Mohit Yadav

Section E
Constitutional
Law II Notes
Contents
Federalism .................................................................................................................................. 2
SR Bommai v. Union of India (Federalism) .......................................................................... 2
State Of West Bengal v. Union of India ................................................................................ 6
Union & Its Territory ................................................................................................................. 7
In Re Berubari Union and Exchange of Enclaves ................................................................. 7
Union and State Executive ......................................................................................................... 9
Ram Jawaya Kapur v. State Of Punjab .................................................................................. 9
S.P. Anand v. H.D. Deve Gowda ......................................................................................... 12
U.N.R. Rao v. Indira Gandhi ............................................................................................... 13
Shamsher Singh v. State Of Punjab ..................................................................................... 14
Parliament and State Legislature ............................................................................................. 17
B. R. Kapoor v. State Of Tamil Nadu .................................................................................. 17
Re Gujarat Assembly Election Matter ................................................................................. 18
Ordinances ............................................................................................................................... 19
D.C. Wadhwa v. State of Bihar............................................................................................ 19
AK Roy v. Union of India.................................................................................................... 20
R.K. Garg. v. Union of India ............................................................................................... 21
PARLIAMENTARY PRIVILEGES ....................................................................................... 22
In M S M Sharma v S K Sinha (AIR 1959) SC 393( Searchlight Case) ............................ 23
P V Narsimha Rao v State ( 1998) 4 SCC 626 .................................................................... 24
In re Keshava Singh (1965) The UP Assembly Case .......................................................... 24
Raja Ram Pal v Speaker Lok Sabha (2007) 3 SCC 184 ...................................................... 26
Distribution of Legislative Powers .......................................................................................... 27
State Of Bihar & Others v. Sm. Charusila Dasi................................................................... 28
State Of A.P vs National Thermal Power Corpn ................................................................. 30
Plenary and Ancillary Powers of Legislation ...................................................................... 32
Doctrine of Harmonious Construction:Gujarat University v. Madholkar ........................... 32
Doctrine of Colourable Legislation ..................................................................................... 36
Doctrine of Pith and Substance ............................................................................................ 37
State Of Rajasthan vs Shri G. Chawla And Dr. Pohumal .................................................... 37
The State Of Karnataka & Ors. vs M/S. Drive-In Enterprises............................................ 40

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 Union of India vs. H.S. Dhillon ........................................................................................... 42
Hoechst Pharmaceuticals Ltd. vs State Of Bihar ................................................................. 45
Tests of Repugnancy (Deep Chand Case) ........................................................................... 46
RULE OF REPUGNANCY..................................................................................................... 48
HOECHST PHARMACEUTICALS V STATE OF BIHAR AIR 1983 SC 1019 .............. 49
Zaverbhai v State of Bombay (1954) ................................................................................... 51
RESIDUARY POWER OF LEGISLATION .......................................................................... 51
UNION OF INDIA V H S DHILLON (AIR 1972 SC 1061) .............................................. 51
FREEDOM OF TRADE COMMERCE AND INTERCOURSE ............................................ 54
ATIABARI TEA CO LTD v STATE OF ASSAM, AIR 1961 SC 232 .............................. 56
AUTOMOBILE TRANSPORT CO v STATE OF RAJASTHAN ..................................... 57
G K KRISHNAN v STATE OF TAMIL NADU (1975) 1 SCC 375 .................................. 58
VIDEO ELECTRONICS (PVT) LTD V STATE OF PUNJAB (1980) 4 SCC 134 ........... 59
SRI MAHAVIR OIL MILLS LTD v STATE OF J&K (1996) 11 SCC 39 ........................ 60
Emergency Provisions ............................................................................................................. 62
S R BOMMAI V UNION OF INDIA (1994) (A NINE-JUDGE BENCH DECISION)..... 62
RAMESHWAR PRASAD V UNION OF INDIA (2005) 7 SCC 625 ................................ 65

Federalism

SR Bommai v. Union of India (Federalism)

• The court examined issues such as the nature of Indian Constitution, certain aspects of
the Centre-State relations.
• Chief Minister, Bommai claimed he had the majority in the house and was willing to
prove it on the floor of the house but the President exercised its power under Article
356 of the constitution issued Proclamation dissolving Bommai Government and the
Assembly and assumed the administration of the State of Karnataka.
• Sri Ram Janmabhoomi-Babjri Masjid Issue
o After the demolition of Babri Masjid, UP government resigned and President
took control of the state. Violent communal clashes soon followed across India
and President dismissed the State Governments and dissolved the Legislative
Assemblies of Rajasthan, Madhya Pradesh and Himachal Pradesh and
assumed administration of the respective States In all of these states BJP was
in power.
• A.M. AHMADI - In order to maintain the unity and integrity of the nation our
Founding Fathers appear to have leaned in favour of a strong Centre while
distributing the powers and functions between the Centre and the States.

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• Dicey - Federalism is, therefore, a concept which unites separate States into a Union
without sacrificing their own fundamental political integrity, the essence of a
federation is the existence of the Union and the States and the distribution of powers
between them, Federalism, therefore, essentially implies demarcation of powers in a
federal compact.
• On a conjoint reading of these articles, it becomes clear that Parliament has the right
to form new States, alter the 1ireas of existing States, or the name of any existing
State. Thus the Constitution permits changes in the territorial limits of the States and
does not guarantee their territorial integrity. Even names can be changed. In doing so,
it has not to seek the concurrence of the State whose area, boundary or name is likely
to be affected by the proposal.
• Post-independence, some of the subjects of common interest were, however,
transferred to the Union List, thereby enlarging the powers of the Union to enable
speedy and planned economic development of the nation.
• States depend for financial assistance upon the Union since their power to raise
resources is limited.
• Article 368 confers powers on Parliament to amend the Constitution, albeit by a
specified majority. The power extends to amending matters pertaining to the
executive as well as legislative powers of the States if the amendments are ratified by
the legislatures of not less than one-half of the States. This provision empowers
Parliament.to so amend the Constitution as to curtail the powers of the States. A
strong Central Government may not find it difficult to secure the requisite majority as
well as ratification by one half of the legislatures if one goes by past experience.
These limitations taken together indicate that the Constitution of India cannot be said
to be truly federal in character as understood by lawyers in the United States of
America.
• Under our Constitution the State as such has no inherent sovereign power or
autonomous power which cannot be encroached upon by the Centre.
• Constitution of India is differently described, more appropriately as 'quasi-federal'
because it is a mixture of the federal and unitary elements, leaning more towards· the
latter but then what is there in a name, what is important to bear in mind is the thrust
and implications of the various provisions of the Constitution bearing on the
controversy in regard to scope and ambit of the Presidential power under Article 356
and related provisions.
• P.B. SAWANT, J. - Article 1 of the Constitution states that India shall be a Union of
States. Thus the States are constitutionally recognised units and not mere convenient
administrative divisions.
• HM Seervai in defence of federalism:-
o It is no objection to our Constitution being federal that the States were not
independent States before they became parts of a Federation. A federal
situation existed, first, when the British Parliament adopted a federal solution
in the G.O.I. Act, 1935, and secondly; when the Constituent Assembly
adopted a federal solution in our Constitution;

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o Parliament’s power to alter the boundaries of States without their consent is a
breach of the federal principle, but in fact it is not Parliament which has, on its
own, altered the boundaries of States. By extra-constitutional agitation, the
States have forced Parliament to alter the boundaries of States. In practice;
therefore, the federal principle has not been violated;
o The allocation of the residuary power off legislation to Parliament (i.e. the
Federation) is irrelevant for determining the federal nature of a Constitution.
The U.S. and the Australian Constitutions do not confer the residuary power
on the Federation but on the States, yet those Constitutions are indisputably
federal;
o External sovereignty is not relevant to the federal feature of a Constitution, for
such sovereignty must belong to the country as a whole. But the division of
internal sovereignty by a distribution of legislative powers is an essential
feature of federalism, and our Constitution possesses that feature.
o The enactment in Article 352 of the emergency power arising from war or
external aggression which threatens the security of India merely recognises de
jure what happens de facto in great federal countries like the U.S., Canada and
Australia in times of war, or imminent threat of war, because in war, these
federal countries act as though they were unitary.
o The power to proclaim an emergency originally on the ground of internal
disturbance, but now only on the ground of armed rebellion, does not detract
from the principle of federalism because such a power, as we have seen exists
in indisputably federal constitutions.
o The provisions of Article 355 imposing a duty on the Union to protect a State
against external aggression and internal disorder are not inconsistent with the
federal principle. The war power belongs to the Union in all Federal
Governments.
o both federal and State laws operate on the same individual, it must follow that
in case of conflict of a valid federal law and a valid State law, the federal law
must prevail and our Constitution so provides in Article 254.
o Our Constitution has adopted the method of empowering the Union
Government to give directions to the States to give effect to the Union law and
to prevent obstruction in the working of the Union law. Such a power, though
different in form, is in substance the same as the power of the Federal
Government in the U.S. to enforce its laws, if necessary by force. Therefore,
the power to give directions to the State Governments does not violate the
federal principle;
o Article 356 (read with Article 355) which provides for the failure of
constitutional machinery was based on Article 4, Section 4 of the U.S.
Constitution and Article 356, like Article 4, Section 4, is not inconsistent with
the federal principle. As stated earlier, these provisions were meant to be the
last resort, but have been gravely abused and can therefore be said to affect the
working of the Constitution as a Federal Government. But the recent
amendment of Article 356 by the 44th Amendment, and the submission to be

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 made hereafter that the doctrine of the political question does not apply in
India, show that the courts can now take a more active part in preventing a
mala fide or improper exercise of the power to impose a President's rule,
unfettered by the American doctrine of the political question;
o The view that unimpo1tant matters were assigned to the States cannot be
sustained in face of the very important subjects assigned to the States in List
II, and the same applies to taxing powers of the States, which are made
mutually exclusive of the taxing powers of the Union so that ordinarily the
States have independent source of revenue of their own. In addition to the
exclusive taxing powers of the States, the States become entitled either to
appropriate taxes collected by the Union or to' a share in the taxes collected by
the Union.
• The fact that during emergency and in certain other eventualities their powers are
overridden or invaded by the Centre is not destructive of the essential federal nature
of our Constitution. The invasion of power in such circumstances is not a normal
feature· of the Constitution. They are exceptions and have to be resorted to only
occasionally to meet the exigencies of the special situations. The exceptions are not a
rule.
• Whatever the bias in favour of the Centre, it cannot be argued that merely because
(and assuming it is correct) the Constitution is labelled unitary or qm1si-federal or a
mixture of federal and unitary structure, the President has unrestricted power of
issuing Proclamation under Article 356(1).
• K. RAMASWAMI - Indian Constitution federalism is not based on any agreement
between federating units but one of integrated whole as pleaded with vision by Dr.
B.R. Ambedkar on the floor of the Constituent Assembly at the very inception of the
deliberations and the Constituent Assembly unanimously approved the resolution of
federal structure.
• the organic federalism designed by the Founding Fathers is to suit the parliamentary
form of Government to suit the Indian conditions with the objective of promoting
mutuality and common purpose rendering social, economic and political justice,
equality of status and opportunity; dignity of person to all its citizens transcending
regional, religious, sectional or linguistic barriers as complimentary units in working
the Constitution without confrontation.
• B.P. JEEVAN REDDY - The fact that under the scheme of our Constitution, greater
power is conferred upon the Centre vis-a-vis the States does not mean that States are
mere appendages of the Centre. Within the sphere allotted to them, States are
supreme. The Centre cannot tamper with their powers. More particularly, the courts
should not adopt an approach, an interpretation, which has the effect of or tends to
have the effect of whittling down the powers reserved to the States.
• Federalism in the Indian Constitution is not a matter of administrative convenience,
but one of principle - the outcome of our own historical process and recognition of the
ground realities.

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State Of West Bengal v. Union of India
• The Political sovereignty of India is distributed between the Union of India and the
States with greater weightage in favour of the Union.
• Characteristics of Federalism:-
o A truly federal form of Government envisages a compact or agreement
between independent and sovereign units to surrender partially their authority
in their common interest and vesting it in a Union and retaining the residue of
the authority in the constituent units. Ordinarily each constituent unit has its
separate Constitution by which it is governed in all matters except those
surrendered to the Union, and the Constitution of, the Union primarily
operates upon the administration of the units. Our Constitution was not the
result of any such compact or agreement: Units constituting a unitary State
which were non-sovereign were transformed by abdication of power into a
Union,
o Supremacy of the Constitution which cannot be altered except by the
component units. Our Constitution is undoubtedly supreme, but it is liable to
be altered by the Union Parliament alone and the units have no power to alter
it. Distribution of powers between the Union and the regional units each in its
sphere coordinate and independent of the other. The basis of such distribution
of power is that in matters of national importance in which a uniform policy is
desirable in the interest of the units authority is entrusted to the Union, and
matters of local concern remain with the States.
o Supreme authority of the courts to interpret the Constitution and to invalidate
action violative of the Constitution. A federal Constitution, by its very nature,
consists of checks and balances and must contain provisions for resolving
conflicts between the executive and legislative authority of the Union and the
regional units. Supreme authority of the courts to interpret the Constitution
and to invalidate action violative of the Constitution. A federal Constitution,
by its very nature, consists of checks and balances and must contain provisions
for resolving conflicts between the executive and legislative authority of the
Union and the regional units.
• Therefore the power of the Union to legislate in respect of property situate in the
States even if the States are regarded qua the Union as Sovereign, remains
unrestricted, and the State property is not immune from its operation. Exercising
powers under the diverse entries which have been referred to earlier, the Union
Parliament could legislate so as to trench upon the rights of the States in the property
vested in them. If exclusion of a State property from the purview of Union legislation
is regarded as implicit in those entries in List I, it would be difficult if not impossible
for the Union Government to carry out its obligations in respect of matters of national
importance. No positive interdict against its exercise is perceptible in the Constitution:
and the implication of such an interdict assumes a degree of sovereignty in the States
of such plenitude as transcends the express legislative power of the Union. The
Constitution which makes a division of legislative and executive powers between the

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 Union and the States is not founded on such a postulate, and the concept of superiority
of the Union over the States in the manifold aspects already examined negatives it.

Union & Its Territory

In Re Berubari Union and Exchange of Enclaves

• An agreement was entered between India and Pakistan to resolve the boundary
dispute. Certain questions of law emerged with regard to implementation of
agreement and President of India, in exercise of the powers under Article 143( I) of
the Constitution, referred three questions to the Supreme Court for its advice:
o Is any legislative action necessary for the implementation of the Agreement
relating to Berubari Union?
o If so, is a law of Parliament relatable to Article 3 of the Constitution sufficient
for the purpose or is an a1nend1nent of the Constitution in accordance with
Artic1e 368 of the Constitution necessary, in addition or in the alternative?
o Is a law of Parliament relatable to Article 3 of the Constitution sufficient for
implementation of the agreement relating to Exchange of Enclaves or is an
amendment of the Constitution in accordance with Article 368 of the
Constitution necessary for the purpose, in addition or ill the alternative?
• Attorney General contended that the said Agreement is merely the recognition or
ascertainment of the boundary which had already been fixed and in no sense is it a
substitution of a new boundary or the alteration of the boundary implying any
alteration of the territorial limits of India. He emphasises that the ascertainment or the
settlement of the boundary in the light of the award by which both Governments were
bound, is not an alienation or cession of the territory of India, and according to him,
if, as a result of the ascertainment of the true boundary in the light of the award,
possession of some land has had to be yielded to Pakistan it does not amount to
cession of territory; it is merely a mode of settling the boundary.
• In view of this factual position there should be no difficulty in holding that it falls
within the territories which immediately before the commencement of the
Constitution were comprised in the Province of West Bengal. Therefore, as a result of
the implementation of this Agreement the boundaries of West Bengal would be
altered and the content of Entry 13 in the First Schedule to the Constitution would be
affected.
• Mr. Chaterjee raises contention that Parliament has no power to cede territory and
agreement must be declared void as:-
o Framers were determined to keep the entire territory of India as inviolable and
sacred. The very first sentence in the preamble, which declares that "We, the
people of India, having solemnly resolved to constitute India into a sovereign
democratic republic", says Mr Chatterjee, irrevocably postulates that India
geographically and territorially must always continue to be democratic and
republican.

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 o it is argued that whereas the Constitution has expressly given to the country
the power to acquire other territories it has made no provision for ceding any
part of its territory; and in such a case the rule of construction viz. expressio
unius est exclusio alterius must apply.
• Court held that the preamble is not a part of the Constitution, and, "it has never been
regarded as the source of any substantive power conferred on the Govenm1ent of the
United States, or on any of its departments. Such powers embrace only those
expressly granted in the body of the Constitution and such as may be implied from
those so granted".
• On a true construction of Article 1(3) (c) it is erroneous to assume that it confers
specific powers to acquire foreign territories.
• There can be no doubt that a sovereign State can exercise its right to cede a part of its
territory to a foreign State.
• In the Indian Constitution, the emphasis on the preservation of the territorial integrity
of the constituent States is absent.
• It may, therefore, be assumed that in construing Article 3 we should take into account
the fact that the Constitution contemplated changes of the territorial limits of the
constituent States and there was no guarantee about their territorial integrity.
• The acquisition of foreign territory by India in exercise of its inherent right as a
sovereign State automatically makes the said territory a part of the territory of India.
After such territory is thus acquired and factually made a part of the territory of India
the process of law may assimilate it either under Article 2 or under Article 3(a) or (b).
• Can Parliament legislate in regard to the agreement under Article 3? Broadly stated
Article 3 deals with the internal adjustment inter se of the territories of the constituent
States of India. Article 3(a) enables Parliament to form a new State and this can be
done either by the separation of the territory from any State, or by uniting two or more
States or parts of States, or by uniting any territory to a part of any State. There can be
no doubt that foreign territory which after acquisition becomes a part of the territory
of India under Article 1(3) (c) is included in the last clause of Article 3(a) and that
such territory may, after its acquisition, be absorbed in the new State which may be
formed under Article 3(a). Thus Article 3(a) deals with the problem of the formation
of a new State and indicates the modes by which a new State can be formed.
• Article 3(c) deals with the problem of the diminution of the area of any State. Such ·
diminution may occur, where the part of the area of a State is taken out and added to
another · State, and in that sense Articles 3(b) and 3(c) may in some cases be said to
be correlated; but does Article 3(c) refer to a case where a part of the area of a State is
taken out of that State and is not added to any other -State but is handed over to a
foreign State? If the power to acquire foreign territory which is an essential attribute
of sovereignty is not expressly conferred by the Constitution there is no reason why
the power to cede a part of the national territory which is also an essential attribute of
sovereignty should have been provided for by the Constitution. Both of these essential
attributes of sovereignty are outside the Constitution and can be exercised by India as
a sovereign State. Therefore, even if Article 3(c) receives the widest interpretation it

8
 would be difficult to accept the argument that it covers a case of cession of a part of
national territory in favour of a foreign State. The diminution of the area of any State
to which it refers postulates that the area diminished from the State in question should
and must continue to be a part of the territory of India; it may increase the. area of any
other State or may be dealt with in any other manner authorised either by Ai1icle 3 or
other relevant provisions of the Constitution, but it would not cease to be a part of the
territory of India. It would be unduly straining the language of Article 3(c) to hold that
by implication it provides for cases of cession of a part of national territory.
Therefore, we feel no hesitation in holding that the power to cede national territory
cannot be read in Article 3(c) by implication.
• It would not be competent to Parliament to make a law relatable to Article 3 of the
Constitution for the purpose of implementing the Agreement. This· conclusion must
inevitably mean that the law necessary to implement the Agreement has to be passed
under Article 368.
• The Agreement amounts to a cession of a part of the territory of India in favour of
Pakistan; and so its implementation would naturally involve the alteration of the
content of and the consequent amendment of Article I and of the relevant part of the
First Schedule to the Constitution, because such implementation would necessarily
lead to the diminution of the territory of the Union of India. Such an amendment can
be made under Article 368. Parliament may, however, if it so chooses, pass a law
amending Article 3 of the Constitution so as to cover cases of cession of the territory
of India in favour of a foreign State.

