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CASE NO.:

Appeal (civil) 6453 of 2001

PETITIONER:

I. T. C. LIMITED

Vs.

RESPONDENT:

AGRICULTURAL PRODUCE MARKET COMMITTEE & ORS.

DATE OF JUDGMENT: 24/01/2002

BENCH:

CJI & G.B. Pattanaik

JUDGMENT:

With

Civil Appeal Nos. 540/87, 541/87, 3872/90, 3024/88,

3023/88, 1535/88, 1194/88, 1394/88, 1536/88, 1980/88,

1981/88, 3715/88, 2464/88, 6619/97, 2088-89/99, C.A. No.

671 of 2002 @ S.L.P.(Civil) No. 892/85, C.A. Nos. 673-

675/2002 @ 27568-27570/95 and Writ Petition (Civil) No.

8614/1982.

JUDGMENT

PATTANAIK, J.

Leave granted in all the Special Leave Petitions.

I.T.C. Limited filed a writ petition under Articles 226

and 227 of the Constitution of India before the Patna High

Court against an order of assessment passed by the

Agricultural Produce Market Committee, Monghyr,

demanding a sum of Rs.35,87,072/-, inter alia on the ground

that the purchase of unprocessed tobacco leaves from the

growers, being the subject matter of the levy, the Market

Committee has no power to levy and collect fee. The stand

taken before the High Court was that tobacco leaves neither

having been bought or sold within the market area and the

power to levy and collect market fee under Section 27 of the

Bihar Agricultural Produce Markets Act, being on the

Agricultural produce bought or sold in the market area, the

Market Committee was not entitled 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

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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 and that is how

the matter has been placed before the Constitution Bench.

Subsequent to the Bihar case, similar cases arising out of

judgment of other High Courts on being assailed before this

Court, those cases also have been tagged on to this case.

When this batch of cases had been earlier listed before a

Constitution Bench and arguments had been advanced on

behalf of company, the Court felt that it would be appropriate

to issue notice to the Attorney General and the Advocate

Generals of all the States, as most of the States have their

State Act called the Agricultural Produce Market Act and

pursuant to the order of this Court dated 10th of April, 2001,

notices were issued to Advocate Generals of all the States as

well as to the Ld. Attorney General, whereafter this case has

been heard by this Bench.

Different State Legislatures have enacted Agricultural

Produce and Markets Act for regulating sale and purchase of

the agricultural produce within the market area and for levy

and collection of market-fee. Parliament having declared that

it is expedient in the public interest that Union should take

under its control the tobacco industry, enacted the Tobacco

Board Act, 1975 which is an Act to provide for the

development of tobacco industry under the control of the

Union Government. Under the Agricultural Produce Markets

Act, the State Government having notified 'tobacco' as an

agricultural produce, the purchase and sale of tobacco is to be

regulated under the provisions of the State Act and the

Market Committee has the right to levy and collect market-

fee on such sale and purchase of the notified agricultural

produce viz. the tobacco. In a case arising from the State of

Karnataka, this Court by a majority of 2:1, came to hold that

the tobacco industry having been taken over by the Central

Government under Entry 52 of List I and having passed the

Tobacco Board Act, the State Legislature ceases to have any

jurisdiction to legislate in that field and, therefore, the

provisions contained in the Karnataka Act, entitling the

Market Committee to levy market-fee in respect of sale and

purchase of tobacco within the market area directly, collides

with the Tobacco Board Act, 1975 and as such the State Act

so far as it relates to tobacco was struck down. The

minority view expressed by Justice Mukherjee was however

to the effect that both Acts can operate in their 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

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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

Allahabad High Court considered the constitutional validity

of U.P. Krishi Utpadan Mandi Adhiniyam, 1964, and came to

hold, that the Adhiniyam permitting levy and collection of

fee under Section 17(iii), in so far as it applies to tobacco, is

not repugnant to the provisions of Tobacco Board Act and

further held that the decision of the Supreme Court in Ram

Chander Kailash Kumar vs. State of U.P. is binding,

notwithstanding the subsequent decision of the Supreme

Court in the case of ITC vs. State of Karnataka (supra), and

therefore, the Tobacco Merchants' Association has assailed

the legality of the aforesaid Full Bench decision. So far as

the State of Tamil Nadu is concerned, the Tamil Nadu

Agricultural Marketing Board has assailed the judgment of

the Division Bench of the High Court as the High Court

followed the judgment of this Court in the ITC case and held

that the State Legislature has no legislative power or

competence to notify tobacco for the purpose of control and

regulation and levy market fee under the provisions of Tamil

Nadu Regulation Act, 1959. In fact the High Court held that

the ratio of majority opinion in ITC case squerely applies

and, therefore, the State Legislature of Tamil Nadu has no

legislative power to notify or provide for notifying tobacco

for the purpose of control, regulation and levy of fee or other

charges under the provisions of Tamil Nadu Agricultural

Produce Markets Act, 1959.

Jayalakshmi Tobacco Company filed a Civil Writ

Petition No. 8614 of 1982 under Article 32, challenging the

constitutional validity of certain provisions of Karnataka

Agricultural Produce Marketing (Regulation) Act, 1966, on

the ground that in view of Tobacco Board Act, 1975 and

Tobacco Association Act, 1975, the entire field regarding the

development of tobacco industry including the marketing of

tobacco was occupied and the State legislation is repugnant

to the Central Act.

So far as 12 appeals arising out of the judgments of

Madhya Pradesh High Court are concerned, the High Court

of Madhya Pradesh followed the judgment of this Court in

the ITC case and held that the Market Committee will not be

entitled to realise any market fee in relation to the trade with

regard to tobacco since the Market Committee Act is

repugnant to the Tobacco Board Act. It may be stated that

though the Writ Petition had been filed challenging the

constitutional validity 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,

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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 make law in relation to growing of raw

tobacco, or even sale thereof, and to that extent the Tobacco

Board Act must be held to be invalid. According to him the

State Legislature was fully competent to enact the

Agricultural Market Committee Act, and providing therein,

for levy of fee for sale and purchase of agricultural produce

including tobacco. Apart from the main arguments,

advanced by these two learned senior counsel, several other

counsel appearing for Market Committee, namely, Mr.

Ashok Ganguli, appearing in Tamil Nadu case, Dr. A.M.

Singhvi, appearing for Market Committee, Monghyr , Mrs.

Shobha Dikshit, appearing for Krishi Mandi of Farukkabad,

Mr. Pramod Swarup appearing in the case arising out of the

judgment of Allahabad High Court, Mr. G.L. Sanghi

appearing for Krishi Mandi in the Madhya Pradesh batch of

appeals, supported the arguments advanced by Mr. Dwivedi.

Mr. G.L. Sanghi, the learned senior counsel appearing for

Madhya Pradesh Krishi Mandi, in M.P. batch of appeals

submitted for re-conciliation of both the Acts, and contended

that there exists no repugnancy and both Acts can be allowed

to operate. Mr. Trivedi, the learned Additional Solicitor

General, appearing for the Attorney General of India,

however, contended, that the constitutionality of Tobacco

Act, not having been assailed in any of these cases, the Court

need not embark upon an enquiry with regard to the

competence of Parliament to enact the Tobacco Board Act

under Entry 52 List I of the VIIth Schedule. He also further

contended, that the tobacco industry having been notified, as

an industry, the control of which the Parliament thought it

expedient to be taken over in the public interest, and the

Tobacco Board Act having been enacted, there cannot be any

limitation for exercise of power of the Parliament even in

relation to the growing of tobacco or sale of tobacco at

specified place as well as levy of fee for such sale, and in that

view of the matter, the Market Committee Act providing levy

of market fee on sale and purchase of tobacco within the

market area must be struck down. It is true, as contended by

the learned Additional Solicitor General that the

constitutional validity of the Tobacco Board Act had not been

assailed in any of these cases, and only in this Court, Mr.

Rakesh Dwivedi, the learned senior counsel, appearing for

the State of Bihar raised the contention in view of 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

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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 power under Article 246(1) of the

Constitution. Article 246(1) itself being, notwithstanding

anything in Clauses 2 and 3 of such Article, once Parliament

makes a law in relation to control of an industry in respect of

which a declaration has been made, the State Legislature will

be denuded of its power to make any law in respect of that

industry. Mr. Shanti Bhushan contends, that every Entry in

the Legislative List has to be construed in its widest sense, as

was held by this Court in Harakchand Ratanchand

Banthia & Ors. etc. vs. Union of India & Ors. (1970) 1

SCR 479, and even Privy Council has also laid down the said

proposition. There is, therefore, no rational to give restrictive

meaning to the expression 'industry' in Entry 52 of List I of

the VIIth Schedule. The learned counsel placed reliance on

the meaning of the word 'industry' contained in

Encyclopedia of Britannica, which indeed is too wide and

submitted, the Court cannot and ought not give a restricted

meaning to the expression so as to denude the legislative

authority to make law on the subject. The learned counsel

made a reference to laws made by the Parliament, on a

declaration being made in terms of Entry 52 of List I,

namely, the Cardomon Act, 1965; The Central Silk Board

Act, 1958; The Coffee Act, 1942; The Rubber Act, 1947; The

Tea Act, 1953; The Coir Industry Act, 1953; The Coconut

Development Board Act, 1979 and The Tobacco Board Act,

1975. The learned Counsel urged that the Industries

(Development & Regulation) Act, 1951, had declared only

certain manufacturing industries, but that by itself will not

denude the Parliament of its legislative competence to make

law over any industry once a declaration, in terms of Entry

52 of List I is made, vesting the entire control over the

industry with the Union Government. According to

Mr. Shanti Bhushan, the Constitution Bench

decision in Harakchand's case (1970) 1 SCR 479, fully

answers this question. The learned counsel contends that the

Entries in the three lists are only the heads or fields of

legislation demarcating the area over which the appropriate

legislalture can operate. The legislative entries must be

given a large and liberal interpretation, reason being that the

allocation of subjects to the lists is not by way of scientific or

logical definition but is a mere enumeration of broad and

comprehensive categories. According 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

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(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 of Parliamentary Legislation, any

provision contained therein, which have a reasonable nexus

would be within the legislative competence of the Parliament

under Article 246(1) of the Constitution and would be valid.

