DOCTRINE OF RESIDUARY

POWERS
CONSTITUTIONAL INTERPRETATION
 LEGISLATIVE HISTORY
 Logical scheme for the division of powers between the Federal Centre and the States is
to have a list of enumerated powers given either to the Centre or to the States, with the
residue to the other.

 It is impossible to include and enumerate all the subject- matters in the lists and there is
always scope of omission. This creates the need for residuary powers.

 As per the Government of India Act, 1935 there were two exclusive lists, namely, a list of
federal powers and a list of provincial powers, and a concurrent list on which both the
Provinces and the Federation had competence to legislate.

 Then, the residuary powers were not allocated either to the Federation or to the
Provinces but was under Section 104 of the Government of India Act, 1935, reserved to
be allocated by the Governor-General in his discretion to the Federation or to the
Provinces.

 This created problem of excessive discretion and arbitrariness.

 In order to deal with this situation, Constitution of India has specifically vested
the residuary power as an exclusive head of power in the Union by entry 97 of
List I of the Seventh Schedule and Article 248 of the Constitution.

 Though in view of the exhaustive enumeration of subjects in the Lists it was that
the role of the residuary power should be an extremely limited one.

 Residuary powers have been vested in the Centre so as to make the Centre
strong. As was stated in the Constituent Assembly by Jawaharlal Nehru,
Chairman of the Union Powers Committee:

“We think that residuary powers should remain with the Centre. In view however of the
exhaustive nature of the three lists draw up by us, the residuary subjects could only
relate to matters which, while they may claim recognition in the future, are not at
present identifiable and cannot therefore be included now in the lists.”
 RESIDUARY POWERS
 Article 248 vests the residuary powers in the Parliament.

 It says that Parliament has exclusive power to make any law with respect to
any matter not enumerated in the Concurrent List or the State List.

 Entry 97 in the Union List also lays down that Parliament has exclusive power
to make laws with respect to any matter not mentioned in the State List or
the Concurrent List including any tax not mentioned in either of these Lists.

 The Indian Constitution makes a departure from the practice prevalent in

U.S.A., Switzerland and Australia where residuary powers are vested in the
States. This reflects the leanings of the Constitution-makers towards a strong
Centre
 The scope of residuary powers is very wide.

 For example, under entry 3 in List III, Parliament can legislate with respect to
preventive detention in grounds mentioned therein. Further, Parliament can
legislate with respect to preventive detention under entry 9, List I, on ground
mentioned therein. But these two entries do not exhaust the entire field of
preventive detention. Parliament can legislate under its residuary power with
respect to preventive detention on any ground not mentioned in these two
entries. Thus, Parliament has enacted the Conservation of Foreign Exchange and
Prevention of Smuggling Act, 1974 [COFEPOSA] providing for preventive
detention in connection with smuggling and foreign exchange racketeering. This
Act can find support from entry 36, List I (foreign exchange) and Parliament’s
residuary power.

 In certain cases when the power of the Union was challenged and it could have
been sustained on the doctrine of ancillary powers, the availability of the
residuary power has lent an additional argument to support the Union power.
 RULES OF INTERPRETATION
 The priority of the powers of Parliament over that of the State Legislature must be
invoked only as a last resort, when it is not possible fairly to reconcile the
enumerated powers of the two Legislatures.

 When two constructions are possible, one of which will avoid resort to the residuary
power, and the other will necessitate such resort, the former must be preferred.

 Where the source of power is traceable to a particular entry, no resort can be had to
the residuary power of Parliament under Entry 97. Therefore where the impugned
legislation falls under a specific Entry, it cannot be justified under residuary entry.

 Parliament’s residuary power is not to be interpreted so expansively as to whittle

down the power of the State Legislatures
 Parliament therefore has the power to enact a law which is not covered by any
entry in list II and list III through the residuary clause.
*

*Subject to judicial decisions.

 CASES
1. Union of India v. H. S. Dhillon (AIR 1972 SC 1061).
Facts: The Wealth Tax Act was originally enacted in 1957 by Parliament and it
imposed a tax on the capital value of net wealth on the relevant valuation date of
every individual, Hindu undivided family and company. The Act defined 'net
wealth' to mean the amount by which the aggregate value of all the assets of the
assessee is in excess of the aggregate value of all the debts of the assessee on
the valuation date. Though the Act brought within its purview all movable and
immovable assets, yet it excluded agricultural land. However, the Act was
amended by the Finance Act of 1969 to include agricultural land for purposes of
wealth tax. The validity of the amendment was challenged by Shri Dhillon, a
landlord, in the High Court of Punjab and Haryana and later in the Supreme Court.
Grounds for challenge:
a. That wealth tax on agricultural land could be imposed under Entry 49, List II by
the states and not by the union.
b. That even if that was not so Parliament had no competence to enact an Act
imposing wealth tax on agricultural land either under Entry 86 of List I and/or
under its residuary powers.
Held:
a. In analyzing the nature of a tax under Entry 86 the court stated that : It is not imposed
on the components of the assets of the assessee: it is imposed on the total assets
which the assessee owns, and in determining the net wealth not only the
encumbrances specifically charged against any item of asset, but the general liability
of the assessee to pay his debts and to discharge his lawful obligations have to be
taken into account.
b. The court added that the tax under entry 49 of list II contemplates the levy of tax on
lands and buildings or both as units. It is normally not concerned with the division of
interest or ownership in the units of lands or buildings which are brought to tax. Tax on
lands and buildings is directly imposed on lands and buildings and bears a definite
relation to it.
c. The concept of a tax under entry 86 and one under entry 49 was defined and it was
held that both cover different fields and there was no conflict between them.
d. In case of a Central Legislation the proper test was to inquire whether the matter fell
in List II or List III. Once it is found that the matter does not fall under List II,
Parliament will be competent to Legislate on it under its residuary power in Entry 97
of List I. In such a case it becomes immaterial whether it falls under Entries 1-96 of
List or not. (residuary power- given widest interpretation)
2. International Tourism Corporation v. State of Haryana (1981 SCR
(2) 364).

Facts: The state of Haryana through Haryana Passengers and Goods Taxation Act,
1952 levied a tax on transporters plying motor vehicles between Delhi and Jammu
& Kashmir. They used national highway to pass through Haryana without picking up
or setting down any passenger in the state. It was contended that the responsibility
for constructing and maintaining of national highways rests on the Centre and
therefore it was argued by the transporters that the tax could hardly be regarded
as valid.

Grounds for Challenge:

a. That Parliament alone had exclusive jurisdiction under Entry 23 read with Entry
97 of List I to legislate in respect of National Highways, including levy of taxes
on goods and passengers carried on National Highways.
b. That Entry 56 of List II which empowered the levy of taxes on goods and
passengers carried by road merely authorized the levy of taxes which were of
regulatory and compensatory nature.
Held:
a. Upheld the constitutionality of the Act.
b. The Court held that before exclusive legislative competence can be
claimed for Parliament by resorting to the residuary power, the legislative
incompetence of the State Legislature must be clearly established. Entry
97 itself is specific that a matter can be brought under that Entry only if it
is not enumerated in List II or List III.
c. Court held that where the competing entries are an entry in List II and
entry 97 of List I the entry in the State List must be given a broad and
plentiful interpretation and should not be interpreted in favor of Centre by
resorting to the residuary power.
d. The residuary power cannot be so expansively interpreted as to whittle
down the power of the State Legislature. That might affect and jeopardize
the federal principle. The resort to the residuary power should be the last
refuge.

The decision in the instant case has neutralised much of the affects of the Dhillon's case where
the residuary power was given widest interpretation.