PETITIONER:
AVINDER SINGH ETC.
Vs.
RESPONDENT:
STATE OF PUNJAB & ANR. ETC.
DATE OF JUDGMENT19/09/1978
BENCH:
KRISHNAIYER, V.R.
BENCH:
KRISHNAIYER, V.R.
DESAI, D.A.
CITATION:
1979 AIR 321 1979 SCR (1) 845
1979 SCC (1) 137
CITATOR INFO :
R 1979 SC1550 (13)
R 1979 SC1803 (12)
RF 1980 SC 738 (9)
F 1983 SC 762 (19)
R 1991 SC2096 (30)
ACT:
Constitution of India-Articles 14, 265-Vice of
excessive delegation-Absence of guidelines-What can be
delegated-Imposing flat rate of taxation-Choice of
classification in taxing statute.
Punjab Municipalities Act, 1976-Sec. 90 Punjab
Municipal Act, 1911-Sec. 62A-Double taxation if prohibited
by Art. 265.
HEADNOTE:
The Municipalities of Punjab are governed by two
enactments. The numerous little ones are statutory bodies
created and controlled by the Punjab Municipal Act, 1911 and
few large ones by the Punjab Municipal Corporation Act,
1976. For the purpose of the present petitions the
provisions run on identical terms. The State of Punjab in
April, 1977 required the various municipal bodies in the
State to impose tax on the sale of Indian made foreign
liquor @ Re. 1/- per bottle w.e.f. 20-5-1977. The Municipal
authorities having failed to take action pursuant to the
directive the State of Punjab directly issued a notification
under sec. 90(5) of the Punjab Municipal Corporation Act,
1976 and similar provision of the Municipal Act, 1911.
The petitioner challenged the constitutional validity
of the said statutes and levy on the following grounds:
1. Section 90(2)(b) of the Act suffers from the vice of
excessive delegation or legislative abdication.
2. There are no guidelines for the exercise of the wide
fiscal power of the Corporation or Government which make it
too unreasonable to be salvaged by Art. 19(5) and too
arbitrary to be equal under Art. 14.
3. The order imposing the tax itself is vitiated
because:
(a) It seeks to impose the tax which is already
imposed and, therefore, violates section 90
(4);
(b) There is double taxation;
(c) It levies too heavy taxation;
(d) Picking out from the broad spectrum of luxury
goods or intoxicants the Indian made foreign
liquor amounts to discrimination;
(e) No opportunity of being heard was given;
(f) Unequals are being treated equally by
imposing Re. 1/- per bottle irrespective of
the type of liquor taxed, price of the liquor
and alcoholic content.
Dismissing the appeal.
^
HELD: (1) There is nothing in Art. 265 of the
Constitution prohibiting double taxation. [850 D]
846
Cantonment Board Poona v. Western India Theatres Ltd.,
AIR 1954 Bom. 261 approved.
(b) The plea that flat rate of Re. 1/- per bottle
be it on brandy or other stronger beverage or
be it Rs. 50/- or Rs. 500/- per bottle cannot
be seriously pressed. In the field of
taxation many complex factors enter the
fixation and flexibility is necessary for the
taxing authority. [850E-F]
Moopil Nair (K.T.) v. State of Kerala, [1961] 3 SCR 77;
East India Tobacco Co. v. State of A.P., [1963] 1 SCR 404 at
406; A. Hajee Abdul Shakoor & Co. v. State of Madras. [1964]
8 SCR 217 at 230 referred to.
(2) If the Municipal body proposed to impose a tax it
is required to offer an opportunity to the residents of
area. No such procedural fetter is to be found under sec.
90(5) if the levy is imposed by the State Government. It is
impossible for the Court to imply invitation of objections.
'No taxation without representation' is not applicable to a
Government controlled by an elected legislature exercising
its power of taxation. [852B, C, D]
(3) Sec. 90(4) talks of tax not already imposed. The
Sales Tax imposed by the state legislature under the Punjab
General Sales Tax Act 1948 is no bar to the present levy.
Section 90 deals with the levy of taxes for Municipal
Corporation. The injunction is confined to repetition of the
taxes which the Municipality has already imposed. If the
Corporation has not already imposed the tax. the embargo is
absent. It is of no moment that some other body, including
the State Legislature has already entered the field. The
question is has the Municipal Committee or Corporation under
this Act already exacted a similar tax ? [852F, H, 853BC]
(4) The Founding Document of the nation has created the
three great instrumentalities and entrusted them with
certain basic powers-legislative, judicative and executive.
Abdication of these powers by the concerned
instrumentalities, amounts to betrayal of the constitution
and it is intolerable in law. The legislature cannot
delegate the essential legislative functions. The
legislature is responsible to the people and its
representative, the delegate may not be and this is why
excessive delegation have been frowned upon by
constitutional law. However, the complexities of modern
administration are so bafflingly intricate and bristle with
details, urgencies difficulties and the need for flexibility
is such that our legislature may not get off to a start if
they must directly and comprehensively handle legislative
business in all their plenitude and particularisation.
Delegation of some part of legislative power becomes a
compulsive necessity for viability. Of course, every
delegate is subject to the authority and control of the
principal and exercise of delegated power can always be
directed or cancelled by the Principal. Therefore, even if
there be delegation, parliamentary control over delegated
legislation should be a living continuity as a
constitutional necessity. [853GH, 854A, B, C, D, E]
Devi Das Gopal Krishnan & Ors. v. State of Punjab &
Ors., [1967] 3 SCR 557 at 565; P. N. Kaushal etc. v. v.
Union of India & Ors. [1979] 1 SCR 122; Corp. of Calcutta &
Anr. v. Liberty Cinema, [1963] 2 SCR 477 referred to.
The taxes levied under the Act can be utilised only for
the purpose of the Act. There is a clear purpose contained
in the provisions about the purpose and limit of the tax.
What is needed for the purpose of the Act by way of
financial resources may be levied by the Corporation. Beyond
that not. Moreover the
847
items on which taxes may be imposed are also specified. Thus
the legislature has fixed the purpose of the taxation,
objects of the taxation and limits of the taxation. [856A-B]
It is too late in the day to contend that the
jurisprudence of delegation of legislative power does not
sanction parting with the power to fix the rate of taxation,
given indication of the legislative policy with sufficient
clarity. [860 B]
When the Government is imposing taxes for the
Municipality the Government is bound to know what ought to
have been done by the Municipality. The whole scheme of the
statute shows that Government has an important role to play
in the running of the municipalities. The financial control
over the corporation is with the State Government. [865E]
As between the two interpretations that which sustains
the validity of law must be preferred. [864E]
M. K. Papiah & Sons v. The Excise Commr. & Anr., [1975]
3 SCR 607; Sita Ram Bishambhar Dayal v. State of U.P.,
[1972] 2 SCR 141 referred to.
JUDGMENT:
ORIGINAL JURISDICTION: Writ Petitions Nos. 4038, 4147,
4148, 4149, 4150, 4202, 4204, 4207, 4213, 4215, 4222, 4224,
4227, 4232, 4236, 4246, 4249, 4251, 4259, 4311, 4343 & 4347
of 1978.
(Under Article 32 of the Constitution).
V. M. Tarkunde, P. H. Parekh, C. B. Singh and Mukul
Mudgar for the Petitioners in W.P. Nos. 4038 and 4244/78.