According to the learned counsel, a law dealing with the raw-

material of a declared industry cannot be held to be having no

nexus with the industry itself and if the Parliament would be

denuded of its power to make law, dealing with raw-material

of the declared industry then the very purpose of making a

declaration and taking over the control of the industry in the

interest of the public would be frustrated. If the Parliament

does not choose to cover all aspects of that industry and may

confine the regulation of that industry only with regard to the

manufacturing part, as was done in the Industries

(Development & Regulation) Act, 1951, then certainly there

would be no repugnancy even if the State Legislature makes

a law dealing with the raw materials of the notified industry,

provided the State law is referable to any of the Entries in

List II. So far as the observations made by the Consntitution

Bench in Tikaramji's case (supra), Mr. Shanti Bhushan

contends that the articles relatable to the scheduled industry

were finished products and not raw materials and therefore

the Industries (Development & Regulation) Act, 1951 did not

at all purport to cover or have any provisions therein relating

to sugarcane. It was in this context the observations came to

be made by this Court in Tikaramji's case (supra) that the

expression 'industry' will have a limited meaning. Mr.

Shanti Bhushan also placed reliance on the Constitution

Bench decision in Chaturbhai M. Patel vs. Union of India

1960 (2) SCR 362 which dealt with the legislative

competence under the Government of India Act, 1935. The

Court was, in that case examining the question, whether the

Central Exicse Act was beyond the legislative competence

under the Government of India Act 1935. On examining

Entry 45 of the Union List and Entries 27, 29 and 31 of the

State List, the Court held that the examination should be as to

whether the Act in question, is a law with respect to matters

enumerated in item 45 of List I, or to the matters

enumerated in items 27 and 29 of List II. Quoting the

observations of Federal Court to the effect ;

"It must inevitably happen from time to time

that legislation, 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

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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

legislation by the Central legislation on a subject of

legislation expressly within its power. According to Mr.

Shanti Bhushan, if the expression 'industry' is construed in

the wide sense, in which it was construed by this Court in the

Constitution Bench judgment of Harakchand(supra) then

the provisions of Tobacco Board Act of 1975 would certainly

be within the legislative competence of Parliament,

notwithstanding the fact that some of those provisions may

touch upon subjects contained in the State Lists. The learned

counsel, in this connection also placed reliance on a recent

decision of this Court in the case of State Bank of India vs.

Yasangi Venkateswar Rao (1999) 2 SCC 375. With

reference to the decisions of this Court in Calcutta Gas

(1962) Supp. SCR 1, the Mcdowell (1996) 3 SCC 709and

Tikkaramji (supra), the learned counsel contended, that in

none of these cases, the competence of Parliament to make

any law was under consideration. On the other hand, both in

Calcutta Gas (supra) case and in Mcdowell (supra) case,

what was under consideration is as between the two entries, if

one is general and the other is special then which law would

prevail, and the Court held that the special law would prevail

over the general law. In Calcutta Gas case the word

'industry' in Entry 24 was held to be a general entry,

whereas word 'gas and gas works' in Entry 27 was held to be

a special entry and applying the principle of harmonious

interpretation the Court held that the expression 'industry'

will be given a limited scope so as to exclude from its ambit

gas and gas works, and it is in this sense, it was held that

from the expression 'industry' in Entry 24 in List II the gas

and gas works must be excluded. In Mcdowell's case

(supra) also the Court applied the same principle of special

excluding general and held that the production and

manufacturing of liquor would not fall under Entry 24 of List

II but under Entry 8 of List II, which relates to intoxicating

liquor that is to say that the production, manufacture,

possession, transport, purchase and sale of intoxicating

liquors. According to the learned counsel, these decisions

will have no relevance in the context of the present case,

where the competence of the Parliament to make any law

within the ambit of Entry 52 of List I is the subject matter of

scrutiny. Mr. Shanti Bhushan also 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

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(supra) the competence of the Parliament to make law had

not been assailed, and on the other hand, what was under

consideration is whether the Central Act and the State Act

could be held to cover different fields so that there was no

repugnancy between the two. It was further contended that

the State Acts would be ultra vires as they related to subject

which were brought to the Union List by a declaration in

terms of Entry 52. Mr. Shanti Bhushan contends, that all the

decisions in which constitutional validity of Parliamentary

enactment was questioned on the ground of ambit of Entry 52

of List I, the Court has upheld the validity of the same as in

Harakchand(supra). Any incidental observation where the

competence of Parliament to make law was not under assail,

cannot be relied upon for the proposition that the expression

'industry' in Entry 52 of List I must have a restricted

meaning. With special reference to Tikaramji's case (supra)

the learned counsel contended that the Court was not

examining the scope of word 'industry', as contained in

Entry 52 of List I, as is apparent from the discussions at page

414 of the SCR, but was examining the question, whether

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 sugarcane industry could

act within the scope of Entry 52 of List I, and would as well

legislate upon sugarcane. The observations of the learned

Judges at page 420 of the report, according to Mr. Shanti

Bhushan, are only in that context and when the Court did not

go into the question as to whether the word 'industry' could

or could not have a wide meaning which could be applied

when Parliament purported to cover other aspects apart from

the manufacturing processes, it would not be appropriate to

hold that the word 'industry' in' Entry 52 of List I must be

given a restricted meaning. According to the learned counsel

in Tikaramjis (supra) the Court was considering the question

of repugnancy and it answered by comparing the provisions

of Industries (Development and Regulation) Act with the

provisions of UP Regulation of Sugarcane Act and found

that there was no repugnancy and two were covering two

different fields and could therefore co-exist. It is urged that 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 laws made

by the Parliament under Entry 54 of List I of the VIIth

Schedule and the Court was examining those laws and the

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legislative competence vis-à-vis Entry 23 of List II, but those

principles laid down in Tulloch's case (supra) as well as in

Baijnath's case (supra) would equally apply to the

legislation made under Entry 52 of List I, as has been held by

this Court in paragraph 11 of Ishwari Khetan Sugar Mills

vs. State of U.P. (1980) 4 SCC 136 judgment. The learned

counsel stated that what has been stated therein, that on a

law being made by the Parliament in respect of a particular

industry the State's legislative power would stand denuded

only to the extent that any aspect related to that industry is

actually covered by the Parliamentary legislation. In other

words, it is necessary to examine the extent of coverage by

the Parliament enactment, as has been held in Ganga Sugar,

and the extreme argument advanced in the case that the

industry as a subject by itself goes out of the competence of

the State Legislature, was not accepted. According to Mr.

Shanti Bhushan, it is a well settled principle, once a

Parliamentary Legislation is enacted, whether in exercise of

its competence under Entry in List I or List III, or there is an

incidental or anciliary coverage over some Entries in the

State List, and there is any repugnancy between the law made

by the Parliament and law made by the State Legislature,

then it is only the Parliamentary law to the extent of

repugnancy which has to prevail and not the State legislation.

On the question of the re-conciliation between the Tobacco

Board Act and the Agricultural Market Committee Act, and

in relation to the provisions contained in Section 31 of the

Tobacco Board Act to the effect, - "provisions of this Act

shall be in addition to, and not in derogation of, the

provisions of any other law for the time being in force", the

learned counsel contends, the aforesaid provision by no

stretch of imagination can be construed to mean, that

notwithstanding the State Legislation being repugnant to the

Parliamentary law, yet the State legislation will be permitted

to operate. According to the learned counsel, Section 31 of

the Tobacco Board Act purports to declare that if a law which

was consistent with the Tobacco Board Act and made

additional requirement of some kind, laid down under any

other Act, it should not be 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 the

sweep of the Agricultural Markets Act. In this view of the

matter, the Tobacco Board Act having been a special Act

regulating the sale and purchase of the agricultural produce,

namely, Tobacco and the Marketing Act, being of a general

nature, the Marketing Act will cease to operate in respect of

Tobacco. Analysing different provisions of the Tobacco

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Board Act, 1975 and the Bihar Agricultural Produce

Marketing Act the counsel urged, that the provisions cannot

co-exist and, therefore, the majority view in ITC case rightly

held that the Agricultural Market Committee Act, framed by

the State Legislature is ultra vires.

Mr. Nageshwar Rao, learned senior counsel appearing

for the Tobacco Merchants' Association, reiterated all that

had been argued by Mr. Shanti Bhushan, and placing reliance

upon several authorities submitted, that the Tobacco Board

Act being a special Act, enacted by Parliament for

controlling the tobacco industry and making provision

therein, relating to growing of tobacco and purchase or sale

of tobacco, which have direct nexus with the tobacco

industry, the general provisions of the Agricultural Produce

Market Act will have to give way to the Tobacco Board Act,

and therefore, the Market Committee would have no power

to levy market fee by taking recourse to the provisions of the

Market Committee Act on the purchase and sale of tobacco

within a market area.

Mr. Rakesh Dwivedi, learned senior counsel, who led

the main argument by contending that the Parliament had no

competence to make the Tobacco Board Act in its entirety,

particularly in relation to growing and raw-materials of the

tobacco industry, appearing for the State of Bihar contended,

that the subject matter 'industry' in Entry 52 of List 1 of the

VIIth Schedule cannot be construed to be all pervasive and

the Constitution Bench of this Court in Tikaramji (supra)

conclusively held that the raw-materials which are integral

part of the industrial process cannot be included in the

process of manufacture or production. According to Mr.

Dwivedi, the Court should construe a particular entry in the

Schedule in a manner so that the other Entries in the

Schedule will not be otiose. Consequently, the raw-materials

would be goods which would comprised in Entry 27 of List II

and the manufacturing process or production would come

within the ambit of expression 'industry' in 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 respect of goods

produced by the silk industry. The Court so held being of the

opinion that any wider interpretation to the expression

'industry' in Entry 52 of List 1 would render Entry 33 in List

3 to be otiose and meaningless. Mr. Dwivedi also further

contended that both in Indian Aluminium Company (1992)

3 SCC 580 as well as Siel Ltd. And Others vs. Union of

India and Others (1998) 7 SCC 26, Tikaramji and Calcutta

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Gas have been followed and it has been held that the term

'industry' in Entry 24 of List II and Entry 52 of List 1 could

have the same meaning and it would not take within its ambit

Trade and Commerce or production, supply and distribution

of goods coming within the province of Entry 26 and 27 of

List II. Referring to the Constitution Bench decision of this

Court in Belsund Sugar Mills (1999) 9 SCC 620, Mr.

