judgement:
Civil Appeal No. 8454 (NL) Of 1983.
From the Judgment and order dated the 8th August, 1980 of the Madhya Pradesh High Court Bench at Gwalior in Civil Miscellaneous Petition No. 127 of 1972.
H.K. Puri, for the Appellant.
A.K. Sanghi for the Respondent.
J. This is an appeal, by special leave, against the Judgment dated 8th August, 1980, by the High Court of Madhya Pradesh at Jabalpur in Civil Miscellaneous Petition No. 127 of l972.
The appellant is a trade union registered under the Trade Union Act.
It represents employees in the Chambal Hydel Irrigation Scheme under the Department of Chambal Project of Government of Madhya Pradesh in Gwalior Division.
The union raised three demands and served notices of these demands on the Deputy Chief Engineer, Major Project, Chambal, Bhopal.
The demands were: (1) Chambal allowance; (2) Dearness allowance equal to that of the Central Government employees; and (3) Wages for the 1022 period of strike lasting 20 days in the year 1966.
Copies of these notices were sent to the Assistant Labour Commissioner, Indore and the Secretary, Government of Madhya Pradesh.
The Deputy Chief Engineer did not respond to the demands.
There upon, the Assistant Labour Commissioner, Gwalior, at the instance of the union tried for a settlement, but did not succeed.
He sent a report under Section 12(4) of the Industrial Disputes Act.
The State Government, the first respondent in the appeal refused to refer the matter to the concerned Tribunal by its order dated 15.3.1969.
The appellant took the matter before the High Court by filing Miscellaneous petition No 29/69 for a mandamus to the State Government to refer the dispute for adjudication.
The High Court allowed the writ petition.
quashed the order of the State Government dated 15th March, 1969, and directed it to consider the question whether a reference was necessary or not.
When the matter went back to the Government, the Government took the stand that the provisions of the Industrial Disputes Act were not applicable to the workmen in the Chambal Hydel Irrigation Scheme since the Scheme was not an Industry and hence again refused to refer the dispute to the Tribunal.
The appellant pursued the matter further by filing miscellaneous petition No. 45 of 1970 before the High Court.
The High Court allowed the petition and directed the Government to take suitable action under Section 12(5 of the Act.
The Government challenged this decision before this Court by filing S.L.P.No.
933 of 1972, without success.
The matter, therefore, went back to the Government again. 'By its order dated 13.1.1972, the State Government referred only one question to the Tribunal and that related to the wages for the strike period but declined to refer the other two questions.
The reason given for this was: (1) that the Government was not in a position to bear the additional burden; and (2) that grant of the special allowance claimed would invite similar demands by other employees which would affect the entire administration.
Miscellaneous Petition No. 127 of 1972 was, therefore, filed for a direction to the State to refer the other two demands also.
In the meanwhile, this Court as per its decision dated July 20, 1978, bad confirmed the decision of the High Court that Chambal Project was an Industry within the meaning of the Industrial Disputes Act.
After this decision was rendered by this Court, the Government reviewed the matter and passed an order on 3.5.1979 giving additional reasons for refusing to refer the dispute for adjudication.
The reasons stated were as under: 1023 "(1) That the State Government was not in a position A to pay dearness allowance equal to that of Central Government employees.
In the present situation the State Government would not pay dearness allowance equal to that of Central Government employees to any particular department.
the question of such payment to the petitioners, therefore, does not arise.
B (2) The work charged employees were already given a consolidated pay.
Therefore, there was no justification for paying such employees the Chambal allowance.
The rules regulating the service conditions of the work charged employees of the Chambal division do not provide for payment of Chambal allowance to them. ' ' 3.
Before the High Court, it was contended by the appellant that the State Government had by refusing to refer the dispute to the Tribunal giving the above reasons taken upon itself the power to decide the dispute and had usurped the powers of the Tribunal.
It was further contended that the question raised related to the conditions of service of the employees and was, therefore, a matter primarily to be decided by the Tribunal The High Court repelled the contention and held as follows: "It is now 12 years that the matter has been pending.
But it would appear from the history of the case that the delay has been mostly due to the fact that the case was pending before various Courts.
The Government has not materially changed its stand.
As regards Chambal allowance, they were, from the very inception, taking the stand P that the work charged employees of the Project were given a consolidated salary and the service conditions did not warrant payment of extra allowance.
Now the rules regulating service conditions of the work charged employees of the project did not contain the provision for payment of Chambal allowance to them.
The Government was of the opinion that prima facie no case arises, particularly, when the extra benefit was already being granted to them.
The Government undoubtedly could no decide the matter finally, but they could certainly consider whether a prima facie case for reference has been made out on merits.
If no case is made out, it would be open to the Government to refuse 1024 to refer such a question and it could not be said that the Government was usurping the functions of the Tribunal and deciding the case finally.
In our opinion, the State Government 's order could not be said to be punitive and it takes into account the entitlement of the Chambal employees for the Chambal allowance.
As regards the other question, the State Government are on a firmer ground.
Since the Government is not paying dearness allowance equal to that of the Central Government employees to the employees in any other department in the State, there is no reason to discriminate and pay the same to the Chambal employees.
This is what the State Government have stated and we think that if the allowance at the rate payable to the Central Government employees is not paid to any one in the State, the Government was justified in holding that no prima facie case has been made out by the petitioner for referring this dispute to the Tribunal.
The State Government have also considered the question of expediency that by payment of such allowance to the Chambal employees alone, there would be dissatisfaction amongst the other employees of the State.
Both these reasons are germane and relevant.
The Government here was not deciding the case finally.
It has to decide question of expediency and whether a prima facie case has been made out. " In support of this conclusion the High Court relied upon the observations made by this Court in Bombay .
Union of Journalists P vs State of Bombay(l) and held that the Government was not precluded from making a prima facie examination of the merits of the dispute while considering whether a reference was necessary or not.
It was further held that "the two reasons given by the State Government fulfilled necessary test laid down by the orders of this Court earlier and the various Supreme Court decisions cited by the petitioners.
In the appeal before us, it was contended that the approach made by the High Court was erroneous and that the High Court had failed to properly delineate the jurisdiction of the Government under Section 10 read with Section 12(5) of the Industrial Disputes (1) ; 1025 Act.
It was contended before us that the question raised by the appellant had to be decided by the Tribunal on evidence to be adduced before it and it could not be decided by the Government on a prima facie examination of the facts of the case.
This submission was met with the plea that the Government had in appropriate cases at least a limited jurisdiction to consider on a prima facie examination of the merits of the demands, whether they merited a reference or not.
We have considered the rival contentions raised before us The High Court apparently has relied upon the following passage in Bombay Union of Journalists vs State of Bombay, (Supra) C ". .But it would not be possible to accept the plea that the appropriate Government is precluded from considering even prima facie the merits of the dispute when it decides the question as to whether its power to make a reference should be exercised under Section 10(1) read with Section 12(5) or not.
If the claim made is patently frivolous, or is clearly belated, the appropriate Government may refuse to make a reference.
Likewise, if the impact of the claim on the general relations between the employer and the employees in the region is likely to be adverse, the appropriate Government may take that into account in deciding whether a reference should be made or not. ' ' We find that the approach made by the High Court was wrong and the reliance on the above passage on the facts of this case, is misplaced and unsupportable.
This Court had made it clear in the same Judgment in the sentence preceding the passage quoted above that it was the province of the Industrial Tribunal to decide the disputed questions of fact. ".
Similarly, on disputed questions of fact, the appropriate Government cannot purport to reach final conclusions, for that again would be the province of the Industrial Tribunal. " Therefore, while conceding a very limited jurisdiction to the State Government to examine patent frivolousness of the demands, it is to be understood as a rule, that adjudication of demands made 1026 by workmen should be left to the Tribunal to decide.
Section 10 permits appropriate Government to determine whether dispute 'exists or is apprehended ' and then refer it for adjudication on merits.
The demarcated functions are (1) reference, (2) adjudication when a reference is rejected on the specious plea that the Government cannot bear the additional burden, it constitutes adjudication and thereby usurpation of the power of a quasi judicial Tribunal by an administrative authority namely the Appropriate Government.
In our opinion, the reasons given by the State Government to decline reference are beyond the powers of the Government under the relevant sections of the Industrial Disputes Act.
What the State Government has done in this case is not a prima facie examination of the merits of the question involved.
To say that granting of dearness allowance equal to that of the employees of the Central Government would cost additional financial burden on the Government is to make a unilateral decision without necessary evidence and without giving an opportunity to the workmen to rebut this conclusion.
This virtually amounts to a final adjudication of the demand itself.
