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Prof. Dr. Mohan R Boll

INTRODUCTION

The word‘doctrine’has been derived from the Greek word “doxa.” It is understood as “opinion.”Originally, doctrines were those of the Catholic Church.The teachings of the so-called doctors (religious scholars) of the Church were considered as doctrines. But today a doctrine can come from many other sources. Old and established legal principles are called legal doctrines. As a general rule, there is an agreement that the doctrine is not a formal source of law but rather “a source of inspiration” of the rule of law or a de facto authority.[3]The paper attempts to highlight some leading judgments of the Supreme Court of India to trace the principles of law forming basis for the application of the three main doctrines viz.,  the doctrines of Pith and substance, repugnancy and colourable legislation which have been applied by the common law systems. The trident testing the constitutionality of the laws dealing with the legislative relations of the Union and the States in India is being analysed in this paper.

1.      Doctrine of Pith and Substance

The doctrine of pith and substance is otherwise known as the doctrine of predominant purpose or true nature and character of law. The doctrine finds its origin from the principle that it is necessary to examine the true nature and character of the legislation to know whether it falls in a forbidden sphere.[4] The doctrine is sometimes expressed in terms of ascertaining the ‘nature and the true character of Legislation´, and it is also emphasized, that the name given by the Legislature in short title, is immaterial. Again, for applying the pith and substance´ doctrine, regard is to be had (i) to the enactment as a whole; (ii) to its main objects; and (iii) the scope and effects of its provisions.  This doctrine was first applied in India by Justice Porter, in Prafulla Kumar Mukherjea v. Bank of Commerce Ltd., Khulna.[5]It was held that the State law, dealing with money lending, is not invalid, merely because it incidentally affects promissory notes. Sir Maurice Gwyer, C.J. in Central Provinces and Berar Act No. XIV of 1938,[6]observed that the doctrine of pith and substance is sometimes invoked to find out the nature and content of the legislation. However, when there is an irreconcilable conflict between the two legislations, the Central legislation shall prevail. However, every attempt would be made to reconcile the conflict. The doctrine of ‘pith and substance’ evolved by the Privy Council has been followed by this Court throughout. Thus, in State of Bombay v. F. N. Balsara[7] Fazl Ali, J., representing the Constitution Bench followed the decision of the Judicial Committee, reiterated that if the Act, when so viewed, substantially falls within the powers expressly conferred upon the Legislature which enacted it, then it cannot be held to be invalid, merely because it incidentally encroaches on matters which have been assigned to another Legislature. It was held that the validity of an Act is not affected if it incidentally trenches on matters outside the authorised field, and therefore it is necessary to inquire in each case what is the pith and substance of the Act impugned. If the Act, when so viewed, substantially falls within the powers expressly conferred upon the Legislature which enacted it, then it cannot be held to be invalid, merely because it incidentally encroaches on matters which have been assigned to another legislature.

1.1 Determines the true nature and character

Sir Maurice Gwyer, C. J., in Subramanyam Chettiar v. Muthuswamy Goundan,[8] has observed that it might inevitably happen from time to time that legislation, though purporting to deal with a subject in one list,[9] touches also on a subject in another list, and the different provisions of the enactment may be so closely intertwined that blind adherence to a strictly verbal interpretation would result in a large number of statutes being declared invalid because the legislature enacting them may appear to have legislated in a forbidden sphere. Hence the rule which has been evolved by the Judicial Committee whereby the impugned statute is examined to ascertain its ‘pith and substance’, or its ‘true nature and character’, for the purpose of determining whether it is legislation with respect to matters in this list or in that.”[10]

In Atiabari Tea Co. Ltd. v. State of Assam,[11] Gajendragadkar, J. for the majority, had explained the purpose of the rule of pith and substance thus:

“The test of pith and substance is generally and more appropriately applied when a dispute arises as to the legislative competence of the legislature, and it has to be resolved by reference to the entries to which the impugned legislation is relateable, when there is a conflict between the two entries in the legislative list, and legislation by reference to one entry would be competent but not by reference to other, the doctrine of pith and substance is invoked for the purpose of determining the true nature and character of the legislation in question.”

 

Dr. MukundakamSharma,J., in Rajiv Sarin v. State of Uttarakhand[12] has held that as and when there is a challenge to the legislative competence, the courts will try to ascertain the pith and substance of such enactment on a scrutiny of the Act in question. In this process, it would also be necessary for the courts to examine the true nature and character of the enactment, its object, its scope and effect to find out whether the enactment in question is genuinely referable to a field of the legislation allotted to the respective legislature under the constitutional scheme.[13]

1.2 Doctrine flows from Article 246(1)

All India Federation of Tax Practitioners  v. Union of India,[14] concerns the constitutional status of the levy of service tax and the legislative competence of Parliament to impose service tax under Article 246(1) read with Entry 97 of List I of the Seventh Schedule to the Constitution.  S. H. Kapadia J., opined that “This doctrine of pith and substance flows from the words in Article 246(1), quoted above, namely, with respect to any of the matters enumerated in List I. The bottom line of the said doctrine is to look at the legislation as a whole and if it has a substantial connection with the Entry, the matter may be taken to be legislation on the topic. That is why due weightage should be given to the words “with respect to” in Article 246 as it brings in the doctrine of ‘pith and substance’ for understanding the scope of legislative powers.”[15]

The Dipak Debbarma Court, [16]speaking through Justice Ranjan Gogoi, has held that in interpreting Article 246 regard must be had to the constitutional scheme which visualises a federal structure giving full autonomy to the Union Parliament as well as to the State legislatures in their respective/demarcated fields of legislation. The problem may, however, become a little more complex than what may seemingly appear as the two legislations may very well be within the respective domains of the concerned legislatures and, yet, there may be intrusion into areas that fall beyond the assigned fields of legislation. In such a situation it will be plain duty of the Constitutional Court to see if the conflict can be resolved by acknowledging the mutual existence of the two legislations. If that is not possible, then by virtue of the provisions of Article 246(1), the Parliamentary legislation would prevail and the State legislation will have to give way notwithstanding the fact that the State legislation is within the demarcated field (List II). This is the principle of federal supremacy which Article 246 of the Constitution embodies. The said principle will, however, prevail provided the pre- condition exists, namely, the Parliamentary legislation is the dominant legislation and the State legislation, though within its own field, has the effect of encroaching on a vital sphere of the subject or entry to which the dominant legislation is referable. This is the principle that is discernible from the Constitution Bench judgment of this Court in State of West Bengal and Ors. v. Committee for Protection of Democratic Rights, West Bengal and Ors.[17]

