discuss the citations as I

will have to consider

JI'

G

II

A

B

c

D

E

F

G

1074 SUPREME COURT REPORTS [1979] 1 s.c.R.

all these points at the time of final arguments and any

order given now will not be proper.

I dismiss the application

of the accused on the short

ground that it is not possible for this Court to hold that the

cognizance

was taken on an invalid report and the order of

the Court ordering framing of charge is a nullity on the

ground that on record

no offence is committed and no cog­

nizance could be

taken."

Aggrieved by the aforesaid crdcr of the Special Magistrate, the

appellants moved the High ~:ourc of Pu11jab and Horyona under Arti­

cles 226

and 227 of

the Constitutl0n and section 561-A of the Code

of Criminal Procedure, 1898 challenging their prosecution inter alia

on the grounds that the Control Order and the notification which

formed the basis of their prosecution did not have the force of law as

they had not been laid before the Houses of Parliament within a

reasonable time

as required under section 3 ( 6)

of the Act; that the

Control Order

and

the Notification fixing the maximum selling price

of the commodity

in question for the contravention of which the appel­

lants had been hauled up were invalid as the same did not appear to

be preceded by the formation of the requisite opinion under section

3(1)

of the Act which was a 'sine quu 11011 for issue of any order by

the Central Government or by the Controller; that none of the 18

concerns which, according to the prosecution sold the aforesaid B.P.

sheets to the appellants and who were equally guilty of the offence

under section 7 of the Act having been proceeded against, in the Court

of the competent jurisdiction, the prosecution of the appellants was

violative of Article

14 of the Constitution and that the purchases of

the

aforesaid B.P. sheets having been openly made and entered in the

account books of appellant No. I, the

mens rea which was a

necessary

ingredient of the offence under section 7 of the Act was totally lacking in

the case.

In the return filed by it in opposition to the writ petition, the res­

pondent while denying that the Control Order had not been placed

before both Houses of Parliament. as required by sub-section ( 6) of

section 3 of the Act

or that the i'Ssue of the

Control Order or the Noti-

fication fixing maximum selling

prices of various categories of iron

and1

steel including the commodity i'n question was not based on the for­

mation of the opinion envisaged by sub-section 1 of s

1zction 3 of the

Act conceded that the notification

fixing the maximum

selling prices

B of the cat:egories of iron and steel including the commodity in ques­

tion had not been placed before both Houses of Parliament but

contended that ·the provisions of sub-section ( 6) of section 3 of the

•

,,

t

•

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"·"

ATLAS CYCLE LTD. v. HARYANA (Jaswant Singh,!.) 1075

Act requiring the placing of the order contained in the aforesaid

notification before both Houses of Parliament

were directory and

not mandatory and the

omission to comply with that requirement

did not have

the effect of invalidating the notification. The respon­

dent further contended that the notification

fixing the

maximum

selling prices of various categories of iron and steel including the

black plain iron sheets being a part

of the Control

Order and a piece

of delegated legislation, it

was not necessary to lay it before the

Houses of Parliament.

It was also pleaded by the respondent that

the

mens rea of the accused was manifest from various manipulations

res~ted to by t~m as also from the fact that they wanted to

increase theic production and earn more profits. The respondent

also averred that launching

of prosecution against any person depen­

ded on the availability of

sufficient evidence and that non-prosecution

of the

sellers of the iron sheets in question did not involve any

discrimination

as envisaged by Article 14 of the Constitution but

was due to non-availability of adequate and reliable evidence against

them.

After careful consideration of the rival contentions of the parties,

the

High Court by its elaborate judgment and order dated May 31,

1974 dismissed

the petition overruling the contentions of the appel­

lants.

One of the

learned Judges of the High Court constituting the

Bench

which dealt with

the writ peti'tion also observed that the Noti­

fication

in question had not in reality been issued under section 3 of tire Act which required it to be laid before both Houses of Parliame'nt

but was issued in exercise of the power conferred by section 4 of the

Act

which plainly related to issue of incidental orders arising out of

the nature of the powers conferred and duties imposed thereunder and

the purpose whereof

was to enable the various authoriti'es mentioned

therein to provide the details to

fill up gaps in

'the Control Orders

issued under section 3 of the Act

so as to ensure the harmonious

and

rational working of the orders. The High Court, however, being of

the opinion that the case involved a substantial question of law relat~

ing to the vires of the notification fixing the maximum selling prices

of various categories of iron and steel including the commodity in

question certified the case a.S eminently fit for appeal to this Court.