Dwivedi submits that in the aforesaid case the Court was

construing the provisions in Entry 28 of List II as well as

Entry 33 of List III and sugar and sugar cane having been

held as food stuff coming within the ambit of Entry 33 of List

III, the Market Committee Act referable to Entries 26, 27 and

28 of List II was held to be subject to the Sugar Cane Act.

Thus industry in Entry 24 of List II and Entry 52 of List I

would not cover the subject matter coming within the ambit

of Entries 26 and 27 of List II or Entry 33 of List III. It is

therefore urged, that the raw tobacco which would be a

produce of agriculture and thus the raw-material for the

tobacco industry, which required to be cured and processed

and for such a raw-material for the tobacco industry, the

Parliament cannot make any legislation by making a

declaration and taking over the control of tobacco industry

under Entry 52 of List I. Tobacco, not being a food stuff, the

same will also not come within the ambit of Entry 33 of List

III, and therefore, the raw-tobacco would continue to be

within the exclusive domain of the State Legislature and

State Legislature would have power to make law in relation

to the raw-tobacco which would be referable to Entry 14

(Agriculture), Entries 26, 27 and 28 of List II, as has been

held by this Court in the Constitution Bench decision in the

case of Belsund Sugar (supra). Mr. Dwivedi contends that

judged from this angle to the extent the Tobacco Board Act

seeks to regulate the market by providing for auction

platform and by seeking 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 majority

judgment of this Court committed error in construing the

meaning to be given to the word 'industry' under Entry 52 of

List I by relying upon the decision under Mining Legislation,

which was wholly unwarranted. Mr. Dwivedi urged that

even the Tobacco Board Act has not been made operative in

the State of Bihar and several other States, for instance,

Section 13, 13A and 14A. This being the position, in the

States where aforesaid provision had not been brought into

force, there cannot be any difficulty in allowing the State

Act, namely, the Agricultural Market Committee Act to

operate. With reference to legislative history for the

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expression 'industry' in Entry 52 of List I, Mr. Dwivedi

contends that the fact that a separate entry was made for

regulating trade and commerce, production, supply and

distribution of the products of controlled industry would

suggest that the expression 'industry' in Entry 52 of List I

will have a restricted meaning. Mr. Dwivedi urged that if the

contention of the appellant, that the word 'industry' in Entry

52 of List I should be given a wider interpretation is correct,

then the same would be destructive of the scheme pertaining

to distribution of powers. Mr. Dwivedi refers to the

judgment of this Court in Tikaramji as well as the judgment

of Full Bench of Allahabad High Court in SIEL case and

points out as to how the law relating to trade and commerce

and production, supply and distribution of goods has been

traced in these two cases and how after the end of the second

world war when emergency was lifted, the power to enact on

the subject was given to the Central Legislature by India

(Central Government & Legislature) Act, 1946. Mr. Dwivedi

urged, even though under Government of India Act 1935, the

subject of trade, commerce, production, supply and

distribution of goods was within the competence of the

provincial legislature, the law was made temporarily by the

Central Legislature. Under the Constitution of India, Article

369 was included which empowers the Parliament to make

laws for 5 years with respect to trade and commerce in and

the production, supply and distribution of certain specified

products. That very Article 369 shows that the subject

matters of raw-cotton, raw-jute, cotton seed etc. would be

covered by the Entries in List II and even the marginal note

of Article 369 throws sufficient 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 or compulsion to give this

entry a wider meaning merely because the war situation is

being dealt with in the State Entry. In such a situation Entry

33 of List III is always available to Parliament for controlling

products and Article 250 gives over riding power to the

Parliament to legislate with respect to any matter enumerated

in the State List during the period of proclamation of

emergency. Even Articles 352 to 354 also confer sufficient

power on the President to declare by proclamation that a

grave emergency exists which can be kept alive as long as the

war situation or need of defence is required. By virtue of

Article 353 the power of Parliament would extend to making

of laws with respect to a matter not enumerated in the Union

List, therefore the Constitution makers have well thought of

and designed the Constitution in such a manner in the matter

of distribution of power that there would be no difficulty at

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all for the Parliament to enact any law when the country is in

war, and therefore, in normal times there should be no

justification to give the expression 'industry' a wider

meaning and thereby denuding the State Legislatures to make

law on several heads of legislation enumerated in List II.

According to Mr. Dwivedi, reference to Entry 5 of List I, in

this context was wholly mis-conceived as that is a specific

Entry in List I with regard to arms, and as such, would not be

covered under Entry 27 of List II and Entry 33 of List III.

Mr. Dwivedi also contended that reference to Article 254(1),

in this context is mis-conceived as the said Article can be

invoked both by the Parliament and the State Legislatures to

make law with respect to one of the matters enumerated in

the Concurrent List. The expression 'repugnant' in Article

254(1) refers to matter only in the Concurrent List, and it is

in this connection, he placed reliance on the decision of this

Court in the case Deep Chand (1959) Suppl.(2) SCR 8 and

Hoechst Chemicals (1983) 4 SCC 45 . According to Mr.

Dwivedi Federalism having been accepted as one of the basic

features of our Constitution, as was held by this Court in S.R.

Bommai (1994) 3 SCC 1, a construction of a particular

legislative Entry which would denude another legislative

body from exercising its power in respect of several heads of

legislation could be held to be contrary to the basic feature of

the Constitution, and therefore, 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. The very

object of the Tobacco Board Act, being to encourage export

of good quality tobacco and to augment the foreign exchange

reserves, the same does not seek to regulate and control the

sale and purchase of tobacco in normal markets in different

States. Therefore trade and commerce, production, supply

and distribution of tobacco in different markets in India could

not be regulated by the Tobacco Board Act. He also urged

that the Act in question may not be solely to the field of

Legislation in Entry 52 of List I inasmuch as foreign

exchange comes within Entry 36 of List I, whereas law

ensuring fair and remunerative prices for the growers and

minimum prices for export of tobacco could be referable to

Entry 34 of List III. This being the position, it is not possible

to define the 'industry' in its widest form. Further the

Tobacco Board Act being an Act to regulate the sale of

tobacco at auction platform, the raw-material which is

produced by the growers in so far as the growing of raw-

material is concerned, the same would be the matter

pertaining to exclusive domain of 'agriculture' covered by

Entry 14 of List II and the Parliament cannot be permitted to

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encroach upon the domain of the State Legislature. The

learned counsel places reliance on the decision of this Court

in A.S. Krishna (1957) SCR 399. Mr. Dwivedi does not

agree with the submission of the counsel appearing for the

company that the tobacco industry is one comprehensive

integrated industry covering within its expanse the growing

of tobacco, curing, marketing and export. According to him,

growing of tobacco is pure and simple agriculture and the

industrial aspect begins after the industries purchase raw

tobacco from the growers and begin curing the same.

Consequently the Market Acts enacted by the State

Legislature would be fully competent, legal and valid

governing the sale and purchase of tobacco within the local

market area. Referring to the provisions of the Bihar Act,

the counsel urged that the same had been enacted by the State

Legislature under Entry 28 of List II, the object being to

provide for better regulation of buying and selling of

agricultural product and the establishment of markets for

agricultural produce. The comparison of the provisions of

the Market Act and the Tobacco Board Act would show that

both the Acts can operate, particularly when the Tobacco

Board 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 allowed to operate.Therefore, the Market

Committee would be entitled to levy market fee on the sale

and purchase of Tobacco within the market area. Reliance

was placed on the decisions of this Court in M. Karunanidhi

(1979) 3 SCC-431, Chanan Mal (1977) 1 SCC-340 and

Ishwari Khaitan (1980) 4 SCC 136. With special reference

to the majority judgment of this Court in ITC's case the

counsel urged that the aforesaid decision has not noticed

several decisions of this Court starting from Tikaramji,

Calcutta Gas -----etc. Mr. Dwivedi also contended that, as

has been held by this Court in several decisions, in the event

of any conflict between the law made by the Parliament with

reference to some Entry in List I and the law made by the

State Legislature with reference to any Entry in List II, the

Courts must try to harmonise and re-concile, which is well

known method of construction. The majority view, however,

did not examine the provisions of two Acts for its conclusion

as to whether both Acts could be allowed to operate,

whereas the judgment of Hon'ble Mukherjee, J proceeds on

the basis that both the Acts could operate in its own field.

According to Mr. Dwivedi, the principle of occupation of

field by a particular legislature is a concept relevant for

interpreting an entry in the Concurrent List and it will have

no application when the legislation in question is under a

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particular Entry in List I. According to Mr. Dwivedi, where

a particular legislation made by the Parliament is found to be

occupying the entire field then the extent of occupation of the

field would have to be examined with reference to

Entry 33 of List III to find out which field remains available

to the State Legislature, and if, there is any repugnancy then

same has to be dealt with, with reference to Article 254. But

the Act in question not having been made (Tobacco Board

Act ) with reference to Entry 33 of List III, conclusion with

reference to Article 254 was wholly erroneous. It is lastly

urged, that the majority view in ITC case not having noticed

the earlier Constitution Bench decisions in Tikaramji,

Calcutta Gas as well as other cases following the same, the

conclusion is unsustainable in law, and therefore, this

Constitution Bench must hold that the ITC case has not been

correctly decided. While interpreting and considering the

word 'industry' occurring in different Entries of 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 when a question of legislative competence

arises, the head of the Legislation in any entry cannot be

differently construed. In other words, the word 'industry'

occurring in Entry 24 of List II as well as Entry 7 and Entry

52 of List I must have the same meaning. That being the

position, Parliament cannot be permitted to amend Industry

Development Regulation Act by including Sugarcane, as has

been held by this Court in Belsund Sugar. Mr. Dwivedi

repelled the argument of Mr. Shanti Bhushan that the

observations in Tikaramji must be confined to the fact from

that case on the ground that, it is no doubt true, that in

Tikaramji the validity of the Parliamentary enactment had

not been questioned, and on the other hand, it is the power of

the State Legislature to enact the Sugarcane Act, was the

subject matter of consideration. But the Court did examine

the provisions of the State Act to find out whether it

encroached upon Entry 52 of List I as sugar industry was a

controlled industry under the provisions of IDR Act, 1951.