Union and State Executive

Ram Jawaya Kapur v. State Of Punjab

• Writ petition under Article 32 of the Constitution, was filed by six persons who
carried on the business of preparing, printing, publishing and selling text books for
different classes in the schools of Punjab, particularly for the primary and middle
classes, under the name and style "Uttar Chand Kapur & Sons", It was alleged that the
Education Department of the Punjab Government pursuant to their "so-called policy
of nationalisation of text books", issued a series of notifications since 1950 regarding
the printing, publication and sale of these books which not only placed unwarranted
restrictions upon the rights of the petitioners to carry on their business but also
practically ousted them and other traders from the business altogether and this was a
violation of their fundamental under Article 19(1)(g), It was contended that the
restrictions were being imposed without the authority of law and therefore not saved
by clause (6) of Article 19.
• Mukherjea, C.J. – Petitioner’s Contentions:-
o Contention 1 - The executive Government of a State is wholly incompetent,
without any legislative sanction, lo engage in any trade or business activity
and that the acts of the Government in carrying out their policy of establishing

9
 monopoly in the business of printing and publishing text books for school
students is wholly without jurisdiction and illegal
o Contention 2 -assuming that the State could create a monopoly in its favour in
respect of a particular trade or business, that could be done not by any
executive act but by means of a proper legislation which should conform to
the requirements of Article 19(6) of the Constitution
o Contention 3 - it was not open to the Government lo deprive the petitioners of
their interest in any business or undertaking which amounts to property
without authority of law and without payment of compensation as is required
under Article 31 of the Constitution
• Contention 1 - Constitution clearly recognises a division of governmental functions
into three categories viz, the legislative, the judicial and the executive, the function of
the executive cannot but be to execute the laws passed by the legislature or to
supervise the enforcement of the same. The legislature must first enact a measure
which the executive can then carry out. (Used Article 73 & 162 and Australian Case)
o Court’s reasoning - Article 73 provides that the executive powers of the Union
shall extend to matters with respect to which Parliament has power to make
laws and to the exercise of such rights, authority and jurisdiction as are
exercisable by the Government of India by virtue of any treaty or any
agreement.
o Article 73 & 162 does not contain any definition as to what the executive
function is and what activities would legitimately come within its scope. They
are concerned primarily with the distribution of the executive power between
the Union on the one hand and the States on the other. They do not mean, as
petitioner seems to suggest, that it is only when Parliament or the State
Legislature has legislated on certain items appertaining to their respective lists
that the Union or the State executive, as the case may be, can proceed to
function in respect to them. On the other hand, the language of Article 172
clearly indicates that the powers of the State executive do extend to matters
upon which the State Legislature is competent to legislate and are not confined
to matters over which legislation has been passed already. The same principle
underlies Article 73 of the Constitution.
• One Australian case discarded on the basis that the provision upon which it was based
was not present in Indian constitution.
• Motilal v. Government of the State of Uttar Pradesh - The point canvassed there
was whether the Government of a State has power under the Constitution to carry on
the trade or business of running a bus service in the absence of a legislative enactment
authorising the State Government to do so. Chief Justice Malik was of opinion that in
a written Constitution like ours the executive power may be such as is given lo the
executive or is implied, ancillary or inherent. It must include all powers that may be
needed to carry into effect the aims and objects of the Constitution. It must mean
more than merely executing the laws. According to the Chief Justice the State has a
right to hold and manage its own property and carry on such trade or business as a

10
 citizen has the right to carry on, so long as such activity does not encroach upon the
rights of others or is not contrary lo law. An act would be within the executive power
of the State if it is not an act which has been assigned by the Constitution of India to
other authorities or bodies and is not contrary to the provisions of any law and does
not encroach upon the legal rights of any member of the public.
• Our Constitution, though federal in its structure, is modelled on the British
parliamentary system where the executive is deemed to have the primary
responsibility for the formulation of governmental policy and its transmission into law
though the condition precedent to the exercise of this responsibility is its retaining the
confidence of the legislative branch of the State. The executive function comprises
both the determination of the policy as well as carrying it into execution. This
evidently includes the initiation of legislation, the maintenance of order, the
promotion of social and economic welfare, the direction of foreign policy, in fact the
carrying on or supervision of the general administration of the State.
• The Cabinet enjoying, as it does, a majority in the legislature concentrates in itself the
virtual control of both legislative and executive functions; and as the Ministers
constituting the Cabinet are presumably agreed on fundamentals and act on the
principle of collective responsibility, the most important questions of policy are all
formulated by them. Suppose now that the Ministry or the executive Government of a
State formulates a particular policy in furtherance of which they want to start a trade
or business. Is it necessary that there must be a specific legislation legalising such
trade activities before they could be embarked upon? We cannot say that such
legislation is always necessary. If the trade or business involves expenditure of funds,
it is certainly required that Parliament should authorise such expenditure either
directly or under the provisions of a statute. What is generally done in such cases is,
that the sums required for carrying on the business are entered in the annual financial
statement which the Ministry has to lay before the house or houses of legislature in
respect of every financial year under Article 202 of the Constitution. So much of the
estimates as relate to expenditure other than those charged on the consolidated fund
are submitted in the form of demands for grants to the legislature and the legislature
has the power to assent or refuse to assent to any such demand or assent to a demand
subject to reduction of the amount (Article 203). After the grant is sanctioned, rule
appropriation bill is introduced to provide for the appropriation out of the
consolidated fund of the State of all moneys required to meet the grants thus made by
the assembly (Article 204). As soon as the appropriation Act is passed, the
expenditure made under the heads covered by it would be deemed to be properly
authorised by law under Article 266(3) of the Constitution.
• It is true that the appropriation Acts cannot be said to give a direct legislative sanction
to the trade activities themselves. But so long as the trade activities are carried on in
pursuance of the policy which the executive Government has formulated with the tacit
support of the majority in the legislature, no objection on the score of their not being
sanctioned by specific legislative provision can possibly be raised. Objections could
be raised only in regard to the expenditure of public funds for carrying on of the trade

11
 or business and to these the appropriation Acts would afford a complete answer.
Specific legislation may indeed be necessary if the Government require certain
powers in addition to what they possess under ordinary law in order' to carry on the
particular trade or business. Thus when it is necessary to encroach upon private. rights
in order to enable the Government to carry on their business, a specific legislation
sanctioning such course would have to be passed.
• Petitioner’s fundamental rights are not violated as there is a no fundamental right in
the publishers that any of the books printed and published by them should be
prescribed as text books by the school authorities. So the utmost that could be said is
that there was merely a chance or prospect of any or some of their books being
approved as text books by the Government. Such chances are incidental to all trades
and businesses and there is no fundamental right guaranteeing them. Petitioner’s right
to publish books is not taken away and since there is no fundamental right to be
approved by the government or be prescribed in schools, there is no violation of any
fundamental right.

S.P. Anand v. H.D. Deve Gowda

• H.D. Deve Gowda, not being a member of either House of Parliament, was appointed
as the Prime Minister of India. The petitioner contended that he was not eligible to be
appointed as the Prime Minister of India and President of India committed a grave and
serious constitutional error in swearing him in as the Prime Minister. This action of
the President according to the petitioner, was violative of Articles 14, 21 and 75 of the
Constitution and, therefore, void ab initio and deserved to be quashed by an
appropriate writ, which may be issued under Article 32 of the Constitution.
• Har Sharan Verma v. Tribltuvan Narain Singh, Chief Minister, U.P. - Interpreting
the said clause in the context of Article 163 and other clauses of Article 164, this
Court held that clause 4 of Article 164 had an ancient lineage and there was no reason
to whittle down the plain thrust of the said provision by confining it to cases where a
person being a member of the legislature and a Minister, for some reason, loses his
seat in the State. The Court, therefore, on a combined reading of the aforesaid two
provisions held that a person not being a member of either House of Parliament can
be appointed a Minister up to a period of six months.
• When we compare Articles 74 and 75 with Articles 163 and 164, the first point of
difference is that while the former deal with the President and the Prime Minister, the
latter deal with the Governor and the Chief Minister. Article 74(1) and Article 163(1)
are substantially the same except that the sentence beginning with 'except' and ending
with 'discretion', special to the Governor's function, is not to be found in Article 74(1).
The proviso to Article 74(1) which grants a special privilege to the President is not to
be found in Article 163(1) whereas clause (2) of Article 163 is not to be found in
Article 74. Clause (2) to Article 163 is a corollary to the exception clause in Article
163( l) and has no relevance to the issue on hand. Article 74(2) and Article 163(3) are
verbatim.
• Articles 75(1) and 75(2) are identical to Article 164(1) except that in the case of the
latter, the two clauses have been combined into one. The proviso to Article 164(1)

12
 which is special to States, is not to be found in Article 75. The rest of the clauses of
the two articles are identical except for consequential changes.
• On a plain reading of Article 75(5) it is obvious that the Constitution-makers desired
to permit a person who was not a member of either House of Parliament to be
appointed a Minister for a period of six consecutive months and if during the said
period he was not elected to either House of Parliament, he would cease to be a
Minister. This becomes clear if one were to read the debates of the Constituent
Assembly (the draft Articles were 62 and 144 for the present Articles 75 and 164).
Precisely on the ground that permitting such persons to be appointed Ministers at the
Union or State levels would "cut at the very root of democracy", an amendment was
moved to provide: "No person should be appointed a Minister unless at the time of his
appointment, he is elected member of the House:" which amendment was spurned by
Dr. Ambedkar
• The Council of Ministers is made collectively responsible to the House of the People.
The form of the oath prescribed in the Third Schedule under Article 75( 4) is the same
for the Prime Minister as well as a Minister. In other words, the Constitution does not
draw any distinction between the Prime Minister and any .other Minister in this
behalf. This is not to say that the Prime Minister does not enjoy a special status; he
does as the head of the Council of Ministers but the responsibility of the Council of
Ministers to the House of the People is collective. Besides, the caption of Article 75
as a whole is "Other provisions as to Ministers". No separate provision is to be found
dealing with the appointment of the Prime Minister as such. Therefore, even though
the Prime Minister is appointed by the President after he is chosen by such number of
members of the House of the People as would ensure that he has the confidence of the
House and would be able to command the support of the majority, and the Ministers
are appointed on the advice of the Prime Minister, the entire Council of Ministers is
made collectively responsible to the House and that ensures the smooth functioning of
the democratic machinery.

U.N.R. Rao v. Indira Gandhi

• During dissolution of the House of the People, there can be no Prime Minister The
appellant contended that under the Constitution as soon as the House of the People
was dissolved under Article 85(2), the Council of Ministers, i.e. the Prime Minister
and other Ministers, ceased to hold office. This argument was based on the wording of
Article 75(3), which provides that "the Council of Ministers shall be collectively
responsible to the House of the People". How can the Council .of Ministers be
responsible to the House of the People when it has been dissolved under Article
85(2)? It was contended that it was not void in the carrying out of Governmental
function will be created because the President can exercise the executive power of the
Union either directly or through officers subordinate to him in accordance with
Article 53(1) of the Constitution
• It will be noticed that Article 74(1) is mandatory in form. We are unable to agree with
the appellant that in the context the word 'shall' should be read as 'may'. Article 52 is
mandatory. In other words "there shall be a President of India'. So is Article 74(1).

13
 The Constituent Assembly did not choose the Presidential system of Government. If
we were to give effect to this contention of the appellant we would be changing the
whole concept of the Executive. It would mean that the President need not have a
Prime Minister and Ministers to aid and advise in the exercise of his functions. As
there would be no 'Council of Ministers, nobody would be responsible to the House of
the People. With the aid of advisers he would be able to rule the country at least till he
is impeached under Article 61.
• Now comes the crucial clause three of Article 75. The appellant urges that the House
of People having been dissolved this clause cannot be complied with. According to
him it follows from the provisions of this clause that it is was contemplated that on the
dissolution of the House of People the Prime Minister and the other ministers must
resign or be dismissed by the President and the President must carry on the
Government .as best as he can with the aid of the Services. As we have shown above.
Article 74(1) is mandatory and, therefore, the President cannot exercise the executive
power without the aid and advice of the Council of Ministers We must then harmonise
the provisions of Article 75(3) with Article 74(1) and Article 75(2). Article 75(3)
brings into existence what is usually ·called "Responsible Government". In other
words the Council of Ministers must enjoy the confidence of the House of People.
While the House of People is not dissolved under Article 85(2)(a), Article 75(3) has
full operation. But when it is dissolved the Council of Ministers cannot naturally
enjoy the confidence of the House of People. Nobody has said that the Council of
Ministers does not enjoy the confidence of the House of People when it is prorogued.
In the context, therefore, this clause must be read as meaning that Article 75(3) only
applies when the House of People does not stand dissolved or prorogued. We are not
concerned with the case where dissolution of the House of People takes place under
Article 83(2) on the expiration of the period of five years prescribed therein, for
Parliament has provided for that contingency in Section 14 of the Representation of
Peoples Act, 1951.

Shamsher Singh v. State Of Punjab

• Two freshers in the State Judiciary (the appellants), were on probation. Before the
expiry of the period, the High Court having discovered unsavoury conduct of the
appellants, as controlling authority, considered it fit to terminate their services on
grounds of unsuitability. The Council of Ministers, on a consideration of the High
Court's report, acted on it and ended the probation of the appellants, although the
Governor's personal satisfaction about this step was neither sought nor secured. TI1e
orders terminating probation were challenged primarily on the ground that the power
of appointment being with the Governor (or the President, in the case of Central
Services), the removal must be by him alone. Wherever the Constitution vests power
in the Governor or President, it has to be exercised by him, applying his own mind to
the materials. He can neither surrender the power to his Ministers nor delegate to his
officers
• First, there are several constitutional functions, powers and duties of the Governor.
These are conferred on him eo nomine the Governor. The Governor, is, by and under

14
 the Constitution, required to act in his discretion in several matters. These
constitutional functions and powers of the Governor eo nonmine as well as these in
the discretion of the Governor are not executive powers of the State within the
meaning of Article 154 read with Article 162.
• Second, the Governor under Article 163 of the Constitution can take aid and advice of
his Council of Ministers when he is exercising executive power of the State. The
Governor can exercise powers and functions without the aid and advice of his Council
of Ministers when he is required by or under the Constitution to act in his discretion,
where he is required to exercise his constitutional functions conferred on him eo
nomine as the Governor.
• Third, the aid and advice of the Council of Ministers under Article 163 is different
from the allocation of business of the government of the State by the Governor to the
Council of Ministers under Article 166(3) of the Constitution. The allocation of
business of government under Article 166(3) is an instance of exercise of executive
power by the Governor through his Council by allocating or delegating his functions.
The aid and advice is a constitutional restriction on the exercise of executive powers
of the State by the Governor. The Governor will not be constitutionally competent to
exercise these executive powers of the State without the aid and advice of the Council
of Ministers.
• Fourth, the executive powers of the State are vested in the Governor under Article
154(1). The powers of appointment and removal of Subordinate Judges under Article
234 have not been allocated to the Ministers under the Rules of Business of the State
of Punjab. Rule 18 of the Rules of Business states that except as otherwise provided
by any other rule cases shall ordinarily be disposed of by or under the authority of the
Minister-in-charge who may, by means of Standing Orders, give such directions as he
thinks fit for the disposal of cases in his department. Rule 7(2) in Part D of the Punjab
Civil Service Rules which states that the Governor of Punjab may on the
recommendation of the High Court remove from service without assigning any cause
any Subordinate Judge-or revert him to his substantive post during the period of
probation is incapable of allocation to a Minister. Rule 18 of the Rules of Business is
subject to exceptions and Rule 7(2) of the Service Rules is such an exception.
Therefore, the appellants contend that the power of the Governor to remove
Subordinate Judges wider Article 234 read with the aforesaid Rule 7(2) of the Service
Rules cannot be allocated to a Minister.
• It is noticeable that though in Article 74 it is stated that there shall be a Council of
Ministers with the Prime Minister at the head to aid and advise the President in the
exercise of is functions, there is no provision in Article 74 comparable to Article I 63
·that the aid and advice is except in so far as he is required to exercise his functions or
any of them in his discretion. It is necessary to find out as to why the words 'in his
discretion' are used in relation to some powers of the Governor and not in the case of
the President.
• State of U.P. v. Babu Ram Upadltya held that the power of the Governor to dismiss at
pleasure, subject to the provisions of Article 311, is not an executive power under

15
 Article 154 but a constitutional power and is not capable of being delegated to officers
subordinate to him. The Governor could not delegate his pleasure to any officer nor
could any law provide for the exercise of that pleasure by an officer with the result
that statutory rules governing dismissal were binding on every officer though they
were subject to the overriding pleasure of the Governor. This would mean that the
officer was bound by the rules but the Governor was not.
• Moti Ram Deka 's case and this Court restated that proposition No. 2 must be read
along with the subsequent propositions specified as propositions Nos. 3, 4, 5 and 6.
The ruling in Moti Ram Deka's case is that a law can be framed prescribing the
procedure by which and the authority by whom the said pleasure can be exercised.
The pleasure of the President or the Governor to dismiss can therefore not only be
delegated but is also subject to Article 311. The true position as laid down in Moti
Ram Deka 's case is that Articles 310 and 311 must no doubt be read together but
once the true scope and effect of Article 311 is determined the scope of Article 310(1)
must be limited in the sense that in regard to cases falling under Article 311 (2) the
pleasure mentioned in Article 310(2) must be exercised in accordance with the
requirements of Article 311.
• The majority view in Babu Ram Upadltya's case is no longer good law after the
decision in Moti Ram Deka's case
• In making a report under Article 356 the Governor will be justified in exercising his
discretion even against the aid and advice of his Council of Ministers. The reason is
that the failure of the constitutional machinery may be because of the conduct of the
Council of Ministers. This discretionary power is given to the Governor to enable him
to report to the President who, however, must act on the advice of his Council of
Ministers in all matters. In this context Article 163(2) is explicable that the decision of
the Governor in his discretion shall be final and the validity shall not be called in
question. The action taken by the President on such a report is a different matter. The
President acts on the advice of his Council of Ministers. In all other matters where the
Governor acts in his discretion he will act in harmony with his Council of Ministers.
The Constitution does not aim at providing a parallel administration within the State
by allowing the Governor to go against the advice of the Council of Ministers.
• For the foregoing reasons we hold that the President as well as the Governor acts on
the aid and advice of the Council of Ministers in executive action and is not required
by the Constitution to act personally without the aid and advice of the Council of
Ministers or against the aid and advice of the Council of Ministers. Where the
Governor has any discretion the Governor acts on his own judgment. The Governor
exercises his discretion in harmony with his Council of Ministers. The appointment as
well as removal of the members of the Subordinate Judicial Service is an executive
action of the Governor to be exercised on the aid and advice of the Council of
Ministers in accordance with the provisions, of the Constitution. Appointments and
removals of persons are made by the President and the Governor as the constitutional
head of the Executive on the aid and advice of the Council of Ministers. That is why
any action by any servant of the Union or the State in regard to appointment or

16
 dismissal is brought against the Union or the State and not against the President or the
Governor.

