-

• J

785

ti· '.

LACHMI NARAIN ETC. ETC.

I '«'.'

: . i~: ....... \;,..-~~

v.

UNION OF INDIA & ORS.

November 25, 1975

fY. V. CHANDRACHUD, R. S. SARKARIA AND A. C. GUPTA, JJ.] :S

Union Territories (Laws) Act, 1950, s. 2-Bengal Finance (Sales Tax) Act,

1941, extended to Delhi with certain modificatidns by 1951-Notification­

Notificatlon more than 6 years later inserting further modificatio11 of the

Bengal Act in the 1951 Notification-Validity-Section 6(2) of the Bengal Act

l'l!quiring 3 months notice before withdrawing exemption from tax-If man­

dardry-lf period of notice could be curtailed by Central Govunment by Noli•

fication-Leglslation by reference, when can be inferred-Government, if can

take advallfage of its /apse-General Clc!llses Act (10 of 1897), s. 21, app/ica•

bi/ity.

Section 2, of the Part C States (Laws) Act. 1950, empowered the Central

Government

to extend by notification in the official gazette, to any

Part C

State, or to any part of it, with such rest,rictidns and modifications as it thinks

fit, any enactment in force in a Part A State. In 1951, the Central Government,

in exercise of this power, extended by a Notification the Bengal Finance (Sales

Tax) Act, 1941, to the then Part C State of Delhi with certain modifications

in s. 6. The section, after such extension with modifications, provided :