 

1.3 Resolves the conflict of jurisdiction

M Venkatachalliah J., in Ujagar Prints Etc v. Union of India [18]had observed that the doctrine is applied to resolve the conflict of jurisdiction. If the Act in its pith and substance fails in one List it must be deemed not to fail in another List, despite incidental encroachment.Its validity should be determined accordingly. The pith and substance rule, thereby, resolves the problem of overlapping of “any two entries of two different Lists vis-a-vis the Act on the basis of an inquiry into the “true nature and character” of the legislation as a whole and tries to find whether the impugned law is substantially within the competence of the Legislature which enacted it, even if it incidentally trespasses into the legislative field of another Legislature.

1.4 Aids to validate legislation

Rangnath Misra J., in Vijay Kumar Sharma v.State of Karnataka [19]has observed that when a law is impugned on the ground that it is -ultra vires the powers of the legislature which enacted it, what has to be ascertained is the true character of the legislation.  To do that, one must have regard to the enactment as a whole, to its objects and to thescope and effect of its provisions. If  on such examination it is found  that the legislation is in substance one on a matter assigned to the legislature,  then  it must  be held to  be  valid  in its entirety, even though it  might  incidentally  trench  on matters which are beyond its competence.[20]When the legislative encroachment is under consideration the doctrine of pith and substance comes to the aid to validate a legislation which would otherwise be invalid for the very want of legislative competence. When the repugnancy between the two legislations is under consideration, what is in issue is whether the provision of the State enactment though otherwise constitutionally valid, has lost its validity because the Parliament has made legislation with a conflicting provision on allegedly the same matter.

1.5 Operation in Concurrent Field

 

In Tika Ramji & Ors. etc. v. State of  U.P.  &  Ors.,[21] the same question had arisen for resolution. It was held that- the pith and substance is applicable only when both the Centre as well as the State Legislatures were operating in the Concurrent field. There was no question of any trespass upon the exclusive jurisdiction vested in the Centre under Entry 52 of List I.

1.6 State’s Competence validates the Act

Justice A Alagiriswami J., speaking for the Constitution Bench of the Supreme Court of India in
The Kerala State Electricity Board v. Indian Alluminium Co.,[22] case has analyzed the doctrine of pith and substance. The Kerala State Electricity Board has imposed surcharge on the bulk consumers of electricity declaring electricity as ‘essential article’. The declaration was made in pursuance of the power conferred on it under Section 2 (a) of the Kerala Essential Articles Control (Temporary Powers) Act, 1961. The Surcharge Order called [the Kerala State Electricity (Supply and Licensees Areas) Surcharge Order, 1968] was made under section 3 of the Act. The respondents, who were bulk consumers of electricity, questioned before the High Court the validity of the surcharge order. It was alleged that the Kerala Act was repugnant to the Electricity Act, 1910 and the Electricity (Supply) Act, 1948 (both are Central Acts). The order had been struck down by the High Court. Hence, the Electricity Board had moved an appeal to the Supreme Court. The Apex Court had appreciated the criteria to invoke the doctrine of pith and substance. It was held “For deciding under which entry a particular legislation falls the theory of “pith and substance” has been evolved by the Courts. If in pith and substance a legislation falls within one List or the other but some portion of the subject matter of that legislation incidentally trenches upon and might come to fall under another List, the Act as a whole would be valid notwithstanding such incidental trenching.” The Court found that the Kerala Act was a matter falling under entries 26 and 27 of List II of Schedule VII of the Constitution of India. Therefore, it was held that the State Act does not trench upon the field occupied by the 1948-Act which falls partly under Entry 43 of List I and partly under Entry 38 of List III.

1.7 Incidental encroachments

Justice Ruma Pal, in ITC Ltd. v. Agricultural Produce Market Committee, [23]observed that the federal structure under the constitutional scheme can also work to nullify an incidental encroachment made by the Parliamentary legislation on a subject of a State legislation where the dominant legislation is the State legislation.

Justice Rangnath Misra in Vijay Kumar Sharma v. State of Karnataka.,[24] was dealing with the validity of denial of permits to the contract carriage operators in Karnataka. The provisions of Sections 14 and 20 of Karnataka Contract Carriages (Acquisition) Act, 1976 provides for the prohibition for fresh permits or renewal of existing permits on or from the date of vesting. On the other hand, the provisions of Sections 74 and 80(2) of the Motor Vehicles Act, 1988 [central Act] says that ordinarily not to refuse to grant an application for permit of any kind. Thus the petitioners contended a conflict of the two legislations. The Supreme Court observed:

“When the legislative encroachment is under consideration the doctrine of pith and substance comes to the aidto validate a legislation which would otherwise be invalid for the very want of legislative competence. ….The doctrine of Pith and Substance has no application when the matter in question is covered by an entry or entries in the Concurrent List and has occupied the same field both in the Union and the State Law. It matters little as in which entry or entries in the Concurrent List the subject-matter falls or in exercise whereof the Act/provision or provisions therein was made. The Parliament and Legislature of the State have exclusive power to legislate upon any subject or subjects in the Concurrent List. The question of incidental or ancillary encroachment or to trench into forbidden field does not arise. The determination of its ‘true nature and character also is immaterial.”

 

It was held that the Karnataka  Act was  enacted by the  State  Legislature for acquisition  of  contract carriages under Entry  42  of  the Concurrent List read with Article 31 of the Constitution to give  effect  to the provisions of Articles  39(b)  and (c) thereof.  The Motor Vehicles Act, 1988 on the other hand was enacted by the Parliament under Entry 35 of the Concurrent List to regulatethe operation of the motor vehicles.  They thus occupy different areas. Therefore, it was ruled that the doctrine of pith and substance had no application in the case.

The doctrine of pith and substance has no application when the matter in question is covered by an entry or entries in the Concurrent List and has occupied the same field both in the Union and the State Law.[25] It matters little as in which entry or entries in the Concurrent List the subject-matter falls or in exercise whereof the Act/provision or provisions therein was made. The Parliament and Legislature of the State have exclusive power to legislate upon any subject or subjects in the Concurrent List. The question of incidental or ancillary encroachment or to trench into forbidden field does not arise. The determination of its ‘true nature and character also is immaterial.