The demand can never be characterised as either preverse or frivolous.
The conclusion so arrived at robs the employees of an opportunity to place evidence before the Tribunal and to substantiate the reasonableness of the demand.
Same is the case with the conclusion arrived at by the High Court accepting the stand of the State Government that the employees were not entitled to the Chambal allowance as the same was included in the consolidated pay.
This question, in fact, relates to the conditions of service of the employees.
What exactly are the conditions of service of the employees and in what manner their conditions of service could be improved are matters which are the special preserve of the appropriate Tribunals to be decided in adjudicatory processes and are not ones to be decided by the Government on a prima facie examination of the demand.
This demand again can never be said to be either perverse or frivolous.
There may be exceptional cases in which the State Government may, on a proper examination of the demand, come to a conclusion that the demands are either perverse or frivolous and do not merit a reference.
Government should be very slow to attempt an examination of the demand with a view to decline reference and Courts will always be vigilant whenever the Government attempts to usurp the powers of the Tribunal for adjudication of valid dis 1027 putes.
To allow the Government to do so would be to render A Section 10 and Section 12(5) of the Industrial Disputes Act nugatory.
We have no hesitation to hold that in this case, the Government had exceeded its jurisdiction in refusing to refer the dispute to the Tribunal by making its own assessment unilaterally of the reasonableness of the demands on merits.
The High Court erred in accepting the plea of the Government that refusal to refer the demands in this case was justified.
The demands raised in this case have necessarily to be decided by the appropriate Tribunal on merits.
In the result, we set aside the Judgment of the High Court, allow this appeal and direct the State Government to refer all the questions raised by the appellant to the appropriate Tribunal.
The appeal is allowed with costs to the appellant quantified at Rs.2,500 n S.R. Appeal allowed.

summary:
The appellant is a trade union registered under the Trade Unions Act.
It represents employees in the Chambal Project of Government of Madhya Pradesh in Gwalior Division.
The union raised three demands, namely, (1) Chambal allowance; (2) Dearness allowance equal to that of the Central Government employees; and (3) Wages for the period of strike lasting 20 days in the year 1966 and served notices of these demands on the Deputy Chief Engineer, Major Project Chambal Since the attempts for settlement by the canciliation officer failed, a full report of the dispute under section 12 (4) of the Act was sent to the State Government which, by its order dated 15.
3. 1969, refused to refer the matter to the concerned Tribunal.
The appellant took the matter before the High Court by filing Miscellaneous Petition No 29169 for a mandamus to the State Government to refer the matter for adjudication.
The High Court allowed the writ petition, and directed the State Government to consider the question whether a reference was necessary or not.
The Government again refused to refer the dispute to the Tribunal, taking the stand that the provisions of the Industrial Disputes Act were not applicable to the workmen in the Chambal Scheme as it was not Industry '.
The appellant approached the High Court for the second time by filing Miscellaneous Petition No. 45 of 1970 and challenged the said orders.
The High Court allowed the petition and directed the Government to take suitable action under section 12 (5) of the Act.
The Government challenged the said decision before the Supreme Court by filing SLP No. 933 of 1972 without success.
Later, by its order dated 13.
1. 72, the State Government referred to the Tribunal only the third question of payment of wages for the strike period and declined to refer the other two questions for the reasons that (a) the Government was not in a position to bear the additional burden and (b) the grant of the special allowance claimed would invite similar demands by other employees which would affect the entire administration.
The appellant was perforced 1020 to approach the High Court, for the third time, by way of a miscellaneous Petition No. 127 of 1972 for a direction to the State to refer the other two demands also.
In the meanwhile, the Supreme Court by its decision dated July 20, 1978 confirmed the High Court 's order that Chambal Project was a 'industry ' within the meaning of the Act.
whereupon the Government reviewed the matter and passed an order on 3. 79 giving additional reasons for declining to refer the dispute for adjudication namely, (a) the State Government was not in a position and therefore cannot pay Central DA to any of its employees in any department and (b) the work charged employees who get a consolidated salary are not entitled to Chambal allowance under the rules.
The High Court, by its decision dated 8th August 1980 dismissed the petition holding that the reasons given by the Court are germane and relevant.
Hence the appeal by special leave.
Allowing the appeal, the Court, ^ HELD: 1.1 The reasons given by the State Government to decline reference are beyond the powers of the Government under the relevant sections of the Industrial Disputes Act.
[1026C] 1.2 While conceding a very limited jurisdiction to the State Government to examine patent frivolousness of the demands, it is to be understood as a rule, that adjudication of demands made by workmen should be left to the Tribunal to decide.
Section 10 permits appropriate Government to determine whether dispute 'exists or is apprehended" and then refer it for adjudication on merits.
The demarcated functions are (1) reference, (2) adjudication.
[1025H; 1026A] 1.3 When a reference is rejected on the specious plea that the Government cannot bear the additional burden, it constitutes adjudication and thereby usurpation of the power of a quasi judicial Tribunal by an administrative authority namely the Appropriate Government.
What the State Government had done in this case is not a prima facie examination of the merits of the question involved.
To say that granting of dearness allowance equal to that of the employees of the Central Government would cost additional financial burden on the government is to make a unilateral decision without necessary evidence and without giving an opportunity to the workmen to rebut this conclusion.
This virtually amounts to a final adjudication of the demand itself.
The demand can never be characterized as other perverse or frivolous.
The conclusion so arrived at robs the & employees of an opportunity to place evidence before the Tribunal and to substantiate the reasonableness of the demand.
[1026B E] 1.4 What exactly are the conditions of service of the employees and in what manner their conditions of service could be improved are matters which are the special preserve of the appropriate Tribunals to be decided in adjudicatory processes and are not once to be decided by the Government on a prima facie examination of the demand.
The question whether the emp 1021 loyees were/were not entitled to the Chambal allowance as they are in A receipt of a consolidated pay relates to the conditions of service of the employees Further this demand also cannot be said to be either perverse or frivolous.
[1026F G] 1.5 However, there may be exceptional cases in which the State Government, may, on a proper examination of the demand, come to a conclusion that the demands are either perverse or frivolous and do not merit a reference.
Government should be very slow to attempt an examination of the demand with a view to decline reference and Courts will always be vigilant whenever the Government attempts to usurp the powers of the Tribunal for adjudication of valid disputes.
To allow the Government to do so would be to render section 10 and section 12 (5) of the Industrial Disputes Act nugatory.
[1026G H; 1027A] C Bombay Union of Journalists vs State of Bombay ; , explained and followed.


judgement:
Civil Appeal No. 11417 of 1983 From the Judgment and Order dated 14.
9. 1983 of the High Court of Madras in W. P. N. 4615 of 1983.
K. Ram Kumar for the Appellant.
A. V. Rangam for the Respondents The Judgment of the Court was delivered by SEN, J.
This appeal by special leave directed against the judgment and order of the Madras High Court dated September 14, 1983 raises a question of some complexity.
The question is as to whether cl. 3 (IA) of the Tamil Nadu Paddy (Restriction on Movement) Order, 1982 issued by the State Government under s 3 of the read with the Government of India, Ministry of Agriculture (Department of Food) Order, a. section R, 800 dated June 9, 1978, with the prior concurrence of the Government of India, was ultra vires the State Government being in excess of its delegated powers.
That depends on whether the delegation of a specific power under cl.
(d) of sub section
(2) of section 3 of the Act by the aforesaid notification issued by the Central Government under section 5 to regulate the storage, transport, distribution, disposal, acquisition, use or consumption of an essential commodity, in relation to foodstuffs, carries with it the general powers of the Central Government under sub section
(1) of section 3 of the Act to regulate or prohibit the production, supply and distribution of essential commodities and trade and commerce therein.
There is a conflict OF opinion on this question between different High Courts.
Hence we thought it fit to grant special leave and heard the appeal on merits.
After hearing the parties, we dismissed the appeal by an order dated December 5, 1983 for reasons to follow.
The reasons therefore are set out below .
Briefly stated, the facts are these.
In the State of Tamil Nadu, there has been a system of imposing levy on purchase of paddy by traders in vogue since the year 1970.
This was imposed by cl. 3 (5) (i) of the Tamil Nadu Paddy and Rice (Licensing, Regulation & Disposal of Stock) Order, 1968 issued by the State Government under section 3 of the Act with the prior concurrence of the Government 1033 Of India.
Cl. 3 (5) (i) empowered the State Government to impose A and collect upto 50% of the stocks by way of levy on purchases of paddy by traders on payment of price specified from time to time.
The said Order was replaced by the Tamil Nadu Paddy and Rice (Regulation of Trade) Order, 1974 issued under section 3 of the Act with the prior concurrence of the Government of India.
