Input:
Appeals Nos. 21 to 23, 46, 47, 125 and 274 of 1969.
Appeals from the judgment and orders dated April 10, 1968 of the Madras High Court in Writ Petitions Nos.
387 of 1968 etc.
section V. Gupte, G. Ramanujam and A. V. Rangam, for the appel lants (in C.As.
21 to 23 of 1969) and the respondent (in C.As.
Nos. 46, 47, 125 and 274 of 1969).
V. K. T. Chari, T. N. C. Rangarajan and D. N. Gupta, for the appellants (in C.As.
Nos. 46 and 47 of 1969) and the respondents (in C.As.
Nos. 21 and 23 of 1969).
V. K. T. Chari, A. R. Ramanathan, T. N. C. Rangarajan and R. Gopalakrishnan, for the appellant (in C.A. No. 125 of 1969).
K. C. Rajappa, section Balakrishnan and section Laxminarasu, for the appellant (in C.A. No. 274 of 1969).
K. C. Rajappa, section Balakrishnan, section Laxminarasu and N. M. Ghatate, for the respondents (in C.A. No. 22 of 1969).
The Judgment of the court was delivered by Ramaswami, J.
In these appeals which have been heard together a common question of law arises for determination, namely, whether the Madras Urban Land Tax Act, 1966 (12 of 1966) is constitutionally valid.
In 1963 the Madras Legislature enacted the Madras Urban Land Tax Act, 1963 which came into force in the city of Madras on the 1st of July, 1963.
In the Statement of Object and Reasons of the 1963 Act it was stated that the Taxation Enquiry 271 Commission and the Planning Commission were suggesting the need for imposing a suitable levy on lands put to non agricultural use in urban areas.
The State Government, after examining the report of the Special Officer, decided to levy a tax on urban land on the basis of market value of the land at the rate of 0.4% on such market value.
Section 3 of the Act of 1963 (which win be referred to as the old Act) provided that there shall be levied and collected for every fasli year commencing from the date of the commencement of the Act, a tax on urban land from every owner of urban land at the rate of 0.4% of the average market value of the urban land in a sub zone as determined under subsection (2) of section 6.
Section 7 provided for the determination of the highest and lowest market value in a zone.
For determining the average market value, the Assistant Commissioner shall have regard to any matters specified in clauses (a) to (e) of sub section 2 of section 6; namely: (a) the locality in which the urban land is situated; (b) the predominant use to which the urban land is put, that is to say, industrial, commercial or residential; (c) accessibility or proximity to market, dispensary, hospital, railway station, educational institution, or Government offices; (d) availability of civil amenities like water supply, drainage and lighting; and (e) such other matters as may be prescribed.
The constitutional validity of Act 34 of 1963 was challenged and in Buckingham & Carnatic Co., Ltd. vs State of Madras(1) a Division Bench of the Madras High Court held that the im pugned Act fell under Entry 49, List 11 of Schedule VII to the Constitution and was within the legislative competence of the State Legislature.
But the, Act was struck down on the ground that article 14 of the Constitution was violated, because the charging section of the Act levied the tax on urban land not on the market value of such urban land but on the average value of the lands in the locality known as a sub zone.
The new Act (Act 12 of 1966) was passed by the State Legislature after the decision of the Madras High Court.
In the new Act provisions relating to fixation of average market value in the sub zone were omitted.
Instead, section 5 of the new Act provides that there shall be levied and collected from every year commencing from the date of the commencement of the Act a tax on each urban land from the owner of such urban land at the rate of 0.4% of the market (1),(1966) II M.L.J. 172.
272 value of such urban land.
Section 2(10) defines "owner" as follows "Owner includes (i) any person (including a mortgagee in possession) for the time being receiving or entitled to receive, whether on his own account or as agent, trustee, guardian, manager or receiver for another person or for any religious or charitable purposes, the rent or profits of the urban land or of the building constructed on the urban land in respect of which the word is used; (ii) any person who is entitled to the kudiwaram in respect of any inam land; but does not include (a) a shrotriemdar; or (b) any person who is entitled to the melwaram in respect of any inam land but in respect of which land any other person is entitled to the kudiwaram.
Explanation.
For the purposes of clause (9) and clause (10) inam land includes lakhiraj tenures of land and shrotriam land.
Section 2(13) defines 'land ' to mean any land which is used or is capable of being used, as a building site and includes garden or grounds, if any, appurtenant to a building but does not include any land which is registered as wet in the revenue accounts of the Government and used for the cultivation of wet crops.
" Section 6 states "For the purposes of this Act, the market value of any urban land shall be estimated to be the price which in the opinion of the Assistant Commissioner, or the Tribunal, as the case may be, such urban land would have fetched or fetch, if sold in the open market on the date of the commencement of this Act".
Section 7 provides for the submission of returns by the owner of urban land and reads "Every owner of urban land liable to pay urban land tax under this Act shall, within a period of one month from the date of the publication of the Madras Urban Land Tax Ordinance, 1966 (Madras Ordinance 273 III of 1966) in the Fort St. George Gazette, furnish to the Assistant Commissioner having jurisdiction a return in respect of each urban land containing the following particulars, namely : (a) name of the owner of the urban land, (b) the extent of the urban land, (c) the name of the division or ward and the street, survey number and subdivision number of the land and other particulars of such urban land, (d) the amount which in the opinion of the owner is the market value of the urban land.
" Section 1 0 deals with the procedure for the determination of the market value by the Assistant Commissioner and states : (1) Where a return is furnished under section 7 the Assistant Commissioner shall examine the return and made such enquiry as he deems fit.
If the Assistant Commissioner is satisfied that the particulars mentioned therein are correct and complete he shall, by order in writing determine the market value of the urban land and the amount of urban land tax payable in respect of such urban land.
(2) (a) Where no examination of the return and after the enquiry the Assistant Commissioner is not satisfied that the particulars mentioned therein are correct and complete he shall serve a notice on the owner either to attend in person or at his office on a date to be specified in the notice or to produce or cause to be produced on that date any evidence on which the owner may rely in support of his return.
(b) The Assistant Commissioner after hearing such evidence as the owner may produce in pursuance of the notice under clause (a) and such other evidence as the Assistant Commissioner may require on any specified points shall, by order in writing, determine the market value of the urban land and the amount of urban land tax payable in respect of such urban land.
(c) Where the owner has failed to attend or produce evidence in pursuance of the notice under clause (a) the Assistant Commissioner shall, on the basis of the enquiry made under clause (a), by order in writing determin e the market value of the urban land and the amoun t of urban land tax payable in respect of such urban land.
" 274 Section 11 enacts : (1) Where the owner of urban land has failed to furnish the return under section 7 and the Assistant Commissioner has obtained the necessary information under section 9 he shall serve a notice on the owner in respect of each urban land specifying therein (a) the extent of the urban land, (b) the amount which, in the opinion of the Assistant Commissioner, is the correct market value of the urban land, and direct him either to attend in person at his office on a date to be specified in the notice or to produce or cause to be produced on that date any evidence on which the owner may rely.
(2) After hearing such evidence, as the owner may produce and such other evidence as the Assistant Com missioner may require on any specified points, the Assistant Commissioner shall, by order in writing, determine the market value of the urban land and the amount of urban land tax payable in respect of such urban land.
(3) Where the owner has failed to attend or to produce evidence in pursuance of the notice under subsection (1) the Assistant Commissioner shall, on the basis of the information obtained by him under section 9, by order in writing, determine the market value of the urban land and the amount of the urban land tax payable in respect of such urban land.
" Section 20 provides for an appeal to the Tribunal from the orders of the Assistant Commissioner : "(1) (a) Any assessee objecting to any order passed by the Assistant Commissioner under section 10 or 11 may appeal to the Tribunal within thirty days from the date of the receipt of the copy of the order.
(b) Any person denying his liability to be assessed under this Act may appeal to the Tribunal within thirty days from the date of the receipt of the notice 1 of demand relating to the assessment :.
Provided that no appeal shall lie under clause (a) or clause (b) of this sub section unless the urban land tax has been paid before the appeal is filed.
275 (2) The Commissioner may, if he objects to any order passed by the Assistant Commissioner under section 10 or 11, direct the Urban Land Tax Officer concerned to appeal to the Tribunal against such order, and such appeal may be filed within sixty days from the date of the receipt of the copy of the order by the Commissioner.
(3) The Tribunal may admit an appeal after the expiry of the period referred to in clause (a) or clause (b) of sub section (1) or in sub section (2), as the case may be, if it is satisfied that there was sufficient cause for not presenting it within that period.
(4) An appeal to the Tribunal under this section shall be in the prescribed form and shall be verified in the prescribed manner and shall be accompanied by such fee as may be prescribed.