1.8 Social Welfare Law Preferred 

In Vishal N Kalsaria v. Bank of India & Ors.,[26] respondent Nos. 4 and 5 had been granted a loan against equitable mortgage of several properties by the Bank of India [including the property in which the appellant is allegedly a tenant.] The respondents failed to clear the dues from the loan amount borrowed by them within the stipulated statutory period of 60 days. On an application before the Chief Metropolitan Magistrate, Mumbai u/S.14 of the SARFAESI Act the Magistrate directed the Assistant Registrar, Borivali Centre of Courts to take possession of the secured assets. The appellant approached the Court under the Maharashtra Rent Control Act, 1999, and the matter ultimately reached the Supreme Court.

Justice Gopala Gowda observed that the Rent Control Act being asocial welfare legislation must be construed as such. It was categorically maintained that ‘A landlord cannot be permitted to do indirectly what he has been barred from doing under the Rent Control Act, more so when the two legislations, that is the SARFAESI Act and the Rent Control Act operate in completely different fields.’ While SARFAESI Act is concerned with Non- Performing Assets of the Banks, the Rent Control Act governs the relationship between a tenant and the landlord and specifies the rights and liabilities of each as well as the rules of ejectment with respect to such tenants. The Apex Court clarified that it was a settled position of law that once tenancy is created, a tenant can be evicted only after following the due process of law, as prescribed under the provisions of the Rent Control Act. It was held that ‘a tenant cannot be arbitrarily evicted by using the provisions of the SARFAESI Act as that would amount to stultifying the statutory rights of protection given to the tenant.’ Accordingly, the Apex Court ruled that the provisions of the SARFAESI Act cannot be used to override the provisions of the Rent Control Act.

1.9 Relatable Subject matter

In State Bank of India vs Santosh Gupta,[27] R.F. Nariman, J. observed that applying the doctrine of pith and substance to SARFAESI, it was clear that in pith and substance the entire Act is referable to Entry 45 List I read with Entry 95 List I. The Act deals with recovery of debts due to banks and financial institutions, inter alia through facilitating securitization and reconstruction of financial assets of banks and financial institutions. The Act sets up a machinery in order to enforce the provisions of the Act. In pith and substance, SARFAESI does not deal with “transfer of property”. In fact, in so far as banks and financial institutions are concerned, it deals with recovery of debts owing to such banks and financial institutions and certain measures which can be taken outside of the court process to enforce such recovery. Under Section 13(4) of SARFAESI, apart from recourse to taking possession of secured assets of the borrower and assigning or selling them in order to realise their debts, the banks can also take over the management of the business of the borrower, and/or appoint any person as manager to manage secured assets, the possession of which has been taken over by the secured creditor. Banks as secured creditors may also require at any time by notice in writing, any person who has acquired any of the secured assets from the borrower and from whom money is due or payable to the borrower, to pay the secured creditor so much of the money as is sufficient to pay the secured debt. It is thus clear that the transfer of property, by way of sale or assignment, is only one of several measures of recovery of a secured debt owing to a bank and this being the case, it is clear that SARFAESI, as a whole, cannot possibly be said to be in pith and substance, an Act relatable to the subject matter “transfer of property”. At this juncture it is necessary to point out that insofar as the State of Jammu & Kashmir is concerned, Sections 17A and Section 18B of SARFAESI, which apply to the State of Jammu & Kashmir, substituted ‘District Judge’ and the ‘High Court’ for the ‘Debts Recovery Tribunal’ and the ‘Appellate Tribunal’ respectively.[28]

2. Doctrine of Repugnancy

The concept of repugnancy does not arise as far as the American and Canadian Constitutions are concerned, as there is no Concurrent List there, nor is there any provision akin to Article 254 of the Constitution of India.[29]

2.1 Only under Federal Constitutions

Repugnancy arises in the Australian Constitution, which has a Concurrent List and a provision i.e. Section 107, akin to Article 254 of the Constitution of India. In the Australian cases, the concept of Repugnancy has really been applied in the context of Criminal Law where for the same offence, there are two inconsistent and different punishments, which are provided and so the two laws cannot co-exist together. To put it differently, an area where the two Acts may be repugnant is when the Central Act evinces a clear interest to be exhaustive and unqualified and therefore, occupies the entire field.

2.2 Applicability in India – Two Repugnant Situations

In M.P. Sundararamier & Co. v. The State of Andhra Pradesh & Anr,[30] the Supreme Court has held that in our Constitution, a conflict of the taxing power of the Union and of the States cannot arise. It follows that the two laws viz. sub-s. (3) of s. 5 of the Act and paragraph 21 of the Control order issued by the Central Government under sub-s. (1) of s. 3 of the Essential Commodities Act, operate on two separate and distinct fields and both are capable of being obeyed. Therefore, it was held that there was no question of any clash between the two laws and the question of repugnancy does not come into play.

In India the doctrine of Repugnancy or inconsistency between the provisions of Central and State enactments can occur in two situations. The first, in case of a Central and a State Act on any field of entry mentioned in List III of the Seventh Schedule (Concurrent List). To such a situation of repugnancy or inconsistency, the provisions of Article 254 of the Constitution would apply.[31] If there is such an inconsistency, Article 254(1) makes it very clear that the central law will prevail subject, however, to the provisions of Article 254(2) and further subject to proviso to Article 254(2).[32]

The second situation of repugnancy or inconsistency is between to a subsequent Central law covered by an Entry of List I and an earlier State law relatable to one or more Entries of List II. How such a situation is to be resolved and answered and which legislation would have primacy is the moot question that arises for consideration by the Courts.[33] Such repugnancy may also arise where both laws operate in the same field and the two cannot possibly stand together e.g., where both prescribe punishment for the same offence but the punishment differs in degree or kind or in the procedure prescribed.[34]

2.3 The Four propositions

Four propositions were laid down for application of the doctrine by a Constitution Bench of 5 judges in M. Karunanidhi v. Union of India.[35]Justice Fazal Ali, speaking for the Court referring to the earlier authorities opined that the following propositions emerge:-

1. That in order to decide the question of repugnancy it must be shown that the two enactments contain inconsistent and irreconcilable provisions, so that they cannot stand together or operate in the same field.