Yogeshwar Prasad, Mrs. Rani Chhabra and Miss M. Bali
for the Petitioners in W.P. Nos. 4147-4150, 4207, 4232 and
4343/78.
B. R. Kapur and S. K. Sabharwal for the Petitioners in
W.P. Nos. 4213, 4215, 4246, 4249, 4311, 4224 and 4227/78.
O. P. Sharma for the Petitioners in W.P. Nos. 4222,
4259/78.
Pramod Swarup for the Petitioner in W.P. 4347/78.
Shreepal Singh for the Petitioner in W.P. 4236/78.
M. P. Jha for the Petitioner in W.P. 4251/78.
M. C. Bhandare (In W.P. 4204 and 4227/78 only) Mrs. S.
Bhandare, A. N. Karkhanis and Miss Malini Poduval for R. 3
(In W.P. 4204, 4227/78) and for R. 3 in 4215 and for R. 3-4
in 4249/78.
G. L. Sanghi (In W.P. 4038/78 only) S. K. Mehta, K. R.
Nagaraja, P. N. Puri and G. Lal for Municipality (rr) in
W.P. 4038, 4207, 4215, 4249, 4227.
Hardev Singh and R. S. Sodhi for the State of Punjab in
(W.P. 4038/78).
Bishamber Lal for the State of Punjab in (W. P.
4147/78).
848
Naunit Lal for Municipal Committee (R.6) in W.P. 4249
and for r. 4 in 4227/78.
The Judgment of the Court was delivered by
KRISHNA IYER, J.-This heavy bunch of writ petitions
impeaching the validity of a tax on foreign liquor raises a
few familiar legal riddles. A rupee per bottle sold within
every municipal town or city is the impugned levy, meant,
according to the Punjab Government, to serve the twin
purposes of replenishing the resources of municipal bodies
reduced by house tax exemptions and of weaning drinkers from
overly consuming foreign liquor as a prohibitionist gesture.
To pick the pocket of every spirituous bibber of the higher
brackets by a tiny tax may be but a feeble homage to Art. 47
of the Constitution, and to finance welfare projects with
this tainted tax may be queer Gandhiana. The will to enforce
‘dry’ sobriety in society and to abolish massive human
squaller by fleecing the fat few, is made of sterner stuff,
maybe. But matters of means and ends, of police and
morality, are largely for the legislature and validity is
the province of the court. We let slip the observation only
because, from a certain angle, these dual grounds make odd
companions and add to the credibility gap, although our
focus is solely on the legality of the levy.
It is better to begin with the story of the tax under
challenge. The petitioners are all licensees to trade in
foreign liquor including Indian made foreign liquor. They
are either wholesalers or retailers and pay excise duty and
other fees and taxes including sales tax under the general
sales tax law which imposes a levy of 10 per cent, on sales
of foreign liquor. There are also octroi levies of 10 per
cent, and educational tax of 2 per cent, and these add up to
a considerable burden; but the commodity taxed is foreign
liquor, Indian made or other, whose consumer usually belongs
to the well to do sectors.
The municipalities of Punjab are governed by two
enactments. The numerous little ones are statutory bodies
created and controlled by the Punjab Municipal Act, 1911 and
the few large ones by the Punjab Municipal Corporation Act,
1976 (the Act, for brevity, hereafter). For our purposes,
the provisions run on identical terms and so we will take up
the latter statute which compresses into one section a
plurality of sections in the former, and set out the common
scheme to study the critical issues raised. Arguments have
been addressed only on this basis.
The immediate facts which have launched the litigative
rocket need to be narrated now to get a hang of the core
questions in their correct perspective. The State of Punjab,
in April 1977, under its statutory
849
power [s. 90(4)] required the various municipal bodies in
the State to impose a tax on the sale et al, of foreign
liquor at the rate of Re. 1/- per bottle with effect from
May 20, 1977. The municipal authorities having tarried too
long or totally failed to take action pursuant to this
directive, the State directly entered the fiscal arena and
issued a Notification under s. 90(5) dated May 31, 1977,
which reads thus:
“Whereas the Government of Punjab, in exercise of
the powers conferred by sub-section (4) of section 90
of the Punjab Municipal Corporation Act, 1063-A-PSLG-
77/12170, dated 11th April, 1977, required of the
Municipal Corporation of Ludhiana in Punjab to impose
tax on the sale of “Indian made Foreign Liquor” at the
rate of rupee one per bottle, by the 20th May, 1977.2. And Whereas, the Municipal Corporation of
Ludhiana has failed to carry out the aforesaid order of
the Punjab Government within the stipulated period.3. Now, therefore, in exercise of the powers
conferred by sub-section (5) of section 90 of the
Punjab Municipal Corporation Act, 1976, the President
of India is pleased to impose/modify the tax on the
sale of “Indian made Foreign Liquor” within the
Municipal Corporation of Ludhiana at the rate of rupee
one per bottle. The tax shall come into force with
effect from 1st June, 1977.L.S. BINDRA
Joint Secretary to Govt. Punjab
Local Government Department”This notification, issued under s. 90(5) read with s.
90(2)(b) of the Act, was later modified marginally but
survives substantially. The petitioners (licensees)
challenge its vires both as contrary to the statutory
provision (s. 90) and as violative of the Constitution. The
triple shapes of the fatal constitutional pathology are that(a) s. 90 (2)(b) of the Act suffers from the vice of
excessive delegation or legislative abdication; (b) there
are no guidelines for the exercise of the vagariously wide
fiscal power of the corporation or Government which make it
too unreasonable to be salvaged by Art. 19(5) and too
arbitrary to be ‘equal’ under Art. 14; and (c) the order
itself is vitiated by multiple infirmities. The principal
invalidatory charge, based on the Act, is that s. 90(4)
interdicts any tax ‘already imposed’. The present tax is on
sales and there is, under the general sales tax law, already
a like levy on sales of foreign liquor in the State, and so
the second fiscal venture is beyond Government’s power. We
have to consider these grounds of attack on the notification
which are the emphatic submissions of
850
Shri Tarkunde who led the arguments. There are more
subsidiary submissions urged by other counsel on a lower
key, though, but we have to deal with them too in due
course. Briefly, they are (a) that in picking out for
taxation, from the broad spectrum of luxury goods or
intoxicants, foreign liquor alone, discrimination has been
practised, (b) that even assuming that Government can
exercise the power of the municipal body, it may not do so
without adhering to the procedural fairness implied in the
Explanation to s. 90(2) applicable to municipal bodies and(c) that unequals are being treated equally because the tax
of Re. 1/- bottle at a flat rate disregards germane
considerations like the price of the liquor or the degree of
alcoholic content. A feeble plea that the tax is bad because
of the vice of double taxation and is unreasonable because
there are heavy prior levies was also voiced. Some of these
contentions hardly merit consideration, but have been
mentioned out of courtesy to counsel. The last one, for
instance, deserves the least attention. There is nothing in
Art. 265 of the Constitution from which one can spin out the
constitutional vice called double taxation. (Bad economics
may be good law and vice versa). Dealing with a somewhat
similar argument, the Bombay High Court gave short shrift to
it in Western India Theatres(1). Some undeserving
contentions die hard, rather survive after death. The only
epitaph we may inscribe is: Rest in peace and don’t be re-
born ! If on the same subject-matter the legislature chooses
to levy tax twice over there is no inherent invalidity in
the fiscal adventure save where other prohibitions exist.Likewise, the plea that a flat rate of Re. 1/- per
bottle, be it brandy or other stronger beverage or be it Rs.