That apart, the Constitution Bench having thoroughly gone

into the constitutional history including the corresponding

entries in the Government of India Act, and then considering

a particular provision, and ultimately holding that it would

not bring within its sweep the raw-materials which is the

stage prior to the manufacture of industry, it is not

permissible for another Constitution Bench to by pass the

earlier Constitution Bench decision by limiting the ratio

therein to the fact of that case, more so when the said

decision had been followed later on in several other

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Constitution Bench decisions and has stood the test for last

two decades. With reference to Banthia's case Mr. Dwivedi

contends that in the very same judgment the only question

that cropped up for consideration is whether the

Goldsmith's work was a handi-craft requiring application of

skill and the art of making gold ornaments and was not an

'industry', within the meaning of Entry 52 of List I or Entry

33 of List III of the 7th Schedule, the Court never examined

with reference to Entry 14 dealing with agricultural raw-

material and in fact the Court observed that it is not necessary

for the purposes of this case to attempt to define the

expression 'industry' precisely or to state exhaustively all the

different aspects. The Court was however, satisfied 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 the

control is spelled out by the parliamentary legislation. The

extent of parliamentary legislation is seen only to determine

how much is taken out from Entry 24 of List II and nothing

more. Though in this case the Court relied upon the earlier

decision of this Court in State of West Bengal vs. Union of

India (1964) 1 SCC 371, but unfortunately in the West

Bengal case the scope of 'industry' did not fall for

consideration, and that is why even Tikaramji had not been

referred to. But it cannot be concluded that the Constitution

Bench was departing from Tikaramji and laying down some

new principles without even discussing Tikaramji. Mr.

Dwivedi submitted that in Ishwari Khaitan, no doubt the

judgment of this Court in Baijnath has been relied upon but

the said reference and reliance was for a different purpose

and not to equate the structure of Entry 52 of List I with

Entry 54 of List I. The Court referred Baijnath Kedia for

the limited purpose as in both cases the denudation of States'

power is only to the extent of control, while Baijnath

dealtwith Entry 23 of List II, Ishwari Khaitan dealt with

Entry 24 of List II. The subject matter of other entries was

not in issue. It would, therefore, be a fallacy to contend that

Ishwari Khaitan relied upon Baijnath Kedia to hold that

the entire field is occupied by the Central Legislation though

the majority view in ITC case holds so, and that must be

held to be not correctly decided in view of the series of

decisions starting from Tikaramji, already referred to. Mr.

Dwivedi, in this connection relies upon the Constitution

Bench decision in Belsund Sugar Company (1999) 9 SCC

620 wherein in paragraphs 117 and 118 the cases under

Mines and Mineral Regulation and Development Act had

been noticed and the Court ultimately held that this scheme

of the legislative entries is entirely different from the scheme

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of Entry 52 of List I read with Entry 24 of List II with which

the Court was concerned in Belsund Sugar. According to

Mr. Dwivedi the ratio in Belsund Sugar would support the

contention on the question of competence of Parliament to

enact Tobacco Board Act covering the field of growing and

raw-material prior to any manufacturing process. Mr.

Dwivedi strongly relied upon the Full Bench decision of

Allahabad High Court in SIEL's case (AIR 1996 All. 135)

and submitted that the Full Bench had considered all 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 however is subject to entry 52 of list I.

According to the learned counsel, wherever the Constitution

intended that the entries in list II were to be made subject to

entries in list I, it was specifically and clearly so provided.

Where however an entry in list II is not subject to list I or list

III, then the power of the State legislature to legislate with

regard to that matter is supreme. The Bihar Agriculture

Markets Act, being relatable to entries 14 and 28 of list II,

which is not subject to any entry either in List I or List III,

the same must be held to be supreme and there would be no

fetter on the power of the State Legislature to make the

Agricultural Produce Markets Act. With reference to the

expression "subject to List I" in McDowell's case, 1996(3)

S.C.C.709, Supreme Court had itself observed that the power

to make a law with respect to 'industries' lies with the States

under Entry 24 of List II but the said entry is made expressly

subject to the provisions of Entries 7 and 52 in List I. If the

Parliament declares by law that it is expedient in the public

interest to take over the control of a particular industry, then

such industry gets transplanted to List I. According to the

learned counsel, the industry in respect of which Parliament

makes a declaration contemplated under Entry 52 of List I,

the States are denuded of the power to make any law with

respect to them under Entry 24 of List II. But making of a

declaration by Parliament does not have the effect of

transplanting the industry from the State List to the Union

List. Entry 52 of List I since governs only Entry 24 of List

II but not other Entry like Entry 8, as was the case for

discussion in Mc.Dowell's case, the power of the State

Legislature cannot be denuded to make a law referable to

Entry 8. This being the correct position, as enunciated by

this Court and the founding fathers of the Constitution

having taken due care by expressly stating, when a particular

Entry in List II is subject to an Entry in List I or List III,

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thereby demarcation being made, in respect of other entries

in List II, the power of the State Legislature is exclusive and,

therefore, it would be prohibited field for the Union to make

any law. Reiterating the argument advanced by Mr.

Dwivedi, Dr. Singhvi also contends that the question of

occupied field is only relevant in the case of laws made with

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 matters in

list I and list II and repugnancy can only be a concept

peculiar to list III. It is no doubt true that Entry 52 of List I

over rides only Entry 24 of List II and no other entry under

List II. It has been held by this Court in Bihar Distillery,

1999(2) SCC 727 and Dalmia Industry 1994(2) SCC 583

that Trade, Commerce, production, distribution of products

of alcohol industry can be regulated both by the Centre and

the State. Bihar Agriculture Produce Markets Act being

relatable to entry 14 and 28 of List II, that Act must operate

on its own and not being affected by law made by

Parliament under Entry 52 of List I. In this connection, the

learned counsel refers to the Judgment of this court in

Belsund 1999(9) SCC 620 para 70. According to Dr.

Singhvi, the Tobacco Act by providing Section 31 indicates

the intention of the Parliament that the Act would not govern

the entire field in exclusion to all other Acts in existence. In

this view of the matter, there cannot be any justification in

denying the market Committee to levy market fee in respect

of the sale and purchase of tobacco within the market area as

the Market Committee Act is a duly enacted law by the State

Legislature within its competence to legislate under Entry 14

and 28. Dr. Singhvi also urged that mere declaration under

Entry 52 is not enough but the law in question must be found

which actually occupied the field. Dr. Singhvi urged that

mere existence of power is not enough but the power must be

exercised and on account of such exercise, the field must be

occupied so as to hold that the central law would collide with

the State law. It was so held in Belsund 1999(9) SCC 620

with regard to tea. To the same effect is the ratio in the case

of Western Coal Fields 1982(1) SCC 125 and Fateh Chand

1977(2) SCC 677. According to the learned counsel in the

case in hand, there is no question of conflict or repugnancy

between the Tobacco Act and the Bihar Act since both Acts

operate in mutually exclusive and different field and

therefore, the majority judgment in ITC case would not apply

to the Bihar Agricultural Produce Act. Dr. Singhvi also

made an extreme argument to the effect that even if the

Central legislation is construed to occupy the entire field

under list I, yet the State Act can still be operative and market

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fee could be levied by the Market Committee under the State

Act for services provided 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 List II are considered. Consequently,

the majority view in ITC case must be over-ruled.

Mr. G.L. Sanghi, the learned senior counsel, appearing

for Mandi Samiti in Madhya Pradesh batch of appeals,

submitted that in the case in hand, relevant enquiry should be

whether the State Act is within the exclusive subject matter

of the State Legislature under Entry 28 of List II. According

to him, there is no irreconcilable clash between the two Acts,

which is also apparent from the mandate of Section 31 of the

Central Act. The object and purpose of the State Act being

establishment of market places and the same object having

been achieved by the various provisions providing for large

scale infrastructural establishment and provision of a large

variety of services, the State Act rightly requires those who

avail these services to pay the requisite market fee and also in

order to provide for appropriate control, to take licenses

wherever a market functionary desires to function within the

market yard or market area. The provisions of Tobacco

Board Act, more specifically Section 8 however mandates

that the Board has to apply its mind to provide appropriate

measures including the measure of setting up an auction

platform and since the auction platform has to have a

location, the Board cannot but think it fit to establish such

platform within the market area. Such a step will be

consistent with the mandate of Section 31 and, therefore, it

will not be in derogation of the State Act. The amendment

introduced in Tobacco Board Act, according to Mr. Sanghi is

achieved by the enforcement of the amending Act which

exhausts itself by merely introducing the amending

provisions into the parent Act so that the requirement of sub-

section (1) of Section 3 of the Parent Act, namely bringing

into force the newly added Sections will have to be complied

with. Thus the amended sections as well as Section 13 of the

Act having not been enforced within the State of Madhya

Pradesh, there cannot be any inconsistency or repugnancy

between the two Acts assuming that bringing into force all

the said Sections may create some inconsistency. According

to Mr. Sanghi, the objects of the Tobacco Board Act being

development of Tobacco Industry, more particularly in

respect of virginia tobacco, is not in any manner defeated by

the provisions of the State Act and the object of the State Act

are not defeated by the existing or even non-enforced

provisions of the Tobacco Board Act. In this view of the

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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 general reference to the provisions contained in List I or

List III. Therefore, in respect of all other entries in List II,

the State Legislature enjoys the exclusive power to enact

laws and consequently, if the State Act has been enacted

under Entry 28 of List II, the State Act must be allowed to

operate. The contention that Parliament enjoys superior

legislative powers with regard to subject matters enumerated

in List II, according to Mr. Ganguli, would hold good only in

respect of those entries in List II which expressly provide that

the subject matter thereof are subject to the matters dealt with

in various entries in List I. But that principle cannot be

extended to the subject matters covered by other entries in

List II. Placing reliance on the provision of Section 100 of

the Government of India Act, 1935 which corresponds to

Article 246 of the Constitution which was interpreted by

Sulaiman, J in Subrahmanyam Chettiyar vs. Muttuswamy

Gounder, reported in 1940 FCR 188, which has been

approved by the Constitution Bench in the case of KSEB vs.