Cl. 5 (1) of this Order empowers the State Government to impose and collect levy upto 50% of the purchase of paddy and rice by the dealers other than retail dealers and they are paid prices notified by the Government.
This clause was subsequently amended in 1976.
The power to impose and collect levy on the purchase of paddy and rice was exercised by the State Government under section 3 of the Act with a view to procure the stock for distribution of rice to about 118 lakhs family card holders throughout the State through nearly 17, 800 fair price shops.
A review of the food situation in the latter half of 1980 and the beginning of 1981 revealed that the stock of paddy and rice with the Government was not adequate to meet the requirements under the public distribution system.
The State Government in the Food & Cooperation Department accordingly, decided to enforce the levy on traders by G. O. Ms. No. 33 dated January 1, 1981 and to collect 40% levy on the purchases of paddy and rice by dealers even though it had the power to impose levy upto 50% at prices fixed by it from time to time.
Thereafter, the Government in the Food & Cooperation Department by G. O. MS.
No. 765 dated October 1, 1981 increased the levy from 40% to 50% from kuruvai season 1981.
There was a failure of monsoon in the State in the years 1981 82 and the off take of rice in the fair price shops had increased from 34,000 tonnes in April to 85,000 tonnes in December 1982.
Due to failure of south west monsoon in the year 1982 and consequent poor rainfall, the storage level in the Mettur reservoir fell.
As a result of this there was a steep fall in kuruvai cultivation of paddy.
In Thanjavur district alone, the acreage of paddy cultivation was reduced from 4. 5 lakhs acres to 2.97 lakhs acres.
Added to this, the north east monsoon in the State also failed causing a serious fall in the production of paddy.
In the circumstances, the State Government in the Food & Cooperation Department had no other alternative but to introduce a monopoly procurement scheme of paddy with a view to procure the maximum stock of paddy by banning the purchases by traders.
1034 In exercise of the powers conferred under section 3 of the read with the Government of India, Ministry of Agriculture (Department of Food) Order, G. section R. 800 dated June 9, 1978, with the prior concurrence of the Government of India, the State Government promulgated the Tamil Nadu Paddy (Restriction on Movement) Order, 1982 on October 22, 1982.
3 (1) of the Order provides: "No person shall transport, move or otherwise carry or prepare or attempt to transport, move or otherwise carry, or aid or abet in the transport, movement or otherwise carrying of paddy outside the State by road/rail or otherwise except under and in accordance with the conditions of a permit issued by an authorized officer.
" On January 22, 1983, the State Government Department issued G. O. MS.
No. 42 for purchase of the entire marketable surplus of paddy in Thanjavur District by the Government through the Tamil Nadu Civil Supplies Corporation as an agent of the Government.
On February , 1982, the State Government in the Food & Co operation Department issued another G. O. Ms. No. 84 extending the provision made with regard to Thanjavur district of Chidambaram and Kattumannarkoil taluks in South Arcot district and Musiri, Kulithalai, Lalgudi and 7 Tiruchirapalli taluks in Tiruchirapalli district.
On May 11, 1983, the State Government in the Food & Co operation Department issued G. O. Ms. No. 293 introducing sub cl.
(1A) to cl. 3 of the Order.
The newly inserted cl.
(IA) is as follows: "No person shall transport, move or otherwise carry or prepare or attempt to transport, move or otherwise carry, or aid or abet in the transport, movement or otherwise carrying of paddy outside the places notified under Clause 3 of the Tamil Nadu Paddy & Rice (Restriction of Rates) Order, 1974 by road/rail or otherwise.
" Thereafter, on June 20, 1983, the State Government in the Food & Cooperation Department by G. O. Ms.
No 413 made a further amendment to the newly introduced sub cl.
(1A) of cl. 3.
The amended cl.
(IA) of cl. 3 is follows: 1035 "No person shall transport, move or otherwise carry or prepare or attempt to transport, move or otherwise carry, or aid or abet in the transport, movement or other wise carrying of paddy outside the Thanjavur District, Chidambaram and Kattumannarkoil Taluks in South Arcot District and Musiri, Kulithalai, Lalgudi and Tiruchirapalli Taluks in Tiruchirapalli District.
" These various orders were issued by the state Government in exercise of the powers conferred by section 3 of the Act read with the Government of India, Ministry of Agriculture (Department of Food) Order, G. section R. 800 dated June 9, 1978 which is set out below: C "MINISTRY OF AGRICULTURAL AND IRRIGATION (DEPARTMENT OF FOOD) ORDER New Delhi, the 9th June, 1978.
G. section R. 800 In exercise of the powers conferred by section 5 of the (10 of 1955), and in supersession of the Order of the Government of India in the late Ministry of Agriculture (Department of Food) No. G. section R. 316 (E) dated the 20th June, 1972, the Central Government hereby directs that the powers conferred on it by sub section
(1) of section 3 of the said Act to make orders to provide for the matters specified in cls.
(a), (b), (c), (d), (e), (f), (h), (i), (ii) and (j) of sub section
(2) thereof shall, in relation to foodstuffs be exercisable also by a State Government subject to the conditions (1) that such powers shall be exercised by a State Government subject to such directions, if any, as may be issued by the Central Government in this behalf; (2) that before making an order relating to any matter specified in the said cls.
(a), (c) or (f) or in regard to distribution or disposal of foodstuffs to places outside the State or in regard to regulations or transport of any foodstuffs, under the said cl (d), the State Government shall also obtain the prior concurrence of the Central Government and 1036 (3) that in making an order relating to any of the matter specified in the said cl.
(i) the State Government shall authorize only an officer of Government.
Sd/ K. Balakrishnan, Dy.
Secretary to the Government of India (No. 3 (Genl) (1)/78 D&R (1) 59).
" The appellant and various other agriculturists of Thanjavur district and the aforesaid traditionally rice growing areas of South Arcot and Thiruchirapalli districts challenge the constitutional validity of cl. 3 (1A) of the Order placing a complete ban on the transport, movement or otherwise carrying of paddy outside Thanjavur district and the aforementioned taluks of South Arcot and Thiruchirapalli districts by petitions under article 226 of the Constitution in the High Court.
There were as many as 300 writ petitions in the High Cort which were disposed of by the judgment under appeal.
The validity of cl 3 (IA) of the Order was assailed on three main grounds: (1) Cl.
3 (1A) was wholly arbitrary and irrational and thus violative of article 14 of the Constitution.
(2) Cl.
3 (IA) was in excess of the delegated powers conferred on the State Government under section 3 of the Act by the aforesaid G. section R 800 dated June 9, 1978 issued by the Central Government under section 5 of the Act.
And (3) The total ban on movement of paddy from out of Thanjavur district and the aforesaid taluks of South Arcot and Thiruchirapalli districts by cl. 3 (1A) of the Order was an unreasonable restriction on the freedom of trade and commerce guaranteed under article 19 (l) (g) and also infringes the freedom of inter State trade, commerce and intercourse under article 301 of the Constitution.
The High Court repelled all these contentions.
Shri P. Govindan Nair, learned counsel appearing for the appellant argued the case with much learning and resource.
Learned counsel with his usual fairness did not advance some of the contentions raised before the High Court as they were apparently misconceived.
He has confined his submissions to only two grounds, namely: (l)Cl. 3 (IA) of the impugned Order issued by the State Government under section 3 of the Act read with G. section R. 800 dated June 9, 1978 issued by the Central Government under section 5 of the Act with the prior concurrence of the Government of India placing a ban on the transport, movement or otherwise carrying of 1037 paddy from out of Thanjavur district, the two taluks of South Arcot district and the four taluks of Thiruchirapalli district, was ultra vires the State Government being in excess of the delegated powers.
It is urged that the delegation of a specific power under cl.
(d) of subs.
(2) of section 3 of the Act by the aforesaid notification issued by the Central Government under section 5 of the Act to regulate the storage, transport, distribution, disposal etc.
Of an essential commodity, in relaston to foodstuffs, does not carry with it the general power of the Central Government under sub section
(l) of section 3 to regulate or prohibit the production, supply and distribution thereof and trade and commerce therein.
And (2) The word 'regulating ' in cl.
(d) of sub section (2) of section 3 of the Act does not take in 'prohibiting ' for the words 'regulating ' and 'prohibiting ' denote two distinct and separate attributes of power and they are mutually exclusive Otherwise according to learned counsel, there was no point in the Legislature using both the words 'regulating ' and 'prohibiting ' in sub section
(1) of section 3 of the Act and the words 'regulating ' and 'prohibiting ' differently in various clauses of sub section
(2) thereof.