50/- or Rs. 500/- per bottle, cannot be seriously pressed.
In the field of taxation many complex factors enter the
fixation and flexibility is necessary for the taxing
authority to make a reasonably good job of it. Moopil Nair’s
case(2) does not discredit as unconstitutional anathema all
flat rates of taxation. Maybe, in marginal cases where the
virtual impact of irrationally uniform impost on the same
subject is glaringly discriminatory, expropriatory and
beyond legislative competence, different considerations may
arise; but to condemn into invalidity a tax because it is
levied at a conveniently flat rate having regard to the
commodity or service which has a high range of prices and
the minimal effect on the overall price, its easy means of
collection and a variety of other pragmatic variables, is an
absurdity, especially because in fiscal matters large
liberality must be extended to the Government having regard
to the plurality of criteria
851
which have to go into the fiscal success of the measure. Of
course, despite this forensic generosity, if there is patent
discrimination in the sense of treating dissimilar things
similarly or vice-versa, the court may treat the tax as
suspect and scrutinise its vires more closely. In the
present case, intoxicating liquids falling in the well-known
category of foreign liquors form one class and a flat
minimal rate of Re. 1/- per bottle has no constitutional
stigma of inequality. It is so easy to conceive of
innumerable taxes imposed in this manner in the daily
governance of the country that illustrations are
unnecessary. As excisable articles go, foreign liquor is a
distinct category and absence of micro-classification within
the broad genus does not attract the argument of inequality.
Likewise, picking and choosing within limits is inevitable
in taxation. The correct law is found in East India Tobacco
Co.(1)
“It is not in dispute that taxation laws must also pass
the test of Art 14. That has been laid down recently by
this Court in Moopil Nair v. The State of Kerala. But
in deciding whether a taxation law is discriminatory or
not it is necessary to bear in mind that the State has
a wide discretion in selecting the persons or objects
it will tax, and that a statute is not open to attack
on the ground that it taxes some persons or objects and
not others. It is only when within the range of its
selection, the law operates unequally, and that cannot
be justified on the basis of any valid classification,
that it would be violative of Art. 14. The following
statement of the law in Willis on “Constitutional Law”
page 587, would correctly represent the position with
reference to taxing statutes under our Constitution:-
“A State does not have to tax everything in order
to tax something. It is allowed to pick and choose
districts, objects, persons, methods and even rates for
taxation if it does so reasonably……..The Supreme
Court has been practical and has permitted a very wide
latitude in classification for taxation.”
(See also Abdul Shakoor & Co. case)(2). The foreign liquor
levy does not fail on this score.Shri Yogeshwar Prasad urged that s. 90(2) obligated the
municipal body to offer an opportunity to the residents of
the city to file objections to the tax proposed and consider
them before finalising
852
the impost. This fair procedure must attach to the exercise
of the power even under s. 90(5); and since that has not
been done the impugned notification must fail. It is clear
from s. 90 that the scheme is that if the municipal
corporation wishes to impose a tax under s. 90(2) it must go
through the due process indicated in the Proviso and secure
Government’s approval. But if Government is to exercise its
power under s. 90(5) no such procedural fetter is found in
the Section. Maybe, that power is different from procedure
for its exercise; but unless the statute insists, it is
impossible for the court to imply invitation of objections
and consideration thereof from the residents. For this
simple reason, there is no merit in the submission. Whether
the failure to hear before fixing a tax has a lethal effect
upon the fiscal power of the Government under s. 90(5) also
is of little moment although urged by the same counsel. May
be, it is desirable that the State acquaints itself with the
actual sentiments of the denizens of the local area before
imposing tax on them. But it is not inherent in the
constitutional requirements for the exercise of the State’s
power of taxation that objections should be called for and
considered. ‘No taxation without representation’ is a slogan
with a different dimension and has nothing to do with a levy
by a government controlled by an elected legislature
exercising its power of taxation. We are unable to accede to
the contention that representations from the residents not
having been invited the taxation notification is bad in law.
What is wholesome is different from what is imperative.Indeed, we are left with the two major arguments
addressed by Shri Tarkunde and echoed or endorsed by other
counsel. Even here, we may dispose of the submission based
on the wording in s. 90(4), namely, that taxing power under
section can be exercised in respect of a particular impost
only if that species of tax is “not already imposed”.The power under s. 90(4) is permissible only if the tax
is new and not already imposed. The petitioner’s argument is
that the tax is on sales and is clearly a sales tax. There
is already a sales tax on foreign liquor at the rate of 10
per cent, under the Punjab General Sales Tax Act, 1948. So
the present rupee tax is a second round in breach of the
forbiddance in s. 90(4). Simple enough, if the expression
‘not already imposed’ in s. 90(4) is a ban on further tax
whatever the statute; but if the taboo is not on the
topology of the tax but limited to the specific statute the
contention is specious. And it takes little reflection to
hold the latter to correct view. We must remember the
statutory setting and the placement of the provision. S. 90
occurs in Chapter VIII headed ‘Taxation’. That Section prim-853
arily empowers municipal corporations to levy taxes. S.
90(1) specifies a number of items many of which are taxed
also at State level, e.g. lands, vehicles. S. 90(2) is so
widely worded that many taxes covered by it would already
have been occupied field at the State or even Central level.
The municipal body may not have any index of taxes already
imposed by other bodies and they are many. S. 90 would then
be a precarious power, often an exercise in futility and
frequently a litigative trap. No. That is not the meaning of
the prohibition `not already imposed’. The Government
exercises the power of the corporation under s. 90(5) and
cannot enter what is forbidden ground for the latter. And
what is forbidden is that the municipal body shall not
repeat the same tax, if it has imposed that tax earlier
under that Act. The injunction is plain and is confined to
repetition of those taxes which the municipality has already
imposed. If the Corporation has not already imposed the tax
proposed, the embargo is absent. It is of no moment that
some other body, including the State Legislature has already
entered the field. The question is : has the municipal
committee or corporation, under this Act, already exacted a
similar tax? If it has, the second exercise is anathema.
Nobody has a case that the corporation has earlier taxed
foreign liquor under this Act. Therefore, the submission has
no substance and we reject it.The sole surviving ground of invalidation pressed by
the petitioners which deserves serious examination is what
we have outlined right at the outset, viz., that on the face
of s. 90(2), (3), (4) and (5) read together,
unconstitutionality is writ large, in the sense of naked and
uncanalised power with every essential legislative function
surrendered to the humour and hubris of the State Executive.If this charge be true the consequence is in no doubt.