6(1) No tax shall be payable under this Act on the sale of goods

specified in the first column of the Schedule subject to the ccindi­

tions etc; and

(2) The State Government [Amended as Central Government in

c

D

· 19561 after giving by notification in the official gazette not less

~~~l~c!ti~::'~~d ;~t~: o~iti~r~~e~~iogth~~w1~ ~~e'::~Yth~Ysl~~= E.

dule and thereupon the Schedule shall be amended accordingly

A modified Schedule of goods exempted from tax under s. 6 was also subsli·

luted for the original Schedule in the Bengal A<:t, by the Notification.

After

the passing of the

States Reorganisation Act, 1956, the Part C States

(Laws) Act became Union Territories (Laws) Act, 1950. with necessary adap­

tations.

In 1957, the Central Government issued a Notification in purported exercise

of the powers under s. 2 of the

1950-Act. amending the 1951-Notification.

By the 1957-Notification an additional modification of s. 6 of the Bengal Act

was introduced in the 1951-Notification, namely the words "such previous

notice

.as it considers

reasonable" were substituted for the words "not less than

3 months' 11oticc'' in s. 6(2).

In 1959, Parliament passed the Bengal (Sales Tax) (Delhi Amendment) Act,

1959, making some amendments in various secticms of the Bengal Act but teft G

s. 6 untouched.

By various notifications. exemption from sales tax was granted to several

commodities. but subsequently, the exemption was withdrawn by other notifi­

cations

after

gfring notice of less than 3 mon.ths.

Dealers in those commodities, who were aggrieved by the withdrawal of the

exemption. challenged the validity

of the withdrawal. The High Court dismiss­

ed their petitions, on the main ground that Parliament.

while enacting the

Amending Act of 1959, had put its seal of approval to the curtailed period

of

notice in s. 6(2) and as such, it should be

taken to have been provided by

Parliament itself in the Bengal Act.

fli

78 6 SUPReME COURT REPORTS (1976) 2 S.C.R.

A Allowing the appeals t'o this Court,

B

c

D

E

F

·G

H

HELD : The 19'57-Notification purporting to substitute the words "such

previous notice as it considers reasonable" for the words "not less than 3

months' notice" in s. 6(2) of the Bengal Act, is beyond the powers of the

Central Government, conferred on it, by

s. 2 of the Union Territories (Laws)

Act, 1950; and in consequence, the various notifications, in so

far as they with­

drew exemptions from tax with

respect to the sewral commodities, are invalid

and ineffective, as tbe exemption was withdrawn without complying with the

mandatory requirement of not less

than 3 months' notice enjoined by the

section. [808-D-E]

(I) (a) The primary power bestowed by s. 2 of the Union Territories

(Laws) Act, 1950, on the Central Government

is one of

exte11sio11, that is,

bri11gi11g into operation and effect, in a Union Territory, an enactment already

in force in· a State. The discretion conferred by the section to make "restric­

tions and modifications'' in the enactment sought to be extended. is not a sepa­

rate and independent power, which can b'C exercised apart from the power oc

extension, but is an integral constituent of the power of extension. This is made

clear hy the use of the preposition "with" one meaning of which (which accord;

with

the'context) is

"part of the same whole". [801 E-F]

(b) •There are 3 limits on the power giV\"!n by s. 2. (i) The powe'

exhausts itself on ·extension of the ena·ctment. It can be exercised only once,

simultaneously with the extension

of the enactment, but .cannot be exercised

repeatedly or subsequently to such e.xtension. (ii)

The power cannot be used

for a purpose other than that

of extension. In the exercise of the

power, onl~·

such restrictions and modification<; can be validly engrafted in the enactment

sought to be extended, which are necessary to bring it into operation and effect

in the Union Territory .. Modifications which are not necessary. for, or

ancil·

lary and. subservient to the purpose of extension, are not permissible. And.

only such modifications can be legitimately necessary for such purpose, as ar"

required to adjust, adapt, and make the enactment suitable to the peculiar local

conditions

of the Union Territory for carrying it into operation and effect.

(iii) The _words

"restrictions and· modifications" do not cover such alteration:;

as involve a change in any essential feature of the enactment or the ]egislativ"

policy built into it. [801G-H, 802A]

(c) If the words "such restrictions and modifications as it thinks fit" arc

given the wide construction of giving an unfettered power of amending and modify.

ing the enactment sought to

be extended, as contended by the

respondent, the

validity of the section itself becomes vulnerable on account of the vice o'

excessive delegation. Moreover. such a construciion would be repugnant to

the context and content of the section, read as a whole. [802 B-C]

Rajnarain Singh v. The Chairman

Patna Administration Committee, Paille

[1955] 1 S.C.R. 291 and Re: Delhi Laws Act, [1951] S.C.R. 7·17. referre,1

to.

(2) The 1957-Notification transgresses these limits in two respects:

(a) The power has not been exercised contemporaneously with the extension

·or for the purposes of the -,,xtension of the Bengal Act to Delhi but 6 l ycan

thereafter. The power of extension with restrictions and modifications ·had

exhausted itself when the Bengal Act was extended to Delhi with some altera­

tions by the 195i-Notification. [8020-E]

The power given under s. 2 of the 1950-Act, cannot be equated to th•J

"Henry VTII clame" of the Acts of the British Parliam..,nt, because while the

power under s. 2 can he exercised only once when the Act is extended. tho:

power under a "Henry VIII Clause" can be invoked, if there ts nothing ccn­

trary in the clause. more than once on the arising of a difficulty when tlic Act

is opera!ire. [802F-H] .

Observations of Fazal Ali.

J. at p.

850 in Re: De/hi Laws Act case explain­

ed.

•

t

-

..

LACHMI NARAIN V. UNION 78 7

(b) The alteration sought to be i,ntro~uc_ed in s. 6(2) _by the !957-No_tifica-A

tion goes beyond the scope of the · restnctions and modifications ' perm1ss1ble

under s. 2 of the 1950-Act, because, it purports to change the essential features

of s. 6(2) and the legislative policy· inherent therein. · [803F]

Section 6(2) before the issue of the 1957-Notification, requiring the Govern­

ment to give "not Jess than 3 months' notice" of its intention to add to or omit

from or otherwise amend the Schedule to the l 9•50-Act, embodies a determina-

tion of legislative policy and .its formulation as an absolute rule of' conduct

could

be diluted, changed or amended only by the

legislatme, in the exercise

of its essential legislative function, which could not be delegated to the Govern­

ment .. [803Gc804E, F, G]

(i) The language of the sub-section as it stood is emphatically prohibitive

and it commands the Government

in unambiguous negative terms that the period

of the requisite notice must not

be Jess than 3

months, showing that the provi·

sion was mandatory and not directory. [804-A-BJ

B

(ii) The scheme of the Bengal Act is that the tax is to be quantified and C

assessed on the quarterly turnover; and the period of not less· than 3 months'

notice conforms to the scheme and ensures that the imposition of a new tax or

exemption does not cause dislocation

or inconvenience either to the dealer or

the Revenue. [804B-C]

(iii)

By fixing the period at not less than 3 months, purchasers on whom

the

i~cidence of tax really falls have adequate notice of taxable items. [804-CJ

(iv)" Dealers and others likely to be affected bv an amendment of the Sche-D

dule ~et sufficient time to make representations and adjust their affairs. [804-D]

The span of notice was thus the essence of the legislative mandate. The

necessity of notice and the span of notice both are integral to the scheme

of

the provision and it cannot be split up into essential and non-essential

compo­

nents, the whole of it being mandatory. [804-E-F]

Jt.aza Buland Sugar Co. Ltd. v. Mu.11icip11/ Board, Rampur, [1965] I S.C.R.

970, distinguished. ·

(3 )(a) Pt. Benarsi Das Bhanot v. Srate of Madhya Pradesh [!959] 2 S.C.R.

,427 .. does not assist the respondent. That was a case where the contention that

s. 6(2) of the C.P. & Bihar Sales Tax Act, 1947, was invalid on the ground of

excessive delegation, was rejected by the Court. In the present case, it is the

validity of a Notification purported to be issued under s. 2 of the J 950-Act,

that is impeached as beyond the powers of modification conferred by the sec-

1ion. [804H, 805A]

(b) In the present case, the Central Government did not directly amend

s. 6(2). More than 6 years after the extension of the Act by the 1951-Noti­

fication, it amended the sub-section indirectly by amending the 1951-Notifica­

tion. But on the extension of the Act to Delhi, the 1951-Notification had

ex"hausted its purpose. and the purported amendment, through the medium of

rnch a "dead" Notification is an exercise in !'utility. Further, an amendment

which was not directly permissible could not be done indirectly. [805-B, Cl

E

F

G

' (4) The High Court was in error in holding that Parliament had validated

r

or re-enacted referentially, with retroactive effect, what was sought to be done

by the 1957-Notification when it passed the Amending Act, 1959. [807C]

The Amending Act leaves s. 6(2) untouched. It does not even indirectly

refer to the 1957-Notification or the amendment purportedly made by it in

s.

6(2). Nor does it re-enact or validate what was sought to be

achieved by

that. notification.

No indication of referential incorporation or validation

or the

1957-Notification or the amendment sought to be made by it, is available eitl;er

in the Preamble or in any other provision of the Amending Act. Parliament,

despite its presumed awareness

of the 1957-Notification, has said nothing in the

Amending Act indicating that

i~ has in any manner focorporated, re-enacted or

H

A

788 SUPREME COURT REPORTS (1976] 2 :>.C.R.

validated the 1957-Notification or the amendment sought to be mooe thereby,

while passing the Amending Act, 1959. [805-E-F, 807-B-C]