2. That there can be no repeal by implication unless the inconsistency appears on the face of the two statutes.

3. That where the two statutes occupy a particular field, there is room or possibility of both the statutes operating in the same field without coming into collision with each other, no repugnancy results.

4. That where there is no inconsistency but a statute occupying the same field seeks to create distinct and separate offences, no question of repugnancy arises and both the statutes continue to operate in the same field.

2.4 Endeavour to Reconcile the Conflict

The Apex Court in M/s Hoechst Pharmaceuticals Ltd. and Ors. v. State of Bihar,[36]had held that where the two lists under Schedule VII appear to conflict with each other, an endeavour should be made to reconcile them by reading them together and applying the doctrine of pith and substance. It is only when such attempt to reconcile fails that the non-obstante clause in Art. 246(1) should be applied as a matter of last resort. For, in the words of Gwyer, C.J. in the matter of the Central Provinces & Berar Sales of Motor Spirit and Lubricants Taxation Act, 1938,[37] :”For the clause ought to be regarded as a last re- source, a witness to the imperfections of human expression and the fallibility of legal draftsmanship.” Gwyer, C.J. reiterated [38] that the principles laid down by the Privy Council in a long line of decisions in the interpretation of ss. 91 and 92 of the British North America Act, 1867 must be accepted as a guide for the interpretation of s. 100 of the Government of India Act, 1935:

“It must inevitably happen from time to time that legislation, though purporting to deal with a subject in one list, touches also on a subject in another list, and the different provisions of the enactment may be so closely intertwined that build adherence to a strictly verbal interpretation would result in a large number of statutes being declared invalid because the Legislature enacting them may appear to have legislated in a forbidden sphere. Hence the rule which has been evolved by the Judicial Committee whereby the impugned statute is examined to ascertain its ‘pith and substance’ or its true nature and character for the purpose of determining whether it is legislation in respect of matters in this list or in that.”

 

2.5 Legislative Supremacy

Justice S. M. SIKRI, in State of Orissa vs. M.A. Tulloch & Co.,[39] has explained the concept of repugnancy as under:

“……Repugnancy arises when two enactments both within the competence of the two Legislatures collide and when the Constitution expressly or by necessary implication provides that the enactment of one Legislature has superiority over the other then to extent of the repugnancy the one supersedes the other. But two enactments may be repugnant to each other even though obedience of each of them is possible without disobeying the other.  The test of two legislations containing contradictory provisions is not, however, the only criterion of repugnancy, for if a competent legislature with a superior efficacy expressly or impliedly evinces by its legislation an intention to cover the whole field, the enactments of the other legislature whether passed before or after would be overborne the on the ground of repugnance. Where such is the position, the inconsistency is demonstrated not by a detailed compression of provisions of the two statutes but by the mere existence of the two pieces of legislation………”

 

Justice Ranjan Gogoi in UCO Bank v. Dipak Debbarma,[40]has observed that the doctrine of repugnancy or inconsistency between the provisions of Central and State enactments can occur in two situations. The first, in case of a Central and a State Act on any field of entry mentioned in List III of the Seventh Schedule (Concurrent List). To such a situation of repugnancy or inconsistency, the provisions of Article 254 of the Constitution would apply. If there is such an inconsistency, Article 254(1) makes it very clear that the central law will prevail subject, however, to the provisions of Article 254(2) and further subject to proviso to Article 254(2). In the present case the conflict between the Central and the State Act is on account of an apparent overstepping by the provisions of the State Act dealing with land reform into an area of banking covered by the Central Act. The test, therefore, would be, to find out as to which is the dominant legislation, having regard the area of encroachment. The Court held that the dominant legislation being the Parliamentary legislation(the SARFAESI Act), the provisions of the Tripura Act of 1960, pro tanto, (Section 187) would be invalid. It is the provisions of the Act of 2002, which do not contain any embargo on the category of persons to whom mortgaged property can be sold by the bank for realisation of its dues that will prevail over the provisions contained in Section 187 of the Tripura Act of 1960.

2.6 No repugnancy if the matters are different

A Constitution Bench of the Apex court speaking through Venkatarama Ayyar, J. in Zaverbhai Amaidas v. State of Bombay,[41] emphasised that the important thing to consider with reference to this provision was whether the legislation is ‘in respect of the same matter’. That is to say if the later legislation deals not with the matters which formed the subject of the earlier legislation, but with other and distinct matters though of a cognate and allied character, then Art. 254(2) will have no application.

2.7 Different Fields

Justice Mukundakam Sharma in  Rajiv Sarin v. State of Uttarakhand & Ors.,[42] the question was whether there was repugnancy between S. 18 (1) (CC ) of the Kumaun and Uttrakhand Zamindari Abolition and Land Reforms Act, 1960 and S.37 and S 84 of The  Forest Act,  1927. No compensation has been provided under the U.P. Amt Act 1978 for private forests acquired for being neglected or mismanaged.  But, if the acquisition is done under the Forest Act r/w the Land Acquisition Act 1894 market value and ‘solatium’ is payable. The Apex Court ruled that the Forest Act, 1927 has nothing to do with the agrarian reforms but deals with forest policy and management. The Forest Act only gives an enabling power to the government to acquire forests in accordance with the provisions of the Land Acquisition Act, 1894. The Court found that the UP Act is relatable to Schedule VII List II Entry 18 read with List III Entry 42.  Hence, it was held that there is no repugnancy between the provisions of both the Acts.

2.8 Provisions of the Code prevail over

In Lalitha Kumari v. State govt. of UP,[43] it was held that it was clear from the mandate of Article 254(1) of the Constitution that if there is any inconsistency between the provisions of the Code and the Police Act, 1861, the provisions of the Code will prevail and the provisions of the Police Act would be void to the extent of the repugnancy. If at all, there is any inconsistency in the provisions of Section  154  of  the  Code  and  Section  44  of  the  Police  Act,  1861, with regard to the fact as to whether the FIR is to be registered  in k  or  in  the  General  Diary,  the provisions  of  Section  154  of  the  Code  will  prevail  and  the  provisions  of  Section  44  of  the  Police  Act,  1861  (or  similar  provisions  of  the  respective corresponding  Police  Act  or  Rules  in  other  respective  States)  shall  be  void  to  the  extent  of  the  repugnancy.    Thus, FIR  is to  be  recorded  in  the  FIR Book, as mandated under Section 154 of the Code, and it is not correct to state that information will be first recorded in the  General  Diary  and  only  after  preliminary  inquiry,  if  required, the information will be registered as FIR.