This

is how the case is before us.

At the hearing of the appeal though the learned counsel for

the

appellants have reiterated all the contentions raised by them in the

aforesaid writ petition,

the only substantial question of law with which

we are concerned at the present stage is whether the aforesaid noti­

fication fixing the

maximum selling price of the commodity in question

is void for not having b_een laid before both Houses of Parliament.

A

B

c

D

E

F

G

H

, .. ~

A

B

c

D

1076 SUPREME COURT REPORTS [1979] 1 s.c.R.

For a proper determinati'<m of the aforesaid question, it is neces­

sary to notice a

few provisions of the Act which are relevant for the

purpose of the appeal.

Section 2

is a glossary of the Act. According to

clause (")(vi)

of the said section, iron and steel and manufactured products thereof

fall within the ambit of the expression "essential commodity".

Sub-section ( 1) of section 3 of the Act confers on the Central

Government the general power

of making and issuing orders provid­

ing for regulating or prohibiting

the producti<on, supply and distribution

of an essential commodity and trade and commerce therein if it is of

opinion that it is necessary or expedient so to do for m&•ntaining or

increasing supplies of any essential commodity or

for securing its

equitable distribution and availability at fair prices

oc "or securing any

essential commodity for the

defence of India or the efficient conduct

of military operations.

Sub-section (2) of section 3 of the Act specifies the orders which

without prejudice to the generality of the powers conferred by sub­

section t 1) of section 3 can be issued thereunder.

Clause (c)

of sub-section (2) of section

·3 of the Act authorises

the issue of an order for controlling the price at which

any essential

commodity

may be bought or sold.

Su~section ( 6) of section 3 of the Act ordains that every order

E made under this section

by the Central or by any officer or authority

of the Central Government shall be laid before both Houses of Par-

F

G

H

liament as soon as may be, after it is made.

section 4 of the Act lays down that an order made under section

3 may confer powers and impose duties upon the Central Government

or the State Government or officers and authorities of the Central

Government or State Government and may contain directions to any

State Government or to officers and authorities thereof as to the

exercise

of any such powers or the discharge of any such duties.

Section 5 of the Act deals with delegation of

powers. It provides

that

tho Central Government may, by notified order, direct that the

power to make orders or issue notifications unJer section 3 shall, in

relation to such matters and subject to such conditions, if

any, as may

be specified

~n the direction, be exercisable also by (a) such officer

or auhtority subordinate to the Central Government, or (b) such State

Government or such officer or authority subordinate to a State Gov­

ernment,

as may be specified in the direction.

Section 6

of the Act which embodies the non-obstante clause 'lays

down that any order made under section 3 shall have effect notwith­

standing anything i'nconslstent therewith contained in any enactment

y

•

.

'·

ATLAS CYCLE LTD. v. HARYANA (Jaswant Singh,!.) 1077

«her than this Act or any instrument having effect by virtue of any A

enactment other than this Act.

Section 7 of the Act lays down the penalties which any person

,;; contravening any ord~r made under section 3 shall entail.

Section 10 of the Act which c!eals with offences by the companies

provides as follows:-

" l 0. ( 1) If Uie person oontravening an order made

under section 3 is a company, every person who, at the time

the contravention

was committed, was in charge of, and was

responsible to, the company for the conduct of the business

of the company as well as the company, shall be deemed to

be guilty of the contravention and shall

be liable to be pro­

ceeded against and punished accordingly :

Provided that nothing contained in this sub-section shall

:render any such person liable to any punishment

if he proves

B

c

that the contravention took place without his knowledge or D

that he exercised all due diligence to prevent such

contra·

vention.

