Module 9: Amendment of the Constitution

- ‘Custom or usage’ becomes law subject to following conditions:

i. Practice/prevalent from time immemorial
ii. Uniform Practice
iii. Should not be contrary to public policy (eg. Sati, Child Marriage)
- Personal laws can come under ‘custom or usage’.
- ‘laws in force’ covers both pre and post constitutional law which is not redundant.
- Personal laws have been treated as an exception to law under Article 13.

Ahmedabad Women's Action Group v. Union of India 1997

The petitioners asked for the following aspects of Sharia Law to be declared void
under the Constitution of India:
i. Polygamy,
ii. Summary Talaq,
iii. Shia law of inheritance which discriminate against females on ground
of sex.
SUPREME COURT: Consti recognises the existence of these personal laws when it
deals with the topic falling under personal law in item 5 in the Concurrent List. The
fact that framers themselves left personal laws outside the ambit of Part III of the
Constitution means that they should not be challenged by the reasons of FR. Also, the
court relied upon Article 44 of the Constitution. Petition was dismissed.

LANDMARK CASES RELATING TO THE BASIC STRUCTURE OF THE CONSTITUION

1. Shankari Prasad Deo v. Union of India, 1951
2. Sajjan Singh v. State of Rajasthan, 1965
3. Golak Nath vs. The State of Punjab, 1967
4. Kesavananda Bharati v. The State of Kerala, 1973
5. Indira Gandhi v. Raj Narain, 1975
6. Minerva Mills Ltd. v. Union of India, 1980
7. Chandra Kumar v. Union of India, 1997

1. SHANKARI PRASAD CASE

 Challenged the validity of the First Amendment Act to the Constitution of India. The
amendment was related to giving unrestricted power to the govt relating to land reforms
and this power was put in 9th schedule and therefore made immune to judicial review or
any challenges made on the grounds of violation of Article 31A and 31B (Fundamental
Right to Property).

 ISSUE: Amendments whether law or not?

 CHALLENGED: Amendment (an amendment to Article 31A and 31B) which takes away
fundamental right of the citizens is not allowed by article 13(2). It was argued that
“State” includes parliament and “Law” includes Constitutional Amendments.
 The SUPREME COURT of India held that the power to amend the Constitution, including
Fundamental Rights is contained in Article 368. Such an amendment is not a law
within the meaning of Article 13(2) as the power to make a law comes from Article 245
and the power to amend comes from Article 368.

2. SAJJAN SINGH V STATE OF RAJASTHAN

 ISSUE: The main contention before the five-judge bench of the Supreme Court was that
the Seventeenth Amendment limited the jurisdiction of the High Courts and, therefore,
required ratification by one-half of the States under the provisions of article 368. The
court unanimously disposed of this contention, but members of the court chose to deal
with a second submission, that the decision in the Shankari Prasad case should be
reconsidered
 CHALLENGED: 17th Constitutional Amendment which was put under 9th schedule.
 SUPREME COURT HELD:
i. The Chief Justice (Gajendragadkar C.J.) in delivering the view of the majority
(Gajendragadkar C.J., Wanchoo and Raghubar Dayal JJ.) expressed their full
concurrence with the decision in the earlier case. The words “amendment of this
constitution” in article 368 plainly and unambiguously meant amendment of all
the provisions of the Constitution; it would, therefore, be unreasonable to hold
that the word “law” in Article 13(2) took in Constitution Amendment Acts
passed under article 368.
ii. Justice Hidayatullah (minority opinion): Fundamental Rights are so sacred in
nature that they cannot be amended and every constitution in the world has a
few basic features which cannot be amended.

3. GOLAK NATH CASE

 ISSUE: A bench of eleven judges (such a large bench constituted for the first time) of the
Supreme Court deliberated as to whether any part of the Fundamental Rights provisions
of the constitution could be revoked or limited by amendment of the constitution.
 CHALLENGED: The stand taken in the previous two cases.
 HELD: The court said the process of creating an amendment is same as of passing a new
law. A bill is present, debated upon and finally assented if accepted. The process of
amendment does not deviate much from the ordinary legislative (Art.245) process.
 It also held that the power to amend does not come from Article 368 but from entry 97
of List I (residuary powers) read with article 245 and 248 under the ordinary legislative
powers of the parliament. So, there is no difference between ordinary legislation and
amendment of the constitution.
 The Fundamental Rights were transcendental and inviolable and the Parliament of India
had no power to take away or abridge any of the Fundamental Rights guaranteed by the
Constitution by way of the Constitutional amendments.
 An amendment is, therefore, a law for the purposes of Article 13 and if it violates
fundamental rights, it becomes void to the extent of contravention.
 To use a loophole, the Parliament brought 24th Constitutional Amendment to add
Article 368(1) and 368(3) both of which gave parliament unlimited power only
restricted by Fundamental Rights.

4. KESAVANANDA BHARATI V. THE STATE OF KERALA

 ISSUE: Certain Amendments after the 24th CAA were challenged which curtailed the
right to property, a fundamental right at that point of time.
 CHALLENGE: 24th, 25th, 26th and 29th Amendment in derogation of Article 31C.
 COURT: 13 Judges Bench. The court by majority overruled the Golak Nath case which
denied parliament the power to amend fundamental rights of the citizens
 Six learned Judges (Ray, Phalekar, Mathew, Beg, Dwivedi and Chandrachud, JJ) who
upheld the validity of 29th Amendment did not subscribe to basic structure doctrine.
The other six learned Judges (Chief Justice Sikri, Shelat, Grover, Hegde, Mukherjee
and Reddy JJ) upheld the 29th Amendment subject to it passing the test of basic
structure doctrine. The 13th learned Judge (Khanna, J), though subscribed to basic
structure doctrine, upheld the 29th Amendment agreeing with six learned Judges who
did not subscribe to the basic structure doctrine
 The concept of BSD has been borrowed from Germany. “Certain features in the
constitution which cannot be contravened or diluted through amendments, they are the
basis of our constitution and form the pillars on which it stands.”

i. Justice H R Khanna
Upheld the amendments. He did not think FRs to be a basic structure of the
constitution and therefore, Right to Property was also not a Basic Structure.
 Democratic Govt
 Parliamentary form of govt
 Secularism
FRs including the Right to Property are NOT part of the basic structure. (Only Judge)

ii. Justice Sikri

 Supremacy of Constitution
 Democratic & Republican form of Govt.
 Secularism
 Separation of Powers
 Federal Character
 Fundamental Freedoms

iii. Justices Shelat & Grover

 J Sikri's list
 The mandate to build a welfare state (DPSPs)
 The Unity and Integrity of the nation.
 iv. Justice Hegde & Mukherjee
 Sovereignty of India
 Democratic form of Govt
 Unity & Integrity of the country
 Mandate to build a welfare state
 Fundamental Freedoms

v. Justice Reddy
 Objectives in the preamble read with the fundamental freedoms.
Amendment means change not destruction. Implied Limitation has existed.

SIX JUDGES WHO HELD PARLIAMENT HAS UNLIMITED POWERS:

i. Justice Ray
All provisions of Constitution are on equal footing such that no provision is more
important that the other and it is not possible to classify some as essential and
others as non-essential.
Only limitation on the powers of the Parliament to amend the Constitution is that
there should be a constitution in the end - amend it but do not destruct it.

ii. Justice Palekar

The Constitution itself has not provided any limitation to the power of the
Parliaments in amending it. It is not the job of the judiciary to do so now. The
parliament has the express power to amend the constitution.

iii. Justice Mathew

There are no provisions in the Constitution which cannot be amended. The
parliament has unlimited power which extends to amending the FRs aswell.

iv. Justice Beg

Role of the Judiciary in examining the Constitution is limiteid to checking
whether the procedure (of amendment) as laid down by Article 368 was followed
or not. That's the only limitation to the power of both the Judiciary and the
Parliament.

v. Justice Dwivedi & Justice Chandrachud

Parliament has unlimited power to amend the FRs because if FRs were beyond
amendments, Article 368 would have mentioned this. Goes on explaining the
three procedures set out under Article 368(simple/special majority & ratification).

5. INDIRA NEHRU GANDHI V. RAJ NARAIN

 ISSUE: The 39th Amendment Act made the elections of PM, Prez, VP immune from
judicial review under 9th Schedule changing Art. 71, 329A and Representatives of
People's Act, 1971.
 CHALLENGE: Cl(4) of Article 329-A, which was inserted by the 39th Amendment in
1975.
 HELD: The Supreme Court applied the theory of basic structure and struck down
329A(4) on the ground that it was beyond the amending power of the parliament as it
destroyed the basic feature of the constitution. The court held that the democratic
government, free and fair election, judicial review are all part of the basic structure of
the constitution.

i. Justice Y.V. Chandrachud listed four basic features which he considered

unamendable:
 Sovereign democratic republic status.
 Equality of status and opportunity of an individual.
 Secularism and freedom of conscience and religion.
 ‘Government of laws and not of men’ i.e. the rule of law.

ii. J. HR Khanna said that keeping elections out of the ambit of the judicial
review runs counter to democracy, free and fair elections and hence violative
of the basic structure.

iii. CJ Ray the rule of law (part of BS) is violated by this amendment which
results in arbitrariness.

iv. CJ Beg talks about the doctrine of separation of powers which includes checks
and balances. This doctrine is violated through this amendment which bars
judicial review. Checks and balances are part of the basic structure which
cannot be taken away.

42nd Amendment
After the decision of the Supreme Court in Keshvanand Bharti and Indira Nehru
Gandhi case the Constitution (42nd Amendment) Act, 1976 was passed which added
two new clauses, namely, clause (4) and (5) to Art.368 of the Constitution. It declared
that there shall be no limitation whatever on the constituent power of parliament to
amend by way of addition, variation or repeal of the provisions of the Constitution
under this Article.
This Amendment would put an end to any controversy as to which is supreme,
Parliament or the Supreme Court. Clause (4) asserted the supremacy of the
parliament. It was urged that Parliament represents the will of the people and if
people desire to amend the Constitution through Parliament there can be no
limitation whatever on the exercise of this power. This amendment removed the
limitation imposed on the amending power of the Parliament by the ruling of the
Supreme Court in Keshvanand Bharti’s case. It was said that the theory of ‘basic
structure’ as invented by the Supreme Court is vague and will create difficulties. The
amendment was intended to rectify this situation.
 6. MINERVA MILLS V UOI
 ISSUE: The validity of the amendment made to Art.31C by the 42nd amendment Act
was challenged on the ground that they are destructive of the ‘basic structure’ of the
Constitution.
 CHALLENGE: Supremacy of the Constitution
 HELD: The Supreme Court by majority of 4 to 1 struck down clauses (4) and (5) of
the article 368 inserted by 42nd Amendment, on the ground that these clauses
destroyed the essential feature of the basic structure of the constitution. It was ruled
by court that a limited amending power itself is a basic feature of the Constitution.
 Clauses (4) and (5) are invalid on the ground that they violate two basic features of
the Constitution viz. limited nature of the power to amend and judicial review. The
courts cannot be deprived of their power of judicial review. The procedure prescribed
by Cl. (2) is mandatory. If the amendment is passed without complying with the
procedure it would be invalid. The Judgment of the Supreme Court thus makes it clear
that the Constitution is Supreme not the Parliament. Parliament cannot have unlimited
amending power so as to damage or destroy the Constitution to which it owes its
existence and also derives its power.
 An undue importance on civil liberties and rights in total disregard of the need to
bring about social and economic justice, may lead to a mass upheaval. Any
importance on the Directive Principles alone, in total disregard of the rights and
liberties, may lead to totalitarianism. Hence a harmonious balance should be
maintained between Part III and Part IV of the Constitution and real synthesis should
come out only from harmonising the spirit of political democracy with the spirit of
economic democracy.

Module 1: Legislative Relations

FEDERALISM
Dicey: a natural constitution for a body which desire union and do not desire unity.
- Distribution and separation of powers which relate to the three branches of Govt :
leg, exec, and jud. Jud Power is not divided at all.
- The exec power broadly follows the line of division of legislative powers but Art 73
and 162 primarily deal with the distribution of exec powers and as does the Chapter II
of the Part XI.
GOVERNMENT OF INDIA ACT, 1935
- The method of threefold distribution of powers adopted was a mixture of Canada and
Australia.
- Canada: enumerating the powers of both centre and units of federation in lists/doesn’t
give residuary powers to dominion, doesn’t have a long concurrent list.
- Australia: enumerating concurrent powers and providing method of resolving
repugnancy in the concurrent field/ doesn’t leave unenumerated powers to the state.
- Exclusive rights List 1: Federal; List 2: Provincial; List 3: Concurrent.
- In case of conflict, the provincial law would be pro tanto void.
 - Residuary powers were given to the Governor General
Current Situation:
- Distribution of legislative powers between the Union and States (Art 246-254); three
lists in the 7th schedule of the Constitution with as many as 210 subjects to make it
exhaustive in order to minimise litigation over conflict of jurisdiction.
- Total number of subjects: 97-66-47
ARTICLE 245
Every federation requires a division of powers b/w the federal govt and the States. Nature of
distribution is threefold as was under the GOI ‘35
List I: 99
List II: 61
List III: 52
While the legislative power is derived from Art 245, the source, the Entries in the constitution
only demarcate the legislative fields of the respective legislatures and do not confer
legislative powers as such.

COMPETENCY OF THE STATE:

1. Clauses 1 and 2 of Art 245 read together imply that State Legislatures have no extra
territorial powers but a legislation which is in substance in respect of matters within
the competence of that State Legislature would NOT be ultra vires simply because it
may have possible effect outside the territory.

2. If there is a territorial nexus between the person to be charged and the State seeking to
tax him, the taxing statute may be upheld depending on :
(i) The connection must be real and not illusory
(ii) The liability south to be imposed must be pertinent to that connection. The
liability imposed may be disproportionate to the territorial connection but it is of
no importance on the question of validity of the statute.

1) New Delhi Municipal Committee v State of Punjab 1997

The extension of an Act has the same effect as if that has been made by extending legislature
for that area. Here Punjab Municipal Act 1911 was extended to Delhi which amounted to
Parliamentary enactment.