Parliament and State Legislature

B. R. Kapoor v. State Of Tamil Nadu

• Jayalalithaa, was convicted in two criminal cases by the trial court. On appeal, High
Court suspended her sentences but her application for stay of judgment was rejected.
She then contested elections and her nomination was rejected due to criminal
convictions. Her party came into the majority and she became the Chief Minister.
This was challenged in appeal.
• Har Sharan Verma v. Tribhuvan Narain Singh,Chief Minister, U.P. – Person was
not a member of either house of legislature of the state and was made Chief minister.
Court held that Article 164(1) does not provide any qualification for person to be
selected as Chief Minister. Accordingly, court held that it sees no reason as to why
164(4) be restricted to only cases where a Minister loses for some reaso11 his seat in
the Legislature of the State.
• Har Sharan Verma v. Union of India – Court considered the question in the context
of membership of Parliament and Article 75(5), which is similar in terms to Article
164( 4). The Court said that a person who was not a member of either House of
Parliament could be a Minister for not more than· six months; though lie would not
have any right to vote, he would be entitled, by virtue of Article 88, to participate in
the proceedings of Parliament.
• S.P. Anand v. H.D. Deve Gowda - parity of reasoning if a person who is not a
member of the State Legislature can be appointed a Chief Minister of a State under
Article 164(4) for six months, a person who is not a member of either House of
Parliament can be appointed Prime Minister for the same duration.
• S.R. Chaudhuri v. State of Punjab – Using Article 164(4) same person was being
made minister again and again during the same term without fighting the election
which was not allowed by the court.
• To answer the question before us, three sub-Articles of Article 164 need, in our view,
to be read together, namely, sub-Articles (1),(2) and (4)…Necessarily implicit in sub-
Article (4) read with sub- Articles (1) and (2) is the requirement that a Minister who is
not a member of the legislature must seek election to the legislature and, in the event
of his failing to secure a seat in the legislature within six months, he must cease to be
a Minister. The requirement of sub- Article (4) being such, it follows as the night the
day that a person who is appointed a Minister though he is not a member of the
legislature shall be one who can stand for election to the legislature and satisfy the
requirement of sub-Article (4). In other words, he must be one who satisfies the
qualifications for membership of the legislature contained in the Constitution (Article
173) and is not disqualified from seeking that membership by reason of any of the
provisions therein (Article 191) on the date of his appointment

17
Re Gujarat Assembly Election Matter
• The dissolved Legislative Assembly of the State of Gujarat was constituted in March
1998 and its five-year term was to expire on 18.3.2003. On 19.7.2002 on the advice of
the Chief Minister, the Governor of Gujarat dissolved the Legislative Assembly. The
last sitting of the dissolved Legislative Assembly was held on 3rd April 2002.
Immediately after dissolution of the Assembly, the Election Commission of India took
steps for holding fresh elections for constituting the new Legislative Assembly.
However, the Election Commission by its order dated 16th August, 2002 while
acknowledging that Article 174(1) is mandatory and applicable to an Assembly which
is dissolved and further that the elections for constituting new Legislative Assembly
must be held within six months of the last session of the dissolved Assembly, was of
the view that it was not in a position to a conduct elections before 3rd of October,
2002 which was the last date of expiry of six months from last sitting of the dissolved
Legislative Assembly. It is in this context the President of India in exercise of powers
conferred upon him by virtue of Clause (1) of Article 143 of the Constitution of India
referred three questions for the opinion of the Supreme Court by this order dated 19th
August, 2002 which run as under…
• the first question that arises for consideration is whether Article 174(1) is applicable
to a dissolved Assembly?... A plain reading of Article 174 shows that it stipulates that
six months shall not intervene between the last sitting in one session and the date
appointed for its first sitting in the next session. It does not provide for any period of
limitation for holding fresh election in the event a Legislative Assembly is
prematurely dissolved. It is true that after commencement of the Constitution, the
practice has been that whenever either Parliament or Legislative Assembly were
prematurely dissolved, the election for constituting fresh Assembly or Parliament, as
the case may be, were held within six months from the date of the last sitting of the
dissolved Parliament or Assembly…Article 174 deals with a live legislature. The
purpose and object of the said provision is to ensure that an existing legislature meets
at least every six months, as it is only an existing legislature that can be prorogued or
dissolved.
• Holding:-
• Article 174(1) of the Constitution relates to an existing, live and functional
Legislative Assembly and not to a dissolved Assembly.
• The provision in Article 174(1) that six months shall not intervene between its last
sitting in one session and the date appointed for its sitting in the next session is
mandatory and relates to the frequencies of the sessions of a live and existing
Legislative Assembly and does not provide for any period of limitation for holding
fresh elections for constituting Legislative Assembly on premature dissolution of the
Assembly.
• The expressions "the House", "either House” is synonymous with Legislative
Assembly or Legislative Council and they do not refer to different bodies other than
the Legislative Assembly or the Legislative Council, as the case may be.

18
 • Neither under the Constitution nor under the Representation of the People Act, any
period of limitation has been prescribed for holding election for constituting
Legislative Assembly after premature dissolution of the existing one. However, in
view of the scheme of the Constitution and the Representation of the People Act, the
elections should be held within six months for constituting Legislative Assembly from
the date of dissolution of the Legislative Assembly.
• Under the Constitution, the power to frame the calendar or schedule for elections for
constituting Legislative Assembly is within the exclusive domain of the Election
Commission and such a power is not subject to any law either made by Parliament or
State Legislature.

Ordinances

D.C. Wadhwa v. State of Bihar

• These writ petitions have been filed by four petitioners challenging the practice of the
State of Bihar in promulgating and repromulgating ordinances on a massive scale and
in particular they have challenged the constitutional validity of three different
ordinances issued by the Governor of Bihar, namely, (r) Bihar Forest Produce
(Regulation of Trade) Third Ordinance, 1983, (ii) The Bihar Intermediate Education
Council Third Ordinance, 1983, and (iii) The Bihar Bricks Supply (Control) Third
Ordinance, 1983
• Question is, can the Governor go on re-promulgating ordinances for an indefinite
period of time and thus take over to himself the power of the Legislature to legislate
though that power is conferred on him under Article 213 only for the purpose of
enabling him to take immediate action at a time when the legislative assembly of the
State is not in session or when in a case where there is a legislative council in the
State, both Houses of Legislature are not in session
• The object of this provision is that since the power conferred on the Governor to issue
Ordinances is an emergent power exercisable when the Legislature is not in Session,
an Ordinance promulgated by the Governor to deal with a situation which requires
immediate action and which cannot wait until the legislature reassembles, must
necessarily have a limited life. Since Article 174 enjoins that the Legislature shall
meet at least twice in a year but six months shall not intervene between its last
sitting in one session and the date appointed for its first sitting in the next Session and
an Ordinance made by the Governor must cease to operate at the expiration of six
weeks from the reassembly of the Legislature, it is obvious that the maximum life of
an Ordinance cannot exceed seven and a half months unless it is replaced by an Act of
the Legislature or disapproved by the resolution of the Legislature before the expiry
of that period. The power to promulgate an Ordinance is essentially a power to be
used to meet an extra-ordinary situation and it cannot be allowed to be perverted to
serve political ends.
• The law-making function is entrusted by the Constitution to the Legislature consisting
of the representatives of the people and if the Executive were permitted to continue

19
 the provisions of an Ordinance in force by adopting the methodology of
repromulgation without submitting to the voice of the Legislature, it would be nothing
short of usurpation by the Executive of the law- making function of the Legislature.
The Executive cannot by taking resort to an emergency power exercisable by it only
when the Legislature is not in Session, take over the law- making function of the
Legislature. That would be clearly subverting the democratic process which lies
at the core of our constitutional scheme…The Government cannot by-pass the
Legislature and without enacting the provisions of the Ordinance into an Act of the
Legislature, repromulgate the Ordinance as soon as the Legislature is prorogued.
• Of course, there may be a situation where it may not be possible for the Government
to introduce and push through in the Legislature a Bill containing the same provisions
as in the Ordinance, because the Legislature may have too much legislative business
in a particular Session or the time at the disposal of the Legislature in a particular
Session may be short, and in that event, the Governor may legitimately find that it is
necessary to repromulgate the Ordinance. Where such is the case, re-promulgation of
the Ordinance may not be open to attack. But otherwise, it would be a colourable
exercise of power on the part of the Executive to continue an Ordinance with
substantially the same provisions beyond the period limited by the Constitution, by
adopting the methodology of repromulgation…We must accordingly strike down the
Bihar Intermediate Education Council Ordinance, 1983 which is still in opera- tion
as unconstitutional and void.

AK Roy v. Union of India

• CHANDRACHUD, C.J. This is a group of Writ Petitions under Article 32 of the
Constitution challenging the validity of the National Security ordinance, 2 of 1980,
and certain provisions of the National Security Act, 65 of 1980, which replaced the
ordinance. Writ Petition No. 5724 of 1980 is by Shri A. K. Roy, a Marxist member of
the Parliament, who was detained under the ordinance by an order passed by the
District Magistrate, Dhanbad, on the ground that he was indulging in activities which
were prejudicial to public order. Ten members of the Parliament, one an Independent
and the others belonging to various political parties in opposition applied for
permission to intervene in the Writ Petition on the ground that since the ordinance-
making power of the President is destructive of the system of Parliamentary
democracy, it is necessary to define the scope of that power. We allowed the
intervention…The National Security ordinance, 1980, was passed in order “to provide
for preventive detention in certain cases end for matters connected therewith”…The
Parliament was not in session when it was promulgated and its preamble recites
that it was being issued because the “President is satisfied that circumstances exist
which render it necessary for him to take immediate action”
• …while setting out the petitioner s case, the thrust of his argument is that the power to
issue an ordinance is Dan executive power, not a legislative power, and consequently,
is not law. In view of the clear and specific provisions of the Constitution bearing
upon this question, it is quite impossible to accept this argument. The heading of
Chapter III of Part V is “Legislative Powers of the President”. Clause (2) of Article

20
 123 provides that an ordinance promulgated under Article 123 “shall have the same
force and effect as an Act of Parliament”. The only obligation on the Government is
to lay the ordinance before both Houses of Parliament and the only distinction which
the Constitution makes between a law made by the Parliament and an ordinance
issued by the President is that whereas the life of a law made by the Parliament would
depend upon the terms of that law, an ordinance, by reason of sub clause (a) of clause
(2), ceases to operate at the expiration of six weeks from the reassembly of
Parliament, unless resolutions disapproving it are passed by both Houses before the
expiration of that period.
• It is clear from this provision, if indeed there was any doubt about the true position,
that the Constitution makes no distinction in principle between a law made by the
legislature and an ordinance issued by the President. Both, equally, are products of the
exercise of legislative power and, therefore, both are equally subject to the
limitations which the Constitution has placed upon that power. It may sound strange
at first blush that the executive should possess legislative powers, but a careful look at
our Constitution will show that the scheme adopted by it envisages the exercise of
legislative powers by the executive in stated circumstances. An ordinance can be
issued by the President provided that both Houses of the Parliament are not in session
and the President is satisfied that circumstances exist which render It necessary for
him to take immediate action An ordinance which satisfies these pre-conditions has
the same force and effect as an Act of Parliament.

R.K. Garg. v. Union of India

• These writ petitions raise a common question of law relating to the constitutional
validity of the Special Bearer Bonds (Immunities and Exemptions) Ordinance, 1981
(hereinafter referred to as the Ordinance)…we may now proceed to consider the
challenge against the constitutional validity of the Ordinance on the ground that the
President had no power to issue the Ordinance under Article 123 of the Constitution.
There were two limbs of the argument under this head of challenge; one was that
since the Ordinance had the effect of amending the tax laws, it was outside the
competence of the President under Article 123 and the other was that the subject
matter of the Ordinance was in the nature of a Money Bill which could be introduced
only in the House of the People and passed according to the procedure provided in
Articles 109 and 110 and the President had therefore no power under Article 123 to
issue the Ordinance by-passing the special procedure provided in Articles 109 and
110 for the passing of a Money Bill. There is, as we shall presently point out, no force
in either of these two contentions, but we may point out straightaway that both these
contentions are academic, since the Act has been brought into force with effect from
the date of promulgation of the Ordinance
• It may be noted, and this was pointed out forcibly by Dr. Ambedkar while replying to
the criticism against the introduction of Article 123 in the Constituent Assembly-that
the legislative power conferred on the President under this Article is not a parallel
power of legislation. It is a power exercisable only when both Houses of Parliament
are not in session and it has been conferred ex-necessitate in order to enable the

21
 executive to meet an emergent situation. Moreover, the law made by the President by
issuing an Ordinance is of strictly limited duration. It ceases to operate at the
expiration of six weeks from the reassembly of Parliament or if before the expiration
of this period, resolutions disapproving it are passed by both Houses, upon the passing
of the second of those resolutions. This also affords the clearest indication that the
President is invested with this legislative power only in order to enable the executive
to tide over an emergent situation which may arise whilst the Houses of Parliament
are not in session. Further more, this power to promulgate an Ordinance conferred on
the President is co-extensive with the power of Parliament to make laws and the
President cannot issue an Ordinance which Parliament cannot enact into a law. It will
therefore be seen that legislative power has been conferred on the executive by the
Constitution makers for a necessary purpose and it is hedged in by limitations and
conditions. The conferment of such power may appear to be undemocratic but it is not
so, because the executive is clearly answerable to the legislature and if the President,
on the aid and advice of the executive, promulgates an Ordinance in misuse or abuse
of this power, the legislature cannot only pass a resolution disapproving the
Ordinance but can also pass a vote of no confidence in the executive.
• Now once it is accepted that the President has legislative power under Article 123 to
promulgate an ordinance and this legislative power is co-extensive with the power of
the Parliament to make laws, it is difficult to see how any limitation can be read into
this legislative power of the President so as to make it ineffective to alter or amend tax
laws. If Parliament can by enacting legislation alter or amend tax laws, equally can
the President do so by issuing an Ordinance under Article 123. There have been, in
fact, numerous instances where the President has issued an Ordinance replacing with
retrospective effect a tax law declared void by the High Court or this Court. Even
offences have been created by Ordinance issued by the President under Article 123
and such offences committed during the life of the Ordinance have been held to be
punishable despite the expiry of the Ordinance…

PARLIAMENTARY PRIVILEGES
Parliamentary privileges enable the members to discharge their functions without fear and are
necessary for democratic functioning. Articles 105 and 194 are identical containing the
privileges of Parliament and State legislatures respectively.

Article 105 (1) provides that there shall be freedom of speech in Parliament. This freedom is
however subject to rules regulation the procedure of the House. For instance under Article
121/212 the conduct of a judge of the Supreme Court or High Courts cannot be discussed in
Parliament or State Legislatures. Rules may forbid the use of un-parliamentary language

Article 105(2) provides that no Member of Parliament shall be liable to any proceedings in a
court of law in respect of anything said or any vote given by him in Parliament or any
committee thereof. Thus Article 105(2) provides absolute immunity to MP’s from any
proceedings in a court of law

22
Article 105(3) does not grant any specific privilege. It give to Parliament and State
Legislatures all the privileges enjoyed by British House of Commons as on 26 January 1950.

Article 105(3)/194(3) contain a clear mandate to the legislature to codify the privileges.

The Parliamentary privileges under clause 3 are not codified.

The key question is: does the power of judicial review extend to parliamentary privileges?
Would fundamental rights override the privileges and privileges would be subservient to
fundamental rights?

Article 122(212) of the Constitution reads

(1) The validity of any proceedings in Parliament shall not be called in question on the
ground of any alleged irregularity of procedure
(2) No officer or Member of Parliament in whom powers are vested by or under this
Constitution for regulating procedure or the conduct of business, or for maintaining
order, in Parliament shall be subject to the jurisdiction of any court in respect of the
exercise by him of those powers.

In M S M Sharma v S K Sinha (AIR 1959) SC 393( Searchlight Case)

The Supreme Court held that Parliamentary privileges shall not be subject to Article 19(1)
(a) of the Constitution. In this case the editor of a news letter Searchlight had published a
report of the proceedings of Bihar Legislative Assembly which had been expunged by the
Speaker. The editor was held guilty of contempt of the House. He sought injunction from the
court against the contempt proceedings on the ground of his fundamental right to freedom of
speech under Article 19 (1) (a) of the Constitution.

He argued that the intent of the Constituent Assembly was that the privileges should be
codified eventually. Once codified they would be “law” under Article 13 (2) and therefore
liable to be struck down if they violated any of the fundamental rights. Such a codified law
would be subject to Article 19(1) (a).

He further argued that his right under Article 21 will be violated if he was produced before
the Privileges Committee of the House which could order his imprisonment.

The State Legislature claimed its privilege to prohibit publication of proceedings as at the
commencement of the Constitution the British House of Commons enjoyed the privilege to
prohibit publication of debates and proceedings of the House. The Court accepted the claim
of Bihar Legislature to take action for the breach of this privilege by MSM Sharma

On the question of the argument based on Article 19(1) (a) the Court held that freedom of
speech in legislature contained in Article 194(1) (105(1) being specific as against the general
freedom of speech under Article 19(1)(a), the general restriction that applied by Article 19(2)
would not apply to freedom of speech under Article 194(1). The Supreme Court rejected the
contention based upon Article 19(1) (a) and held that privileges under Article 194(3) would

23
not be subject to Article 19(1) (a) and in case of conflict between Article 19(1)(a) and 194(3)
the latter will prevail.

As regards Article 194(2) the Court held that it was not the intention of framers of the
Constitution to make immunity for speeches given or vote given in legislature subject to
fundamental rights guaranteed under constitution.

As regards the argument based on Article 21 the Court held that in case the Editor was
produced before the Committee of Privileges in the Bihar Legislature the rules framed by the
Assembly under Article 208 would constitute a procedure established by law and there would
be no violation of Article 21

It is important to bear in mind that the Court in this case made no comment on whether
Article 21 would override privileges.

P V Narsimha Rao v State ( 1998) 4 SCC 626

Bribe was given to some MP’s to vote against motion of no-confidence against Prime
Minister P V Narsimha Rao. He was charged under IPC and Prevention of Corruption Act for
entering into a conspiracy and bribing some MP’s to induce them to vote against motion of
no-confidence at a time when he was the PM.

The Court’s majority held that under Article 105(2) the activity of bribe taking by an MP is in
respect of anything said or any vote given by him in Parliament and anything would mean
everything including accepting a bribe and so Rao could not be prosecuted in a court of law.
In case after accepting bribe an MP did not actively cast his vote, he may be prosecuted
because then there would be no nexus between vote and bribe.

This decision has been widely criticized for promoting corruption in political life.

In re Keshava Singh (1965) The UP Assembly Case

In 1964 Keshava Singh a private citizen was found guilty of contempt of UP Assembly as he
had committed a breach of privilege of an M L A N N Pandey by printing and publishing
certain contemptuous pamphlets against Pandey. Keshava Singh was summoned to
Legislative Assembly. Then Keshava Singh wrote a disrespectful letter to the Speaker and
acted in an unruly manner when being reprimanded in the LA. The Speaker issued a warrant
of arrest for the detention of Keshava Singh for 7 days for contempt of the House.