The vice of unreasonableness and arbitrariness are
manifestations of the same vice as has been pointed out in
P. N. Kaushal etc.(1).An examination of excessive delegation of legislative
power takes us to the scheme of the Act and insight into the
dynamics of municipal administration. Certain fundamentals
must be remembered in this context and then the text of the
provision understood in the constitutional perspective. The
Founding Document of the nation has created the three great
instrumentalities and entrusted them with certain basic
powers-legislative, judicative and executive. Abdication of
these powers by the concerned instrumentalities, it is
axiomatic, amounts to betrayal of the Constitution itself
and it is intolerable in law. This means that the
legislature cannot self-efface its
854
personality and make over, in terms plenary, the essential
legislative functions. The legislature is responsible and
responsive to the people and its representatives, the
delegate may not be and that is why excessive delegation and
legislative hara kiri have been frowned upon by
constitutional law. This is a trite proposition but the
complexities of modern administration are so bafflingly
intricate and bristle with details, urgencies, difficulties
and need for flexibility that our massive legislatures may
not get off to a start if they must directly and
comprehensively handle legislative business in all their
plenitude, proliferation and particularisation. Delegation
of some part of legislative power becomes a compulsive
necessity for viability. If the 500-odd parliamentarians are
to focus on every minuscule of legislative detail leaving
nothing to subordinate agencies the annual output may be
both unsatisfactory and negligible. The Lawmaking is not a
turnkey project, ready-made in all detail and once this
situation is grasped the dynamics of delegation easily
follow. Thus, we reach the second constitutional rule that
the essentials of legislative functions shall not be
delegated but the inessentials, however numerous and
significant they be, may well be made over to appropriate
agencies. Of course, every delegate is subject to the
authority and control of the principal and exercise of
delegated power can always be directed, corrected or
cancelled by the principal. Therefore, the third principle
that emerges is that even if there be delegation,
parliamentary control over delegated legislation should be a
living continuity as a constitutional necessity. Within
these triple principles, Operation Delegation is at once
expedient, exigent and even essential if the legislative
process is not to get stuck up or bogged down or come to a
grinding halt with a few complicated bills. It is apt to
excerpt here an oft-quoted observation from Vasantlal
Maganbhai Sanjanwala affirmed in Devi Das Gopal Krishnan &
Ors(1) :“The Constitution confers a power and imposes a
duty on the legislature to make laws. The essential
legislative function is the determination of the
legislative policy and its formulation as a rule of
conduct. Obviously it cannot abdicate its functions in
favour of another. But in view of the multifarious
activities of a welfare State, it cannot presumably
work out all the details to suit the varying aspects of
a complex situation. It must necessarily delegate the
working out of details to the executive or any other
agency. But there is a danger inherent in such a
process of delegation. An over
855
burdened legislature or one controlled by a powerful
executive may unduly overstep the limits of delegation.
It may not lay down any policy at all; it may declare
its policy in vague and general terms; it may not set
down any standard for the guidance of the executive; it
may confer an arbitrary power on the executive to
change or modify the policy laid down by it without
reserving for itself any control over subordinate
legislation. This self effacement of legislative power
in favour of another agency either in whole or in part
is beyond the permissible limits of delegation. It is
for a Court to hold on a fair, generous and liberal
construction of an impugned statute whether the
legislature exceeded such limits. But the said liberal
construction should not be carried by the Courts to the
extent of always trying to discover a dormant or latent
legislative policy to sustain an arbitrary power
conferred on executive authorities. It is the duty of
the Court to strike down without any hesitation any
arbitrary power conferred on the executive by the
legislature.”Such being the basics, accepted by presidential
profusion of this Court, we have to examine whether any
essential legislative function has been transplanted into
the hands of Government or corporation by the Act, whether
the delegation itself is an entrustment of overboard power,
so unguided that the delegate may run amok and do what is
arbitrary, unreasonable and violative of Articles 14 and 19
of the Constitution. Taxation is exaction and even
expropriation and, therefore, the right to property is in
peril when a fiscal measure is afoot. Article 10 comes into
play when law is made for purposes of taxation and that law
must comply with Part III. Arbitrariness must be excluded in
the law, for, if power is arbitrary it is potential
inequality and Art. 14 is fatally allergic to inequality
before the law.These generalities take us to the particularities of
the present case. Shri Tarkunde turned the forensic
fusillade on the total absence of guidance and regulation
anywhere in the statute, expressly or implicitly, and on a
true construction, according to him, a blanket power has
been vested by s. 90 on the corporation and, indubitably, on
the Government.The jurisprudence of delegation of legislative power,
as earlier mentioned, has been the subject matter of this
Court’s pronouncements. In the absence of the rate of
taxation being indicated by the Legislature, Shri Tarkunde
and other counsel appearing on either side drew our
attention to Liberty Cinema,(1) the land-mark case on the
point. The later decisions have affirmed the principle in
Liberty Cinema. But
856
before we enter into a fuller discussion we may concretize
the specific contention urged by counsel for the
petitioners. Section 90(1) sets out certain items for
taxation by the corporation. The taxes so levied are to be
utilised for the purposes of the Act. Therefore, there is a
clear directive contained in the provision about the purpose
and limit of the tax. What is needed for the purposes of the
Act by way of financial resources may be levied by the
corporation. Beyond that, no. If the corporation has a fancy
for spending money on purposes unconnected with the Act and
seeks to levy a tax for the fulfillment of such extra-
statutory objects the mis-adventure must fail. Moreover, the
items on which taxes may be imposed are also specified.
Thus, the legislature has fixed the purpose of the taxation,
the objects of the taxation and the limits of the taxation.
In short, s. 90(1) is a textbook illustration of valid
delegation by the legislature.The offending area is approached as we move down to
sub-section (2) (b) which enables the corporation “to levy
any other tax which the State Legislature has power to
impose under the Constitution”. The fiscal area is obviously
specious and so the question directly arises whether this
over-broad provision accords with or exceeds the principles
of delegation. Sub-section (3) leaves the rates of levy to
be specified by the Government and the legislature, argue
petitioners’ counsel, has given no indication of the minima
or the maxima of such rates. Can such non-fixation of at
least the maximum rate of taxation be upheld or does it
enable the delegate to usurp the essential functions of the
legislature ? When we proceed further to sub-section (5),
the Government is clothed with the power to notify the tax
which the corporation shall levy and, in exercising this
power, not even the wholesome obligation of receiving
representations could considering objections, contained in
the Proviso to s. 90(2), is present. Can such untrammeled
power, liberated from local pressures and intimate
appreciation of municipal needs, be sanctioned as within the
deligible ambit ? These are the substantial grounds of
attack which we have to consider presently.Back to the Liberty Cinema case (supra), Sarkar, J. who
spoke for the majority overruled the contention that the
levy in question was a fee and held that it was a tax and
addressed himself to the question of excessive delegation of
legislative functions to the municipal corporation “because
it left it entirely to the latter to fix the amount of the
tax and provided no guidance for that purpose”.While what constitutes an essential feature cannot be
delineated in detail it certainly cannot include a change of
policy. The legislature is the master of legislative policy
and if the delegate is free to switch policy it may be
usurpation of legislative power itself. So we have
857
to investigate whether the policy of legislation has been
indicated sufficiently or even change of policy has been
left to the sweet will and pleasure of the delegate in this
case.We are clearly of the view that there is fixation of
the policy of the legislation in the matter of taxation, as
a close study of s. 90 reveals; and exceeding that policy
will invalidate the action of the delegate. What is that
policy ? The levy of the taxes shall be only for the
purposes of the Act. Diversion for other purposes is
illegal. Exactions beyond the requirements for the
fulfillment of the purposes of the Act are also invalid.