2) Gujarat Ambuja Cements Ltd v UOI 2005

The distinction between the object of tax, the incidence of tax and the machinery for the
collection of tax is there. Legislative competence is to be determined wrt the object of the
levy and not with reference to its incidence or machinery.
----x-----
ART 245: deals with territorial extent of laws made by the Union and the State Legislatures.
(1) Subject to the provisions of this 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
 (2) No law made by Parliament shall be deemed to be invalid on the ground that it would
have extra-territorial operation.
Parl has the power to legislate for the whole or any part of the territory of India, as defined in
Art.1 (3).
Art 240(2) says that as regards the Union Territories, a regulation made by the President may
repeal or amend a law made by Parl in relation to such territory.
Para 5(1) of the Fifth Sch. Says that the application of acts of parl to any scheduled area may
be barred or modified by notifications made by the governor.
Art 245(1) lays down the rule of Private International Law that all laws are territorial. Eg.
Entry 17 in List II(water, that is to say, water supplies, irrigation, and canals, drainage and
embankments, water storage and water power) does not authorise a State to pass a legislation
wrt or affecting any aspect of the waters of an inter-State river beyond its territory.
ART 246
Art 246 distributes the legislative powers conferred by Art 245 between the Union and the
State Legislatures wrt the different lists in the 7th Sch.
It does not provide for the competence of the Parliament or the State Legislatures as is
ordinarily understood but merely provides for the respective legislative fields.
(1) Union
(2) Concurrent
(3) State
(4) Reconcile
ART 247
Establishments of additional court by Parliament
ART 248
Residuary Power including taxation on entries not mentioned in the lists.
ART 249
1) 2/3rd of the member present and voting resolution declared by the State for Parliament
to make laws in national interest.
2) In force for not exceeding one year or keep on continuing it again and again for one
year.
3) It will cease to be a fetter on the power of the Union parl to the extent that the
resolution goes.
ART 250
1) Power of parliament to legislate wrt any matter in the State List if a proclamation of
emergency is in operation
2) Six Months after the proclamation has ceased to operate.
ART 251
Repugnancy.
 ART 253
Legislation for giving effect to international agreements in conformation of Art 51(c): 14-I.
Parliament can invade List II insofar necessary for the purpose of implementing the treaty
obligations of India.

1. Doctrine of Territorial Nexus

This means that once a state legislature, competent to legislate with respect to a particular
subject, has some connection with a person, object or activity within its territorial limits
which connection is relevant or pertinent to the subject-matter of legislation, the application
or operation of the Act may extend to persons, objects or activities (as the case may be)
outside the state.
- Sufficiency of territorial connection involves consideration of two elements
(1) The connection must be real and not illusory,
(2) The liability sought to be imposed under the Act must be relevant to that
connection.
CASES:
1. In State of Bombay v RMD Chamarbaughwala 1957: The respondent, the organiser
of a prize competition, was outside the State of Bombay. The paper through which the
prize competition was conducted was printed and published outside State of Bombay
but it had a wide circulation within the State of Bombay. A tax levied by the State of
Bombay on the lotteries and prize competitions under Bombay Lotteries & Prize
Competition Control and Tax Act 1948 was extended to the newspapers published
outside the state “in a lump sum having regard to the circulation or distribution of the
newspaper in the State”. The provision was questioned on the ground that it purported
to affect men residing and carrying on business outside the State. The contention was
rejected and provision held valid because the newspapers though printed and
published outside Bombay had a wide circulation there; they had collectors in
Bombay to collect the entry fee for the competition. The State sought to collect the tax
only on the amount received by the newspapers from the State and, therefore, there
was sufficient territorial nexus entitling the State of Bombay to impose a tax.
- The fact that the liability imposed may be disproportionate to the territorial
connection is of no importance on the question of validity of the statute.

2. In State of Bombay v Narayandas Mangilal, Bombay State Legislature enacted a law

prohibiting a bigamous marriage and made it a criminal offence to enter into such a
marriage. Marriages contracted outside the State by people domiciled within the state
were also prohibited. The act was declared ultra vires as no territorial nexus could be
established between the state and marriage/crime.

3. State of Bihar v Charusila, the Bihar Hindu Religious Trusts Act, 1951 provided that
s.92 of the CPC would not apply to any religious trust as defined in the State of Bihar.
Received President’s assent under 254(2), Bihar changed the CPC to effect: the act
 applied to any religious trust within State of Bihar, any part of whose property was
also within the State. Territorial nexus with the state of Bihar hence established.

- THE THEORY OF NEXUS AS APPLIED TO TAXING LAWS:

1. Wallace Bros v Commissioner of IT 1948 PC: A company incorporated in

England having its registered office there was carrying on business in India. The
income-tax authorities in India imposed a tax on the Company not merely in
respect of the income received in India but also of the income received in
England. Held, by the Privy Council that the Indian Legislature was competent to
tax the income received in England.

2. Tata Iron & Steel Co. V. State of Bihar 1958: §2(g) of the Bihar Sales Tax Act,
1947 allows the state of Bihar to collect Assessment’s Sales Tax even after
Independence. TISCO says that the incidence of sale is not happening in Bihar
only manufacturing is being done in Bihar so Bihar should not be allowed to take
this sales tax. As regards the power of a state legislature to impose a sales tax
under Entry 54 of List II read with Art 286(1)(a), it has been held that though the
tax is imposed on a completed sale, if one or more of the several ingredients of a
sale take place within a state, that is sufficient territorial nexus to enable it to tax
the completed sale which takes place outside the taxing State.
The SC came up with the two tests here: A real/no illusory connection & the
liability imposed.

3. RMDC Bombay case (The prize competition Act)

4. State of Bihar v Charusila Devi

Charusila has established a trust and a diety (Iswar Srigopal) at her home in Bihar
with terms like – the deity is the beneficiary of the trust. She buys property
throughout India. The Bihar Hindu Religious Trusts Act, 1951 provided that s.92
of the CPC would not apply to any religious trust as defined in the State of Bihar.
Received President’s assent under 254(2), Bihar changed the CPC to effect: the
act applied to any religious trust within State of Bihar, any part of whose property
was also outside the State. Territorial nexus with the state of Bihar hence
established.

5. Tikaramji v State of UP
Sugar has been declared as a ‘controlled industry under entry 52, List I. The State
of UP enacted an Act to regulate the supply of sugarcane to the sugar factories. It
was challenged as ultra vires. Entry 52 of List I and Entry 24 of List II indicate
that generally industries fall within the exclusive sphere of the State except those
industries which are controlled by the Parliament. Entry 27 of List II and 33 of
the List III indicate the production, supply and distribution of products of the
 controlled industries fell within the concurrent jurisdiction under entry 33(a) of
List III.

2. DOCTRINE OF COLOURABLE
LEGISLATION
In order to determine the true nature of legislation impeached as colourable –
(i) The court must look into the substance and not merely the form of the act
(a) Effect of the legislation
(b) its object or purposes
(ii) It has nothing to do with the motive of the legislation; this doctrine is in essence a
question of vires or power of the legislature to enact the law in question. The
doctrine is related to legislative competence and not to legislative powers.
Quando aliquid prohibetur ex directo, prohlbetur et per obliquum
This doctrine means that though a legislature is not fettered in the exercise of its exclusive
powers, by an consideration of the possible effects of the exercise of such powers upon the
powers allotted to some other legislature, it cannot –
“Under the guise or the pretence or in the form of an exercise of its own powers, carry out an
object which is beyond its powers and a trespass on the exclusive powers of the other”
- Neither the federal not the state legislature has the power under the colourable
exercise of its own powers, to nullify by implication or expressly, statutes which it
could not enact. What cannot be done directly cannot be done indirectly.
- What is to be seen is the substance of the Act which is material and not the form or
outward appearance. If the subject matter is beyond the powers of the legislature to
legislate upon the form in which law is clothed would not save it from condemnation.

1) The court must look into the substance and not merely the form of the Act
2) The mere object of the legislature is not conclusive as to the validity of the legislation. An
act may have a perfectly lawful object but it may seek to achieve that object by invalid
methods.
3) All the statutes forming a scheme should be read together in order to find out whether they
would nullify a power belonging to another Legislature and then struck down.
4) When an enactment is void or inoperative, any attempt to exclude attack on it by barring
jurisdiction of the Courts will be deemed to be, an attempt to do by indirect means what
the legislature was not entitled to do.
5) Time will not validate the act. It will remain ultra vires.

CASE: KC Gajapati Narayan Deo v State of Orissa

Orissa Estates Abolition Act, 1952 was enacted by the state of Orissa under the power given
in concurrent list for abolishing Zamindari and Orissa Agricultural IT Act of 1950 under
Entry 62-III. In this case, the validity of Orissa Agricultural Income Tax (Amendment) Act
1950 was in question. The argument was that it was not a bona fide taxation law but a
colourable legislation whose main motive was to artificially lower the income of the
 intermediaries so that the state has to pay less compensation to them on acquisition of estates
under Orissa Estates Abolition Act, 1952. SC held that it was not colourable legislation
because the state was well within its power to set the taxes, no matter how unjust it was. The
state is also empowered to adopt any method of compensation under entry 46-II. The motive
of the legislature in enacting a law is totally irrelevant.
From the gross income, agricultural income tax is deducted. The rate of the tax was increased
and the slab was lowered to $15,000 from $30,000.

3. Delegatus non potest deligare

State Legislature, not a delegate of the Union Parliament:
Excessive Delegation; Subordinate Legislation; Sub-delegated legislation
They derive power from the same Constitution. Within its appointed sphere, the state
legislature has plenary powers. The union cannot delegate or transfer its power to the
state legislature and vice versa.
The essential legislative functions which cannot be delegated to the executive are –
(i) The determination of Legislative policy and its formulation as a rule of conduct. In other
words, the Legislature cannot delegate to another agency the exercise of its judgment on
the question as to what the law should be. Though it can always delegate ancillary and
subordinate powers necessary for carrying out the policy and purposes of the Act as may
be necessary to make the legislation complete, effective and useful.
(ii)The power to repeal or to make it inoperative
(iii) The power to modify an Act in its essential particulars.
(iv) The power to make exemptions from the operation of an Act, without laying down the
policy for guidance of the latter.
(v)Prescribing an offence and its punishment.
(vi) Prescribing a special procedure for the trial of a statutory offence

The functions which may be delegated –

(i) A legislature cannot foresee and provide for all future contingencies.
(ii)The power to extend the operation of an act
(iii) Once the essential legislative function is performed by the Legislature by declaring the
policy, the extent of delegation is a matter for the discretion of the Legislature and the
Court is not competent to say that the legislature should not have done beyond a certain
limit or that it should have provided a different standard.

1. Queen v Burrah
North Eastern states were governed by the Lt Guv of Bengal who once appointed an
officer to govern the Garo hills. One act made by the Birtish Parliament i.e. Act 22 of the
1869, this power to govern extended to Khasi and Jayantia hills under certain
circumstances i.e. Act – Power to Lt Guv – to appoint an Officer
Sub-delegation is never allowed. But what saved it here was the Conditional Legislation.
 2. In re Delhi Laws Act 1912
Certain sections were scrutinized by the Court for their constitutionality.
(a) Delhi Laws Act (13 of 1912), S.7,
(b) Ajmer-Merwara (Extension of Laws) Act (52 of 1947), S.2 and
(c) Part C States (Laws) Act (30 of 1950), S.2
The six-judge bench took interesting standpoints where the constitutionality of the first two
Acts under the scanner were upheld whereas the second part of Section 2 of the Part C States
(Laws) Act (30 of 1950) was held to be ultra-vires.
Firstly, the Province of Delhi was carved out of the Province of Punjab and was put under a
Chief Commissioner and by section 2 of the Delhi Laws Act the laws in force in the Punjab
continued to be operative in the newly created Province of Delhi. Section 7 of the Delhi Laws
Act enables the Government (executive) to extend by notification with such restrictions and
modifications as it thinks fit, to the Province of Delhi or any part thereof, any enactment
which is in force in any part of British India.
Secondly, till the Government of India Act, 1915, there was unitary government in India. By
the Act of 1915, Provincial legislatures were given powers of legislation but there was no
distribution of legislative powers between the Centre and the Provinces. To the extent to
which section 7 of the Delhi Laws Act is held ultra vires, section 2 of the Ajmer-Merwara
(Extension of Laws) Act 1947, should also be held ultra vires.
By Section 2 of the Part C States (Laws) Act the Parliament has given power to the Central
Government by notification to extend to any part of such State (Part C State), with such
restrictions and modifications as it thinks fit, any enactment which is in force in Part A State
at the date of the notification. The chief observed that the section although framed on the
lines of the Delhi Laws Act and the Ajmer-Merwara Act is restricted in its scope as the
executive government is empowered to extend only an Act which is in force in any of the
Part A States. For the same reasons he considers certain parts of the two sections covered by
Questions 1 and 2 ultra vires, that part of section 2 of the Part C States (Laws) Act, 1950,
which empowers the Central Government to extend laws passed by any Legislature of Part A
State, will also be ultra vires.

JUSTICE KANIA (Minority)

Chief Justice Kania, formed part of the minority along with Mahajan, J. The Chief Justice
declared that, whether sovereign or subordinate, the legislative authority can delegate if it
stands the three basic tests:
(1)It must be a delegation in respect of a subject or matter which is within the scope of the
legislative power of the body making the delegation.
(2) Such power of delegation is not negatived by the instrument by which the legislative body
is created or established; and
(3) It does not create another legislative body having the same powers and to discharge the
same functions which it has, if the creation of such a body is prohibited by the instrument
which establishes the legislative body itself.