Indal, 1976(1) SCC 466, the counsel urged that the State

Legislature enjoys exclusive legislative power under Article

246(3) to make laws with respect to the subject matter

enumerated in Entry 28 of List II i.e. "Market and Fairs".

This power has not been conditioned by any restrictions in so

far as the distribution of legislative power between the

Parliament and the State Legislature is concerned and

consequently, this power cannot be curtailed or restricted by

the exercise of legislative power of the Parliament with

reference to any of the entries either in List I or List III. Mr.

Ganguli further contends that the entry in three lists of the

constitution are not powers but fields of legislation. The

power to legislate is given by Article 246. The entries in

different lists demarcate the area over which the appropriate

legislature can operate. According to him, the concept of

federal supremacy can not be invoked to deny the state

legislature the power to make laws with respect to such

subject matters, which are exclusively assigned to it under

the State list. If a law made by the State Legislature is

impugned on the ground of incompetency and on

examination of the law, it is found that the law in substance is

with respect to a matter in List II, then the law would be valid

in its entirety. It is only in case of a seeming 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 ,

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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

declared industry. Therefore, such legislative competence of

the Parliament would not confer power in relation to raw

materials which may be an integral part of the industrial

process and thereby denuding the State Legislature of its

power to make laws with respect to subject matters covered

by either entries in List II. Mr. Ganguli contends that this

Court has consistently taken the view that the subject matter

of Entry 52 of List I pertains to manufacture and production

activities and therefore, it would not be appropriate that the

word "industry" should have a wider meaning so as to

include also the raw materials within the same. With

reference to the decisions of this Court in relation to law

made by the Parliament, regulating the Mines and Minerals

Development, Mr. Ganguli contends that the subject matter

of entry 54 of List I is the same as in Entry 23 of List II and

Entry 23 of List II further provides that it should be further

subject to the provisions of List I with respect to regulation

and development under the control of the Union. In such a

case, therefore, once the Parliament makes a declaration in

Section 2 of the Mines and Minerals Development and

Regulation Act, then all aspects of Regulations and Minerals

Development even including taxes on minerals are covered

by the said declaration and, therefore, the State Legislature is

denuded of its power to make laws with reference to the

subject matter. This has been so held in Baij Nath Kedia vs.

State of Bihar , 1969 (3) SCC 838, State of Orissa vs.

M.A.Tulloch 1964(4) SCR 461, India Cement vs. State of

Tamil Nadu, 1990(1) SCC 12 and Orissa Cement Ltd. vs.

State of Orissa & Ors., 1991 Supp.(1) SCC 430. But the

subject matter of Entry 52 of List I and the subject matter

comprised in Entry 2 4 of List II both relate to Industry and

entry 24 of List II is subject to Entry 7 and 52 of List I. The

State legislature could not have made a law in exercise of

power under Entry 24 of List II so as to make other entries

redundant. According to Mr. Ganguli, the expression

"Industry" cannot have a wider meaning. On the question of

repugnancy, Mr. Ganguli contends that the said question

arises only when both legislatures are competent to enact the

respective laws and the two laws cover the same field. If the

two laws are found to be operating in the same field and are

also found to be inconsistent with each other, 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

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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

to the learned counsel the two Act over-lap only as regards

sale and purchase of Tobacco within the notified area and if

auction platform registered with Board are held within the

market area, then the so called conflict in the two Acts can be

easily avoided and both Acts would be allowed to operate.

While Market Committee would be entitled to levy fees in

respect of sale and purchase of tobacco in the market area for

the services rendered including the entire infrastructure, the

tobacco Board Act can yet levy fee as provided under

Tobacco Board Act, which would be a separate fee for

special services rendered by it, as determined by the Central

Government under Section 14A and according to the learned

counsel, this is the only harmonious construction which

should be and ought to be made of the two provisions.

According to Mr. Ganguli, the majority decisions in ITC

case are in conflict with Tika Ram vs. State of U.P.1956

SCR 393, Calcutta Gas 1962 Supp. SCR 1, Kannan Devan

Hills, 1972(2) SCC 218, Ganga Sugar 1980(1) SCC 223,

B. Viswanathan 1991(3 ) SCC 358, and therefore, the said

decisions must be held to be erroneous. In fact the minority

view expressed by Justice Mukherjee, looking at the object of

two Act, allowing both the Act to operate in their respective

fields should be upheld. Mr. Ganguli contended that though

the competence of the Parliament to make Tobacco Board

Act covering the field exclusively within the competence of

the State Legislature, had not been assailed in any of these

writ petitions, but in view of the nature of controversy that

has arisen and the arguments advanced in the case leaves no

room for doubt that each of the parties including the Central

Government as well as the Tobacco Board had the

opportunity of placing its case and, therefore there should be

no fetter on the power of the Court to decide the legislative

competence of the Parliament in the case in hand.

Mr. Malhotra, the learned senior counsel, appearing for

the Tobacco Board though initially proceeded with the

arguments that both Acts could be reconciled but later on

categorically submitted that the Central Legislation must

prevail. According to him the Tobacco Industry got lifted

from Entry 24 of List II to Entry 52 of List I and the same

must be held to be a special Act dealing with tobacco

industry right from the stage of growing till it is exported.

This being a special 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

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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 learned counsel also contended that

it is a cardinal rule of interpretation that words in an entry

should be given their ordinary, natural and grammatical

meaning subject to the rider that legislative entries are

required to be interpreted broadly and widely so as to give

powers to the legislatures to enact the law with respect to the

matters enumerated in the legislative entries. He places

reliance on the decision of this Court in R.S. Rekhchand

Mohota, 1997(6) SCC 12, Rai Ramkrishna & Ors. vs. The

State of Bihar -1964(1) SCR 897 and Indian Aluminium

Company & Others vs. State of Kerala & Ors. 1996(7)

SCC 637. He also referred to the case of Harakchand

Ratanchand Banthia 1969(2) SCC 166, which had been

relied upon by Mr. Shanti Bhushan in his arguments. Mr.

Malhotra contends that the majority decision in ITC case,

therefore, must be held to be correct.

The learned Additional Solicitor General Mr. Trivedi

appearing for the Attorney General of India placed before us

the process of manufacture of tobacco and indicated how

tobacco is grown commercially. To emphasise on the issue

he contended that the tobacco industry having been notified

to be a 'controlled industry' it will be a disaster if the

Parliament is held to have no competence to make law in

relation to growing of tobacco or processing of raw tobacco.

According to the learned Additional Solicitor General the

trade and commerce in product of controlled industry being

covered by Entry 33 of List I, the legislative power of the

State is subordinate to the power of the Parliament in respect

of List III. He further contended that the constitution itself

has specifically put down entries in List II in which the

power is expressed in general terms but is made subject to the

provisions of entries in either list I or list III. Consequently,

no anomaly will arise in holding exclusive power with the

Parliament in respect of the subject coming under any entry

in List I. He further contended that Tobacco Board Act

covers the entire field of tobacco industry and is within the

competence of Parliament under Entry 52 of List I.

Tikaramji was a case which concerned only with a part of

the industry namely manufacture of sugar. The observations

made in Tikaramji 1956 SCR 393 were in the background of

that case, as in that case the Court was never concerned with

the entire process as in the present case. According 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

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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 be applied to the case in hand. The

learned Addl. Solicitor General contends that the

Constitution being an organic document, has to be interpreted

in its widest amplitude. According to the learned Addl.

Solicitor General the majority decision in ITC case must be

held to be the correct law. The counsel states that the validity

of the Tobacco Board Act was also not under challenge in the

ITC case which stood disposed of by the judgment of this

Court since reported in 1985 (Supp.) SCC 476 and, therefore,

it would not be appropriate for this Court to examine the

legislative competence of the Parliament in relation to the

enactment of the Tobacco Board Act.

Though several counsel have raised contentions in

different forms as indicated earlier, but essentially the

following questions arise for our determination:-

1. Whether the Tobacco Board Act enacted by the

Parliament under Entry 52 of List I can be held to be

constitutionally valid and within the legislative

competence of the Parliament, so far as the

provisions contained in the same in relation to the

growing of tobacco and sale of raw-materials, and

this in turn would depend upon the question whether

the word 'industry' used in Entry 52 of List I should

be given a restricted meaning ;

2. Even if the Tobacco Board Act is held to be

constitutionally valid and the Agricultural Produce

Market Act is also held to be constitutionally valid

and within the powers of the State Legislature, so far

as purchase and sale of tobacco within the market

area is concerned, whether both the Acts can be

allowed to operate, as was held by the minority

judgment in ITC case;

3. If there is a repugnancy between the two then

whether the Central Act would prevail, as was held

by the majority judgment in ITC case.

But before considering several elaborate arguments advanced

on these issues, it may be noticed that the Constitution of

India itself defines the political authority, locates the sources

of political power and also indicates how the power has to be

exercised setting out the limits on its own use. The rules

relating to the distribution of legislative power by providing

the legislative heads for the Parliament to make law in

respect of subjects enumerated in List I, and similarly

enumerating the subjects in List II with respect to which the

State Legislature can frame law, in fact constitutes the heart

of 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

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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 meaning to any of them. Powers of the

Union and the State Legislatures are both expressed in

precise and in definite terms and, therefore, there can be no

reason in such a case in giving broader interpretation to one

rather than to the other. It is only when an apparent

overlapping occurs the doctrine of 'pith and substance' has to

be applied to find out the true nature of legislation and the

Entry within which it would fall. When different entries in

the same List crop up for consideration the usual principle

followed is that each particular entry should relate to a

separate subject or group of subjects and every attempt

should be made to harmonise different entries and to discard

a construction which will render any of the entries

ineffective.