Krishna C/umdra v; Union of India, A.I.R. 1975 S.C. 1389, referred 10.

(5) A mere amendment of an Act by a comperent legislature does not ,•

amount to re-enactment) of the parent Act. [807D]

B Venkatarao Esajirao Limberkar's case [1970] 1 S.C.R. 317, explained.

(6) The respondent cannot contend that if tire withdrawal of exemPtion '

c

D

E

without giving 3 months' notice was illegal, then tire grant of exemption With·

out giving 3 months' notice was also void. [808-A]

(a) Some of the goods were granted exemption by the 1951-Notification

itself and, hence, there is no question of giving notice for giving those exemp-·

tions. [807-G]

(b) The validity of the notifications granting exemptions after the extension

of the Act to Delhi

is not in issue in the writ petitions; and whether or not the

requisite notice

was given before granting exemption is a question of fact de;pend­

ing on

evidence. [807G]

( c) To allow the respondent to take such a plea would be violative the

fundamental principle of natural justice, according to which. a party cann t be

allowed

to take advantage of his own lapse or wrong.

[807-H]

(7) The respondent cannot also rely on s. 21 of the General Clauses Act.

because, the source of the power

to amend

the Schedule to th·e 1950-ct is

s. 6{2) of the Bengal Act and not s. 21 of the General Clauses Act, an the

power has to

be exercised within the limits of s. 6(2) and for the

purpos!: for

which it was conferred. [808-B-C]

Gopiclwnd v. Delhi Administrotidn, [1959] Suppl. 2 S.C.R. 87, re(erred

tg.

CNIL APPELLATE JURISDICTION :: Civil Appeals Nos. 2221-2225,

1801 and 2524 of 1972.

From the Judgment and orders dated the 18-11-71, 29-3-1972

and 5-2-1972 of the Delhi High Court in L.P. No. 53/71 and Civil

Writ Petitions Nos. 612, 640, 643 and 649 /71, 281/72 and 1052 of

F 1971 respectively.

A. K.

Sen, Sarioo Prasad Ba/ram Senglwl and C. P. Lal for the

Appellants

in CAs 2221-2225/72

B.

Sen, S. P. Nayar. and M. N. Shroff for Respondents 2-3,

(In CAs. 2221-2225/72) for Respondents 1-4 in C.A. 1801).

G S. V. Guvte, Mrs. Leila Sait and U, K. Kaithan for Interveners

H

(In·CAs. 2221-2225/72) ~nd Appellants (In CAs. 2524/72)

M. C. Blzandare, Sardar Bahadur Saharya, B. N. Kirpal and V. B.

SaluJ(ya for the Appellant in CA 1801/72.

The Judgment of the Court was delivered by

SARKARIA, J. Whether the Notification No. SR0-2908, dated

De·ce1!1ber 7! 1957 issued by the Central Government in purported

exercise of its powers under s. 2 of the Union Territories (Laws)

•

I I

..

"

I

• 1

LACHMI NARAIN v. UNION (Sarkaria, !.) 789

Act, 1950, is ultra vires the Central Government, is the prini;:ipal A

question that arises in these appeals which will be disposed of by a

conunon judgment.

The question has arisen in these· circumstances , ..

Section 2 of the Part C States (Laws) Act, 1950, empowered

the Central Government to extend by notification in the Official B

Gazette, to any Part C State, or to any part of such State, with such

restrictions and modifications as it thinks fit, oany enactment which

is in force in a Part A State. In exercise of this power, the Central

Government by a Notification No. SRO 615 dated the 28th April

1951, extended to the then Part C State of Delhi, the Bengal Finance

(Sales-Tax) Act, 1941 (for short, the Bengal

Act), with, inter

a:lia,

these modifications C

"In sub-section (2) of Section 6, -

(a) ...

(b) for the words "add to the Schedule", the words

"add to or omit or otherwise amend the Schedule" shall be

substituted." D

For the Schedule of the Bengal Act, this Notification substituted

a modified Schedule of goods exempted under s. 6.

The

· relevant

items in the modified Schedule were as follows:

"8. Fruits, fresh and dried (except when sold in sealed

containers) .

11. Pepper, tamarind and chillies.

14. Turmeric.

16. Ghee.

17. Cloth of such description

as may from time to time

E

be specified

by notification in the Gazette costing less F

per yard than Rs. 3/-

or such other sum as may

be

specified. · ,,1

21A. Knitting wool." o·-.·;r -r

Section 6 of the Bengal Act after its extension to Delhi, as modi­

fi.ed by the said Notification, reads thus :

"6(1) No tax shall be payable under this Act on the sale

of goods specified

in the first column of the Schedule

subject

to the conditions and exceptions if any set

out in the corresponding entry in the second column

thereof.

(2) The State Government after giving by Notification in

the

Official Gazette not less than 3 months' notice

of its iI11tention so to do may by like notification

9-159SCI/76

G

H

A

B

c

D

F

G

H

790 SUPREME COURT REPORTS (1976) 2 S.C.R.

add to or omit from or otherwise amend the Sche­

dule and thereupon the Schedule shall be deemed to

be amended accordingly." (emphasis supplied)

By a Notification, dated 1-10-1951,, in sub-section (1) of s. 6,

the words "the first column of" were omitted and for the words "in

the corresponding entry in the second column thereof" the word

"therein" was substituted. ·

By a notification country liquor was included i.1 the Schedule as

item No. 40 of exempted goods with effect from 19-4-1952.

On 1-11-1956, as a result of the coming into force of the States

Reorganization Act, 1956, and the Conlstitutiop. (Seventh Amend­

ment) Act, 1956, Part C States were abolished. Part C State of

Delhi became a Union Territory and the Delhi Legislative Assembly,

was also abolished. In 1956, Part C State (Laws) Act, 1950

(hereinafter referred to as Laws Act) also became the Union Terri·

tories (Laws) Act, 1950, with necessary adapt>ations.

On 1-12-1956, Parliament passed the Bengal Finance (Sales-Tax)

(Delhi Amendment) Act, 1956

which introduced amendments in

different sections of the Bengal Act

as applicable to Delhi. It made

only two changes in

s. 6 Firstly, the word 'Schedule', wherever it

occurred,

was replaced by the words

"Second Schedule~'. Secondly,

the words "Central Government" were substituted for the words

"State Government".

On December 7, 1951, in the Gazette of India Extraordinary

there appeared a notification, which reads

as below :

"S. R. 0. 3908-In exercise of the powers conferred by

section 2 of the Union Territories (Laws) Act, 1950 (30

of 1950), the Cen~ral Government, hereby makes the

following amendment in the notification of the Government

of India in the Ministry of Home Affairs No. S.R.O. 615,

dated the 28th April, 1951 (extending to the Union Terri­

tory of Delhi and the Bengal Finlance (Sales Tax) Act,

1941, subject to certain modifications) namely

:-

In the said notification, in the modifications to the

Bengal Act aforesaid, in item 6 (relating to sub-section (2) o.f section (6), after sub-item (a), the following sub-item

shall be inserted, D'llmely :- ~ l :-·

"(aa) for the words "not less than three months' notice,"

the words "such previous notice as it considers reasonable"

shall be substituted".

The vires of this notification dated 7-12-1957, is the subject of

primary challenge in these appeals (hereinafter it will be referred to

as the impugned notification).

I

LACHMI NARAIN v. UNION (Sarkaria, !.) 791

Item 17 in the Second Schedule of the Bengal Act was amended

with effect from December 14, 1957 by Notification No. SRO 3958,

~s under ; ·

"17. All varieties of cotton, woollen, rayon or artificial

silk fabric but not including real silk fabrics".

"Conditions subject to which tax shall not be payable :

.

In respect of tobacco-cotton fabrics, rayon or artificial

silk fabrics and woollen fabrics as defined in item

9, 12,

12A, 12B at the First Schedule to the Central Excises and

Salt Act, 1944

(I of 1944) included in entries (a) and (c)

above, no tax under the Bengal Finance (Sales Tax) Act

1941, shall

be payable in the

Union Territory. of Delhi

only if additional duties of excise have been leVIed on them

under the Additional Duties of Excise

(Goods. of Special

Importance) Act

1957".

The aforesaid condition was withdrawn by Notification No.

GSR 203, dated 1-4-1958.

By Notification No. GSR 202, dated 1-4-1958, the Cen­

tral Government withdrew the exemption of country liquor from tax

' by omitting item No. 40 from the Second Schedule.

By Notification No. GSR 1076 dated 19-9-1959, the Central

'Government withdrew the exemption from tax of Items,

8, 11, 14 and

21A

by omitting them from the Second Schedule with effect from

1-10-1959.

On 1-10-1959, the Bengal (Sales-Tax) (Delhi Amendment) Act,

1959 (Act XX of 1959) came into force whereby Parliament m;:de

some amendments in different sections of the Bengal Act_ but left

'5.6 untouched.

A

B

c

D

E

'r By a Notification No. GSR 964 dated 16-6-1966, notice was

-given that item 17 of the Second Schedule would be substituted with F

-effect from 1-7-1966, as follows :

"Item-17-All varieties, cotton, woollen, nylon, rayon,

pure silk or artificial silk fabrics but excluding Durries,

Druggets and carpets". ·

The proposed amendment was given .effect to from 1-7-1966 by

Notification No. GSR 1061 dated 29-6-66. One result of 'this

amendment was that exemption of Durries from tax was withclrnwn

while, such exemptioi1 was among others, extended to 'pure-silk'. '

.

By a

~otification GSR 1038, dated 14-7-1970, notice was

-given that item 17 in the Second Schedule would be substituted with

effect from 1-8-1970, as follows :

. "17 .. All varieties of cotton fabrics_, rayon, or artificial

sdk fabncs and woollen · fabrics but ·not including Durries

Druggets and carpets". '

G

H

792

SUPREME COURT REPORTS [1976] 2 S.C.R.

A Such substitution of item 17 was made with effect'from 1-8-70 by

Notification GSR 1119 dated 31-7-1970. One result of this noti­

fication

was that the exemption of 'pure-silk' from tax was with­

drawn.

The appellants

in Civil Appeal No. 2221 of 1972 are deakrs in

durries. They feel aggrieved by the Notification

GSR 1061 dated

B 29-6-1966 whereby exemption of Durries from sales-tax was with­

. drawn.

The appellants in Civil Appeals 2222, 2223 and 2225 of 1~72

deal in knitting wool. Their cause of action arose when exemption

of knitting wool was withdrawn by Notification dated 19-9-1959,

w.e.f. 1-10-1959.

c The appellants in Civil Appeals 2524 of 1972 deal inter alia