(5) The Tribunal may after giving both parties to the appeal an opportunity of being heard, pass such orders thereon, as it thinks fit and shall communicate any such orders to the assessee and to the Commissioner in such manner as may be prescribed." Section 30 confers power of revision in the Board of Revenue: and is to the following effect : (1) The Board of Revenue may, either on its own motion or on application made by the assessee in this behalf, call for and examine the records of any proceeding under this Act (not being a proceeding in respect of which an appeal lies to the Tribunal under section 20) to satisfy, itself as to the regularity of such proceeding or the correctness, legality or propriety of any decision or order passed therein and if, in any case, it appears to the Board of Revenue that any such decision or order should be modified, annulled, reversed or remitted for reconsideration, it may pass orders accordingly : Provided that the Board of Revenue shall not pass any order under this subsection in any case, where the decision or order is sought to be revised by the Board of Revenue on its own motion, if such decision or order had been made more than three years previously : Provided further that the Board of Revenue shall not pass any order under this section prejudicial to any 276 party unless he has had a reasonable opportunity of making his representations.
" Section 33 states : "(1) The Tribunal, the Board of Revenue, the Commissioner, the Assistant Commissioner, or the Urban Land Tax Officer or any other officer empowered under this Act shall, for the purposes of this Act, have the same powers as are vested in a Court under the Code of Civil Procedure, 1908 (Central Act V of 1908), when trying a suit in respect of the following matters, namely : (a) enforcing the attendance of any person and examining him on oath; (b) requiring the discovery and production of documents; (c) receiving evidence on affidavit; (d) issuing commissions for the examination of witnesses; and any proceeding before the Tribunal, the Board of Revenue, the Commissioner, the Assistant Commissioner the Urban Land Tax Officer or any other officer empowered under this Act shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228 and for the purposes of section 196, of the Indian Penal Code (Central Act XLV of 1860).
(2) In any case in which an order of assessment is passed ex parte under this Act, the provisions of the Code of Civil Procedure, 1908 (Central Act V of 1908), shall apply in relation to such order as it applies in relation to a decree passed ex parte by a Court.
" The validity of the new Act was challenged in a group of writ petitions before the Madras High Court on various constitutional grounds.
By a common judgment dated the 10th April, 1968 a Full Bench of five Judges overruled all the contentions of the petitioners with regard to the legislative competence of the Madras Legislature to enact the new Act.
However, the Full Bench by a majority of 4 to 1 struck down section 6 of the new Act as being violative of articles 14, 19(1)(f) of the Constitution.
The State of Madras and other respondents to the writ petitions (hereinafter ,called the respondents for the sake of convenience) filed appeals 277 Nos.
21 to 23 of 1969 under a certificate granted by the High Court under articles 1,32 and 1 3 3 (I) (a), (b) and (c) of the Constitution.
The writ petitioners (hereinafter called the petitioners) have filed C.As Nos. 46, 47, 125 and 274 of 1969 against the same judgment on a certificate, granted by the High Court under article 132 of the Constitution.
The first question to be considered in these appeals is whether the Madras Legislature was competent to enact the legislation under Entry 49 of List 11 of Schedule VII of the Constitution which reads : "Taxes on lands and buildings".
It was argued on behalf of the petitioners that the impugned Act fell under Schedule VII, List 1, Entry 86, that is "Taxes on the capital value of the assets, exclusive of agricultural land, of individuals and companies; taxes on the capital of companies.
" The argument of Mr. V. K. T. Chari may be summarised as follows : The impugned Act was, both in form and substance, taxation of capital and was hence beyond the competence of the State Legislature.
To tax on the basis of capital or principal value of assets was permissible to Parliament under List 1, Entries 86 and 87 and to State under Entry 48 of List II.
Taxation of capital was the appropriate method provided for effecting the directive principle under article 39 of the Constitution, namely, to prevent concentration of wealth.
Article 366(9) contains a definition of 'estate duty ' with reference to the principal value.
Entry 86 of List I (Taxes on capital value of assets exclusive of agricultural land) and Entry 88 (Duties in respect of succession to such property) form a group of entries the scheme of which is to carry out the directive principle of article 39(c).
The Constitution indicated that capital value or principal value shall be the basis of taxation under these entries and, therefore, the method of taxation of capital or principal value was prohibited even to Parliament in respect of other taxes and to the States except in respect of Estate Duty on agricultural land.
Such in effect is the.
argument of Mr. V. K. T. Chari.
But in our opinion there is no warrant for the assumption that entries 86, 88 of List I and Entry 48 of List II form a special group embodying any particular 'scheme.
The directive principle embodied in article 39(c) applies both to Parliament and to the State Legislature and it is difficult to conceive how entries 86 to 88 of List I would exclude any power of the State Legislature to implement the same principle.
The legislative entries must be given a large and liberal interpretation, the reason being that the allocation of the subjects to the lists is not by way of scientific or logical definition but by way of a mere sixplex enumeratio of broad categories.
We see no reason, therefore, for holding that the entries 86 and 87 of List I preclude the State Legislature from taxing capital value of lands and buildings under 13SupCI69 4 278 Entry 49 of List II.
In our opinion there is no conflict between Entry 86 of List I and Entry 49 of List 11.
The basis of taxation under the two entries is quite distinct.
As regards Entry 86 of List I the basis of the taxation is the capital value of the asset.
It is not a tax directly on the capital value of assets of individuals and companies on the valuation date.
The tax is not imposed on the components of the assets of the assessee.
The tax under Entry 86 proceeds on the, principle of aggregation and is imposed on the totality of the value of all the assets.
It is imposed on the total assets which the assessee owns and in determining the net wealth not only the encumbrances specifically charged against any item of asset, but the general liability of the assessee to pay his debts and to discharge his lawful obligations have to be taken into account.
In certain exceptional cases, where a person owes no debts and is under no enforceable obligation to discharge any liability out of his assets it may be possible to break up the tax which is leviable on the total assets into components and attribute a component to lands and buildings owned by an assessee.
In such a case, the component out of the total fax attributable 'Lo lands and buildings may in the matter of computation bear similarity to a tax on lands and buildings levied on the capital or annual value under Entry 49, List II.
But in a normal case a tax on capital value of assets bears no definable relation to lands and buildings which may or may not form a component of the total assets of the assessee.
But Entry 49 of List II, contem plates a levy of tax on lands and buildings or both as units.
It is not concerned with the division cf interest or ownership in the units of lands or buildings which are brought to tax.
Tax on lands and buildings, is directly imposed on lands and buildings, and bears a definite relation to it.
Tax on the capital value of assets bears no definable relation to lands and buildings which may form a component of the total assets of the assessee.
By legislation in exercise of power under Entry 86, List I tax is contemplated to be levied on the value of the assets.
For the purpose of levying tax under Entry 49, List 11 the State Legislature may adopt for determining the incidence of tax the annual or the capital value of the lands and buildings.
But the adoption of the annual or capital value of lands and buildings for determining tax liability will not make the fields of legislation under the two entries overlapping.
The two taxes are entirely different in their basic concept and fall on different subject ' matters.
In Ralla Ram vs Province of East Punjab(1) the Federal Court held that the tax levied by section 3 of the Punjab Urban (1) 279 Immoveable Property Tax Act, 17 of 1940 on buildings and lands situated in a specified area at such rate not exceeding twenty per cent.
of the annual value of such buildings and lands, as the Provincial Government may by notification in the official Gazette direct in respect of each such rating area was not a tax on income, but was a tax on lands and buildings within the meaning of Item No. 42 of List 11 of the Seventh Schedule of the Government of India Act, 1935.
In that case it was contended that under the provisions of the Punjab Act the basis of the tax was the annual value of the buildings and since the same basis was used in the Income tax Act for determining the income from property and generally speaking the annual value is the fairest standard for measuring income and, in many cases, is indistinguishable from it, the tax levied by the impugned Act was in substance a tax on income.
The Court pointed out that the annual value is not necessarily actual income, but is only a standard by which income may be measured and merely because the Income tax Act had adopted the annual value as the standard for determining the income, it did not follow that, if the same standard is employed as a measure for any other tax, that latter tax becomes also a tax on income.
It was held by the Court that in substance the property tax levied by section 3, Punjab Urban Immoveable Property Tax Act, 1940 fell within item 42 of the Provincial List and was not a tax on income falling within item 54 of the Federal List although the basis of the tax was the annual value of the building.
The same view has been expressed by this Court in Sudhir Chandra Nawn vs Wealth Tax Officer(1) wherein it was held that the power to levy tax on lands and buildings under Entry 49 of List II did not trench upon the power conferred on Parliament by Entry 88 of List I and, therefore, the enactment of the Wealth Tax Act by Parliament was riot ultra vires.
The problem in this case is the problem of characterisation of the law or classification of the law.
In other words the question must be asked : what is the subject matter of the legislation in its "pith and substance" or in its true nature and character for the purpose of determining whether it is legislation with respect to Entry 47 of List 11 or Entry 86 of List 1.
In Gallahagher vs Lynn 2 ) the principle is stated as follows : "It is well established that you are to look at the true nature and character of the legislation the, pith and substance of the legislation.