.Keshava Singh moved to the High Court for a writ of Habeas Corpus. A Division Bench of
High Court in Lucknow ordered his release on an interim bail pending the decision on
Habeas Corpus petition.

UP Legislature issued a contempt notice against the 2 judges for having entertained the writ
petition. The House passed a Resolution that the lawyers and the 2 judges be brought before
the House in custody.

The Judges and advocates filed a writ of mandamus before Allahabad High Court A Full
Bench of the High Court consisting 28 Judges (except the 2 judges) made directions

24
restraining the Speaker from issuing warrants and restraining the Marshal of the House from
executing the warrant if it had already been issued.

Taking note of a grave constitutional crisis the President of India sought advisory opinion of
the Supreme Court under Article 143.

A bench of 7 judges delivered their opinion led by Justice Gajendragadkar.

Relying on Searchlight case Chief Justice Gajendragadkar placed a radically different

interpretation of parliamentary privileges, making them generally subject to fundamental
rights and secured to the judiciary power to determine the legality or constitutionality of
legislative privileges on case to case basis.

Broadly speaking the Court laid down the following propositions.

(a) The correct interpretation of Searchlight case would be that while Article 19(1) (a) would
not override privileges. Article 21 may override privileges as in Searchlight case the
Constitution bench did examine argument based on Article 21 on its merits. The Court further
held that the general proposition that privileged would not be subservient to fundamental
rights was incorrect.

(b) Whether a House possesses a particular privilege under 105(3) or 194(3) is for the court to
decide on case to case basis. The Searchlight case did not preclude the application of all
fundamental rights, it precluded the application of Article 19(1) (a) to privileges

(c ) In the matter of privilege the action of Parliament or any of its members is subject to
judicial review on grounds of irrationality, illegality or unconstitutionality

(d) The House of Commons was a Superior Court and general warrants issued by it could not
be reviewed by a court but Indian Parliament or legislatures are not a Court of Law. In India
the courts can examine the legality of general warrant issued by a Legislature. High Court has
power to issue a writ against any “authority” under Article 226 including legislature

(e) Under Article 211 the conduct of a judge can never be subject matter of any action taken
by the House in exercise of powers and privileges. Therefore the action of UP legislature
against the judges was improper.

(f) Article 212 is only concerned with regulation of procedure inside the House and is not a
limitation on the power of the Court. This Article provides for ouster of court’s jurisdiction in
respect of regulation of procedure inside the House.

(g) Article 194(3) refers to future laws defining powers and privileges of the legislature and
such laws will always be subject to fundamental rights under Article 13(2) and the Courts
would be competent to examine the validity of codified privileges.

Keshava Singh marked the beginning in the subservience of privileges to fundamental rights
and the advisory opinion felt itself bound by the ruling of Searchlight case.\

25
The reasoning of Keshava Singh was adopted by a 5 judge bench in Raja Ram Pal

Raja Ram Pal v Speaker Lok Sabha (2007) 3 SCC 184

Aaj Tak a news channel conducted a sting operation “operation Duryodhan” in which 11
MP’s (10 from Lok Sabha and 1 from Rajya Sabha were caught on camera accepting bribes
to ask certain questions in Parliament and thereby misusing their powers for illegal
gratification and money gains. Video was telecast repeatedly leading to an uproar. The
Committee of Privileges of Lok Sabha and Ethics Committee of Rajya Sabha heard the
matter and found all the MP’s guilty and recommended their immediate disqualification. The
recommendations were accepted and all the 11 MP’s were expelled.

The expelled MP’s approached the Supreme Court for relief and challenged their expulsion
as unconstitutional. Sabharwal CJ, K G Balakrishnan, DK Jain and CK Thakkar JJ held that
their expulsion was constitutional but Justice Ravindran gave a dissenting opinion holding
that their expulsion was unconstitutional

Contentions of expelled MP’s

1. Expulsion is a punitive measure. The House of Commons had power to punish for its
contempt in its capacity as High Court of Parliament and since this status was not
accorded to Indian Parliament the power to expel for contempt could not be claimed
by Parliament under Article 105 (3).
2. Article 105(3) could not be the basis of expulsion as it would come in conflict with
other Articles 101 or 102 which deal with disqualification of MP’s.
3. There was a denial of principles of natural justice in inquiry proceedings of
Parliament which cannot be exempted from judicial review
4. Supreme Court is the final arbiter on constitutional issues and can determine the
legality of the action of Parliament. Parliament cannot determine the legality of its
own actions

Speaker of Lok Sabha refused to appear before the Court viewing the matter as a political
question and therefore non-justiciable and Union of India took the stand that action of
expulsion was within the inherent privilege of Parliament over which the courts had no
jurisdiction.

The Supreme Court cited the supremacy of the Constitution and held:

1. The contention of the petitioners that Parliament did not inherit the power of
expulsion rejected as in UP Assembly case (1965) where the Court had held that
British Parliament was sovereign but in India sovereignty was distributed in a federal
structure. Hence British Constitution could not be compared with Indian Constitution.
Parliament in India possesses the power to expel its members.
2. Provisions dealing with Disqualification did not clash with a power to expel under
Article 105(3). Articles 101(dealing with vacancies) and 102 (disqualification of
members) served a different purpose. While disqualification operates to prevent a

26
 candidate from re-election, expulsion occurs after the election of the member and
there is no bar on re-election.
3. Power of contempt is remedial and not punitive. Parliament cannot be denied power
to expel a member for contempt of the House under Article 105(3). This power was
available to House of Commons as on 26.01.1950
4. Parliament is a co-ordinate organ and Supreme Court has power of judicial review
under Article 13(2) which would extend to privileges on case to case basis.
5. The Court gave wide interpretation to Article 122 (212) and held that while Article
122 precluded an inquiry into the proceedings of Parliament on ground of
PROCEDURAL IRREGULARITY, this provision did not oust judicial review if the
proceedings of Parliament were tainted on account of SUBSTANTIVE OR GROSS
ILLEGALITY OR UNCONSTITUTIONALITY. An illegal or unconstitutional
procedure could be a subject of judicial review. Article 122 was intended to prohibit
cases of internal parliamentary proceedings on the ground of mere procedural
irregularity.
6. The Court’s majority held that privileges of parliament may be subject to fundamental
rights on case to case basis. For this holding the Court drew support from Keshava
Singh case.

7. The Court rejected the doctrine of Exclusive Cognisance. The English doctrine of
Exclusive Cognisance stipulates that Parliament has the exclusive power to deal with
breach of privileges and the court have no jurisdiction to entertain a matter arising out
of breach of privileges. This doctrine has been displaced in India by Articles 122/212.

CONCLUSION

The Supreme Court’s judgment in Raja Ram Pal prohibits judicial interference with
respect to internal parliamentary proceedings on the ground of procedural irregularity.
The Court gave a wide interpretation of Article 122 by holding that this provision did
not preclude judicial review if the procedure was illegal or unconstitutional.
The strongest implication of Raja Ram Pal is that the court will now be able to
exercise scrutiny over non-legislative proceedings, not just those proceedings dealing
with parliamentary expulsions. Any proceeding which is tainted with gross illegality
or substantive illegality will be subject to judicial review. Raja Ram Pal opens
floodgates to challenge parliamentary proceedings. This judgment makes
parliamentary privileges subservient to fundamental rights on case to case basis and
heavily relies on Keshava Singh opinion for its conclusion.

Distribution of Legislative Powers

Distribution of Legislative Powers

 Article 245:Territoriality Clause

 Article 246: Subject Matter of Laws made by Parliament and State Legislatures

27
State Of Bihar & Others v. Sm. Charusila Dasi
Bihar Hindu Religious Trusts Act, 1950

Section 3 of the Act says- "This Act shall apply to all religious trusts, whether created before
or after the commencement of this Act, any part of the property of which is situated in the
State of Bihar ". The argument before us on behalf of the respondent is this. Under Art. 245
of the Constitution, Parliament may make laws for the whole or any part of the territory of
India and the legislature of a State may make laws for the whole or any part of the State.
Clause (2) of the said Article further states that no law made by Parliament shall be deemed
to be invalid on the ground that it would have extra-territorial operation. Article 246 gives the
distribution of legislative power; Parliament has exclusive power to make laws with respect
to any of the matters enumerated in what has been called the Union List; Parliament as also
the legislature of a State have power to make laws with respect to any of the matters
enumerated in the Concurrent List; the legislature of a State has exclusive power to make
laws for such State or any part thereof with respect to any of the matters enumerated in the
State List. Item 28 of the Concurrent List is “charities and charitable institutions, charitable
and religious endowments and religious institutions ".

Learned counsel for the respondent contends that by reason of the provisions in
Arts. 245 and 246 of the Constitution read with item 28 of the Concurrent List, the Bihar
legislature which passed the Act had no power to make a law which has operation outside the
State of Bihar; he further contends that under s. 3 the Act is made applicable to all religious
trusts, whether created before or after the commencement of the Act, any part of the property
of which is situated in the State of Bihar; therefore, the Act will apply to a religious
institution which is outside Bihar even though a small part of its property may lie in that
State. It is contended that such a provision is ultra vires the power of the Bihar Legislature,
and Parliament alone can make a law which will apply to religious institutions having
properties in different States. Alternatively, it is contended that even if the Act applies to a
religious institution in Bihar, the provisions of the Act can have no application to such
property of the institution as is outside Bihar…

 “An Interpretation as will make it operative and not in-operative”

It is necessary first to determine the extent of the application of the Act with reference to ss. 1
(2) and 3 of the Act read with the preamble. The preamble states:- " Whereas it is expedient
to provide for the better administration of Hindu religious trusts in the State of Bihar and for
the protection and preservation of properties appertaining to such trusts.” It is clear from the
preamble that the Act is intended to provide for the better administration of Hindu religious
trusts in the State of Bihar. Section 1 (2) states that the Act extends to the whole of the State
of Bihar, and s. 3 we have quoted earlier. If these two provisions are read in the context of the
preamble, they can only mean that the Act applies in cases in which (a) the religious trust or
institution is in Bihar and (b) any part of the property of which institution is situated in the
State of Bihar. In other words, the aforesaid two conditions must be fulfilled for the
application of the Act. It is now well settled that there is a general presumption that the
legislature does not intend to exceed its jurisdiction, and it is a sound principle of

28
construction that the Act of a sovereign legislature should, if possible, receive such an
interpretation as will make it operative and not in-operative…We accordingly hold that s. 3
makes the Act applicable to all public religious trusts, that is to say, all public religious and
charitable institutions within the meaning of the definition clause in s. 2 (1) of the Act,
which are situated in the State of Bihar and any part of the property of which is in that State.

 No Question of Extra-Territorial Operation

Undoubtedly, the Bihar Legislature has power to legislate in respect of, to use the
phraseology of item 28 of the Concurrent List, " charities, charitable institutions, charitable
and religious endowments and religious institutions " situate in the State of Bihar. The
question, therefore, narrows down to, this: in so legislating,, has it power to affect trust
property which may be outside Bihar but which appertains to the trust situated in Bihar ? In
our opinion, the answer to the question must be in the affirmative. It is to be remembered that
with regard, to an interest under a trust the beneficiaries' only right is to have the trust duly
administered according to its terms and this right can normally be enforced only at the place
where the trust or religious institution is situated or at the trustees' place of residence. The Act
purports to do nothing more. Its aim., as recited in the preamble, is to provide for the
better administration of Hindu religious trusts in the State of Bihar and for the protection of
properties appertaining thereto. This aim is sought to be achieved by exercising control over
the trustees in personam. The trust being situate in Bihar the State has legislative power over
it and also over its trustees or their servants and agents who must be in Bihar to administer,
the trust. Therefore, there is really no question of the Act having extraterritorial operation.

 Sufficiency of the Territorial Connection

A deed of trust was executed by the respondent on March II, 1938, when she was residing at
D in the State of Bihar, in respect of the properties described in the Schedules referred to
in the deed, some of which were situated outside the State of Bihar…(the fact) that the
temples where the deities are installed are situated in Bihar, that the hospital and charitable
dispensary are to be established in Bihar for the benefit of the Hindu public in Bihar gives
enough territorial connection to enable the legislature of Bihar to make a law with respect to
such a trust… in the Tata Iron & Steel Co.'s case…it was pointed out that sufficiency of the
territorial connection involved a consideration of two elements, namely, (a) the connection
must be real and not illusory and (b) the liability sought to be imposed must be pertinent to
that connection. It cannot be disputed that if the religious endowment is itself situated in
Bihar and the trustees function there, the connection between the religious institution and the
property appertaining thereto is real and not illusory ; indeed, the religious institution and the
property appertaining thereto form one integrated whole and one cannot be dissociated from
the other.

 Judgment

We do not see any reason why the principleswhich were followed in The State of Bombay v.
R. M. D. Chamarbaugwala should not be followed in the present case. In R. M. D.
Chamarbaugwala's case it was found that the respondent who was the organiser of a prize

29
competition was outside the State of Bombay; the paper through which the prize competition
was conducted was printed and published outside the State of Bombay, but it had a wide
circulation in the State of Bombay and it was found that " all the activities which the gambler
is ordinarily expected to undertake“ took place mostly, if not entirely, in the State of Bombay.
These circumstances, it was held, constituted a sufficient territorial nexus which entitled the
State of Bombay to impose a tax on the gambling that took place within its boundaries and
the law could not be struck down on the ground of extra-territoriality. We are of the opinion
that the same principles apply in the present case and the religious endowment itself being in
Bihar and the trustees functioning there, the Act applies and the provisions of the Act cannot
be struck down on the ground of extra- territoriality.

State Of A.P vs National Thermal Power Corpn

The High Court of Andhra Pradesh at Hyderabad has, by its impugned judgment dated April
11, 1990, allowed the writ petition filed by the respondent National Thermal Power
Corporation Ltd. (hereinafter 'NTPCL', for short) and declared that the levy of duty by the
State of Andhra Pradesh on the sales of electrical energy generated by the Corporation-
respondent No.1 at its thermal power station set up at Ramagundam, within the State of
Andhra Pradesh, and sold to the Electricity Boards of Karnataka, Kerala, Tamil Nadu and the
State of Goa in pursuance of contracts of sales occasioning inter-State movement of
electricity is incompetent and outside the power of State Legislature. Consequently, the tax
levied and collected has also been held to be without authority of law, hence liable to be
refunded in accordance with law. On a prayer made by the learned Advocate General on
behalf of the State of Andhra Pradesh, the High Court certified that the case involves a
substantial question of law as to the interpretation of Constitution under Article 132. The
appeal has been filed pursuant to the certificate so granted by the High Court. On
4.10.1991, a bench of two learned Judges directed the appeal to be placed for hearing before
a Constitution Bench, as required by Clause (3) of Article 145 of the Constitution.

 Inter-State Sale or Intra-State Sale

Andhra Pradesh Electricity Duty Act, 1939 provides for levy of duty on certain sales and
consumption of electricity by licensees in the State of Andhra Pradesh. The definition of the
term 'licensee' specifically includes the National Thermal Power Corporation (respondent
No.1) or any other Corporation engaged in the business of supplying energy. Section 3 of the
Act is the charging section…the limited question arising for our consideration is __ whether
sales of energy by NTPCL, the respondent No.1, to several Electricity Boards situated outside
the State of Andhra Pradesh and to the State of Goa, attract the incidence of taxation under
Section 3 of the Act…The controversy centres mainly around the question as to under which
entry Andhra Pradesh Electricity Duty Act, 1939 is covered and whether the sales of
electricity by NTPCL, the respondent No.1, to the Electricity Boards situated outside the
State of Andhra Pradesh and to the State of Goa, can be construed as inter-State sale or intra-
State sale.

 Section 3 of Central Sales Tax Act

30
When is a sale or purchase of goods said to take place in the course of inter-State trade
or commerce.—A sale or purchase of goods shall be deemed to take place in the course
of inter-State trade or commerce if the sale or purchase—

(a) occasions the movement of goods from one State to another; or

(b) is effected by a transfer of documents of title to the goods during their movement
from one State to another. Explanation 1.—Where goods are delivered to a carrier or
other bailee for transmission, the movement of the goods shall, for the purposes of
clause (b), be deemed to commence at the time of such delivery and terminate at the
time when delivery is taken from such carrier or bailee. Explanation 2.—Where the
movement of goods commences and terminates in the same State it shall not be deemed
to be a movement of goods from one State to another by reason merely of the fact that
in the course of such movement the goods pass through the territory of any other State.

 Creating A Fiction

Generally speaking, a legislation having extra territorial operation can be enacted only by
Parliament and not by any State Legislature; possibly the only exception being one where
extra territorial operation of a State legislation is sustainable on the ground of territorial
nexus. Such territorial nexus, when pleaded, must be sufficient and real and not illusory. In
Burmah Shell Oil Storage & Distributing Co.India Ltd.(supra), which we have noticed, it was
held that sale for use or consumption would mean the goods being brought inside the area for
sale to an ultimate consumer, i.e. the one who consumes. In Entry 53, 'sale for consumption'
(the meaning which we have placed on the word 'sale') would mean a sale for consumption
within the State so as to bring a State Legislation within the field of Entry 53. If sale and
consumption were to take place in different States, territorial nexus for the State, where the
sale takes place, would be lost. We have already noticed that in case of electricity the events
of sale and consumption are inseparable. Any State legislation levying duty on sale of
electricity, by artificially or fictionally assuming that the events of sale and consumption have
taken place in two States, would be vitiated because of extra territorial operation of State
legislation.

 Judgment: Cannot tax an Inter-State Sale by Creating a Fictional Territorial

Nexus

In 20th Century Finance Corporation's case…The, majority has clearly opined that the State
where the goods are delivered in the transaction of inter-State sale, cannot levy a tax on the
basis that one of the events in the chain has taken place within the State; so also where the
goods are in existence and available for the transfer of right to use, there also that State
cannot exercise power to tax merely because the goods are located in that State…However,
we are dealing with the case of electricity as goods, the property whereof, as we have already
noted, is that the production (generation), transmission, delivery and consumption are
simultaneous, almost instantaneous. Electricity as goods comes into existence and is
consumed simultaneously; the event of sale in the sense of transferring property in the goods
merely intervenes as a step between generation and consumption. In such a case when the

31
generation takes place in one State wherefrom it is supplied and it is received in another State
where it is consumed, the entire transaction is one and can be nothing else excepting an inter-
State sale on account of instantaneous movement of goods from one State to another
occasioned by the sale or purchase of goods…Though it may be permissible to fix the situs of
sale either by appropriate State legislation or by Judge made law as held by the majority
opinion in 20th Century Finance Corporation case, we would like to clarify that none of the
two can artificially appoint a situs of sale so as to create territorial nexus attracting
applicability of tax legislation enacted by any State Legislature and tax an inter-State sale in
breach of Section 3 of the CST Act.

