judgement:
vil Appeal Nos. 150 and 160 of 1964.
Appeals by special leave from the award dated September 20, 1962, of the Industrial Tribunal, Ernakulam in Industrial Dispute Nos. 11 and 10 of 1962 respectively.
761 G.B. Pai, J.B. Dadachanji, O.C. Mathur and Ravinder Narain, for the appellant.
M.R.K. Pillai, for the respondents.
The Judgment of the Court was delivered by Gajendragadkar, C.J.
The short question of law which these two appeals raise for our decision relates to the construction of sections 3 and 11 of the Kerala Industrial Establishments (National and Festival Holidays) Act, 1958 (No. 47 of 1958) (hereinafter called the Act.
That question arises in this way.
Two complaints were filed against the appellant, the Tam Oil Mills Company Ltd., by the two groups of respondents, its workmen, respectively under section 33A of the .
These applications alleged that the management of the appellant had contravened the provisions of section 33 of the said Act inasmuch as it had denied its employees leave with wages on Founder 's Day and Good Friday in 1962.
According to the respondents, they were entitled to have holidays with pay on the said two days under the terms and cOnditions of service, and so, they claimed that the Tribunal should direct the appellant to give its employees holidays under the said existing arrangement and should pass other appropriate order 's for the payment of wages for the two holidays in question.
The appellant disputed the correctness of the respondents ' contention.
The Tribunal has rejected the appellant 's plea and has declared that the respondents are entitled to the privilege 'of paid holidays on Founder 's Day and Good Friday in 1962.
It has also ordered that the appellant should pay the wages to the respondents for those two days and the proportionate salary of the staff members as soon as the award comes into force.
It is against these orders passed by the Tribunal on the two complaints preferred before it by the respective respondents that the appellant has come to this Court by special leave; and on its behalf, Mr. Pai has contended that in making the award ', the Tribunal has misconstrued the effect of sections 3 and 11 of the Act.
Standing Order 30 of the Standing Orders of the appellant company makes provision for leave of all categories.
S.O. 30 (vi) provides for holidays.
It lays down that the factory will be closed on the following days which will be considered as Company Holidays with pay, and will not be counted against the casual or privilege leave of an employee: 1.
New Year Day (1st January).
Founder 's 'Day (Saturday nearest to 3rd March) 3.
Good 3 Friday 4.
Onam 5.
Christmas Day (25th December) There is a note appended to this:proVision which makes it clear that in the event 'of the Company being compelled to observe a holiday or holidays for reasons of State such day or days shall not be counted as against 'the privilege or casual leave of the employees but shall 762 be treated as a Company holiday or holidays.
Thus, it is clear that under the relevant Standing Order, the respondents are entitled to 5 paid holidays every year.
After the Standing Orders were framed and certified, there was an agreement between the appellant and the respondents ' Union as a result of which the appellant agreed to grant a further holiday, and ' this agreement raised the number of total paid holidays in a year to 6.
The additional holiday which the appellant thus agreed to give to the respondents was to be given on the day when the respondents ' Union would celebrate its Union Day.
Apparently, this holiday was analogous to the Founder 's Day, the idea underlying the agreement being that just as the appellant gave a paid holiday on the Founder 's Day, the respondents should be given a paid holiday on the Union Day.
It appears that even after this agreement was reached, the respondents began to claim additional holidays; but the appellant was not prepared to make any addition to the list of holidays.
It was prepared to leave the choice of the agreed holidays to the employees provided they submitted to the Company an agreed list of such holidays.
In 1958, the Act was passed and it came into force on the 29th December, 1958.
Section 3 of the Act provides "Grant of National and Festival Holidays Every employee shall be allowed in each calendar year a holiday of one whole day on the 26th January, the 15th August and the 1st May and four other holidays each of one whole day for such festivals as the Inspector may, in consultation with the employer and the employees specify in respect of any industrial establishment".
The result of this provision was that every employer to whom the Act applied had to declare holidays on the 26th January, the 15th August and the 1st May and had to give four other holidays according to the decision of the Inspector, the requirement of the section being that the Inspector had to consult the employer and the employees before fixing such other holidays.
In other words, section 3 statutorily fixed the number of paid holidays at 7; fixed three out of them and left the decision of the remaining four to the Inspector who had to consult the employer and the employees.
In pursuance of this provision, the Inspector declared certain holidays for the year 1959.
Not satisfied with the decision of the Inspector, one of the appellant 's employees Mr. Baskara Menon filed a writ petition in the Kerala High Court under article 226 of the Constitution challenging the validity of the Inspector 's decision.
In that writ petition, the question about the construction of section 3 of the 763 Act was agitated.
In the result, the High Court held that the complaint made by the petitioner against the validity of the decision of the Inspector was not well founded, and so, the writ petition was dismissed.
In 1962, the appellant followed the same procedure and got a decision as to the festival holidays from the Inspector and declared that the said holidays would be observed as paid holidays in the year.
At this time, certain industrial disputes were pending between the appellant and its employees belonging both to monthly and daily rated categories before the Industrial Tribunal at Ernakulam.
The respondents felt that the declaration of the holidays made by the appellant for the year 1962 amounted to a contravention of section 33 of the , and so, they filed the two present complaints before the Industrial Tribunal under 33A of the said Act.
That, in brief, is the genesis of the present complaints.
We have already noticed the provisions of section 3 of the Act.
The contention raised by the respondents before the Tribunal was that the statutory provision as to 7 paid holidays prescribes the minimum number of holidays which the employer has to give to his employees.
This provision, according to the respondents, does not over ride or abrogate the existing arrangement as to paid holidays.
In regard to paid holidays which are common to section 3 and the present arrangement they would, of course, have to be treated as paid holidays, but the four other festival holidays which the Inspector decides from year to year would be in addition to the holidays which the appellant is bound to give to the respondents under the existing arrangement, and since the appellant has limited the number of paid holidays to 7 for the year 1962, it has acted contrary to the terms of employment evidenced by the existing arrangement as to paid holidays and that constitutes the violation of section 33 of the .
This contention has been upheld by the Tribunal; and Mr. Pai argues that the view taken by the Tribunal is plainly inconsistent with the true scope and effect of section 3 read with section 11 of the Act.
That takes us to section 11 of the Act, because this section has to be read along with section 3 in determining the validity of the conclusion recorded by the Tribunal on the main point of dispute between the parties.
section 11 reads thus: "Rights and privileges under other laws, etc., not affected Nothing contained in this Act shall adversely affect any rights or privileges which any employee is entitled to with respect to national and.
festival holidays on the. date on which this Act comes into force under any other law, contract, custom or usage, if such rights or privileges are more favourable to him than those to which he would be entitled under this Act".
D)5 SCI 10 764 This section gives an option to the employees, they can choose to have the paid ' holidays either as prescribed by section 3 or as are available to them under any other law, contract, custom or usage exercising this choice, it must, however, be borne in mind by the employees that the 26th January, the 15th August and the 1st May have to be taken as three holidays.
That is the direction of section 3.
In regard to the remaining 4.
the Inspector decides which days should be paid holidays.
In other words, the.
statutory requirement is 7 paid holidays.
If under the existing arrangement the employees are entitled to 'have more ,,than7 paid holidays, that right will not be defeated by section 3, because section 11 expressly provides that if the rights or privileges in respect of paid holidays enjoyed by the employees are more favourable than are prescribed by section 3, their existing rights and privileges as to the total number of holidays will not be prejudiced by section 3.
The scheme of section 11 thus clearly shows that section 3 is not intended to prescribe a minimum number of paid holidays in addition to the existing ones, so that the respondents should be entitled to claim the seven holidays prescribed by section 3 plus the six holidays to which they are entitled under the existing arrangement.
If in addition to the three holidays which are compulsory under section 3, the employees are getting, say 3 ' other paid holidays, then section 3 would step in and would require the employer to give his employees one more paid holiday, so as to make the number of paid holidays 7.
In our opinion, if sections 3 and 11 are read together, there can be no doubt that the respondents ' claim that they should have 7 holidays as prescribed by section 3 plus 6 holidays as are available to them under the present arrangement is cleary untenable.
In the present case, the respondents were having six paid holidayS. The statute has fixed the minimum number at 7 paid holidays, and so, since the existing arrangement was less favourable to the employees, the statutory provision will come to their help and they will be entitled to claim 7 paid holidays in a year, and that means that section 3 will be operative.
If that be so, the procedure followed by the employer in consulting the Inspector and in fixing the list of 4 paid holidays for 1962 in addition to the three holidays fixed by the statute is perfectly consistent with the provisions of section 3 of the Act.
The Tribunal was, therefore, in error in holding that the appellant had contravened section 33 of the .