Coming to the case in hand, the relevant entries which

arise for our consideration are Entries 52 of List I, Entry 24

of List II and Entry 28 of List 2. Under Entry 52 of List 1

Tobacco Board Act has been enacted by Parliament and

under Entry 28 of List II the Agricultural Produce Market

Act has been framed by the State Legislature. Incidentally,

also Entry 7 of List 1 and Entries 14 and 27 of List 2 crop up

for consideration. It would, therefore, be appropriate to

indicate those Entries hereunder :

" LIST - I

Entry 7 Industries declared by Parliament

by law to be necessary for the purpose of defence

or for the prosecution of war.

Entry 52 - Industries, the control of

which by the Union is declared by Parliament by

law to be expedient in the public interest.

LIST - II

Entry 24 Industries subject to the

provisions of (entries 7 and 52) of List I.

Entry 27 Production, supply and

distribution of goods subject to the provisions of

entry 33 of List III; and

Entry 28 Markets and fairs."

Though the State Legislature has power to make law in

relation to any industry under Entry 24 of List II, but the said

Entry itself being subject to the provisions of Entries 7 and

52 of List I, once Parliament makes a declaration by law

identifying an industry, the control of which is taken over by

the Union in the public interest, then the State Legislature is

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denuded of its competence to make any law in respect of that

industry, notwithstanding its competence under Entry 24 of

List II. The industry in question having been identified and

necessary declaration to that effect being made in terms of

Entry 52 of List I 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's case and

followed in several other authorities, as contended by Mr.

Dwivedi. In the majority judgment of this Court in ITC case

(1985) Suppl. 1 SCR 145, the majority view expressed by

Hon'ble Fazal Ali, J. came to hold that the Centre having

taken over an industry under Entry 52 of List I and having

passed the Act to regulate the legislation, and the said

legislation having covered the entire field, the State

Legislatures ceases to have any jurisdiction to legislate in that

field, and if it does so, then the State Legislation would be

ultra vires of the powers of the State Legislature. Even the

minority view expressed by Hon'ble Justice Sabyasachi

Mukherjee also accepts the recognised principle of

Parliamentary supermacy in the field of legislation engrafted

in Article 246. The learned Judge also held that the words in

a constitutional document conferring legislative powers

should be construed most liberally and in their widest

amplitude, following the judgment of this Court in Navin

Chandra vs. CIT, Bombay (1955) 1 SCR 829. The

minority view also was not to the effect that the Tobacco

Board Act was beyond the legislative competence of the

Parliament. On the other hand having held the Tobacco

Board Act to be constitutionally valid and the Agricultural

Market Act enacted by the State Legislature to be a valid

piece of legislation, the learned Judge came to hold that the

said Act essentially dealing with the object to regulate

marketing of agricultural produce and the control of coffee

(for tobacco) industry would not be defeated if the marketing

of coffee (for tobacco) is done within the provisions of

Marketing Act, the State Legislatures' power to make

Marketing Act ought not to be denuded and one must avoid

corroding the State's ambit of power of legislation which will

ultimately lead to erosion of India being a union of States.

The minority view appears to have been influenced by the

fact that the States must have the power to raise and mobilise

resources in their exclusive fields. Thus all the three learned

judges did not doubt the competence of the Parliament to

enact Tobacco Board Act. While the majority view was to

the effect that the Marketing Act will not operate so far as

dealing with the sale and purchase of tobacco within the

market area, as the field is fully occupied by the Central Act,

namely, the Tobacco Board Act, the minority view proceeded

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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 well established that the widest amplitude should be given

to the language of the entries". The Court in that case did not

think it necessary to attempt to define the expression

"industry" precisely or to state exhaustively of its different

aspects but considered the question whether the manufacture

of gold ornaments by goldsmith in India falls within the

connotation of the word "industry" in the appropriate

legislative Entries. The Court unequivocally rejected the

contention raised by Mr. Daphtary that if the process of

production was to constitute "industry" a process of

machinery or mechanical contrivance was essential, as in the

opinion of the Court there is no reason why such a limitation

should be imposed on the meaning of the word "industry" in

the legislative lists. The Court also rejected the argument

advanced on behalf of Mr. Palkhivala that manufacture of

gold ornaments was not an industry because it required

application of individual art and craftsmanship, as in the

opinion of the Court mere use of the skill or art is not a

decisive factor and it was held that the said factor will not

take the manufacture of gold ornaments out of the ambit of

the relevant legislative entries. It is in this connection, the

Court observed :

"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 of broad and comprehensive

categories."

The Court ultimately came to the conclusion that the

manufacture of gold ornaments by goldsmith 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. At Page 490 of the

aforesaid Judgment, while construing as to what is the

meaning of the word "Industry" in Entry 52 of List I and

Entry 24 of List II, it referred to the definition of "industry"

in Shorter Oxford English Dictionary as well as the meaning

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of the said word in Webster's Third New International

Dictionary and the contention raised on behalf of the

applicant that if the word "industry" is construed in this wide

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 liquors for human consumption

(b)opium, Indian hemp and other narcotic drugs

and narcotics, non-narcotic drugs;

© medical and toilet preparations containing

alcohol or any substance included in sub-

paragraph (b) of this entry.

Item 27. Trade and commerce within the

province; markets and fairs, money lending and

money lenders."

Item 29. Production, supply and distribution of

goods; development of industries, subject to the

provisions in List I with respect to the

development of certain industries under Federal

control."

A bare look at those Entries and on being compared with

the Entries in list II of the Seventh Schedule of the

Constitution of India, it appears that Entry 27 of the State

List under the Government of India Act now comprises of

Entries 26 and 28 of List II of the Seventh Schedule and

Entry 29 of the State List in the Government of India Act is

now combined in Entry 27 of the State List relating to

production, supply and distribution of goods and also Entry

24 of List II namely development of Industries. In the

aforesaid Constitution Bench decision, a passage from the

judgment of the Federal Court reported in (1940) F.C.R.

188, 201 was quoted, which may be extracted hereunder:

"It must inevitably happen from time to time that

legislation, 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

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them may appear to have legislated in a forbidden

sphere."

The Constitution Bench approved the aforesaid Judgment of

the Federal Court and referring to the judgment of this Court

in the State of Rajasthan vs. G. Chawla [AIR 1959 SC

544], the Court held :

"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."

The Court ultimately held that the Federal Legislature did

have the competence to make provisions in Sections 6 and 8

of the Central Excise & Salt Act under Entry 45 of List I of

the Government of India Act, 1935 and observed thus:

"It is within the competence of the Central

legislation to provide for matters 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 provisions of

the Act and the Rules made thereunder were, in

our opinion, essentially connected with the

levying & collection of 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 provincial field of items 27 or

29 would not affect its constitutionality because

the extent of invasion of the provincial field may

be a circumstance to determine the true pith and

substance but once that question is determined the

Act, in our opinion, would fall on the side of the

Central field and not that of the provincial field."

In Synthetics and Chemicals Ltd. And Ors. vs. State of

U.P. and Ors., 1990(1) SCC 109, it was held that the

Constitution must not be construed in any narrow or pedantic

sense and that construction which is most beneficial to the

widest possible amplitude of its power must be adopted. In

the said case, after noticing the principle of construction in

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relation to a constitutional provision, providing division of

power and jurisdiction in a federal constitutional scheme, it

was held:

"It is well settled that widest amplitude should be

given to the language of the entries in three Lists

but some of these entries in different lists or in the

same list may override and sometimes may appear

to be in direct conflict with each other, then and

then only comes the duty of the court to find the

true intent and purpose and to examine the

particular legislation in question. Each general

word should be held to extend to all ancillary or

subsidiary matters which can fairly and

reasonably be comprehended in it. In interpreting

an entry it would not be reasonable to import any

limitation by comparing or contrasting that entry

with any other in the same list."

In Express Hotels Private Ltd. Vs. State of Gujarat and

Anr., 1989 (3) SCC 677, the Court was no doubt

interpreting some entries providing for taxes on luxuries but

dealing with the general principles of an Entry in a

legislative list, the Court held :

"We are dealing with an entry in a Legislative

List. The entries should not be read in a narrow

or pedantic sense but must be given their fullest

meaning and the widest amplitude and be held to

extend to all ancillary and subsidiary matters,

which can fairly and reasonably be said to be

comprehended in them."

As has been stated earlier, even in his minority judgment 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 I, nor do we find any justification in the contention of

the counsel appearing for the States and also different Market

Committees that the provisions contained in Tobacco Board

Act dealing with the growing of tobacco as well as making

provision for sale and purchase of tobacco, must be held to

be beyond the legislative competence of the Parliament, as it

does not come within the so-called narrow meaning of the

expression "industry" on the ground that otherwise it would

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denude the State Legislature of its power to make law dealing

with market under Entry 28, dealing with agriculture under

Entry 14 and dealing with goods under Entry27 of List II.

Such an approach of interpretation, in our considered opinion

would be against the very scheme of the constitution and

supremacy of the Parliament and such an approach towards

interpreting the power sharing devices in relation to entries in

List I and List II would be against the thrust towards

centralisation. In our considered opinion, therefore, the

word "industry" in Entry 52 of List I should not be given any

restricted meaning and should be interpreted in a manner so

as to enabling the Parliament to make law in relation to

subject matter which is declared and whose control has been

taken over to bring within its sweep any ancillary matter,

which can be said to be reasonably included within the power

and which may be incidental to the subject of legislation, so

that the Parliament would be able to make an effective law.

So construed and on examining different provisions of the

Tobacco Board Act, we do not find any lack of legislative

competence with the Parliament so as to enact any of the

provisions contained in the said Act, the Act in question

having been enacted by the Parliament on a declaration being

made of taking over of the control of the Tobacco industry by

the Union and the Act being intended for the development of

the said industry.

The main prop of the argument advanced by Mr. Dwivedi

is the decision of this Court in Tikaramji, which was

followed in Calcutta Gas, Kanandevan and Ganga Sugar

Corporation, all of which are Constitution Bench decisions.