2.9 Direct and Irreconcilable Conflict

In Deep Chand v. State of Uttar Pradesh,[44] the Supreme court had pointed out that repugnancy between two statutes would arise (i) if there was direct conflict between the two provisions and (ii) if the law made by Parliament and the law made by the State Legislature occupied the same field. It has already been stated that the State Act intended to eliminate private operators from the State in regard to contract carriages acquired under the existing permits, vehicles and ancillary property and with a view to giving effect to a monopoly situation for the State undertaking made provision in s. 20 for excluding the private operators. The 1988 Act does not purport to make any provision in regard to acquisition of contract carriage permits which formed the dominant theme or the core of the State Act. Section 20 of the State Act creates a monopoly situation in favour of the State undertaking qua contract carriages by keeping all private operators out of the filed. Since ss. 73, 74 and 80 of the 1988 Act do not contain any provision relating to who the applicants for contract carriages can or should be, and those sections can be applied without any difficulty to the applications of the State undertaking, and there does not appear to be any repugnancy between the two Acts for invoking Art. 254 of the Constitution. A provision in the State Act excluding a particular class of people for operating contract carriages or laying down qualifications for them would not run counter to the relevant provisions of the 1988 Act.

2.10 Saving of State Law by Presidential Assent

In State of Tamil Nadu v. Adhiyaman Education and Research Institute,[45]Justice PB Sawant has held that to the extent that the State legislation is in conflict with the Central legislation though the former is purported to have been made under Entry 25 of the Concurrent List but in effect encroaches upon legislation including subordinate legislation made by the Centre under Entry 25 of the Concurrent List or to give effect to Entry 66 of the Union List, it would be void and inoperative. If there is a conflict between the two legislations, unless the State legislation is saved by the provisions of the main part of clause (2) of Article 254, the State legislation being repugnant to the Central legislation, the same would be inoperative. Whether the State law encroaches upon Entry 66 of the Union List or is repugnant to the law made by the Centre under Entry 25 of the Concurrent List, will have to be determined by the examination of the two laws and will depend upon the facts of each case.

Justice K.G. Balakrishnan, in Govt. of A.P. v. J.B. Educational Society, [46]has dealt with the principles for the application of the doctrine of repugnancy. It was held that Clause (2) of Article 245 deals with a situation where the State legislation having been reserved and having obtained President’s ascent prevails in that State; this again is subject to the proviso that the Parliament can again bring a legislation to override even such State legislation. The Apex Court observed that the educational needs of the locality are to be ascertained and determined by the State. Having regard to the regulations framed under the AICTE Act, the representatives of the State have to be included in the ultimate decision making process and having regard to the provisions of the Act, the Writ Petitioners would not in any way be prejudiced by such provisions in the A.P. Act. Moreover, the decision, if any, taken by the State authorities u/S 20(3)(a)(i) would be subject to judicial review and we do not think that the State could make any irrational decision about granting permission.  Hence, it was ruled that Section 20(3)(a)(i) is not in any way repugnant to Section 10 of AICTE Act and it is constitutionally valid.

2.11 Presidential Assent not required

Justice K.S. Radhakrishnan, in KT Plantatations vs. State of Karnataka,[47] was dealing with the clash between the Land Acquisition Act, 1894 and the Devikarani Roerich (Acquisition and Transfer) Act 1996. The q of repugnancy under Article 254 arises when the provisions of both the laws are fully inconsistent or are absolutely irreconcilable and it is impossible without disturbing the other or conflicting results are produced, when both the statutes covering the same field are applied to a given set of facts. The Court found that the Devikarani Roerich (Acquisition and Transfer) Act, 1996 falls under List II entry 18. The dominant purpose of the Act was to preserve and protect Roerich estate. Incidentally the Act deals with the acquisition of paintings, artefacts and the other valuable belongings of the Roerichs. Finally, the Apex Court observed that there was no repugnancy between the provisions of the Land Acquisition Act, 1894 and the Karnataka Land Reforms Act, 1961, and hence no assent of the President is warranted under Article 254(2) of the Constitution.

2.12 Legislative Incompetence Invalidates the Law

Justices V. Gopala Gowda, Amitava Roy were dealing with the doctrine of repugnancy in M/S. Gujarat Ambuja Exports Ltd v. State of Uttarakhand &Ors.[48]The State legislature of Uttarakhand enacted the Uttarakhand Agricultural Produce Marketing (Development and Regulation) Act, 2011. Subsequently, the State Legislature has amended the Act with retrospective effect. Section 27(c)(iii) of the amended Act provides that any such agricultural produce, which arrives in any Market area of the State for sale, storage, processing, manufacturing, transaction or other commercial purposes from any other State or out of Country for the first time, it shall be registered as “Primary Arrival” and on such produce, Market fee and Development cess shall be payable. Subsequently, the appellants were served notice requiring them to ensure that the payment of ‘Mandi fee’ or ‘development cess’. Aggrieved, the appellants filed Writ Petitions before the High Court challenging the constitutional validity of the Amendment Act, 2012. The validity of the Act and the notice-cum-demand were upheld by the High Court. The Division Bench has approved the orders of the Single judge. Hence, the appeal. The Supreme Court observed that the State Legislature did not have the competence to enact the impugned provisions which sought to levy ‘market fee’ and ‘development ‘cess’ even on those agricultural produce which were not being brought into the market for the purpose of sale, but for the purpose of manufacture or further processing. Since the State Legislature was not competent to enact the impugned provision of Section 27(c)(iii) of the Act, the same is liable to be struck down.

3.      Doctrine of Colourable legislation

The doctrine is based on the maxim “Quandoa liquid prohibetur ex directo, prohibeturet per obliquum”. The maxim means-“when anything is prohibited directly, it is also prohibited indirectly”. “Whatever legislature can’t do directly, it can’t do indirectly”.