If on the view of the statute as a whole, you find that the substance of the legislation (1) ; (2) [1937] C. 853 870 280 is within the express powers, then it is not invalidated if incidentally it affects matters which are outside the authorized field.
The legislation must not under the guise of dealing with one matter in fact encroach upon the forbidden field.
Nor are you to look only at the object of the legislator.
An Act may have a perfectly lawful object e.g. to promote the health of the inhabitants, but may seek to achieve that object by invalid methods, e.g., direct prohibition of any trade with a foreign country.
In other words, you may ' certainly consider the clauses of an Act to see whether they are passed 'in respect of ' the forbidden subject.
" In the case of Subrahmanyan Chettiar vs Muttuswami Goundan(1) Sir Maurice Gwyer, C.J. said : "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 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 : Citizens Insurance Company of Canada vs Parsons(); Russell vs The Queen(3); Union Colliery Co. of British Columbia vs Bryden(4); Att.
Gen. for Canada vs Att.
Gen. for British Columbia(5); Board of Trustees of Lethbridge Irrigation District vs Independent Order of Foresters(6).
In my opinion this rule of interpretation is equally applicable to the Indian Constitution Act.
" For the reasons already expressed we hold that in pith and substance the new Act in imposing a tax on urban land at a percentage of the market value is entirely within the ambit of Entry 49 of List II and within the competence of the State Legislature and does not in any way trench upon the field of legislation of Entry 86 of List I. (1) [194O] F.C.R. 188 at 201.
(2) [1881] 7 A.C. 96.
(3) [1882] 7 5) 301 A.C. III.
(6) 281 It was then said that as Entry 49 of List 11 provides for taxes on lands and buildings, the impugned Act which imposes tax on lands alone cannot be held to fall under that entry.
It was submitted that when the Legislature taxed land deliberately the legislation fell under List 11 of Entry 45, i.e., "land revenue, including the assessment and collection of revenue, the maintenance of land records, survey for revenue purposes and records of rights and alienation of revenues ' ' and not under Entry 49 of that List.
The legislative history of Entry 49 of List 11 does not however lend any support to this argument.
Before the Government of India Act, 1935 lands and buildings were taxed separately and all that was done under the Government of India Act, 1935 and ' the Constitution was to combine the two entries relating to land and buildings into a single entry.
Section 45 A of the Government of India Act, 1919 provided for making rules under the Act for the devolution of authority in respect of provincial subjects to local Governments, and for the allocation of revenues or other moneys to those Governments. ' The Government of India by a notification dated December 16, 1920 made rules under that provision called the "Scheduled Tax Rules".
These Rules contained two schedules.
The first Schedule contained eight items of tax or, fee.
The Legislative Council of a Province may without obtaining the previous sanction of the Governor General make and take into consideration any law imposing for the purposes of the local Government any tax included in Schedule I. Schedule II contained eleven items of tax.
In making a law imposing or authorising any local authority to impose for the purposes of such local authority any tax in Schedule 11, the Legislative Council required to previous sanction of the Governor General.
In Schedule II, item No. 2 was tax on land or land values and item 3 was a tax on buildings.
In the Government of India Act, 1935 the two entries were combined and List 11, Entry 42 is "Taxes on lands and buildings and hats and Windows".
The legislative history of Entry 49, List 11 does not, therefore, lend any support to the argument that Entry 49 of List 11 relating to tax on land and buildings cannot be separated.
On the other hand we are of opinion that Entry 49 "Taxes on lands and buildings" should be construed as taxes on land and taxes on buildings and there is no reason for restricting the ampli tude of the language used in the Entry.
This view is also borne out by authorities.
In Raja Jagannath Baksh Singh vs The State of U.P.(1) the question at issue was whether the tax imposed by the U.P. Government on land holdings under the U.P. Large Land Holdings Tax Act, 1957 (U.P. Act 31 of 1957) 'was constitutionally valid.
It was held that the legislation fell under Entry (1) 282 49 of List 11 and the tax on land would include agricultural land also.
Similarly in H. R. section Murthy vs Collector of Chittoor & Anr.(1) it was held that the land cess imposed under sections 78 and 79 of the Madras District Boards Act (Mad.
Act No. XIV of 1920) and Mines and Minerals (Regulation and Development) Act, (Act 67 of 1957) was a tax on land falling under Entry 49 of the State List.
We are of opinion that the argument of Mr. V. K. T. Chari on this aspect of the case must be rejected.
We proceed to consider the argument that no machinery is provided for determining the market value and the provisions of the new Act, therefore, violate article 14 of the Constitution.
The argument was stressed by Mr. V. K. T. Chari that the guidance given under the 1963 Act has been dispensed with and the Assistant Commissioner is not bound to take into account, among other matters, the sale price of similar sites, the rent fetched for use and occupation of the land, the principles generally adopted in valuing land under the Land Acquisition Act and the compensation awarded in recent land acquisition proceedings.
We see no justification for this argument.
The procedure for determining the market value and assessment of urban land is described in Chapter III of the new Act.
Section 6 provides that the market value of the urban land "shall be estimated to be the price which in the opinion of the Assistant Commissioner, or the Tribunal, as the case may be, such urban land would have fetched or fetch, if sold in the open market on the date of the commencement of this Act.
" It was said on behalf of the petitioners that the opinion which the Assistant Commissioner has to form is purely subjective and may be arbitrary.
We do not think that this contention is correct.
Having regard to the language and context of section 6 of the new Act we consider that the opinion which the Assistant Commissioner has to form under that section is not subjective but should be reached objectively upon the relevant evidence after following the requisite formalities laid down in sections 7 to 11 of the new Act.
Instead of the Assistant Commissioner classifying the urban land and determining the market value in a zone, the present Act requires a return to be submitted by the owner mentioning the amount which, in the opinion of the owner, is the market value of the urban land.
On receipt of the return, if the Assistant Commissioner is satisfied that the particulars mentioned are correct and complete, he may determine the market value as given by the owner of the land.
If he is not satisfied with the return, he shall serve a notice to the owner asking him to attend his office with the relevant evidence in support of his return.
After bearing the owner and considering the evidence produced, the Assistant Commissioner may determine the (1) 28 3 market value.
In case the owner fails to attend or fails to produce the evidence, the Assistant Commissioner is empowered to assess the market value on the basis of an enquiry made by him.
Section 11 prescribes the procedure for determining the market value when the owner fails to furnish a return as required under section 7.
The section requires the Assistant Commissioner to serve a notice on the owner specifying amongst other things the amount, which in the opinion of 'the Assistant Commissioner, is the correct market value and directing the owner to attend in person at his office on a date specified in the notice or to produce any evidence on which the owner may rely.
After hearing such evidence as the owner may produce and considering such other evidence as may be required, the Assistant Commissioner may fix the market value.
The proceeding before the Assistant Commissioner is judicial in character and his opinion regarding the market value is reached objectively on all the materials produced before him.
Section 20 provides for an appeal by the assessee objecting to the determination of the market value made by the Assistant Commissioner to a Tribunal within thirty days from the date of the receipt of the copy of the order.
The Act requires that the Tribunal shall consist of one person only who shall be a judicial officer not below the rank of a Subordinate Judge.
By section 30, the Board of Revenue is empowered either on its own motion or on application made by the assessee in this behalf, to call for and examine the records of any proceedings under the Act (not being a proceeding in respect of which an appeal lies to the Tribunal under section 20) , to satisfy itself as to the regularity of such proceeding or the correctness, legality or propriety of any decision or order passed therein, and if it appears to the Board of Revenue that any such decision or order should be modified, annulled , reversed or remitted for reconsideration, it may pass orders accordingly.
Section 32 enables the urban land tax officer, or the Assistant Commissioner, or the Board of Revenue or the Tribunal to rectify any error apparent on the face of the record at any time within three years from the date of any order passed by him or it.
Section 33 confers power on the Assistant Commissioner to take evidence, to require discovery and production of documents and to receive evidence on affidavit etc.
Thus the Act envisages a detailed procedure regarding submission of returns, the making of an assessment after hearing objections and a right to appeal to higher authorities.
We are hence unable to accept the contention of the petitioners that the provisions of section 6 of the new Act are violative of article 14 of the Constitution.
It is necessary to state that the High Court decided the case in favour of the respondents mainly on the ground that investment 284 of the power to determine value of the urban land under section 6 of the Act constituted excessive delegation of authority and so violative of articles 19(1) and 14 of the Constitution.
(see the judgment of Veeraswami, J., who pronounced the main judgment in the High Court.
But Mr. V. K. T. Chari did not support this line of reasoning, in his arguments before this Court.
On the other hand learned counsel conceded that the power of determining the value of the urban land being judicial or quasi judicial in character the doctrine of excessive delegation of authority had no application.
We pass on to consider the next contention raised on behalf of the petitioners namely that the Act should be struck down as an unreasonable restriction on the right to acquire, hold and dispose of property and as such violative of article 1 9 (1) (f) of the Constitution.