JUSTICE FAZL ALI(MAJORITY OF 5 – Upholding The Delegation)

The legislature,
 1) Must normally discharge its primary legislative function itself and not through others.
2) Can delegate and this power is ancillary to and necessary for the full and effective
exercise of its power of legislation
3) Cannot abdicate its legislative functions, and does not become a parallel legislature

MUKHERJEE, J. (MAJORITY)
As regards constitutionality of the delegation legislative powers, the Indian Legislature
cannot be in the same position as the omnipotent British Parliament and how far delegation is
permissible has to be ascertained in India as a matter of construction from the express
provisions of the Indian Constitution.
BOSE, J.
In favour of delegated legislation, he concurred with the opinion above.
But delegation of this kind cannot proceed beyond that; it cannot extend to the repealing or
altering in essential particulars laws which are already in force in the area in question.
DAS, J.
The opinions of the learned justice can be summarized as follows:
i. The principle of non-delegation of legislative powers founded either on the doctrine
of separation of powers or the theory of agency has no application to the British
Parliament or the legislature constituted by an Act of the British Parliament;
ii. The operation of the act performed under delegated power is directly and immediately
under and by virtue of the law by which the power was delegated and its efficacy is
referable to that antecedent law; India is no longer under the British rule so it is not
sub-delegation but mere delegation at first step.
iii. The power of delegation is however subject to the qualification that the legislature
may not abdicate or efface itself, that is, it may not, without preserving its own
capacity intact, create and endow with its own capacity a new legislative power not
created or authorised by the Act to which it owes its own existence.

4. DOCTRINE OF INCIDENTAL AND

ANCILLARY POWERS:
The doctrine is founded upon the principle that on the face of the constitution, the legislative
power falls both in the Union as well as State lists, but on a careful scrutiny of the subject of
enactment, it becomes clear that it falls merely incidentally in one list, but substantially in
another list. It cannot be applied to validate a law which colourably or by fraud on the
Constitution directly overrules a law declared or mandamus/directions issued by court in
exercise of its power of judicial review.
Constitutional provisions are entitled to a liberal or generous interpretation and not to a strict
construction as may be applicable to statutes.

- An incidental power is one that is directly and immediately appropriate to the

execution of specific power granted and not one that has a slight or remote relation to
it.
- This doctrine means that in enacting a legislation, the legislature has not travelled
beyond the legislative field allotted to it but that there has been merely incidental
encroachment of powers which does not affect the main scheme of distribution of
powers.
- Ancillary power: reasonably comprehended within/in aid of and not inconsistent with
the granted power.

(1) R S Joshi v Ajit Mills

§5 of the Bombay Sales Act gives the list of goods on which sales tax should not be
levied i.e. that they’re of such essential nature.
§46 if it is found that a seller is collecting sales tax on any of these products,
punishment.
§63(1)(h) tells the punishment of simple imprisonment, fine or both.
§37 also tells the penalty.
- If this is a simple forfeiture of money/property - lies with the union and not with state.
- The entry sales tax is given a wider meaning to punish those who are collecting sales
tax on restricted (ancillary & incidental matter) excess collection.

(2) Bombay Prohibition Act, 1949

- To ban sale, possess, manufacture, distribution, transportation of liquor and all liquids
containing alcohol.
- GOI act, 1934: Federal List, Provincial & Concurrent.
- Entry 19/90 of the Federal List read with Entry 31 of Provincial List: Intoxicating
Liquor
- Entry 91 of the 7th Schedule to GOI Act, 1935.
- The import and export of goods – foreign liquor.
- “Import ends when the product enters the border and then they are subject to same
laws.”

(3) Tikaramji v State of UP

Sugar has been declared as a ‘controlled industry’ under entry 52, List I. The State of
UP enacted the UP Sugarcane Regulation of Supply & Purchase Act of 1953 to regulate
the supply of sugarcane to the sugar factories. It was challenged as ultra vires. Entry 52
of List I and Entry 24 of List II indicate that generally industries fall within the
exclusive sphere of the State except those industries which are controlled by the
Parliament. Entry 27 of List II and 33 of the List III indicate the production, supply and
distribution of products of the controlled industries fall within the concurrent
jurisdiction under entry 33(a) of List III.

5. DOCTRINE OF PITH AND

SUBSTANCE
The phrase means true nature and character. Thus the doctrine postulated for its application,
that the impugned law is substantially within the legislative competence of legislature that
made it, but only incidentally encroached upon the legislative field of another legislature.
The doctrine in short means that if the substance of a legislation falls within the legitimate
power of a legislature, the legislation does not become invalid merely because it incidentally
affects a matter outside its authorised sphere.
The expression “with respect to” in art 246 brings in the doctrine of pith and substance in.
Apply it to
(1) Enactment as a whole
(2) Its main objects
(3) The scope and effect of its provision
(4) In the context of fundamental rights, the courts have discarded “pith and substance
rule” and the violation of fundamental rights will be based on “direct and inevitable”
effect of a statutory provision.
(5) Laid down by Privy Council in interpreting British North America Act, 1867. Applied
in India for the first time in In re. Central Province and Berar Act (known as Central
Province’s case) 1939 FCR 18.
GENERAL PRINCIPLES FOR INTERPRETATION OF THREE LISTS:
(1) The entries in the lists should be given a large and liberal interpretation
(2) Each general word should be held to extend to all ancillary or subsidiary matters
which can fairly and reasonably be said to be comprehended in it.
(3) When the vires of an enactment is challenged, and there is any difficulty in
ascertaining the limits of its power, the difficulty must be resolved, so far as possible,
in favour of the legislative body, putting the most liberal construction upon the
relevant legislative entry so that it may have the widest amplitude.
(4) Courts should interpret the ambit wrt facts of each case instead of attempting an
abstract definition, circumscribing their scope once for all.

(1) State of Bombay v F N Balsara, a conflict was sought to be made out between entry
41, List I and Entry 8, List II. Arguing for a broader view of the Central entry, it was
suggested that the ‘import’ of intoxicating liquors would not end with mere landing of
goods on the shore but would also imply that the imported goods reach the hands of
the importer who should be able to possess them. Therefore it was said that the State
could not prohibit the possession and sale of intoxicating liquor as that would amount
to a power to prohibit their import into the country, as one is a necessary consequence
of the other. To reconcile the two entries, SC gave a limited meaning to word import
of central entry in order to give effect to the state entry. Court held that ‘import’
standing by itself, could not include sale or possession of the article imported into the
country by a person residing in the territory in which it was imported. State has no
reference to import and export but merely deals with production, manufacture,
possession, transport, purchase and sale of intoxicating liquors. The State legislature
could therefore prohibit the possession, use and sale of intoxicating liquors. Thus
entry 8 List II has been given effect by narrowing down the scope of the central entry
which could otherwise nullify the state power if it were to be broadly interpreted.
 (2) Praful Kumar Banerjee v Bank of Khulna (Privy Council)
Bengal Money Lender’s Act, 1946 was made as per GOI Act, 1935 to regulate the
practice of moneylending.
Entry 21-II (Provincial List): money lending and money lenders.
Entry 28-I (Federal List): Cheques, Bills of Exchange, Promissory Notes & other
negotiable instruments
Money lended with an I owe You note is a promissory note. Incidental degree of
encroachment is permitted. To determine the true nature of an act i.e. its pith and
substance, we look at the following features of an act:
i) Objective
ii) Scope
iii) Effect as a whole

(3) State of Rajasthan v G Chawla

Ajmer(Sound Amplifiers Control Act, 1952) to contain noise pollution.
31-I, 6-II, 1-II
In pith and substance, this act is about public health and order. Valid.

(4) State of Karnataka v Drive-in Enterprises

State levied entertainment tax under 62-II.
There was difference in ticket prices for those who sit on ground and who come in
their vehicles. Issue: Whether state can levy taxes on the entry of vehicle?
Court said yes as in vehicle there’s more entertainment. The tax on their entry is
simply incidental.

6. HARMONIOUS CONSTRUCTION:
(1) FN Balsara v State of Bombay
(2) Ishwari Khetan Sugar Mills v State of UP
- State of UP acquired mismanaged sugar mills under the UP Sugar
Undertaking(Acquisitions) Act, 1971. Sugar is a controlled industry.
- Entry 7 and 52 are the exceptions, the state can legislate over all such matters.
- Entry 42-III (Acquisition & Requisition) – Development & Regulation diff from A&R.
- The state is free to legislate over the matters of acquisition to give effect to Entry 42-III
as the parliament hasn’t.

EDUCATION:
(3) Kumari Nivedita Jain v State of MP
Min. Qual. Marks
- General category – 50% aggregate and 30% in each.
- ST/SC – 40% aggregate and 30% in each.
 Rule No. 20 introduced by state and board deleted all the requirements for ST/SC
causing wide disparity in the quality of students, reducing the standards of education.
State argued that quality comes after admission takes place. The standard of education
has to be maintained after getting such sort of admission.
Court accepted the view of the state.

(4) Dr Preeti Shrivastava v State of MP

Entrance at PG (medical) level. Court said only a difference of 10% between the
minimum qualifying marks of general and SC/ST students would be permissible.

(5) DAV College v State of Punjab

DAV wanted to teach in Hindi but state legislature made Gurumukhi as the medium of
instruction. Court held that Punjabi will lead to a poor quality education as it is not
spoken all over India.

(6) Central Provinces and Berar Sales of Motor Lubricants & Spirits Act 1938
§3: difference between sales tax and excise duty.
The dealers/retailers of lubricants and spirit will have to pay sales tax.
Provinces were levying excise duty and not the sales tax in this manner.
Excise duty can be charged at any stage till the product reaches the consumer and it is
under the Federal Powers as mentioned in the GOI Act, 1935
Sales Tax can be charged only at the point when retailer is selling product to consumer
and excise duty is before reaching the retailer.

7. Doctrine of Repugnancy – Art 254

i. Clear and direct inconsistency b/w Centre and State Act.
ii. Such inconsistency is irreconcilable or brings the State Act in direct collision with the
Central Act or brings about a situation where one cannot be obeyed without
disobeying the other.
Parliamentary legislations will predominate – when the two overlap & conflict even in their
allotted sphere by virtue of non-obstinate clause in Art 246(1) and when conflicted in the
concurrent list by virtue of 254(1).
Exception is 254(2): The State legislation having been reserved and having obtained
President’s assent prevails in that State subject to the proviso that repugnancy between a law
made by state legislature wrt one of the matters falling under the Concurrent list.
-x
1) Direct Conflict: where one cannot be obeyed without disobeying the other. If you
can’t apply harmonious construction (in application of the law) then it’s the case of
repugnancy – only in the matters of concurrent list wherein the law of the parliament
is to prevail. The only exception is that: if the law made by the state is to come into
conflict with the law of the centre so with prior assent of the President before
enactment, the state gets the upper hand in the matter.
 2) Intended Field: It is evident that the Union Parliament intended its legislation to be a
complete and exhaustive code relating to the subject, it shall be taken that the Union
law has replaced State Legislation relating to the subject.

3) Occupied/Covered Field: Even where the central act is not exhaustive, repugnancy
may arise if it occupies the same field as the State Act. If they deal with separate and
distinct matters though of a cognate and allied character or their purposes are
different, repugnancy does not arise.
No repugnancy arises where the encroachment is not substantial or the subject-matter
of the legislation is not the same. It applies only to the entries of the List III.

CASES:

1. Hoechst Pharmaceuticals v State of Bihar:

 The parliament made Essential Commodities Act [under Entry 33-III] (goods
necessary in public interest) connected to Entry 52-I (industries in public interest)
eg. Cotton, Jute, Salt. The central legislation comes up with the delegated
legislation – Drugs Price Control Order [under Entry 33-III] to the central
executive dealing with indirect tax. It permits the dealer to shift the burden of tax
to the consumers. Section 5 of the Bihar Finance Act, 1981 [Entry 54-II ] – if the
gross income is above 5 lacs $ in that case in addition to sales tax, a surcharge
could be levied and you cannot shift the burden. Article 254 will not apply here as
both the acts are made under different lists so you can only try harmonious
construction. Repugnancy will arise only when they were made under the same
(concurrent) list. The court said try to reconcile the applications of the laws. The
union law says it’s permissible while the state says it is not allowed. The union
law does not make it mandatory while allowing.
 Repugnancy as has been pointed out by the Supreme Court in Hoechst
Pharmaceutical Ltd v. State of Bihar, AIR 1983 SC 1019, would arise only when
both the legislature bodies operate in a field common to them i.e. when they
simultaneously legislate on the same matter in the concurrent list and speak in
different voice. Inconsistency would arise when the provisions of two could not
logically exist at the same time, or when they clash impose contradictory duties or
confer contradictory rights. Where there is direct conflict between two provisions,
or where one could not be obeyed without disobeying the other, a clear case of
repugnancy might appear.

2. M Karunanidhi v UOI
Validity of Tamil Nadu Public Men (Criminal Misconduct) Act, 1947 as amended
by the Act of 1947 challenged on the ground that it was inconsistent with the
Central Acts of IPC & CrPC and Prevention of Corruption Act, 1947. The state
Act was passed after obtaining the assent of the President. The court held it
could survive as it was a supplementary act only. The State Act itself permits the
 Central Acts to come to its aid after an investigation is completed and a report is
submitted.

3. Deep Chand v State of UP

The validity of U.P. Transport Service (Development) Act was involved. By this
Act the State Government was authorised to make the scheme for
nationalisation of Motor Transport in the state. The law was necessitated
because the Motor Vehicles Act, 1939 did not contain any provision for the
nationalisation of Motor Transport Services. Later on, in 1956 the Parliament with
a view to introduce a uniform law amended the Motor Vehicle Act, 1939,
and added a new provision enabling the State Government to frame rules of
nationalisation of Motor Transport. The Court held that since both the Union
Law and the State Law occupied the same field, the State Law was void to the
extent of repugnancy to the Union Law.

8. DOCTRINE OF OCCUPIED FIELD

Arises in relation to List III of Seventh Schedule/concurrent sphere in order to determine
whether a state legislation is repugnant to the central legislation (Art 254) as the rest is
covered field in List I and II.
1) If the State law is reliable to an exclusive power in the state list, it may co-exist with
the Union Law relating to the Concurrent List, because there is no question of any
conflict of jurisdiction within the same field
2) Where, however, both relate to a concurrent power, the question arises whether they
operate in the same field; if they do, the Union law will prevail if it has ‘occupied the
field’. Otherwise the State law may co-exist in the absence of any repugnancy with
the Union law. Express provision in Art 254
3) Repugnancy arises in the following cases:
(a) Where one cannot be obeyed without disobeying the other law
(b) Where one creates a right which is taken away by the other.
To find out whether there is any repugnancy, the following are relevant:
i. the express words employed in an Entry(which will include Inci&Anci
matters)
ii. The scheme of the Act under scrutiny
iii. Its object and purpose
iv. Its true nature and character
v. The pith and substance of the legislation
Repugnancy may also arise, even in the absence of a direct conflict, when the superior
legislation evinces an intention to cover the entire field leaving no room or the rival
legislation to operate in that field.
 4) If it is evident that the Union Parliament intended its legislation to be a complete and
exhaustive code, relating to the subject it shall be taken that the union law has
replaced the state legislation relating to the subject.