Plenary and Ancillary Powers of Legislation

In 1957, the U. P. Legislature passed the U. P. Large Land Holdings Tax Act …Entry 49 in
List II of the 7th Schedule of the Constitution. This Entry relates to taxes to lands and
buildings. The argument is that 'Lands' in the context does not include agricultural lands and
so, the U. P. Legislature was not competent to levy the tax. In considering the merits of this
argument, it is necessary to bear in mind that we are interpreting the words used in the
Constitution and it is an elementary cardinal rule of interpretation that the words used in the
Constitution which confer legislative power. must receive the most liberal construction and if
they are words of wide amplitude, they must be interpreted so as to give effect to that
amplitude. It would be out of place to put a narrow or restricted construction on words of
wide amplitude in a Constitution. A general word used in an entry like the present one must
be construed to extend to all ancillary or subsidiary matters which can fairly and reasonably
be held to be included in it…It is, however, urged that since Entry 46 in list II refers to taxes
on agricultural income, it follows that agricultural income is not included in Entry 49… But it
must be remembered that both Entries 46 and 49 are in List II and it would make no
difference whether the State legislation imposing taxes on agricultural income is sustained by
reference to Entry 46 rather than by reference to Entry 49.- Per Gajendragadkar J in
Jagnnath Baksh Singh

Doctrine of Harmonious Construction:Gujarat University v. Madholkar

Shrikant son of Shri Krishna Madholkar appeared for the Secondary School Certificate
examination held by the State of Bombay in March, 1960, and was declared successful. He
took instruction in the various subjects prescribed for the examination through the medium of
Marathi (which is his mother-tongue) and answered the questions at the examination also
in the medium of Marathi. Shrikant joined the St. Xavier's College affiliated to the University
of Gujarat, in the First Year Arts class and was admitted in the section in which instructions
were imparted through the medium of English. After successfully completing the First Year
Arts course in March, 1961, Shrikant applied for admission to the classes preparing for the
Intermediate Arts examination of the University through the medium of English. The
Principal of the College informed Shrikant that in view of the provisions of the Gujarat
University Act, 1949, and the Statutes 207, 208 and 209 framed by the Senate of the
University, as amended in 1961 he could not without the sanction of the University permit
him to attend classes in which instructions were imparted through the medium of English.
Shri Krishna, father of Shrikant then moved the Vice-Chancellor of the University for

32
sanction to permit Shrikant to attend the "English medium classes" in the St. Xavier's
College. The Registrar of the University declined to grant the request, but by another letter
Shrikant was "'allowed to keep English as a medium of examination“ but not for instruction.

 Legislation in Question

St. Xavier's College was affiliated to the University of Bombay under Bombay Act 4 of 1928.
The Legislature of the Province of Bombay enacted the Gujarat University Act, 1949…By
s. 5(3) of the Act, from the prescribed date all educational institutions admitted to the
privileges of the University of Bombay and situate within the University area of Gujarat were
deemed to be admitted to the privileges of the University of Gujarat…Section 4 of the Act
enacted a provision which is not normally found in similar Acts constituting Universities. By
that. section various powers of the University were enumerated. These powers were made
exercisable by diverse authorities of the University set out in s. 15. We are concerned in these
appeals with the Senate, the Syndicate and the Academic Council…In 1954, the Gujarat
University framed certain Regulations dealing with the media of instruction…After the
constitution of a separate State of' Gujarat, Act 4 of 1961 was enacted by the Gujarat State
Legislature.

 Two Crucial Questions for Determination

A petition was then filed by Shri Krishna Madholkar on behalf of himself and his minor son
Shrikant in the High Court of Gujarat for a writ or order in the nature of Mandamus or other
writ, direction or order requiring the University of Gujarat to treat ss. 4(27), 18 (i) (xiv) and
38A of the Gujarat University Act, 1949 (as amended in 1961), and Statutes 207, 208 and
209 as void and inoperative…The High Court of Gujarat by order dated January 24, 1962,
issued the writs prayed for. The University and the State of Gujarat have separately appealed
to this Court with certificates of fitness granted by the High Court. Two substantial questions
survive for determination-(1) whether under the Gujarat University Act, 1949, it is open to
the University to prescribe Gujarati or Hindi or both as an exclusive medium or media of
instruction and examination in the affiliated colleges, and (2) whether legislation authorising
the University to impose such media would infringe Entry 66 of List I, Seventh Schedule to
the Constitution.

 Judgment on Question (i)

Therefore, neither under the Act as originally framed nor under the Act as amended by Act 4
of 1961 was there any power conferred on the University to impose Gujarati or Hindi or both
as exclusive medium or media of instruction and examination and if no such power was
conferred upon the University, the Senate could not exercise such a power. The Senate is a
body acting on behalf of the University and its powers to enact Statutes must lie within the
contour of the powers of the University conferred by the Act. On the view we have
expressed, consideration of the question whether the State Government is competent to enact
laws imposing Gujarati or Hindi or both as an exclusive medium or media of instruction in
the Universities, may appear academic, But we have thought it necessary to consider the
question because the High Court has declared certain provisions of Act 4 of 1961 relating to

33
medium of instruction as ultra vires the State Legislature and on the question which was
argued at considerable length we were invited by counsel for the appellants to express our
view for their guidance in any future legislation which may be undertaken.

 Question (ii)

By the Constitution a vital change has been made in the pattern of distribution of legislative
powers relating to education between the Union Parliament and the State Legislatures. By
item No. 11 of List II (Deleted by the 42nd Amendment) of the Seventh Schedule to the
Constitution, the State Legislature has power to legislate in respect of "'education including
Universities subject to the provisions of items 63, 64, 65 and 66 of List I and 25 of List
III“…(Item 63) Power to enact legislation with respect to the institutions known at the
commencement of the Constitution as the Benaras Hindu University, the Aligarh Muslim
University and the Delhi University and other institutions declared by Parliament by laws to
be an institution of national importance is thereby granted exclusively to Parliament. Item 64
invests the Parliament with power to legislate in respect of "'institutions for scientific or
technical education financed by the Government of India wholly or in part and declared by
Parliament, by law, to be institutions of national importance". Item 65 vests in the Parliament
power to legislate for "Union agencies and institutions for (a) professional, vocational or
technical training, including the training of police officers; or (b) the promotion of special
studies or research; or (c) scientific or technical assistance in the investigation or detection of
crime". By item 66 power is entrusted to Parliament to legislate on "co-ordination and
determination of standards in institutions for higher education or research and scientific and
technical institutions".

 “Subject to”

Item 25 of the Concurrent List confers power upon the Union Parliament and the State
Legislatures to enact legislation with respect to "vocational and technical training of labour".
It is manifest that the extensive power vested in the Provincial Legislature to legislate with
respect to higher, scientific and technical education and vocational and technical training of
labour, under the Government of India Act is under the Constitution controlled by the five
items in List I and List III mentioned in item 11 of List II. Item 63 to 66 of List I are carved
out of the subject of education and in respect of these items the power to legislate is
vested exclusively in the Parliament. Use of the expression "subject to" in item 11 of List
II of the Seventh Schedule clearly indicates that legislation in respect of excluded
matters cannot be undertaken by the State... this Court in considering the import of the
expression "subject to" used in an entry in List II, in relation to an entry in List I observed
that to the extent of the restriction imposed by the use of the expression ""subject to"
in an entry in List II, the power is taken away from the State Legislature. Power of the State
to legislate in respect of education including Universities must to the extent to which it is
entrusted to the Union Parliament, whether such power is exercised or not, be deemed to be
restricted. If a subject of legislation is covered by items 63 to 66 even if it otherwise falls
within the larger field of "education including Universities" power to legislate on that subject
must lie with the Parliament.

34
  “Harmoniously Construed”

Item 11 of List II and item 66 of List I must be harmoniously construed. The two entries
undoubtedly overlap: but to the extent of overlapping, the power conferred by item 66 List I
must prevail over the power of the State under item 11 of List II. It is manifest that the
excluded heads deal primarily with education in institutions of national or special importance
and institutions of higher education including research, sciences, technology and vocational
training of labour. The power to legislate in respect of primary or secondary education is
exclusively vested in the States by item No. 11 of List II, and power to legislate on medium
of instruction in institutions of primary or secondary education must therefore rest with the
State Legislatures. Power to legislate in respect of medium of instruction is, however, not a
distinct legislative head; it resides with the State Legislatures in which the power to legislate
on education. is- vested, unless it is taken away by necessary intendment to the contrary.
Under items 63 to 65 the power to legislate in respect of medium of instruction having regard
to the width of those items, must be deemed to vest in the Union. Power to legislate in respect
of medium of instruction, in so far it has a direct bearing and impact upon the legislative head
of co-ordination and determination of' standards in institutions of higher education or
research and scientific and technical institutions, must also be deemed by item 66 List I to be
vested in the Union.

 A Degree of Overlapping is Inevitable

The State has the power to prescribe the syllabi and courses of study in the institutions named
in Entry 66 (but not falling within entries 63 to 65) and as an incident thereof it has the power
to indicate the medium in which instruction should be imparted. But the Union Parliament
has an overriding legislative power to ensure that the syllabi and courses of study prescribed
and the medium selected do not impair standards of education or render the co-ordination of
such standards either on an All India or other basis impossible or even difficult. Thus, though
the powers of the Union and of the State are in the Exclusive Lists, a degree of overlapping is
inevitable…It does not, however, follow that even within the permitted relative fields there
might not be legislative provisions in enactments made each in pursuance of separate
exclusive and distinct powers which may conflict. Then would arise the question of
repugnancy and paramountcy which may have to be resolved on the application of the
"doctrine of pith and substance" of the impugned enactment. The validity of the State
legislation on University education and as regards the education in technical and scientific
institutions not falling within Entry 64 of List I would have to be judged having regard to
whether it impinges on the field reserved for the Union under Entry 66. In other
words, the validity of State legislation would depend upon whether it prejudicially affects
co-ordination and determination of standards, but not upon the existence of some definite
Union legislation directed to achieve that purpose. If there be Union legislation in respect of
co-ordination and determination of standards, that would have paramountcy over the State
law by virtue of the first part of Art. 254(1) ; even if that power be not exercised by the
Union Parliament the relevant legislative entries being in the exclusive lists, a State law
trenching upon the Union field would still be invalid.

35
  Judgment

It is true that "medium of instruction" is not an item in the legislative list. It falls
within item No. 11 as a necessary incident of the power to legislate on education : it
also falls within items 63 to 66. In so far as it is a necessary incident of the powers under item
66 List I it must be deemed to be included in that item and therefore excluded from item 11
List II. How far State legislation relating to medium of instruction in institutions has impact
upon co-ordination of higher education is a matter which is not susceptible, in the absence of
any concrete challenge to a specific statute, of a categorical answer…We are unable,
however, to agree with the High Court that Act 4 of 1961 in so far as it amended the
proviso to s. 4(27) is invalid, because it is beyond the competence of the State Legislature.

 Contd.

By the amendment of the proviso to s. 4 (27), the Legislature purported to continue the use of
English as the medium of instruction in subjects selected by the Senate beyond a period of ten
years prescribed by the Gujarat University Act, 1949. Before the date on which the parent
Act was enacted, English was the traditional medium of instruction in respect of all subjects
at the University level. By enacting the proviso as it originally stood, the University was
authorised to continue the use of English as an exclusive medium of instruction in respect of
certain subjects to be selected by the Senate. By the amendment it is common ground that no
power to provide an exclusive medium other than the pre-existing medium is granted.
Manifestly, imparting instruction through a common medium, which was before the Act the
only medium of instruction all over the Country, cannot by itself result in lowering standards
and coordination and determination of standards cannot be affected thereby. By extending the
provisions relating to imparting of instruction for a period longer than ten years through the
medium of English in the, subjects selected by the University, no attempt was made to
encroach upon the powers of the Union under item No. 66 List I.

Doctrine of Colourable Legislation

It is only when a legislature which has no power to legislate frames a legislation so
camouflaging it as to appear to be within its competence when it knows it is not, it can be
said that the legislation so enacted is colourable legislation. In K.C. Gajapati Narayan Deo
v. State of Orissa, Mukherjea, J., who spoke for the Court observed as under: "It may be
made clear at the outset that the doctrine of colourable legislation does not involve any
question of bona fides or mala fides on the part of the legislature. The whole doctrine
resolves itself into the question of competency of a particular legislature to enact a particular
law. If the legislature is competent to pass a particular law, the motives which impelled it to
act are really irrelevant. On the other hand, if the legislature lacks competency, the
question of motive does not arise at all. Whether a statute is constitutional or not is thus
always a question of power."

Thus the whole doctrine resolves itself into a question of competency of the concerned
legislature to enact the impugned legislation. If the legislature has transgressed the limits

36
of its powers and if such transgression is indirect, covert or disguised, such a legislation
is described as colourable in legal parlance. - Ashok Kumar v. Union of India

Doctrine of Pith and Substance

It must inevitably happen from time to time that legislation though purporting to deal with a
subject in one list, touches also upon a subject in another list, and the different provisions of
the enactment may be so closely intertwined that blind observance 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. Hence the rule
which has been evolved by the Judicial Committee, whereby the impugned statute is
examined to ascertain its pith and substance or its "true nature and character," for the purpose
of determining whether it is legislation with respect to matters in this list or in that.- Sir
Maurice Gwyer C.J. in Subramanyan Chettiar's case

 “Priority in what respect?”

…the question must be asked what in pith and substance is the effect of the enactment of
which complaint is made and in what list is its true nature and character to be found. If these
questions could not be asked, much beneficent legislation would be stifled at birth, and many
of the subjects entrusted to Provincial Legislation could never effectively be dealt with…No
doubt where they come in conflict List I has priority over Lists III and II and List III has
priority over List II, but, the question still remains, priority in what respect? Does the priority
of the Federal Legislature prevent the Provincial Legislature from dealing with any matter
which may incidentally affect any item in its list or in each case has one to consider what the
substance of an Act is and, whatever its ancillary effect, attribute it to the appropriate list
according to its true character? In their Lordships' opinion the latter is the true view.- Per
Lord Porter in Prafulla Kumar Mukherjee vs The Bank Of Commerce

State Of Rajasthan vs Shri G. Chawla And Dr. Pohumal

This appeal was preferred by the State of Ajmer, but after reorganisation the b of States,
the State of Rajasthan stands substituted for the former State. It was filed against the decision
of the Judicial Commissioner of Ajmer, who certified the case as fit for appeal to this Court
under Art. 132 of the Constitution. The Ajmer Legislative Assembly enacted the Ajmer
(Sound Amplifiers Control) Act, 1952, (hereinafter called the Act) which received the assent
of the President on March 9, 1953. This Act was successfully impugned by the respondents
before the learned Judicial Commissioner, who held that it was in excess of the powers
conferred on the State Legislature under s. 21 of the Government of Part C States Act, 1951
and, therefore, ultra vires the State Legislature. The respondents (who were absent at the
hearing) were prosecuted under S. 3 of the Act for breach of the first two conditions of the
permit granted to the first respondent, to use sound amplifiers on May 15 and 16, 1954. These
amplifiers, it was alleged against them, were so tuned as to be audible beyond 30 yards
(condition No. 1) and were placed at a height of more than 6 feet from the ground (condition
No. 2). The second respondent was at the time of the breach, operating the sound amplifiers
for the Sammelan, for which permission was obtained.

37
  Rival Entries

…the Judicial Commissioner of Ajmer held that the pith and substance of the Act fell within
Entry No. 31 of the Union List and not within Entry No. 6 of the State List, as was claimed
by the State…

Entry No. 31 of The Union List: Post and Telegraphs; Telephones, wireless, broadcasting
and other like forms of communication.

Entry No. 6 of The State List: Public health and sanitation; hospitals and dispensaries.

The attention of the learned Judicial Commissioner was apparently not drawn to Entry No. 1
of the State List, which is to the following effect: Public order(but not including the use of
naval, military or air forces of the Union in aid of civil power.)

 Not Allowed

 Judgment

There can be little doubt that the growing nuisance of blaring loud-speakers powered by
amplifiers of great output needed control, and the short question is whether this salutary
measure can be said to fall within one or more of the Entries in the State List. It must be
admitted that amplifiers are instruments of broadcasting and even of communication, and
in that view of the matter, they fall within Entry 31 of the Union List. The manufacture, or
the licensing of amplifiers or the control of their ownership or possession, including the
regulating of the trade in such apparatus is one matter, but the control of the 'use' of such
apparatus though legitimately owned and possessed, to the detriment of tranquility, health
and comfort of others is quite another. It cannot be said that public health does not demand
control of the use of such apparatus by day or by night, or in the vicinity of hospitals or
schools, or offices or habited localities.

 Unfolding the Pith and Substance

The pith and substance of the impugned Act is the control of the use of amplifiers in the
interests of health and also tranquility, and thus falls substantially (if not wholly) within the
powers conferred to preserve, regulate and promote them and does not so fall within the
Entry in the Union List, even though the amplifier, the use of which is regulated and
controlled is an apparatus for broadcasting or communication. As Latham, C. J., pointed
out in Bank of New South Wales v. The Commonwealth (1): “ A power to make laws 'with
respect to' a subject matter is a power to make laws which in reality and substance are laws
upon the subject-matter. It is not enough that a law should refer to the subject-matter or apply
to the subject-matter: for example, income tax laws apply to clergymen and to hotel-keepers
as members of the public; but no one would describe an income-tax law as being, for that
reason, a law with respect to clergymen or hotel-keepers. Building regulations apply to

38
buildings erected for or by banks; but such regulations could not properly be described as
laws with respect to banks or banking.”

 Contd.

On a view of the Act as a whole, we think that the substance of the legislation is within the
powers conferred by Entry No. 6 and conceivably Entry No. 1 of the State List" and it does
not -purport to encroach upon the field of Entry No. 31, though it incidentally touches upon a
matter provided there. The end and purpose of the legislation furnishes the key to connect it
with the State List. Our attention was not drawn to any enactment under Entry No. 31 of the
Union List by which the ownership and possession of amplifiers was burdened with any such
regulation or control, and there being thus no question of repugnancy or of an occupied field,
we have no hesitation in holding that the Act is fully covered by the first cited Entry and
conceivably the other in the State List. The Judicial Commissioner's order, with respect,
cannot be upheld, and it must be set aside. We allow the appeal and reverse the decision, and
we declare the Act in all its parts to be intra vires the State Legislature.

 B. Viswanathiah And Company And ... Vs State Of Karnataka

The two appeals and the three writ petitions challenge the validity of the provisions of the
Mysore Silkworm Seed and Cocoon (Regulation of Production, Supply and Distributions)
Act, 1959 (Act No. 5 of 1960), hereinafter referred to as 'the impugned Act‘…the argument
before us was limited to a single contention. This was that the impugned provisions lack
legislative competence after the enactment, by Parliament, of the Central Silk Boards Act
(Act 61 of 1948), (hereinafter referred to as 'the Central Act') which contains a declaration
contemplated under Entry 52 of List I in the Seventh Schedule to the Constitution of India.
We shall be addressing ourselves only to this argument.

 Facts

The above Act, was amended by the Karnataka Act 33 of 1979. In the preamble, in addition
to the 'silk worm seed' and 'cocoon', reference was added to silk yarn‘…The short point made
on behalf of the petitioners is that any legislation in respect of 'silk industry' can be enacted
only by Parliament and the State Legislature is incompetent to legislate on this matter. This is
because Section 2 of the Central Silk Board Act, which reads as follows: "It is hereby
declared that it is expedient in the public interest that the Union should take under its control
the silk industry.”…In this context, it is emphasised that originally the Central Act and the
declaration in S. 2 had been restricted to 'raw silk industry' but, by an amendment of
1953 effective from 25.3.1954, their scope was widened to include the entire 'silk industry'.
The long title of the Central Act is that it is "an Act to provide for the development under
Central control of the silk industry and for that purpose to establish a Central Silk Board".