It was argued that the test of reasonableness would be that the tax should not be so high as to make the holding of 'the property or the carrying on of the activity (business or profession) which is subject to taxation, uneconomic according to accepted rates of yield.
In this connection it was said that the new Act by imposing a tax on the capital value at a certain rate was not correlated to the income or rateable value and, therefore, violates the requirement of reasonableness.
We are unable to accept the proposition put forward by Mr. Chari.
It is not possible to put the test of reasonableness into the straight jacket of a narrow formula, The objects to be taxed,, the quantum of tax to be levied, the conditions subject to which it is levied and the social and economic policies which a tax is designed to subserve are all matters of political character and these matters have been entrusted to the Legislature and not to the Courts.
In applying the test of reasonableness it is also essential to notice that the power of taxation is generally regarded as an essential attribute of sovereignty and constitutional provisions relating to the power of taxation are regarded not as grant of power but, as limitation upon the power which would otherwise be practically without limit.
It was observed by this Court in Rai Ramakrishna vs State of Bihar(1) : "It is of course true that the power of taxing the people and their property is an essential attribute of the Government and Government may legitimately exercise the said power by reference to the objects to which it is applicable to the utmost extent to which Government thinks it expedient to do so.
The objects to be taxed so long as they happen to be within the legislative competence of the Legislature can be taxed by the legislature according to the exigencies of its needs, because (1) A.T.R. 1963 S.C. 1667 at 1673.
28 5 there can be no doubt that the State is entitled to raise revenue by taxation.
The quantum of tax levied by the taxing statute, the conditions subject to which it is levied, the manner in which it is sought to be recovered, are all matters within the competence of the Legislature, and in dealing with the contention raised by a citizen that the taxing statute contravenes article 19 Courts would naturally be circumspect and cautious.
Where for instance it appears that the taxing statute is plainly discriminatory, or provides no procedural machinery for assessment and levy of the tax, or that it is confiscatory, Courts, would be justified in striking down the impugned statute as unconstitutional.
In such cases, the character of the material provisions of the impugned statute is such that the Court would feel justified in taking the view that, in substance, the taxing statute is a cloak adopted by the Legislature for achieving its confiscatory purposes.
This is illustrated by the decision of this Court in the case of Kunnathat Thathunni Moopil Nair vs State of Kerala ; where a taxing statute was struck down because it suffered from several fatal infirmities.
On the other hand, we may refer to the case of Jagannath Baksh Singh vs State of Uttar Pradesh ; where a challenge to the taxing statute on the ground that its provisions were unreasonable was rejected and it was observed that unless the infirmities in the impugned statute were of such, a serious nature as to justify its description as a colourable exercise of legislative power, the Court would uphold a taxing statute." As a general rule it may be said that so long as a tax retains it&.
character as a tax and is not confiscatory or extortionate, the reasonableness of the tax cannot be questioned.
Mr. Chari submitted that the existing property tax under section 100 of the City Municipal Corporation Act and the tax on urban lands under the new Act both enacted under Entry 49 of the State List, one of them imposing a tax on the capital value of urban lands and the other on the annual value of lands and buildings exhaust an unreasonably high proportion of income.
I Or instance, it is pointed out that in W.P. No. 2835 of 1967 the annual income on property was Rs. 6,000 and the proposed market value for the lands alone comes to Rs. 10,40,000.
The urban land tax at 0.4% of the market value is Rs. 4,160 and the income tax at the rate applicable to the petitioner was Rs. 1.234.
The total tax burden in the aggregate under the three beads was Rs. 6,794, which 286 exceeds the rental income.
In W.P. No. 3686 of 1967 the municipal annual value was Rs. 4,095, the property tax was Rs. 1,098 and the urban land tax at 0.4% was Rs. 1,523.
The proportion of the two taxes together to yearly or annual municipal value worked out to Rs. 62.5%.
It was, therefore, said that the taxes put together would practically exhaust the total income and the charging section in the new Act was unreasonable.
The answer to the contention is that the charge is on the market value of the urban land and not on the annual letting value on which the municipal property tax is based.
The basis of the two taxes being .different it is not permissible to club together the two taxes and complain of the cumulative burden.
If the tax is on the market value of the urban land as it is in this case it does not admit of a complaint that it takes away an unreasonably high proportion of the income.
A tax on land values and a tax on letting value, though both are taxes under Entry 49 of List II cannot be clubbed together in order to test the reasonableness of one or the other for the purposes of article 19 (I).
But so far as the new Act is concerned we consider that the levy at 0.4% of the market value of the urban land is by no means confiscatory in effect.
It was also pointed out by Mr. V. K. T. Chari that in certain cases the market value of the urban land was arrived at by applying what is known as the contractor 's method not to the building which stands on the land whose value is, ascertained by that means but to some other building on a different land taken for comparison.
It was said that it was difficult enough for a to apply the contractor 's method of valuation to his own building which could be done by a competent architect after taking into account all measurements.
But it is absolutely an impossible task to check up or make objections to the contractor 's method applied to another man 's property which cannot be trespassed upon.
It was said that the contractor 's method was the last resort in valuation when a building has to be valued apart from the land and that it was a wrong application of the formula to use it to value the land without the building particularly when valuation of land can be made by applying the principles of the Land Acquisition Act.
But this argument has no bearing on the constitutional validity of the charging section or the machinery provisions of the Act.
It is, however, open 'to the writ petitioners to challenge the validity of the particular valuation in any particular case by way of an appeal under a statute or to move the High Court for grant of writ under article 226 of the Constitution.
The impugned Act provides for the retrospective operation of the Act.
Section 2 states that except sections 19, 47 and 48, other sections shall be deemed to, have come into force in the City of 287 Madras on the 1st day of July, 1963 and sections 19 and 47 shall be deemed to have come into force in the City of Madras on the 21st May, 1966.
It also provides that section 48 shall come into force on the date of the publication of the Act in the Fort St. George Gazette.
Section 6 enacts that the market values of the urban lands shall be estimated to be the price which in the opinion of the Assistant Commissioner or the Tribunal such urban land would have fetched or fetch if sold in the open market on the date of the commencement of the Act,, that is, from 1st July, 1967.
The urban land tax is, therefore payable from 1st July, 1963.
It is contended on behalf of the petitioners that the retrospective operation of the law from 1st July, 1963 would make it unreasonable.
We are unable to accept the argument of the petitioners as correct.
It is not right to.
say as a general proposition that the imposition of tax with retrospective effect per se renders the law unconstitutional.
In applying the test of reasonableness to a taxing statute it is of course a relevant consideration that the tax is being enforced with retrospective effect but that is not conclusive in itself.
Taking into account the legislative history of the present Act we are of opinion that there is no unreasonableness in respect of the retrospective operation of the new Act.
It should be noticed that the Madras Act of 1963 came into force on 1st July, 1963 and provided for the levy of urban land tax at the same rate as that provided under the new Act.
The enactment was struck down as invalid by the judgment of the Madras High Court which was pronounced on the 25th March, 1966.
The legislature by giving retrospective effect to Madras Act 12 of 1966 that the urban land must be taxed on the date on which the 1963 Act came into force the new Act cured the defect from which the earlier Act was suffering.
In Rai Ramkrishna 's case(1) the question at issue was whether the Bihar Taxation on Passengers and Goods (Carried by Public Service Motor Vehicles) Act, 1961 (17 of 1961) was violative of article 1,9(5) and (6) of the Constitution for the reason that it was made retrospective with effect from 1st April, 1950.
It appears that the Bihar Finance ,Act, 1950 levied a tax on passengers and goods carried by public service motor vehicles in Bihar.
In an appeal arising out of a suit filed by the passengers and owners of goods in a representative capacity, the Supreme Court pronounced on the 12th December, 1960 a judgment declaring Part III of the said Act unconstitutional.
Thereafter an Ordinance, namely, Bihar Ordinance No. 2 of 1961 was issued on the 1st of August, 1961 by the State of Bihar.
By this Ordinance, the material provisions of the earlier Act of 1950 which had been struck down by this Court were validated and brought into force retrospectively from the (1) ; 288 date when the earlier Act had purported to come into force.
Subsequently, the provisions of the said Ordinance were incorporated in the Act, namely, the Bihar Taxation on Passengers and Goods (Carried by Public Service Motor Vehicles) Act, 1961 which was duly passed by the Bihar Legislature and received the assent of the President on 23rd September, 1961.
As a result of the retrospective operation of this Act, its material provisions were deemed to have come into force on April 1, 1950, that is to say, the date on which the earlier Act of 1950 had come into, force '.
The appellants challenged the validity of this Act of 1961.
Having failed in their writ petition before the High Court, the appellants came to this Court and the argument was that the retrospective operation prescribed by section 1 (3) and by a part of section 23 (b) of the Act so completely altered the character of the tax proposed to be retrospectively recovered that it introduced a serious infirmity in the legislative competence of the Bihar Legislature itself.
The argument was rejected by this Court and it was held that having regard to the relevant facts of the case the restrictions imposed by the said retrospective operation was reasonable in the public interest under article 19(5) and (6) and also reasonable under article 304(b) of the Constitution.