in pure silk. They are aggrieved by Notification, dated 31-7-1970 by

which exemption of 'pure-silk' was withdrawn w.e.f. 1-8-1970.

D

E

The appellants in Civil Appeal No. 2224 of 1972 is a Kiryana

dealer. He

feels aggrieved

l;ly the Notification dated 19-9-1959

whereby

items 8,

·11 and 14 were deleted from the Second Schedule

with

effect from 1-10-1959.

The appellants

in Civil Appeal No.

1801 of 1972 are licensed

vendors of country liquor. They feel adversely affected by Notifica­

tion GSR 1076, dated 19-9-1959 whereby exemption of country

liquor from tax

was

witpdrawn with effect from 1-10-1959.

Several writ petitions were filed in the High Court to question

the validity of the Government action withdrawing the exemptions with

notice far less than

three_ months. A learned Judge of the High

Court allowed eight

of these petitions by a common judgment recor­

ded in Civil Writ 574-D of 1966, Lachmi Narain v.

Union of India

and others. Against that judgment, the Revenue carried appeals

under Clause 10 of the Delhi High Court Act, 1966, to a Bench

of the High Court. In the 1 meanwhile more writ petitions (C. Ws.

F 593 to 652, 792 to 806 of 1971) were instituted in which the same

question

was involved. The Division Bench, by a common

f udgment,.

allowed the appeals and dismissed the writ petitions.

· The writ petitioners have now come in appeal to this Court on

1

the basis of a certificate granted by the High Court under Article 13 3

( 1) (a) and ( c) of the Constitution.

G In the High Court the validity of the withdrawal of the exemp-

H

tions was challenged on these grounds :

(1) The powe~ given by s.2 of the Laws Act to the

Central Government to extend enactments in force

in oa State to a Union Territory, with such restric­

tions and modifications

as it thinks fit, could be

exercised only to make such modifications in the

enactment

as were necessary in view of the pecu-

liar local conditions. The modification

in s. 6(2)

of the Bengal Act made by

SRO 3908,, dated

•

(2)

{3)

(4)

LACHMI NARAIN v. UNION (Sarkaria, J.)

7-10-1957, was not necessitated by this reason. It

was therefore, ultra vires s. 2 of the Laws Act;

Such a modification could be made only once when

the Bengal Act

was extended to Delhi in

1~51.

No modification could be made after such extension.

The modification could not change the policy . of

the legislature reflected in the Bengal . Act. The

impugned modification was contrary to

It, and

The modifications giving notice to withdraw the

exemptions and the notifications issued pursuant

thereto withdrawing the exemptions from sales-tax

793

with respect to Durries, Ghee, (and other items

relevant to these petitions) were void

as the statu­

tory notice

of not less than three months as requi­

red by

s. 6(2) prior to its modification by the im-

pugned notification

of 7th December, 1957, had not

been given.

·

A

B

c

Finding on all the four grounds in favour of the writ pet~tion~rs,

the learned Single Judge declared "that the purported mod1fical!on D

of

s. 6(2) of the Bengal Finance (Sales-Tax) Act 1941 by the

Government

of India's notification No.

SRO 3908, dated 7th Decem-

ber, 1957,

was ineffective and s. 6(2) continues to be the same as

before as if it was not so modified at

all." In consequence he qua-

shed the Government notifications GSR 964, dated 16-6-1966 and

GSR 1061 dated 29-6-1966 because they were not in compliance with

the requirement

of s. 6(2) of

the Bengal Act. · E

The contentions canvassed before the learned Single Judge were

repeated before the appellate Bench of the High Court.. The Bench

did not pointedly examine the scope of the power

of modification

given to the Central Government by s.2 of the Laws Act with speci­

fic reference to the purpose for which it was conferred and its pre-

cise limitations.

It did not squarely. dispel the reasoning of the lear-F

ned Single

Judge that the power of modification is an integral part

of the power of extension and "cannot therefore be exercised except

for the purpose of the extension". It refused to accept that reason-

ing with the summary remark-"from the extracts quoted by the

learned Single Judge from the judgment of the Supreme Court in

Re: Delhi Laws Act(') and from the Judgment in Rajnarain Singh

v. The Chairman Patna Administration Committee Patna and G

anr.(

2

)

the principle deduced by the learned Judge does not appear to

follow.

We are therefore not inclined, as at present advised to sup-

port the above

observations". The .Bench however hastened to

a<l<l : • .

"However, since the matter was not argued at great

length and the appellants' Counsel rested his submissions on H

the other aspects of the case,

we would not

·like to express

(1) [1951] S.C.R. 741. (2) [1955] I S.C.R. 291.

A

B

c

D

E

F

G

H

794

SUPREME COURT REPORTS [1976] 2 S.C.R.

any definite opinion on the question as to whether the power

of making any

modifieation_s or restrictions in the Act

can

only be exercised at the time of extending the Act and that

it cannot be done subsequently by the Central Government

in exercise of its power."

Seeking support from the observations of this Court in Raza

Buland Sugar Co. Ltd. v. Municipal Board, Rampur,(') the Bench

held that what is mandatory in s. 6(2) is the requirement as. to the

giving of

reasonable notice of the Government's intention

to am~nd

the second Schedule, for the information of the public, and that

"no special significance or sanctity is attached to the span of time

of three months provided in sub-section (2) of s. 6." The Bench

found that since the withdrawals of the exemptions in question, had

been made after reasonable notice, the same were not invalid.

However, the main ground on which the decision of the Bench

rests

is that the infirmity, if any, in the impugned notification dated

7-12-1957, had been cured and rectified when

"Parliament while

enacting the Amendment Act, 1959

(Act No.

20 of 1959) put its

seal of approval to the curtailed pericid _of notice. As such the cur­

tailed period· of notice shall be taken to have been provided by

Parliament on the ratio of Supreme Court's decision in Venkatamo

Esajirao Limberkar's case(

2

) ".

Apart from the grounds taken in their writ petitions, the learned

Counsel for the appellants have tried to raise before us another ground

under the garb of what they styleQ as merely an additional argument".

They now seek to challenge the vires of the Notification SRO 615,

dated the 28th April, 1951 in so far

as it relates to the insertion in

sub-section

(2) of s. 6 of that Act, between the words

"add to"

and "the Schedule'', of the words "or omit or otherwise amend".

It is argued that this insertion was beyond the power of modification

conferred

on the Central Government by s. 2 of the

Laws Act. The

point sought to be made out is that if the insertion made by the

Notification dated 28-4-1951, in sec.

6(2) was ineffective and non

est

in the eye of law, the Central Government would have no power

to

"omit" anything from the exempted goods itemised in the Schedule.

It is argued that u

1

nder s. 6(2) sans this insertion, the Central Govern­

ment was empowered only

to

"add to" and not "omit" from the

exempted items enumerated in the Schedule, and consequently, the

withdrawal of the exemptions

in question was ultra vires the

Central

Government.

T11e entertainment of this p]ea at this stage is stoutly opposed by

Shri B. Sen, learned Counsel for the Revenue.

We are hot inclined

to permit the appellants to add to the list of

impugned Notifications, now in section appeal. In their writ peti­

tions, the appeI!ants did not chaJlenge the validity of the Notificatioln

dated 28-4-51.

They never raised this point before the learned

(!) [1965] 1 S.C.R.

970. (2) [1970] I S.C.R. 317

•

•

•

'

"

LACHMI NARAC v. UNION (Sarkaria, J.) 795

Single Judge. Of course, b1~fore the appellate Bench, _an argument A

was addressed on this point, but it does not appear to have been ·

pressed. The Bench noted :

"In the present appeal, the Bengal Act as ext~nded by

SRO 615, dated the 28th April 1951, did not suffer from any

infirmity. It

is conceded by the learned Counsel for the res­

pondent that the Central Government at the time it extended

the Bengal Act,

was competent to introduce such modifica­

tion and restrictions

as it thought

fit."

The certificate under Art. 133 of the Constitution was neither sought,

nor granted on any ground touching the validity of the Notification,

dated 28-4-1951.

In the face of all this, it is now too late for the appel­

lants

to commit a volte face. Accordingly, we decline to entertain

this

new ground of challenge.

The learned Counsel for the parties have, more or less, reiterated

the same contentions which they had advanced in the High Court.

On behalf of the appellants, it is contended that the power of modi­

fication conferred on the Central Government

by s. 2 of the Laws Act

is not an unfettered power of delegated

legislation· but a subsidiary

power conferred for the limited purpose of extension and application

to a Union Territory, an enactment in force i'a a State. It is main­

tained that only such modifications are permissible in the exercise of

that power which are necessary to adapt and adjust such. enactment

to local conditions.

According to Shri Ashok Sen, the power given by s. 2 is a power

of conditional legislation which

is different from the power of delegated

legislation.

It is submitted that it is not a recurring power; it exhausts

itself on extension, and in

no case this power can be used to change

the basic scheme and structure of the enactment or the legislative policy

ingrained in

it. The submission

is that the impugned notification,

dated 7-12-1957,

is bad because it has been issued more than

6t years

after the extension of Bengal Act, and it attempts

to

·change the re­

quirement

of s. 6(2) as to

"not less than three months notice" which

is the essence of the whole provision.

Reference has been made to this Cour4:'s opinion in Re : Delhi

Laws

Act (supra) and the decision in Raj Narain Singh case (supra).

Shri Ashok

Sen further submits that by the amending Act 20 of