 High Court’s Decision

It will at once be seen that the point raised by the petitioners/ appellants has been repelled by
the High Court on the basis of a series of decisions of this Court regarding scope of Entry 52
of List I in the Seventh Schedule to the Constitution. The High Court has pointed out that
39
when Entry 52 talks of control of industry it does not mean all aspects of the industry in
question. An industry comprises of 3 important aspects: (i) raw materials (ii) the process of
manufacture or production; and (iii)the distribution of the products of the industry.
Legislation in regard to raw materials would be permissible under Entry 27 of List 2,
notwithstanding a declaration of the industry under Entry 52 to be one within the purview of
parliamentary legislation. The process of manufacture or production can be legislated on by
States under Entry 24 of List 2 so long as the industry is not a controlled industry within the
meaning of Entry 7 or Entry 52 of List I. So far as the third aspect viz. the distribution of the
products of the industry are concerned, the State Legislature would be quite competent to
legislate thereto in regard thereto under Entry 27 of List II. However, when the industry is
also a controlled industry legislation in regard to the products of the industry would be
permissible by both the Central and the State Legislatures by virtue of Entry 33 of List
3. This in short is the decision of the High Court (based on various SC decisions).

 SC Judgment

In other words, though the production and manufacture of raw silk cannot be legislated upon
by the State Legislature in view of the provisions of the Central Act and the declaration in
section 2 thereof, that declaration and Entry 52 do not in any way limit the powers of the
State Legislature to legislate in respect of the goods produced by the silk industry. To
interpret Entry 52 otherwise would render Entry 33 in List 3 of the Seventh Schedule to the
Constitution otiose and meaningless. In this view of the matter the limitation contained in
Entry 52 does not affect the validity of the present legislation…In view of our
conclusion above, the State legislation would be quite valid unless it is repugnant to the
provisions of a Central legislation on the subject. A persual of the Central Act makes it
clear that the pith and substance of the legislation is the constitution of a silk Board for
research into the scientific, technological and economic aspects of the industry. It does not
have anything to do with the aspects covered by entry 33 in List III. There is, therefore, no
infirmity in the legislation under consideration.

The State Of Karnataka & Ors. vs M/S. Drive-In Enterprises

Facts

The Drive-in-Theatre of the respondent with which we are concerned here is a cinema with
an open-air-theatre into which admissions are given to persons desiring to see cinema while
sitting in their motor cars taken inside the theatre. The Drive-in-Theatre has also an
auditorium wherein other persons who are without cars, view the film exhibited therein either
standing or sitting. The persons who are admitted to view the film exhibited in the
auditorium are required to pay Rs.3/- for admission therein. It is not disputed that the State
Government has levied entertainment tax on such admission and the same is being realised.
However, if any person desires to take his car inside the theatre with a view to see the
exhibition of the films while sitting in his car in the auditorium, he is further required to pay a
sum of Rs.2/- to the proprietor of the Drive-in-Theatre. The appellant-State in addition to
charging entertainment tax on the persons being entertained, levied entertainment tax on
admission of cars inside the theatre. This levy was challenged by the proprietors of the Drive-

40
in-Theatres by means of writ petitions before the Karnataka High Court which were allowed
and levy was struck down by a single Judge of the High Court. The said judgment was
affirmed by a Division Bench of that Court. It was held, that the levy being not on a person
entertained (i.e. Car/Motor vehicle), the same was ultra vires.

 Karnataka Entertainment Tax Act

After the aforesaid decision, the Karnataka Legislature amended the Act by Act No.3 of
1985…After the aforesaid amendments, the appellant herein, again levied entertainment tax
on admission of cars into Drive-in- Theatre. This levy was again challenged by means of a
petition under Article 226 of the Constitution and the said writ petition was allowed, and as
stated above , the High Court struck down (the amendments)…On the arguments of learned
counsel of parties, the question arises as to whether the State Legislature is competent to
enact law to levy tax under Entry 62 of List II of Seventh Schedule on admission of
cars/motor vehicles inside the Drive-in-Theatre…when a levy is challenged, its validity has
to be adjudged with reference to the competency of the State Legislature to enact such a law,
and while adjudging the matter what is required to be found out is the real character and
nature of levy.

 Judgment

Entry 62 of List II of Seventh Schedule empowers the State Legislature to levy tax on
luxuries, entertainment, amusements, betting and gambling. Under Entry 62, the State
Legislature is competent to enact law to levy tax on luxuries and entertainment. The
incidence of tax is on entertainment. Since entertainment necessarily implies the persons
entertained, therefore, the incidence of tax is on the person entertained. Coming to the
question whether the State Legislature is competent to levy tax on admission of cars/motor
vehicles inside the Drive-in-Theatre especially when it is argued that cars/motor vehicles are
not the persons entertained. Section 3 which is charging provision, provides for levy of tax on
each payment of admission. Thus, under the Act, the State is competent to levy tax on each
admission inside the Drive-in-Theatre. The challenge to the levy is on the ground that the
vehicle is not a person entertained and, therefore, the levy is ultra vires. It cannot be disputed
that the car or motor vehicle does not go inside the Drive-in-Theatre of its own. It is driven
inside the Theatre by the person entertained.

 Quality of Entertainment

In other words the person entertained is admitted inside the Drive-in Theatre along with the
car/motor vehicle. Thereafter the person entertained while sitting in his car inside the
auditorium views the film exhibited therein. This shows that the person entertained is
admitted inside the Drive-in Theatre along with the car/motor vehicle. This further shows that
the person entertained carries his car inside the Drive-in-Theatre in order to have better
quality of entertainment. The quality of entertainment also depends on with what comfort the
person entertained has viewed the cinema films. Thus, the quality of entertainment obtained
by a person sitting in his car would be different from a squatter viewing the film show. The
levy on entertainment varies with the quality of comfort with which a person enjoys the

41
entertainment inside the Drive-in-Theatre. In the present case, a person sitting in his car or
motor vehicle has luxury of viewing cinema films in the auditorium. It is the variation in the
comfort offered to the person entertained for which the State Government has levied
entertainment tax on the person entertained.

 Real Nature of Levy

The real nature and character of impugned levy is not on the admission of cars or motor
vehicles, but the levy is on the person entertained who takes the car inside the theatre and
watches the film while sitting in his car. We are, therefore, of the view that in pith and
substance the levy is on the person who is entertained. Whatever be the nomenclature of levy,
in substance, the levy under heading admission of vehicle is a levy on entertainment and not
on admission of vehicle inside the Drive-in-Theatre. As long as in pith and substance the
levy satisfies the character of levy, i.e. entertainment, it is wholly immaterial in what name
and form it is imposed. The word entertainment is wide enough to comprehend in it, the
luxury or comfort with which a person entertains himself. Once it is found there is a nexus
between the legislative competence and subject of taxation, the levy is justified and
valid…We accordingly hold that the impugned levy is valid.

 Article 248:Residuary Powers of Legislation

248. (1) Parliament has exclusive power to make any law with respect to any matter not
enumerated in the Concurrent List or State List.

(2) Such power shall include the power of making any law imposing a tax not mentioned
in either of those Lists.

Union of India vs. H.S. Dhillon

Section 3 of the Wealth Tax Act, 1957, imposes a tax on the capital value of the net wealth of
an assessee. Net wealth, under the Act, is the amount by which the aggregate value of all
assets of the assessee, computed in the manner provided by the Act, is in excess of the
aggregate value of all debts (subject to some exceptions) owed by the, assessee; and assets,
under s. 2(e) as it originally stood, meant generally property of every description but not
including agricultural land, growing crops, grass or standing trees on such land. Section 24 of
the Finance Act, 1969, amended s. 2(e) of the Wealth Tax Act and included agricultural land
etc., in the assessee's assets for the purpose of computing his net wealth. The High Court held
that the amendment was beyond the legislative competence of Parliament.

 Submissions

The submissions of Mr. Setalvad, appearing on behalf of the Union in brief were these : That
the impugned Act is not a law with respect to any entry (including entry 49) in List II; if this
is so, it must necessarily fall within the legislative competence of Parliament under entry 86,
read with entry 97, or entry 97 by itself read with Art. 248 of the Constitution; the words
"exclusive of agricultural land" in entry 86 could not cut down the scope of either entry 97
List I, or Art. 248 of the Constitution.

42
The submissions of Mr. Palkiwala, who appeared on behalf of the respondent in the appeal,
and the other counsel for the interveners, in brief, were these: It was the scheme of the
Constitution to give States exclusive powers to legislate in respect of agricultural land,
income on a agricultural land and taxes thereon; in this context the object and effect of
specifically excluding agricultural land from the scope of entry 86 was also to take it out of
the ambit of entry 97 List I and Art. 248; the High Court was wrong in holding that the
impugned Act was not a law in respect of entry 49 List II.

 Questions for Consideration

It seems to us that the best way of dealing with the question of the validity of the impugned
Act and with the contentions of the parties is to ask ourselves two questions; first, is the
impugned Act legislation with respect to entry 49 List II? and secondly, if it is not, is it
beyond the legislative competence of Parliament? We have put these questions in this order
and in this form because we are definitely of the opinion, as explained a little later, that the
scheme of our Constitution and the actual terms of the relevant articles, namely, Art. 246,
Art. 248 and entry 97 List I, show that any matter, including tax, which has not been allotted
exclusively to the State Legislatures under List II or concurrently with Parliament under List
III, falls within List I, including entry 97 of that list read with Art. 248.

It seems to us unthinkable that the Constitution-makers, while creating a sovereign

democratic republic, withheld certain matters or taxes beyond the, legislative competency of
the legislatures in this country either legislating singly or jointly.

 Framers’ Intent

There does not seem to be any dispute that the Constitution makers wanted to give residuary.
powers of legislation to the Union Parliament. Indeed, this is obvious from Art. 248 and entry
97 List I. But there is a serious dispute about the extent of the residuary power…For example,
in entry 82, taxes on agricultural income have been excluded from the ambit of "taxes on
income";, in entry 84 there is exclusion of duties of excise on alcholic liquors for human
consumption and on opium, Indian hemp and other narcotic drugs and narcotics; in entry 8-6,
agricultural land has been excluded from the field of taxes on the capital value, of the assets;
in entry 87, agricultural land has again been excluded',from the Union Estate duty in respect
of property; and in entry 88, agricultural land has been further excluded from the incidence of
duties in respect of succession to property. It was urged that the object of these, exclusions
was to completely deny Parliament competence to legislate on these excluded matters.

 Content of the Residuary Power

It will be noticed that all the matters and taxes which have been excluded, except taxes on the
capital value of agricultural land under entry 86 List I, fall specifically within one of the
entries in List II. While taxes on agricultural income have been excluded from entry 82 List I,
they form part of entry 46 List II. Duties of excise excluded in entry 84 List I have been
included in entry 51 List II; agricultural land exempt in entry 87 List I has been incorporated
as entry 48 List II; and, similarly, agricultural land exempted from the incidence of duties in

43
respect of succession to property (Entry 88 List I) has been made the subject-matter of duties
in respect of succession in entry 47 List II. It seems to us that from this scheme of distribution
it cannot be legitimately inferred that taxes on the capital value of agricultural land were
designedly excluded from entry 97 List I…If the residuary subjects had ultimately been
assigned to the States could it have been seriously argued that vis-a- vis the States the matter
of Taxes on "Capital value of agricultural land" would have been outside the powers of
States? Obviously not, If so, there ,can be no reason for excluding it from the residuary
powers ultimately conferred on Parliament. The content of the residuary power does not
change with its conferment on Parliament.

 Impossible to Limit the Width of Article 248

…if on a proper interpretation of entry 49 List II, read in the light of entry 86 List I, it is held
that tax on the capital value of agricultural land, is not included within entry 49 List II or that
the, tax imposed by the impugned statute does not fall either in entry 49 List II or entry 86
List I, it would be arbitrary to say that it does not fall within entry 97 List I. We find it
impossible to limit the width of art. 248 and entry 97 List I by the words "exclusive of
agricultural land" in entry 86 List I. We do- not read the words "any other matter" in entry 97
to mean--that it has any reference to topics excluded in entries 1-96 List I.' It is, quite clear
that the words "any other matter" have reference to matters on which the Parliament has been
given power to legislate by the enumerated entries 1-96 List I and not to matters on which it
has not been given power to legislate. The matter in entry 86 List I is the whole entry and not
the entry without the, words "exclusive of agricultural land". The matter in entry 86 List I
again is not tax on capital value of assets but the whole entry…it would, we think, be
erroneous to treat entry 82 List I (Taxes on income other than agricultural income) as
containing two matters, one, tax on income, and the other, as "other than agricultural
incomes.

 Only Question to be Asked is…

It seems to us that the function of Art. 246 (1), read with entries 1-96 List I, is to give positive
power to Parliament to legislate in respect, of these entries. Object is not to debar Parliament
from legislating on a matter, even if other provisions of the Constitution enable it to do so.
Accordingly, we do not interpret the words "any other matter" occurring in entry 97 List I to
mean a topic mentioned by way of exclusion. These words really refer to the matters
contained in each of the entries 1 to 96. The words "any other matters' had to be used because
entry 97 List I follows entries 1-96 List I. It is true that the field of legislation is demarcated
by entries 1-96 List I, but demarcation does not mean that if entry 97 List I confers additional
powers we should refuse to give effect to it. At any rate, whatever doubt there may be on the
interpretation of entry 97 List I is removed by the wide terms of Art. 248. It is framed in the
widest possible terms. On its terms the only question to be asked is : Is the matter sought to
be legislated on included in List II or in List III or is the tax sought to be levied mentioned
in List II or in List III ? No question has to be asked about List I. If the answer is in the
negative, then it follows that Parliament has power to make laws with respect to that matter
or tax.

44
  Judgment

Although we have held that the impugned Act does not impose a tax mentioned in entry 49,
List II, we would like to caution that in case the real effect of a Central Act, whether called a
Wealth Tax Act or not, is to impose a tax mentioned in entry 49 List II the tax may be bad as
encroaching upon the domain of State legislatures…it is (therefore) not necessary to decide
the question whether the impugned Act falls within entry 86 List I, read with entry 97 List I,
or entry 97 List I alone…

 Article 254: Repugnancy

(1) If any provision of a law made by the Legislature of a State is repugnant to any provision
of a law made by Parliament which Parliament is competent to enact, or to any provision of
an existing law with respect to one of the matters enumerated in the Concurrent List, then,
subject to the provisions of clause (2), the law made by Parliament, whether passed before or
after the law made by the Legislature of such State, or, as the case may be, the existing law,
shall prevail and the law made by the Legislature of the State shall, to the extent of the
repugnancy, be void.

(2) Where a law made by the Legislature of a State with respect to one of the matters
enumerated in the Concurrent List contains any provision repugnant to the provisions of an
earlier law made by Parliament or an existing law with respect to that matter, then, the law so
made by the Legislature of such State shall, if it has been reserved for the consideration of the
President and has received his assent, prevail in that State:

Provided that nothing in this clause shall prevent Parliament from enacting at any time any
law with respect to the same matter including a law adding to, amending, varying or
repealing the law so made by the Legislature of the State.

Hoechst Pharmaceuticals Ltd. vs State Of Bihar

Art. 254 of the Constitution makes provision first, as to what would happen in the case of
conflict between a Central and State law with regard to the subjects enumerated in the
Concurrent List, and secondly, for resolving such conflict. Art. 254(1) enunciates the normal
rule that in the event of a conflict between a Union and a State law in the concurrent field, the
former prevails over the latter. Cl. (1) lays down that if a State law relating to a concurrent
subject is 'repugnant' to a Union law relating to that subject, then, whether the Union law is
prior or later in time, the Union law will prevail and the State law shall, to the extent of such
repugnancy, be void…The question of repugnancy under Art. 254(1) between a law made by
Parliament and a law made by the State Legislature arises only in case both the legislations
occupy the same field with respect to one of the matters enumerated in the Concurrent List,
and there is direct conflict between the two laws. It is only when both these requirements are
fulfilled that the State law will, to the extent of repugnancy become void.

 Contd.
(To be Read with Slide 23 Gujarat University Case)

45
Art. 254(1) has no application to cases of repugnancy due to overlapping found between List
II on the one hand and List I and List III on the other. If such overlapping exists in any
particular case, the State law will be ultra vires because of the non-obstante clause in Art.
246(1) read with the opening words "Subject to" in Art. 246(3). In such a case, the State law
will fail not because of repugnance to the Union law but due to want of legislative
competence. It is no doubt true that the expression "a law made by Parliament which
Parliament is competent to enact" in Art. 254(1) is susceptible of a construction that
repugnance between a State law and a law made by Parliament may take place outside the
concurrent sphere because Parliament is competent to enact law with respect to subjects
included in List III as well as 'List I“. But if Art. 254(1) is read as a whole, it will be seen that
it is expressly made subject to cl. (2) which makes reference to repugnancy in the field of
Concurrent List-in other words, if cl. (2) is to be the guide in the determination of scope of cl.
(1), the repugnancy between Union and State law must be taken to refer only to the
Concurrent field.

 Clause 2: Exception to the General Rule

To the general rule laid down in cl.(1), cl.(2) engrafts an exception, viz., that if the President
assents to a State law which has been reserved for his consideration, it will prevail
notwithstanding its repugnancy to an earlier law of the Union, both laws dealing with a
concurrent subject. In such a case, the Central Act will give way to the State Act only to the
extent of inconsistency between the two, and no more. In short, the result of obtaining the
assent of the President to a State Act which is inconsistent with a previous Union law relating
to a concurrent subject would be that the State Act will prevail in that State and override the
provisions of the Central Act in their applicability to that State only. The predominance of the
State law may however be taken away if Parliament legislates under the proviso to cl. (2).
The proviso to Art. 254(2) empowers the Union Parliament to repeal or amend a repugnant
State law, either directly, or by itself enacting a law repugnant to the State law with respect to
the 'same matter'. Even though the subsequent law made by Parliament does not expressly
repeal a State law, even then, the State law will become void as soon as the subsequent law of
Parliament creating repugnancy is made.

Tests of Repugnancy (Deep Chand Case)

Repugnancy between two statutes may thus be ascertained on the basis of the following three
principles:

(1) Whether there is direct conflict between the two provisions

(2) Whether Parliament intended to lay down an exhaustive code in respect of the subject
matter replacing the Act of the State Legislature; and

(3) Whether the law made by Parliament and the law made by the State Legislature occupy
the same field.

 Direct Conflict

46
 A State law would be repugnant to the Union law when there is direct conflict between the
two laws…We may briefly refer to the three Australian decisions relied upon. As stated
above, the decision in Clyde Engineering Company's case (supra), lays down that
inconsistency is also created when one statute takes away rights conferred by the other. In Ex
Parte McLean's case, supra, Dixon J. laid down another test viz., two statutes could be said to
be inconsistent if they, in respect of an identical subject-matter, imposed identical duty upon
the subject, but provided for different sanctions for enforcing those duties. In Stock Motor
Ploughs Limited's case, supra, Evatt, J. held that even in respect of cases where two laws
impose one and the same duty of obedience there may be inconsistency.