In our opinion the ratio of this decision applies to the present case where the material facts are of a similar character.
In this context a reference may be made to a recent review of retroactive legislation in the United States of America : "It is necessary that the legislature should be able to cure inadvertent defects in statutes or their administration by making what has been aptly called 'small repairs '.
Moreover, the individual who claims that a vested right has arisen from the defect is seeking a windfall since had the legislature 's or administrator 's action had the effect it was intended to and could have had, no such right would have arisen.
Thus, the interest in the retroactive during 'of such a defect in the administration of government outweighs the individual 's interest in benefiting from the defect. .
The Court has been extremely reluctant to override the legislative judgment as to the necessity for retrospective taxation, not only because of the paramount governmental interest in obtaining adequate revenues, but also because taxes are not in the nature of a penalty or a contractual obligation but rather a means of apportioning the costs of government among those who benefit from it.
Indeed, as early as 1935 one commentator observed that "arbitrary retroactivity" may continue . to rear its head 289 in tax briefs, but for practical purposes, in this field, it is as dead as wager of law." (Charles B. Hochman in at p. 705).
In view of the legislative background of the present case we are of opinion that the imposition of the tax retrospectively from 1st July, 1963 cannot be said to be an unreasonable restriction.
We, therefore, reject the argument of the petitioners on this aspect of the case, For these reasons we hold that the Madras Urban Land Tax Act, 1966 (Act 12 of 1966) must be upheld as constitutionally valid.
We accordingly set aside the judgment of the Madras High Court dated the 10th April, 1968 and order that writ petitions filed by the petitioners should be dismissed.
In other words C.As 21 to 23 are allowed and C.As 46, 47, 125 and 274 are dismissed.
There will be no order with regard to costs of these appeals.
21 to 23 of '69 allowed.
R.K.P.S. C.As. 46, 47, 125 and 274 of '69 dismissed.

Output:
By section 3 of the Madras Urban Land Tax Act, 1963, a tax was levied on every owner of urban land at the rate of 0.4 % of the average market value of the urban land as determined under section 6(2) of the Act.
The vires of the Act was challenged by a writ petition and the impugned Act.
was struck down on the ground that it violated article 14 of the Constitution because the charging section levied the tax on urban land not on the market value of such land but on the average value of the land in a sub zone .
Thereafter the State Legislature passed the Madras Urban Land Tax Act 12 of 1966 which omitted the provisions relating to fixation of average market value in the sub zone, and instead provided in section 5 for the levy of a tax on urban land from the owner at the rate of 0.4% of the market value of 'such urban land.
The validity of the new Act was again challenged in a group of writ petitions before the High Court which held that the Madras Legislature was competent to enact the new Act but that it was violative of articles 14 and 19(1)(f) of the Constitution.
In appeals to this Court it was contended, inter alia, on behalf of the petitioners (1) that the impugned Act fell under Entry 86, List I and not under Entry 49 of List 2, so that the State Legislature was incompetent to pass the Act; furthermore as Entry 49, List 2 provides for taxes on land and buildings, the impugned Act which imposed tax on land alone could not be held to fall under the Entry; (ii) that the machinery was provided for determining the market value and the matter having been left to the arbitrary determination of the Assistant Commissioner, the provisions of the new Act were violative of article 14 of the Constitution (iii) that the Act was an unreasonable restriction on the right to acquire, hold and dispose of property and as 'such was violative of article 19 (1) (f) of the Constitution; furthermore together with the existing property tax under section 100 of the City Municipality Corporation Act the tax under the impugned Act exhausted an unreasonably high proportion of income and on this account also it was an unreasonable restriction; it was also contended that the giving of retrospective operation to the Act from July, 1963 made it unreasonable.
HELD: The Madras Urban Land Tax Act 12 of 1966 was constitutionally valid.
(i) In pith and substance the new Act in imposing a tax on urban land at a percentage of the market value is entirely within the ambit of 269 Entry 49 of List II and within the competence of the State Legislature, it does not in any way trench upon the field of legislation of Entry 86 of List 1.
[280 G H] There was no conflict between Entry 86 of List I and Entry 49 of List II.
The tax under Entry 86 proceeds on the principle of aggregation and is imposed on the totality of the net value of an assets.
Entry 49 of List II, contemplates a levy of tax on lands and buildings or both as units; it is not concerned with the division of interest or ownership in the units of land or buildings which are brought to tax.
[278 E F] The legislative entries must be given a large and liberal interpretation, the reason being that the allocation of the subjects to the Lists is not by way of scientific or logical definition but by way of a mere sixplex enumeratio of broad categories.
[277 G H] Ralla Ram vs Province of East Punjab, , Sudhir Chandra Nawn vs Wealth Tax Officer, A.I.R. 1969 S.C. 59; Gallahagher vs Lynn, at p. 870; and Subrahmanyan Chettiar vs Mittuswami Goundan, [1940] F.C.R. 188 at 201; referred to.
The legislative history of Entry 49, List II, does not lend any support to the argument that Entry 49 of List if relating to tax on land and, buildings cannot be separated.
On the other hand Entry 49 "Taxes on lands and buildings" should be construed as taxes on land and taxes on buildings and there is no reason for restricting the amplitude of the language used in the Entry.
[281 G] Raja Jagannath Baksh Singh vs The State of U.P., ; ; and H. R. section Murthy vs Collector of Chittoor and Anr., ; ; referred to.
(ii) The provisions of section 6 of the new Act were not violative of article 14 of the Constitution.
Having regard to the language and context of section 6 of the new Act, the opinion which the Assistant Commissioner has to form under that section is not subjective but should foe reached objectively upon the relevant evidence after following the requisite formalities laid down in sections 7 to 1 1 of the new Act.
The proceeding before the Assistant Com missioner is judicial in character and his opinion regarding the market value is reached objectively on all the materials produced before him.
[282 F] (iii) The new Act was also not violative of article 19(1) (f) of the Constitution.
It is not possible to put the test of reasonableness into the straight jacket of a narrow formula.
The, objects to be taxed, the quantum of tax to be levied; the conditions subject to which it is levied and the social and economic policies which a tax is designed to subserve are all matters of political character and these matters have been entrusted to the Legislature and not to the Courts.
In applying the test of reasonableness it is also essential to notice that the power of taxation is generally regarded as an essential attribute of sovereignty and constitutional provisions relating to the power of taxation are regarded not as grant of power but as limitation upon the power which would otherwise be practically without limit.
[284 E] Rai Ramakrishna vs State of Bihar, ; at 1673; referred to.
270 The charge under the City Municipality Corporation Act was a tax .,on the annual letting value whereas the charge under the Act of 1966 was .on the market value of the urban land.
The basis of the two taxes being different, it was not permissible to club the two together and complain of the cumulative burden.
As a general rule, so long as a tax retains its character as a tax and is not confiscatory or extortionate, the reasonableness of the tax cannot be questioned.
In so far as the new Act of 1966 was concerned, it could not be said that the levy at 0.4% of the market value of the urban land was confiscatory in effect [285 F] (iv) In view of the legislative background of the new Act of 1966, which replaced the earlier Act of 1963, it could not be said that the imposition of the tax retrospectively 'from July, 1963, was an unreasonable restriction.
[289 B]


Input:
Civil Appeal No. 1207 of 1975.
(Appeal by special leave from the judgment and order dated 5 8 1975 of the Punjab & Haryana High Court in Letters Patent Appeal No. 459/75).
J.S. Wasu, Adv.
General, Punjab and O.P. Sharma, for the appellants.
V.C. Mahajan and S.S. Khanduja, for respondent No. 1.
P.K. Pillai, for respondent No. 1.
The Judgment of the Court was delivered by KHANNA, J.
This is an appeal by special leave by the State of Punjab against the order of the Punjab & Haryana High Court, whereby at was directed that the Minister in charge of Irrigation Department be impleaded as a party in the writ petition filed by V.P. Duggal respondent.
The Minister was also directed to file his affidavit.
In the writ petition filed by him, Duggal respondent challenged notification dated January 29, 1974 fixing the seniority of the engineers n the Irrigation Department of the Punjab Government.
During the course of the heating of the writ petition, an order was made by the High Court on November 18, 1974 that the Minister concerned might give a personal hearing to the parties and thereafter pass the necessary order in the matter.
The Minister concerned thereafter heard the parties and made a speaking order on February 18, 1975 affirming the earlier seniority list.
The writ petition was thereafter amended, and 97 in the amended petition, Duggal respondent also challenged the validity of .the later order of February 18, 1975.
At the resumed hearing of the writ petition, the learned Judge hearing the petition directed that the Minister con cerned be impleaded as a party in the petition, as in the view of the learned Judge, allegation had been made against the Minister that he had deviated from the normal procedure while passing the impugned order dated February 18, 1975 inasmuch as he had dealt with the matter directly and by passed the Secretary of the Department.