(2) Notw;'thstanding anything contained in sub-section

( 1) , where an offence under this Act has been committed

by a company and it

is proved that the offence has been

committed with the consent

or connivance of, or is

attribut­

able to any neglect on the part of, any director, manager,

secretary

or other officer of the company, such director,

manager, secretary

or other officer shall also be deemed to

be guilty of that offence and shall be liable to be proceeded

against and punished accordingly.

E

F

,,, Explanation. - For the purposes of this section, •

•

•

(a) "company" means any body corporate, and inclu­

des a firm or other association of individuals; and

(b) "director" in relation to a firm means a partner in G

the firm."

We may also at this' stage advert to the Control Order which was

issued by the Central Government vide S.R.O. 1109/ESS. COMM/

liRON AND STEEL dated May, 8, 1956 in exercise of the powers

conferred on it by section 3 of the Act. Sub-clause (1) of clause 15 H

of this Order authorises the Co~tro\ler to fix by notification in the

Gazette of India the maximum prices at which any iron and steel may

l 6-699 SCI/78

r

1078 SUPREME COURT REPORTS [1979] 1 S.C.R'-

A be sold (a) by a producer, (b) by a stockholder including ~ con­

trolled stockholder and ( c) by any person or class of persons. Sub­

clause

(3) of clause 15 of the Control

Order which is material for

the purpose of the case provides:

"15. (3) No producer or stockholder or other person

B shall sell or offer to sell, and no person shall acquire, any

iron or steel at a price exceeding the maximum prices

fixed

under sub-clause (1) or (2)

."

It was under sub-clause ( 1) of clause 15 of the Control Order

that the notification in question was issued.

C Though sub-section (6) of section 3 of the Act provides that

every order made by the Central Government or by any officer oc·

authority of the Central Government shall be laid before both Hous­

es of Parliament as soon as may be after it is made, tha important

point to be considered in the absence of analogous statutes like the

Statutory Instruments Act, 1946 and the Laying

of Documents before

D Parliament (Interpretation) Act, 1948 prescribing the conditions, the period and the legal effect of the laying of order before the Parliament

is whether the provision is directory or mandatory. It is well to

remember at the outset that the use of the word 'shall'

is not conclusive

and decisive

of the

matter' and the Court has to ascertain the true

intention

of the legislatnre, which is the determining factor,

and:

E that must be done by looking carefully to the whole scope, nature

and design

of the statute. Reference in this connection may be made

to the decision

of this Court in

State of U.P. v. Manbodlum Lal

Srivastava('). 'Reference in this behalf may also be made with ad­

vantage to another decision of this Court in The State of Utfar Pra­

desh & Ors. v. Babu Ram Upadhya(') where Subba Rao, J. (as he

F then was) after quoting with approval the passage occurring at page

516

in Crawford

"On the Construction of Statutes" as well as the

passage. occurring at page 242 in 'Craies on Statute Law', 5th Edition,.

observed

as follows :-

G

H

"The relevant rules of interpretation may be briefly stated

thus: When a statute

uses the word

"shall'', prima facie,

it is mandatory, but the Court may ascertain the real inten­

tion

of the legislature by carefully attending to the whole

scope of the statnte. For ascertaining the real intention of

the

Legislature, the Court may consider, inter alia, the

nature and the

design of the

statute, and the consequences

which would

follow from construing it one way or the other,.

(I) [1958] S.C.R. 533

(2) [1961] 2 S.C.R. 679

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A

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ATLAS CYCLE LTD. v. HARYANA (Jaswant Singh, J.) I 079

the impact of other provisions whereby the necessity of

comply;•ng with the provisions in question is avoided, the

circumstances, namely, that the statute provides for a con­

tingency of the non-compliance

with the provisions, the fact

that the non-compliance with the provisions

is or is not

visited

by some penalty, the serious or trivial consequences

that

fiow therefrom, and, above all, whether the object of

the legislation

will be defeated or furthered."

Thus two considerations for regarding a provision

as directory

are : ( 1) absence

of any provision for the contingency of a particular

provi~ion not being complied with or followed and (2) serious gene­

ral inconvenience and prejudice that would result

to the general pub­

lic if the act of the Government or an instrumentality

is declared

invalid for non-compliance with the particular provision.