It is urged that there cannot be a total prohibition on transport, movement or otherwise carrying of paddy out of the areas in question under cl.
(d) of subs.
(2) of s 3 but only regulation of such activities in the course of trade and commerce by grant of licences or permits The learned counsel is fortified in his submissions by the decisions of the Punjab, Allahabad and Orissa High Courts in Sujan Singh v State of Haryana,(1) State of Uttar Pradesh vs Suraj Bhan(2) and Bejoy Kumar Routrai vs State of Orissa(3) and he questions the correctness of the decision of the Gujarat High Court in Nanalal Navalnathji Yogi Collestor of Bulsar& Ors.(4) taking a view to the contrary.
We are afraid, we are unable to accept any of the contentions advanced by him.
In order to appreciate the contentions advanced, it would be convenient to set out the relevant statutory provisions.
Sub section
(1) of section 3 of the Act is in these terms: "3 (1).
Power to control production, supply, distribution etc.
Of essential commodities (1).
AIR [1968] Pun. 363 (2).
AIR [.972] Al].
401 (3).
AIR [1976] Orr.
138 (4).
[1981] .
87 1038 If the Central Government is of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices, (or for securing any essential commodity for the defence of India or the efficient conduct of military operations) it may, by order, provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein.
" Sub section
(2) of section 3 of the Act, insofar as material, lays down: " 3.
(2) Without prejudice to the generality of the powers conferred by sub section
(1), an order made thereunder may provide (a) * * * * (b) * * * * (c) * * * * (d) for regulating by licences, permits or otherwise the storage, transport, distribution, disposal, acquisition, use or consumption of any essential commodity.
" section S of the Act provides: "5.
Delegation of powers The Central Government may, by notified order, direct that (the power to make orders or issue notifications under section 3) shall in relation to such matters, and subject to such conditions, if any, as may be specified in the direction, be exercisable also by (a) such officer or authority subordinate to the Central Government, or (b) such State Government or such officer or authority subordinate to a State Government.
as may be specified in the direction.
" 1039 The infirmity in the argument lies in the erroneous assumption A that the source of power on authority to promulgate the impugned Order was derived by the State Government under cl.(d) of sub s (2) of section 3 of the Act by virtue of the delegation of powers by the Central Governmnent by the notification No G. section R. 800 dated June 9, 1978 under s 5 of the Act.
The source of power to promulgate an order of this description is derived from sub section (1 of section 3 of the Act, According to its plain language, the aforesaid notification No. G. section R. 800 provides that in exercise of the powers conferred by section 5 of the Act, and in supersession of the earlier order of the Government of India in the Ministry of Agriculture, Department of Food, No. G. S R 316 dated June 20, 1972, the Central Government directs that 'the powers conferred on it by sub section
(1) of section 3 of the Act ' to make orders to provide for matters specified in clauses (a), (b), (c), (d), (e), (f), (h), (i), (ii) and (j) of sub section
(2) thereof shall, in relation to foodstuffs, 'be exercisable also by a State Government subject to the conditions set out therein '.
There must be some meaningful effect given to the words 'the Central Government hereby directs that the powers conferred on it by sub section
(1) of section 3 of the Act to make orders etc. shall be exercisable also by a State Government subject to the conditions set out therein '.
On a plain construction, the first part of the aforesaid notification in specific terms provides for the delegation by the Central Government under section 5 of the Act of the powers conferred on it by sub section
(1) of section 3 of the Act.
That power is general in its terms and authorises inter alia the promulgation of any order providing for regulating or prohibiting the production, supply and distribution of, and trade and commerce in, any essential commodity, insofar as it is necessary or expedient so to do for maintaining or increasing supplies or for securing their equitable distribution and availability at fair prices.
The second part of the notification directs that the power to make 'orders thereunder ' i.e. the power under sub section
(1) of section 3 of the Act shall be exercisable also by a State Government, in relation to foodstuffs, with respect to 'such matters ' viz. for the matters specified in clauses (a), (b), (c), (d), (e), (f), (h), (i), (ii) and (j) of sub section
(2) thereof and subject to 'such conditions ' set out therein.
The aforesaid notification G. section R. 800 dated June 9, 1978 issued by the Central Government was strictly in conformity with section 5 of the Act.
Of the three conditions, the one that is material for our purpose is condition 2 It provides that before making an order under cl.
(d) of sub section
(2) of section 3 of the Act in regard to 1040 distribution or disposal of foodstuffs to places outside the State or in regard to regulations or transport of any foodstuffs, the State Government shall also obtain the prior concurrence of the Central Government.
It is manifest on a plain reading that the aforesaid notification No. G. section R. 800 dated June 9, 1978 was strictly in conformity with the requirements of section 5 of the Act.
Learned counsel for the appellant however strenuously con tends that the delegation of powers by the Central Government under section 5 of the Act must necessarily be in relation to 'such matters ' and subject to 'such conditions ' as may be specified in the notification.
The whole attempt on the part of the learned counsel is to confine the scope and ambit of the impugned order to cl.
(d) of sub s ( .) of g. 3 of the Act which uses the word 'regulating ' and take it out of the purview of sub section
(1) of section 3 which uses the words 'regulating or prohibiting '.
That is not a proper way of construction of sub ss (l) and (2) of section 3 of the Act in their normal setting.
The restricted construction of section 3 contended for by learned counsel for the appellant would render the scheme of the Act wholly unworkable.
As already indicated, the source of power to make an order of this description is sub section
(l) of s 3 of the Act and sub section
(2) merely provides illustration for the general powers conferred by sub section
Sub section
(2) of section 3 of the Act commences with the words 'Without prejudice to the generality of the powers conferred by sub section
(1) '.
It is manifest that sub section
(2) of s 3 of the Act confers no fresh powers but is merely illustrative of the general powers conferred by sub section
(1) of section 3 without exhausting the subjects in relation to which such powers can be exercised.
The matter is no longer res integra.
The question directly arose for consideration by this Court in Santosh Kumar Jain vs The State (1).
There, the Court was considering the validity of the Sugar and sugar Products Control Order, 1947 issued by the then Provincial Government of Bihar in exercise of the powers conferred on it by section 3 of the Essential Supplies (Temporary Powers) Act, 1946 by virtue of the delegation of powers by the Central Government to make orders in relation to foodstuffs under cl.
(j) of sub section
(2) of section 3 of that Act.
Patanjali Shastri, J., speaking for the Court explaining the relevant functions of sub sections
(1) and (2) of section 3 of the Act, said: (1) ; 1041 "It is manifest that sub section
(2) of section 3 confers no fur.
A the or other powers on the Central Government than what are conferred under sub section
(1), for it is "an order made thereunder" that may provide for one or two other of the matter specifically enumerated in sub section
(2) which are only illustrative, as such enumeration is "without prejudice to the generality of the powers conferred by sub section
Seizure of an article being thus shown to fall within the purview of sub section
(l), it must be competent for the Central Government or its delegate, the Provincial Government, to make an order for seizure under that sub section apart from and irrespective of the anticipated contravention of any other order as contemplated in cl.
(j) of sub section
" The Court drew support for this view from the decision of the Privy Council in Emperor vs Sibnath Banerjee.
( ') The Federal Court in that case held r. 26 of the Defence of India Rules made under cl (j) of sub s (2) of section 3 of the Defence of India Act, 1939 to be ultra vires, which decision was reversed by the Privy Council, The Court quoted with approval the following observations of Lord Thankerton, J. delivering the judgment of Privy Council: "In the opinion of their Lordships, the function of sub section (2) is merely an illustrative one; the rule making power is conferred by sub section
(1), and "the rules" which are referred to in the opening sentence of sub section
(2) are the rules which are authorized by, and made under, sub section
(1); the provisions of sub s (2) are not restrictive of sub section
(1), as, indeed is expressly stated by the words "without prejudice to the generality of the powers conferred by sub s (1).
" This accords with our view of the purport and effect of sub sections
(1) and (2) of section 3 of the Act.
In Atulya Kumar vs Director of Procurement & Supply(a), the challenge was to the validity of West Bengal Foodgrains (Intensive Procurement Order, 1952 issued under section 3 (1) of the Essential Supplies (Temporary Powers) Act, 1946 by virtue of delegation of powers by the Central Government under section 5 of the Act which was (1) LR [1945] 72 IA 241.
AIR [1953] Cal.
1042 almost in identical terms with section 5 of the Act.
Sinha, J. (as he then was) held that the powers to promulgate the levy order was derived from sub section
(1) of s 3 of the Act; and that the power was general in terms and authorized inter alia the promulgation of any order providing for regulating or prohibiting the production, supply and distribution of, and trade and commerce in, any essential commodity, insofar as it appears necessary or expedient to the State Government for maintaining or increasing supplies or for securing their equitable distribution and availability at fair prices.