Like in s. 90(1), s. 90(2) also contains the words of
limitation `for the purposes of this Act’ and that limiting
factor governs sub-sections (3), (4) and (5). Sub-section
(3) vests nothing new beyond sub-sections (1) and (2). Sub-
section (4) does not authorise the government to direct the
corporation to impose any tax falling outside sub-section
(1) or sub-section (2). Sub-section (5) also is subject to a
similar circumscription because the Government cannot issue
an order to impose a tax outside the limitation of sub-
section (1) or sub-section (2). Thus, the impugned provision
contains a severe restriction that the taxation leviable by
the corporation, or by the Government acting for the
corporation, shall be geared wholly to the goals of the Act.
The fiscal policy of s. 90 is manifest. No tax under guise
of s. 90(2) (b) can be charged if the purposes of the Act do
not require or sanction it. The expression “purposes of this
Act” is pregnant with meaning. It sets a ceiling on the
total quantum that may be collected. It canalises the
objects for which the fiscal levies may be spent. It brings
into focus the functions, obligatory or optional, of the
municipal bodies and the raising of resources necessary for
discharging those functions-nothing more, nothing else.In Liberty Cinema (supra) it was contended that the
rate of tax was an essential feature of legislation and if
the power to fix it were abandoned it amounted to abdication
of legislative power. After an exhaustive examination of the
judgments of this Court, Sarkar, J. reached the conclusion
that there was clear authority “that the fixing of rates may
be left to the non-legislative body”. The matter does not
end here, since the delegate may under guise of this freedom
tyrannies and exact exorbitant sums which the legislature
would hardly have intended. If this possibility exists and
there is no guideline given to the non-legislative body in
the matter of fixation of rates, the result may be a
frustration of the legislative object itself. For this
reason, the Court in the Liberty Cinema (supra) case
observed as axiomatic :“No doubt when the power to fix rates of taxes is
left to another body, the legislature must provide
guidance for such
858
fixation. The question then is, was such guidance
provided in the Act ? We first wish to observe that the
validity of the guidance cannot be tested by a rigid
uniform rule; that must depend on the object of the Act
giving power to fix the rate. It is said that the
delegation of power to fix the rates of taxes
authorised for meeting the needs of the delegate to be
valid, must provide the maximum rate that can be fixed,
or lay down rules indicating that maximum. We are
unable to see how the specification of the maximum rate
supplies any guidance as to how the amount of the tax
which no doubt has to be below the maximum, is to be
fixed. Provision for such maximum only sets out a limit
of the rate to be imposed and a limit is only a limit
and not a guidance.It seems to us that there are various decisions of
this Court which support the proposition that for a
statutory provision for raising revenue for the
purposes of the delegate, as the section now under
consideration is, the needs of the taxing body for
carrying out its functions under the statute for which
alone the taxing power was conferred on it, may afford
sufficient guidance to make the power to fix the rate
of tax valid.”(Pp. 493-494)
In the Western India Theatres case (supra) the power
given to the corporation (of the city of Poona), in terms
very wide, to levy “any other tax” came to be considered
from the point of view of abdication of legislative
function. The negation of this argument was based on the key
words of limitation contained therein, namely, “for the
purposes of the Act” and it was held “that this permits
sufficient guidance for the imposition of the tax.”In Devi Das Gopal Krishnan & Ors. (supra) this Court
again considered a similar contention. The crucial passage
in the judgment of Sarkar, J. was there extracted with
approval by Subba Rao, C.J. :“It (the Municipal Corporation) has to perform
various statutory functions. It is often given power to
decide when and in what manner the functions are to
performed. For all this it needs money and its needs
will vary from time to time, with the prevailing
exigencies. Its power to collect tax, however, is
necessarily limited by the expenses required to
discharge those functions. It has, therefore, where
rates have not been specified in the statute, to fix
such rates as may be necessary to meet its needs. That,
we think, would be sufficient guidance to make the
exercise of its power to fix the rates valid.”#R#(Pp.562-563)
859
In the Municipal Corporation of Delhi(1) case, the
proposition that where the power conferred on the
corporation was not unguided, although widely worded, it
could not be said to amount to excessive delegation, was
upheld. Delegation coupled with a policy direction is good.
Counsel emphasised that the court had made a significant
distinction between the local body with limited functions
like a municipality and Government :“The needs of the State are unlimited and the
purposes for which the State exists are also unlimited.
The result of making delegation of a tax like sales tax
to the State Government means a power to fix the tax
without any limit even if the needs and purposes of the
State are to be taken into account. On the other hand,
in the case of a municipality, however large may be the
amount required by it for its purposes it cannot be
unlimited, for the amount that a municipality can spend
is limited by the purposes for which it is created. A
municipality cannot spend anything for any purposes
other than those specified in the Act which creates it.
Therefore in the case of a municipal body, however
large may be its needs, there is a limit to those needs
in view of the provisions of the Act creating it. In
such circumstances there is a clear distinction between
delegating a power to fix rates of tax, like the sales
tax, to the State Government and delegating a power to
fix certain local taxes for local needs to a municipal
body.A review of these authorities therefore leads to
the conclusion that so far as this Court is concerned
the principle is well established that essential
legislative function consists of the determination of
the legislative policy and its formulation as a binding
rule of conduct and cannot be delegated by the
legislature. Nor is there any unlimited right of
delegation inherent in the legislative power itself.
The legislature must retain in its own hands the
essential legislative functions and what can be
delegated is the task of subordinate legislation
necessary for implementing the purposes and objects of
the Act. Where the legislative policy is enunciated
with sufficient clearness or a standard is laid down,
the courts should not interfere. What guidance should
be given and to what extent and whether guidance has
been given in a particular case at all depends on a
consideration of the provisions of the parti-860
cular Act with which the Court has to deal including
its preamable. Further it appears to us that the nature
of the body to which delegation is made is also a
factor to be taken into consideration in determining
whether there is sufficient guidance in the matter of
delegation.”“……………………..
It is too late in the day to contend that the
jurisprudence of delegation of legislative power does not
sanction parting with the power to fix the rate of taxation,
given indication of the legislative policy with sufficient
clarity. In the case of a body like a municipality with
functions which are limited and the requisite resources also
limited, the guideline contained in the expression “for the
purposes of the Act” is sufficient, although in the case of
the State or Central Government a mere indication that
taxation may be raised for the purposes of the State may be
giving a carte blanche containing no indicium of policy or
purposeful limitation. In a welfare State allowing in
privations, the total financial needs may take us to
astronomical figures. Obviously that will be no guideline
and so must be bad in law. Something more precise is
necessary; some policy orientation must be particularised
Shri Tarkunde relied on this differentiation in attacking s.
90(6) of the Act. He argued that had the municipal
corporation done the job there would have been some guidance
from the section. But when the Government did it, it did not
have any such restraint and could, therefore, run berserk.
We do not appreciate this contention as we will explain at a
later stage. Suffice it to say that flexibility in the form
the legislative guidance may take, is to be expected.
Wanchoo, C.J. explained :“It will depend upon the circumstances of each
statute under consideration; in some cases guidance in
broad general terms may be enough; in other cases more
detailed guidance may be necessary. As we are concerned
in the present case with the field of taxation, let us
look at the nature of guidance necessary in this field.