In the result, the appeals must be allowed, the orders passed by the Tribunal in the two respective complaints set aside, and the two complaints dismissed.
There would be no order as to costs.
Appeals allowed.

summary:
Under the Standing Orders of the appellant company, its employees were entitled to five holidays with pay on specified dates during each year.
Furthermore, by an agreement with the respondents ' union, the company had agreed to grant an additional day 's holiday with pay, thus raising the total number of paid annual holidays to six.
In 1958 the Kerala Industrial Establishments (National and Festival Holidays) Act, 1958, was passed and section 3 of the Act required every employer to declare holidays on every 26th January, 15th August and 1st May, and to grant four additional festival holidays each year, on dates to be fixed by the Inspector after consulting the employer and the employees.
The number of paid holidays was thus statutorily fixed at 7.
In 1962, the company obtained the Inspector 's decision on the four festival holidays and declared the dates on which such holidays would be given.
At that time, while an industrial dispute between the company and its employees was pending.
the respondents filed applications under section 33A of the , before the Tribunal.
It was contended in these applications that the statutory provision in section 3 for 7 paid holidays did not override or abrogate the existing arrangement as to paid holidays and that the holidays to be given under section 3 would be in addition, to the holidays which the appellant was bound to give the respondents under existing arrangements; and that the appellant 's attempt to limit the nUmber of paid holidays to 7 during 1962 was contrary to the terms of employment evidenced by the existing arrangement and therefore violative of section 33.
This contention was upheld by the Tribunal.
In appeal to this Court, HELD: Under section 3 the statutory requirement is 7 paid holidays each year.
If under an existing arrangement the employees were entitled to more than 7 paid holidays, such more favourable right was protected by section 11.
The scheme of section 11 clearly shows that section 3 is not intended to prescribe a minimum number of paid holidays in addition to the existing ones and, in the present case, would operate only to raise the total number of holidays from 6 under the existing arrangements to 7 paid holidays in accordance with section 3.
[764 B E]


judgement:
Appeal No. 531 of 1964.
Appeal from the judgment and order dated September 24, 1963 of the Madhya Pradesh High Court in Misc.
Petition No. 130 of 1962.
G. section Pathok, Rameshwar Nath, section N. Andley, P. L. Vohra, for the appellant.
M. Adhikari, Advocate Gencral for the State of Madhya Pradesh and 1.
N. Shroff, for the respondents.
G.S. Pathak, B. Dutta, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for interveners Nos. 1 and 2.
V. M. Lmaye and section section Shukla, for intervener No. 3.
G. section Pathak, B. Dutta, section N. Vakil, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for intervener No. 4.
C. B. Agarwala and O. P. Rana, for intervener No. 5.
The Judgment of the Court was delivered by Gajendragadker, C.J.
The principal question of law which arises in this appeal is in regard to the validity of the Central Act 526 the (No. 38 of 1961) (hereinafter called 'the Act ').
It arises in this way.
The appellant, Jaora Sugar Mills (Pvt.) Ltd., is a Private Limited liability Company incorporated under the Indian Companies Act.
Its registered office is it Jaora within the premises of the Sugar Mills owned by it.
The appellant manufactures sugar and carries on the business, inter alia, of the production and sale of the said commodity since 1955 when it was incorporated.
The sugarcane season for the manufacture of sugar generally covers the period December to March, and the sugarcane crushing season usually begins on the 1st of October and ends on the 30th June.
Respondent No. 1, the State of Madhya Pradesh, enacted the Madhya Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 195 8 (No. 1 of 1959) (hereinafter called 'the Madhya Pradesh Act ').
Section 23 of the said Act made a sugarcane cess payable as prescribed by it.
Rules 60 to 63 of the Madhya Pradesh Sugarcane (Regulation of Supply & Purchase) Rules, 1959, made under the said Act, provide for the method of collection of cess.
Section 21 of the said Act prescribes for the payment of commission to the Cane Development Council which was proposed to be constituted under section 5.
Rules 45 to 47 prescribe the quantum of commission payable to the said Council and refer to the manner in which the said payment has to be made.
The validity of section 23 of the Madhya Pradesh Act was challenged before the Madhya Pradesh High Court under Article 226 of the Constitution in The Bhopal Sugar Industries vs State of Madhya Pradesh (Misc.Petition No. 27 of 1961).
Before the writ petition challenging the validity of the said Act came to be heard before the said High Court, a similar provision in the U.P. Sugarcane Cess Act, 1956 (U.P. Act XXII of 1956) had already been struck down by this Court as unconstitutional in Diamond Sugar Mills Ltd. & Anr.vs The State of Uttar Pradesh and Anr.(1).
The common feature of the charging sections in both the Madhya Pradesh and the U.P. Acts was that they authorised the respective State Governments to impose a cess on the entry of cane into the premises of a factory for use consumption or sale therein.
It was urged before this Court in the case of Diamond Sugar Mills Ltd.(1) that the premises of a factory was not a 'local area ' within the meaning of Entry 52 in List II of the Seventh Schedule to the Constitution, and so the Act passed by the U.P. Legislature was beyond its competence.
This argument was upheld.
"We are of opinion", observed Das Gupta J., who spoke for the majority of the Court, "that the (1) ; at p. 256.527 proper meaning to be attached to the words "local area" in Entry 52 of the Constitution (when the area is a part of the State imposing the law) is an area administered by a local body like a municipality, a district board, a local board, a union board, a Panchayat or the like.
The premises of a factory is, therefore, not a "local area".
Following this decision the Madhya Pradesh High Court struck down section 23 of the impugned Madhya Pradesh Act in the Bhopal Sugar Industries, and allowed the writ petition to that extent.
This decision was pronounced on August 31, 1961.
The validity of section 21 of the Madhya Pradesh Act prescribing the payment of commission to the Cane Development Council, was also challenged before the Madhya Pradesh High Court by the Bhopal Sugar Industries Ltd. by another writ petition (Misc.Petition No. 340 of 1961).
The said High Court held that the: commission directed to be paid by the impugned section was a "fee" and the delegation to the State Government to implement the said provision by prescribing Rules thereunder amounted to valid delegation and as such, the impugned section was not open to any effective challenge.
In the result, section 21 was upheld.
This decision was pronounced on January 30, 1962.
It appears that as a result of the decision of this Court in the case of Diamond Sugar Mills(1), the U.P. was passed by the Central Legislature on March 21, 1961 (No. IV of 1961), and it received the assent of the President the same day.
It may be mentioned that the decision of this Court in the case of Diamond Sugar Mills(2) was pronounced on December 13, 1960, and Parliament thought that it was necessary to validate the imposition and collection of cesses made under the said Act and so, the U.P. was passed.
Parliament, however, realized that there were several other State Acts which suffered from the same infirmity, and so, on September 11, 1961, the Act with which we are concerned in the present proceedings, was passed.
It has also received the assent of the President the same day.
This Act purports to validate the imposition and collection of ceases on sugarcane under ten different Acts passed by the Legislatures of seven different States.
Section 3 of the Act is the main validating section.
Section 5 purported to amend the, specified provisions in the U.P.
The said section was brought into force at once, and the remaining provisions of the Act were to (1) ; 528 come into force in the respective States as from the dates which may be specified in that behalf by a notification issued by the Central Government and published in the Official Gazette.
The relevant date, so far as the respondent State is concerned, is December 26, 1961.
On March 17, 1962, respondent No. 2, the Collector of District Ratlam, issued a notice to the appellant demanding payment of sugarcane cess at the rate prescribed by the respondent State under the relevant Rules.
The said notice also demanded payment of cane commission for the years 1959 60 and 1960 61, as prescribed by the relevant Rules.
The appellant challenged the validity of these demands and addressed respondent No. 2 in that behalf.
It alleged that both the demands were invalid, because the Act under the authority of which they purported to have been made, was itself ultra vires and unconstitutional.
In respect of the demand for cane commission for the year 1959 60, the appellant fired an additional (,round that the Cane Development Council itself had come into existence on August 26, 1960, and so, it was not permissible for respondent No. 2 to make a demand for commission in respect of the year 1959 60.
It was also alleged that the demand for cane commission at the flat rate of 3 nP, per maund was not related to the services proposed to be rendered by the said Council and as such, was invalid.
These pleas were resisted by the respondents.
It was urged on their behalf that the impugned Act was valid, and that the demands made by respondent No. 2 for the recovery of the cess and the commission were fully justified.
On these the Madhya Pradesh High Court considered the, two broad issues which arose before it.
It has held that the provisions of the impugned Act are constitutionally valid, and that the demand for cess made by respondent No. 2 could not be effectively challenged.
In regard to the demand for cane commission, the High Court was not impressed by the plea made by the appellant, particularly in relation to the sugarcane season of 1959 60 and it hold that even though the Council may not have come into existence, a demand could be made with a view to provide for the constitution of the said Council and thus enable it to afford service and assistance to the mills like the appellant.