 Intended Occupation

The Supreme Court noticed the conclusive test of inconsistency laid down by Isaacs J. in
Clyde Engineering Co. Ltd. v. Cowburn, 1926-37 CLR 466. The said test was: "If however, a
competent legislature expressly or implicitly evinces its intention to cover the whole field that
is a conclusive test of inconsistency where another legislature assumes to enter to any extent
upon the same field." The Supreme Court also cited with approval the following principle
stated by Dixon J. in Ex parte Mclean. 1930-43 CLR 472. "If it appeared that the Federal
Law was intended to be supplementary to or cumulative upon State law, then no
inconsistency would be exhibited in imposing the same duties or in inflicting different
penalties. The inconsistency does not lie in the mere co-existence of two laws which are
susceptible of simultaneous obedience. It depends upon the intention of the paramount
Legislature to express by its enactment, completely, exhaustively, or exclusively, what shall
be the law governing the particular conduct or matter to which its attention is directed. When
a Federal statute discloses such an intention, it is inconsistent with it for the law of a State, to
govern the same conduct or matter."

 Occupied Field

The test of repugnancy was thus explained by Dixon J. in -- 'Victoria v. The Commonwealth',
58 Com-W LR 618 (C):

"Substantially it amounts to this. When a State law, if valid, would alter, impair or detract
from the operation of the law of the Commonwealth Parliament, then to that extent it is
invalid. Moreover, if it appears from the terms, nature or the subject-matter of a Federal
enactment that it was intended as a complete statement of the law governing a particular
matter or set of rights or duties, then for a State law to regulate or apply to the same matter
or relation is regarded as a detraction from the full operation of the Commonwealth law and
so is inconsistent."

 Illustration

 State of Haryana enacts a law mandating that teachers in Universities in Haryana must
be UGC NET qualified;

 The Law does not apply to institutions mentioned in Entries 63, 64 and 65 in List I;

47
  Union of India then enacts a law whereby teachers in private Universities in India
need not be UGC NET qualified if they have a foreign degree;

 Doctrine of pith and substance to be invoked to see if State law and Union Law is
relatable to Entry 66 List I or Entry 25 List III; if pith and substance is “coordination
and determination of standards in higher education”, State Law can only be
challenged on grounds of legislative competence, not repugnancy; If both laws
relatable to Entry 25 List III, test of repugnancy to be applied

 Assuming both Laws are Relatable to Entry 25 List III

 Direct conflict between two laws with respect to private Universities in Haryana;

 State Law will not apply to private universities in Haryana as the Union Law
“occupies the field” in this respect;

 State Law will however continue to apply to non-private Universities in Haryana as

the Union Law does not cover non-private Universities in Haryana;

 Assuming that the State Law postdates the Union Law and is reserved for
consideration of the President and assented to, then the State Law will prevail in
Haryana over the Union Law [254(2)]

 Power of Parliament to Legislate with respect to a Matter in the State List

Articles 246(4), 247,249-253,352,356

RULE OF REPUGNANCY
Article 254 of the Constitution makes provision, first what would happen in case of conflict
between a Central and State law with regard to the subjects enumerated in the Concurrent
List and secondly for resolving such conflict. Article 254 (1) enunciates the normal rule that
in the event of conflict between a Union and State law in the Concurrent list the former
prevails over the latter. Clause (1) lays down that if a State law relating to a Concurrent
subject is repugnant to a Union law relating to that subject, then, whether the Union law is
prior or later in time, the Union law will prevail and the State law shall to the extent of such
repugnancy, be void.

To the general rule laid down in clause (1), clause (2) engrafts an exception, viz, that if the
President assents to a State law which has been reserved for his consideration, it will prevail
notwithstanding its repugnancy to an earlier law of the Union, both laws dealing with a
Concurrent subject. In such a case the Central law will give way to the State law only to the
extent of inconsistency between the two and no more.

The predominance of the State law may however be taken away if Parliament legislates under
the proviso to clause (2). The proviso to clause (2) empowers the Parliament to repeal or
amend a repugnant State law either directly or by itself enacting a law repugnant to State law
with respect to the ‘same matter’. Even though the subsequent law made by Parliament does

48
not expressly repeal a State law, even then the State law will become void as soon as the
subsequent law of Parliament creating repugnancy is made.

A state law will be repugnant to the Union law when there is a direct conflict between the two
laws. Such repugnancy may also arise when both laws operate in the same field and the two
cannot possibly stand together.

HOECHST PHARMACEUTICALS V STATE OF BIHAR AIR 1983 SC 1019

Relevant Entries

List II Entry 54 ---Taxes on sale and purchase of goods

List III Entry 33 --Trade and Commerce and the production supply and distribution of the
products of any industry where the control of such industry is declared by Parliament by law
to be expedients in public interest.

Law passed by Parliament under entry 33 List III

Essential Commodities Act 1955 has been passed by Parliament under entry 33 List III
providing for regulation production supply and distribution of essential commodities

Under this law the Central government passed an order by under section 3 of the Act which
stated that manufacturers or producers of goods could pass on the tax liability (sales tax and
excise duty) to the consumers. In other words the sales tax could be recovered from
purchasers of goods and products by the manufacturers and producers.

The Central law was on the subject of Price Fixation of essential commodities under entry 33
List III

Law passed by Bihar Legislature under Entry 54 List II

Section 5 of Bihar Finance Act 1981 prohibited the dealers to recover surcharge ( sales tax)
from the purchasers .This law interdicted that no dealer liable to pay a surcharge in addition
to tax payable by him shall be entitled to collect the amount of surcharge from the purchaser.

Section 5 provided for the imposition of a surcharge at 10 percent of the amount of tax
payable by a dealer whose gross turnover during a year exceeded rupees 5 lakhs, in addition
to tax payable by him’

Messrs Hoechst Pharmaceuticals and Glaxo Laboratories challenged the Bihar Act on the
ground that under the Central law they were allowed to pass on the tax liability to consumers
but the Bihar Act denied them

Argument of Petitioners

Price fixation is an occupied field by Central law and State law is repugnant to Central Law
and hence void under Article 254(1).

Argument of Bihar State

49
Central law and State law operated in different and distinct fields. Under entry 54 List II

Under Entry 54 the State while levying a tax on sale or purchase of goods is competent to
prohibit the dealers liable to pay a surcharge from recovering the same from the purchaser.

Apparent Conflict

There was an apparent conflict between Central law which allowed manufacturers or
producers of drugs to pass on the liability to pay sales tax to the purchaser and the State law
which prohibits such manufacturers or producers to recover surcharge (sales tax) from
purchasers

Argument of Petitioners

Since Parliament has chosen to occupy the field of price fixation under entry 33 List III the
State legislature is not competent to pass a law under entry 54 List II prohibiting the passing
of liability of tax to the purchasers, Hence the State law was repugnant to Central law and
void under 254 (1)

The Supreme Court held

“The true principle in judging the constitutional validity of section 5 of the Act is to
determine whether in pith and substance it is a law relatable to Entry 54 of List II and not
whether there is repugnancy between section 5 of the Act and Price Control order made by
the Central government under Essential Commodities Act under entry 33 of List III.”

“The question of repugnancy under Article 254 (1) between a law made by Parliament and a
law made by the State legislature can arise only in case both the legislations occupy the same
field with respect to one of the matters enumerated in the Concurrent List, and there is a
direct conflict between the two laws. It is when both these requirements are fulfilled that the
State law will to the extent of repugnancy, become void.”

“Article 254(1) has no application cases of repugnancy due to overlapping found between
List II on the one hand and Lists I and III on the other. If such overlapping exists in any
particular case the State law will be ultra vires because of the non-obstante clause in Article
246(1) read with the opening words “subject to” in Article 246(3). In such a case the State
law will fail not because of repugnance to the Union law but due to want of legislative
competence”

“The underlying principle is that the question of repugnancy arises only when both the
legislatures are competent to legislate in the same field that is with respect to one of the
matters enumerated in the Concurrent List. Article 254(1) cannot apply unless both the Union
and State Law relate to a subject specified in the Concurrent List and they occupy the same
field”

Decision

50
There cannot be any intrusion by a law made by Parliament under entry 33 List III into
a forbidden field viz the State’s exclusive power to make a law with respect to levy and
imposition of a tax on sale or purchase of goods relatable to Entry 54 List II. It follows
that the two laws viz the price control order passed by the Central government under
Essential Commodities Act passed under entry 33 List III and Section 5 of the Bihar
Finance Act operate on two separate and distinct fields and both are capable of being
obeyed. There is no question of any clash between the two laws and the question of
repugnancy does not come into play

THE APPLICATION OF PROVISO TO ARTICLE 254(2)

Zaverbhai v State of Bombay (1954)

The Central Legislature passed Essential Supplies (Temporary Powers) Act in 1946. Section
7 of the Central Act provided for penalties for contravention of orders made under Section 3
of the Act. The punishment provided under Section 7 was imprisonment up to three years or
with fine or both.

In 1947 the Bombay Legislature passed a law enhancing the imprisonment which may extend
up to seven years and not less than six months plus fine.

Both the Central and State laws were on a matter enumerated in List III.

Since the State law was repugnant to Central law on the same matter the assent of Centre was
obtained and under Article 254(2) the State law became operative in the State of Bombay
despite being repugnant to Central Law

In 1950 Central Legislature enacted a new Section 7 and divided the offences in three
categories in the Essential Supplies (Temporary Powers Act).

Section 7 of the Central Act also specified punishments separately for the three categories of
offences. The Central law provided for imprisonment for three years or fine or both

Since the State Law had provided for imprisonment for 7 years and not less than six months
plus fine there was an apparent repugnancy between the State law and Central law.

The Supreme Court held that the Bombay Act of 1947 was impliedly repealed by Section 7
which had amended the Central Act in 1950 and Section 2 of the Bombay Act cannot prevail
as against Section 7 of the Essential Supplies (Temporary Powers) Act 1946 as amended in
1950.

RESIDUARY POWER OF LEGISLATION

UNION OF INDIA V H S DHILLON (AIR 1972 SC 1061)
Note-This is a seven judge bench decision of the Supreme Court

Facts of Controversy

51
This case involved the definition of “net wealth” in the Wealth Tax Act 1957 a
Central Law as amended by the Finance Act 1969. The amended definition of
‘net wealth’ included agricultural land in assets for the purpose of calculating
tax on capital value of the net wealth.
The relevant entries are:
Entry 86 List I ‘taxes on capital value of assets, exclusive of agricultural land’
Entry 97 List I ‘any other matter not included in List II or List III’
Entry 49 List II ‘taxes on lands and buildings’
Article 248 states: (1) Parliament has exclusive power to make any law with
respect to any matter not enumerated in Concurrent List or State List.
(2) Such power shall include the power of making any law
imposing tax not mentioned in either of those lists
It was argued that the object and effect of exclusion of agricultural land from
entry 86 List I was to take agricultural land out of the ambit of Entry 97 List I
and Article 248 and therefore Wealth Tax Act as amended by Finance Act
including agricultural land for calculating tax on capital value of assets was a
law under Entry 49 List II.
Argument of M C Seetalvad for Government of India
The impugned Act is not a law with respect to Entry 49 List II and if this is so,
it must necessarily fall within the legislative competence of Parliament under
Entry 97 List I read with Article 248 or under Entry 86 List I read with Entry 97
List I. The words ‘exclusive of agricultural land’ in Entry 86 L I could not cut
down the scope of Entry 97 List I or Article 248 .
He argued that the proper way of testing the validity of a Central law was first
to see whether the Central law was with respect to a matter or tax mentioned in
List II, if it was not, no other question would arise and Central law will be valid.
Argument of Palkiwala for the Respondents
It was the scheme of the Constitution to give States exclusive power to legislate
in respect of agricultural land, income on agricultural land and taxes thereon.
The object and effect of excluding agricultural land from the scope of Entry 86
I was take it out of the ambit of Entry 97 I and Article 248 and therefore the
impugned law was a law with respect to Entry 49 L II
Decision of the Supreme Court

52
The best way of dealing with the question of validity of the Impugned Central
Law to ask two question
1. Is the impugned Act is a legislation with respect Entry 49 L II
2. If it is not is it beyond the legislative competence of Parliament?
It is unthinkable that the Constitution makers had withheld certain matters or
taxes beyond the legislative competence of the legislatures of this country.
“If on proper examination of Entry 49 List II read in the light of Entry 86 List I,
it is held that tax on the capital value of agricultural land is not included with in
Entry 49 List II or in Entry 86 I it would be arbitrary to say that it does not fall
under Entry 97 I read with Article 97 List I. We do not read ‘any other matter in
Entry 97 List I to mean that it has any reference to topics excluded in Entries 1-
96. The words ‘any other matter’ have reference to matters on which Parliament
has been given power to legislate by the enumerated entries 1-96. Accordingly
we do not interpret the words ‘any other matter’ to mean a topic mentioned by
way of exclusion.”
On the terms of Entry 97 List I read with Article 248 the only question to be
asked is: Is the matter sought to be legislated or included in List II or List Iii
or is the tax sought to be levied mentioned in List II or List III. No question
has to be asked about List I. If the answer is in the negative then it follows
that Parliament has the power to make laws with respect to that matter or tax.
It must be remembered that the function of the lists is not to confer powers;
they merely demarcate the legislative fields.
(The Court explained that taxing power has been distributed between the
Centre and the States and there no entry in the Concurrent List dealing
with taxes)
Question
Whether the impugned Act is a law with respect to Entry 49 list II
Answer
The tax under Entry 49 II is not a personal tax but a tax on property whereas
wealth tax is a personal tax. Therefore the impugned Act was not a law with
respect to Entry 49 List II. Parliament had not encroached upon a legislative
field assigned exclusively to State Legislatures.
Hence the impugned legislation is valid either under entry 86 List I read with
Entry 97 List or under Entry 97 List I standing by itself.

53
The Supreme Court held that the Wealth Tax Act did not fall within either
Entry 86, List I or Entry 49 List II. If the impugned Act was not a law under
entry 49 List II the Central Act was valid.
However even assuming that that the Wealth Tax Act as originally enacted
was a legislation under Entry 86 List I nothing in the Constitution prevented
Parliament from combining its powers under Entry 86 List I with its powers
under Entry 97 List I. There was no principle which prevented Parliament
from relying on the powers specified under entries 1-96 and supplementing
them with powers under Entry 97 List I and Article 248.
Parliament could include agricultural land in the capital value of assets under
Entry 86 List I but it could include it in the exercise of its power under Entry 97
List I because agricultural land was not a matter included in any of the entries 1-
96 of List I.
The Court clarified that even if there were doubts in the acceptance of this
interpretation they were removed by Article 248 which gave exclusive power to
Parliament to make a law on any matter not enumerated in List II or List III. As
tax on capital value of assets was not included I Lists II or List III, Parliament
was competent to enact a law on that subject.
Conclusion
“If a Central Act is challenged as being beyond the legislative competence
of Parliament it is enough to enquire if is a law with respect to matters or
taxes in List II. If is not, no further question arises”
Comment: The interpretation given by the Supreme Court in Dhillons case
on scope of residuary power of Parliament can be appreciated so as to
avoid any vacuum in the area of legislative powers as would have happened
had the Court adopted a restrictive view of the residuary power of
Parliament. This interpretation gives a new dimension to power of the
Centre.

FREEDOM OF TRADE COMMERCE AND INTERCOURSE

The Constitution-makers desired to promote free flow of trade and commerce in India as they
fully realized that economic unity and integration of the country provided the main sustaining
force for the stability and cultural unity of the federal polity and that the country should
function as one single economic unit without barriers on internal trade.

The origins of Article 301 which states “Trade commerce and intercourse throughout the
territory of India shall be free” may be traced directly to Section 92 of the Australian

54
Constitution which states: Trade Commerce and intercourse among the States shall be
absolutely free: but there are some significant differences between the two provisions

1. Section 92 immunizes interstate trade only whereas Article 301 includes inter-state as
well intra-State trade
2. Section 92 makes freedom of trade’ absolutely ‘free but in India exceptions to Article
301 has been laid down in Article 302-304.

Meaning of trade, commerce and intercourse

Trade means buying and selling with intention to earn profit. Business is synonymous for
trade - a systematic and organized activity with intention to gain.

Commerce means transmission or movement in which profit may not be the intention.
Bringing a commodity for personal consumption is commerce. Commerce includes all
transportation by land, air or water. It includes telephone telegraph or wireless or e-commerce
which causes movement

Intercourse means commercial as well as non-commercial intercourse. Trade is a species of

intercourse where the dominant element is to earn profit. Intercourse would include
movements and dealings even of non-commercial in nature. It would include travel and all
forms dealings with others. Such dealings may be by speech, music, radio or television.

The content of Article 301

Freedom under Article 301 means right to free movement of persons and things, tangible or
intangible, commercial or non-commercial, unobstructed by barriers, inter-State or intra-
State. All obstructions to free flow of trade would offend Article 301. The object of this
provision to break down any barrier between States and within the State so that India
maintains economic unity for sustained economic growth.

Exceptions to Article 301

1. Parliament can impose such restriction on freedom of trade as may be necessary in

public interest (article 302). However Parliament cannot discriminate between one
State and another nor can it give preference to one State over another (Article 303(1).
There is one case where discrimination among the States is permissible: it is in the
case of famine or scarcity of goods in any part of India (Article 303(2))

55
 2. A State may by law impose on goods imported from other States any tax to which
similar goods manufactured in the State are subject( Article 304 (a)
3. A State may by law impose reasonable restriction on the freedom of trade commerce
and intercourse in public interest. But this power is restricted in two respects:
(a) a State legislature cannot make a law with respect to trade and commerce which
discriminates between the States (Article 303 (1) and
(b) a Bill imposing restriction on trade and commerce or intercourse shall not be
introduced in the State Legislature without the previous sanction of the President

THE TEST OF DIRECT AND IMMEDIATE RESTRICTION

ATIABARI TEA CO LTD v STATE OF ASSAM, AIR 1961 SC 232( A five judge
bench decision)

In this case the Supreme Court was concerned with the Assam Taxation (on goods carried by
Roads and Inland Waterways) Act 1954 which was passed under Entry 56 of List II of the
seventh Schedule of the Constitution. The appellants carried on the business of growing tea
and exporting it to Calcutta via Assam. In the course of passing through Assam the tea was
liable to tax under the Act.

The appellants contended that the Act had violated the freedom of trade guaranteed by Article
301as it had obstructed free flow of trade and as it was not passed after obtaining the
sanction of the President as required by Article 304 (b) it was ultra vires.

MEANING OF “FREE”

The Supreme Court held that the accent on Article 301 is on the movement aspect of trade.
This Article requires that the flow of the trade throughout India shall run smooth and
unhampered by any restriction on the free flow and movement of trade. It is the free
movement and transport of goods from one part of the country to another part that is intended
to be saved by Article 301 and if a law or tax imposes a direct restriction on the very
movement of such goods, it attracts the provision of Article 301 and its validity can be
sustained only if it satisfied the requirement of Article 304(b).

The Court declared:

“Our conclusion therefore is that when Article 301 provides that trade shall be free
throughout the territory of India it means that the flow of trade shall run smooth and

56
unhampered by any restriction either at the boundaries of the States or at any other
points inside the States themselves. It is the free movement or transport of goods from
one part of the country to the other that is intended to be saved, and if any Act imposes
any direct restriction on the very movement of such goods it attracts the provisions of
Article 301. The freedom of movement of trade cannot be subject to any restriction in
the form of taxes imposed on carriage of goods or their movements. Such restriction can
be imposed by the State legislatures only after satisfying the requirements of Article
304(b) of the Constitution”

“Restriction freedom from which is guaranteed by Article 301 would be such

restrictions as directly and immediately restrict or impede the free flow or movement of
trade. Taxes may and do amount to restriction but it is only such taxes which directly
and immediately restrict free movement of trade would fall within the purview of
Article 301.”