The guidance may take the form of providing maximum
rate of tax upto which a local body may be given the
discretion to make its choice, or it may take the form
of providing for consultation with the people of the
local area and then fixing the rates after such
consultation. It may also take the form of subjecting
the rate to be fixed by the local body to the approval
of Government which acts as a watch-dog on the actions
of the local body in this matter on behalf of the
legislature. There may be other ways in which guidance
may
861
be provided. But the purpose of guidance, whatsoever
may be the manner thereof, is to see that the local
body fixes a reasonable rate of taxation for the local
area concerned. So long as the legislature has made
provision to achieve that reasonable rates of taxation
are fixed by local bodies, whatever may be the method
employed for this purpose-provided it is effective, it
may be said that there is guidance for the purpose of
fixation of rates of taxation. The reasonableness of
rates may be ensured by fixing a maximum beyond which
the local bodies may not go. It may be ensured by
providing safeguards laying down the procedure for
consulting the wishes of the local inhabitants. It may
consist in the supervision by Government of the rate of
taxation by local bodies. So long as the law has
provided a method by which the local body can be
controlled and there is provision to sec that
reasonable rates are fixed, it can be said that there
is guidance in the matter of fixing rates for local
taxation. As we have already said there is pre-
eminently a case for delegating, the fixation of rates
of tax to the local body and so long as the legislature
has provided a method for seeing that rates fixed are
reasonable, be it in one form or another, it may be
said that there is guidance for fixing rates of
taxation and the power assigned to the local body for
fixing the rates is not uncontrolled and uncanalised.
It is on the basis of these principles that we have to
consider the Act with which we are concerned.(pp. 269-270)
In the Municipal Corporation of Delhi (supra) case it
was significantly observed :“According to our history also there is a wide
area of delegation in the matter of imposition of taxes
to local bodies subject to controls and safeguards of
various kinds which partake of the nature of guidance
in the matter of fixing rates for local taxation. It is
in this historical background that we have to examine
the provisions of the Act impugned before us.”(p. 271)
Both the sides relied on certain important criteria
contained in the judgment of Wanchoo, C.J., especially
because it is a Bench of seven Judges and the ratio therein
laid down has considerable authority and binds us. Dealing
with municipal bodies and the nature and
862
content in that Municipal Act, the court observed what is
instructive for us in the present case :“This is in our opinion a great check on the
elected councillors acting unreasonably and fixing
unreasonable rates of taxation. This is a democratic
method of bringing to book the elected representatives
who act unreasonably in such matters. It is however
urged that s. 490 of the Act provides for the
supersession of the Corporation in case it is not
competent to perform or persistently makes default in
the performance of duties imposed upon it by or under
the Act or any other law or exceeds or abuses its
power. In such a case the elected body may be
superseded and all powers and duties conferred and
imposed upon the Corporation shall be exercised and
performed by such officer or authority as the Central
Government may provide in this behalf. It is urged that
when this happens the power of taxation goes in the
hands of some officer or authority appointed by
Government who is not accountable to the local
electorate and who may exercise all the powers of
taxation conferred on the elected Corporation by the
Act. . . .”“Another guide or control on the limit or taxation
is to be found in the purposes of the Act. The
Corporation has been assigned certain obligatory
functions which it must perform and for which it must
find money by taxation. It has also been assigned
certain discretionary functions. If it undertakes any
of them it must find money. Even though the money that
has to be found may be large, it is not, as we have
already indicated, unlimited for it must be only for
the discharge of functions whether obligatory or
optional assigned to the Corporation. The limit to
which the Corporation can tax is therefore
circumscribed by the need to finance the functions,
obligatory or optional which it has to or may undertake
to perform. It will not be open to the Corporation by
the use of taxing power to collect more than it needs
for the functions it performs….”“Another limit and guideline is provided by the
necessity of adopting budget estimates each year as
laid down in s. 109 of the Act. That section provides
for division of the budget of the Corporation into four
parts i.e. general, electricity supply, transport,
water and sewage disposal. The budget will show the
revenue and expenditure and those
863
must balance so that the limit of taxation cannot
exceed the needs of the Corporation as shown in the
budget to be prepared under the provisions of the Act.
These four budgets are prepared by four Standing
Committees of the Corporation and are presented to the
Corporation where they are adopted after debate by the
elected representatives of the local area. Preparation
of budget estimates and their approval by the
Corporation is therefore another limit and guideline
within which the power of taxation has to be exercised.
Even though the needs may be large, we have already
indicated that they cannot be unlimited in the case of
the Corporation, for its functions both obligatory and
optional are well defined under the Act. Here again
there is a limit to which the taxing power of the
Corporation can be exercised in the matter of optional
taxes as well, even though there is no maximum fixed as
such in the Act.”(Pp. 271-273)
In the present case it was the State Government, not
the municipal corporation, which fixed the rate; but the
Government did only what the Corporation ought to have done.It acted for the purposes of the corporation’s finances and
functions and not to replenish its own coffers. In the
Municipal Corporation of Ahmedabad City,(1) a further point
fell for consideration which has some relevance to the
present set of arguments. Shri Tarkunde submitted that even
if the provision requiring the sanction of the Government
for the rate fixed by the corporation were a guideline and a
control indicative of a legislative policy, that was absent
in the impugned levy since the Government directly acted.
Shelat, J. negatived a kindred submission:“…….It is impossible to say that when a
provision requiring sanction of the Government to the
maximum rate fixed by the Corporation is absent, the
rest of the factors which exist in the Act lose their
efficacy and cease to be guidelines. Furthermore, if
the Corporation were to misuse the flexibility of the
power given to it in fixing the rates, the State
legislature can at any moment withdraw that flexibility
by fixing the maximum limit up to which the Corporation
can tax. Indeed, the State Legislature has now done so
by s. 4 of Gujarat Act, 8 of 1968. In view of the
decisions cited above it is not possible for us to
agree with counsel’s contention
864
that the Act confers on the Corporation such arbitrary
and uncontrolled power as to render such conferment an
excessive delegation.”(1)
We have no hesitation in holding that the law is well-settled and none of the canons governing delegation of
legislative power have been breached in the present case.We will explain a little more in detail, with specific
reference to the scheme of the Act, why we hold that the tax
is valid and does not suffer from the infirmity of excessive
delegation.The thrust of Shri Tarkunde’s argument is that even if,
in the light of Liberty Cinema (supra) and later rulings,
guidelines are found in s. 90 (2) of the Act, the notified
impost being by the State Government did not have the
benefit of such guidelines. The local body knew precisely
the local needs and the cost of such local services. Like
wise, the local councillors would be responsive and to local
lobbies and be restrained from reckless taxes. None of these
controls were operational when Government acted or directed.