1959, Parliament did not put its seal of approval on the impugned

notification or the changes sought to be made by it in

s. 6 of the Bengal

Act.

It is stressed that the amending Act of 1959, did not touch s. 6

at

all and therefore it could not be said with any stretch of imagination,

that Parliament had referentially or impliedly incorporated or ap­

proved the purported change made by the impugned notification, in the

Bengal Act.

As against the above,

Shri B. Sen, the learned Counsel for the Reve­

nue submits that the impugned notification does not change the essen­

tial structure or the policy embodied in

s. 6(2) of the Bengal Act.

B

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E

F

G

H

796 SUPREME COURT REPORTS [1976] 2 S.C.R.

A According to Counsel, the policy und~rlying s.6(2) is that reasonable

notice

of the Government's intention to

adc!_ to or omit anything from

the Second Schedule must be given by publication in the Official

Gazette.

It is maintained that the requirement as to

"not less than

three months' notice" in the section was not a matter of policy but one

of detail or expedience; it was only directory, and the modification

made by the impugned notification did not

go beyond adjusting and

B adapting it to the local conditions of Delhi. Bengal, it

is pointed out,

is a big, far-flung

State while the Territory of Delhi is a small, compact

area and therefore, it would not be necessary or unreascmable to

give

a notice of less than three months for every amendment of the

Sche­

dule. Reliance has been placed on this Court's dictum in Raza Buland

Sugar Co.'s case (supra). It is argued t.hat the power to add or omit

from the Second Schedule conferred on the Government is in conso-

C nance with the accepted practice of the Legislature; fliat it is usual for

the legislature to leave a discretion to the executive to determine de­

tails relating to the working of taxation laws, such

as the selection

of persons

on whom the

tax. is ·to be levied or rates at which it is to be

charged in respect of different classes of goods and the like. Reference

has been made to the observations of this Court in

Pt.

BenarJ·i Das

Bhanot

v. State of Madhya

Pradesh(') in the context of s. 6(2) of

D the Central Provinces and Berar Sales Tax Act 194 7.

E

F

G

Shri B. Sen further contends that the power of modification given

by s. 2 of the Laws Act, does not exhaust itself on first exercise; it can

be exercised evep subsequently if through oversight or otherwise, at

the time of extension of the enactment the Central Government fails

to adapt or modify certain provisions of the extended enactment for

bringing it in accord with local conditions.

In this connection support

has been sought from the observations of Fazl Ali

J. at p.

850 of the

Report in

Re : Delhi Laws

Act. (supra). Our attention has also

been invited to

s. 21 of the General Clauses Act which according to

Counsel, gives power

to the Central Government to add to, amend,

vary or rescind any notification etc.

if the power to do so does not run

counter to the policy of the legislature or affect any change

in its essen­

tial features.

Learned Counsel has further tried

to support

the reasoning of the

appellate Bench of the High Court, that whatever infirmity may have

existed in the impugned notification and the modification made there­

by in

s. 6(2), it was rectified and cured by Parliament when it passed

the Amendment Act

20 of 1959. It is urged that the Bengal Act to­

gether with the modifications made by notifications, dated 28-4-51,

and 7-12-1957, must have been before Parliament when it considered

and passed the Amendment Act of 1959. Our attention has been

invited to its preamble which

is to the effect :

"An Act further to

amend the Bengal Finance (Sales-Tax) Act, 1941,

as in force in the

Union Territory of

Delhi," and also to the words "as in force in the

Union Territory of D1:;lhi" in s. 2 of the amending Act. Reference has

been made to this Court's decisions in

Venkatrao Esajirao's case

(supra), and

Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd. v. The Assis­

tant Commissioner of Sales-tax and ors. (

2

).

(1) [1959] 2 S.C.R. 427. (2) [1974] 2 S.C.R. 879-A.I.R. 1974 S.C. 1660.

f

..

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.. <

...

LACHMI NARAIN v. UNION (Sarkaria, !.) 797

An alternative argument advanced by Shri B. Sen is that if in

s.

6(2) the requirement as to

"not less than three months' notice" was

mandatory and a matter of legislative policy, then the exemptions from

tax granted to Durries, pure silk etc. after the issue of the impugned

;notification must be treated nonest and void

ab initio, inasmuch as

the amendments of the Second Schedule whereby those exemptions

were granted, were made without complying with the ~equi.rement. of

"not less than three months' notice". It is argued that 1f tlus reqmre­

ment

was a sine qua non for amendment of the

Second Schedule, it

could not be treated mandatory in one situation and directory in an­

other.

If it was mandatory then compliance with it would he absolutely

necessary both for granting an exemption and withdrawing an exemp-

tion from tax.

In this view of the matter, according to

Shri B. Sen,

the withdrawal of the exemption through the impugned notification was

a mere formality; the notification? simply declared the withd,rawal of

something which did not exist in the eye

of law.

f\ppellants cannot

therefore have any cause of grievance

if the invalid and still-born

exemptions were withdrawn by the questioned notifications.

In reply to this last argument, learned Counsel for the appellants

submit that this ground of defence was not pleaded by the Revenue in

its affidavit before the learned

Single Judge. This, according to the

Counsel,

was a question of fact which

requitep evidence for its determi­

nation, and was therefore required to be pleaded. ·· Since the Respon­

dents did not

do so, they should not have been allowed to take it for

the first time at the

ti.me of arguments. Even otherwise--proceeds the

argument-the Respondents are not competent to take this stand which

is violative of the basic canon of natural justice, according to which no

party can be allowed to take advantage

of its own wrong. It is stressed

that the object

of the requirement of not less than three months' notice,

was to afford an opportunity to persons likely to be adversely affected,

to raise objections against the proposed

withdraW"al or curtailment of

an exemption from tax. That being the case, only the persons aggrieved

could have the necessary locus standi to complain of a non-compliance

with this requirement.

A

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E

In Re: Delhi Laws (supra) this Court inter alia examined the con-F

stitutional validity of

s. 2 of the Laws Act in the light of general prin­

ciples relating to the nature,

scop~ and limits of delegated . legislation.

Section 2 as it then stood, was as follows :

"The Central Government may, by notification in the

Official Gazette, extend to any Part C State (other than

Coorg and the Andaman and,Nicobar Islands) or to any part

of such State with &uch restrictions and modifications as it

thinks fit any enactment which is in force in a Part A State

at the date of the notification and provision may be made in

any enactment so extended for the repeal or amendments of

any corresponding law (other than a Central Act) which

.is

for the time being applicable to that

Part C State."

G

The Court by a majority held that the first part of this section which H

empowers the Central Government to extend to any Part C State or to

any part

of such

State with such modifications and restrictions as it

798

SUPREME COURT REPORTS [1976] 2 S.C.R.

A

t~inks fit any enactment which is in force in a Part A State, is intra

v1res, and that the latter part of this section which empowers the Cent­

ral Government to make provision in any enactment extended to a

Part C S~ate '.for repeal .or amendment of any law (other than a Central

Act) ~h1ch 1s for the time being applicable to that Part C State, is

t~ltra vzrcs. Consequent upon this opinion, the latter part of the sec-,_..

t10n was deleted by s. 3 of the Repealing and Amending Act, 1952

B

c

D

(Act XLVIJI of 1952) with effect from 2-8-1951.

The majority opinion in upholding the validity of the first portion

of

s. 2 of the Laws Act drew a good deal from the observations· of

the·

Privy Council in Queen v. Burah (

11) wherein it was said :

"If what has been done is legislation within . the general

scope

of

the affirmative words which give the power and if i~

violates no express condition or restrictions by which that

pow~r is limited. . . . . . it is not for any court of justice to

enquire further or to enlarge constructively those conditions

and restrictions".

x x x

"Where plenary powers of legislation exist as to parti­

cular subjects, whether

in an Imperial or in a

Provincial Legis­

lature, they may (in their Lordships judgment) be well

exercised, either absolutely or conditionally. Legislation

conditional on the use of particular powers,

or on the exer­

cise of a limited discretion, entrusted by the legislature to

E persons in whom it places confidence,

is no uncommon thing;

and, in any circumstances it may

be highly

convenient."

F

G

H

-; (emphasis supplied'}

Before proceeding further, it will be proper to say a few words in

regard to the argument that the power conferred by s. 2 of the Laws

Act

is a power of conditional

legislation and not a power of delegated

legislation.

In our opinion, no useful purpose will be served to pursue this line of argument because the distinction propounded between the

two categories of legislative powers makes no difference, in principle.

In either case, the person to whom the power is entrusted can

d<;> noth­

ing beyond the limits which circumscribe the power; he has to

act­

to use the words of Lord

Selborne-"within the general scope of the

atlirmative words which give the power" and without violating any

"express conditions or restrictions by which that power is limited".

There is no magic in a name. Whether you call it the power of