That is why the High Court rejected the, appellant 's contentions in that behalf and dismissed its writ petition.
This judgment was pronounced on September 24, 1963.
The appellant then applied for and obtained a certificate from the High Court and it is with the said certificate that it has come 529 to this Court by appeal.
That is how the principal question which arises for our decision is whether the High Court was right in holding that the Act is constitutionally valid.
A subsidiary question also falls to be decided and that has relation to the demand for commission for the year 1959 60.
The Constitutional position with regard to the legislative competence of the State Legislatures on the one hand, and the Central Legislature on the other in respect of the cess in question is not in doubt.
We have already referred to the decision of this Court in Diamond Sugar Mills(1), and in view of the said decision, it is obvious that the cess in question was outside the legislative competence of the States.
This very conclusion leads to the irresistible inference that Parliament would have legislative competence to deal with the subject matter in question having regard to article 248 read with Entry 97 in List I of the Seventh Schedule to the Constitution.
Article 245(1) provides, inter alia, that subject to the provisions of this Constitution, Parliament may make laws for the whole or any part of the territory of India; and the relevant Entry relates to any other matter not enumerated in List 11 or List III including any tax not mentioned in either of those Lists.
Article 248 provides : "(1) Parliament has exclusive power to make any law with respect to any matter not enumerated in the Concurrent List or State List.
(2) Such power shall include the power of making any law imposing a tax not mentioned in either of those Lists."
It is not disputed that if Parliament intended to make a law in regard to the levy of a cess such as has been prescribed by section 3 of the Act, its legislative competence is not open to doubt.
Mr. Pathak for the appellant, however, contends that what the Act purports to do, and in fact and in substance has done, is to validate the invalid State Statutes: the Act, in other words, does not represent provisions enacted by Parliament as such, but it represents an attempt made by Parliament to validate laws which are invalid on the ground that the State Legislatures which enacted the said laws, had no legislative competence to do so.
That is the main ground on which the validity of the Act has been challenged before us.
This ground has, no doubt, been placed before us in two or three different forms.
(1) ; 530 Before dealing with these contentions, it is necessary to refer to the provisions of the Act.
The Act purports to have been passed to validate the imposition and collection of cesses on sugarcane under certain State Acts and to amend the U.P. Sugarcane cess (Validation) Act, 1961.
Section 5 which has achieved this latter purpose has already been mentioned.
With the said section we are not concerned in the present appeal.
Section 1(2) provides for the date from which the provisions of the Act shall come into force in different States; and as we have already noticed, the relevant dates for the respective States would be the dates which would be the notification issued by the Central Government and published in the Official Gazette.
Section 2 is a definition section; section 2(a) defines "cess" as meaning the cess payable under any State Act and includes any sum recoverable under any such Act by way of interest or penalty.
Section 2(b) defines a "State Act" as meaning any of the ten Acts specified by it which were in force in the seven respective States from time to time, by way of amendment or adaptation.
Then the ten State Acts are enumerated under this sub section.
Section 3 is the validating section, and it is necessary to read it.
Its heading is validation of imposition and collection of cesses under State Acts.
It reads thus : "3.(1) Notwithstanding any judgment, decree or order of any Court, all cesses imposed, assessed or collected or purporting to have been imposed, assessed or collected under any State Act before the commencement of this Act shall be deemed to have been validly imposed, assessed or collected in accordance with law, as if the provisions of the State Acts and of all notifications, orders and rules issued or made thereunder, in so far as such provisions relate to the imposition, assessment and collection of such cess had been included in and formed part of this section and this section had been in force at all material times when such cess was imposed, assessed or collected; and accordingly, (a)no suit or other proceeding shall be maintained or continued in any Court for the refund of any cess paid under any State Act; (b) no Court shall enforce a decree or order directing the refund of any cess paid under any State Act; and (c) any cess imposed or assessed under any State Act before the commencement of this Act but not collected before such commencement may be recovered (after) 531 assessment of the cess, where necessary) in the manner provided under that Act.
(2) For the removal of doubts it is hereby declared that nothing in sub section (1 ) shall be construed as preventing any person (a) from questioning in accordance with the provisions of any State Act and rules made thereunder the assessment of any cess for any period; or (b) from claiming refund of any cess paid by him in excess of the amount due from him under any State Act and the rules made thereunder."
Section 4 provides that nothing in this Act shall be construed as validating section 1 1 of the Bombay Sugarcane Cess Act, 1948 (Bombay Act No. 82 of 1948) and accordingly the said section shall be omitted.
Section 5 refers to the amendment of U.P.
That, in brief, is the position with regard to the provisions of the Act.
Mr. Pathak contends that what the Act has done is to attempt to cure the legislative incompetence of the State Legislatures by validating Acts which were invalid on the ground of absence of legislative competence in the respective State Legislatures.
His case is that if an Act is invalid not because the Legislature enacting the impugned Act has no legislative competence, but because some of its provisions contravene the fundamental rights of citizens unjustifiably, it is possible to validate the said Act by removing the invalid provisions from its scope.
Similarly, if an Act passed by the State Legislature is substantially valid, but is invalid in regard to a portion which trespasses in a field not within the legislative competence of the State Legislature, it would be possible to validate the Act by removing the invalid portion from its scope.
In fact if the invalid provision is severable from the rest of the Act, courts dealing with the question of its validity may strike down the invalid portion alone and uphold the validity of the remaining part of the Statute.
But where an impugned Act passed by a State Legislature is invalid on the ground that the State Legislature did not have legislative competence to deal with the topic covered by it, then even Parliament cannot validate such an Act, because the effect of such attempted validation, in substance, would be to confer legislative competence on the State Legislature in regard to a field or topic which, by the relevant provisions of the Schedules in the Constitution, is outside its jurisdiction.
This position is not and cannot be disputed.
If it is shown that the impugned 532 Act purports to do nothing more than validate the invalid State Statutes, then of course, such a validating Act would be outside the legislative competence of Parliament itself.
Where a topic is not included within the relevant List dealing with the legislative competence of the State Legislatures, Parliament, by making a law, cannot attempt to confer such legislative competence on the State Legislatures.
The difficulty in accepting Mr. Pathak 's argument, however, arises from the fact that the assumption on which the whole argument is founded, is not justified on a fair and reasonable construction of section 3.Section 3 does not purport to validate the invalid State Statutes.
What Parliament has done by enacting the said section is notto validate the invalid State Statutes, but to make a law concerningthe cess covered by the said Statutes and to provide that the said law shall come into operation retrospectively.
There is a radical difference between the two positions.
Where the Legislature wants to validate an earner Act which has been declared to be invalid for one reason or another, it proceeds to remove the infirmity from the said Act and validates its provisions which are free from any infirmity.
That is not what Parliament has done in enacting the present Act.
Parliament knew that the relevant State Acts were invalid, because the State Legislatures did not possess legislative competence to enact them.
Parliament also knew that it was fully competent to make an Act in respect of the subject matter covered by the said invalid State Statutes.
Parliament, however, decided that rather than make elaborate and long provisions in respect of the recovery of cess, it would be more convenient to make a compendious provision such as is contained in section 3.
The plain meaning of section 3 is that the material and relevant provisions of the State Acts as well as the provisions of notifications, orders and rules issued or made thereunder are included in section 3 and shall be deemed to have been included at all material times in it.
In other words, what section 3 provides is that by its order and force, the respective cesses will be deemed to have been recovered, because the provisions in relation to the recovery of the said cesses have been incorporated in the Act itself.
The command under which the cesses would be deemed to have been recovered would, therefore, be the command of Parliament, because all the relevant sections, notifications, orders, and rules have been adopted by the Parliamentary Statute itself.
We are, therefore, satisfied that the sole basis on which Mr. Pathak 's argument rests is invalid, because the said basis is inconsistent with the plain and clear meaning of section 3.
As we have already indicated, Mr. Pathak does not dispute and rightly that it is competent to Parliament 533 to make a law in respect of the cesses in question, to apply the provisions of such a law to the different States, and to make them retrospective in operation.
His whole contention is based on what he records to be the true scope and effect of section 3.
If the construction which he places on section 3 is rejected, the argument about the invalidity of the Act must likewise be rejected.
The same contention has been placed before us by Mr. Pathak in another form.
He suggests that the Act in question is a colourable piece of legislation.
His case is that when Parliament realised that as a result of the invalidity of different State Statutes the respective States were faced with the problem of refunding very large amounts to the persons from whom the cesses were recovered, it has passed the present Act not for the purpose of levying a cess of its own, but for the purpose of enabling the respective States to retain the amounts which they have illegally collected.