CASES:

1. VIJAY KUMAR SHARMA V STATE OF KARNATAKA

42-III: Acquisition of Property
§4 of the Karnataka Contract Carriages (Acquisition) Act 1976: that the State CC and
issued permits under the MVA, 1939 will vest in the State without encumbrances.
This legislation was passed with the assent of the President.
§14 provides that no application for fresh permit or their renewal shall be entertained
except for vehicles owned by the State Road corporation.
§20: the concerned authority is not allowed to entertain applications from any person
apart from the State Road corporation.

The amended MVA 1988 was more liberalized in grants of permits.

§73 of the MVA gives a process and mode of application for permits to be granted to
CC.
§74: It is the regional transport authority which is the concerned authority for grants
of permits, the conditions attached to the granting and empowers the state govt when
directed by the central govt to limit the number of permits.
§80 various kinds of applications and permits granted by the regional transport
authority.

KCC(A) Act, was repugnant with MVA 1939 so they took president’s assent. Now
that MVA was amended in 1988 – repugnancy was again feared.

HELD:
1) Identify the field which was occupied by using the doctrine of pith and substance.
Entry 42-III (Acquisition – KCC(A) Act)
Entry 35-III (Mech. Propelled vehicles – MVA 1988)
The entries are in concurrent list so repugnancy arises. [Hoescht]
2) In M. Karunanidhi, both acquired the same field. Here, they are occupying
different field so they have to be harmoniously constructed and are not repugnant.

2. JB EDUCATIONAL SOCIETY V STATE OF ANDHRA PRADESH

25-III (Education): State made A P Educational Act, 1982
JB Educational Society asked for permission under §20 to open engineering colleges
in different parts of Andhra Pradesh. Permission was denied to JBES as their areas
already had many colleges.
§19 classifies educational institutions under govt, local and private institutions.
 §20 allows the state to establish an authority to survey the number of educational
institutes in areas where more or less constructions are to be granted.
All India Council of Technical Education under §10 of the AICTE, 1987 surveys to
tell where engineering colleges are required and giving grants to tech. edu, allocation
of disembursements and funds promoting technical education for women,
handicapped, weaker sections, training of teachers, regulating the courses etc.
HELD: They are occupying the same field of education. Is there a head-on
inconsistency? No. AICTE is a general regulatory body whereas AP is granting
permission for establishment of these colleges.

RESIDUARY POWERS
97-I, Art. 248, and 246 read together.

1) UOI v HS Dhillon
Wealth Tax Act, 1957 enacted by Parliament.
Entry 86-I (taxes on assets of a person, eg. agriculture)
The aggregate value of all assets, excluding agricultural income and deducting all
debts and liabilities.
§24 of the Finance Act, 1969 amended the Wealth Tax Act to add agricultural
land into calculation.
Entry 49-II(taxes on lands and buildings)

HELD:
The lists are very specific when coming to tax entries so if agricultural land is not
mentioned in List II and III, it will fall within residuary powers. Your wealth, your
assests, your worth – incidence of taxation is different in case of wealth tax as
under the States it is by the virtue of ownership (Land Revenue States Act)

ADMINISTRATIVE RELATIONS
Art. 262: Adjudication of River Water Disputes (Interstate) by Parliament

Eg. Damodar Valley Corporation Act, River Board Act, Interstate River Water Disputes
Act 1956

 Entry 56-I
 Entry 17-II
 Court said nothing in schedule 7 can make legislations on interstate disputes. It is
coming from Art. 262. Art 248 read with 97-I.
 Art 262(2) – Notwithstanding anything in this constitution, the parliament can make
legislation to allow neither the SC or any other court can exercise jurisdiction on
matters specified in Clause 1.
  Composition of the water tribunal – 1 chairman, 2 members – eligible to become HC
Judges.
 Kaveri River Water Dispute – River starts from Karnataka, passing to Kerala,
Puducherry to Tamil Nadu. 1892. States were Pondicherry, the state of Mysore,
Madras Presidency. The French, Mysore, British India. Kaveri Management Board
constituted by Government in 1990s. In 1990s, farmers complained resulting in
Kaveri River Water Disputes Tribunal. The state of Karnataka will release water but
Kt issued an ordinance which was later transferred to an Act: Karnataka will not
follow the interim orders of the water tribunal. The president submitted 143 to SC - In
re Kaveri River Water Disputes 1992. Since disputes resolved by water tribunal are
final and no state can issue unilateral decisions, Karnataka is bound to obey the orders
otherwise it will result in failure of parliamentary machinery.
 Krishna and Narmada River water disputes.

Art 263: provisions wrt an INTERSTATE COUNCIL – advisory, not binding, not been a very
effective body, can be constituted by the President to be headed by Central Executive, CM of
states and Lt Gen of UTs are members. It facilitates negotiations between states.

 4 zonal councils

PLANNING COMMISSION AND NITI AYOG (Jan 1, 2015)

 Think tank and a body which will foster cooperative federalism.

 The Chairman : PM
 VC: appointed by PM
 CM of states and Lt Gen of UTs are members
 3 full time expert members – BRDO, Economist, and 2 other members
 4 ex-officio members nominated by the centre
 Approach is supposed to be bottom up instead of command line.
 Task force on Digital India, sub-committee of states on Swacch Bharat creating plans
and their implementations
 Functions of NITI Ayog.

Bodies created: National Institute of Labour Economics Research and Development for
sector-specific (Labour) development; Digital India.

Financial Relations
If the tax is collected unlawfully and not in power, can it be refunded? The answer is different
for direct and indirect tax.

I. Indirect Tax: Burden already shifted to the buyer so no burden on seller and
therefore, they cannot refund. Leads to unjust enrichment but tax is now with
consolidated fund.
II. Direct Tax: Refund is possible. Burden has not shifted.
Case: Mafatlal Industries Ltd v UOI

§11(b) of Excise Act, §27 of the Customs Act.

Mafatlal(Appellant) has textile mills and manufactures blended yarn which is used in Art Silk
manufacturing; excise tax was levied on the blended yarn when it was sold. Gujarat HC
declared it unconstitutional; SC said that no refund can take place as it is indirect tax and the
burden has already shifted from the seller. Mills & Maftlal did not suffer from any losses – so
the refund to them is not justified. §72 of the Contract Act: if this is unjust enrichment, there
should be restitution. Indirect Tax targeted the customers rather than the sellers. No refund
given.

Three situations where refund can be asked by the appellants:

i. Legislation unconstitutional
ii. Tax levied because of wrong interpretation/misinterpretation
iii. Persons under wrong impressions that he has to pay the tax and he paid it when he
was not supposed to pay.

Reasons for judgment:

i. Principle of Restitution
ii. Fiscal chaos
iii. Idea of economic and distributive justice (in other form reaches to injured parties)
iv. Public Interest.

Distinction between Tax & Fees:

Fees: Quid pro quo of the service

Tax: Irrespective of any service or the amount of service.

Case: Commissioners Hindu Religious Endowment v Shri Lakshmindra Tirtha Swamiar

Madras Hindu Religious Endowment Act, 1954: 8 maths in Uddipi, every 2 years, religious
priests charge their maths and have a ceremony and have incurred a heavy debt; Hindu
Religious Endowment Board appointed a manager but there was mismanagement; So the
board decided under §76 of this Act: 5% of the Annual Revenue Tax on entry. The managers
of the Hindu Religious Trust contested this and said it is violative of constitution. It is a tax,
not fees; Entry 47 List III – fees making state competent to make a legislation. If it is tax then
it does not fall into any of the 3 lists so it will be a residuary power so state. It is not
competent; court suffered to Australian case Matheros v Chicory Marketing Board.

(a) Tax is a compulsory extraction of money by public office for public purpose
enforceable by law and not dependent on services rendered.
(b) Essence of Tax is compulsion and payment is enforceable by law
(c) It is an imposition for public benefit without any reference to the specific benefit of
the taxpayer. An eg: road tax is collected but it is up to the govt how to use it.
 (d) Tax is a part of common burden. Taxation depends on capability of the tax payer to
pay
(e) Tax benefit goes to the general public rather than the specific tax payer.
(f) Fees: charge for special service rendered by public office to a specific person charged
for the expenses incurred by the public office to do so and is applied at a uniform rate
(g) Fees are voluntary in most cases and involuntary in some exceptional cases.
(h) Fees may not be proportional to the expenses incurred.
(i) Fees benefit goes to the fee payer.

Applying these tests court said that since every temple is compelled to pay 5% tax to
government as a contribution to tax, not fee, the Madras legislation is incompetent because
the tax legislation comes under residuary powers.

City Corporation of Calicut v T Sadasivam:

License fee is levied on land or premises for soaking coconut husk under Kerala Municipal
Act, 1984. Is it a tax or fee? If it is tax, it should be under Centre. The court said it is not
necessary to apply the ‘quid pro quo’ test in a strict sense but in a general sense i.e. if you get
anything in return then it will be a fee.

The test is ‘COMPULSION TEST’ i.e. Compulsion to pay; fee cannot be in connection to the
object sought – so compulsion is the final and ultimate test: if you soak coconut then you’re
paying the fees.

Sikandrabad Hyderabad Hotel Corporation v Hyderabad Municipal Corporation:

Under §21 of the Act passed by HMC – a license fee is taken to issue a license after certain
inspections for running hotels. The court said that even though it is compulsory for thte hotels
to get inspected and therefore the fees – a trait of tax, the HMC is charging money for
specific service, which is not compulsory for the general public.

GST:
1) Art 246 (A) (1): Provides the power of parliament and state legislative subject to
clause (2) to make legislation.
2) Art 246 (A) (2): Parliament enjoys exclusive powers in interstate sales. Trade barriers
should not be created to create a uniform market & a unified fiscal policy (EU). There
is, however, State GST & Centre GST – so there’s no uniformity.
3) Art 248: Residuary powers of the parliament are subject to 246(A)
4) Art 249: Power of the parliament to legislate in National interest.
5) Article 268 (1): such duties levied by the GOI but collected & apptd by the State
which go into consolidated fund of the state. Eg. Stamp, Excise, Medicinal &
Toilet(deleted). In UTs, collection goes into CFI.
 6) Article 268(A): Deleted.
7) Art 269A: Inserted – consignment of goods – For the goods on which GST will
apply.
8) 269: for the goods on which GST will not apply.
9) IGST: Interstate GST: Levied & collected by GOI appt by Centre & State on the basis
of the recommendations of GST Council.
10) Explanation: Imports = IGST Goods
11) Amount collected in clause (1) will go to the CFS.
12) SGST when left and has IGST will go to Union.
13) Insertion in 270
i. To insert 269A (union list)
j. Inserted 270(1)(a) GST Council and (b) every financial year
k. The % of 270(2) CS by within 60 days.
14) 271
15) 279A Creates GST Council – Prezi within 60 days. FM chairperson. State FM
members. Decide their own VC. Recommendations about tax cess by all three tiers of
govt, tax exemptions, threshold limits of GST applicability, quantity of goods
supplied in different states, uniform taxation. Center/State weightage: 1:2
16) 286 will not apply to sale but supply
17) 368 (special amendment procedure)
18) 366 12(a)
19) 267 empowers president and governor
20) Insertion in the 7th schedule List I entry 84 substituted – deleted 92 and 92C
21) Entry 52-II deleted, 54 added.

Intergovernmental Tax Immunity

Article 285. Borrowed from UK & US.

(1) International Airport Authority v MCD

Airport Authority was under debt of property tax amounting to ₹I crore 71 lacs 71000.

In RD shetty, court has agreed that IAA is a state under Article 12. States cannot leevy tax on
union’s property.

§3 of the IAA Act: IAA is a body corporate which ahs the rights to hold, acquire, dispose off
property.

§12 – all the property and other asses before the commencement of the Act with Director
General are not with the authority. Authority was here therefore with its own property. The
authority itself cannot be the property of Union if that’s the case.
If there is depreciation in property it can be exempted from IT.

Article 289(2) if any business is being carried out on behalf of the state, then tax can be
levied on by the union.

Under Principle of Estoppel, IAA was deriving benefits under IT Act where it is a corporate
and was having depreciation on its property. So you are saying one thing at one place and
different at other. Disadvantage cannot be evaded after deriving benefit. MCD can levy tax.

(2) In re Sea Customs Act

§20 of the SCA 1878(import and export) and §3 of the Centre Excise & Salt Tax
Act(manufacturing and production)

Majority distinguished between directly and indirectly levied taxes. .289 saves the income
and property of the state only from direct taxes. 289(1) will not apply on indirect taxes. Union
has the power to regulate international and intergovernmental trade and commerce – so
narrow interpretation of article 289 here.

Minority said 366 clause 28 says does not make a difference between direct and indirect tax.
The definition even in the heading of 289 says taxation onlyl if not applied on 289, will
violate Constitution. 246 - plenary power of the parliament to legislate over union matters.
289 - is an exception to 246. Minority said application of 289 is to be considered with 246,
285(Reverse of this), 289 and 366(28).There is no distinction to be made between direct and
indirect tax as union has been exempted by 289 and 285 from making a distinction.

EXECUTIVE POWER
1. Ram Jawaya Kapur v State of Punjab
Article 73 and 162. Pb was publishing its own books.
1905: Mr Ram and 5 others were publishing text books.
Under Alternative Textbook Scheme, all the textbooks were to be submitted by
Publisher/Author for approval by Education Board to be sold as an alternative
textbook.
1952: Only authors were allowed now and the state education board will publish it.
Publishers ran out of business.
Challenge: 19(1)(g) and right to property.
State executive needs the backing of legislation. They are co-extensive. Since there
was no legislation, the executive cannot do so.