Direction was also issued that the Minister should file an affidavit in regard to the allegations made in the petition.
At the hearing of the appeal before us, the learned Advo cate General for the State of Punjab has contended that the allegations made in the amended petition do not disclose any personal animus on the part of the Minister concerned and as such the High Court was in error in directing that the Minister be impleaded as a party.
The learned Advocate General has also assailed the direction of the High Court in sofar as the Minister has been called upon to file his personal affidavit.
As against that, Mr. Mahajan on behalf of Duggal respondent has urged that looking to the facts of the case if the High Court came to the conclusion that the Minister was a necessary or proper party, this Court should not interfere in the matter.
We have given the matter our consideration, and it seems to us that the direction for the impleading of the Minister as a party was given by the High Court with a view to apprise the Minister of the allegations made in the petition and thus to afford him an opportunity of controverting those allegations, if he so deemed proper.
Taking the totality of the facts and circumstances of the case, we do not feel persuaded to interfere with the order of the High Court adding the Minister as a party to the writ petition.
The High Court was, however, in our opinion in error in direct ing that the Minister concerned should file his affidavit.
It is essentially for the Minister concerned to decide in the light of the allegations made in the petition as to whether he should or should not file an affidavit.
We, therefore, decline to interfere with the order made by the High Court insofar as it has directed that the Minister be impleaded as a party.
The other part of the order whereby the Minister concerned was directed to file his personal affidavit is set aside.
The appeal shall stand disposed of accordingly.
The parties in the circumstances shall bear their own costs.
M.R. Appeal partly allowed.

Output:
The respondent challenged the validity of a Government Notification, and also the Minister 's order upholding the same.
At the hearing, the High Court directed that the concerned Minister be impleaded as a party, and file his personal affidavit.
Challenging the directions, the appel lant contended before this Court, that the allegations against the Minister did not disclose any personal ammus on his part, and he was not liable to be added as a party or to file his affidavit.
Partly allowing the appeal, the Court, HELD: The direction for the impleading of the Minister as a party was given by the High Court with a view to ap praise the Minister of the allegations made in the petition and thus to afford him an opportunity of controverting those .allegations, if .he so deemed proper.
We decline to interfere.
It is essentially for the Minister concerned to decide in the light of the allegations made in the petition as to whether he should or should not file an affidavit.
[97 E F]


Input:
Appeal No. 1958 of 1968.
Appeal by special leave from the judgment and order dated August 2, 1966 of the Allahabad High Court in Special Appeal No. 960 of 1964.
G. B. Pai, Bhuvnesh Kumari, O. C. Mathur, J. B. Dadachanji & Co., for the appellant.
Danial Latifii and section Ramachandran, for respondents Nos. 4 and 5.
The Judgment of the Court was delivered by VAIDIALINGAM, J.
The short question that raises for consideration in this appeal, by special leave, is whether the State Government has power under section 6G of the U.P. (hereinafter to be referred to as the Act) to withdraw an order already passed referring a dispute for adjudication.
The facts leading up to the filing of the Writ Petition by the appellant are as follows The appellant, a public limited company, carrying on business of manufacture and sale of sugar from sugarcane, employs about a thousand workmen in its factory at Baitalpur.
The appellant retired three workmen, namely, Chhatradheri Lal Chandrika Prasad Srivastava and Bal Karan.
This led to an industrial dispute.
The State Government by Notification No. 785/LC/XVIII/LA 97(GR)/1959 dated October 25, 1960, referred the said dispute to the Labour Court, Gorakhpur, for adjudication.
This reference (hereinafter to be referred to as Reference, No. 1) was registered by the Labour Court as Adjudication Case No. 93 of 1960.
The parties filed their written statements and proceedings went on resulting in the Labour Court passing an award dated February 26, 1961, holding) that the retirement of the three workmen was neither legal nor justified.
This award was published in the U.P. Gazette dated May 6, 1961, by the State Government 's Notification dated April 4, 1961, No. 1176(EIO)36/ A/46(ST) 59.
There were similar disputes regarding the retirement of several other workmen and accordingly that dispute was referred by the State Government to the same Labour Court for adjudication by Notification No. 322(LC)XVIII LA 115,(GS)/1959 dated October 31, 1960.
This reference (hereinafter to be, referred to as Reference No. 11) was registered by the Labour Court as Adjudication Case No. 98 of 1960.
At this stage it must be mentioned that Reference No. 11 related to several workmen numbering about thirty or forty which included also the three Workmen covered by Reference No. 1.
The three workmen covered by Reference No. 1 made an application to the Labour Court for deleting their names from Reference No. 11 on the ground that their grievance is the subject of adjudication in Case No. 93 of 1960.
Though the appellant opposed this application, the Labour Court by its order dated February 21, 1961, accepted the prayer of the three workmen and as such they ceased to have anything to do further in Reference No. 11.
Adjudication Case No. 98 of 1960, arising out of Reference No. 11, also resulted in an award being passed by the Labour Court on February 27, 1961.
In this award, the Labour Court had decided the dispute on merits.
But it has specifically stated that it is not record ' any finding with 'regard to the ing 69 three workmen covered by Reference No. 1, as their names have been excluded from Adjudication Case No. 98 of 1960, arising out of Reference No. 11.
This award dated February 27, 1961, was published in the State Gazette on April 4, 196f.
We have earlier mentioned that the award dated February 26, 1961, in Adjudication Case No. 93 of 1960, arising out of Reference No. 1, was published in the State Gazette on May 6, 1961.
After the award was made on February 26, 1961, the State Government issued a Notification on February 28, 1961, withdrawing the Notification dated October 25, 1960, making Reference No. 1.
The order of withdrawal runs as follows "GOVERNMENT OF UTTAR PRADESH LABOUR (A) DEPARTMENT No. 167(LG)/XVIII LA 97(GR)/1959 Dated Kanpur, February 28, 1961 ORDER Whereas an industrial dispute between the employers and the workmen of the concern known as Shree Sitaram Sugar Co. Ltd., Baitalpur, Distt.
Deoria relating to retirement of the workmen, was referred for adjudication to the Labour Court at Gorakhpur in G.O. No. ' 785(LC)/XVIILLA 97 (GR)/1959, dated October 25, 1960.
And whereas the same dispute is also covered by G.O. No. 822 (LC)/XVIII LA 115(GR)/1959, dated October 31, 1960, as amended by G.O. No. 912(LC)/XVIII LA115(GR)/1959, dated November 21, 1960, referring the same question of retirement of workmen to Labour Court at Gorakhpur; Now, therefore, in exercise of the powers conferred by sub section (1) of section 6 G of the U.P. (U.P. Act No. XXVIII of 1947), the Governor is pleased to order that G.O. No. 785(LC)/ XVIII LA 97(GR)/1959, dated October 25 1960, referring the said dispute for adjudication, shall be and is hereby withdrawn." Sd/ J. Prasad Under Secretary.
" It will be noted from the above Notification that the State Government had withdrawn its previous order referring the dispute by Virtue of powers stated to be conferred under subsection (1) of section 6 G of the Act.
We have also referred to the fact that the award in Reference No. 1 was published in the State Gazette on May 6, 1961.
It will be noted that the material dates to be considered with regard to Reference No.1 are as follows : (a) The dispute was referred for adjudication by Notification dated October 25, 1960.
(b) The award was made on February 26, 1961.
70 (c) The Notification dated October25, 1960, referring the dispute was withdrawn by Notification dated February 28, 1961.
(d) The award was published in the State Gazette dated May 6, 1961.
It will be noted from these dates that the order withdrawing the original reference was made two days after the Tribunal had passed the award.
The publication of the award was after the State Government had withdrawn its original order making the reference.
The appellant filed the Writ Petition in the High Court under Article 226 for the issue of writ of certiorari quashing the award dated February 26, 1961 and also for a mandaus directing the State Government to withdraw its Notification dated May 6, 1961, publishing the award.
The proceedings before the High Court related to the matters arising out of Reference No. 1.
According to the appellant, the, award dated February 28, 1961, had become ineffectual and useless in view of the State Government having withdrawn the Notification dated October 25, 1960, referring the dispute for adjudication.
Its further contention was that having withdrawn on February 28, 1961, its previous order referring the dispute, the State Government had no power to publish the award, as it had done on May 6, 1961 and that the said order publishing the award had to be revoked.
The union contested the Writ Petition on the ground that the State Government has no power under section 6 G to withdraw an order already passed referring a dispute for adjudication and that, in any event, it has no such power after an award has been made by a Labour Court or Tribunal.
According to the union, the order of withdrawal dated February 28, 1961, is of no effect and that the publication of the award on May 6, 1961, was valid and that the State Government cannot be called upon to revoke the same.
The learned single Judge posed two questions for consideration (1) whether the power to withdraw under section 6 G of the Act is confined to withdrawal for purposes of transferring the proceedings to another Court or Tribunal; and (2) whether the power under section 6 G can be exercised at any stage until the award of the Labour Court or Tribunal has become enforceable under section 6 A of the Act.