This aspect of the matter, says Mr. Pathak makes the Act a colourable piece of legislation.
We are not impressed by this argument.
The challenge to the validity of a Statute on the ground that it is a colourable piece of legislation is often made under a disconnection as to what colourable legislation really means.
As observed by Mukherjea J., in K. C. Gajapati Narayan Deo and Others vs The State of Orissa(1) "the idea conveyed by the expression 'colourable legislation is that although apparently a Legislature in passing a statute purported to act within the limits of its powers, yet in substance and in reality it transgressed these powers, the transgression being veiled by what appears, on proper examination, to be a mere presence or disguise." This observation Succinctly and effectively brings out the true character of the contention that any legislation is colourable legislation.
Where a challenge is made on this round, what has to be proved to the satisfaction of the Court is that though the Act ostensibly is within the legislative competence of the Legislature in question, in substance and in reality it covers a field which is outside its legislative competence.
It would be noticed that as soon as this aspect of the matter is borne in mind, the argument that the Act is a colourable piece of legislation takes us back again to the true scope and effect of the provisions of section 3.
If the true scope and effect of section 3 is as Mr. Pathak assumes it to be, then, of course, the Act would be void on the round that it is a colourable piece of legislation.
But if the true scope and effect of section 3 is as we have already held it to be, then in passing the Act, Parliament has (1) ; at p. II.534 exercised its undoubted legislative competence to provide for the recovery of the specified cesses and commissions in the respective State areas from the dates and in the manner indicated by it.
When demands were made for the recovery of the said cesses, they will be deemed to have been made not in pursuance of the State Acts but in pursuance of the provisions of the Act itself.
Therefore, we do not think there is any substance in the argument that the Act is invalid on the ground that it is a colourable piece of legislation.
Mr. Pathak has raised another contention against the validity of the Act.
He argues that the Act has not been passed for the purposes of the Union of India, and the recoveries of cesses which are retrospectively authorised by it are not likely to go in the Consolidated Fund of India.
He contends that the recoveries have already been made by the respective States and they have gone into their respective Consolidated Funds.
In support of this argument, Mr. Pathak has referred to the general scheme of the devolution of revenues between the Union and the States which is provided for by the relevant Articles contained in Part XII of the Constitution and he has relied more particularly on the provisions of Act.
Article 266, no doubt, provides for two different Consolidated Funds and Public Accounts, one in relation to India and the other in relation to the respective States.
it reads thus: "266.(1) Subject to the provisions of article 267 and to the provisions of this Chapter with respect to the assignment of the whole or part of the net proceeds of ,certain taxes and duties to States, all revenues received by the Government of India, all loans raised by that Government by the issue of treasury bills, loans or ways and means advances and all moneys received by that Government in repayment of loans shall form one consolidated fund to be entitled "the Consolidated Fund of India", and all revenues received by the Government of a State, all loans raised by that Government by the issue of treasury bills, loans or ways and means advances and all moneys received by that government in repayment of loans shall form one consolidated fund to be entitled "the Consolidated Fund of the State".
(2)All other public moneys received by or on behalf of the Government of India or the Government ,of a State shall be credited to the public account of 535 India or the public account of the State, as the case may be.
(3)No moneys out of the Consolidated Fund of India or the Consolidated Fund of a State shall be appropriated except in accordance with law and for the purposes and in the manner provided in this Constitution".
It will be noticed that the contention raised by Mr. Pathak on the basis of article 266 makes an assumption and that is that the cesses already recovered by the different States will not be transferred to the Consolidated Fund of India, but will remain with the respective States; and that such a position would invalidate the law itself.
We are not prepared to accept this argument as well.
What happens to the cesses already recovered by the respective States under their invalid laws after the enactment of the impugned Act, is a matter with which we are not concerned in the present proceedings.
It is doubtful whether a plea can be raised by a citizen in support of his case that the Central Act is invalid because the moneys raised by it are not dealt with in accordance with the provisions of Part XII generally or particularly the provisions of article 266.
We will, however, assume that such a plea can be raised by a citizen for the purpose of this appeal.
Even so it is difficult to understand how the Act can be said to be invalid because the cesses recovered under it are not dealt with in the manner provided by the Constitution.
The validity of the Act must be judged in the light of the legislative competence of the Legislature which passes the Act and may have to be examined in certain cases by reference to the question as to whether fundamental rights of citizens have been improperly contravened, or other considerations which may be relevant in that behalf.
Normally it would be inappropriate and indeed illegitimate to hold an enquiry into the manner in which the funds raised by an Act would be dealt with when the Court is considering the question about the validity of the Act itself.
As we have just indicated, if the taxes of cesses recovered under an Act are not dealt with in the manner prescribed by the Constitution, what remedy a citizen may have and how it can be enforced, are questions on which we express no opinion in this appeal.
All we are consider ing at this stage is whether even on the assumption made by Mr. Pathak, it would be permissible for him to contend that the Act which is otherwise valid, is rendered invalid because the funds in question will not go into the Consolidated Fund of India.
L7Sup.165 6 536 In truth, this argument again proceeds on the basis that Parliament has passed the Act not for the purpose of treating the recoveries made as those under its provisions retrospectively enacted, but for the purpose of validating the said recoveries as made under the invalid State Acts; and we have already pointed out that section 3 completely negatives such an assumption.
Therefore, we do not think that Mr. Pathak is right in contending that the provisions of the Act are invalid in any manner.
It would thus be seen that though Mr. Pathak presented his argument in three different forms, in substance his grievance is very simple.
He says that section 3 of the Act does not purport to act prospectively; it acts merely retrospectively and its effect is just to validate collections illegally made in pursuance of invalid statutory provisions enacted by State Legislatures.
the crucial question is: if collections are made under statutory provisions which are invalid because they deal with a topic outside the legislative competence of the State Legislatures, can Parliament, in exercise of its undoubted legislative competence, pass a law retrospectively validating the said collections by covering their character from collections made under the State Statutes to that of the collections made under its own Statute operating retros pectively ? In our opinion, the answer to this question has to be in the affirmative, because to hold otherwise would be to cut down the width and amplitude of the legislative competence conferred on Parliament by article 248 read with Entry 97 in List I of the Seventh Schedule.
Whether or not retrospective operation of such a law is reasonable, may fall to be considered in certain cases; but that consideration has not been raised before us and in the circumstances of this case, it cannot validly be raised either.
We must, therefore, hold that the High Court was right in rejecting the appellant 's case that the Act was invalid, and hence no demands could be made under its provisions either for a cess or for commission.
There is, however, one subsidiary question which still remains to be considered and that has relation to the demand for cess commission for the year 1959 60.
The appellant 's case is that this demand is invalid.
The material facts in relation to this point are not in dispute.
We have already noticed that the sugarcane crushing season is usually between 1st October and the 30th June, and that the Cane Development Council was constituted for the first time on August 26, 1960.
In other words, the Council was not in existence throughout the period covered by the demand in question which relates to the year 1959 60.
Section 21 of the 537 Madhya Pradesh Act provides for the payment of commission on purchase of cane; and Rules 45 to 47 prescribe the manner in which the said payment has to be made.
It is true that the functions of the Cane Development Council as prescribed by section 6 of the said Act show that the Council is expected to render service to the mills like the appellant; and so, it can be safely assumed that the commission in question which was authorised to be recovered under section 21 of the Madhya Pradesh Act initially, and which will now be taken to have been recovered under section 3 of the Act is a "fee".
Mr. Pathak contends that it is plainly illegal to recover such a fee for a period during which the council did not exist at all and could have rendered no service whatever.
It is well settled that the imposition of a fee is generally supported on the basis of quid pro quo, and so, it is urged that the impugned recovery for the year 1959 60 is plainly without any quid pro quo and as such, cannot be enforced.
The High Court did not accept this argument, because it held that the doctrine of quid pro quo did not require that actual service must be rendered first before a fee can be levied or demanded.
In support of this view, the High Court has relied upon certain observations made by this Court in H. H. Sudhindra Thirtha Swamiar vs Commissioner for Hindu Religious and Charitable Endowments, Mysore(1), While rejecting the contention which was raised before this Court in that case that the levy prescribed by section 76(1) of the Madras Religious Endowments Act, 1951 (No. XIX of 1951) was invalid, Shah, J., who spoke for the Court observed: "A levy in the nature of a fee does not cease to be of that character merely because there is an element of compulsion or coerciveness present in it, nor is it a postulate of a fee that it must have direct relation to the actual services rendered by the authority to individual who obtains the benefit of the service.
If with a view to provide a specific service, levy is imposed by law and expenses for maintaining the service are met out of the amounts collected, there being a reasonable relation between the levy and the expenses incurred for rendering the service, the levy would be in the nature of a fee and not in the nature of a tax".