Moreover, the absence of the wholesome obligation to receive
and pay regard to objections [Proviso to s. 90(2)] removed
the procedural check envisaged by the Legislature. These
criticisms highlight the role of Government in the setting
of s. 90(5) and its competence to be acquainted with the
needs of municipal denizens, the finances of the local body
and the like.It must be remembered that as between two
interpretations that which sustains the validity of the law
must be preferred. A close look at the schematic provisions
and administrative realities is very revealing. Is
Government innocent of the total needs of municipal bodies
and indifferent to the legitimate pressures of its denizens
?An overview of local self-government may set the
perspective. The statutory pattern of municipal government
is substantially the same all over the country. The relevant
legislation fabricates these local bodies, invests them with
corporate personality, breathes life into them, charges them
with welfare functions, some obligatory, some optional,
regulates their composition through elected representatives,
provides for their finances by fees and taxes and heavily
controls their self-government status through a Department
of the State Government in various ways, including direction
and correction, sanction and supersession. Consequentially
the law clothes the State Government with considerable
powers over almost every aspect of municipal work-865
ing Local self-government, realistically speaking, is a
simulacrum of Art. 40 and democratically speaking, a half-
hearted euphemism, for in substance, these elected species
are talking phantoms with a hierarchy of State officials
hobbling their locomotion. Their exercises are strictly
overseen by the State Government, their resources are
precariously dependent on the grace of the latter and their,
functions are fulfilled through a chief executive appointed
by the State Government. Floor-level democracy in India is a
devalued rupee, Art. 40 and the evocative opening words of
the Constitution, notwithstanding. Grass roots never sprout
until decentralisation becomes a fighting creed, not a pious
chant. What happens to Panchayats applies to municipalities.This description has critical relevance to the cases on
hand because one of the propositions underlying the major
arguments advanced before us is that while municipal bodies
know their needs and respond to local pressures and tailor
their taxes accordingly, the distant State Government is
neither aware nor responsive and the impugned tax measure is
bad because the pragmatic and policy guidelines of (a) the
local people’s welfare requirements vis-a-vis available
municipal finances, and (b) people’s pressurising proximacy
and municipality’ correctional reaction to undue tax burdens
are absent when the power is exercised by a remote control
board niched in the State Secretariat. But if the picture is
of a powerless talking shop of elected councillors passing
resolutions but all the do’s and don’ts, sanctions and
approvals, countermands and even supersession of the Council
itself reside in the State Government, the effective voice,
the meaningful responses, the appreciation of budgetary
needs and gaps and need for grants and a host of other
responsibilities can be traced to the Government. Such is
the backdrop to the discussion of the issues raised.Now let us scan the Act from this angle. Corporations
are created for the purposes of carrying out the provisions
of the Act and they are charged with municipal
administration (see s. 4). So, corporations cannot do
anything beyond the purposes set out in the statutory
provisions. This itself is a statutory restriction on
action. The composition of the body corporate is by
periodically elected councillors (see s. 5) and this feature
ensures responsive action. The powers necessary for
municipal government are spelt out as also the obligatory
and discretionary functions (see Chapter III).Now come certain other aspects of local self-
government. The entire executive power of the corporation
vests in the Commissioner who is appointed by Government.
This means that the Corporation Council takes a back seat in
the municipal administration see ss. 47,
866
52 et al. Section 54 brings the Government into the
expenditure picture. The municipal staff also is, in a way,
under Government control (s. 71).Money shall be spent by the municipality only according
to budget provisions and budget estimates shall be submitted
to Government for approval which has the power to modify
them. Thus, the financial control over the corporation by
Government is a statutory fact.Now we may consider the mode of raising tax revenue.
Any non-traditional tax (i.e. which falls under s. 90(2) of
the Act) has to be with the prior approval of Government.
Indeed, affirmative direction to impose taxes may be issued
by the Government to the local body and if the addressee is
indifferent the Government itself may impose the tax and the
corporation shall levy such tax. Sub-section (6) enables
Government to make other tax payments to municipal bodies.
Municipal borrowings require government sanction, municipal
accounts shall be audited by government auditors. Chapter
XXII provides for further government control upto even
supersession of the corporation itself. Even the resolutions
of corporations may be suspended by Government and its
proceedings annulled or modified. There is a whole army of
governmental minions in the department of local self-
government to sit upon, check, oversee and control municipal
doings that the elective element becomes a decorative
parlour.This conspectus of provisions brings into bold relief
the anaemic nature of municipal autonomy. Full-blooded units
of self-government, reflecting full faith in decentralised
democracy uninhibited by a hierarchy of bureaucrats is the
vision of Art. 40. While the Gandhian goal is of a shining
crescent on a starry sky the sorry reality is that our
municipalities vis-a-vis government are wan like a full moon
at midday.This study of the statutory scheme shows that, in large
measure, municipal councils reign, municipal commissioners
rule; local self government is an experiment in directed
democracy by the bureaucracy, Art. 40, notwithstanding.
State Governments master-mind municipal administration in
broad policies and even in smaller details and legally can
suspend resolutions and supersede the organ itself.
Municipal legislation sanctions this Operation Mask. If
pluralism and decentralisation are to strengthen our
democracy more authority and autonomy, at least
experimentally, must be vested in local bodies. To day,
prompt elections when periods expire are rare; councillors
exist, debate, resolve, but power eludes them. Even so,
municipal maya also counts ceremonially and otherwise.867
To set the record straight, we must state that many
municipal bodies do exercise their limited powers properly
and serve the public without nagging interference by
Government officials. Municipalities are realities, often
precarious, though.This statutorily sanctified comprehensive oversight by
Government weaken the assumption of Shri Tarkunde that State
Governments know little of the needs and respond remotely to
the pressures of the locality and that the guidelines
stressed in the rulings cited above vanish when Government
directly operates under s. 90(5). The finances, budgetary
estimates and many aspects of the affairs of each municipal
body, reach the Government, channelled through its minions,
and, by force of statute, are approved, sanctioned, modified
or reversed by the State Secretariat. So, there is not much
force in the submission that under s. 90(5) governmental
action may be a blind man’s buff, not intelligent
appreciation.Secondly, under s. 90(5) Government acts to augment
municipal revenues and so will, understandably, inform
itself of the needs of the corporation and, on fiscal
economics, ‘of what the traffic will bear’. The statutory
strategy also ensures this. First, a directive is given,
obviously after considering relevant matters. Only if
indifference or intractability is displayed, the fiscal
sword of s. 90(5) is unsheathed.Moreover, there is overall control by the legislature,
sometimes, ineffective, sometimes meaningful. It is familiar
knowledge that there are a number of institutionalised means
by which the legislature exercises supervision and control
over municipal matters. Broadly speaking, they are: (a)
through inter-relations, (b) by discussions and debates, (c)
by approval or otherwise of rules and orders, and (d) by
financial control when the budget is presented. A study of
the legislative proceedings in the various States of the
country brings out many of these means of control (see
Indian Administrative System, edited by Ramesh K. Arora &
Co. Chapter 17). In a sense, the general municipal
administration comes under fire in the House on many
occasions, including during the debate on the Governor’s
Address. Financial control and supervision by the
legislators come up when budget proposals which contain
allocation for municipal administration are presented to the
House and at the time of the Appropriations Bill. Moreover,
the Public Accounts Committee, the Estimates Committee and
like other bodies also make functional probes into municipal
administration-fiscal and other. There may be a big gap
between the power of control and its actual exercise but it
is also a fact that in a general way the political echelons
in Government and the bureaucracy in turn are influenced in
their policies by the criticisms
868
of the municipal administration on the floor of the House
and through other representations. We cannot, therefore,
dismiss the legal position that there is control by the
Legislature over Government in its supervision of municipal
administration therefore, delegated legislation cannot be
said to be uncontrolled or unchecked by the delegator.This discussion is of critical importance in view of
the argument put forward by Shri Tarkunde that when
Government exercises power under s. 90(6) it is a law unto
itself, unbridled and uncontrolled by the Legislature. We
may now refer to a few decisions which have been brought to
our notice by counsel appearing for the municipal bodies and
the State of Punjab to make out that the needs of
municipalities and the pressures of local people are within
the ken of the State Government and they also respond like
municipal bodies and guide themselves in the manner
corporations do. More importantly, excessive delegation
stands negatived because of legislative control over
Government. Even in the Liberty Cinema case, (supra) the
control by Government over the municipal administration was
relied upon as a policy guideline and it is an a fortiori
case if the Government itself takes action, responsible and
responsive as it is to the elected representatives of the
House.Great stress was laid on Papiah’s case(1) which dealt
with subordinate legislation elaborately and upheld the
validity of a provision where, superficially viewed, too
wide a power had been delegated. Mathew, J. speaking for the
court, gave considerable latitude to the Legislature in
delegating its power and referred to many prior rulings. He
quotes Subba Rao, C.J. to say:“An over-burdened Legislature or one controlled by a
powerful executive may unduly overstep the limits of
delegation. It may not lay down any policy at all; It
may declare its policy in vague and general terms; it
may not set down any standard for the guidance of the
executive; it may confer an arbitrary power on the
executive to change or modify the policy laid down by
it, without reserving for itself any control over
subordinate legislation. This self-effacement of
legislative power in favour of another agency either in
whole or in part is beyond the permissible limits of
delegation.”(2)
869
Nevertheless, this observation was neutralised by
another made by Hegde, J. in Bishar Dayal (1):“However much one might deplore the ‘New
Despotism’ of the executive, the very complexity of the
modern society and the demand it makes on its
Government have set in motion forces which have made it
absolutely necessary for the Legislatures to entrust
more and more powers to the executive. Text book
doctrines evolved in the 19th Century be come out of
date.”Mathew, J. proceeded to cover English cases and reached
the conclusion:“The legislature may also retain its control over
its delegate by exercising its power of repeal. This
was the basis on which the Privy Council in Cobb & Co.