Presidential Elections:
1971 Census based:
Weightage of votes = total population of state/no of mla divided by 1000
For presidential election = total no. of votes of mlas/ no of MPs
 1. NB Khare v Election Commissioner
NBK Challenged presidential election on the grounds that there was vacancy in
electorate collage because there was no assemblies in PB & H. Court held that no
ordinary person can challenge such election. Only a presidential candidate and that
too with support of 10 electors can challenge.

2. In re Presidential Elections 1961

Gujarat assemble vacancy in electorate. Cnanot challenge on grounds of vacancy.

3. P & VP elections Act 1952, Amendment of 1977

50 electors need to propose the name and it has to be seconded by 50: President.
For vice president: 20+20.

LEGISLATIVE POWERS OF THE EXECUTIVE:

ARTICLE 123: power of the president to promulgate ordinances during the recess of the
parliament.
1. King Emperor v Benoari Lal
The governor general is the sole judge whether such circumstances exists which
required promulgation of the ordinance. Satisfaction is subjective – no objective test
to see the necessity. Completely beyond the ambit of Judicial Review.

2. SKG Sugar v State of Bihar:

Art 213 the governor is the sole judge under the circumstance that render it necessary
to promulgate an ordinance. No scope for judicial review.

3. RC Cooper v UOI
Banking Companies (Acquisition & Transfer Undertaking) Ordinance 1961 enacted
into an Act. Obiter Dictum: Justice Ray: Satisfaction of the president can be
challenged on the account of bad faith, malafide, or corrupt motive.
1975 – 38th Amendment to the Constitution inserted 123(4): the satisfaction of the president is
completely beyond the subject of judicial review.
44th amendment deleted this clause.
4. AK Roy v UOI – (preventive detention)
National Securities Ordinance, 1980 and relying on SR Bommai v UOI(Case on
Promulgation of Emergency – you can challenge the satisfaction of the president on
grounds of malafidae) So the Judiciary should be able to do the same for these
promulgations too.

5. T Venkata Reddy v State of AP – Opinion of the Court changed again.

Ordinance was equated with legislation as if it violates FR, it is void. The motive
behind legislation cannot be challenged and only competency can be challenged.

6. K Nagaraja v State of AP – same as above

No limitation except competency.
 7. Rameshwar Prasad v UOI
Although the advice tendered to the President is confidential and cannot be brought
under the purview of Judicial review, the existence of the relevant material so
provided to the President can be subjected to Judicial Review.

8. DC Wadhwa v State of Bihar

1967-1981 : 256 ordinances were promulgated in Bihar. They expire the ordinances
on purpose and bring them in a new name with same provisions for years. Some
ordinances were kept alive for 14 years or more in the same manner. Ordinarily law
making power is with the legislature. By repromulgating ordinance – the executive is
usurping its power. The State was ordered to pay $10.000 to DC Wadhwa for
conducting the research.

9. Krishna Kumar Singh v. State of Bihar

7 Judges: 400+ ordinances were repromulgated from 1980-92 after DC Wadhwa for
acquiring Sanskrit schools. The employees of the school became govt servants till the
time of lapsing of the last ordinance in 1992. The issue was of rights endured. The
rights and liabilities which were created through legislation which ceased to exist
usually endure.
Temporary Legislation- specified time period. The same is with the ordinances. Like
legislations, any right and liability will also endure even after the ordinance ceases to
exist - Justice Lokur gave minority judgment: where rights and liabilityies endured
by an ordinance are equal to legislation referring to the judgment in T Venkata Reddy.
Justice Chandrachud(Majority) – the rights and liabilities created under an ordinance
also cease to exist/lapse/have effect with the ordinance except when –
i. It is impossible to completely reverse those rights and liabilities.
ii. It will harm public interest if we do not allow those rights and liabilities to
continue.

Court said:

Any repromulgation is a fraud to our constitution, no circumstance should allow for

repromulgation of any ordinance. It is a mandatory requirement ot produce an ordinance
before the houses. Checks & Balances – Judicial Review – Indira Gandhi v Raj Narain. The
executive has legislated, the legislative should check.

Justice Lokur(minority):

Article 123&213: The ordinance does not have to be placed before the house. It can and will
lapse on its own. Criticism: Public interest is not defined for which you can continue those
Rights & Liabilities.

Powers of the Governor: 72&161

 1. “Pardon” - person completely absolved of the crime as if he had never.
2. “reprieve” – undergoing punishment temporarily suspended. It is not parole.
3. “respite” – delay in execution of a sentence.
4. “commutation” – changing the punishment to a punishment of lesser degree.
5. “remission” – the same sentence is reduced.
(a) KM Nanavati v state of Bombay

Before the matter could go to SC, Governor granted suspension of punishment. HC

challenged and then SC held that when matter is sub judice, the power of pardon cannot be
exercised. When SC finally decided the matter the governor again granted.

(b) Khehar Singh v UOI

Sent a mercy petition to the president for oral hearing by his relative in front of the President.
He challenged this when President refused. SC said the procedure of granting mercy is
completely at the discretion of the President, such that the courts cannot interfere.

(c) Kuljeet Singh v Lt Guv of Delhi

Billa & Ranga brutally murdered children of around 5 years of age. They were given death
penalty and President rejected their mercy petition. They challenged as President didn’t give
any reason which is mandatory. The court said giving reason when it is not mandatory does
not affect a case like this.

(d) Maru Ram v UOI

CrPC amended in 1978 to introduce §433A i..e 14 years life imprisonment mandatory in:

i. Crime in which death penalty could be given eg. murder

ii. When death sentence has been commuted.

Challenged as it interferes with the powers of the governor and president. Court said no,
harmoniously construct the two – the executive can still grant all sorts of pardons.

(e) SR Bommai v UOI

When the president or governor passes any order at their discretion with the aid of CoM,
Judicial review is limited to two grounds.

i. Want of relevant material (adequacy not material)

ii. Oblique motive

(f) Epuru Sudhakar v State of AP

A congress minister was murdered by a member of Telugu Desam Party. Governor
granted pardon. It was challenged in HC on grounds of malafide. The SC upheld the
HC verdict and prescribed the grounds of granting pardon and all other prerogative
powers:
i. Want of relevant material (adequacy not sufficient)
 ii. Malafide intention
iii. Non-application of mind
iv. Extraneous/irrelevant consideration
v. Relevant material was not considered
vi. Order suffers from arbitrariness
vii. Pardon was obtained by means of fraud.

Governor: 153-156
Doctrine of pleasure – AG, CoM, Guv, Civil Servants(311), Other constitutional
functionaries.

Surya Narayan v Raghukul Tilak (RJ Guv): appointed by Janta Party, dismissed by Indira
Gandhi. Upheld.

NM Thomas, Guv of Nagaland was dismissed by Center. Dismissed the NLA without
consulting centre.

BP Singhal v UOI 2010

UP GJ Har Goa guv dismissed by BJP

1) Produce documents, files which formed the basis of roder of the president
2) Certiorari to quash the appointment of new governor by BJP
3) Removed governor should be allowed to complete their term.
4) Order should be a speaking order.
a. Petition maintainable
b. Position of guv under constitution – ¶23 not a servant of central government. St of RJ
v UOI: Guv is the formal channel of communication between the centre and the state.
c. Express implied restriction 156(1) on the exercise of pleasure by president – no math
formula but has to be read together with 156(3)
d. Role of governor in exercise of pleasure is subject to judicial review.

¶37 conclusions of the court after looking at the Constituent Assembly Debates:

1) Instead of impeachment or enquiry.

2) it was assumed that the withdrawl of pleasure resulting in removal of governor should
be with valid reasons – not necessary to enumerate them though.

Doctrine of pleasure is relaced by impeachment which is very rare so governor should not be
removed and allowed to continue their terms.

75&156: Doctrine of pleasure is different in both.

¶40 need for giving reasons(CA)

 - phy/mental disability
- acts of corruption or moral turpitude
- behaviour unbecoming of governor
- politics or subversive activities
- central govt loses belief/confidence in the governor
- governor’s ideology is not in sync with the centre’s.
Last three reasons are often cited but are not valid.

¶42 whether JR is possible?

Prerogative powers have to be very limited prima facie arbitrary, malafide, capricious
– only then court will ask the govt to place relevant material to decide whether a
reasonable man would find it relevant? The sufficiency is at the discretion of the
president.

¶50: Article 156(1) governor holds office at the pleasure of president.

Conclusion:

(a) who can remove governor without any reason, opportunity, speaking order etc?
(b) Though no need of reason, the power under art 156(1) cannot be exercised in
arbitrary capricious or unreasonable manner but rare and exception circumstances
with valid compelling reason.
(c) Guv cannot be removed because he is out of sync with the centre.
(d) No need to assign reason, there is a presumption of validity of exercise of power
to withdrawal of pleasure unless the petitioner prima facie shows arbitrary,
malafide, capricious, or whimsical.

29-03-2017

SARKARIA COMMISSION:

3 members : J. Sarkaria, Sen and Siva Raman

Discussed about various things regarding their report – how it came to be etc.

- Indian federalism is unique – we need a stronger centre: we cannot administer as

unitary form because of our plural nature – so we try to decentralize to a certain extent
only, giving power to regions also.
- She goes on about various historical acts eg. 1919, 1935.
- Recommendations as to financial relations, inter-governmental councils, deployment
of central forces in the state, media, role of governor which are done chapter wise.

1. Legislative Relations –
 i. Wrt Residuary powers which have been left with the centre - apart from the
residuary taxation powers, rest of the residuary powers should be put in the
concurrent list
ii. Wrt concurrent list – whenever the centre is enacting a law on a matter in this
list it should engage in a consultative process with the states through the inter-
governmental Council (262). Consultation is not mandatory otherwise it would
make the legislative process rigid.
iii. Centre should legislate in order to maintain uniformity and should give more
leeway to the state in the concurrent list.
iv. Give more autonomy to bodies like UGC regulating the operation of entry 66
Education so as to bring uniformity.
v. Entry 45 list III – Commissions of Inquiries Act, 1952 gives power to both the
centre and the state to set up a commission of inquiry. Have consultation in the
intergovernmental council before setting up such commissions to avoid big
blunders like Karnataka v. UOI.
vi. Art. 252 – law by Centre in a matter given in state list – should not be 3 years.
If state legislature is amending such law by the parliament then governor
should reserve it for the consent of the president. Periodical reviews by the
parliament should be done as to whether the law should be re-enacted or taken
back.
vii. Taxation, Local bodies etc.

2. Administrative Relations
i. 365 should be the measure of last resort when the state is not complying with
the centre’s order – the state should be reprimanded first.
ii. Qualifications of the governor – eminent person, outside the state, detached
figure is not connected with the state, not active in politics, once removed
from his position – should not be given any office of profit, cannot take part in
active politics, desirous that she is not associated with the ruling party.
iii. Removal of the Governor – state chief minister. Matter goes before VP or LS
Speaker/Retd. CJI. Governor should be informally intimidated about his
grounds of removal and an immediate explanatory response can be asked and
presented in front of the 2 members’ advisory body which recommends it to
the president.
iv. Who should governor appoint as the CM? Invite a political party or pre-poll
alliance which enjoys the
a. widest majority (Governor had discretion in the Goa thingy – he didn’t this
Congress’ 17 was not widest majority)
b. Absolute majority – you are bound. (Absolute would have been 21)
c. Pre-poll alliance (BJP+)
d. Single largest party which stakes its claim. (Congress)
e. Then post-poll alliance.
v. If a no-confidence vote took place and the ruling party lost confidence, then
till the time fresh elections are held, if govt was not dismissed for
 misdemeanour or corruption – they can be made care taker govt which can not
take any major policy decisions.
vi. Within 4 months president has to clear the bill if it was reserved for his assent.

31-03-2017

PUNCHI COMMISSION REPORT

1. Wrt president’s rule in the state it recommends that it should identify certain localised
areas of constant strife due to communal and internal disturbances for consideration of
imposition of President’s rule.
2. Rule should not be for more than 3 months at a period of time.
3. On advice of state govt, prosecution can be started against state minister.
4. Consider a pre-poll alliance as a single political party. The order of precedence to be
followed in case of a hung assembly –
i. Call the group with the largest pre-poll alliance commanding largest number
ii. Call single largest party with the support of others
iii. Call a post poll alliance which is commanding the largest support
5. Person of eminence should not be active in local politics even prior to two years of his
appointment as governor
6. Governor should actively settle the matter within the maximum of 4 months period.
7. Bring constitutional amendment for appointment and removal by impeachment of the
governor. Removal should only be done after consulting the CM
8. Wrt Appointment as well the CM should have a say in the appointment.
9. The practice of considering the governor as a political football should stop.
10. This appointment should not be with the president but a committee comprising of
Prez, Home Minister, Speaker of Lok Sabha, CM of the concerned state and if
required, Vice president.
11. Homeland Security kind of body in India. A body called as the NIC(national
integration council) which should meet atleast once a year and in cases of communal
incident it should appoint eminent persons to go do fact finding.

EMERGENCY PROVISIONS

In the proclamation itself they should mention the reason irrespective of art. 74(2). 356. The
report of the guv is placed before each house of the parliament as a speaking document, on
the basis of which proclamation is issued should be given wide media coverage and should be
published in public in full.

22-02-17
POWERS OF THE SUPREME COURT
 Article 129 – punishment for contempt of SC. Article 19(2) says that contempt of

court reasonably restricts freedom of speech.

 Article 32 & 131 – Original Jurisdiction - approach the SC for enforcement of FR and

for resolving Centre-State disputes.

 Article 71 – Extraordinary Jurisdiction – candidates challenging the Presidential and

Vice-Presidential elections.

 Article 132-134 - Civil & Criminal Appellate Jurisdiction

 Article 136 – SLP – it is at the discretion of the court to admit the appeal. Once

admitted, it functions as an appellate court.

 Article 143 – Advisory Jurisdiction – President referring to the SC for its advice.

 Article 137 – Review Jurisdiction - power of the Supreme Court to review its own

judgments.