The High Court thought that these observations justified the view that a fee could be validly recovered from the appellant by way of commission to be paid to the Cane Development Council, even though the Council may not have come into existence during the whole of the period in question.
In our opinion, the High Court has ignored the context in which the Said observations were made has misjudged their effect.
It is not necessary for us decide (1) [1963] Supp. 2 S.C.R. 323.538 whether the service must be rendered for the whole of the period covered by the fee, or whether it is necessary that the service must be rendered first and the fee can be recovered thereafter.
These fine and academic questions are not relevant in the present case, because it is not even suggested that during the whole of the period any service whatever was rendered by the Council at all.
In this connection, it is necessary to bear in mind the fact that section 23(1) of the Madhya Pradesh Act required, inter alia, that the commission had to be paid to the Council at the rate and in the proportion prescribed by it.
Other statutory provisions including the Rules further provided that the failure to pay the said commission on the occasion of the purchase, would entail the liability to pay interest and the, said commission along with the interest was made recoverable as arrears of land revenue.
Having regard to these provisions, it seems to us very difficult to accept the view that the commission which had to be paid to the Council fell to be paid even though the Council was not in existence at all throughout the sugar crushing season in question.
On the special facts of this case, therefore, we are satisfied that no amount could be validly claimed by way of commission for the year 1959 60.
The notice of demand (Annexure D) which has been issued in that behalf shows that the cane commission 3 NP per maund which has been demanded from the appellant by respondent No. 2 for the years 1959 60 and 1960 61, amounts to Rs. 1,26,152/86 nP.
It is common ground that out of this amount, Rs. 54,037.57P represents the commission for the year 1959 60.
We must accordingly hold that the demand made by respondent No. 2 for the payment of cess commission for the year 1959 60 amounting to Rs. 54,037.57P is invalid and the notice to that extent must be cancelled.
In the result, the appeal substantially fails and the order passed by the High Court is confirmed, subject to the modification in regard to the demand for the payment of cane commission for the year 1959 60.
There would be no order as to costs.
Appeal dismissed and Order modified.

dataset_name: IN-Abs

summary:
Under the Madhya Pradesh Sugarcane (Regulation of Supply and Purchase) Act 1958 (1 of 1959) a cess was levied on sugarcane and for this purpose a sugarcane factory was treated as a 'local area '.In the Diamond ' Sugar Mills case it was held by this Court that such a levy was not valid.
Following this decision the Madhya Pradesh High Court struck down section 23, which was the charging section of the aforesaid Madhya Pradesh.
Act No. 1 of 1959.
There were Acts in several other States which suffered from the same infirmity and to meet the situation Parliament passed the (38 of 1961).
The Act made valid, by section 3, all the assessments and collections made before its commencement under the various State Arts and laid down that all the provisions.
of the State Acts as well as the relevant notifications, rules etc.
made under the State Acts would be treated as part of section 3; further.
the said section was to be deemed to have existed at all material times when the cess was imposed, assessed and collected under the State Acts.
The, appellant, a sugar factory, was asked to pay the cess for the years 1959 60 and 1960 61.
It however, challenged the levy in a writ petition before the High Court.
The High Court having dismissed the petition, the.
appellant came to this Court with certificate.
The contentions urged on behalf of the appellant were : (1) What the validation of the Act had done was to attempt to cure the legislative incompetence of the State Legislatures by validating State Acts which were invalid on the ground of absence of legislative competence in the respective State Legislatures; (2) Parliament had passed the Act in question not for the purpose of levying a cess of its own, but for the purpose of enabling the respective states to retain the amounts which they had illegally collected.
The Act was therefore a colourable piece of legislation; (3) The Act had not been passed for the purposes of the Union of India and the recoveries of cesses which were retrospectively authorised by it were not likely to go into the Consolidated Fund of India; (4) The sugarcane crushing season was between October 1, and June 30th. 'Me Cane Development Council which was constituted on August 26, 1960 was not in existence throughout the period covered by the demand for the year 1950 60. 'Me demand was a 'fee ' and it was illegal to recover such a wee for a period during which the council did not exist at all and could have rendered no service whatever.
HELD:(i) In view of the decision of this Court in Diamond Sugar Mills it was obvious that the cess in question was outside the legislative competence of the States.
This very conclusion led to the irresistible inference that Parliament would have legislative competence to deal with the subject matter in question, having regard to article 248 read with Entry 524 97 in List I of the Seventh Schedule to the Constitution.
Thus the legislative competence of Parliament to levy a cess such as was imposed by section 3 of the (Central Act 38 of 1961) was not in doubt.
Diamond Sugar Mills Ltd. & Anr.
vs Slate of Uttar Pradesh & Anr. , referred to.
(ii)When an Act passed by a State Legislature is invalid on the ground that the State Legislature did not have legislative competence to deal with the topics covered by it, then even Parliament cannot validate such an Act, because the effect of such attempted validation, in substance, would be to confer legislative competence on the State legislature in regard to a field or topic which, by the relevant provisions of the schedules to the Constitution, is outside its jurisdiction.
Where a topic is not included within the relevant List dealing with the legislative competence of the Slate Legislatures, Parliament, by making a law cannot attempt to confer such legislative competence on the State Legislatures.
[531 G] But section 3 of the impugned Act does not purport to validate the invalid State Statutes.
What Parliament has done by enacting the said section is not to validate the invalid State statutes, but to make a law concerning the cess covered by the said Statutes and to provide that he said law shall come into operation retrospectively.
Parliament knew that the relevant State Acts were invalid because the State Legislatures were not competent to enact them.
Parliament also knew that it was fully competent to make an Act in respect of the subject matter covered by the said invalid State Statutes.
Parliament however decided that rather than make elaborate and long provisions in respect of the recovery of cess, it would be more convenient to make a compendious provision such as is contained in section 3.
The plain meaning of section 3 is that the material and relevant provisions of the State Act as well as the provisions of notifications, orders and rules issued or made thereunder are included in section 3 and shall be deemed to have been included at all material times in it.
In other words what section 3 provides is that by its order and force the respective cesses will be deemed to have been recovered, because the provisions in relation to the recovery of the said cesses have been incorporated in the Act itself.
The command under which the cesses would be deemed to have been recovered would, therefore, be the command of Parliament.
[532 C H] (iii)Where a challenge to the validity of a legal enactment is made on the ground that it is a colourable piece of legislation, what has to be proved to the satisfaction of the court is that though the Act ostensibly is within the legislative competence of the legislature in question, in substance and in reality it covers field which is outside its legislative competence.
In passing section 3 however Parliament exercised its undoubted legislative competence to provide for the recovery of the specific(] cesses and commissions in the respective State areas from the date and in the manner indicated by it.
The Act could not therefore be attacked on the ground of being a colourable piece of legislation.
[533 F H] K.C.
Gajatpati Narayan Dea & Ors.
vs State of Orissa, [1954] S.C.R.1 relied on.
(iv)The validity of an Act must be judged in the light of the legislative competence of the legislature which passes the Act and may have to be examined in certain cases by reference to the question as to Whether fundamental right of citizens have been improperly contravened, or to other considerations which may be relevant in that behalf.
But normally it would be inappropriate, indeed illegitimate, to hold an enquiry into the manner in which the funds raised by an Act would be dealt with when 525 the court is considering the question about the validity of the Act itself.
Therefore it was impermissible to contend that the Act was invalid because the funds in question would not go into the Consolidated Fund of India.
[535 E H] (v)If collections are made under statutory provisions which are invalid because they deal with a topic outside the legislative competence of the State Legislature, Parliament can in exercise of its undoubted legislative competence, pass a law retrospectively validating the said collections by converting their character from collections made tinder the State Statutes to that of collections made under its own statute operating retrospectively.
To hold otherwise would be to cut down the width and amplitude of the legislative competence conferred on Parliament by article 248 read with Entry 97 in List I of the Seventh Schedule.
[536 C E] (vi)The functions of the Cane Development Council as prescribed by section 6 of the Madhya Pradesh Act show that the Council is expected to render service to the mills like the appellant and so it can be safely assumed that the commission which was authorised to be recovered under section 21 of the Madha Pradesh Act is a 'fee '.
The imposition of a fee is generally supported on the basis of quid pro quo.
The Council was however constituted for the first time on August 26, 1960.
In other words the Council was not in existence throughout the periods covered by the demand relating to the year 1959 60.
It did not render any service at all during the said period.
On the special facts of the case no amount could therefore be validly claimed by way of commission for the year 1959 60.
[537 A B; 538 C D] H. H. Sudhindra Thirtha Swamiar vs Commissioner of Hindu Religious and Chtartible Endowments, Mysore, [1963] Supp.
2 S.C.R., referred to.


judgement:
ivil Appeal No. 149 of 1965.