"conditional legislation" l\S Privy Council called it in Burah's . ca~e

(supra) or 'ancillary legislation' as the Federal Court termed ~t. m

Choitram v. Commissioner of Income-tax, Bihar(2) or 'subsidiary

le11islation' as Kania C.J. styled, it or whether you camouflage it under

the veiling name of 'administrative or quasi-legislative power'-as

Professor Cushman and other authorities have done it-necessary for

(1) 5 I.A. 178. (2) f1947] FCR 116.

...

'

LACHMI NAR(AIN v. UNION (Sarkaria, !.) 799

bringing into operation and effect an enactment, the fact remains

that it has a content, howsoever small and restricted of the law­

making power itself. There

is ample authority in support of the

proposition that the power to extend and carry into operation

an enactment with necessary modifications and adaptations

is in

truth and reality in the nature of a power of delegated legislation.

In

Re : Delhi Laws Act (supra)

S. R. Das J. said that on strict ana­

lysis it was "nothing but a delegation of a fractional legislative power".

Anglin J. in Grays case(1

1

) regarded this what is called conditional

legislation'

as

"a very common instance of limited delegation. More

or

less to the same effect is the view taken by Evatt J. of Australia in Dignams casee). Prof. Kennedy (vide his treatise 'Constitution of

Canada', 2nd Edn. p. 463),

is also of opinion that 'conditional legisla­

tion'

is

"a form of delegation".

We do not want to multiply authorities nor wish to carry this aca­

demic discussion to a final conclusion because it

is not necessary for

solution of the problem in hand.

In the instant case, the precise question with which we are faced

is whether the purported substitution

of the words "such previous

notice

as it considers

reasonab1e" for the words "not less than three

months notice" in s. 6(2) by the impugned notification dated 7th

December 1957, was in excess of. the power of 'modification' conferred

on the Central Government by

s. 2 of the Laws Act.

This question has to be answered in the light of the principles enun­

ciated

by this

Court in Re : Delhi Laws Act relating to the nature and

scope of

this power.

Out of the majority who upheld the validity of this provision of

s. 2 of the Laws Act, with which we are concerned, Fazl Ali J. ex­

plained the scope of the words "much modifications as it thinks fit"

in s. 2, thus :

"These are not unfamiliar words and they are often used

by careful draftsmen to enable laws which are applicable to

one place or object. to be so adapted

as to apply to another.

The power of introducing necessary restrictions and modifi­

cations is

incidental to the power to apply or adapt the law,

and in the context in which the provision

as to modification

occurs it camrot bear the sinister sense attributed to it. The

modifications are

to be made within the framework of the

Act and they cannot be such

as to affect its identity or struc­

tur·e or the essential purpose to be served by it. The power

to modify certainly involves a discretion to make suitable

changes, but it would be useless to give an authority · the

power to adapt a law

witho:ut giving it the power to make

suitable

changes."

Vivian Bose J. also observed in a similar strain, at p. 1124;

(1) 57 S.C.R. 150 (Canada). (2) [19311 46, C.L.R. 73

B-

c:

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m

800 SUPREME COURT REPOR1'S [1976] 2 S.C.R,

A "The power to "restrict and modify" does not import the

power to make essential changes.

It is confined to altera­

_tions of a minor character such as are necessary to make an

Act intended for one area applicable to another and

to bring

.it into harmony with laws already in being in the State, or

to delete portions which are meant solely for another area.

To alter the essential character of an Act or to change

it. in

.B material particulars is to legislate, and that, namely, the power

to legislate, all authorities are agreed, cannot be delegated by

a legislature which

is not

unfettered."

Mukherjea J. was of the view that the "essential legislative func­

tion" which consists in the @.termination or choosing of the legistative

policy and of formally enactine that policy into a "binding rule of con­

duct" cannot be delegated. Dealing with the construction of the words

"restrictions" and "modification" in the Laws Act, the learned Judge

said,, at pages 1004-1006 :

"The word "restrictions" ...... connotes limitation im-

posed on a particular provision

so as to restrain its applica­

tion or limit its scope, it does not by any means involve any

change in the principle.

It seems to me that in the

;::ontcxt

and used alongwith the word "restriction" the word "'modi­

fication" has been emplqyed also in a cognat.e sense, and it

does not involve any material or substantial alt<!ration. The

dictionary meaning of the expression "to modify" is to "tone

.down" or to "soften the rigidit)'l of the thing" or "to make

partial changes without any radical alteration". It would be

quite reasonable to hold that the word "modification" in s. 7

of the Delbi Laws Act (which

is almost identical with the

present

s. 2, Laws Act) means and signifies changes of such

character

as are necessary to make the statute which is sought

to be extended suitable

to the local conditions of the province.

I do not think that the executive Government is entitled to

change the whole nature or policy underlying any particular

Act

or to take different

portions from different statutes and

prepare what has been described before

us as

"amalgam" of

several laws . . . . . . these things would be beyond the scope

of the section itself." (emphasis supplied).

S. R. Das J. (as he then was) delineated the scope of the power

of "modification" given under s. 7 of the Delhi Laws Act, 1912 (for

short the Delhi Act) at

p.

1089 as follows:

"It may well be argued that the intention of section 7

of the Delhi Laws Act

was that

th~ permissible modifications

were

'to be such as would, after modification, leave the

!lencral

character of the enactment intact. One of the meamngs of

the word "modify" is given in the Oxford Dictionary Vol. I,

page

1269 as

"to alter without radical transformation". If

this meaning is given to the word "modification" in section 7

-0£ 'the Delhi Laws Act, then the modifications contemplated

t

,

!

..

.j

LACHMI NARAIN v. UNION (Sarkaria, J.) 801

thereby were nothing more than adaptations whic_h were in-Al

eluded in the expressions mutatis mutandis and the "restric-

tions, limitations or proviso" mentioned in the several in-

stances

of conditional legislation

re.ferred to by the Privy

Council (in Burah's case)."

(emphasis supplied & parenthesis ac/ded)

It is to be noted that the language of s.7 of the Delhi Act was B

substantially the same as that of the first portion of s. 2 of the Part

C State Laws Act, as it then stood. What Das J. said about the scope

of "restrictions and modifications" in the context of s. 7 of the Delhi

Act substantially applies to the ambit and meaning

of these words

occurring in

s. 2 of the Laws Act.

Again,

in Rajnarainsingh's case (supra), Vivian Bose J. speaking C

for

the1 Court, summed up the majority view in regard to the nature

and scope of delegated legislation in

Re : Delhi Laws (supra), thus :

"In our -opinion the majority view was that an executive

authority can be authorised to modify either existing or future

laws but not in any essential feature. Exactly what con-

stitutes an essential feature cannot be enunciated in general D

terms, and there

was

spme divergence of view about this in

the former case, but this much is clear from the opinions

set out above : it cannot include a change

of

policy".

Bearing in mind the principles and the scope and meaning of the

expr-~ssion "restrictions and modific;ations" explained in Delhi Laws

Act, let

us now have a close look at s. 2. It

will be clear that the E

primary power bestowed

by the section on the Central Government, is

one of extension, that is, bringing

into operation and effect, in a_ Union

Territory,

an enactment already

in force in a State. The discretion

conferred

by the Section to make 'restrictions and modifications' in

the enactment sought to be extended,

is not a separate and

indepen-·

dent power. It is an integral constituent of the powers of extension.

It cannot be exercised apart from the power of extension. This is F

indubitably clear from the preposition "with" which immediately pre­

cedes the phrase "such restrictions and modifications" and conjoins it

to t:be principal clause of the section which gives the power of exten­

sion. According to the Shorter Oxford Dictionary, one meaning of

th,~ word "with", (which accords here with the context), is "part of

the

same

whole".

The power given by s. 2 exhausts itself on extension of the ena.::t­

ment; it cannot be exercised repeatedly or subsequently to such exten­

sion.

It can be exercised only once,, simultaneously with the extension

of the enactment. This

is one dimension of the statutory limits which

circumscribe

the power. The second is that the power cannot be used

for a purpose other than that of extension.

In the exercise of this

power, only such "restrictiOll'.' and modifications" can be validly engraft­

ed in the enactment sought to be extended,

which are necessary to

bring

it into operation and effect in the Union Territory. "Modifications"

which are not necessary for, or ancillary and subservient to the purpose

G

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'802 SUPREME COURT REPORTS [ 197 6] 2 S.C.R.

of extension, are not permissible. And, only such "modifications" can

be legitimately necessary for such purpose as are required to adjust,

adapt and make the enactment suitable to the peculiar local conditions

of the Union Territory for carrying it in.to operation and effect. In

the context of the section, the words "restrictions and modifications"

do not cover such alterations as involve a change in any essential

feature, of the enactment

or the legislative policy built into it. This

is the third dimension of lhe limits that circumscribe the power.

It is true that the word

"such restrictions and modifications as it