In Tikaramji, no doubt the Constitution Bench of this Court

held that the raw materials which are integral part of the

industrial process, cannot be included in the process of

manufacture or production and thus "industry" within the

meaning of Entry 52 of 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-à-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 material for

the tobacco industry would continue to be within the

exclusive domain of the State legislature and the Parliament

is incompetent to make any legislation in relation to either

growing of tobacco or sale and purchase of tobacco. It

would, therefore, be necessary to examine what really this

Court in Tikaramji has held. At the outset, it may be noticed

that in none of these cases, relied upon by Mr. Dwivedi,

namely Tikaramji, Calcutta Gas, Kanandevan and Ganga

Sugar, the competence of Parliament to make any law

referable to Entry 52 of List I had not been questioned. In

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Tikaramji, the question for consideration was whether the

Act passed by the State Legislature and notification issued

thereunder is repugnant to the Parliament Act and

notification issued thereunder. On examining the provisions

of the State Act namely the Sugarcane Act, the Court held

that the said law concerns solely with the regulation of

supply and purchase of sugarcane and in no way trenched

upon the jurisdiction of the Centre with regard to sugar and

on scrutiny of Section 18-G of the Industries (Development

and Regulation)Act, the Court held that the Act, more

specifically Section 18-G did not cover sugarcane nor even

the Parliament's intention to cover the entire field could be

inferred. The Court was required to find out the meaning of

the expression "any article or class of articles relatable to any

scheduled industry" used in Section 18-G and it held that it

did not refer to the raw materials but only to the finished

products. The Court went into the object of the Central Act

which was equitable distribution and availability of

manufactured articles at fair prices. The argument that had

been advanced in that case was that the Sugarcane Act

enacted by the State Legislature though appears to be a

legislation in regard to sugarcane required for use in sugar

factory but in pith and substance and its true nature is a

legislation in regard to sugar industry which had been

declared under the Industries(Development and Regulation)

Act and control of the industry has been taken over by the

Union. Negativing that contention and on examining the

contents of Entry 24 of List II and Entry 27 of the said List II,

the Court observed that the controlled industries were

relegated to Entry 52 of List I which was the exclusive

province of Parliament leaving the other industries within

Entry 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 made on which Mr.

Dwivedi placed strong reliance, therefore, cannot be made

use of indicating the ambit and contents of the expression

"industry" under Entry 52 of List I. When the Court

observed that the term "industry" which would be capable of

comprising three different aspects: (i) raw materials which

are an integral part of the industrial process, (ii) the process

of manufacture or production and (iii) the distribution of the

products of the industry, and held that raw materials should

be goods which would be comprised of Entry 27 of List II

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and the process of manufacture or production would be

comprised in Entry 24 of List II, except where the industry

was a controlled industry when it would fall under Entry 52

of List I, the Court was obviously not examining the

contents of the expression "industry" under Entry 52 of List

I and that is why the Court observed that the legislation

which was enacted by the centre in regard to sugar and

sugarcane could fall within Entry 52 of List I. When the

legislation in question that was under consideration was held

not to be legislation under Entry 52 of List I, the question of

applying the ratio in the case of Tikaramji, in the context of

Parliament's power to make a law under Entry 52 of List I

and the content and scope of such law or the scope and

content of the expression "industry" under Entry 52 of List I

cannot have any application and consequently, on the basis

of the judgment of this Court in Tikaramji, it cannot be

contended that the expression "industry" in Entry 52 of List

I must have a restricted meaning. It is further apparent from

the conclusion of the Court in that case when it refused to

import the pith and substance argument, holding that the

same cannot be imported for the simple reason that both the

centre as well as the State Legislatures were operating in the

concurrent field and, therefore there was no question of any

trespass upon the exclusive jurisdiction vested in the Centre

under Entry 52 of List I. In other words in Tikaramji,

neither this Court was called upon to examine the content of

the expression "industry" under Entry 52 of List I nor the

relevant Central law which was under consideration had

been enacted with reference to power under Entry 52 of List

I. This being the position, we do not find much force in the

submission of Mr. Dwivedi that the conclusion recorded by

the majority 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 repugnancy

and the two Acts cover two different fields and would co-

exist. In this view of the matter any observations or

conclusion of the Court in Tikaramji will be of no

assistance to us for arriving at a decision as to whether the

term "industry" in Entry 52 of List I would have a restricted

meaning or would have a wide meaning, which is the normal

interpretation of every entry in the respective lists. In

Calcutta Gas case, no doubt Tikaramji, had been followed

and the Court was examining the two competing entries in

list II itself of the Seventh Schedule of the Constitution

namely Entry 24 and 25. While Entry 24 of List II is

"industry", Entry 25 is 'Gas and Gas works' and the

question, therefore was whether law made by the State

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legislature on the subject head 'Gas and gas works' would

prevail over a law made by the State legislature over the

subject "industry" and the Court held that 'Gas and gas

works' being a special subject head, law made thereunder

would prevail over any law made under the general head

"industries". It may be observed that in the Calcutta Gas

case (1962 Supp. S.C.R.1) at page 17, it has been held "It is

not necessary in this case to attempt to define the expression

"industry" precisely or to state exhaustively all its

ingredients." In view of the aforesaid observations, we fail

to understand how this decision can be pressed into service

for ascertaining the true import and content of the expression

"industry" which is the subject head under consideration in

the case in hand. Coming to the decision of this Court in

Kanandevan Hills Produce vs. State of Kerala 1972(2)

SCC 218, as has been stated earlier, it is the validity of State

legislation namely Resumption of Lands Act, 1971, which

was under challenge on the ground of lack of legislative

competence of the State Legislature. The validity of the Act

was upheld on a conclusion that the law was referable to the

legislative head under Entry 18 of List II relating to land and

legislative Entry 42 of List III relating to acquisition and

requisitioning of property. It is in that context, it was

observed that the power of the State legislature to make the

law under the aforesaid two entries could not be denied

merely on the ground that it had some effect on the industry,

the control of which has been taken over under Entry 52 of

List I. But the Court was careful to 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 imagination, the

aforesaid judgment of the Court in Kanan Devan, can be

construed to be an authority for interpreting the expression

"industry" in Entry 52 of List I by giving it a restricted

meaning, as contended by Mr. Dwivedi. In Kanan Devan,

the petitioner therein had assailed the competence of the

State Legislature to enact the legislation in question and had

relied upon Tikaramji, which has been referred to in

paragraph 30 of the judgment. But the Court in paragraph

33 holds that none of these cases assist the petitioners. In

the aforesaid premises, we fail to understand how the

decision in Kanan Devan will be of any assistance to the

respondent State of Bihar in support of the contention that

the Parliament had no legislative competence to enact the

Tobacco Board Act under Entry 52 of List I, so as to include

within the same the provisions relating to growth of tobacco

as well as sale and purchase of raw tobacco within the

market area. The observations of this Court in the

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Constitution Bench decision of Ganga Sugar Corpn. Case,

1980(1) SCC 223, on which Mr. Dwivedi strongly relied

upon , though ex facie appears to be supporting the

contention of the learned counsel for the State of Bihar, but

a deeper scrutiny of the same would make it crystal clear

that the said observation is of no consequence either in the

matter of deciding the ambit of the expression "industry" in

Entry 52 of List I or in deciding the legislative competence

of Parliament to make law like the Tobacco Board Act in

relation to a controlled industry and making provision

therein in respect of the growing of tobacco and purchase

and sale of raw tobacco. In Ganga Sugar's case, the levy of

purchase tax on sugar-cane purchased by a factory owner

under Section 3 of the U.P. Sugarcane (Purchase Tax) Act,

1961, was under challenge on the ground that the legislation

in question being in respect of a controlled industry, the

power belongs exclusively to Parliament under Entry 52 of

List I. The Court repelled this contention on the ground that

Entry 54 in List II of the Seventh Schedule empowers the

State to legislate for taxes on purchase of goods and

therefore, it cannot be said to have invaded Entry 52 of List

I. The Court posed the question as to whether the Purchase

Tax Act is bad because it is a legislation with respect to a

controlled industry namely the Sugar industry and answered

the 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 aforesaid

Constitution Bench decisions of this Court relied upon by

Mr. Dwivedi, appearing for the State of Bihar, the true

import and meaning of the expression "industry" under

Entry 52 of List I was for consideration, nor the competence

of the Parliament to make a legislation in respect of a

controlled industry, so as to include within itself the

provisions relating to the stage prior to manufacture or

production was an issue and consequently these decisions

will be of no assistance so as to strike down the provisions

of the Tobacco Board Act, so far as the provisions contained

therein relating to growing of tobacco/or sale and purchase

of raw tobacco.

It is no doubt true that in Ishwari Khetan's case [1980(4)

SCC 136], while construing Entry 52 of List I and the effect

of the declaration made thereunder by the Parliament, the

Court has relied upon also the legislation made under Entry

54 of List I, which was held to be in pari materia with Entry

52 of List I and the earlier decision of this Court in Baij

Nath Kedia's case, has been followed, as contended by Mr.

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Shanti Bhushan, but we need not embark upon an inquiry in

that respect, in view of our conclusion on the question as to

what would be the ambit and extent of the expression

"industry" occurring in Entry 52 of List I. In Ishwari

Khetan's case, the Court was construing the scope and

ambit of Entry 54 of List II and Entry 52 of List I and had

observed that the State's power under Entry 24 of List II

would get eroded only to the extent the control is assumed

by the Union pursuant to a declaration made by the

Parliament in respect of declared industry as spelt out by

legislative enactment and the field occupied by such

enactment is the measure of erosion and subject to such

erosion, on the remainder the State legislature will have

power to legislate in respect of declared industry without in

any way trenching upon the occupied field. Applying the

aforesaid ratio to the case in hand and having examined the

provisions of the Tobacco Board Act, the answer is

irresistible that the State legislature is denuded of its power

to make any law in relation to growing of tobacco or sale

and purchase of raw tobacco when such a provision has

already been made in the Tobacco Board Act.