Appeal by special leave from the judgment and order dated May 10, 1963 of the Punjab High Court (Circuit Bench) in S.A.O. No. 40 D of 1963.
C.B. Agarwala, B.R.L. lyengar, P.N. Chaddha, S.K. Mehta and K.L. Mehta, for the appellant.
S.T. Desai and Gopal Singh for Harbans Singh, for respon dents Nos. 1 & 2.
Gurcharan Singh and Gopal Singh for Harbans Singh, for respondents Nos.
3 to 5. 831 Sarkar and Bachawat, JJ.
delivered separate but concurring judgments.
Mudholkar, J. delivered a dissenting Opinion.
Sarkar, J.
The respondents are the owners of certain premises in Connaught Circus in New Delhi, which were let out to Allen Berry & Co. (Calcutta) Ltd. Sometime in 1959 Allen Berry & Co. transferred the lease to the appellant and put the latter in possession.
Alleging that the transfer had been made without their consent, the respondents made an application under el.
(b) of the proviso to sub section
(1) of section 14 of the Delhi Rent Control Act, 1958 to the Controller appointed under it against Allen Berry & Co. and the appellant for an order for recovery of possession of the premises from them.
While the application was pending, Allen Berry & Co. went into liquidation and was in due course dissolved and its name was, thereupon, struck off from the records of the proceedings.
The Controller later heard the application and made an order in favour of the respondents for recovery of possession of the premises from the appellant alone.
An appeal by the appellant to the Rent Control Tribunal under the Act against this order was dismissed.
The appellant then moved the High Court of Punjab for setting aside the order of the Tribunal, but there also it was unsuccessful.
It has now come to this Court in further appeal.
It was contended that the order for recovery of possession made against the appellant after Allen Berry & Co. had ceased to be a party to the proceedings, was incompetent.
This contention was based on an interpretation of the terms of sub section
(1) of section 14, the material part of which is set out below: section 14 (1) Notwithstanding anything to the contrary contained in any other law or contract, no order or decree for the recovery of possession of any premises shall be made by any court or Controller in favour of the landlord against a tenant: Provided that the Controller may, on an application made to him in the prescribed manner, make an order for the recovery of possession of the premises on one or more of the following grounds only, namely: (a) . . (b) that the tenant has, on or after the 9th day of June, 1952, sub let, assigned or otherwise parted with the possession of the whole or any part of the premises without obtaining the consent in writing of the landlord; The contention of the appellant was put in this way: The first part of sub section
(1) of section 14 puts a complete ban on recovery of possession from all tenants.
The proviso to it is only an excepting clause and it lifts that ban in the circumstances mentioned in it.
It follows that the proviso.
though it does not expressly mention 832 tenants, permits orders for recovery of possession against them alone.
The tenant in cl.
(b) of the proviso means only the tenant sought to be evicted under the proviso, such tenant having also to be by the express terms of the clause, a tenant who has assigned his tenancy.
This follows from the use of the article "the" before the word "tenant" there.
Therefore the only person against whom an order for recovery of possession can be made under cl.
(b) of the proviso to sub section
(1) of section 14 is the tenant who has assigned his tenancy.
No such order can, hence, be made against the person to whom the tenancy has been assigned.
As the appellant was such a person, no order for eviction could be made against it.
I wish to observe at once that if this contention is correct which 1 do not think it is then the order could never be made against the appellant and the fact that Allen Berry & Co. ceased to be a party to the proceedings made no difference in this regard.
The argument of the appellant is really based on the article "the" prefixed to the word "tenant" in cl.
(b) of the proviso.
It is paid that the article clearly indicates that the only person against whom an order for ejectment can be made under cl.
(b) is the tenant who assigns or sub lets or parts with possession of the tenancy without the landlord 's consent.
I am unable to accept this argument.
The proviso expressly states that an order for ejectment can be made "on one or more of the following grounds" and then sets the grounds out in the different clauses that follow, one of which is cl.
(b) with which we are concerned.
The clauses, therefore, set out the circumstances in which the operative part of the proviso is set in motion, that is, the circumstances in which an order for recovery of possession may be made.
If this is so, as I think it is, the clauses could not have been intended to indicate the person against whom an order for recovery of possession could be made.
This purpose was entirely different.
1 am not suggesting that an order for recovery of possession against the assigning tenant cannot be made.
All that I say is that the clauses do not intend to indicate the persons against whom an order for recovery of possession can be made and so it cannot be argued that the order cannot be made against any other person.
Now the article "the" appears to me to have been used to show that the tenant assigning must be the tenant of the landlord seeking eviction.
So read, the effect of the proviso in cl.
(b) is that a landlord can recover possession if his tenant has assigned.
sub let or transferred possession without his consent.
This would be the natural reading of the provision and would carry out the intention of the Act.
If this is not the correct reading of the provision, the situation would be anomalous.
As the word "tenant" includes by virtue of its definition in section 2(1), a sub tenant.
it would at least be arguable that el.
(b) authorised a superior landlord to recover possession when the sub tenant assigned without his consent.
That could not possibly have been intended for 833 the intermediate tenant would then have lost his tenancy for no fault of his.
Therefore, 1 think the article "the" was used only to emphasize that the tenant assigning must be the tenant of the landlord seeking eviction.
The article "the" does not, in my opinion, lead inevitably to the conclusion that the only person against whom an order for recovery of possession can be made on the ground mentioned in el.
(b) is the tenant assigning or sub letting or parting with possession of his tenancy without the landlord 's consent.
I think there are good reasons why it must be held that the Act contemplated orders for recovery of possession also against persons other than a tenant who has assigned or sub let without the landlord 's consent.
The offending tenant must of course go for, as I have said, he is the immediate tenant of the landlord desiring to recover possession and if he remains he would be entitled to possession and the landlord cannot recover possession.
But this does not mean that the order may not also direct the removal from possession of others along with the immediate tenant when there is one.
The reason for this view I will presently state.
If I am right in what I have said, it will follow that in a case like the present where the tenant becomes extinct without leaving any successor on whom the tenancy devolves, an order can be made against a person who took an assignment of the lease from the tenant before it became extinct.
It is trite saying that the object of interpreting a statute is to ascertain the intention of the legislature enacting it.
When I enquire about the intention behind this statute, 1 find that far from lending any support to the appellant 's contention it tends quite the other way.
First, I observe that the object of the first part of sub section
(1) of section 14 is to ban all recovery of possession of tenanted premises by a landlord and that of the proviso is to lift that ban in specified cases.
The object of the proviso is then to enable the landlord to recover possession in any of the specified cases.
Assume that the present is a case where the landlord became entitled to recover possession under cl.
(b) of the proviso; clearly then the statute intended the landlord to recover possession.
It would be our duty to give effect to that intention unless the language used made it plainly impossible.
I have earlier said that the language used does not compel the view that the only person against whom an order for recovery of possession can be made is the tenant assigning or sub letting without the landlord 's consent.
That being so, orders against all "persons in occupation" must have been contemplated so that the landlord might without further trouble recover possession.
Further find it impossible to hold that the language used indicates an intention that when a right has accrued to a landlord to recover possession, that right would be taken away from him when the tenant assigning has become extinct without leaving a successor, an event which is only accidental and certainly rare.
A court would be fully justified in holding that in such a case it was 834 intended that an order for recovery of possession can be made against the assignee alone for that would enable the object of the statute which was to enable the landlord to recover possession, to be achieved.
An interpretation which defeats the object of a statute is, of course, not permissible.
Then, looking at section 18 of the Act I find that it clearly contemplates an order for recovery of possession under section 14 against a sub tenant.
It says, "Where an order for eviction in respect of any premises is made under section 14 against a tenant but not against a sub tenant referred to in section 17", then in the circumstances mentioned, the sub tenant shall be deemed to become a direct tenant under the landlord.
This section plainly implies that an order for recovery of possession against a sub tenant is contemplated by cl.
(b) of the proviso to sub section
(1) of section 14.
The appellant 's argument to the contrary cannot be sustained against the clear implication of the Act.
If section 14 contemplates an eviction order against a sub tenant, it must equally contemplate such an order against assignees of tenants, for the section makes no distinction between sub tenants and assignees for the purpose of making such orders.
I am not unmindful of the fact that where an order for recovery of possession of any premises is made under section 14 against a tenant assigning or sub letting without the landlord 's consent, that order would under section 25 of the Act be binding on all persons in occupation of the premises except those who leave independent title to them.
This section does not however say that an order for recovery of possession against an assignee of a lessee cannot be made.
It would not, therefore, support an argument that an order for recovery of possession could be made under section 14 against an assignee or a sub tenant.
On the other hand, it seems to me that to an application under cl.
(b) of the proviso to sub section
(1) of section 14 an assignee or sub tenant, as the case may be, should be a proper party.