 Article 142 – Curative Petition – power of the SC to complete justice

 Rupa Ashok Hurrah v Ashok Hurrah (preconditions to approaching SC for its

curative jurisdiction)

Article 129: Contempt of Court

 Entry 77-I: Parliament enacted the Contempt of Courts Act. CoC arises when:

i. When an order or direction of the court is not abided by.

ii. Defamatory or derogatory statements which are likely to shake the faith of the

people in the judicial system.

iii. If a matter is sub-judice.

iv. Attempt to threat or flattery or by altering public opinion.

Eg. Dhananjay, Jessica Lal, Nirbhaya, Arushi Talwar, Yakub Menon, Nanawati
1. Attorney General CK Dapahtry v O P Gupta

Pamphlet published by the respondent that certain judges are not acting fairly in their
judicial capacity alleging corruption. The court said that the test of contempt of court
is that you have to look at the statement and judge that is it only a defamatory
statement against a judge or is it a statement that will shake the faith of the public
in the judiciary? (a very subjective test)
 Judge and judiciary are not different. Fair criticism is dicey. No need to frame a
proper chargesheet when prima facie someone has defamed a judge. Only affidavits
are admitted in contempt of court proceedings as evidences. Prima facie at least,
everyone has to apologise. So submit the truth through affidavits if one wants to save
themself from harsher conditions.
Eg. Retd. J Markandey Katju, Soumya murder case.
Eg Justice Karnan, a sitting judge.

2. P N Duda v. P Shivashankar

P Shivashankar was the law minister invited to give a lecture before the Hyderabad
Bar Association whose member was P N Duda. The speech implied that Justice in our
country is available only to the affluent section of our society so that the poor has no
access to justice. P N Duda brought it to the notice of SC which dismissed the petition
as this is simply an opinion expressed, and not the contempt of court.

Power to punish for contempt –

3. Delhi Judicial Service Association v State

Gujarat police arrested the Chief Judicial Magistrate on false criminal charges.
Assaulted him and handcuffed him. The SC extended its power under 129 stating that
behaviour such as this lowers the authority of the judiciary.

4. Income Tax Appellate Tribunal v V K Agarwal

The secretary from Ministry of Law & Justice had written a letter to the President of
the ITAT criticizing the functioning of the tribunal and alleging that with respect to
particular decision, the court had not decided on the merits rather other
considerations. Brought to the notice of SC, such interference from the executive in
the functioning of the tribunal affects the independence of the judiciary. Even though
ITAT is a quasi-judicial authority and not even a part of the actual judiciary, it will
still be contempt of the court.

ORIGINAL JURISDICTION (32 & 131)

Clause 1: A guarantee for enforcement of the fundamental right.

Clause 2: SC is free to issue any order, writ or direction i.e. not limited to writs only; it can
also issue orders and directions.
Article 359 – remedy for all fundamental rights except 20 and 21 can be suspended during
emergency.
There are instances where the SC has exercised its jurisdiction under Article 32 without
infringement of the FR:
 1. D C Wadhwa v State of Bihar (in public interest about the re-promulgation of

ordinances)

2. Supreme Court Advocates on Record Association v Union of India (appointment of

Judges – the case in which Collegium system has been developed) – Second Judges

Case.

3. Tamil Nadu Cauveri N V V P Sangam v. Union of India (Cauveri River Water

Disputes – the state of Karnataka was not abiding by the decision of the tribunal)

4. Romesh Thapar v State of Madras.

SC under article 32 is not bound by any procedure although usually it takes adversarial
approach.

 Bandhwa Mukti Morcha v Union of India

The court inquisitorial approach – a committee enquired into the practice of bonded labour –
on the basis of its report, the SC granted relief.

 R S Deodhar v State of Maharashtra

Delay of 10 years in filing the writ petition under Article 32 but looking at the circumstances
the court allowed as there is no time limit set for Article 32. Delay does not affect the right to
approach the Supreme Court.

 Suo Moto Cognizance: Sunil Batra v Union of India.

Locus standi under Article 32:

Any person aggrieved. PIL is a relaxation – as any public spirited person can file a case: SP
Gupta v Union of India.

23-02-17

ARTICLE 131: Center-State Dispute

Confers exclusive jurisdiction on the SC wrt disputes between government and state; govt
clubbed with state and other states; and disputes between two or more states when questions
are about legal right of a state or the GOI.
Exception –
 1) Proviso tells that SC will however not enjoy jurisdiction in pre-constitution era

agreements.

2) 262: River water dispute tribunal.

State of Bihar v UOI (locus related)

Bihar had approached SC under 131. The dispute was regarding the parties - railways and
Hindustan Steel Company Ltd. Bihar ordered Iron & Steel from the govt company, Hindustan
Steel Company Ltd. There was a short supply of the ordered goods because of the fault of
Indian railways and the company.

Issue: Can Railways and Hindustan Steel Company be made a party under GOI?

They relied on Article 12 for the definition of State. Agency & Instrumentality test. Indian
Railways will obviously be state but the steel company may or may not be depending on the
organization.

Held: Article 131 is not in part III or part IV where Article 12 is used to consider State. So
GOI means GOI only and state means state only. Whether this govt includes state
government and does not include entities is another issue.

State of Rajasthan v UOI

Home Minister of Janta Party sent a communication to CM of other parties (Congress) in the
states that these CMs should advice the governor to dissolve their government and hold fresh
elections since the party had lost national elections. The congress led govt lost the confidence
as per their belief. The state govts approached SC under 131 wrt this communication seeking
injunction from the SC against the dismissal of their ministries and fresh elections. The UOI
raised four primary objections wrt maintainability –

1) There is a distinction between the state and state government. Article 131 uses state.

2) Article 131 covers only those disputes in which state entity is invested and not state

governments.

3) No denial of constitution right of a state

4) No legal right of party involved. This is a purely political question. No question of

law arises as invoking article 131 requires.

HELD: No separation between the state and state government. The SC also said there is a
question of law involved – whether the Home minister had any such authority or whether the
central govt had the power to issue such communication of dissolving ministries?
SR Bommai – behaviour unwarranted. First step is not to dismiss but to hold floor test.

State of Karnataka v UOI

Whether state will include ministers of state government?

Under the Commissioner of Inquires Act, a commission was set up for inquiring into the
corrupt behaviour of the chief minister of Karnataka and the members of his cabinet. UOI
said it involves the legal right of the state ministers and not the state government. The SC
held that there is no separation between the two. What is state government without its
ministers? Did not take a narrow approach while holding that article 131:

- means state

- means state govt

- means ministers of the state govt

Class by Sanjana on njac.

03-03-17

Presidential reference ARTICLE 143:

 In re Sea Customs

 In re Delhi Laws

 In re Cauvery Water Tribunal

 In re Keshav Singh

 In re Kerala Education Bill

 3rd Judges Case

 In re Vinay Chandra Mishra – BCI had suspended the license of an advocate for

contempt of Court. Can SC exercise power where BCI had powers to punish for

disciplinary actions? Held, BCI can punish but cannot suspend.

SC POWER TO REVIEW ITS OWN DECISIONS ARTICLE 137:

A R Antulay v R S Nair – whether judiciary is capable of violating the Fundamental Rights.

SC gave an order to withdraw the case from CBI and take it up by Bombay HC. The grounds
on which SC can exercise its jurisdiction
 i. Violation of FR

ii. Violation of principles of natural justice

iii. Prima facie mistakes of the court

iv. If the judgment had been obtained by fraud

v. Lack of jurisdiction

CURATIVE PETITION:

Developed to deal where reviewing decisions wasn’t enough. Applied in Rupa Ashok Hurrah
v Ashok Hurrah.
Grounds for admitting curative petition:
i. Violation of Principles of natural justice
ii. If there is bias apparent on the judges
iii. Abuse of process of the court
iv. Other very grave issues eg. Naz Foundation
The process is that the petitioners should have had raised these grounds in the review petition
if there is no ground then no reason arises for admitting the CP. Obtain a certificate from a
senior advocate practicing in the SC. Three senior most judges consider your petition on
admissibility after you’ve submitted it. The bench when constituted will include these three
too.

WRITS:
Writs can be against any authority performing public function.
Certorari and Prohibition are granted against a lower court when –
i. Lower court fails to exercise its jurisdiction when it is there
ii. When it exceeds its jurisdiction
iii. Prima facie error on the face of the record
iv. Court did not consider relevant evidence
v. Violation of principles of natural justice
vi. Court may have applied a law which has been declared unconstitutional
vii. Court acted in contravention of one of the fundamental rights of the party.

IMPEACHMENT

 124(4) and 124(5) Impeachment for SC judges

 217 Impeachment for HC judges
 Judges (Inquiry) Act, 1968
Notice (100 m in LS or 50 in RS)

Speaker/Chairman

Committee (Judge of SC, CJ of a HC and distinguished jurist)

Frame Charge (misdemeanour/incapacity)

Investigation (Hearing)

Report to both houses

If guilty/unfit

Motion in both houses

Passed

Address to the president

Can court review the impeachment proceedings? In Justice V Ramaswami case – His wife
approached the court that he has not been given due hearing before the committee. At that
time, the motion was not considered by the houses so his wife could not be given any
remedy.

Process of Parliament:
Article 79

The president is part of the parliament because he concludes the proceedings of the
parliament. He has the power to summon and prorogue the houses of the parliament.

Article 80

Election indirect in RS, the electorate collage is the legislative assembly. Proportional single
transferable vote method used.

Article 81

 530 members elected directly from the constituencies to the LS

 20 represent UT

 Population considered is from the 2011 census

Article 82

 Next readjustment in 2006

Article 83

 Duration of RS – 1/3rd members retire every 2 years – continuing house

 Duration of LS – 5 years or otherwise dissolved earlier

Article 84

 Qualification, Oath as in IIIrd Schedule

 Age : 30 RS, 25 LS

 Representation of People’s Act 1951

Article 102 &103; 191: Disqualification

i. He holds an office of profit – certain offices are not considered OoP - Parliament

Prevention of Disqualification Act, 1959

ii. Pleas of unsound mind and so declared by the courts.

iii. Pleas of insolvency

iv. Not a citizen of India, voluntarily acquired any other citizenship/ attached to the

other

v. Xth Schedule – clause 2 of Article 102(52nd CAA).

- 103 – The matters of disqualification under 102 shall be finally decided by the

President in consultation with the EC, subject to judicial review.

Office of Profit – holding an office under state/central govt - deriving some profit.

i. Who is the appointing authority? Or does the state/central govt enjoy any control

over the authority?

ii. Who is paying your salary?

iii. Who has the power to dismiss you?

Profit

i. Compensation OR pecuniary benefit?

ii. Whether I am enjoying the benefit or not does not matter. This benefit should

simply be attached to the office. “Chauffer, I like to drive myself”.

Eg. Shibu Soren v Dayanand Sahay

SS was appointed as the President of the Jharkhand Area Autonomous Council by the
State Govt. The position was held at the pleasure of the state govt. He was receiving an
honorarium (the terminology does not matter – gains matter) of Rs. 1750 + daily
allowances + rent free accommodation + car driven by a chauffeur. Both the elements of
Profit + Office were satisfied.

Eg. Bihari Lal Dobray v Roshan Dobray

The respondent was a teacher in a primary school run by Board of Basic Education –
primary function is state function – regulating primary education in the state. The
financial assistance for the Board is received from the Govt. In cases of disciplinary
proceedings against the employees of the Board, the appellate authority is the Govt. So
this is an office under state control. As a teacher he is receiving salary – profits.

Eg. S C Raju v V Pradeep Kr. Dev

An authority ‘Integrated Tribal Development Agency’ on which the govt has some
control as well sends funds and certain govt officials are ex-officio members of the
governing body. S C Raju is appointed as a primary teacher by the Project Officer
(district collector) in one of the schools run by this Agency. He was suspended by the
ITDA. He contested election and won it. Looking at the control, HC held that this is
satisfying both an office and profit. SC reversed it – who has the power to dismiss?
Separate Corporate body – ITDA.

Eg. Jaya Bacchan v UOI

RS member was apptd chairman of UP Film Development Council. Monthly honorarium

5000, entitlement allowances 10000, car with chauffeur, telephone, rent-free
accommodation, medical benefits for her and her family. The court said it doesn’t matter
whether you are using them or not, as long as there are profits attached to your office, you
will be disqualified.

Eg. 25 AAP MLAs disqualified – Principal Secy no salary attached - Article 86-87

Kuldeep Nair v Union of India

 Challenged the amendment made in Representation of People Act, 1951; point of domicile;
Previously the candidate should be registered in the electoral roll of the constituency; The
2003 Amendment: Word ‘state or territory’ replaced to India. Challenge was that when word
used Council of States and if you don’t represent a state what will be the use of the RS when
any citizen of India can be chosen for any state irrespective of domicile. Suported by the
provisions of Constitution wherein Centre has to seek permission of the RS to legislate on the
matter of state, thus, concluding RS is representative of State. People are the selected from
LA and LC in State. The constituent assembly - it was envisaged that the qualifications for
membership should be objective and not subjective like that of ‘residence’ or
‘domicile’.There was no uniformity in §3 about the word ‘residence’ and was very skewed
throughout the Act and thus court observed that the framers didn’t want residence to be there
and furthermore, provisions of Part C were not clear. The word “ordinary resident” §20 of the
Act defines “A permanent intention to reside in that place” Court said that it is very difficult
to ascertain the meaning of resident and that’s why it was rejected.Thus court said that the
amendment was correct and thus there was only a need to go in for the meaning of residence.
Court said that we don’t have strict federal structure as like that of US and as can be proved
by the role of RS which is similar to House of Lords in the UK which is an advisory body:

1) Emergency
2) Centre’s intervention
3) Centre’s role on International Treaty
4) Centre’s role on changing of state’s boundary

State of KT v UOI 131 center setting up enquiry against KT CM and other ministers.

08-03-2017

DEFECTION LAWS
10 Schedule of the Constitution
th

Relevant P. 2 and 4 – a legislature party means that a particular political party and it also
means that the members of that political party who are currently elected and are members of
the house.

Relevant p.2’s explanation – original political party defined – if you contested election on
behalf of X party then the X party is your original political party if you belonged to it on the
date of your nomination. If you did not then after 6 months of joining then that party becomes
so.

Paragraph 2: Disqualification on grounds of defection

i. Voluntarily giving up your original political party

 ii. Within 15 days of voting against the party whip’s order who has not forgiven you.