The learned Judge after referring to the Privy Council decision in Sibnath Banerjee 's case and that of this Court in Santosh Kumar Jain 's case, observed : "Sub section
(2) of section 3, commences with the words "without prejudice to the generality of the powers conferred by sub section
(1). etc.
" This shows that sub section
(2) confers no fresh powers but provides illustrations of the general powers conferred by sub section
(1). " The learned Judge went on to observe: "This is undoubtedly very incompetent drafting.
But I think that the meaning is reasonably clear.
The 'Matters Specified ' in sub section
(2), being "without prejudice" to the generality of the powers conferred by sub s (1) must be held to include such powers.
Thus it cannot be said that the general powers have not been conferred upon the State, but only those specified in cls.
(a) to (j) of sub section
The only limitation is with regard to the kind of essential commodity concerned.
The State has been given powers limited to 'foodstuffs ' only." Quite recently, the Calcutta High Court in Tarakdas Mukherjee vs State of West Bengal(1) and Lila Biswas vs State of West Bengal 12) following the dictum of Sinha, J. in Atulya Kumar 's case, supra, have held that the delegation of specific powers to issue an impugned order of this nature is derived from sub section
(1) of section 3 and that the provisions of sub section
(2) thereof are merely illustrative.
It has further held that the various clauses of sub section
(2) of section 3 of the Act cannot be made operative independently by any notification (1) (2) 1043 under section 5 of the Act without deriving the general powers under sub section
(1) of section 3 of the Act.
We are of the considered opinion that the view of the Calcutta High Court accords both with reason and principle.
The view to the contrary taken by the Punjab, Allahabad and Orissa High Courts in Sujan Singh 'section Suraj Ban 's and Bejoy Kumar Routrai 's cases, supra, dose not lay down good law.
It must accordingly be held that although cl.
(d) of sub section
(2) of section 3 of the Act deals only with a specific power, the general power to issue the impugned order flows from the provisions of sub h.
(1) of section 3 which stands delegated to the State Government by virtue of the notification issued under section S of the Act.
Upon that view, the question as to the construction of the word 'regulating ' occurring in cl.
(d) of sub section
(2) of 8.3 of the Act does not really arise.
However, since the question has been raised at the Bar we think it proper to deal with it.
As a matter of construction, Shri P Govindan Nair, learned counsel for the appellant contends that the words 'regulating ' and prohibiting ' connote two distinct and separate attributes of power which are mutually exclusive and therefore the word 'regulating ' used in cl.
(d) cannot be given the same meaning as 'prohibiting '.
He urges that is A sound rule of construction to give the same meaning to the same word occurring in different parts of an Act of Parliament.
For the purpose of ascertaining the true meaning of the word 'regulating ' in the context of cl.
(d) of sub section
(2) of section 3, he has referred to us the different clauses of that sub section.
A perusal of the various clauses (a) to (j) indicates that while cls.
(a), (d) and (g) speak of the power to prohibit, and the remaining cls.
(b), (c), (f), (h), (i), (ii) and (j) though they do not mention that they are illustrative of the power to regulate impliedly partake of the character of that power.
If the contention of the learned counsel were to be accepted, it would imply that the Central Government derives its power under sub section
(1) of section 3 of the Act as the power to promulgate any order providing for regulating or prohibiting the production, supply and distribution of, and trade and commerce in, any essential commodity insofar as it appears necessary or expedient so to do, for maintaining or increasing supplies or for securing their equitable distribution and availability at fair prices.
If the Central Government were to make an order under sub section
(1) in respect of the matters specified in cl.
(d), it may not only regulate or control the storage, transport, distribution etc.
Of an essential commodity including the 1044 movement of such foodstuffs by grant of licenses, permits or otherwise, but also place a ban on the movement of wheat from one place to another; but the State Government under cl.
(d) has only a regulatory power in relation thereto i.e. to make an order only for regulating the movement of wheat from one place to another by issue of the permits, licenses or otherwise as provided for by cl. 3 of the impugned Order but could not have issued cl. 3 (IA) placing a ban on movement of wheat from one place to another.
Although by force of logic one may be driven to that conclusion that the State Government has power to promulgate cl 3 of the impugned Order but not cl. 3 (IA), there is no reason for us to give such a restrictive meaning to the word 'regulating ' appearing in cl.
(d) of sub section
(2) of section 3 of the Act.
it would seem that the rule of construction is clearly y well recognized that a word may be used in two different senses in the same section of an Act.
The world 'regulation ' has not that rigidity of moaning as never to take in 'prohibition '.
I must depend on the context in which it is used in the statute and the object sought to be achieved by the legislation.
For a time different views were expressed on the question whether the word 'regulation ' in article 19(2) to 19(6) includes 'prohibition ' till the Court in Narendra Kumar vs Union of India(1) answered it in the affirmative.
Shri P. Govindan Nair, learned counsel for the appellant however contends that the word 'regulation ' should not be confused with the expression 'reasonable restrictions ' occurring in article 19(2) to (6) of the Constitution and therefore the view t taken in Narendra Kumar 's case is not applicable.
According to him, the word 'regulation ' in cl.
(d) of sub .
(2) of section 3 of the Act does not take in 'prohibition '.
He seeks to draw a distinction between prohibition or prevention o certain activities and their regulation or governance.
It is said that a power to regulate or govern would imply continued existence of that which is to be regulated or governed; and to be inconsistent with absolute prohibition.
He therefore submits that cl. 3 (IA) of the Order was ultra vires because the State Government had only power under cl.
(d) of sub s, (2) of section 3 of the Act to regulate production, supply and distribution of, and trade and commerce in, essential commodities like foodstuffs by (1) 1045 grant of permits, licenses or otherwise, in contradistinction to the A power of the Central Government under sub section
(1) of section 3 to regulate or prohibit such production, supply and distribution of, and trade and commerce in, essential commodities.
Learned counsel for the appellant placed reliance on the decision of the Allahabad High Court in Suraj Bhan 's case which proceeds Upon a decision of this Court in State of Mysore vs Sanjeeviah(1) holding that power to regulate does not include power to prohibit or restrict.
In Sanjeeviah 's case, the question arose whether two provisos framed by the State Government under section 37 of the Mysore Forest Act, 1900 which empowered the making of rules to regulate the transit of forest produce which placed absolute prohibition against transportation of forest produce between sunset and sunrise and a qualified prohibition in certain circumstances, was beyond the rule making power of the State Government.
The contention on behalf of the State was.
that the two provisos were regulatory and prohibitory In repelling the contention, the Court observed: "The power which the State Government may exercise is the power to regulate transport of forest produce, and not the power to prohibit or restrict transport.
Prima facie, a rule which totally prohibits movement of forest produce during the period between sunset and sunrise is prohibitory or restrictive of the right to transport forest produce.
" These observations do not lay down any rule of universal application.
The word 'regulation ' cannot have any rigid or inflexible meaning as to exclude 'prohibition '.
The word 'regulate ' is difficult to define as having any precise meaning.
It is a word of broad import, having a broad meaning, and is very comprehensive in scope.
There is a diversity of opinion as to its meaning and its application to a particular state of facts, some Courts giving to the term a somewhat restricted, and others giving to it a liberal, construction.
The different shades of meaning are brought out in Corpus Juris Secundum, vol.
76 at p. 611: (1) ; , 1046 "Regulate" is variously defined as meaning to adjust; to adjust; order, or govern by rule, method, or established mode; to adjust or control by rule, method, or established mode, or governing principles or laws: to govern to govern by rule; to govern by, or subject to, certain rules or restrictions; to govern or direct according to rule; to control, govern, or direct by rule or regulations.
"Regulate" is also defined as meaning to direct; to direct by rule or restriction; to direct or manage according to certain standards, laws, or rules; to rule; to conduct; to fix or establish; to restrain; to restrict.
" See also: Webster 's Third New International Dictionary, vol.
II, p. 1913 and Shorter Oxford Dictionary, Vol.
II, 3rd edn., p. 1784.
It has often been said that the power to regulate does not necessarily include the power to prohibit, and ordinarily the word 'regulate ' is not synonymous with the word 'prohibit '.
This is true in a general sense and in the sense that mere regulation is not the same as absolute prohibition.