The two other decisions which require to be noticed by us

are the case of Viswanathiah & Co. vs. State of

Karnataka (1991) 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 made. If after taking over the control

of the industry in exercise of its legislative competence

under Entry 52 of List I, the Parliament while making a

law did not make any provision in relation to the supply

of raw material, then merely because the control of the

industry has been taken over, the State's power to make

legislation in relation to the supply of raw-material would

not get denuded. But that does not mean that the

Parliament cannot make any law in relation to any other

aspect other than the aspect of production and

manufacture of the industry. In other words, the

contention of Mr. Dwivedi that the Parliament's

competence to make any law in respect of the legislative

head 'industry' in Entry 52 of List I would entitle the

Parliament to make a law only with respect to the

production and manufacture and not any earlier stage

cannot be accepted to be correct, and the aforesaid

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decision of this Court cannot be held to have laid down

the law in that way. So far as Belsund Sugar Company's

case is concerned, the question for consideration was,

whether the provisions of the Bihar Agricultural Produce

Markets Act would at all be applicable for levy of market

fee in respect of sale and purchase of sugar cane, in view

of the special provisions contained in the Bihar Sugar

cane Regulation of Supply and Purchase Act, 1981. The

Market Committee Act was also a State Legislation

purported to have been enacted under Entries 26, 27 and

28 of List II. The Sugar cane Regulation of Supply and

Purchase Act purported to be a legislation enacted in

Entry 33 of List III. The Court held that in view of the

special Act dealing with sale and purchase of sugar cane

the general Act, namely, the Market Committee Act will

have no application at all, and therefore, the levy of

market fee by the Market Committee was held to be

invalid. On examining different provisions of the two

Acts the Court also held that there consists direct conflict

between the two Acts and that conflict could be avoided

only if it is held that the Market Act being a general Act

covering all types of the agricultural produce and the

Sugar Cane Act, which also deals with an agricultural

produce like sugar, being a special enactment laying

down an independent exclusive machinery for regulating

sale, purchase and storage of such a commodity under a

special Act, then the special Act would prevail 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.The said decision, therefore

does not support the contention of Mr. Dwivedi,

appearing for the State of Bihar as well as for the State of

Karnataka. Mr. Shanti Bhushan, learned senior counsel,

no doubt argued with vehemence that the principle

enunciated in Hingir-Rampur Coal Co. Ltd. & Ors. vs.

The State of Orissa & Ors. (1961) 2 SCR 537, Belsund

Sugar (1970) 2 SCR 100 and State of Orissa vs. M.A.

Tulloch & Co. (1964) 4 SCR 461, should equally apply

to the case in hand while interpreting the scope and extent

of the legislative competence of the Parliament under

Entry 52 of List I, but we do not think it necessary to

apply the ratio in the aforesaid three cases, inasmuch as in

all those cases the Court was considering the competing

power of the State legislature under Entry 23 of List II

and the power of the Central legislature under Entry 54 of

List I. Both the Entries are on the subject 'Regulation of

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Mines and Minerals Development'. Entry 23 of List 2

itself is subject to the provisions of List I with respect to

the Regulation and Development under control of the

Union, and necessarily therefore, when Union takes over

the control of the Mines and Minerals Development by

legislation under Entry 54 of List I the State Legislature

would be denuded to make any law in relation to the

Mines and Minerals Development under Entry 23 of List

II. But in the case in hand, we are concerned with the

legislation made by the Parliament under Entry 52 of List

I which is the Tobacco Board Act and the legislation

made by the State legislature under Entry 28 or any other

ancillary Entry like Entry 14 or Entry 27 of List II,

namely the Bihar Agricultural Produce Market Act. In

such a case the focus for consideration of the Court would

be as to what is the scope and content of Entry 52 of List I

and once it is held that the expression 'industry' cannot be

given any restricted meaning and the law enacted by the

Parliament, the Tobacco Board Act, is held to be intra

vires then the State legislation, namely, the Bihar

Agricultural Produce Market Act, so far as it deals with

the commodity tobacco will go out of the general sweep

of all agricultural produce notified under the State Act, as

the provisions in respect thereof have been made by the

Central legislation and by application of Article 246 of

the Constitution the Central Act would prevail.

Mr. Dwivedi placed 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

I then the State legislature would not have the

competence to make law with respect to that subject with

reference to some other Entries in List II. It is of course

true, that Courts while examining the competing

legislations would make an attempt and see whether

both the legislations could operate, and that question we

will deal later. But the contention that Entries 14 and 28

of List II not being subject to any Entry under List I and

the Market Committee Act being relatable to Entries 14

and 28 of List II the same should be allowed to operate

notwithstanding the wide meaning to the word 'industry'

in Entry 52 of List I and the Parliament has already taken

over the control of the industry and has made law in that

respect. In the context of our conclusions on the question

of the import and extent of expression 'industry' in Entry

52 of List I it is not necessary to examine the other

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contentions of Dr. Singhvi that whether the theory of

occupied field is relevant only in case of law made with

reference to Entries in List III. We are also not persuaded

to agree with the submission of Dr. Singhvi that the

Market Committee Act can still be operative and the

Market fee could be levied by the Market Committee

under the State Act for services provided by it on the

principle of quid pro quo even if the Court comes to the

conclusion that the Tobacco Board Act is a valid piece of

legislation enacted by the Parliament and that Act also

has made necessary provision for growing of tobacco as

well as purchase and sale of tobacco. We are also unable

to sustain the argument of Mr. Sanghi, learned senior

counsel appearing for Krishi Mandi in the Madhya

Pradesh batch of appeals, that the enquiry in the case

should be whether the State legislature had the legislative

competence to enact the Market Committee Act under 28

of List II. His other submission on the question that there

is no irreconciable clash between the two Acts and the

meaning of Section 31 of Tobacco Board Act will be

considered while considering the different provisions of

the two Acts. Mr. Ganguli, learned senior counsel

appearing for the Tamil Nadu Agricultural Marketing

Board also submitted in the same manner as Dr. Singhvi

and relied upon Article 246(3) of the Constitution. But in

our considered opinion Article 246(1) itself being

notwithstanding anything in clauses 2 and 3 of the said

Article 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 well accepted cardinal rule of

interpretation that the words in constitutional document,

conferring legislative powers should be construed most

liberally and in their widest amplitude.

Coming to the second question, it is no doubt true as

a matter of principle of construction that in the event there

are two competing legislations, one by the Parliament and

one by the State, the Court would make an endeavour if

both the legislations could be allowed to be operated

upon. But on examining the provisions of the two Acts, if

it is found that the Central legislation and the State

legislation come in collision with each, then question of

allowing both of them to operate would not arise. In such

an event, the Central legislation would prevail, provided

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the said legislation is otherwise constitutionally valid

namely the Parliament had the legislative competence to

enact the legislation in question. From the aforesaid stand

point, if we examine the different provisions of the

Tobacco Board Act, more particularly Sections 3, 8 and

32 and the provisions of the Agricultural Produce Markets

Act, more particularly Section 4(2) thereof as well as

Section 15, which is said to be the heart and soul of the

Markets Act in Belsund's case, the conclusion is

irresistible that the two Acts come in direct collision with

each other and it is difficult to reconcile the provisions of

both the Acts. Necessarily, therefore, the Tobacco Board

Act having been enacted by the Parliament and making

all provisions in relation to the tobacco industry including

the provisions for growing of tobacco as well as sale and

purchase of raw tobacco, in accordance with the

procedure prescribed under the said Act, the provisions of

the Agricultural Produce Markets Act, entitling the

Market Committee to levy fee for sale and purchase of

raw tobacco within the market area will not be operative,

so far as the produce 'tobacco' is concerned. In other

words, Central Act would prevail and would govern the

entire gamut of tobacco industry. It is also important to

bear in mind that when parliament decides to take over

the control of a particular industry in the interest of the

said industry as well as in the national interest, the control

should be effective and should be in such a manner that

the desired object can be achieved. Necessarily therefore,

legislation ought to be made providing control 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

assessment order is set aside and it is held that the sale

and purchase of tobacco within the market area of any

Market Committee would not be subjected to the

provisions of the Bihar Agricultural Produce Markets Act.

Civil Appeal No. 6453 of 2001 is accordingly allowed.

Civil Appeal No. 3872 of 1990, filed by the Krishi

Utpadan Mandi Samiti against the Division Bench

Judgment of Allahabad High Court stands dismissed.

We also set aside the Full Bench decision of the

Allahabad High Court and the appeal filed by the

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Tobacco Merchants' Association, assailing the legality of

the Full Bench decision of the Allahabad High Court is

allowed. Similarly, the Judgment of the Division Bench

of the High Court of Madras, which follows the majority

view of this Court in ITC case, is upheld and the appeals

filed by the State of Tamil Nadu as well as the Tamil

Nadu Agricultural Marketing Board are dismissed.

Civil Writ Petition filed by the Jayalakshmi

Tobacco Company under Article 32, registered as Civil

Writ Petition No. 8614 of 1982, challenging the validity

of the provisions of Karnataka Agricultural Produce

Marketing (Regulation) Act, stands disposed of and the

said Act, enacted by the State legislation of Karnataka

must be held to be invalid, so far as the provisions

authorising levy of fee on sale and purchase of tobacco

within the market area is concerned.

The twelve appeals filed against the Judgment of

Madhya Pradesh High Court are dismissed and the

Judgment of the Division Bench of Madhya Pradesh High

Court is upheld.

In different appeals arising out of the judgment of

the Madhya Pradesh High Court, interim stay had been

granted by different Benches on 27.4.88, 2.5.88, 17.8.88

and 5.10.88. By these orders, the Court had stayed the

operation of the judgment, without any condition. All

these orders stood modified by order dated 27.2.89, when

the Court passed the following order:

".. There will be no recovery of arrears

due. There will also be no stay of the refund

collected if any. The amount collected may be

refunded within four months from this date.

In future there will be no stay of recovery of

market-fee found due and payable from the

date of the High Court's judgment. It is,

however, made clear that if the parties have

filed objection against the levy, the objection

shall be disposed of in accordance with law

before the recovery is restored. 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.

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........................................C.J. I.

...........................................J.

(G.B. PATTANAIK)

January 24, 2002.