Acknowledgement.

I have taken efforts in the time-bound and plagiarism-free competition of this project.
However, it would not have been possible without the kind support and help of a number of
individuals that are part of the National Law Institute University, Bhopal.

I am greatly indebted to Sushma Ma’am for her able guidance and constant supervision
towards this project as well as for imparting the knowledge required for the same. I would
also like to express my gratitude towards all staff members of the National Law Institute
University, Bhopal for their kind cooperation and for providing us all with the resources
required to make this project.

My gratitude and appreciation also goes out to my colleagues who helped me in developing
this paper and to people who have willingly helped me out with their abilities. Thank you.
Appellant: Atlas Cycle Industries Ltd and Ors.
v.
Respondent: State of Haryana

Forum: Supreme Court of India

Date of Judgment: October 04, 1978

Bench: Justice Jaswant Singh, Justice Syed Murtaza Fazalali, Justice P.S. Kailasam

Citation: 1979 AIR 1149

1979 SCR (1) 1070
1979 SCC (2) 196

Legislation: Section 3(6) of the Essential Commodities Act, 1955

Issue under consideration: Delegated legislation

1. Brief Background & Material Facts.

The case before the Supreme Court arose out of an appeal petition.

The appellant, in this case, Atlas Cycle Industries Ltd (“Atlas Cycles”) were being reviewed.
The Directorate General carried out a spot review of the Atlas Cycles’ balance sheet in
December 1964. From said review, the DG discovered that Atlas Cycles had purchased tons
of iron sheets from multiple suppliers. The said purchases were under review because it was
alleged that they were made at prices which were beyond the maximum permissible limit.
This limit was set by the Iron and Steel Comptroller. The authority to set the aforementioned
prices was conferred upon the Iron and Steel Comptroller by the Iron and Steel Control
Order,1956.

In the case against Atlas Cycles, the company was claimed to not have complied with the
aforementioned Order. Charges were filed against the company under Section 120B of the
Indian Penal Code read with Section 7 of the Essential Goods Act for criminal conspiracy.
Further charges were filed under Section 7 of the Essential Goods Act read with Section
15(3) of the Iron and Steel Control Order.

The appellants filed an Application under Section 251 of the Code of Criminal Procedure
before the Trial Court, which was dismissed by the said Court vide its Order dated June 04,
1970. The appellants, in their Application, had claimed that the Order setting the maximum
permissible limit for the products, including the ones purchased by Atlas Cycles, was invalid
as it had never been put before and passed by the Parliament.

Aggrieved by this Order, the appellants filed a Writ Petition before the High Court of Punjab
and Haryana under Section 226 of the Indian Constitution. The Petition was rejected by the
High Court.

Grounds cited by the High Court in rejecting the Petition:

 It was held that the legislature, in passing the Essential Commodities Act, never intended
that mere non-compliance with Section 3(6) of the Essential Commodities Act would
result in invalidation of any Order passed under the Act. In light of this observation, it
 was held that, in the instant matter, the non-passing of the Order in question by the
Parliament would not be render the Order invalid.
 The High Court held that in wording section 3(6) of the essential Commodities Act, the
legislature lay down that “any order issued by the central government or by any officer
shall be introduced in both the houses”. The use of the word “shall” renders the intent of
the legislature inconclusive and leaves it to the courts to interpret whether the specific
provision is mandatory or compliance with the same can be dispensed with.

In light of the aforementioned ground, the High Court held that the provision under
consideration is discretionary, because:

 Absence of any provision laying down any contingency in case the provision under
consideration i.e. Section 3(6) is not complied with.
 The Essential Commodities Act, being a welfare legislation, was given a liberal reading,
and the High Court held that if Orders were to be held invalid on just this one ground, it
would be detrimental to the citizens for the benefit of whom the legislation had been
enacted.

Further aggrieved by the judgment of the Punjab and Haryana High Court, the appellants
approached the Supreme Court and an Appeal Petition was filed before the Court which is the
case under analysis here.
2. Provisions under Consideration.

 Section 3(1) empowers the Central Government to pass orders for regulating or
prohibiting the production, supply and distribution of essential commodities and their
trade and commerce.

 Section 3(2) lays down the scope of the aforementioned orders, what can and cannot be
done under the orders.

 Section 3(3) lays down the price consideration payable to parties dealing in essential
commodities and also provides for the setting of price caps.

 Section 3(3A) empowers the Central Government to notify directions in the Official
Gazette to control the rise in prices and hoarding of essential commodities.

 Section 3(6) lays down, “Every order made under this section by the Central Government
or by any officer or authority of the Central Government shall be laid before both Houses
of Parliament, as soon as may be, after it is made.”