At the same time, the power to regulate carries with it full power over the thing subject to regulation and in absence of restrictive words, the power must be regarded as plenary over the entire subject It implies the power to rule, direct and control, and involves the adoption of a rule or guiding principle to be followed, or the making of a rule with respect to the subject to be regulated. 'the power to regulate implies the power to check and may imply the power to prohibit under certain circumstances, as where the best or only efficacious regulation consists of suppression It would therefore appear that the word 'regulation ' cannot have any inflexible meaning as to exclude 'prohibition '.
let has different shades of meaning and must take its colour from the context in which it is used having regard to the purpose and object of the legislation, and the Court must necessarily keep in view the mischief which the legislature seeks to remedy.
The question essentially is one of degree and it is impossible to fix any definite point at which 'regulation ' ends and 'prohibition ' begins.
We may illustrate how different minds have differently reacted as to the meaning of the word 'regulate ' depending on the context in which it is used and the purpose and object of the legislation 1047 In Slattery vs Naylor,(l) the question arose before the Judicial Committee of the Privy Council whether a bye law by reason of its prohibition internment altogether in a particular cemetry, was ultra vires because the Municipal Council had only power of regulating internments whereas the bye law totally prohibited them in the cemetry in question, and it was said by Lord Hobhouse, delivering the judgment of the Privy Council: "A rule or bye law cannot be held as ultra vires merely because it prohibits where empowered to regulate, as regulation often involved prohibition.
" In contrast in Municipal Corporation of the City of Toronto vs Virgo,(2) where the question for decision was whether a section or a bye law prohibiting hawkers from plying their trade, was competently and validity made, Lord Davey delivering the judgment of the Privy Council while laying down that a power to make a bye law to 'regulate ' and 'govern ' a trade does not authorize the prohibition of such trade, and added: "There is a marked distinction between the prohibition or prevention of a trade and the regulation or governance of it, and, indeed, a power to regulate ' and 'govern ' seems to imply the continued existence of that which is to be regulated or governed.
" The predominant object of the Act, as reflected in the preamble is to provide, in the interests of the general public, for the control of the production, supply and distribution of, and trade and commerce in, certain essential commodities.
It is a piece of socioeconomic legislation enacted in the national interest to secure control over the production, supply and distribution of, and trade and commerce in, essential commodities.
The various Control Orders issued by the Central Government under sub s (1) of section 3 of the Act or by the State Government under s 3 read with section 5 have introduced a system of checks and balances to achieve the object of the legislation i.e. to ensure equitable distribution and availability of essential commodities at fair prices.
Special public interest in an industry e.g. that it is engaged in the production of a commodity, (1) LR [1888] AC 446 (2) 1048 vitally essential to the community, may justify the regulation of its production, supply and distribution and its trade and commerce, provided such regulation is not arbitrary and has a rational nexus with the object sought to be achieved.
the power to regulate or prohibit the production, supply and distribution of, and trade and commerce in, essential commodities may be exercised in innumerable ways.
One of the ways in which such regulation or control over the production, supply and distribution of, and trade and commerce in, an essential commodity like foodstuffs may be exercised by placing a ban on inter Slate or inter State movement of foodstuffs to ensure that the excess stock of foodstuffs held by a wholesale dealer, commission agent or retailer is not transported to places outside the State or from one district to another with a view to maximize the procurement of such foodstuffs from the growers in the surplus areas for their equitable distribution at fair prices in the deficit areas.
The placing of such ban on export of foodstuffs across the State or from one part of the State to another with a view to prevent outflow of foodstuffs from a State which is a surplus State prevents the spiral in prices of such foodstuffs by artificial creation of shortage by unscrupulous traders.
But such control can be exercised in a variety of ways otherwise than by placing compulsory levy on the producers, for example, by fixing a controlled price for foodstuffs, by placing a limit on the stock of foodstuffs to be held by a wholesale dealer, commission agent, or retailer, by prohibiting sales except in certain specified manner, etc.
These are nothing but regulatory measures.
We find no lawful justification for giving a restricted meaning to the word 'regulating ' in cl.
(d) of sub section (2) of section 3 of the Act as not to take in prohibiting '.
In State of Tamil Nadu vs M/S Hind Stone and Ors.
( ') Chinnappa Reddy, J. referred with approval the observations of Mathew, J. in G.K. Krishnan vs State of Tamil Nadu(2) laying down that the word 'regulation ' has no fixed connotation and that its meaning differs according to the nature of that, thing to which it is applied.
The learned Judge also observed: "In modern statutes concerned as they are with economic and social activities, 'regulation ' must, of necessity, (1) [l981] 2 SCC 205 (2) [1975] 2 SCR 715 1049 receive so wide an inter pretation that in certain situations, A it must exclude competition to the public sector from the private sector.
More so in a welfare State.
It was pointed out by the Privy Council in Commonwealth of Australia vs Bank of New South wales we agree with what was stated therein that the problem whether an enactment was regulatory or something more or whether a restriction was direct or only remote or only incidental involved, not so much legal as political, social or economic consideration and that it could not be laid down that in no circumstances could the exclusion of competition so as to create a monopoly, either in a State or Commonwealth agency, be justified. ' ' In Krishan Lal Praveen Kumar & Ors vs State of Rajasthan & Ors.
,(l) Suraj Mal kailash Chand & ors.
vs Union of India & Ors.
,(a) and Bishamber Dayal Chandra Mohan & Ors.
vs State of U.P. & Ors.(3) the Court has held that a restriction placed on movement of wheat from one State to another and/on movement of wheat from one district to another under cl.
(d) of sub section
(2) of section 3 of the Act, to be regulatory in character.
Surely when a part of the country is verging on conditions of acute shortage or even famine, it is expected of the government to procure foodstuffs from surplus areas and transport the same for distribution in deficit areas.
[D the State of Tamil Nadu like some other States, the two things most essential for the sustenance of human life are rice and paddy.
It is amply borne out from the material on record that due to the failure of the southwest and north east monsoons in successive years, and the consequent poor rainfall, there was a steep fall in production of paddy.
In the circumstances, the State Government had no other alternative not only to reimpose compulsory levy on the producers of paddy to the extent of 50%%, but also to introduce a scheme for a monopoly purchase of paddy by the Government with a view to build up its buffer stock for distribution through the public distribution (1) 11981] 4 SCC 550 (2) (3) [1982] I SCR 137 1050 system throughout the State.
If one part of the State is faced with a famine or even acute shortage of foodstuffs, it is not unreasonable for the Government to acquire foodstuffs from the surplus areas and distribute the same in areas where they are most needed.
The source of power to issue an order under cl. (d) of sub section
(2) of section 3 of the Act being relatable tot he general powers of the Central Government under sub section
(1) of section 3, there is no reason for us to give a restricted meaning to the word 'regulating ' in cl.
(d) of sub section
(2) of section 3 of the Act so as not to take in prohibiting '.
For the reasons aforesaid, the appeal must fail.
A.P.J. Appeal dismissed.

dataset_name: IN-Abs

summary:
Section 3 (2) (d) Whether regulating includes in the context prohibiting.
Interpretation of statutes Whether some words may be used in different senses in the Same sentence.
Words and phrases Regulation and Prohibiting Meaning and scope of.
Due to failure of monsoon in the years 1981 82, there was a steep fall in production of paddy and it became necessary for the State Government of Tamil Nadu to build up its buffer stocks for distribution through the public distribution system throughout the State.
ID the circumstances, the State Government had no other alternative but to introduce a monopoly procurement scheme with a view to procure the maximum stock of paddy by banning purchase by traders.
This was in addition to compulsory levy on dealers of paddy and rice to the extent of 50% under cl. 5 (1) of the Tamil Nadu Paddy & Rice (Regulation of Trade) Order, 1974.
1029 In exercise of the powers conferred under section 3 of the read with the Government of India, Ministry of Agriculture (Department or Food) Order GSR 800 dated Juno 9, 1978 issued under section 5 of the Act with the prior concurrence of the Government of India, the State Government accordingly promulgated the Tamil Nadu Paddy (Restriction on Movement) Order, 1982 on October 22, 1982.
Clause 3 (1A) of the Order prohibited transport, movement or otherwise carrying of paddy outside the State by road or rail or otherwise except under and in accordance with the conditions of a permit issued by an officer authorised in that behalf.
By GOMS No. 293 dated May 11, 1982 the State Government introduced sub cl.
(IA) to cl. 3 of the Order which prohibited transport; movement or otherwise carrying of paddy outside places notified by cl. 3 of the Order by road or rail or otherwise.
Thereafter, on June 20, 1983, the State Government made a further amendment to the newly inserted cl. 3 (IA) which clamped a complete ban on transport, movement or otherwise carrying of paddy outside the Thanjavur District, Chidambaram and Kattumannarkoil Taluks in South Arcot District and Musiri, Kulithalai, Lalgudi and Tiruchirapalli Talulks in Tiruchirapalli District.
