Atlas Cycle Industries Ltd. v. State of Haryana, AIR 1979 SC 1149

(Legislative Control through Laying Requirement)

FACTS:

• On December 29, 1964, the Development Officer of the Directorate General of Technical Development, New Delhi, discovered that the said appellant’s account books showed that it had acquired black plain iron sheets at a rate higher than the maximum statutory price fixed by the Iron and Steel Controller (the ‘Controller’) under Clause 15(1) of the Iron and Steel (Control) Order, 1956 (the ‘Control Order’).

• On the basis of this discovery, the appellants were prosecuted in the Court of the Special Magistrate, Ambala Cantonment for an offence under Section 120B of the Indian Penal Code read with Section 7 of the Essential Commodities Act, 1955 read with Clause 15(3) of the Control Order. The trial Magistrate dismissed the application.

• The appellants moved the High Court of Punjab and Haryana challenging their prosecution. The High Court dismissed the petition, but certified the case as eminently fit for appeal to the Supreme Court as it involved a substantial question of law relating to the vires of the notification fixing the maximum selling prices.

ISSUE:

Whether the notification fixing the maximum selling price of the commodity in question is void for not having been laid before both Houses of Parliament?

APPELLANT’S CONTENTIONS:

• The Control Order and the Notification which formed the basis of their prosecution did not have the force of law as they had not been laid before the Houses of Parliament within a reasonable time as required under Section 3(6) of the Act.

• The Notification fixing the maximum selling price of the commodity in question was invalid as the same did not appear to be preceded by the formation of the requisite opinion under Section 3(1) of the Act which was a sine qua non for issue of any order.

• The prosecution of the appellants was violative of Article 14 of the Constitution since none of the 18 sellers who were equally guilty of the offence had been proceeded against.

• The purchase of the aforesaid sheets having been openly made and entered in the account books, the mens rea which was a necessary ingredient of the offence under Section 7 of the Act was totally lacking in the case.

RESPONDENT’S CONTENTIONS:

• The respondent conceded that the notification fixing the maximum selling prices had not been placed before both Houses of Parliament but contended that the provisions of sub-section (6) of Section 3 of the Act requiring the placing of the order were directory and not mandatory, and the omission did not have the effect of invalidating the notification.

• The notification fixing the maximum selling prices being a part of the Control Order and a piece of delegated legislation, it was not necessary to lay it before the Houses of Parliament.

• The mens rea of the accused was manifested from various manipulation resorted to by them as also from the fact that they wanted to increase their production and earn more profits.

• Non-prosecution of the sellers did not involve any discrimination as envisaged by Article 14 but was due to non-availability of adequate and reliable evidence against them.

RATIONALE:

Sub-section (6) of Section 3 of the Act provides that every order made under Section 3 shall be laid before both Houses of Parliament, as soon as may be, after it is made.

The Court observed the following with respect to the provision:

• It does not provide that it shall be subject to the negative or the affirmative resolution by either House of Parliament.

• It also does not provide that it shall be open to the Parliament to approve or disapprove the order.

• It does not even say that it shall be subject to any modification which either House of Parliament may think it necessary to provide.

• It does not even specify the period for which the order is to be laid, nor does it provide any penalty for nonobservance of or non-compliance with the direction.

• The requirement as to the laying of the order before both Houses of Parliament is not a condition precedent but subsequent to the making of the order. In other words, there is no prohibition to the making of the orders without the approval of both Houses of Parliament.

It is important to note that laying the Order before both the Houses of Parliament is not a condition precedent for bringing into force the Order, all that sub-section (6) provides is that every Order made under Section 3 of the Essential Commodities Act shall be laid before both the Houses of Parliament, as soon as may be, after it is made. It is significant that the Order is valid and effective from the date it is duly promulgated. It is, therefore, not possible to hold that sub-section (6) of Section 3 of the Essential Commodities Act is mandatory.

HELD:

The Legislature never intended that non-compliance with the requirement of laying as envisaged by sub-section (6) of Section 3 of the Act should render the order void. In these circumstances, the Court was clearly of the view that the requirement as to laying contained in sub-section (6) of Section 3 of the Act falls within the first category, i.e. “simple laying” and is directory not mandatory.

Consequently, non-laying of the aforesaid notification fixing the maximum selling prices of various categories of iron and steel including the commodity in question before both Houses of Parliament cannot result in nullification of the notification. Accordingly, the Court answered the aforesaid question in the negative. In the result, the appeal failed and was dismissed.

COMMENTARY:

A provision as to “laying” may be directory or mandatory. It will depend upon the scheme of the Act, the language used, consequences enumerated in the relevant law and other considerations.

In Atlas Cycle Industries Ltd. v. State of Haryana, the Supreme Court considered this aspect in detail and observed that the use of the word shall is not conclusive or decisive of the matter and the court has to ascertain the intent of the legislature which is the determining factor. Two considerations, according to the court, are relevant:

1. Absence of a provision for contingency of a particular provision not being complied with.

2. Serious general inconvenience and prejudice likely to result to the general public if the act is declared invalid for non-compliance with the provision. - CK TAKWANI