Doctrine of Colorable Legislation[49] or a fraud on the Constitution is built upon the founding stones of the doctrine of Separation of Power. Separation of Power mandates that a balance of power is to be struck between the different components of the State i.e. between the Legislature, the Executive and the Judiciary. The Primary Function of the legislature is to make laws. Whenever, Legislature tries to shift this balance of power towards itself then the doctrine of ‘Colorable Legislation’ is attracted to take care of Legislative Accountability. When power is exercised in bad faith to attain ends beyond the sanctioned purposes of power by simulation or pretension of gaining a legitimate goal, it is called colourable exercise of power.[50] In Naga People’s Movement of Human Rights v. Union of India,[51] held that ‘colourable legislation’ is enacting by the Legislature of a legislation seeking to do indirectly what it cannot do directly. The motive of the legislature is irrelevant to castigate an Act as a colourable device as ascertained by Justice V.R. Krishna Iyyer.[52]

3.1 Guise Acts Forbidden

Justice P B  Gajendragadkar in the Hingir-Rampur Coal Co. Ltd. v. The State of Orissa,[53] has observed that cases may arise where under the guise of levying a fee Legislature may attempt to impose a tax; and in the case of such a colourable exercise of legislative power courts would have to scrutinise the scheme of the levy very carefully and determine whether in fact there is a co-relation between the service and the levy, or whether the levy is either not co-related with service or is levied to such an excessive extent as to be a presence of a fee and not a fee in reality.

3.2 Bonafides or motive of the Law- irrelevant 

Justice B.K. Mukherjea, in  K.C. Gajapati Narayan Deo v. The State of Orissa,[54]was reviewing whether theOrissa Estates Abolition Act, 1952 was a colourable piece of legislation as against the Orissa Agricultural Income-tax (Amendment) Act of 1950. It was contended that it was not a bona fide taxation statute at all. It was contended thatthe real object of which was to reduce, by artificial means, the net income of the intermediaries, so that the compensation payable to them under the Act might be kept down to as low a figure as possible.

Justice Mukherjea observed:

“….the question whether a law was a colourable legislation and as such void did not depend on the motive or bona fides of the legislature in passing the law but upon the competency of the legislature to pass that particular law, and what the courts have to determine in such cases is whether though the legislature has purported to act within the limits of its powers, it has in substance and reality transgressed those powers, the transgression being veiled by what appears, on proper examination, to be a mere pretence or disguise. The whole doctrine of colourable legislation is based upon the maxim that you cannot do indirectly what you cannot do directly….”

 

Justice Mukherjea opined that the idea conveyed by the expression is that although apparently a legislature in passing a statute purported to act within the limits of its powers, yet in substance and in reality it transgressed these powers, the transgression being veiled by what appears on proper examination, to be a mere presence or disguise. According to the Supreme Court, the impugned Act was in substance and form a law in respect to the “taxing of agricultural income”, as described in entry 46 of List 11 of the Seventh Schedule to the Constitution. The State Legislature was competent to legislate on this subject, the Act was not void, and the fact that the object of the legislature was to accomplish another purpose, viz., to reduce the compensation payable under the Estates Abolition Act, cannot render this law a colourable legislation and void. It was ruled that the ulterior object itself was not beyond the competence of the legislature.

In Sonapur Tea Co. Ltd. v. Must. Mazirunnessa, [55]it was reiterated relying on Gajapati’s case that the doctrine of colourable legislation really postulates that legislation attempts to do indirectly what it cannot do directly.

3.3 Legislative Overstepping

In Gullapalli Nageswara Rao v. APSRTC, [56] it was contended thatthe petitioner’s fundamental right to carry on the business of motor transport in Krishna District in Andhra Pradesh, was allegedly affected by the State taking over the routes on which the petitioners have been plying their stage carriages. It was argued that Chapter IVA of the Motor Vehicles Act, 1939 was a piece of colourable legislation. The real object was allegedly to take over their business, under cover of cancellation of permits, in contravention of Article 31 of the Constitution. Justice Subba Rao explained that the question of colourable legislation was, in substance, really one of legislative competence of the legislature that enacted it. The legislature could only make laws within its legislative competence. Its legislative field might be circumscribed by specific legislative entries or limited by fundamental rights created by the Constitution. The legislature could not over-step the field of its competency, directly or indirectly. It would be for the Court to scrutinize if the legislature in purporting to make a law within its sphere, in effect and substance, reached beyond it, it had in fact the power to the lawand its motive in making it would be irrelevant. It was therefore held that the Road Transport Department of the Andhra Pradesh Government is a State Transport Undertaking under the Central Act and therefore it was within its legal competence to initiate the scheme. Thus the doctrine was held inapplicable.

3.4 Different objects and different goals

In the State of Punjab v. Gurdial Singh & Ors.,[57] the Apex Court held that the action becomes bad where the true object is to reach an end different from the one for which the power is entrusted, guided by an extraneous consideration, whether good or bad but irrelevant to the entrustment. When the custodian of power is influenced in exercise of its power by considerations outside those for promotion of which the power is vested, the action becomes bad for the reason that power has not been exercised bonafide for the end design.

3.5 Advancement of the good objectives favoured

Justice R.K. Agrawal, along with HL Dattu, Arun Mishra JJ.,was dealing with the doctrine in
All Kerala Online Lottery Dealers v. State Of Kerala & Ors.[58] The State of Kerala, under Section 5 of the Lotteries (Regulation) Act, 1998, prohibited the sale of all computerized and online lottery tickets marketed and operated through vending machines, terminals, electronic machines and tickets sold through internet in the State. The State declared that Kerala shall be a free zone from online and internet lotteries. Being aggrieved by the notification, the All Kerala Online Lottery Dealers Association, State of Sikkim and one Sreekala and others filed Writ Petitions. The High Court and the Division Bench dismissed the writ petitions. Hence, the appeal to the Supreme Court.The question was whether there was a colourable exercise of power by the State.

The Apex Court held that it was not a case of abdication of legislative power and would not be bereft of any guidelines if the legislation banning lotteries was applied uniformly. It was further ruled that if the ban on the online lottery applies uniformly, it would not be a case of exercising power by a delegatee without any guidelines. The Act has been designedly made to suppress the mischief of lottery. Therefore, the Apex Court felt that an interpretation, which advances the object of the Act, should be favoured.  That means, the State can prohibit online lotteries, if it is not running the said type of lotteries.