(person designated to tell the voting mandate to the party members – support or

against)

iii. Wrt independent members who were elected without being affiliated to a political

party, if he joins any other party after the expiry of 6 months. Within 6 months

you can but after 6 months you cannot join a political party, you’ll be defected.

Exceptions: Para 4 &5

Para 4: Merger of Political Parties is taking place – some members are leaving the party
to join another. Clause 2 of Para 4 gives the min requirements – 2/3rd of that legislature
party must leave and join another party to form a new merged party.

Para 5: Speaker and Chairmen – if you leave your political party because you’ve been
elected as speaker or chairman, it is not considered defection. Once you’re removed from
your post, then you go join the same party – then again it is not defection.

Final decision with the speaker/chairman - If it’s about their disqualification then the house
will elect a member to decide. It does not bar judicial review.

Para 7 of the 10th Schedule was severed & struck down – Kihoto Hollohan – Article 32/226
are not affected by the provisions of para 6.

POWERS, PRIVILEGES ETC.

Article 105: Parliament Article 194: State Legislatures

- There shall be freedom of speech in Parliament. You don’t have to think before you

speech – restrictions of 19(2) do not apply here. Absolute free speech is guaranteed if

the proceedings in the parliament by anyone who is authorized by the parliament to

participate in the proceedings

- No such person will be called to the court - Even the publications authorized by the

parliaments will be immune. (Qualified Privilege to others)

- Clause 3 & 4.
THE EXTENT OF IMMUNITY UNDER ARTICLE 105(2):

1. PV Narsimha Rao v. State via CBI(CBI/SPE)

In 1993, no-confidence motion was brought against the govt of PV Narsimha Rao, the
then PM of India. Certain members of the Jharkhand Mukti Morcha were bribed to
vote against the no-confidence motion, except Ajeet Singh(he also took the bribe)
everyone else voted so. The no-confidence motion was defeated. SC was asked –
“extent of immunity” and “whether a member of Parliament is a public servant under
Prevention Of Corruption Act 1988” – The court said YES under 2(c) of the Act, MP
is a public servant. The extent of immunity enjoyed here was that whatever has a
correlation to the proceedings to the parliament also enjoys the immunity. Whatever
does not have a correlation doesn’t have immunity.
(ebc-india.com/lawyer/articles/9808a1.htm).
 The people who bribed were not related to the proceedings so they were not liable.

 The person who took the bribe and voted so were also given immunity

 But the person who took the bribe and did NOT vote was held liable.

2. Dr Jatish Chandra Ghosh v Hari Sadhan Mukherjee

The speaker did not allow him to ask about the conduct of a civil servant in the house.
So he published it in a journal. Civil Servant sued him under s. 500 and 501 of IPC.
The MP contended he enjoys immunity – the court said No you did not say it during
the proceedings.

3. Suresh Chandra Banerjee v Puneet Gwala (Qualified Privilige)

Will the editor enjoy privilege when he published the whole proceedings of
parliament including defamatory statements by the members? No.

4. MSM Sharma v Shri Krishna Sinha(The search light case)

A speech was made in the parliament, and the speaker requested it to be expunged and
editor MSM who was authorised published the entire proceedings. Parliament charged
him with its contempt. The editor in turn moved the court under 32 saying that he had
the Freedom of speech and his fundamental right was inviolable and the speakers
order was curbing this right.
However the SC ruled in favour of the Speaker as the Parliament can punish for
contempt – 105 and 194. Minority said you can – Article 21 takes privacy. Both said
read FR with other provisions too.
- House of Lords is a court of record
 5. In re Keshav Singh

The author who published a pamphlet critizing the UP Legislative Assembly was called by
the speaker for contempt. He disturbed the house with his misbehaviour. He was sent to 7
days imprisonment so when Allahabad HC granted Habeas Corpus House issued an arrest
warrant against the judges and lawyers. Later, the house withdrew warrant because of huge
hue and cry. However, the judges, lawyers were called in the house.

P asked SC (143) : Judicial review available for contempt judgment but this power can't be
extended to judiciary members.

Article 211 - Judiciary's conduct cannot be discussed in the houses. Judicial review is there if
parliament has acted in a manner of contempt, then P. decision.

6. Raja Rampal v Hon'ble Speaker Loksabha 12 Dec 2005

Sting Operation, Parliamentarians (10m of LS and 1m of RS) taking bribe for asking
questions.
Speaker/Chairman constituted a Joint Parliamentary Committee - Inquiry Committee Report
found sufficient evidence - motion passed that the house should expel those members.
Whether the judiciary can determine the extent of power, privileges, immunities enjoyed by
the Parliament?
YES, as it is the interpreter of the Constitution.
Whether House had the power to expel under 105?
House in UK can expel. Indian Constitution - disqualification under 102, expelling under 105
creates a conflict between the two. Court said no, 102 is disqualification, 105 says
punishment. So expelling for misbehaviour is punishment (violates rule of conduct) -
behaviour unbecoming of the MoP.
Whether the Judiciary has the power to judicial rev.?
There is no situation where the JR is not available. So parliament arbitrarily reacted to JR
here although expelling was still allowed.

JUDICIARY
Can judicial power be delegated?

Eg. BCCI v Bihar Cricket Association.

CSK owned by Indian Cements Ltd. and RR owned by Jaipur IPL Ltd. G. Meiyyappan was a
shareholder in Indian Cements Ltd. and so was his father-in-law, Srinivasan(BCCI
Chairperson).

Bombay HC constituted a probe committee of Justice Mudgal and two other judges. Mudgal
resigned but the other two judges gave their decision of clean chit within one day. BCCI
amended Rule 6.2.4. which provided that no member of the BCCI will have any commercial
interest in the activities that are organized by the board. Amended to “except IPL and
Champion 20-20”. This saved Srinivasan.

This matter reached the SC.

i. Whether HC enjoys jurisdiction? BCCI is not a state under Art. 12. We are a
society under society’s registration act – we’re not a public body – were not
considered state under Zee Telefilms case. Upheld that it is not a state but it is a
public body performing public function.
ii. The amended rule showed that he was trying to be a judge in his own case.
Principle of natural justice was violated.
iii. In ¶110, the Court sets up the Lodha Panel and delegates the function of fact-
finding and prescribing punishment to those who were engaged in corruption and
illegal batting. This delegation was challenged.
iv. Fali Nariman criticized that judiciary cannot confer these functions on just
anybody.
v. Shanti Bhushan – you cannot delegate “essential” judicial powers. In the present
case only non-essential judicial powers were delegated – the major guidelines
were already given in the BCCI v Cricket Association of Bihar – which have
already discussed all the major facts to establish the guilt of the party. Lodha
Committee only has to dig deep to decide the quantum of the punishment.
vi. Fali replies back and then Shanti Bhushan again counters it.

Administrative Tribunals under 323A, 323B

Challenged first in a 5 judge bench in SP Sampat Kumar v UOI which was not very clear in
its ruling so the matter again went in SC 1995 L Chandra Kumar v UOI which was a smaller
bench that referred the first case to be reviewed by a larger bench in 1997 L Chandra Kumar
v UOI.

“Section 28(1) which excluded jurisdiction of the courts: Speaking on this point (for himself,
V. Khalid, G.S. Oza and M.M. Dutt, JJ.) Ranganath Misra, J. (as he then was) held that the
"judicial review" envisaged as the basic structure of the Constitution does not suggest that
effective alternative institutional arrangements cannot be made. Therefore, once the judicial
review by the Supreme Court is left wholly unaffected, the exclusion of the jurisdiction of the
High Courts under Articles 226 and 227 does not render the impugned provision of the Act as
unconstitutional because it does not affect the basic structure.17 Similar view has been
expressed by P.N. Bhagwati, C.J. in his concurring judgment.18 Also, referring to the various
provisions of the Act, Ranganath Misra, J. pointed out that the Act has been enacted to
implement the object of Article 323-A of the Constitution which itself provides for exclusion
of the High Court's power of judicial review, and therefore Section 28 of the Act is not
violative of the Constitution. Referring to Article 323-A, constitutional validity of which was
not questioned, P.N. Bhagwati, C.J. and Ranganath Misra, J. further clarified that this article
impliedly requires that the alternative institutional arrangement must be equally effective and
efficacious as the High Courts.”

323 A – Central Administrative Tribunal

In the Electricity act they’ve set up an Electricity Tribunal – 323B

In SP Sampat Kumar what the court had done was that it had considered the following
questions -

i. S.5(6) of the Administrative tribunals act 1985, a single judge bench of CAT was
empowered to judge.
ii. Can tribunals act as an alternative to HC under 226 and SC under 32 as effective
substitutes?
iii. Whether the tribunals are equal in status to HC?
iv. SP Sampat Kumar had also upheld s. 28 of CAT, 1985 which excluded the
jurisdiction of HC and SC under 226 and 32 – only 136 of the SC remained which
was the appellate jurisdiction.
v. Clause 2(d) 323A, Clause 3(d) of 323B excluded jurisdictions.
1. 7 judge bench which examined the constitutionality of Clause 2(d) 323A, Clause 3(d)
of 323B excluded jurisdictions.
2. Whether these tribunals have the power of judicial review?
3. Are they effective substitutes of HC for discharging the power of Judicial review? If
not, then what changes are required?

01-04-2017

Tribunals are allowed to review certain provisions of the act but they cannot adjudicate over
the constitutionality of the parent act.

Electricity tribunal is a court of first instance in New Delhi for any dispute regarding
electricity and not HC.

This decision has been given prospective effect – you can approach the SC directly under 136
for any decision given prior to L Chandra Kumar whereas the decisions given by any
tribunals post L Chandra Kumar are to be dealt in the HC first.

For any question of law or for interpretation or testing the vires of a subordinate rules – the
technical members sitting as a single bench cannot decide because it is a judicial function as
the technical members do not have the judicial training.

Madras Bar Association v Union of India

- Legislations: IT Act -> IT appellate tribunal (ITAT)

- Courts of first instance -> HC -> Appellate Authority
- So HC were giving varied opinions and decisions such that the National Tax Tribunal
came into being in 2003, was made into an act in 2004, a challenge was raised to IT
Act where matter reached to SC.
 - The primary challenges before the court as put by the petitioners:
i. There was no such huge diversion among the HCs.
ii. Deciding upon a substantial question of law, these are core judicial appellate
functions.
iii. Lacks the trappings of a superior court
iv. Article 323B which allows for setting up of such tribunals – violates the Basic
Structure of the Constitution as it alters separation of powers (in the strict
sense), affects judicial independence (members of the exec will necessarily be
the appointing authority) and is therefore violative of the principle of Rule of
Law(because of the above two reasons).

- Court upheld the validity of 323B relying on L Chandra Kumar’s 7 judge bench.

- The power of judicial review and judicial superintendence is part of basic structure so
you cannot take it away – the NTT Act is replacing the HC which is not permissible
as per the decision of L Chandra Kumar.

- They could not challenge NTT as violative of BSD, so they challenged the parent
323B. Since it was already upheld in a larger bench decision so their case failed.

- NTT cannot be held as an efficient substitute of the judiciary.

- Judicial Appointment.

Madras Bar Association v UOI - II

- National Company Law tribunal and National Company Appellate Tribunal

- Companies Act, 1956 – gave power to constitute NCLT, NCLAT.
- The HCs take long time to deal with matters such as under this act, therefore a
specialized body was made for the same.
- The challenge before the court was in UOI v. R. Gandhi, Chairman of Madras Bar
Association.
- Certain features of NCLT, NCLAT – after suggesting some amendments the court
allowed it.
- However, they never came into being.
- The companies act was amended in 2013 again with the provisions of these two
bodies.
i. Whether NCLT and NCLAT are constitutional?
The court had already observed in UOI v. R. Gandhi, Chairman of Madras Bar
Association that with certain changes both the bodies will become
constitutional. The major problems were the qualifications (§411 of the CA,
 2013) of the president (Always has to be a judicial member) and the members
(technical members are allowed but they can’t be person below the rank of
secretary or additional secretary to the govt.)
Previously, joint secretaries were also being made members of the two bodies
which was WRONG.
The technical members cannot decide on questions of law following L
Chandra Kumar.
ii. §412 - The original selection committee consisted of CJI, or his nominee as
chairperson, SC/HC senior most judge as a member, Secretary in Min. Of
Corporate Affairs, Secretary in Min. Of Law and Justice, Deptt. Of Financial
Services in Min. Of Finance as member – all three as members.
The court observes here that the weightage is more in favour of the executive
which might affect the judiciary separation. So the court gives veto power to
the CJI to maintain judicial superintendence.
iii. From the NCLAT people can go directly to the SC.
 03-04-2017

TRADE& COMMERCE

British North American Act - Canada

Section 92 of the Australian Constitution – trade, commerce and intercourse amongst the
provinces shall be absolutely free.

Article 301 of the Indian Constitution – throughout the territory of India shall be free.

 India relies heavily on the Australian Jurisprudence

 Shows federalism
 Inter and Intra state trade – no barrier anywhere unlike Aussie which is only about
interstate trade.

Protectionism in trade

eg. Spinining of cotton by indians in colonial rule

- high export duty, low import tax
- discriminatory trade practice
- trying to protect local industry from outside states by creating barriers to trade etc.
Economic unity is important to keep the federation intact - cultural, political, regional
imbalances.

§ 297 of the GOI Act, 1935 - prohibited provinces from imposing discriminatory taxes etc.

This was carried forward in 301.

Article 19(1)(g) – what is the difference? Nothing prevents an individual from invoking art.
301 like 19 is only for citizens of India.

- Corporations can approach the court under art. 301 to challenge barriers to trade while
under art. 19 they can’t.
- Therefore, 301 has a broader approach.