Now the policy and object underlying the provisions relating to

laying the delegated legislation made by the subordinate law making

authorities or orders passed by subordinate executive instrumen­

talities before both Houses of Parliament being to keep supervision

and control over the aforesaid authorities and instrumentalities, the

"laying clauses" assume different forms depending on the degree of

control which the legislature may like to exercise.

As evident from

the observations made at pages

305 to 307 of the 7th Edition of

Craies

on

Statute Law and noticed with approval in Hukam Chand

etc. v. Union of India & Ors.(') there are three kinds of laying

which are generally used by the Legislature. These three kinds of

laying are described and dealt with

in Craies on

Statute Law (Supra)

as under.-

(i) Laying without further procedure,

(ii) Laying subject to

negative resolution,

(iii) Laying subject

to affirmative resolution.

(i)

Simple laying. The most obvious example is in sec­

ti'on lil(2) of the 1946 Act. In earlier days, before

the idea of laying in draft had been introduced, there

was a provision for laying rules etc., for a period

during which time they were not in operation and

could be thrown out without ever having come into

operation (compare Merchant Shipping Act, 1894,

s. 417; Inebriates Act 1898, s. 21) but this is not

used now.

(I) [1973] I S.C,R. 896-A.l.R. 1972 S.C. 2427

A

B

c

D

E

F

G

H

B

c

D

E

F

G

II

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SUPREME COUll.T REPORTS (1979] l s.C.R.

(ii) Negative resolution.-Instruments -so-laid--have

~ immediate operative effeet bu. are subject to annul­

ment within forty days without prejudice

to a new

instrument being made.

The phraseology generally

·

'used is "subject. to annulment tn pursuance of a

resolution of either House of Parliament." This is

by far the commonest form of laying. It acts

;;--mostly_ as a deterrent and sometimes forces a

--' Minister (in Sir Cecil Carr's phrase) to "buy off

-~ oppositio_n''_ by_ proposing some modification.

(iii) Affirmative resolution. The phraseology here is

normally "no order shall be made unless a draft has

been laid before Parliament

and has been approved

by a resolution of

each House of Parliament. Nor-

:_ mally, no time limit is fixed for obtaining approval

' none is necessary because the Government will natu­

rally t'ake the earliest opportunity of bringing it

up

for approval

_:_but section 16(3) of.the Housing

•(Fmancial and Miscellaneous Provisions) Act, -1946 -

did impose a limit of forty days.

An old form

(not much used nowadays) provided for

an order to

be made but not to become

cperative'until a resolu­

tion of both Houses of Parliament

had been

obtain­

ed. This form was used in section 10 ( 4) of the

Road Traffic Act, 1930 (cf. Road Traffic Act, 1960,

s.19(3) ... The affirmative resolution procedure

necessitates a debate in every case. This mean3

. that one object of delegation of legislation (vi'z.

saving the time of Parliament) iS to some extent

defeated.

The procedure therefore is

sparingly used

and

is more or

less reserved to cases where the

order almost amounts .to an Act, by effecting changes

which --approxiniate to true legislation (e.g. where

the order is the meat of the matter, the enabling Act

merely. outlining the general purpose)

or where_ the

order replaces local

'Acts or provisional orders and,

most important of all, where the spending, etc. of

-public mone>: is affected.

-Somet;mes where speedy or secret action is -r~quired

(e.g. the imposition of import duties), the order is

· laid with immediate oneration but has to be confirmed

within a certain peridd of Import Duties_ Act, 1958,

(

•

'{

•

ATLAS CYCLE LTD. v. HARYANA (Jaswant Singh, J.) 1081

s.13 ( 4). This process of acting first and getting

approval after has also been adopted in the Emer­

gency Powers Act,

1920 nnder which a state of

emergency can be proclaimed and regnlations made.

The proclamation must be immediately comm11.ni­

cated to Parliament and does not have effect "l'or

longer than a month: but it can be replaced by an­

other proclamation.

Any regulations made under

the proclamation are to be laid before

ParL•ament

immediately and do not continue in force after the

expiration

of seven days from the time when

they

are so laid unless a resolution is passed by both

Houses providing for their continuance."