Conclusion

Thus, it can be summed up that the doctrine of pith and substance is otherwise known as the predominant purpose or true nature and character of law. When a law is impugned as ultra vires the powers of the legislature which enacted it, what has to be ascertained is its pith and substance or its true nature and character. [59]The doctrine is applied to determine whether a legislation is within the legislative competence under Articles 246(1) and 246(3) of the Constitution. The doctrine is applied to resolve the conflict of jurisdiction. If the Act in its pith and substance fails in one List it must be deemed not to fail in another List, despite incidental encroachment. Its validity should be determined accordingly. The pith and substance rule, thereby, resolves the problem of overlapping of “any two entries of two different Lists vis-a-vis the Act on the basis of an inquiry into the “true nature and character” of the legislation as a whole and tries to find whether the impugned law is substantially within the competence of the Legislature which enacted it, even if it incidentally trespasses into the legislative field of another Legislature.

When the repugnancy between the two legislations is under consideration, what is in issue is whether the provision of the State enactment though otherwise constitutionally valid, has lost its validity because the Parliament has made legislation with a conflicting provision on allegedly the same matter. The doctrine has no application when the matter in question is covered by an entry or entries in the Concurrent List and has occupied the same field both in the Union and the State Law. It matters little as in which entry or entries in the Concurrent List the subject-matter falls or in exercise whereof the Act/provision or provisions therein was made. The Parliament and Legislature of the State have exclusive power to legislate upon any subject or subjects in the Concurrent List. The question of incidental or ancillary encroachment or to trench into forbidden field does not arise. The determination of its ‘true nature and character also is immaterial. The doctrine is invoked in order to appreciate the true nature of the law and there are instances where the law has been ruled invalid if it overrides welfare legislation.[60]

The three doctrines help the Courts to verify the Constitutionality of the legislations enacted by the Parliament or the State legislatures respectively. While considering the constitutionality of the legislations, the Courts are expected to verify whether the legislature has power to enact the law. If yes, there shall be nothing to consider excepting a situation where the provision violates the Constitutional rights of the subjects. Having regard to the true nature and the purpose of the legislations, reading the legislations entirely, if the object of the legislations have a direct and reasonable nexus with the objective so as to subserve the common good, the legislation is to be validated.[61] If there is no power directly or impliedly vested with the legislature, or the objects sought to be achieved and the actual provisions have no consensus, the legislation or the part of it becomes ‘colourable’ and hence to be declared void. If the Legislature is competent to pass a particular law, the motives which impelled it to act are really irrelevant. On the other hand, if the Legislature lacks competency, the question of motive does not arise at all. Whether a statute is constitutional or not is thus always a question of power.[62] If the subject matter in substance is something which is beyond the legislative power, the form in which the law is clothed would not save it from condemnation. The constitutional prohibitions cannot be allowed to be violated by employing indirect methods. To test the true nature and character of the challenged legislation, the investigation by the Court should be directed towards examining (i) the effect of the legislation and (ii) its object, purpose or design. While doing so, the Court cannot enter into investigating the motives, which induced the Legislature to exercise its power.[63]

*****

 

 