 Section 4 of the Act provides for the imposition of duties on State Governments. Orders
passed under the aforementioned provisions may confer powers or impose duties on
officers or authorities of both the Central and the State Governments.

 Section 5 expressly provides for the delegation of powers. The Central Government may,
by Orders, empower officers or authorities of both the Central and State Governments
3. Issues before the Supreme Court.

1. Whether the Iron and Steel Control Order was invalid on account of being not passed
by the Parliament?

2. Whether the requirement to lay the order before the two houses of the Parliament as
provided under Section 3(6) of the Essential Commodities Act is mandatory or
discretionary?

The issues before the Supreme Court are legal in nature and there are no questions of facts
involved.
4. Contentions (Arguments) Advanced.

The appellants reiterated the contentions made before the Punjab and Haryana High Court.
Atlas Cycles claimed that the Order setting the maximum permissible limit for the products,
including the ones purchased by Atlas Cycles, was invalid as it had never been put before and
passed by the Parliament. The appellants put their prosecution into question on the grounds
that the control orders and notifications did not have legal force because they were not
introduced within a reasonable period before the House of Parliament under the Essential
Commodities Act.

On the other hand, the respondents claimed that the provision under the Essential
Commodities Act requiring that an order passed under the provisions of Section 3 of the Act
be laid down before the two houses of the Parliament is not mandatory and can be dispensed
with. Therefore, failure to comply with the particular provision i.e. Section 3(6) and not
laying down the Iron and Steel Control Order before the Parliament does not render the Order
invalid.
5. Judgment.

The Supreme Court dismissed the appeal petition, on the grounds:

 It was held that the legislature, in passing the Essential Commodities Act, never intended
that mere non-compliance with Section 3(6) of the Essential Commodities Act would
result in invalidation of any Order passed under the Act. In light of this observation, it
was held that, in the instant matter, the non-passing of the Order in question by the
Parliament would not be render the Order invalid.

 The High Court held that in wording section 3(6) of the essential Commodities Act, the
legislature lay down that “any order issued by the central government or by any officer
shall be introduced in both the houses”. The use of the word “shall” renders the intent of
the legislature inconclusive and leaves it to the courts to interpret whether the specific
provision is mandatory or compliance with the same can be dispensed with.

In light of the aforementioned ground, the Supreme Court held that the provision under
consideration is discretionary, because:

 Absence of any provision laying down any contingency in case the provision under
consideration i.e. Section 3(6) is not complied with.

 The provision does not specify the time frame within which the Order needs to be placed
before the two houses of the Parliament.

 Neither does it provide whether negative or affirmative resolution by either house of the
Parliament.

 The Essential Commodities Act, being a welfare legislation, was given a liberal reading,
and the High Court held that if Orders were to be held invalid on just this one ground, it
 would be detrimental to the citizens for the benefit of whom the legislation had been
enacted.

In light of the aforementioned, it is evident that it was never the intent of the legislature that
merely because orders under the legislation are not passed by the Parliament, they would be
rendered invalid.

As a result, in the instant matter, the Iron and Steel Control Order is not invalid on account of
not being passed by the Parliament.
6. Conclusion.

Delegated legislation, as has been expressly provided for under Section 5 of the Essential
Commodities Act, provides for the delegation of the powers to make laws or rules by an
officer or any other authority under the authority of the legislature.

While the primary legislation, referred to as the enabling law, is made and passed by the
legislature, the legislature can authorise officers or authorities subordinate to both the Central
and State Governments to make rules or law subordinate to the primary legislation.

Enabling legislations may delegate rule making powers to specified authorities. The enabling
legislation may require such rules to be placed before the Parliament.

Laying of the delegated legislation before the two houses of the Parliament may be done in
one of two ways:

 Subject to a negative resolution. The delegated legislation comes into operation as soon
as they are laid before the parliament but are subject to annulment in lieu of a resolution
by either House of Parliament, if not disapproved within 40 days.
 Subject to an affirmative resolution. The delegated legislation is required to be passed by
both houses of the Parliament before it comes into force.

In India, there is no constitutional requirement that allows all delegated legislation to be ‘laid
down.’ Therefore, in the absence of any general law governing the laying procedure:

 All Parliament’s acts should generally be required to lay down the rules on the table of
the houses ‘as soon as may be possible’.
 The laying duration should be thirty days uniformly from the date of final publication of
the rules;
 The rule shall be subject to the amendments that the house may wish to make.
The authority for delegated legislations stems from Article 13(3) of the Indian Constitution.
Article 13(3) provides that “law includes any Ordinance, order, bye law, rule, regulation,
notification, custom or usages having in the territory of India the force of law”.