thinks fit", if construed literally and in isolation, appear to give unfetter­

ed power of amending and modifying the enactment sought to be ex­

tended. Such a wide construction must be eschewed lest the very Yali­

dity of the section becomes vulnerable on account of the vice of

excessive delegation. Moreover, such a construction would be repugn­

ant to the context and the content of the section, read

as a whole,

and the statutory limits and conditions attaching to the exercise of

the power.

We must, therefore, confine the scope of the words

"restrictions and modifications" to alterations of such a character

which keep the inbuilt policy, essence and substance of the enactment

sought to be extended, intact, and introduce only such peripheral or

insubstantial changes which are appropriate and necessary to adapt

and adjust it to the local conditions of the Union Territory ..

The impugned notification, dated 7-12-1957, transgresses the limits

which circumscribe the scope and exercise of the power conferred hy

s. 2 of the Laws Act, at least, in two respects.

Firstly, the power has not been exercised contemporaneously with

the extension or for

the purposes of the extension of the Bengal Act

to Delhi. The power given by

s. 2 of the Laws Act had exhausted

itself when the Bengal Act

was extended, with some alterations, to

Delhi by Notification dated

28-4-1951. The impugned notification has

been issued on

7-12-1957, more than

6!-years after the extension.

There is nothing in the opinion of this Court rendered in

Re : Delhi

Laws Act (supra) to support Mr. B.

Sen's contention that the power

· given by s. 2 could be validly exercised within one year after the

extension. What appears in the opinion of

Faz! Ali J. at page

850,

is merely a quotation from the report of the Committee-on Minister's

Powers which considered the propriety of, the legislative practice of

inserting a "Removal of Difficulty Clause" in Acts of British

Parliament, empowering the executive to modify the Act itself so far

as necessary

fgr bringing it into operation. This device was adversely

commented upon. While some critics conceded that this device

is "partly a draftsman's insurance policy, in case he has overlooked

something" (e.g. Sir Thomas Carr, page 44 of his book "Concerning

English Administrative Law"), others frowned upon it, and nick·

named it as "Henry VIII Clause" after the British Monarch who wa~

a notorious personification of abs'Olute despotism. It was in this

perspective that the Committee on Minister's Powers examined this

practice and recommended :

LACHMI NARAIN v. UNION (Sarkaria, J.) 803

" ...... first, that the adoption of such a clause ought A

"On each occasion when it is, on the initiative of the Minis­

ter in charge of the Bill, proposed to Parliament to be justi-

fied by him upto the essential.

It can only be essential for

the limited purpose of bringing

an Act into operation and it

should accordingly be in most precise language restricted to

those purely machinery arrangements vitally requisite for that

purpose;

and the

.clause should always contain a maximum

time-limit of one year after which .the power should lapse".

It may be seen that the time-limit of one year within which the

power under a Henry

VIII Clause. should be exercisable, was only

a recommendation, and is

not an inherent attribute of such power.

In one sense, the power of extension-cum-modification given under

s.

2 of the Laws Act. and the power of modification and adaptation

conferred under a

usual 'Henry VIII Clause,' are kindred powers of

fractional legislation, delegated by the legislature within narrow cir­

cumscribed limits. But there is one significant difference between the

two. While the power under

s. 2 can be

eJ!:ercised only once when

the

Act is extended, that under a 'Henry VIII

Clal!_se' c,an be invoked,

if there

is nothing to the contrary in the clause-more than once, on

the arising of a difficulty when the Act is operative. That is to

say,,

the power under such a Clause can be exercised whenever a difficulty

arises in the working of the Act after its enforcement, subiect of

course to the time-limit, if any, for its exercjse specified in the statute.

Thus, anything said

in Re: Delhi Laws Act (supra), in regard

to the time-limit for the

exerdse. of power under a 'Henry VIII Clause',

does not hold good in the case of the power gkiven by s.

2 of the Laws

Act. Faz! Ali

J., did not say anything indicating that the power in

question can be exercised within one year of the extension.

On the

contrary, the learned Judge expressed in unequivocal terms,

at page

849:

"Once the Act became operative any defect in its pro­

'vision cannot be removed until amending legislation is pass­

ed."

Secondly, the alteration sought to be introduced by this Notifica­

tion (7-12-1957) in s. 6(2), goes beyond the scope of the 'reshic­

tions and modifications' permissible under s. 2 of the Laws Act; it

purports

to change the essential features of sub-s. (2) of s.

6, and the

legislative policy inherent therein.

Section 6 (2), as it stood immediately before the impugned noti­

fication, requires the State Government to give by Notification in the

Official Gazette "not less than 3 months notice" of its intention to

add

to or omit froni or otherwise amend the

Second Schedule. The

primary key to the problem whether a statutory provision is manda­

tory or directory, is the intention of the law-maker as expressed in

the Jaw, itself. The reason behind the provision may be a further

aid

to the ascertainment of that intention. If the legislative intent

is expressed, clearly and strongly in imperative words, such as the

use

of 'must' instead of

"shall", that will itself be sufficient to hold

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A the provi~ion to be mandatory, and it will not be necessary to pursue

the enqurry fur'ther. If _the provision is couched in prohibitive or

negative language,, it can rarely be directory, the use of peremptory

language in a negative form

is per se indicative of the intent' that

the provision

is to be mandatory (Crawford, the Construction of

Statutes pp. 523-24). Here the language

of sub-section (2)

o'r s. 6

is emphatically prohibitive, it c,ommands the Government in unambi-

B guous negative terms that the period of the requisite notice must not

be less than three months. ·

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In fixing this period of notice in mandatory terms, the legislature .

had, it seems taken into consideration several factors. According to

the scheme of the Bengal Act, the tax

is quantified and

asst'ssed on

the quarterly turnover. The period

of not less than three months

notice conforms to that scheme and

is intended to ensure that imposi­

tion of a new

burde.n or exemption from tax causes least dislocation

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and inconvenience

t9 the dealer in collecting the tax for the Govern-•

ment, keeping accounts and filing a proper return, and to the Revenue

in assessing and collecting the same. Another object of this provi­

sion

is that the public at large and the purchasers on whom

the inci-

dence of the tax really falls, should have adequate notice

of taxable

items. The third object seems to be that the dealers and others likely

to be affected by an amendment

of the

Second Schedule may get

sufficient time and

opportu_nity for making representations, objections

or suggestions in respect

of the intended amendment. The dealers

have also been ensured adequate time to arrange their sales adjust

their affairs and to get themselves registered or get their licenses

amended and brought in accord with the new imposition or exemption.

Taking into

coasideration ali these matters, the legislature has in

its judgment solemnly ineorporated in the statute, fixed the period of

the requisite notice

as

"not less than three months" and willed this

obligation to be absolute. The span of notice

was thus the essence

of the legislative mandate. The necessity of notice and the span of

notice both are integral to the scheme of the provision. The

sub-­

section cannot therefore be split up into essential and non-essential

components, the whole of it being mandatory. The rule

.in Raza

Buland Sugar Co.'s case

(supra) has therefore no application.

Thus section

6(2) embodies a determination of legislative policy

and its formulation

as

•an absolute rule of conduct which could be

diluted, changed or amended only by the legislature in the exercise

of its essential legislative functiO'a which could not, as held in Re ;

Delhi Laws Act (supra) and Rajnarainsingh's case (supra) be dele­

gated to the Government.

For these reasons we are of opinion that the learned single Judse

of the High Court was right in holding that the impugned notification

was outside the authority

of the Central

Goverament as a delegate

under

s. 2 of the Laws Act.

Before proceeding further,

we may mention here in passing

that

the point for decision in Benarsi Das Bhanot' s case (supra) relied on

by the Division Bench of the High Court, was different from the one

,.....

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I

Ll\CHMI NARAIN v. UNION (Sarkuria, /.) 805

before us. There, the constitutional validity of s. 6(2) of the Central

Provinces and Berar Sales Tax Act, 1947, was questioned ou the

ground of excessive delegation.

In the instant case the validity of

s. 6(2) of the

,Bengal Act, as such is not being impeached.

There is yet another facet of the matter. Uy the impugned noti­

fkation, the Central Govemment did not directly seek to amend

s. 6 ( 2). Perhaps it was not sure of its competence to do S'.l more

than 6t years after the extension of Bengal Act to Delhi. It there­

fore chose to amend s. 6(4) indirectly through the amendment of its

earlier notification dated 28-4-51, which was only a vehicle or instru)··

ment meant for extension of the Bengal Act to Delhi. On such ex­

tension, the notification had exhaµsted its purpose and had· spent its

force.

It

ha0 lost its utility altogether as an instrument for modifi­

cation of the Bengal Act. Therefore, the issue

of the