The appellant along with other traders assailed the constitutional validity of cl. 3 (IA) of the Order, as amended, which placed a complete ban on transport, movement or otherwise carrying of paddy outside the Thanjavur district and the aforesaid Taluks in South Arcot and Tiruchirapalli districts as being violative of articles 14, 19(1)(g) and 301 of the Constitution The High Court repelled the contentions and dismissed the writ petitions.
In the appeal, the appellant contended that the impugned cl. 3 (IA) of the Order was ultra vires the State Government on two grounds, namely: (1) The delegation of a specific power under s 3 (2) (d) of the Act to State Government by the aforesaid notification dated June 9, 1978 issued by the Central Government under section 5 of the Act to regulate storage, transport, distribution, disposal etc.
Of an essential commodity, in relation to foodstuffs, does not carry with it The general power of the Central Government under sub section
(1) of section 3 to regulate or prohibit the production, supply and distribution thereof and trade and commerce therein.
And (2) That the word regulating ' in cl.
(d) of section 3 (2) of the Act does not take in 'prohibiting ' and as such there cannot be a total prohicition on transport, movement or otherwise carrying of paddy out of the areas in question under (d) but only regulation of such activities in the course of trade and commerce by grant of licences or permits.
Dismissing the appeal, ^ HELD: 1.
Sub s (2) of section 3 of the offers no fresh powers but is merely illustrative of the general poweres by sub section
(1) of section 3 without exhausting the subjects in relation to such powers can be exercised.
Although cl.
(d) of sub section
(2) of section 3 with a specific power, the general power to issue the impugned 1030 order flows from the provisions of sub section
(1) of s.3 which stands delegated to the State Government by virtue of the notification issued under section S of the Act.
[1042H; 1043B] Santosh Kumar Jain vs The State, [I951] SCR 303, and Emperor vs Sibnath Banerjee, LR [1945]] 72 IA 241, followed.
Nanalal Navalnathji Yogi vs Collector of Bulsar & Ors.
AIR 1981 Guj.
approved.
Atulya Kumar vs Director of Procurement & Supply, AIR 1953 Cal.
548, approved.
_ Tarakdas Mukherjee vs State of West Bengal, and Lila Biswas vs State of West Bengal, , approved.
Sujan Singh vs State of Haryana, AIR 1998 Pun, 363, State of Uttar Pradesh vs Suraj Bhan, AIR 1972 All. 401 and Bejoy Kumar Routrai vs State of Orissa AIR [1976] Orr.
138, overruled.
The word 'regulation ' cannot have any rigid or inflexible meaning as to exclude 'prohibiting '.
It is difficult to define the word 'regulate ' as having any precise meaning.
It has different shades of meaning and must take its colour from the context in which it is used having regard to the purpose and object of the legislation, and the Court must necessarily keep in view the mischief which the legislature seeks to remedy.
The question essentially is one of degree and it is impossible to fix any definite point at which 'regulation ' ends and prohibition ' begins.
The power to regulate does not necessarily include the power to prohibit, and ordinarily the word 'regulate ' is not synonymous with the word 'prohibit '.
This is true in a general sense and in the sense that mere regulation is not the same as absolute prohibition.
But the power to regulate carries with it full power over the thing subject to regulation and in obsence of restrictive words, the power must be regarded as plenary over the entire subject.
It implies the power to rule, direct and control and involves the adoption of a rule or guiding principle to be followed or the making of a rule with respect to the subject to be regulated.
The power to regulate implies the power to check and may imply the power to prohibit under certain circumstances, as where the best or only efficatious regulation consists of suppression.
[1045G H; 1046E F Narendra Kumar vs Union of India, Slaitery vs Naylor, LR [1888] AC 446 and Municipal Corporation of the City of Toronto vs Virgo, LR , Corpus Juris Secundum, vol.
76 at p. 611 and Webster s Third New International Dictionary, vol II, p 1913 and Thorter Oxford Dictionary, vol.
II, 3rd edn., p. 1784, referred to State of Mysore vs H. Sanjeeviah, ; , distinguish and limited.
1031 The source of power to issue an order under cl.
(d) of sub section
(2) of A section 3 of the Act being relatable to the general powers of the Central Government under sub section
(1) of section 3, there is no justification for giving a restricted meaning to the word 'regulating, ' in cl.
(d) of sub section
(2) of section 3 of the Act so as not to take in 'prohibiting '.
A word may be used in two different senses in the same section.
[1050B C] The Act is a piece of socio economic legislation and its predominant object is to provide in the interests of general public, for the control of the production, supply and distribution of, and trade and commerce in, certain essential commodities.
Such control can be exercised in a variety of ways otherwise than by placing compulsory levy on the producers, for example, by fixing a controlled price for foodstuffs, by placing a limit on the stock of foodstuffs to be held by a wholesale dealer, commission agent or retailer by placing sales except in certain specified manners etc.
All these arc nothing but regulatory measures.
Placing a ban on inter State or inter State movement or export of foodstuffs is one of the ways to regulate and control and such ban prevents the spiral rise in prices of such foodstuffs by artificial creation of shortage by unscrupulous traders.
The various Control Orders issued by the Central Government under sub section
(1) of s 3 of the Act or by the State Governments under section 3 read with section 5 have introduced a system of checks and balances to achieve she object of the legislation i.e. to ensure equitable distribution and availability of essential commodities at fair prices.
Special public interest in an industry e. g. that it is engaged in the production of a commodity vitally essential to the community, may justify the regulation of its production, supply and distribution and its trade and commerce, provided such regulation is not arbitrary and has a rational nexus with the object sought to be achieved.
[1048C D; 1047F H; 1048A] If one part of the country or of a State is faced with a famine or even acute shortage of foodstuffs.
it is not unreasonable for the Government to acquire foodstuffs from the surplus areas and distribute the same in areas where they are most needed.
Since there was steep fall in production of paddy due to failure of monsoons the State Government of Tamil Nadu was justified not only to reimpose compulsory levy on the producers of paddy to the extent of 50% but also to introduce a scheme for a monopoly purchase of paddy by the Government with a view to build up its buffer stock for distribution through the public distribution system throughout: the State.
[1049E G] State of Tamil Nadu vs Hind Stone & Ors.
[19811 2 SCC 205, C. K Krishnan vs State of Tamil Nadu [1975] 2 SCR 715, Krishan Lal Praveen kumar & Ors.
vs State of Rajasthan & Ors., , Suraj Mal Kailash Chand & Ors, vs Union of India & Ors., and Bishamber Dayal Chandra Mohan & Ors.
vs State of U.P. & Ors.
, ; , relied on. 1032


judgement:
Civil Appeal No. 764 of 1972.
From the Judgment and order dated the 6th/7th September, 1971 of the Gujarat High Court at Ahmedabad in Special Civil Application No. 1489 of 1969.
G.B. Pai, D.N. Misra, A.N. Ditia and Miss Meera Mothur, for the Appellant.
1088 Abdul Khader, S.T. Desai, Girish Chandra, N.L. Kekar, V. Subba Rao, R.N. Poddar for the Respondents.
The judgment of the Court was delivered by CHINNAPPA REDDY, J.
The question raised in this appeal concerns the vires of Chapter V A of the .
The principal Act was enacted in 1948.
Chapter V A was inserted by section 20 of Act No. 53 of 1951.
The provisions of the Chapter, however, have ceased to have effect on and from July l, 1973.
That is the sequel to a notification issued under section 73 I of the Act.
Chapter V A is headed "Transitory Provisions" and provides for the payment by the principal employer of a special contribution which shall be in lieu of the employer 's contribution payable under Chapter IV in the case of factories or establishments situated in areas in which the provisions of both Chapters IV and V are in force.
The special contribution is required to be such percentage, not exceeding five per cent of the total wage bill of the employer, as the Central Government may specify.
It is also provided that the employer 's special contribution in the case of factories or establishments in areas in which the provisions of both Chapters IV and V are in force shall be fixed at a rate higher than that in the case of factories or establishments situate in areas in which the provisions of the said Chapters are not in force.
The employees ' State Insurance Act, 1948 was enacted to provide for certain benefits to employees in the case of sickness, maternity and employment injury and to make provisions for certain other matters in relation thereto.
It is an obvious social welfare legislation in tune with the Directive Principles of State Policy contained in Articles 41, 42 and 43 of the Constitution.
It is a legislation which comes directly under entries 23 and 24 of list III of the Vllth schedule of the Constitution, which are, "social security and social insurance; employment and unemployment", and "welfare of labour including conditions of work, provident funds, employers ' liability, workmen 's compensation, invalidity and old age pensions and maternity benefits".