' Now at page 317 of the aforesaid Edition of Craies on Statute

Law, the questions. whether the direction to

lay

the rules before Par­

liament is mandatory or merely directory and whether laying is a

condition precedent to their operation or may be neglected without pre­

judice to the effect of the rules are answered by saying that "each

case must depend on its own circumstances or the wording of the

statute under which the rules are made." In the instant case, it would

be

noticed! that sub-section(6) of

section 3 of the Act merely provides

that every order made under,section 3 by the Central Government or

by any officer or anthority of the Central Government shall be laid

before both Houses of Parliament,

as soon as may be, after it is made. It does not provide that it shall be subject to the negative or

the affirmative resolution by either House of Parliament. It also does

not provide that it shall

be open

'to the Parliament to approve or di•-·

approve the order made under section 3 of the Act. It does not

even say that it shall be subject to any modification

which either

House of Parliament

may in its wisdom think it necessary to provide.

It does not even specify the period for which

the order is to be laid

before both Houses of Parliament nor does it provide any penalty for

non-observance of or non-compliance with the direction

as to the

lay­

ing of the order before both Houses of Parliament. '1t would also be

noticed that the requirement

as to the laying of the order before both

Houses of

Parlirunent is not a condition precedent but subsequent to

the making of the order. In other words, there is no prohibition to

the making of the orders without the approval of both Houses of

Parliament. In these circumstances, we are clearly of the view that

the requirement as to laying contained in sub-section (6)

of section

3 of the Act falls

within the first category i.e. "simple laying'" and

A

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1082 SUPREME COURT 11.EPORTS [1979] 1 s.c.R.

is directory not mandatory. We are fortified in this view by a carena

of decisions, both English and Indian.

In Bailey v.

Williamson(•)

whereby section 9 of the Parks Regulations Act, 1872 passed on

June 27, 1872

'.'to protect the royal parks from injury, and to protect the pu!jic in the enjoyment of those royal parks and other royal pos­

sessions for the purpose uf innocent recreation and exercise" it was

provided that any rules made in pursuance of the first schedule to the

Act shall be forthwith laid before both Houses of Parliament,

if

Par­

liament be sitting, or if not, then within three weeks after the beg;n­

ning of the then next ensuing session of Parliament; and if any such

rules shall be disapproved

by either House of

Parliament within one

month of the laying, such rules, or such parts thereof

as shall be

di<s­

approved shall not be enforced and Rules for Hyde Park were made

and published on September 30, 1872 when Parliament was not sit­

ting-and in November 18, 1872, the appellant was convicted under

fl:ction 4 of the Act for that he did unlawfully act in contravention of

Regulation 8 contained

in the first schedule annexed thereto by

delivering a public address not in accordance with the rules of the

said

Park but contrary to the statute, and it was inter alia contended

on

his behalf that in the absence of distinct words in the statute stat­

ing that the rules would be operative in the interval from the time they

were made to the

ti<me when ·Parliament shonld meet next or if Par­

liament was sitting then during the month during which Par­

liament had an opportunity of expressing its opinion npon them, no

rule made

as supplementing the schedule could be operative so as to

render a person liable to be convicted for infraction thereof unless the

same had been laid before the

Parliament, it was held overruling the

contention that the Rules became effective from the time

they were made and it could not be the intention of the Legislature

that the layi•ng of the rules before Parliament should be made a con­

dition precedent to their acquiring validity and that they should not

take effect until they are laid before and approved by Parliament. If

the Legislature had intended the same thing as in section 4, that the

rules shonld not take effect until they had the sanction of the Parl~a­

ment, it would have expressly said so by employing negative language.

In Starey v. Graham(') where it was contended that the Register

of Patent Agents Rules, 1889 which had been repealed by Rules of

1890 could not be re-enacted by mere reference without complying

with the provisions of section 101, sub-s. 4 of 46 and 47 Viet. c. 57

H according

to which, a copy of the Rules of 1889 should also have been

(I) [18731 L.R. VIII Q.B. 118

(2) [1899] l Q.B. 406

A

y

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ATLAS CYCLE LTD. v. HARYANA (laswant Singh, J.) 1083

'laid before both Houses of Parliament in order to make them valid,

<Channell, J. said :

"I somewhat doubt whether the provisions of section 101

are more than directory and whether it is necess~ in any

particular case where reliance

is placed on such rules to

prove that in fact its provisions had been complied

with."