Under this provision an ejectment order can be made only when the assignment or sub letting was without the consent of the landlord.
If it was with such consent, the assignee or the sub tenant would be protected by the Act.
An assignee or a sub tenant is, therefore, interested in showing that there was the requisite consent.
They should hence be entitled to be made parties to the proceedings.
Otherwise, if under section 25 an eviction order obtained against the direct tenant is binding on them, they would be liable to be condemned without a hearing.
It is no argument against this view that the direct tenant would protect them, for they cannot be made to depend on him for the protection of their rights.
The direct tenant may be negligent or incompetent in his defence; he may even collude with the landlord or he may just not bother.
If the assignee or the sub tenant is thus entitled to be heard to oppose the order for eviction, that would be another reason for saying that an order eviction could be made against them also; if they could oppose the 835 making of the order, it would be unnatural to say that the order could not be made against them.
In what 1 have said in this paragraph, I do not wish to be understood as holding that in view of ' section 25 an order for eviction against a tenant is in fact binding on his assignee or sub tenant.
Such a decision is not necessary for this case.
I wish, however, to point out that if section 25 does not make the ejectment order so binding, the appellant cannot resort to it for any assistance.
I have now dealt with the first argument in support of the appeal and I find it unacceptable.
The other argument was that the order for recovery of possession was unwarranted as in fact there had been a consent of the respondents to the assignment in favour of the appellant.
It is said that the consent was given by a clause in the lease under which Allen Berry & Co. held which reads as follows: "That whenever such an interpretation would be necessary in order to give the fullest scope and effect legally ' possible to any covenant or contract herein contained, the expression "The Lessor" hereinbefore used shall include his heirs, executors, administrators and assigns.
and the expression "THE LESSEE" hereinbefore used ' shall include their representatives and assigns.
" I am unable to accept this contention also.
I notice that the lease gave no express right to the lessee to assign with or without the consent of the lessor.
The lessee no doubt had that right under the Transfer of Property Act.
It may be that under the clause the lessee 's assignee would be included in the expression "lessee" as used in the lease; that is the entire effect of the clause.
But this would be so whether the lessor had consented to the assignment or not.
Therefore, this clause does not lead to the conclusion that the lessor had consented to the assignment.
It is of no assistance in the present case.
I am also ' inclined to the view that the consent contemplated by section 14(1): proviso (b) is a direct consent to a contemplated assignment to a particular assignee: see Regional Properties, Ltd. vs Frankenschwerth(1).
Clearly the clause in the case relied upon could not be a consent of this kind.
This point, therefore, also fails.
For these reasons I would dismiss the appeal with costs.
Mudholkar, J.
In this appeal by certificate granted by the Pun jab High Court an unusual question arises for consideration.
That question is whether an application made under section 14(1)(b) of the Delhi Rent Control Act, 1958 by a landlord of a building in Delhi against a tenant who happens to be a company incorporated under the Indian Companies Act, cannot be proceeded with and granted ' on the ground that before the making of any order thereon by the ' (1) 836 Rent Controller the Company is dissolved and is struck off the record of the case.
According to the appellant who claims to be an assignee from the original tenant, that is, the Company, such an application cannot be proceeded with and granted while according to the respondent landlord the fact that the company is dissolved makes no difference.
The facts which are not in dispute and which have been stated in the judgment of Bachawat J. need not be recapitulated because what I have already said is sufficient to enable me to deal with the point.
The relevant part of section 14(1) reads thus: "Notwithstanding anything to the contrary contained in any other law or contract no order or decree for the recovery of possession of any premises shall be made by any Court or Controller in favour of the landlord against a tenant: Provided that the Controller may, on an application made to him in the prescribed manner, make an order for the recovery of possession of the premises on one or more of the following grounds only, namely: (b) that the tenant has, on or after the 9th day of June, 1952, sublet, assigned or otherwise parted with the possession of the whole or any part of the premises without obtaining the consent in writing of the landlord; It is not necessary to refer to cl.
(a) or to the several clauses following el.
(b) in this sub section or to any of the sub sections of section 14.
Looking at sub section
(1) what we find is that it enacts a bar to the making of an order or decree for the recovery of possession of any premises by any court or the controller against a tenant.
In other words the jurisdiction of a civil court or even of the Rent Controller to make an order of eviction against the tenant is taken away.
The proviso, however, lifts the ban against eviction in certain circumstances one of which is that set out in el.
What is important to bear in mind is that sub section
(1) is intended to protect the possession of the tenant.
A proviso to a section or a sub section is subservient to the main provision.
It would, therefore, follow that the ban against the eviction is lifted only with respect to the possession of the tenant and not of any other person.
In so far as persons other than the tenant who may be in possession of the premises which pertain to the tenancy is concerned, the matter is dealt with by section 25 and we can leave that out at any rate for the present.
Another thing to be noticed about section 14 is that 837 though under section 2(1)(b) of the Act the word "tenant" includes several other persons in addition to the one with whom there was a contract that expression must be regarded as relating to the same individual in the entire section or at least in sub section
(1) of section 14 wherever it occurs.
Thus, if in the first part of sub section
(1) of section 14 "tenant" is regarded as meaning as "assignee" of the tenant then it would have to be given the same meaning in cl.
(b) of sub section
(1) of section 14.
That is to say that if there is a sub letting or a further assignment or any other kind of parting with possession by an assignee of the original tenant (the assignment by the original tenant having been accepted or acquiesed in by the landlord) such assignee can be evicted by the landlord if the action of the assignee of the kind mentioned was taken by him without his written consent.
Now, since sub section
(1) is a bar to the jurisdiction of the Rent Controller to make an order or decree for recovery of possession against a tenant it must necessarily follow that the tenant must be a party to a proceeding before him right up to the date of the making of the decree or order.
Thus, if the tenant dies during the pendency of the proceedings and his legal representative is not substituted on the record in his place, the proceeding will abate against him and the Rent Controller will have no jurisdiction to make an order in favour of the landlord.
That is to say, the proviso will not be available to the landlord no matter what the tenant had done if the records of the proceeding became defective because neither the tenant nor his legal representative was any longer a party to those proceedings.
The reason for this is that the ground upon which the landlord 's application is based can be availed of for lifting the ban on the eviction by the Rent Controller of the tenant alone.
Unless an order is obtained against the tenant there would be no occasion for pressing in aid the provisions of section 25 of the Act.
Where during the pendency of the proceedings before the Rent Controller the tenant dies or makes an assignment of whatever interest he may still have left in the demised premises no difficulty would arise because his legal representative or assignee could be brought on record in his place.
But, it must be admitted, that an anomalous position results where the tenant happening to be a company is dissolved during the pendency of the proceedings and can, therefore, be not represented by any person.
The Act does not contemplate this position nor even does the Code of Civil Procedure and so we have it that the defect in the record resulting from the dissolution of a company cannot be removed at all.
The result, however, of this is that the jurisdiction of the Controller to proceed with the application of the landlord and therefore to make eventually an order or decree entitling the landlord to recover possession from the tenant ceases to be exercisable.
Apparently this curious position arises because of a lacuna in the law.
Such a lacuna cannot be removed by the Courts without assuming the power to legislate which obviously is beyond the 839 competence of any court.
The duty of courts is merely to administer the law as they find it.
The only way for remedying the defect is for the legislature to step in and amend the law.
The result of what has happened in this case is that the right which the landlord possessed to evict the now defunct company from the premises through the intervention of the Rent Controller because the company had assigned the demised premises to an.
other without his consent can no longer be availed of by him.
The assignee, who is the appellant before us, can therefore continue to be in possession of the premises even though he may have been liable to be evicted with the aid of section 25 had the company not been dissolved in the meanwhile.
Whether the landlord has now a right under the general law to evict the appellant is not a matter upon which I would express an opinion because it does not strictly arise at this stage.
For these reasons I would allow the appeal, set aside the orders of the courts below and dismiss the application of the respondent landlord under section 14(1)(b) of the Act.
In the particular circumstances of the case I would direct that costs throughout shall be borne by the parties as incurred.
Bachawat, J. Originally one Amar Sarup owned the land and building at plot No. 5, Block 'M ', Connaught Circus, New Delhi.
By a lease dated March 1, 1956, Amar Sarup leased the property to Allen Berry & Co. (Calcutta) Ltd., (hereinafter referred to as the tenant) for a period of five years on a monthly rent of Rs. 297/ .
Sometime thereafter, Amar Sarup transferred the property to the respondents.
In or about May, 1959, the tenant assigned the tenancy rights.
and parted with possession of the whole of the premises to the appellant.
On October 6, 1959, the respondents filed an application before the Rent Controller, Delhi praying for eviction of the tenant and the appellant.