v. Kropp(2) upheld the validity of delegation of the
power to fix rates to the Commissioner Transport in
that case.”(P.613)
The learned Judge quoted the Privy Council(3) which
held that the Legislature was entitled to use any agent or
machinery that it considered for carrying out the object and
the purposes of the Acts and to use the Commissioner for
Transport as its instrument to fix and recover the licence
and permit fees, provided it preserved its own capacity
intact and retained perfect control over him; that as it
could at any time repeal the legislation and withdraw such
authority and discretion as it had vested in him, it had not
assigned, transferred or abrogated its sovereign power to
levy taxes, nor had it renounced or abdicated its
responsibilities in favour of a newly created legislative
authority and that, accordingly, the two Acts were valid,
Lord Morris of Borth-y-Gest said:“What they (the legislature) created by the
passing of the Transport Acts could not reasonably be
described as a new legislative power or separate
legislative body armed with general legislative
authority (see R. v. Burah, 1978) A.C. 889). Nor did
the Queensland Legislatare ‘create and endow’ with its
own capacity a new legislative power not created by the
Act to which it owes its own existence (see In re the
Initiative and Referendum Act (1919) A.C. 945 at 946).”870
The point to be emphasised-and this is rather crucial-
is the statement of their Lordships that the legislature
preserved its capacity intact and retained perfect control
over the Commissioner for Transport inasmuch as it could at
any time repeal the legislation and with draw the authority
and discretion it had vested in him, and, therefore, the
legislature did not abdicate its functions.
The proposition so stated is very wide and sweeping. By
that standard, there is nothing unconstitutional about s.
90(5) of the Act.
In the course of the argument certain observations of
this Court were read to the effect that there was always a
check by the courts on unconstitutional misuse of delegated
power and that, in itself with out more, was good enough to
make the delegation good. So stated, the proposition may be
perhaps too wide to be valid; for any naked delegation may
then be sustained by stating that the court is there as the
watch-dog. We do not have to go that far in the present case
and so we make no final pronouncement on this extension of
delegations jurisprudence.
We must state, while concluding that Punjab & Haryana
High Court has overruled similar contentions on grounds
which have our approval [see AIR 1977 P&H 297 and 74 PLR
(1972) P 149].
We are conscious that constitutional legitimation of
unlimited power of delegation to the Executive by the
Legislature may, on critical occasions, be subversive of
responsible government and erosive of democratic order. That
peril prompts us to hint at certain portents to our
parliamentary system, not because they are likely new but
because society may have to pay the price some day.
As a back-drop to this train of thoughts a few
statements from a working paper presented by Prof. Upendra
Baxi of the Delhi University at a recent seminar may be
excerpted:
“…law making remains the, more or less,
exclusive prerogative of a small cross-section of
elites. This necessarily affects both the quality of
the law made as well its special communication,
acceptance and effectivity. It also reinforces the
highly centralised system of power. It is time that we
considered the desirability and feasibility of building
into the law-making processes a substantial amount of
public participation.”
871
“People’s participation in the enforcement and
implementation of the law is also not actively sought,
sponsored or structured by the State….Equally now is
the idea that there should be a “social audit” of major
legislations by the beneficiaries or, more generally,
the consumers of legal justice.”
“…The situation in regard to delegated
legislation the volume of which is immensely greater
than that of usual legislation, is even more alarming.
The Indian Parliament enacted from the period 1973 to
1977 a total of 302 laws; as against this the total
number of statutory orders and rules passed in the same
period was approximately 25,414. Corresponding figures
for States and union territories are not just available
but the number of rules issued under the delegated
legislation powers may well be astronomical……”
Plenary powers of law-making are entrusted to elected
representatives. But the political government instructed by
the bureaucracy, by and large, gets bills through with the
aid of the three-line whip. Even otherwise, legislators are
some times innocent of legal skills; and complex
legislations call for considerable information and
instruction. The law-making sequence leaves much to
subordinate legislation which, in practical terms, means
surrender to the surrogate, viz., the bureaucracy which
occupies commanding heights within the Secretariat. The
technocracy and the bureaucracy which mostly draft
subordinate legislation are perhaps well-meaning and well-
informed but insulated from parliamentary audit, isolated
from popular pressure and paper-logged most of the time. And
units of local self-government are reduced to a para-babel
mechanisms, what with a pyramid of officialdom above them.
The core of Shri Tarkunde’s argument, even though rejected
in legal terms by force of precedents, has a realistic touch
to the effect that municipal administration in the matter of
taxation, if taken over by Government as under s. 90(5) of
the Act, becomes administration by the barrel of the
Secretariat pen. The doctrine of delegation, in its extreme
positions, is fraught with democracy by proxy of a coterie,
of which the nation, in its naivete, may not be fully
cognizant.
Therefore, the system of law-making and performance
auditing needs careful, yet radical, re-structuring, if
participative, pluralist Government by the People is not to
be jettisoned. We have laid down the law and obeyed the
precedents but felt it necessary to lay bare briefly the
political portents implicit in the extent law, for action by
the national leadership betimes. Who owns and operates
India, that is Bharat ? That disturbing interrogation
becomes deeply relevant
872
as we debate and decide the jurisprudence of delegation of
power and vicarious exercise and so we have pardonably
ventured to make heuristic hints and to project new
perspectives.
The journey’s end is in sight. The discussion has come
to a close. The notification suffers from no infirmity. The
writ petitions stand dismissed. Costs one set. (to the
state)
P.H.P. Petitions dismissed.
873