However, such regulatory measures as traffic regulations, licensing of vehicles, marketing

and health regulations, price control, economic and social planning , prescribing minimum
wages only indirectly impeded the free flow of trade. These are regulatory measures which
promote and facilitate trade and are permissible for an orderly society.

Since the impugned Act had not satisfied the requirement of obtaining previous assent to the
Bill by the President as required by Article 304(b) it was struck down as unconstitutional.

THE COCEPT OF COMPENSATORY TAX

AUTOMOBILE TRANSPORT CO v STATE OF RAJASTHAN AIR 1962 SC 925( A

seven judge bench decision)

In Automobile case the Court held that regulatory measures or compensatory taxes for the
use of trading facilities did not hamper trade, commerce and intercourse and therefore were
not hit by Article 301. Rajasthan Motor Vehicles Taxation Act 1951 provided that no one
could use or keep for use a motor vehicle in Rajasthan without paying an appropriate tax.

Relying upon Atiabari case the appellants argued that since the previous sanction of the
President was not obtained the Act was invalid

The Supreme Court held

57
The interpretation which was accepted by majority in the Atiabari case is correct, but
subject to this clarification: Regulatory measures or measures imposing compensatory
taxes for the use of trading facilities do not come within the purview of restrictions
contemplated by Article 301 and such measures need not comply with the requirements
of the proviso to Article 304(b) of the Constitution.

The Court found that in 1952-1953 the income from motor vehicle taxation was about 34
lakhs and the expenditure on new roads and maintenance of old roads was about 60 lakhs. In
1954-55 the estimated income from tax on vehicles was 35 lakhs but the expenditure on
maintenance of roads was 65 lakhs. The Supreme Court upheld the validity of the impugned
Act as imposing compensatory tax which was permissible and not violative of freedom
guaranteed by Article 301.

Thus the State was charging from the users of motor vehicles nearly 50% of the cost incurred
by the State in maintaining and making roads

For the purpose of ascertaining whether a tax was a compensatory or not, it is necessary
to inquire whether the traders were having the use of facilities for better conduct of
their business and paying not patently much more that what was required for providing
the facilities. It was explained by the Court that the State had to find funds for making
and maintaining roads and fund could only be raised through taxation, It was further
clarified that tax so collected for providing trading facilities need not be kept in a
separate fund.

A compensatory tax does not offend the freedom of trade, commerce and intercourse
guaranteed by Article 301 and therefore such taxes need not meet the requirement of Article
304(b).

G K KRISHNAN v STATE OF TAMIL NADU (1975) 1 SCC 375

In this case the writ petition challenged the validity of a notification by Government of Tamil
Nadu enhancing the motor vehicle tax on omnibuses from Rs 30 per seat per quarter to Rs
100 per seat per quarter, The question for consideration was whether the tax was a
compensatory tax? It was found that Rs 19.51 crores had been spent not only for maintenance
of the roads but also for the construction of new ones and that the receipt from the vehicle tax
was only 16.38 crores.

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Following Autombile Transport Case (1962) the Supreme Court held that the impugned tax
was a compensatory tax and did not violate Article 301. The Court observed that regulations
like rules of traffic facilitate freedom of trade and commerce whereas restrictions impede that
freedom. The collection of tax or toll for the use of roads, bridges, aerodromes, does not
operate as barrier or hindrance to trade. For a tax to become a prohibited tax, it has to be a
direct tax effect of which is to hinder the movement part of trade. If the tax is compensatory
or regulatory it cannot operate as a restriction on the freedom of trade and commerce. A
compensatory tax need not satisfy the requirements of Article 304(b).

Working Test

The Court referred to the working test enunciated in Automobile case according to which the
working test for deciding whether a tax is compensatory or not is to enquire whether the
trades people are having the use of certain facilities for the better conduct of their business
not patently paying much more than what is required for providing the facilities.

The very idea of a compensatory tax is service more or less commensurate with the tax levied

The Court therefore upheld the notification enhancing the tax on motor vehicles in Tamil
Nadu as it was held to be a compensatory tax.

THE POWER OF STATE LEGISLATURES

CASES ON ARTICLE 304 (a)

VIDEO ELECTRONICS (PVT) LTD V STATE OF PUNJAB (1980) 4 SCC 134

In this case the petitioners who carried on the business of selling cinematographic films and
other equipment like projectors, sound recording and reproducing equipment, industrial X ray
films, graphic art films etc, had challenged the notifications issued by the governments of
Punjab and Uttar Pradesh which had provided temporary exemption to the new electronic
local industries from paying sales tax. The UP notification stipulated that the said benefit
shall be available only to those units who have commenced their production between the
dates specified in the notification.

The Punjab notification provided that the rate of sales tax payable by an electronic
manufacturer unit existing in Punjab would be one percent as against normal twelve percent
applicable to units from other States

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In the case of UP notification the Supreme Court held that in as much as it was a case of grant
of exemption to a special class for a limited period on specified conditions and was not
extended to all the products of those goods, it did not offend the freedom of trade guaranteed
by Article 301 and 304 (a)

Similarly in the case of Punjab notification it was held that the exemption was for certain
specified goods and overwhelmingly large number of local manufacturers of similar goods
were subject to sales tax.

It could not be said that the local manufacturers were favoured as against outside
manufacturers

The Supreme Court upholding the validity of the impugned notifications ruled:

“A state which is economically and technically weak on account of various factors should be
allowed to develop economically by granting exemptions, concessions, subsidies to new
industries”

Accordingly the impugned notifications were held not violative of Article 304(a).

Thus a temporary exemption from sales tax to specified goods made within the State with a
view to giving incentives and encouragement to the local industry does not infringe Article
304(a) of the Constitution.

SRI MAHAVIR OIL MILLS LTD v STATE OF J&K (1996) 11 SCC 39

Under Jammu and Kashmir General Sales Tax Act the State government issued notifications
stating that as the cost of production of edible oil in the State of Jammu and Kashmir was
higher than the cost of production of edible oil in the adjoining States the producers of edible
oil in the State of Jammu and Kashmir will be exempted from paying sales tax on edible oil.
But the manufacturers /producers of edible oil from other States were liable to pay tax at the
rate of 8%.

The appellant challenged the constitutional validity of tax exemption as infringing the
requirement of Article 301 and 304(a) of the Constitution.

In this case the Supreme Court invalidated the imposition of 8% sales tax by the State of J&K
on the edible oil imported from other States from which the Edible Oil produced with in J&K
was exempted. The Court rejected the State’s plea that such arrangement was necessary to

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encourage the State oil industry and to subsidize high cost of oil production within the State
.By exempting unconditionally the edible oil produced within the State of J&K altogether
from sales tax while subjecting the edible oil produced in other States to sales tax at 8%, the
State of J&K has brought about discrimination by taxation prohibited by Article 304(a) of the
Constitution.

It was held that the exemption granted from payment of sales tax to local manufacturers
/producers of edible oil is unconstitutional and violative of Article301 and 304(a) of the
Constitution.

Citing Video Electronics case the Supreme Court observed that a limited exception created in
that case cannot be enlarged to eat up the main provision in Article 304(a) which totally
prohibits discriminatory taxation by a State. By exempting unconditionally the edible oil
produced within the State of Jammu and Kashmir altogether from sales tax the State had
brought about discrimination by taxation prohibited by Article 304(a).

The notifications were held to be violative of Article 301 and Article 304(a)

CONCLUSION

The concept of compensatory tax has been evolved judicially in order to provide more
autonomy to the States for raising revenue through taxes under Entries 56 and 57 of List II. It
has consistently been held that these taxes are by their very nature compensatory in character
and are therefore outside the purview of Article 301.The power to impose tax under entry 56
or 57 List II is the power to impose taxes which are in the nature of compensatory or
regulatory measures and when a tax is regulatory or compensatory in nature the measure of
tax need not be proportionate to the expenditure incurred in the services provided to the
traded people.

Thus regulatory measures or compensatory taxes do not offend Article 301 and such
measures need not satisfy the requirement of Article 304(b).

Thus the test for adjudging the validity of law on ground of Article 301 may be stated in the
following manner:

1. A measure which operates on trade, commerce and intercourse indirectly or remotely is

not violative of Article 301

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2. A measure which operates on trade, commerce and intercourse directly and immediately is
violative of Article 301

3. A measure which operates on trade, commerce and intercourse directly and immediately
may not be violative of Article 301 if it is

(a) Regulatory or

(b) Imposes compensatory tax for the use of trading facilities.

Emergency Provisions

S R BOMMAI V UNION OF INDIA (1994) (A NINE-JUDGE BENCH DECISION)

Facts

S R Bommai was sworn in as the Chief Minister of Karnataka on August 30 1988. On 17th
April 1989 one legislator presented a letter to the Governor withdrawing his support to the
Ministry. On 18th April 1989 he presented to the Governor 19 letters allegedly written by 19
legislators withdrawing their support to the Ministry.

The Governor called the Secretary of the Legislature Department and got the authenticity of
the signatures on the said letters verified.

On April 19 1989 the Governor sent a report to the President stating therein that there were
dissensions in the Janata Party which had led to the resignation of Shri Hegde and even after
the formation of the new party headed by S R Bommai there were dissensions and defections.
In support the Governor referred to the 19 letters received by him. He further stated that in
view of the withdrawal of the support by 19 legislators, the Chief Minister S R Bommai did
not command a majority in the Assembly and it was inappropriate to have the State
administered by an Executive, consisting of Council of Ministers which did not command the
majority in the House. He also added that no other political party was in apposition to form
the Government. He therefore recommended to the President that he should exercise his
powers under Article 356(1).

The Governor did not ascertain the view of S R Bommai either after the receipt of 19 letters
or before making his report to the President

On April 20 1989 7 out of 19 legislators who had allegedly sent the letters to the Governor
complained that their signatures were obtained on the earlier letters by misrepresentation and
affirmed their support to the Ministry.

The State Cabinet met on April 20 1989 and decided to convene the Session of the Assembly
on April 27 1989

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The Chief Minister and the Law Minister met the Governor on April 20 1989 and informed
him about the decision to summon the Assembly Session. The Chief Minister offered to
prove his majority on the floor of the House even by pre-poning the Assembly Session if
needed.

On April 20 1989 itself the Governor sent another report to the President referring to the
letters of 7 legislators pledging their support to the ministry and withdrawing their earlier
letters. The Governor however opined that the letters from 7 legislators were obtained by the
Chief Minister by pressuring them and that horse trading was going on and the atmosphere
was getting vitiated.

In the end he reiterated his opinion that the Chief Minster had lost the confidence of the
majority in the House.

On April 20 1989 the President issues proclamation under Article 356(1) dissolving the
House. The proclamation was thereafter approved by the Parliament as required by Article
356(3).

A writ petition challenging the validity of dissolution was dismissed by the High Court of
Karnataka on the ground that the Governor’s report was not irrelevant and had to be accepted
and the satisfaction of the President cannot be faulted

The Supreme Court declared the proclamation dissolving the Assembly as unconstitutional
and observed:

“ It was improper on the part of governor to have arrogated to himself the task of
holding firstly, that the earlier 19 letters were genuine and were written by the said
legislators of their free will and volition. He had not even cared to interview the said
legislators but had merely got the authenticity of the signatures verified through the
Legislature Secretariat. Secondly he also took upon himself the task of deciding that the
seven out of 19 legislators had written the subsequent letters on account of the pressure
from the Chief Minster and not out of their free will. Again he had not cared even to
interview the said legislators. Thirdly it is not known from where the Governor got the
information that there was a horse trading going on between the legislators. Even
assuming that it was so, the correct and proper course for him to adopt was to await the
test on the floor of the House which test the Chief Minister had willingly undertaken to go
through on any day the Governor chose.”

“We are of the view that this is a case where all canons of proprietary were thrown to wind
and the undue haste made by the Governor in inviting the President to issue proclamation
under Article 356(1) clearly smacked of mala fide.”

“The proclamation issued by the President on the basis of the said report of Governor equally
suffered from mala fide”

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“The Proclamation having been based on the said report and so-called information which is
not disclosed was therefore liable to be struck down”

“The assessment of the strength of the Ministry is not a matter of private opinion of any
individual be he the Governor or the President.”

“There cannot be any presumption of allurement or horse trading.”

“Since the “facts” stated by the Governor in his report contained his own opinion on
unascertained material they could hardly be said to form an objective material on which the
President could have acted. The proclamation issued was therefore invalid”

Principles laid down in Bommai on the scope of judicial review of President’s Rule

1. President’s rule can be subject to judicial review to examine whether it was issued on
the basis of any material at all or whether the material was relevant or whether
proclamation was issued in mala fide manner
2. Article 74(2) is not a bar against the scrutiny of the material on the basis of which
President had arrived at his satisfaction. Advice and material are different
3. Proclamation should be approved by both Houses of Parliament. If not approved the
proclamation lapses
4. Legislative Assembly should be kept in suspended animation and should not be
dissolved. Legislative Assembly can be dissolved after the Proclamation has been
approved by both Houses of Parliament
5. President’s satisfaction is subjective but must be based on objective facts
6. Proclamation can be struck down if is based on irrelevant consideration or is mala fide
7. The Union government has obligation to produce the material before the Court
8. If President’s action is unconstitutional the dismissed government can be revived and
Assembly could be reactivated
9. Pending the final disposal of a challenge the court can stay holding the elections
10. Secularism is a part of the basic structure of the Constitution. The acts of a State
government which are calculated to subvert or sabotage secularism can lawfully be
deemed to give rise to a situation in which the government cannot be carried on in
accordance with the provisions of the Constitution
(The Supreme Court in Bommai upheld the validity of the President’s rule in Madhya
Pradesh, Rajasthan, and Himachal Pradesh as these governments had acted against
secularism. The dismissal of these governments was a consequence of violent
reactions in India and abroad as well as in neighbouring countries where some
temples were destroyed as a result demolition of Babri Masjid on December 6th 1992.
The proclamations were issued on January 15, 1993. These governments were run by
BJP. The President had relevant material based upon Governor’s report that these
political parties were fomenting communal tension by campaigning for the demolition
of Babri Masjid .)

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 Improper exercise of power under Article 356 according to Sarkaria Commission
Report which has been incorporated in S R Bommai judgment

1. President rule cannot be imposed on the ground of break-down of law and order or
maladministration
2. President rule cannot be imposed unless the Governor has explored all possibilities of
installing an alternative government in case of resignation or dismissal of a
government
3. The removal of a government which has not been defeated on the floor of the House
and which has not been given an opportunity to prove its majority by floor would be
unconstitutional
4. The assessment of the strength of the Ministry is not a matter of private opinion of the
Governor or President. The strength of the Ministry can be known only by a floor test.
5. Massive defeat of a political party in Lok Sabha elections such as in 1977 or 1980
cannot be a ground for exercising power under Article 356
6. Internal disturbance not amounting to internal subversion or physical break down
cannot be ground for President’s Rule
7. Allegation of corruption against the Ministers cannot be ground for invoking 356.
8. The use of this power to sort out internal differences or intra-party problems of the
ruling party would be constitutionally incorrect
9. Article 356 should be used very sparingly in extreme cases as a measure of last resort
when all available alternatives failed to prevent the breakdown of government
machinery

RAMESHWAR PRASAD V UNION OF INDIA (2005) 7 SCC 625

ISSUE: CAN DISSOLUTION OF ASSEMBLY UNDER ARTICLE 356 (1) BE
ORDERED TO PREVENT STAKING OF CLAIM BY A POLITICAL PARTY ON TH
GROUND THAT THE MAJORITY HAS BEEN OBTAINED BY ILLEGAL MEANS?

This was a peculiar case where even before the first meeting of the Assembly its
dissolution was ordered on the ground that attempts were made to cobble a majority
by illegal means

FACTS

In Bihar general elections were held in February 2005. Names of elected candidates were
notified on March 4, 2005. No party or coalition was in a position to secure 122 seats so
as to have majority out of total 243 seats in the Assembly

Governor’s report recommending Presidents rule in Bihar made on March 7 2005. The
Presidential proclamation was approved by Lok Sabha on March 19 2005 and by Rajya
Sabha on March 21 2005.

Governor again sent a report on April 27 2005 and May 21 2005 to President Buta Singh
stating that some legislators were being induced with offers of money and other
allurements and the Governor recommended the dissolution of the Legislative Assembly

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On May 23 2005 Prime Minister Man Mohan Singh convened a meeting in the mid-night
and obtained the assent of the President who was abroad and the Assembly was dissolved

The Supreme Court struck down the proclamation applying the ratio of S R Bommai case
and held that the proclamation dissolving the Assembly was unconstitutional. However
the Assembly was not restored as the election was in process.

The report of the Governor referred to (1) serious attempts to cobble a majority (2)
winning over MLA’s by offering money, posts and other allurements (3) targeting parties
for a split (4) horse trading among the legislators.

The petitioners alleged that the notification dissolving the Assembly was illegal as it was
based on the report of the Governor which suffered from serious legal and factual
infirmity and were tainted with pervasive mala fides. The object of the report was to
prevent political party led by Nitish Kumar to form the Government.

The Supreme Court held

In the absence of relevant material much less due to verification the Governor’s report
had to treated ipse dixit (his own perception or opinion) of the Governor. The drastic
action was taken on the whims and fancies of the Governor.

The Supreme Court criticized the Union Government for recommending the dissolution
of the Assembly without verifying the facts reported by the Governor. The Governor had
misled the Central government and his action to forestall the formation of new
government led by Nitish Kumar was a mala fide exercise of power. There was no
material at all to support the Governor’s perception that money and other allurements
were being offered to the legislators.

The Supreme Court relying on nine judge bench decision in Bommai observed:

1. It is well settled that if the satisfaction is mala fide or is based on wholly extraneous
or irrelevant grounds the courts would have jurisdiction to examine it because in that
case no satisfaction of the President in regard to that matter on which he is required to
be satisfied. The proclamation under Article 356(1) is subject to judicial review to the
extent of examining that the condition precedent for the issue of proclamation have
been satisfied or not. This examination will involve the scrutiny of the material for
satisfaction of the President

2. While considering the question of material it is not the personal whim, wish, opinion
or view of the President but a legitimate inference drawn from the material placed
before him which is relevant for the purpose.
3. In this case the Union Council of Ministers should have verified the facts stated in
Governor’s report before hurriedly accepting it as a gospel truth. Clearly the Governor
had misled the President.

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4. The case in hand is squarely covered against the Government by the majority decision
in Bommai’s case There cannot be any assumption of allurement or horse trading

5. The assessment of the strength of a ministry is not a matter of private opinion of

President or Governor. The proper course for a Governor was to test the strength of
the ministry on the floor of the House which was not done by the Governor of Bihar

6. In the present case like in Bommai there was no material whatsoever except the ipse
dixit (personal perception or opinion) of the Governor. His main object was to
prevent a political party to stake claim to form government after elections and this
object was destructive to the democratic fabric.

7. Without highly cogent material it was irrational for the Governor to deny claim made
by majority to form the government on the ground that the majority was obtained by
offering allurements and bribe

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