[1] The paper has been published in The IUP Law Review Vol. VII No.4 October 2017
[2] Principal, Kristu Jayanti College of Law, Bengaluru.
[3]  Kelly Buchanan, The Role of the “Doctrine” as a Source of Law in France, https://blogs.loc.gov/law/2010/12/the-role-of-the-doctrine-as-a-source-of-law-in-france/
[4] K. Ramaswamy, J., P.N. Krishna Lal and others v. Govt. of Kerala, 1994 (5) Suppl. SCR 526
[5]AIR 1947 PC 60
[6]In re Central Provinces and Berar Act No. XIV of 1938 (1939) FCR 18
[7] AIR 1951 SC 318 It was observed that the words “possession and sale” occurring in entry 31 of List II are to be read without any qualification whatsoever. It will not be doing any violence to the construction of that entry to hold that the Provincial Legislature has the power to prohibit the possession, use and sale of intoxicating liquor absolutely. The Court opined that there was no real conflict between entry 31 of List II and entry 19 of List I.  Therefore, the Court found it difficult to hold that the Bombay Prohibition Act in so far as it purports to restrict possession, use and sale of foreign liquor is an encroachment on the field assigned to the Federal Legislature under entry 19 of List I.
[8] [1940] F.C.R. 188, 201
[9] Lists of subjects in Schedule VII of the Constitution of India
[10]Quoted by Ramaswami, J., speaking for the Constitution Bench, quoted with approval the classic observations of Sir Maurice Gwyer, C.J. in Subramanyam Chettiar v. Mulluswami Coundan 1940 F.C.R. 188.
[11] [1961] 1 SCR 809
[12] Dr. MukundakamSharma,J., in Rajiv Sarin v. State of Uttarakhand, (2011) 8 SCC 708
[13] Ibid.
[14] AIR 2007 SC 2990
[15] All India Federation of Tax Practitioners v. Union of India AIR 1970 SC 2990.
[16]Uco Bank & Anr vs Dipak Debbarma 2016 SCC OnLine SC 1391
[17]AIR 2010 SC 1476
[18] AIR 1989 SC 516
[19] AIR 1990 SC 2072 The petitioners, a group of contract carriage  operators were denied permits that they had applied for under     ss. 73, 74 and 80 of the Motor Vehicles Act, 1988 in view of the provisions  of ss. 14 and 20 of the Karnataka Contract Carriages (Acquisition) Act, 1976. They filed writ petitions under Article 32 of the Constitution questioning the action of the R.T.A. It was contended that the provisions of ss. 14 and 20 of the Karnataka Act were in direct conflict with the provisions  of ss. 74 and 80(2) of the M.V. Act, 1988 in as much as  while the Regional Transport Authority was enjoined  by the said provisions of the 1988 Act ordinarily not to refuse to  grant  an application for permit of any kind,  the  said provisions  of the Karnataka Act prohibited any person from applying for, and any officer or authority  from  entertaining or granting application for running any contract carriage in the State; [Sub-section  (1)  of  s. 14 prohibited  applications  for  fresh permits  or renewal of existing permits on or from the date of  vesting.]The Karnataka  Act was  enacted by the  State  Legislature  for acquisition  of  contract carriages under Entry  42  of  the Concurrent List read with Article 31 of the Constitution to give  effect  to the provisions of Articles  39(b)  and (c) thereof.  The MV Act 1988 on the other hand was enacted by the Parliament under Entry 35 of the Concurrent  List  to regulate  the  operation of the motor  vehicles.  They thus occupy different areas.
[20]Venkatarama Aiyyar J., in A.S. Krishna v. State of Madras AIR 1957 SC 297
[21] [1956] SCR 393
[22] AIR 1976 SC 1031
[23] (2002) 9 SCC 232
[24] AIR 1990 SC 2072
[25] M Rangnath Misra J., in Vijay Kumar Sharma  v. State of Karnataka &Ors. Etc AIR 1990 SC 2072
[26] Available at http://judis.nic.in/supremecourt/imgs1.aspx?filename=43272
[27] State Bank of India v. Santosh Gupta, available at judis.nic.in/supremecourt/imgs1.aspx?filename=44411
[28]State Bank of India v Santosh Gupta, available at judis.nic.in/supremecourt/imgs1.aspx?filename=44411
[29] Mukundakam Sharma,J., Rajiv Sarin & Anr vs State of Uttarakhand & Ors (2011) 8 SCC 708
[30] AIR 1958 SC 468
[31]UCO Bank &Anr v. Dipak Debbarma2016 SCC OnLine SC 1391
[32] If a State legislature amends a central Act and the law is reserved for presidential assent and receives it, then the State law shall prevail over the central Act. For instance, Section 2-A of the Industrial Disputes Act, 1947  has been amended by the State of Andhra Pradesh in 1987 enabling the individual dismissal disputes to be tried by Industrial Tribunal/ Labour Courts not withstanding anything under Section 10(1) of the Act i.e., without being referred by the appropriate government through the conciliation process or otherwise.
[33]Ibid.
[34] A P Sen J., T. Barai v. Henry Ah Hoe  AIR 1983 SC 150
[35] (1979) 3 SCC 431
[36]1983 (4) SCC45
[37] AIR 1939 F. C. 1
[38] A.L.S.P.P. Subrahmanyan Chettiar v. Muttuswami Goundan (1940) 2 MLJ 170
[39] AIR 1964 SC 1284
[40]2016 SCC OnLine SC 1391 The provisions of the Act of 2002 (the SARFAESI Act) enable the bank to take possession of any property where a security interest has been created in its favour. Specifically, Section 13 of the 2002 Act enables the bank to take possession of and sell such property to any person to realise its dues. The purchaser of such property acquires a clear title to the property sold, subject to compliance with the requirements prescribed.  Section 187 of the Tripura Act of 1960, on the other hand, prohibits the bank from transferring the property which has been mortgaged by a member of a scheduled tribe to any person other than a member of a scheduled tribe. This is a clear restriction on what is permitted by the Act of 2002 for the realisation of amounts due to the bank. The Act of 2002 is relatable to the Entry of banking which is included in List I of the Seventh Schedule. Sale of mortgaged property by a bank is an inseparable and integral part of the business of banking. The object of the State Act, as already noted, is an attempt to consolidate the land revenue law in the State and also to provide measures of agrarian reforms. The field of encroachment made by the State legislature is in the area of banking. So long there did not exist any parallel Central Act dealing with sale of secured assets and referable to Entry 45 of List I, the State Act, including Section 187, operated validly. However, the moment Parliament stepped in by enacting such a law traceable to Entry 45 and dealing exclusively with activities relating to sale of secured assets, the State law, to the extent that it is inconsistent with the Act of 2002, must give way. The High Court in the judgment under challenge has also taken the view that the impugned sale Notification dated 26.06.2012 is invalid for infraction of Rule 5 and Rule 8(5) of the Security Interest (Enforcement) Rules, 2002, in as much as the bank did not obtain any valuation report of the property before resorting to the impugned auction sale. Our attention had been specifically drawn to the stand of the appellant-Bank before the High Court in the counter filed (paragraph 20). Taking into account the averments made in the said affidavit, we find that the sale proclamation had mentioned a reserve price of Rs. 275 lacs and the property had been actually sold by auction at Rs. 416 lacs. That apart, the valuation report dated 14.06.2012 of the approved valuer valuing the property at Rs. 341.15 lacs has also been placed before us by way of an additional document which we are inclined to take on record. The requirements under Rule 5 and Rule 8(5) have, therefore, been complied with and the sale proclamation and the sale effected pursuant thereto cannot be invalidated on the above ground. For the aforesaid reasons, the impugned order passed by the High Court has to be set aside which we hereby do.
[41] [1955] 1 SCR 799
[42] (2011) 8 SCC 708
[43] 2014) 2 SCC 1
[44] AIR 1980 SC 633
[45] (1995) 4 SCC 104
[46] 2005 (2) SCR 302
[47] (2011) 9 SCC1
[48] AIR 2016 SC 394
[49] Ashok Kumar Alias Golu v. Union Of India And Ors 1991 SCC (3) 498
[50] The State of Punjab v. Gurdial Singh & Ors AIR 1980 SC 319
[51] (1998) 2 SCC 109,
[52] R. S. Joshi, S.T.O. Gujarat v. Ajit Mills Ltd., Ahmedabad AIR 1977 SC 2279
[53]AIR 1961 SC 459
[54] AIR 1953 SC 375

[55] [1962] 1 SCR 724
[56] AIR 1959  SC 308
[57] AIR 1980 SC 319
[58]decided on 5 November, 2015 http://judis.nic.in/supremecourt/imgs1.aspx?filename=43110
[59]Gwyer, C. J., in Subramanyam Chettiar v. Muthuswamy Goundan AIR 1941 FC 47
[60]Vishal N Kalsaria v. Bank of India & Ors.Decided on 20 January, 2016, available at http://judis.nic.in/supremecourt/imgs1.aspx?filename=43272
[61] Tinsukhia Electric Supply Co. Ltd v. State of Assam AIR 1990 SC 123
[62] vide Cooley’s Constitutional Limitations, Vol. 1, p. 379
[63] R.S. Joshi, S.T.O. v. Ajit Mills Ltd., (1977) 4 SCC 98, 108 , Naga People’s Movement of Human Rights Vs. Union of India, (1998) 2 SCC 109, 137.


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