The learned single Judge did not consider the first question and proceeded on the assumption that under section 6 G the State Government has power to Withdraw a reference already made.
But, after considering the second question, he came to the conclusion that the power of Withdrawal cannot be exercised after in award had been made by the Tribunal concerned.
In this view, the learned single Judge held that the order of withdrawal dated February 28, 1961, was of no effect and that tie publication of the award on May 6, 1961, was according to law.
In this view, the Court declined to grant any relief to the appellant.
71 The appellant challenged the decision of the learned single Judge in Special Appeal No. 960 of 1964.
The Division Bench of the Allahabad High Court has held that the State Government has power under section 6 G to withdraw any proceedings pending before a. Labour Court or Tribunal.
But it held that as the award had been made on February 26, 1961, there were no proceedings pending before the Labour Court on February 28, 1961, when the order of withdrawal was passed by the State Government.
In this view the Division Bench held that it was not open to the State Government to withdraw the proceedings after the award had been made by the Tribunal and, therefore, the Notification dated February 28, 1961, is of no effect.
By judgment and order dated August 2, 1966, the learned Judges confirmed the order of the single Judge and dismissed the Special Appeal.
The management has come to this Court in this appeal.
Mr. G. B. Pai, learned counsel for the appellant, placed considerable stress on the language of section 6 G of the Act and pointed out that in addition to the power of transferring a proceeding from one Labour Court or Tribunal to another, the said section, has conferred an absolute right on the State Government to withdraw an order already passed referring a dispute for adjudication.
There is only an obligation on the State Government to make the order in writing and also give reasons for the action taken by it.
The counsel very heavily relied on section 6 D of the Act and urged that this power of withdrawing a reference can be exercised till the date when the award becomes enforceable.
Therefore, the mere fact that an award has been made does not take away the power of the State Government to, withdraw a reference.
In the case before us, the counsel pointed out that the award had been made only on February 26, 1961 and the reference had been withdrawn by the State Government on February 25, 1961, long before the award had become enforceable.
The counsel urged that, in view of the circumstances pointed out above, the view of the High Court that the State Government has no power to withdraw the reference, as the award has been made, is erroneous.
Mr. Daniel Latifi, learned counsel for the workmen concerned, on_ the other hand, urged that the view of the High Court that there is a power under section 6 G in the State Government to withdraw a reference is erroneous.
The counsel pointed out that section 6 G confers on the State Government only a power to transfer a proceeding from one Labour Court or Tribunal to another.
The counsel also pointed out that section 6 D has no bearing in the construction of section 6 G of the Act.
When there is no power in the State Government to Withdraw a reference, the counsel pointed out, the question at what stage the proceedings can be withdrawn is purely academic.
Even assuming that there is a power under section 6 G an the State Government to withdraw an order of reference already made, that section, the counsel pointed out, does not give power to order such withdrawal after an award has been passed.
According to him once an award has been made by a Labour Court or Tribun proceedings before it come to a close and there is nothing for being withdrawn by the State Government.
The counsel supported the reasoning of the High Court that section 6 G does not confer any Power on the State Government to 72 withdraw an order of reference after an award had been made by the Labour Court or Tribunal concerned. ' In our opinion, the first and foremost question that should have been considered by the High Court is whither section 6 G confers a power on the State Government to withdraw an order earlier passed referring a dispute for adjudication.
It is only when this point is answered in the affirmative the, further question is upto what stage can the power of withdrawal be exercised by the State.
The, State of Uttar Pradesh was a party before the learned single Judge as well as the High Court and is 2nd respondent in the appeal before us.
We have already referred to the fact that the relief that was asked for by the appellant was by way of writ of mandamus directing the State Government to withdraw the publication, made in the Gazette of May 6, 1961, of the award by its order dated April 4, 1961.
This relief was asked for by the appellant on the ground that the order dated February 28, 1961, of the State, Government withdrawing the reference was well within its power.
In the Writ Petition the powers and functions of the State Government under the Act came squarely for consideration.
Under those circumstances one would have expected the State Government to appear before this Court and place its point of view regarding the points under consideration.
Unfortunately, the State Government has chosen to remain exparte in this appeal.
Hence we have to decide the points in controversy only on the basis of the contentions advanced on behalf of the employer and the workmen.
It is now necessary to refer to certain relevant provisions of the Act.
According to the preamble, the Act has been enacted to provide for powers to prevent strikes and lock outs and for the settlement of industrial disputes and other incidental matters.
Section 2(c) states : " ' Award ' means an interim or final determination of any industrial dispute or of any question relating thereto by, any Labour Court or Tribunal and includes an arbitration award made under Section 5 B." The above definition takes in both interim and final awards. 'Section 4 K gives power to the State Government to refer for adjudication an industrial dispute to the Labour Court or an Industrial Tribunal under the circumstances mentioned therein.
Section 5 gives power to the State Government to include other undertakings in any adjudication.
Section 6 dealing with the proceedings before a Tribunal, Submission of the award and its publication runs as follows : "6.
Awards and action to be taken thereon (1)Where an industrial dispute, has been referred to a Labour Court or Tribunal for adjudication, it shall hold its proceedings expeditiously 'and shall as soon as it is practicable on the conclusion thereof.
submit its award to the State Government.
(2)The award of a Court or Tribunal shall be in writing and shall be signed by its Presiding Officer.
73 (3)Subject to the provisions of sub section (4) every arbitration award and the award of a Labour Court or Tribunal, shall within a period of thirty days from the date of its receipt by the State Government, be published in such manner as the State Government thinks fit.
(4)The State Government may before publication of an award of a Labour Court or Tribunal under sub section (3), remit the award for reconsideration of the adjudicating authority , and that authority shall, after reconsideration submit its award to the State Government, and the State Government shall publish the award in the manner provided in sub section (3).
(5)Subject to the provisions of section 6 A, an award published under sub section (3) shall be final and shall not be called in question in any court in any manner whatso ever.
(6)A Labour Court, Tribunal or Arbitrator any "either of its own motion or on the application of any party to the dispute, correct any clerical or arithmetical mistake in the award, or errors arising therein from I any accidental.
slip or omission; whenever any correction is made as aforesaid, a copy of the order shall be sent to the State Government and the provision of this Act, relating to the publication of an award shall mutatis mutandis apply thereto.
" The above section clearly indicates that when once an industrial dispute has been referred for adjudication, the Labour Court or Tribunal has to conduct its proceedings expeditiously and it has to submit its award to the State Government.
The award has to be published within thirty days of its receipt by the State Government.
Power has no doubt been given to the State Government, before publication of an award, to remit the same for reconsideration.
When the same is received after reconsideration, the State Government is bound to publish the same, as provided under sub section (3).
An award published under sub section (3) is final subject to the provisions of section 6 A.
The Labour Court or Tribunal has power to correct any clerical or arithmetical mistake in the award.
But if any such correction is made, a copy of the order making the correction will have to be sent to the State Government.
The provisions relating to Publication of an award apply to the order making a correction in the award.
Section 6 A deals with the commencement of the award.
The general rule, as provided under sub section (1) is that an award becomes enforceable on the expiry of thirty days from the date of its publication under section 6.
Sub ,section (3) provides for a slightly different period depending upon the circumstances mentioned, therein.
Sections 6 D and 6 G are as follows "6 D. Commencement and conclusion of proceedings, Proceedings before a Labour Court or Tribunal shall be deemed to have commenced on the date of reference of a 74 dispute, to adjudication, and such proceedings shall be deemed to have concluded on the date on which the award becomes enforceable under section 6 A." "6 G. Power to transfer certain proceedings (1)The State Government may, by order in writing and for reasons to be stated therein, withdraw any proceeding under this Act, pending before a Labour Court or Tribunal or transfer a proceeding from one Labour Court or Tribunal to another Labour Court or Tribunal, as the case may be, for the disposal of the proceeding and the Labour Court or Tribunal to which the proceeding is so transferred may, subject to any special directions in the order of transfer, proceed either de novo or from the stage at which it was so transferred; Provided that where a proceeding under section 6 E or section 6 F is pending before a Tribunal, the proceeding may also be transferred to a Labour Court.
(2) Without prejudice to the provisions of sub section (1) any Tribunal, if so authorized by the State Government, may transfer any proceeding under section 6 E or section 6 F pending before it to any one of the Labour Courts specified for the disposal of such proceedings by the State Government by notification in the Official Gazette and the Labour Court to which the proceeding is so transferred shall dispose of the same." Sections 6 D and 6 G substantially correspond to sub section (3) of section 20 and section 33 B respectively of the (Central Act XIV of 1947).
It must be stated that a superficial reading of sub section (1) of section 6 G in isolation will give the impression that the State Government has got two distinct and separate powers, namely (a) to withdraw any proceedings under the Act pending before a Labour Court or Tribunal,; or (b) to transfer the proceedings from one Labour Court or Tribunal to another Labour Court or Tribunal for disposal of the same.