In Jan Mohammad Noor Mohammad Bagban v. The State of

·Guiarat & Am-. C) where it was urged by the petitioner that the toles

framed

by the Provincial Government in 1941 in exercise of the

powers conferred on it under section

26(1) of the Bombay Agricul-

A

B

·turaI Produce Markets Act (22 of 1939) had no legal validity as they c ,

were not laid before each of the Houses of the Provincial Legislature

at the session thereof next following as provided by sub-seCtion (5)

of section

26 of the Act, this Court rejected the contention and up-

held the validity of the said rules. The following observatious made

in that

case by

Shah, J. (as he then was) on behalf of the Constitu-

tron Bench are apposite:- D

"The rules under Act 22 of 1939 were framed by the Pro­

vincial Government of Bombay in 1941. At that time there

was no Legislature in session, the Legislature having been sus­

pended during the emergency arising out of World War II. The

session of the Bombay Legislative Assembly was convened for

the

first time after 1941 on May 20, 1946 and that session was

prorogued on May 24, 1946. The second session of the

Bombay Legislative

A~sembly was convened on Jnly 15, 1946

and that of the Bombay Legislative Council on September

3,

1946 and the rules were placed on the Assembly Table in the

second session before the Legislative Assembly on September

1, 1946 and before the Legislative Counci on

September 13,

1946. Section 26(5) of Bombay Act 22 of 1939 does not

prescribe that the rules acquired validity only from the date

on which they were placed before the Houses of Legislature.

The rules are valid from the date on which they

are made

under s.

26(1). It is true that the Legislature has prescribed

that

the rules shall be placed before the Houses of Legislature,

but failure

to place the rules before Houses of Legislature does

affect the validity

of the rules, merely because they have not

been plac;ed before the Houses of the Legislature. Granting

that the provisions

of sub-s. (5) of

S. 26'by reason of the

failure to place the rules before the Houses of Legislature were

(I) [1966] 1 $.C.R. 505-A.I.R. 1966 S.C. 385.

E

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B

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1084 SUPREME COURT REPORTS (1979] l S.C.R-

vivloted, we are of the view that Sub-s. (5) of S. 26 having

regard to the purposes for which it is nuute, and in the context

in which it occurs, cannot be regarded as mandatory.

(Emphasis supplied).

"The rules have beeu in operation since

the year 1941 and by virtue of

s. 64 of the Gujarat Act

20 of

1964 they continue to remain in operation.

In D. K. Krishnan v. Secretary, Regional Transport Authority, Chi!tor(') where the validity of Ruic 13-A of the Madras Motor Vehi­

cles Rules, 1940, made under the Motor Vehicles Act, 1939 empowering

the Regional Transport Authority to delegate

its functions to the

Secre­

tary was challenged on the ground that it was not laid before the Legis­

lature of the.Madras State as required by section 133(3) of the Act

which provided that the rules shall be laid for not less than fourteen

days before the Legislature as soon

as possible after they are made and

shall be subject to

such modification as Parliament or such Legislature

may make during the session

in which they arc so laid,

Subba Rao, J.

(as he then was) after an exhaustive review of the case law and the text

books on constitutional law by eminent jurists repelled the mntention

observing as follows :-

"The aforesaid discussion in the text books and the case

law indicate the various methods adopted by the Parliament

or legislature to control delegated legislation. That control

is

sought to be effected by directing the rules or regulations

made by the delegated authority to be laid before the Parlia­

ment.

Where the statute makes the laying of the rules before

Parliament a condition precedent or the resolution of the

Parliament a condition subsequent, there

is no difficulty as in

the former case, the rule has

no legal force at all till the condi­

tion precedent

is complied

with and in the latter case, it

ceases to have force from the date of non-compliance with the

condition subsequent.

Nor can there

be any difficulty in a case where the Parlia­

ment or the Legislature,

as the case may be, specifically pres­

cribes the legal effect of non-compliance with that condition.

But more important question arises when the Parliament

directs the laying of the rules before the Parliament without

providing for the consequences of non-compliance

with the

rule.

