Lachmi Narain v. Union of India, AIR 1976 SC 714

(The power to make modification in a legislation does not include power to make modification in any essential feature)

FACTS:

On December 7, 1957, the Central Government issued a notification in the Gazette of India Extraordinary. This notification, made in exercise of powers conferred by Section 2 of the Union Territories (Laws) Act, 1950, sought to amend the notification that had extended the Bengal Finance (Sales Tax) Act, 1941 to the Union Territory of Delhi.

The key change made by the impugned notification was:

In the said notification, the modifications to the Bengal Act aforesaid in item 6 [relating to sub-section (2) of Section 6], after sub-item (a) the following sub-item shall be inserted, namely:- (aa) for the words “not less than three months’ notice”, the word; “such previous notice as it considers reasonable” shall be substituted.

ISSUE:

Whether this amendment made by the Central Government is ultra vires or not?

APPELLANT’S CONTENTIONS:

• Shri Ashok Sen contended that the power of modification conferred on the Central Government by Section 2 of the Laws Act is not an unfettered power of delegated legislation but a subsidiary power conferred for the limited purpose of extension and application to a Union territory. Only such modifications are permissible as are necessary to adapt and adjust such enactment to local conditions.

• The submission is that the impugned notification is bad because it was issued more than 6½ years after the extension of Bengal Act, and it attempts to change the requirement of Section 6(2) as to “not less than three months’ notice” which is the essence of the whole provision.

• Shri Ashok Sen further submits that the amending Act 20 of 1959 by Parliament did not put its seal of approval on the impugned notification, as it did not touch Section 6 at all.

RESPONDENT’S CONTENTIONS:

• The learned Counsel for the respondent contended that the Central Government at the time it extended the Bengal Act was competent to introduce such modifications and restrictions as it thought fit.

• According to the Counsel, the policy underlying Section 6(2) is that reasonable notice of the Government’s intention must be given. It is maintained that the requirement as to “not less than three months’ notice” was not a matter of policy but one of detail or expedience, it was only directory, and the modification did not go beyond adjusting and adapting it to the local conditions of Delhi.

CASE REFERRED TO:

The source from which the power to amend the Second Schedule, comes from Section 6(2) of the Bengal Act and not from Section 21 of the General Clauses Act. Section 21, as pointed out by this Court in Gopi Chand v. Delhi Administration [AIR 1959 SC 609] embodies only a rule of construction and the nature and extent of its application must be governed by the relevant statute which confers the power to issue the notification. The power, therefore, had to be exercised within the limits circumscribed by Section 6(2) and for the purpose for which it was conferred.

RATIONALE:

• Vivian Bose, J observed that the power to “restrict and modify” does not import the power to make essential changes. It is confined to alterations of a minor character such as are necessary to make an Act intended for one area applicable to another and to bring it into harmony with laws already in being. To alter the essential character of an Act or to change it in material particulars is to legislate, and that, namely, the power to legislate, cannot be delegated by a legislature which is not unfettered.

• Mukherjea, J. was of the view that the “essential legislative functions” which consist in the determination or choosing of the legislative policy and of formally enacting that policy into a binding rule of conduct cannot be delegated.

• In Rajnarain Singh case, Vivian Bose, J. speaking for the Court, summed up the majority view in regard to the nature and scope of delegated legislation in Re Delhi Laws, thus: In our opinion the majority view was that an executive authority can be authorised to modify either existing or future laws but not in any essential feature. Exactly what constitutes an essential feature cannot be enunciated in general terms, but this much is clear from the opinions set out above: it cannot include a change of policy.

HELD:

For all the foregoing reasons, the Court was of opinion that the impugned notification, dated December 7, 1957, purporting to substitute the words ``such previous notice as it considers reasonable” for the words “not less than three months’ notice” in Section 6(2) of the Bengal Act, is beyond the powers of the Central Government, conferred on it by Section 2 of the Laws Act.

In consequence, the notifications, dated April 1, 1958, September 19, 1959, June 29. 1966 and July 31, 1970 in so far as they withdrew the exemptions from tax in the case of durries, pure silk, country liquor, kirana articles etc. without complying with the mandatory requirement of not less than three months’ notice enjoined by Section 6(2) of the Bengal Act, are also invalid and ineffective.

The Court allowed these appeals, set aside the judgment of the appellate bench of the High Court and declared the notification dated December 7, 1959, and the subsequent notifications in so far as they withdrew the exemptions from tax mentioned above, to be unconstitutional.