impugned noti­

fication which purported to amend

s. 6(2) through the medium of

a

"dead" notification, was an exercise in futility. In any case, an

amendment which was ·not directly permissible could not be indirectly

smuggled in through the back~door.

We now turn to the main ground on which the judgment of the

• appellate Bench of the High Court rests. The question is, was the

invalidity from which the impugned notification, dated 7-12-1957,

suffered cured

by the Amendment Act of 1959? The Bench seems , to think that by passing this Amendmeqt Act, Parliament had put its

seal of approval on the Bengal Act as it stoodextended and amended

~ the Notifications of 1951 ~nd 1957.

We find no basis for this surmise. This Amendment Act leaves

s. 6(2) untouched; it does not even indirectly, refer to the impugned

notification or the amendment purportedly made

by it in s.

6(.2). Nor

does it re-enact or validate what

was sought to be achieved by the

impugned Notification. No indication of referential incorporation or

validation. of the impug.1ed notification or the amendment sought to

be made by it, is available either in the preamble or in any other pro­

vision of the Amendment Act.

In

K1•fshna Chandra v. Union of lndia,(1) relied upon by the

learned Counsel for the Respondents, the central issue for considera­

tion was, whether R.

20(2) framed by the Bihar Government under

s. 15 of the Mines and Minerals (Regulation and Development) Act,

1957 and the second proviso to

s. 10(2) of the Bihar Land Reforms

Act,

1950 were constitutionally valid. By the combined operation of

these statutory provisions, the petitioners therein were called upon to

pay certain rent and royalties in respect of mining operations. Those

demands were challenged

in Baijnath Kedia v.

State of /Jihar(2)

wherein fuis Court held that the Bihar legislature had no jurisdiction

to enact the second proviso to

s. 10(2) of the

Bihar Act because ·

s. 15 of the Central Act, read with s. 2 thereof, had appropriated

the whole

field relating to mining minerals for Parliamentary legisla­

tion. The upshot

of that

decision was, that the action takfn by tne

(I) A.LR. 1975 S.C. 1389,

I0-159SCJ/76

(2) [1970] 2 5,C.R. 100.

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SUPRE¥E COURT REPORTS [1976) 2 S.C.R.

Bihar Government in modifying the terms and conditions of the leases

which were in existence anterior to the Rules and the levy ~ought to

be made

on the strength of the amended Bihar Act and Rule, were

unsustainable. Thereupon the

State persuaded Parliament to enact

the Validation Act

of 1969 with a view to remove the road-blocks

which resulted in the decision in Kedia's case (supra).

Section 2 of

the Validauon Act runs tnus :

"Validation of certain Bihar State laws and action taken

and things done connected therewith.

(1) The laws specified in the Schedule shall be and shall

be deemed always to have been, as valid as if the

provisions contained therein had been enacted

by

Parliament.

(2) Notwithstanding

any judgment, decree or order of

any court, all actions taken, things done, rules made,

notification issued or purported to have been taken,

done,

made or issued and rents or royalties realised

under

any such laws shall be deemed to have been

validly taken, done, made, issued or realised,

as

·the

case may be, as if this section had been in force at

all material times when such action was taken,

things

were done, rules were made, notifications

were issued, or rents or royalties were

realised,

and no suit or other proceeding shall be maintain­

ed or continued in any court for the refund of rents

or royalties realised under

any such laws.

(3) For the removal of doubts, it is hereby declared that

nothing

in sub-section (2) shall be construed

· as

preventing any person from claiming refund of any

rents or royalties paid by him in excess of the

amount due from him under any such laws."

The precise question before the Court was, whether a statute or

a rule earlier declared by the Court to be unconstitutional or other­

wise

invalid can be retroactive through fresh validating legislation

enacted by the competent legislature. Answering this question

in the

affirmative, this Court, speaking through Krishna Iyer, J. observed :

"where Parliament having power to enact on a topic

actually legislates within

its competence but, as an abbrevi­

ation

of drafting, borrows into the statute by reference the

words of a

State Act not qua State Act but as a convenient

shorthand,

as against a

~onghand writing of all the sec­

tions into the Central Act, such legislation stands or falls

on Parliament's legislative power, vis-a-vis the subject viz.,

mines and minerals. The distinction between the two legal

lines may sometimes be fine but always is real.

* *

v,

.,

LACHMI NARAIN v: UNION (Sarkaria, J.)

If Parliament has the power to legislative on the topic,

it can make an Act on the topic by any drafting means, in­

ciu~ing by referential legislation."

"Taking a total view of the circumstances of the Vali­

dation Act Parliament did more than simply validate an

invalid law passed by the Bihar Legislature but did re­

enact

it with retrospective effect in its own right adding an

amending Central Act to the statute

book."

8 07

The position in the instant case is entirely different. Here,

Parliament despite its presumed awareness

of the impugned Notifi­

fication, has said nothing in the Amending Act of 1959,

indi~ating

that it (Parliament) has by 'longhand' or 'shorthand' method mcor-

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porated, re-enacted or validated the impugned notification or the C

amendment sought to be made thereby, while passing the Amend­

ment Act, 1959. The appellate Bench

was therefore in error in

holding that _Parliament had validated or re-enacted referentially with

retrospective effect what

was sought to be done by the impugned noti­

fication, when it passed the Amending Act, 1959.

The High Court has tried with the aid of this Court's decision in D

Venkatrao v. State of Bombay (supra) to spell out the proposition

that mere amendment of an Act by a competent legislature, amounts

to re-enactment

of the parent Act. We find nothing in this Court's

decision

in Venkatrao's case which warrants the enunciation of such

a

sweeping rule. All that was decided in Venkatrao's case was that

th<: a;;sent given by the President to the Amending Act would be

deemed to

be an assent accorded to the parent Act, also. The deci-E

sion

in Venkatrao's case therefore does not advance the case of

Shri

B. Sen.

Shri B. Sen's alternative argument that the notifications whereby

the exemptions from tax have J;ieen withdrawn in regard to Durries,

pure silk, country liquor etc. are not assailable because those exemp­

tions were earlier granted without giving three months' notice,

is F

manifestly

unsustainable.

Firstly, so far as fruits, fresh and dried (item 8), Pepper, tama­

rind and chillies (item

11), Turmeric (item 14), ghee (item 16),

and knitting wool, (item 21A) are concerned, they were exempted

goods

in the

Schedule of the Bengal Act, as modified and extended

by the Notification, dated 28-4-1951, to Delhi. No question of giv-G

ing notice for granting these exemptions therefore arose. Secondly,

the validity

of the notifications whereby exemptions were granted to

pure silk, liquor etc. after the extension of the Bengal Act to Delhi

is not in issue. This plea was not set up by the Respondents in

their affidavits. Whether or not notice for the requisite period was

given before issuing the exemption notifications, was a question of

fact depending on evidence. Thirdly, to

aIIow the Respondents to H

take their stand on such a plea would be

violative of the fundamental

principle

of natural justiee, according to which, a party cannot

be •

allowed to take advantage of its own lapse or wrong. The statute

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SUPREME CQURT REPORTS

(197Q] 2 S.C.R.

has imposed a peremptory duty on the Government to issue notice of

not less than three months, of its intention to amend the Second

Schedule.

It therefore cannot be allowed to urge that since it had

disobeyed this

manoote on an earlier occasion when it granted the

exemptions it can withdraw the exemptions in the same unlawful

mode. Two wrongs never make a right.

Nor could the Respondents derive any authority or validity from

s. 21 of the General Clauses Act, for the notifications withdrawing

the exemptions. The source from which the power to amend the

Second Schedule, comes is s. 6(2) of the Bengal Act and not s. 21

of the General Clauses Act. Section 21, as pointed out by this Court

in

Gopiclzand v. Delhi

Administration(il) embodies only a rule of

construction and the nature and extent of its application must be

governed

by the relevant statute which confers the power to issue the

notification. The power therefore had to be exercised within the

limits circumscribed by

s. 6(2) and for the purpose for which it

was

conferred.

For all the foregoing reasons,

we are of opinion that the impugn­

ed notification, dated 7-12-1957, purporting to substitute the words

"such previous notice as it considers reasonable" for the words "not

less than three months notice" ins. 6(2) of the Bengal Act is beyond

the powers of the Central Government, conferred on it by

s. 2 of the

Laws Act.

In consequence, the notification dated 1-4-1958,

19-9-1959, 29-6-1966 and 31-7-1970 in

so far as they withdrew the

exemptions from tax in the case of Durries, pure

silk, country liquor,

kirayana articles etc. were withdrawn without complying with the

mandatory requirement of not less than three months notice enjoined

by

s.

6(2) of the Bengal Act, are also invalid and ineffective.

In the result we allow these appeals, set aside the judgment of

the appellate Bench of the High Court and declare the Notification

d~ted 7-12-1957, an~ the subsequent n~tifications in so far as they

withdrew the exemptions from tax, mentioned above, to be unconsti­

tutional. . In the circumstances of the case,

we

leave the parties to

bear their own costs.

V.P.S. Appears allowed .

(l) [1959] Suppl. 2 S.C.R. 87.

+