(1) A.J.R. 1956

Andhra 129.

•

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_ATLAS CYCLE LTD. v. IIARYANA (laswantSingh, J.) . 1085

In th" case of a statute di~ecting rules to be laid before

the P,arliament or the Legislature ·without any condition

attached, the rule

is only

directory. Though the statute says

that the rules shall

be laid before the

Parliament as the provi­

sion in the statute is conceived in public interests, the derelic­

tion

of the duty by the

Minister or other officer concerned in

not following the procedure should not be made to affect the

members

of the public governed by the rules.

It may be asked and legitimately too that when

the Parlia­

ment

to keep its control over delegated legislation directs that the rules shall be laid before the Parliament and if that rule is

constrned as directory, the object itself would

be defeated.

But the.

Parliament or the Legislature, as the case may be if

they intended to make that rule mandatory, they would have

clearly mentioned the legal consequences

of its

non~coru- ·

pliance as they have done in other cases.

This rule (i.e. the one· contained in Section 133(3)

therefore, is not made either a condition precedent or a condi­

tion subsequent

to the coming into force of the rules.

lt

does not provide for any aJ!irmative resolution. The role

continues

to be in force

till fr is modified by the Parliament.

If sub-section (3) i< only directory, in view of the opidion

expressed by us, it is clear from a fair reading of the words

used in the section that the rules made under the section came

into effect immediately they were published and they continu·

ed. to be in force because it is not suggested tbat they were

modified by the Legislature. We, therefore, hold that the rule

in question.is valid.

19

In State v. Karna(') where the very question: with . which we are

concerned in the present case cropped up in connection with the Rajas­

than Foodgrains (Restrictions

on Border Movement) Order, 1959, a

bench

of Rajasthan High Court said as follows

:-

"It is important to note that laying the· Order before both the

Houses of Parliament is not a condition precedent for bringing

into force the Order. All that sub-section.

(6) provides is that

every Order. made under sec. 3 of the Essential Commodities

Act by the Central Government

or

by any officer or authority

of the Central Government shall be laid before both the Houses

of Parliament as soon as after it is made. It is significant that_

(I) [1973124 R.L.W. 487

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1086 SUPREME COURT REPORTS [1979] I s.c.R.

· the Order is valid and effective from the date it is duly pro­

mulgated. Even the limit or period within which it niust be

placed before the Parliament has

not been specified.

· It is,

therefore,

not possible to hold that sub-sec. ( 6) of sec. 3 of the ... Essential Co=odities Act is mandatory. If the . legislature

intend_ed that in order to provide an adequate safeguard it was

necessary

to

make the said provision mandatory it could have

done so in express words.

We are, therefore, of the opinion

that the

Order cannot be considered as invalid merely because

the State was not able to put on record proof of the fact that

the'"Order was laid before both the Houses of Parliament.''

In Mathura Prasad Yadara v. Inspector General, Rly. Protection

Force, Railway Board, New Delhi

&

Ors.(') where it was contended that

Regulation

14 of the Railway Protection Force Regulations, 1966 made

under section 21

of the Railway Protection Force Act (23 of 1957) was

invalid as

it was not laid before both Houses of Parliament as required

D

by sub-section (3) of section 21 of the Act, it was held :

E

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·"What then is the consequence of failure to lay the regu­

lation ? •.•••. A correct construction of any particular laying

clanse depends

upon its own terms. If a laying clause

defe~

the coming into force of the rules until they arc laid, the rules

do not come into force before laying, and the requirement of

laying

is obligatory to make the rule operative.

So the require­

ment of laying in a laying dause which requires an affirmative

procedure will be held to be mandatory for making the rules

operative, because,

in such cases the rules

do not come into

force until they are approved, whether with

or without modi-

·

fication, by Parliament .. But in case of a laying clause which

requires a negative procedure, the coming into force of the

rules is not deferred

and the rules come into force

i=edia­

tely they are made. The effect of a laying clause of this variety

is that the rules continue subject

to any modification that

Parliament

may choose to make when they are laid; but the

rules remain operative until they are so modified. Laying

clauses requiring a negative procedure are, therefore, cons­

trued as directory". The matter is put beyond controversy by

the decision of the Supreme Court in Jan Mohd. v. State of

Gujarat (supra). Our conclusion, therefore, is that the laying

requirement enacted in section 21 (3) of the Act is merely

directory.