The tenant, a limited company, had gone into voluntary liquidation on September 26, 1959 and it was finally wound up and dissolved on October 29, 1960.
On its dissolution, the tenant ceased to exist, and by order of the Rent Controller, its name was struck off from the array of parties in the pending application.
By an order dated October 10, 1962, the Rent Controller passed an order of eviction against the appellant.
An appeal by the appellant to the Rent Control Tribunal, Delhi was dismissed on January 23, 1963, and a second appeal to the Punjab High Court was dismissed on May 10, 1963.
A Letters Patent Appeal from the order dated May 10, 1963 was dismissed on December 11, 1963 on the ground that the appeal was not maintainable, and an appeal to this Court from the last order was dismissed on January 18, 1965.
The appellant has now preferred this appeal from the order dated May 10, 1963 by special leave granted by this Court.
The respondents landlords instituted the proceeding for eviction of the tenant and its assignee relying on the provisions of section 14(1) of the Delhi Rent Control Act, 1958 (Act 59 of 1958), the relevant portion of which is as follows: "14(1).
Notwithstanding anything to the contrary contained in any other law or contract, no order or decree for the recovery of possession of any premises shall be made by any court or Controller in favour of the landlord against a tenant: Provided that the Controller may, on an application made to him in the prescribed manner, make an order for the recovery of possession of the premises on one or more of the following grounds, namely: (b) that the tenant has, on or after the 9th day of June, 1962 sub let, assigned or otherwise parted with the possession of the whole or any part of the premises without obtaining the consent in writing of the landlord;" The case of the landlords is that "the tenant has . assigned. the whole of the premises without obtaining the consent in writing of the landlord", and, therefore, the Controller had jurisdiction to make an order for possession.
The tenant is forbidden by section 16(3)(b) of the Act to make the assignment, for contravention of section 16(3)(b) he is punishable with fine under section 48(2), and the assignment is a ground for eviction under section 14(1), proviso, paragraph (b), and so, the landlords submit that the Controller had jurisdiction to make the order for possession against the tenant and its assignee, and on the dissolution of the tenant, against the assignee alone.
Counsel for the appellant contended that the Controller had no jurisdiction to make the order for possession in the absence of the original tenant.
I cannot accept this submission.
Both the tenant and the assignee were properly parties to the proceedings for possession, and if the tenant company had not been dissolved, the Controller would have been competent to make the order for possession.
The tenant has since been dissolved and ceased to exist, no one can be substituted in its place, and 1 do not see why the proceedings cannot now continue against the assignee alone.
Paragraph (b) of the proviso to section 14(1) evidently contemplates proceedings for possession against both the tenant and the assignee, who as a result of the assignment has been put in possession of the premises.
Counsel for the appellant made the alternative submission that paragraph (b) contemplates an assignment by the tenant against whom the order for eviction is made, and as the appellant was the assignee and not the assignor, there was no ground for its eviction under paragraph (b).
It is true that other paragraphs of the proviso contemplate the eviction of the tenant on the ground of some act on the part of the tenant against whom 840 the proceeding for possession is brought, but under paragraph (b), the assignment is a ground of eviction of both the assigning tenant and the assignee, and in the event of an assignment without the consent in writing of the landlord, the Controller has jurisdiction to make an order for possession not only against the assigning tenant but also against the assignee.
Counsel for the appellant next referred us to cl. 7 of the lease, which is in these terms: "That, whenever such an interpretation would be necessary in order to give the fullest scope and effect legally possible to any covenant or contract herein contained, the expression 'The Lessor ' hereinbefore used shall include his heirs, executors, administrators and assigns and the expression 'The Lessee ' hereinbefore used shall include their representatives and assigns.
" Counsel for the appellant submitted that by cl. 7 of the lease, the landlords have given their consent in writing to the assignment.
I cannot accept this submission.
The consent in writing within the meaning of paragraph (b) of the proviso to section 14(1) may be either general or special, but no such consent was given by cl. 7.
The effect of cl. 7 is that the assignee of the lease enjoys the benefits and is subject to the burden of the covenants in the lease, but the clause does not amount to a consent by the landlord to an assignment either expressly or by necessary implication.
The assignment to the appellant was without the consent in writing of the respondents.
The Controller rightly passed the order for possession of the premises.
Counsel for the appellant contended that the contractual term of the lease not having expired on October 6, 1959.
the proceeding before the Controller was not maintainable.
We indicated in the course of the argument that this contention not having been raised in the Courts below, we are not inclined to allow the appellant to raise it here for the first time.
In the result, the appeal is dismissed with costs.
ORDER In accordance with the opinion of the majority, the appeal is dismissed with costs.
The appellant will have a month 's time from today to vacate the premises.

summary:
The respondents were the owners of certain premises in New Delhi.
The lessee a company of these premises assigned the lease to the appellant.
Alleging that the transfer was done without their consent, the respondents filed an application against the lessee and the appellant under section 14(1) proviso (b) of the Delhi Rent Control Act, 1958, for recovery of possession.
Pending the proceedings, the lessee went into liquidation and its name was struck off from the record.
The Controller thereafter, passed an order in favour of the respondents.
Having moved unsuccessfully the Rent Control Tribunal and the High Court, the appellant, appealed to the Supreme Court contending that: (i) the order made against the appellant, after the lessee ceased to be a party, was incompetent, as the only person against whom an order for recovery of possession can be made under the clause, is the tenant who assigned the tenancy, and (ii) the clause in the lease by which the term "lessee" included the lessee 's assignee operated as a consent by the respondents, to assign.
HELD: (i) (Per Sarkar, J.).
The Act contemplates orders for recovery of possession also against persons other than a tenant who has assigned or sub let without the landlord 's consent, so that, where the tenant becomes extinct without leaving any successor, an order can be made against a person who took an assignment of the lease from the tenant before the lease became extinct.
[833C, D E] The proviso expressly states when an order of ejectment can be made and the clauses of the proviso are not intended to indicate the persons against whom an order for recovery of possession could be made, but only the circumstances in which an order for recovery of possession may be made.
[832E G] The expression "the tenant" in cl.
(b) is used only to emphasise that the tenant assigning must be the tenant of the landord seeking eviction.
So read, the effect of the clause is that a land lord can recover possession if his tenant assigns or sub lets without his consent.
[832H, 833A B] Since the object of the proviso is to enable the landlord to recover possession in the specified cases, orders against all "persons in occupation" must have been contemplated so that the landlord might without further trouble recover possession.
Section 18 plainly implies that an order for recovery of possession against a sub tenant is contemplated by the proviso.
Further.
the order for recovery of possession would, under section 25, be binding on the assignee or sub tenant, and therefore, they would be interested in showing that there was the requisite consent, and hence would be entitled to be made parties to the proceedings.
If they are thus entitled to be heard to oppose the order of eviction, such an order could be made against them also.
[833F G, H; 834C, E, H 835A] 830 Per Bachawat J.(i): Both the tenant and the assignee were properly parties to the proceedings for possession and if the tenant company had been dissolved, there is no reason why the proceedings could not continue against the assignee alone.
[839G] It is true that other clauses of the proviso contemplate eviction of the tenant on the ground of some act on the part of the tenant against whom the proceeding for possession is brought, but under cl.
(b), the assignment is a ground of eviction of both the assigning tenant and the assignee and the Controller has jurisdiction to make an order for possession not only against the assigning tenant but also against the assignee.
[839H 840B] Per Mudholkar J. (Dissenting) The right which the respondents possessed to evict the defunct company from the premises, because the company had assigned the tenancy to the appellant without the respondents ' consent could not be availed of by them, and the appellant could therefore continue in possession.
[838B C] The ban against eviction of a tenant in section 14(1) is lifted by the proviso only with respect to the tenant and not to any other person, because, a proviso is subservient to the main provision.
Therefore, the tenant must be a party to the proceeding right up to the date of making of the order of eviction.
Unless an order is obtained against the tenant there would be no occasion for pressing in aid section 25.
Unlike the case of death of or assignment by, a tenant, an anomalous position results where the tenant happening to be a company is dissolved during the pendency of proceedings and cannot be represented by any one, because of a lacuna in the law: But such lacuna cannot be removed by the Courts without assuming a power to legislate.
[836H, 837F H] (ii) Per Sarkar J.: The clause in the lease according to which "the lessee" includes his assignee, does not lead to the conclusion that the lessor consented to the assignment.
Besides, the consent contemplated by the proviso is a direct consent to a contemplated assignment to a particular assignee.
[835F G] Regional Properties Ltd. vs Frankenchwerth, , applied.
Per Bachawat J: The consent contemplated by cl.
(b) may be either general or special, but the clause in the lease would not amount to a consent by the landlord to an assignment either expressly or by necessary implication.
[840D E]