1950s: An argument arose that any tax which is levied on a trade, business causes
impediments on that business and therefore restricts it which is not allowed by art. 301. Case
on point is:

1. Atiabari Tea Co. v. State of Assam

Legislation: Assam Taxation (On Goods Carried By Roads And Inland Waterways)
Act, 1954
Appeal coming from the HC. Appellants manufactured tea in Jalpaiguri to be sent to
Kolkata in tea chests through river and rail for distribution throughout India.
Incidence of taxation: transportation.
 The Commissioner of IT, Assam sent a notice to Atiabari asking for payment of taxes.
This was challenged by Atiabari;
i. This legislation is discriminatory as it levies tax on how goods are being
carried. Eg. Tea Chests, Bales of Jute. If you were carrying tea in some other
form, tax would not be levied.
ii. Tea is a controlled industry over which only the Centre has the power to
legislate. Indirectly, the Assam govt has enacted a colourable legislation for
regulation of tea industry which it can’t do directly.
iii. It is an excise duty in reality and not a tax as the manufacturer has to pay the
tax which is essentially the excise duty.
iv. This tax is an impediment on trade therefore it is ultra vires Art. 301 of the
Constitution.

SC held that Taxation is a sovereign power – the parliament or the state legislatures are
completely free to device the incidence of taxation provided that the lists are followed. It has
determined that it is easier and convenient to tax bales of jute and chests of tea because they
are quantifiable things. So SC will not interfere in such cases.

Entry 56-II:

The incidence of excise duty is manufacturing. The incidence of taxation under this
legislation is transportation. If manufacturer manufactures and doesn’t transport – there will
be no taxation under this legislation however there will still be excise duty to pay.

§297 of GOI Act – prohibition was only on discriminatory taxes, cess, toll tax etc by the
state.

Art. 245 says legislative power is subject to the provisions of the constitution. Taxation
power which is sovereign power is limited by art. 301 as it is another provisions of the
constitution.

05-04-2017

All taxes cannot be considered as an impediment to trade, commerce and business they‘re
levied for public purpose so if govt doesn’t collect them, how will it provide services? Only
the taxes which directly and immediately impact the trade and commerce will be found
violative of 301. Taxation simpliciter does not avoid 301 otherwise all sort of taxes will have
to be struck down.

Under this legislation if you’ve to carry tea from point A to point B without paying taxes it
will directly hamper the trade, business and commerce which is why this taxation is violative
of 301 liable to be struck down.

INTERNATIONAL TRADES:

 Most favoured Nations – treating the other country at par with your country.
  National treatment Principles

2. Automobile Transport Company v State of Rajasthan

At the time of independence, RJ had separate provinces – Ajmer, Kishangarh etc.

ATC, RJ Roadways Ltd and Framji C Framji: three companies plied buses between Ajmer
and Kishangarh. In 1951, Kishangarh was merged into the state of Rajasthan.

§ 4 Rajasthan Taxation Motor Vehicles Act 1951 imposes tax on use and possession of
vehicles in the state whereas § 11 imposes penalty for non-payment of tax.

J Kapoor, Sarkar, Das(Majority); J Subbarao (Concurring); J Hidayatullah, J Iyengar and

Mudohlkar(Minority)

v. Commonwealth cases.

MAJORITY:

J Das refers to the division bench of the HC which had held that as per Atiabari case tax
should create a direct and immediate impediment on the trade and commerce. As per division
bench of the HC in this case, it was consequential and not direct or immediate relying on
the fact that the appellant companies had contended that if they had to pay tax then they will
have to increase the price of the ticket. If they increase the price of the tickets, consumers will
not use their bus which will create impediment to their trade and business. The HC said that
the rate is not so exorbitant that the consumer will not prefer to go by bus.

CONTENTION OF THE STATE:

The law here is regulatory and compensatory in nature eg. Cess is a regulatory tax.
Compensatory tax: roads, the lights on the roads, the night facilities, the safety mechanisms
employed require maintenance.

Justice Das §92 of an Australian Act: you do have to consider certain restrictions such as
regulatory. So he draws the conclusion that regulatory/compensatory taxes which do not
directly and immediately impact the trade are necessary.

Therefore, Atiabari is changed.

CONCURRING:

J Subbarao: article 301 can have many interpretations. If you’re giving widest connotation
would mean freedom from all aspects. It can also be considered that it is concerned only with
the movement of goods. It can also restrict you from creating geographical trade barriers. 301
to 305 are there only to prevent discriminatory practices.
Federal with unitary bias nature of the constitution. He discusses US jurisprudence wrt
commerce laws. Art. 308 clause 3 what atibari had decided – there is no difference between
direct/indirect affect.

In Australia, compensatory taxes are exempted from §92.

i. Direct from US
ii. Regulatory/Compensatory from Australia

Limitation on Legislative Powers: Every legislation is subject to provisions of the

Constitution. Whether it is violative of any FR, look at the pith & substance, ensure that no
colourable legislation, not repugnant to union legislation, art. 301.

We borrow the language of 301 from §92 OF AUS so we should consider its interpretations.

1. Free means absolutely free – freedom from laws of every distinction. (J Hidayatullah
says we cannot accept this because in India nothing is absolutely free – 301 is
restricted by FR)
2. Freedom from discriminatory trade law (He accepts – however if we take prior
permission of the Prez)
3. Freedom from all interference in trade and commerce. In Aus, it has been modified
that interference does not mean regulation. Regulation does not amount to
interference.
4. Freedom of all laws the pith and substance of which is regulation
5. This is abstract freedom – India mein this has changed to individual freedom.
6. Freedom from pecuniary burdens or imports – Unless and until such pecuniary
burden has some direct impact only then you will consider it

§51 OF CANADIAN CONSTITUTION, ART 1 § 8 CLAUSE 3 OF US, §297 GOI ACT

1935(concerned with discriminatory taxes) - the present constitution chose Aus pattern.

1. All taxation laws are not hit by art. 301 – only those which have direct/immediate
effect.
2. Incidence of taxation
3. Method of collection

How was the tax levied? On tyres or passengers as it will affect the roads wearing and tearing
out? Act does not provide such conditions.

06-04-2017

ARTICLE 302, 303

303(1) is an exception to 302

303(2) is an exception to 303(1)

304 is exception to 301 and 303

GK Krishnan v State of TN

Madras Motor vehicle taxation act 1931

Under this Act by a notification made in September 1971, the rate of tax on contract
carriages(buses/vehicles engaged in public transport) was increased. Challenged.

The court said that the legislature when competent to enact the legislature for levying taxes it
is also competent to increase the tax so that the motive/intent behind the legislation is
irrelevant. It is a contract carriage anyway and not a state carriage.

The rate of enhancement is from ₹30/seat/quarter to ₹100/seat/quarter.

The court observed that the govt bus goes once or twice to the max. The prvt vehicles go ten
times that. The usage of the road and the load being carried by private carriages is much
more. The govt carriages pay surcharge which the private carriages don’t. So the
classification is reasonable. There is a nexus between enhanced tax and usage of the
infrastructure.

Challenge to 301 - there is a distinction between the laws restricting free trade, commerce and
business and those laws which regulate the conduct. If a trade is regulatory it cannot be
considered as an impediment. The tax here is for use of the roads – and it is in proportion to
the usage. We do not have to see into the exactness of the amount.

It is compensatory and regulatory.

4. Khyerbari Tea Company v State of Assam

1961 SAME AS ATIABARI’S 1954 LEGISLATION

This legislation has been enacted with prior assent of the president under 304.

Gopalpur in Jalpaiguri to Kolkata – both the places are in WB but it passes through a very
narrow stretch in Assam (0.5-1mi max) It becomes subjected to this legislation.

The court considers:

i. Tax levied in public interest or not/ How to determine public interest?

The legislature is free to determine any mechanism of recovery and that taxes are
levied on what goods and how. The incidence of taxation is movement and once
goods are carried/moved in assam, the assam state legislature has plenary powers
to legislate.
The legislature was applied retrospectively. Since they’ve plenary powers, they
can do so. Only criminal legislations can not have retrospective operations./
 ii. This is not a question of judicial review
Yes you’ve taken prez’s prior assent under 304.however, JR still remains to check
whether this tax is in public interest or not.
iii. Only jutes and tea
The legislature is free to determine the subject of taxation, rate, its mechanism.
iv. Only 1 miles
The court said distance is irrelevant.
v. Whether the tax is collected in public interest?
J Sarkar/Subbarrao refer to the decision in Atiabari – the test of direct and
immediate impact.
Subbarao says that taxes can be regulatory or compensatory or both – the tax is
still same.

14-04-2017

Jindal Steels:

- Compensatory tax: restriction on trade, commerce and intercourse, outside the

purview of Art. 301
- It is an hybrid between tax(common burden) and fees(quid pro quo)
- Reversed the earlier in 2016.
- ¶1
- The only question before us is that ‘is this tax discriminatory?’ under Art 304(A) i.e.
the states are free to levy taxes on imported goods and the goods being produced in
the state.
- Does away with Atiyabari(direct/immediate) and
Automotive(Compensatory/Regulatory)
- Discriminatory tax even if made with prior assent or for public interest will not save
it. 304 and 302 are to be read separately.

Intergovernmental tax immunity:

s. 285 – 287 ¶37 38 39

¶66 tells us that original draft articles - pertailed to discrimination of one state
over another. S. 243 244 245
¶73 Sinha – don’t make taxation legislations subject to 304(b) because it
circumscribes the state’s power to levy taxes and therefore destroy federation
Taxation implies that it is in public interest

.reasonable restriction clause might not be satisfied even though all the taxies ar enecesseraily
made in favour of the public interest.

¶75 automobile transport.

¶78 what is this concept of compensatory tax

¶79 indian position – CT – outside the purview of 301

1) ¶80,81 every tax is compensatory in nature

2) Nature – common burden Nature – proportional to the services received- not
compatible.
3) ¶82 thirdly, lastly – difficult to apply in actual practice.

15-04-2017

¶88,89 : the starting of 301 suggests that it is subjected to 302-5. Non- ostensive clause is just
a matter of caution.

¶91 – 304 a&b are independent on each other and any discriminatory tax would not be
allowed. Prior assent of the president.

¶92 sums this up. The object was discussed again.

CHIEF JUSTICE THAKUR:

¶96 – Court tried to justify itself by textual interpretation and contextual interpretation of the
constitution. Textual being the language - Taxation is obviously for public interest so that
subjection is obsolete. Look at the nature of the tax, if its discriminatory as per 304 only then
it is violative of 301.

The contextual interpretation i.e. based on the facts - ¶99 -

1) nature of taxation
- no limitation on sovereign power eg. Atiyabari
2) federal nature of the constitution
- part XIII of it wants India as an Economic Unit.
- States should not discriminate between goods coming out of their state and producing
inside.
3) ¶102 Keshavnanda Bharti – BSD
- ¶103 – any attempt to dilute Federal nature will violate BSD.
4) Constituent debates – economic unity was the purpose – The drafting history.
- ¶111 the framers had inserted the non-ostensive clause as a matter of additional
clause.
5) Other provisions of the Constitution
- ¶114 – agricultural land v forest land had same taxation rate- violative of Art. 14
- Reading article 304(a) in the context of art. 14.
- ¶116
6) §92 of the Australian Constitution: trade, commerce and intercourse amongst the
provinces shall be absolutely free.
- ¶120 Atiyabari, Automobile – relied on Aussie HC judgments on §92
 - ¶122 the jurisprudence in Australia has also changed i.e. they have discarded the
compensatory taxes.
- ¶123 only if the discrimination is of protectionist nature §92 would stand violated.
- The validity of these tests therefore fizzles out in India.
- Therefore it overruled these tests for the purpose of India
- §297 of GOI, 1935
7) Art 306
- Part A, B, C states.
- Part B were acceding into India through agreements and were not part of British India
- There was a concession demanded by these princely states i.e. Art 306 allowed
protectionist restrictions for a period of 10 years.
- Purpose of Part XIII is basically to avoid protectionism and create a single economic
unit therefore it went against.
8) Challenges to the tax being excessive in nature
- You can approach the court under Art 14 claiming arbitrariness.
- It is anyway a sovereign power – state can levy any tax it likes – very heavy burden to
prove the same challenge.
9) §297 of GOI and constituent assembly debates
- Purpose of inserting 301-6 : framers ewere concerned with removal of tarrifs and
trade barriers – discriminatory levies
- Did not specifically prohibit discriminatory taxes because it allowed them to keep a
balance between goods being imported and goods which were being produced in the
state. It is the purpose of 304.
10) Check the tax only on the angle of art. 304(a)
- Sales tax and VAT is not charged on the goods being imported in the state.
- Entry tax if not levied then there will be no tax set off on the goods being produced
and being imported in the state.(¶161) there is an adjustment.
- It is necessary to do this classification.
- A tax if found not discriminatory by applying 304(a) is constitutionally valid.

¶156

17-04-2017

EMERGENCY PROVISIONS

Art. 352 replacement of armed rebellion by internal aggression.

- (4) mandatorily to be placed before both the houses of parliament.

- For approval: majority of total membership of both houses and 2/3 rd votes of both
houses’ members present and voting.
- For a period of six months – further extended to six months more
- If only one house approves, then emergency lapses after one month
- In case of disapproval by RS – the proclamation expires after one month
- Disapproval by LS – the emergency is immediately removed.
- Impact of national emergency – coextensive authority
 - Alter the financial arrangements under art 268 and 279 by placing it before the
parliament
- Suspension of FR(last class)
- Art 255 read with 256
- Boothnath v State of WB - judiciary will not go into such questions
- 38th CAA art 352(5) inserted for satisfaction of the Prez is final conclusive (condition
precedent) and no JR possible of it.
- Minerva Mills upheld that JR is possible.
- 44th CAA 1978 struck down the above clause.

Minerva Mills

Extended ambit of JR whether it is BSD or not

No one can abrogate the power of the judiciary as it is the interpreter – it is their duty to
intervene. The satisfaction of the prez is subjective and (condition precedent).

355

Imposes two duties on the centre-

i. The centre has to protect the state frm external aggression and internal disturbance
ii. The state govt follows constitutional provisions (read with 356)
- Feature can be found in other purely federal nations eg. US; §119 of the Aus Consti.
- They act as unitary bodies then.

356

Prez satisfied on report of governor or otherwise(limited by SR Bommai) that the govt cannot
be carried on in accordance with the provisions of the constitution.

SR Bommai v UOI

KR(Defection), Meghalaya, MP, RJ, HP(widespread violence after Ayodhya)

Nagaland(defection) – no checks for floor test

Last resort. Situations that cna be remedied – all the judges