It logically follows that failure to lay Regulation

(I) [1974) 19 M.P.L.J. 373.

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ATLAS CYCLE LTD. v. IIARYANA (Jaswa11t Singh, J.) 1087

14 has no effect on its validity and it contim1es to be effective A

and oiierative from the date it was made."

Relying on the decision m D. K. Krishnan v. Secretary Regional

"Transport Authority, Chittoor (supra), Grover, J. speaking for-the bench

in Krishna Khanna & Anr. v. State of Punjab(') said that sub-section

(6) of section 3 of the Essential Commodities Act, 1955 was merely of . B

a directory nature and its non-compliance did not render the Pupjab

Coal Control Or~er, 1955 invalid or void.

Metcalfe & Ors. v. · Cox & Ors. (

2

)

where the Commissioners

·(charged with the duty of making provisions for improving the adminis­

·tration of the Scotish Universities) assuming to act under powers of · c

·section 16 of the Universities (Scotland) Act, 1889 executed an instru~

ment in writing declaring that they had affiliated and did thereby affi-

liate the University College of Dundee to and make it form part iif the

·un'iversity of St. Andrews which was treated as an ordinance and held

to be invalid on the ground that it had not been laid before Parliament

4 not helpful to the appellants, as the decision in that case turned u,ron D

·the construction of the language of section 20 of the said Act which

provided that all ordinances made by the Commissioners are

to be

published in the Edinburgh Gazette, laid before Parliament and sub­

mitted to

Her Majesty, the Queen for approval and no such ordinance

shall be effectual until

it shall have been so published, laid before Parlia-

.ment and approved by

Her Majesty in Council. E

The decision of this Court in

Narendra Kumar & Ors. v.

The Union

.-of India & Ors.(') on which counsel for the appellants have heavily

'leaned is clearly distinguishable. In that case, the Non-ferrous Metal

·control Order, 1958 was held to be invalid essentially on the ground

that the principles specified. by the Central Government in accordance F

with clause 4

of the Order were not published either on April 2, 1958 .'on which the order was publlshed in the Government Gazette or any

·other date. It would be noticed that while considering the effect of non-

. · publication of the aforesaid principles which formed an integral part of

the order by which alone the Central Government could regulate the

distribution and supply

of the essential commodities, it was only inci: G

dentally.

that a mention was made by the Court to the dTect that the

principles had not been laid before both Houses

of Parliament.

Likewise the decisions of this Court

in Express Newspapers

(Private) Ltd. & Anr. v. The Union of India & Ors(') and in re: The

(1) A.I.R. 1958 Punjab 32

(2) [1895! A.C.

328

(I{.L.)

(3) [1960] 2 S.C.R. 375

(4) [1959) SCR 12-AIR 1958 SC 578.

H

1088 SUPREME COURT REPORTS

!

[1979] 1 'S.c.R.

A Kera/a Education Bill, 1957 ( 1959 S.C.R. 995 : A.I.R. 1958 S.C.

956) are also not helpful to the appellants. The point in~olved in the

present case was not directly in issue in those cases and the observations

made therein abo.ut laying were merely incidental.

From the foregoing discussion, it inevitably follows that the Legisla-

B ture never intended that non-compliance Wlth the requirement of laying

as envisaged by sub-section ( 6) of section 3 of the Act should render

the order.void. Consequently non-laying of the aforesaid notification

fixing the maximum .elling prices of various categories ·of iron and steel

including The_ commodity in. question before both Houses of Parliament

cannot result

in nullification of the

notlfication. Accordingly, we answer

C · the aforesaid question in the negative. In view of this answer, it is not

necessary to deal with the other contention raised by the respondent t<>

the effect that the aforesaid notification being of a subsidiary character,

it was not necessary

to lay it before both Houses of

Parliament to make

it valid.

D

In

the result, the appeal fails and is dismissed.

N.V.K.

Appeal dismissed~