It is on the basis of such a reading of the section that Mr. Pai, the learned counsel, urged that there is an absolute power in the State Government to withdraw an order already passed referring a dispute for adjudication.
This power ' according to the learned counsel, is distinct and separate front the power given under the same section to the State Government to transfer a proceeding from one Labour Court or Tribunal to another.
If we do not accept the contention of Mr. Pai that section 6 G confers two such distinct and separate powers, section 6 D will not assist the appellant.
It is only if we hold that the Government has a power to withdraw simpliciter, the further question regarding the stage upto which the power could be exercised.
will arise for consideration.
75 We have already pointed out that section 6 casts a duty on the Tribunal, when a dispute has been referred to it, to deal with it expeditiously and to submit its award to the State Government.
The State Government has also an obligation to publish the award within thirty days of its receipt.
No doubt sub section (4) of section 6 gives power to the State Government, before publishing the award, to remit the same for reconsideration.
But still a duty is cast upon the State Government to publish the award as reconsidered by the Tribunal within thirty days of its receipt.
Section 6 A also gives certain powers toy the State Government regarding the award, which normally becomes enforceable under sub section (1) on the expiry of thirty days from the date of its publication.
Section 6 G, in our opinion, deals only with the power of the State Government to transfer a proceeding from one Labour Court or Tribunal to another and for purposes of such transfer to withdraw the proceedings from the Labour Court or Tribunal from whom it is being transferred.
We are free to admit that the wording of sub section (1) is capable of being construed as conferring on the State Government a power to withdraw any proceedings or to transfer a proceeding from one Labour Court or Tribunal to another.
But having regard to the scheme of section 6 G, read in the light of the other provisions referred to earlier, the section will have to be interpreted as giving to the ,State Government only a power to transfer a proceeding from one Labour Court to another.
When section 6 makes it obligatory that an award has to be made by the Tribunal concerned, and that it has to, be published by the State Government within thirty days of its receipt and declare that the award on publication becomes final, it is idle to expect that the legislature intended to nullify the entire proceedings.
by conferring an absolute power of withdrawal on the State Government under section 6 G.
The proper way of reading section 6 G is to limit the power of withdrawal, referred to therein, only for the purpose of transferring the proceedings from one Labour Court or Tribunal to another.
That the expression 'or ' in section 6 G(1) interposed between 'withdraw any proceedings '.
. or 'transfer a proceeding ' will have tar be understood as 'and '.
So read, the power conferred under section 6 G on the State Government is that of withdrawing any proceedings from one Labour Court or Tribunal and transferring the same to another.
Mr. Pai drew our attention to section 33 B of the Central Act and emphasised that the said section is words differently from section 6 G of the Act.
According to him, the wording of section 33 B clearly shows that the withdrawal of any proceedings is only for transferring the same to another Labour Court or Tribunal.
On the other hand, the counsel pointed out that a different phraseology has been used in section 6 G indicating the conferment of two distinct powers.
We have already referred to this aspect and expressed the view that a superficial reading of section 6 G will support the contention of Mr. Pai.
If the expression 'or ', as mentioned earlier, is read as 'and ', the section does not present any difficulty.
That having due regard to the scheme of the statute and the purpose sought to be served the expression 'or ' can be read under certain circumstances as 'and ' as has been laid down 76 by this Court in Mazagaon Dock Ltd. vs The Commissioner of Income Tax and Excess Profits Tax.(1) Adopting the same principle and having due regard to the object of section 6 G, which essentially is only to confer in the State Government a power to transfer a proceeding from one Labour Court or Tribunal to another, the expression 'or ' has to be read in section 6 G as 'and ', If so read, sub section (1) of section 6 G confers on the State Government only a power to withdraw a proceeding from one Labour Court or Tribunal and transfer the same to another.
It is needless to state that transfer of a proceeding can only be when it is pending before A Labour Court or Tribunal.
Section 6 D, in our opinion, has no relevancy in construing section 6 G. Section 6 D is enacted for a totally different purpose.
For instance section 6 E provides for conditions of service etc.
to remain unchanged in certain circumstances during the pendency of proceedings.
Similarly under section 6 F a question may arise whether an employer has contr avened the provisions of section 6 E during the pendency of proceeding before a Labour Court or Tribunal.
It may be quite essential to consider whether any proceedings were pending before a Labour Court or Tribunal.
For the purpose of considering the question whether ,any proceedings were pending, the Act has created a fiction under section 6 D by indicating the starting point of a proceeding before a Labour Court as well as its conclusion.
The starting point of the proceedings has been fixed from the date of the reference and its termination has been fixed as the date on which the award becomes enforceable under section 6 A.
During this period broadly it has to be considered that proceedings are pending before a Labour Court or Tribunal.
We need not refer to the other provisions of the Act where the duration of the pendency of proceedings may assume importance.
Section 6 D can be invoked only in those cases.
But it does not come into the picture, as mentioned earlier, in construing section 6 G. Mr. Pai referred us to the decision of this Court in The Sirsilk Ltd., and Others vs Government of Andhra Pradesh & Another(2), where the provisions of section 17 and 18 of the Central Act were read in harmony and the State Government was directed not to publish the award though its publication was mandatory.
We are not faced with ,such a situation in the case before us.
We have already referred to the fact that in Adjudication Case No. 98 of 1960, arising out of Reference No. 11, respondents 4 to 6 herein had requested the Labour Court to exclude them from the said adjudication on the ground that they are already covered by Adjudication Case No. 93 of 1960, arising out of Reference No. 1.
The Labour Court passed an order on February 21, 1961, excluding the said three workmen from Adjudication Case 'No. 98 of 1960.
That means the said three workmen had no further interest in the said Adjudication Case.
If that is so, the award passed on February 26, 1961, in the case arising out of Reference No. 1 was perfectly correct and the publication of the said award on May 6, 1961, was also in pursuance of the mandatory provisions of the Act. 'There is no question of any conflict between the two awards.
Hence the appellant cannot seek any assistance from the decision of this (1) (2) 77 Court in The Sirsilk Ltd., and Others vs Government of Andhra Pradesh& Another(1) and it cannot ask for a writ of mandamus directing the State Government to cancel the publication of the award.
We are in agreement with the view of the High Court that the appellant is not entitled to any relief, though for different reasons.
The appeal fails and is dismissed with costs.
G.C Appeal dismissed.

Output:
The appellant company retired three of its workmen and the industrial dispute thus arising was referred to the Labour Court, Gorakhpur, for adjudication The reference was registered by the Labour Court as Adjudication Case No. 93 of 1960.
The parties filed their written statement and proceedings went on resulting in the Labour Court passing an order dated February 26, 1961 holding that the retirement of the three workmen was neither legal nor justified.
There were similar disputes regarding the retirement of several other workmen and the dispute relating to them was referred to the same Labour Court and this reference was registered as Adjudication Case No. 98 of 1960.
The three workmen whose cases were the subject matter of the first reference were also included in the second reference.
They applied to the Labour Court to have their names deleted from the second reference, and they were accordingly deleted.
The Labour Court gave its award in the second reference on February 27, 1961.
In this award the Labour Court specifically stated that it was not recording any finding with regard to the three workmen covered by the first reference.
On a representation made by the appellant the State Government issued a notification on February 28. 1961 withdrawing the first reference relating to the three aforesaid workmen.
This was purported to be done under sub section (1) of section 6 G of the U.P.
Even so the State Government published the award in the first reference on May 6, 1961.
The appellant filed a writ petition in the High Court under article 226 of the Constitution for the issue of a writ of certiorari quashing the award dated February 26, 1961 and also for a mandamus directing the State Government to withdraw its Notification dated May 6. 1961.
The single Judge as well as the Division Bench decided against the appellant.
In appeal before this Court, HELD : (i) The wording of sub section (1) of section 6 G is capable of being construed as conferring on the State Government a power to withdraw any proceedings or to transfer a proceeding from one Labour Court or Tribunal to another.
But having regard to the scheme of section 6 G read in the light of the other provisions of the Act the section will have to be interpreted as giving to the State Government only a power to transfer a proceeding from one Labour Court to another.
When section 6 makes it obligatory that an award has to be made by the tribunal concerned and that It has to be published by the State Government within 30 days of its receipt and declares that the award on is idle to expect that the legislature intended to by conferring an absolute power of withdrawal on Government State section 6 G.
The proper way of reading section 6 G is to limit the power of withdrawal referred to therein only for the purpose of transferring proceedings from one Labour Court or Tribunal to another.
[75D] The provisions of section 33B and section 6 D of the Act did not support a contrary conclusion.
Sirsilk Ltd. and Others vs Government of Andhra Pradesh & Another ; , distinguished.
(ii) The expression 'or ' in section 6 G (1) interposed between 'withdraw any proceedings ' or 'transfer a proceeding ' will have to be understood as 'and '.
[75H] Mazagaon Dock Ltd. vs The Commissioner of income tax and Excess Profits Tax; , relied on.