The Act extends to the whole of India and comes into force on such date or dates as the Central Government may appoint, different dates being permissible for different provisions of the Act and or different States or for different parts thereof.
It applies to all factories including factories belonging to the Government other than seasonal factories.
Chapter 1089 II provides for the establishment of the Employees ' State Insurance A Corporation for administering tho scheme of Employees ' State Insurance in accordance with the provisions of the Act.
The Corporation is to be a body corporate HAVING perpetual succession and a common seal.
There are detailed provisions for the Constitution of a Standing Committee and a Medical Benefit Council.
Chapter III provides for Finance and Audit.
Section 26, in particular, provides for the establishment of a Fund called the Employers ' State Insurance Fund into which all contributions paid under the Act and all other money received on behalf of the Corporation shall be paid.
The Corporation is authorised also to accept grants, donations and gifts from the Central or any State Government, local authority or any individual or body whether incorporated or not, for all or any of the purposes of the Act.
Section 28 lists the purposes for which the Fund may be expended and it includes among other items, (i) payment of benefits and provision of medical treatment and attendance to insured persons and, where the medical benefit is extended to their families.
the provision of such medical benefit to their families, in accordance with the provisions of this Act and defraying the charges and costs in connection therewith; and E (ii) . . . . . (iii) . .
(IV) establishment and maintenance of hospitals, dispensaries and other institutions and the provisions of medical and other ancillary services for the benefit of insured per sons and, where the medical benefit is extended to their families;" ChapterlV provides for the manner of insurance of all the employees in factories or ESTABLISHMENT to which the Act applies and the payment of contribution for that purpose.
The contribution payable in respect of an employee shall comprise contribution payable by the employer called employees contribution and contribution payable by the employee called employee 's contribution.
The contribution has to be paid at the rates specified in the first schedule.
Detailed provision is made for the method and payment 1090 of contribution.
Chapter V deals with benefits Section 46 specifies the benefits to which the insured persons, their dependants and others shall be entitled.
There are other detailed provisions indicating the manner of working out the various benefits.
Quite obviously the scheme could not be implemented straight away throught out the country but could only be implemented by stages.
It, therefore, became necessary for the Parliament to make certain transitory provisions, which it did by the introduction of Chapter V A by Act 53 of 1951.
The Statement of objects and reasons of Act 53 of 1951 may be usefully extracted here.
The Statement is as follows: "The , was passed by the Dominion Legislature in April 1948.
It provides for certain benefits to industrial employees in case of sickness maternity and employment injury The Act permits tho implementation of the scheme by stages.
It was intended that the scheme should be implemented in the first instance in Delhi and Kanpur, but regional implementation of such schemes is always attended with certain practical difficulties.
The principal difficulties are the rise in the cost of production and the diminution of the competitive capacity of industries located in those regions.
The main objections of the employers centred round the former difficulty and those of the Uttar Pradesh Government emphasised the latter.
The Central Government have considered those objections and are anxious to avoid any competitive handicap to any region.
This may be best achieved by an equitable distribution of the employer 's contribution, even where implementation is affected only in certain areas, among the employers in the whole country employers in regions where the scheme is implemented paying slightly higher contributions.
This will minimise the contribution leviable from the employers and spread the incidence of the cost of the scheme equitably.
This Bill is primarily intended to achieve this object.
" The notes on Clause )0 of the Bill which provided for the introduction of Chapter V A was to the following effect, 1091 "Clause 20 A new self contained chapter is proposed A providing for the collection of employer 's special contribution throughout the Union.
The rate of the contribution which may be varied from time to time is to be fixed by the Central Government after two months ' notice by notification.
The rate of the contribution shall be higher m areas where the scheme applied than in other areas.
The manner of and time within which the special contribution is to be paid would be notified by the Central Government.
Consequential provisions fitting the employer 's special contribution into the existing scheme of the Act and other necessary provisions have been made in this Chapter.
The Central Government is empowered to give directions or provide for such matters as may be necessary for the removal of any difficulty.
The Chapter can be withdrawn from operation by the Central Government after giving three months ' notice.
" The desirability and the necessity for the implementation of the scheme by stages has been brought out by a Constitution Bench of this court in Basant Kumar vs Eagle Rolling Mil/s(l) where it was stated. ". .
In the vary nature of things, it would have been impossible for the legislature to decide in what areas and in respect of which factories the Employees ' State Insurance Corporation should be established.
It is obvious that a scheme of this kind, though very beneficent, could not be introduced in the whole of the country all at once.
Such beneficial measures which need careful experimentation have some times to be adopted by stages and in different phases, and so, inevitably, the question of extending the statutory benefits contemplated by the Act has to be left to the discretion of the appropriate Government.
"Appropriate Government" under section 2(1) means in respect of establishments under the control of the Central Government or a Railway administration or a major port or a mine or oil field(i, the Central Government, and in all other cases, the State Government.
Thus, it is clear that when extending the Act to different establishments, the relevant (1) ; 6 SCR 913 1092 Government is given the power to constitute a Corporation for the administration of the scheme of Employees ' State Insurance.
The course adopted by modern legislatures in dealing with welfare scheme has uniformly conformed to the same pattern.
The legislature evolves a scheme of socioeconomic welfare, makes elaborate provisions in respect of it and leaves it to the Government concerned to decide when, how and in what manner the scheme should be introduced.
" In the present case the appellant company which was formed in 1965 and went into production the same year, was exempted from the provisions of Chapter V A of the Act until the provisions of Chapter V of the Act were enforced in the area where the appellant 's factory was situated.
However this exemption was withdrawn with effect from May 31, 1969 by a notification of the Government.
The appellant company questioned its liability to pay special contribution under Chapter V A of the by filing a writ petition in the High Court of Gujarat under article 226 of the Constitution.
The writ petition was dismissed by the High Court on September 7, 1971 and the present appeal has been filed pursuant to a certificate granted by the High Court under article 132(1) and 133(1) (c) of the Constitution.
Meanwhile Chapter V A has ceased to have effect on and from July 1, 1973.
We are, therefore, concerned in this appeal with the question of the payment of special contribution under Chapter V A by the appellant company for the period, May 31, 1969 to March 26, 1973.
The main ground on which the appellant canvasses the correctness of the judgment of the High Court is that the contribution payable under Chapter V A is a fee and its levy is illegal as the Act does not contemplate the rendering of any service or the conferment of any benefit to the appellant company or its employees as quid pro quo for the payment.
The provisions of Chapter V A, therefore, according to the learned counsel, are ultra vires.
We are afraid that the very approach of the appellant to the problem at issue suffers from a basic defect.
The appellant 's argument proceeds on the fundamental misconception that the payment of contribution directed to be made by the employer under the or other similar payment or benefit under various other social welfare legislations must either be labelled as a tax or a fee in order to attain legitimacy or not at all.
The idea that such payment, contribution or whatever name 1093 is given to it should be so pigeon hold and fitted in stems from a misunderstanding of the scheme of our Constitution in regard to social welfare legislation.
Apart from the preamble which promises to secure to all its citizens, "justice, social, economic and political", the State is enjoined by the Directive Principles of State Policy to secure a social order for the promotion of the welfare of the people.
In particular articles 41, 42 and 43 enjoin the State to make effective provision for securing the right to work, to education and public assistance in cases of unemployment, old age, sickness and disablement, and in other cases of any undeserved want, to make provision for securing just and humane conditions of work and maternity relief and to secure by suitable legislation or economic organisation or in any other way, to all workers, agricultural, Industrial or otherwise, work, a living wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities.
It is in pursuance of these Directive Principles that we find entries 23 and 24 in list III of the VlIth Schedule of the Constitution.
Both Parliament and the Legislature of any State, subject to conditions with which we are not concerned, have power to make laws with respect to any of the matters enumerated in List llI It is pursuant to the power entrusted in respect of entries 23 and 24 of List III that Parliament has enacted the .
In our understanding, entries 23 and 24 of List III, of their own force, empower Parliament or the legislature of a State to direct the payment by an employer of contributions of the nature of those contemplated by the for the benefit of the employees.
These contributions or for example contributions to provident funds or payments of other benefits to workers are not required to be and cannot be labelled as taxes or fees for the sole and simple reason that they are neither taxes nor fees.
List I and List lI contain several entries in respect of which taxes may be levied by the Parliament, by the Legislature of any State and by both.
Entry 97 is a residuary clause which enables Parliament to legislate in respect of any other matter not enumerated in List lI or List III including any tax not mentioned in either of those lists.
Entry 96 of List I enables Parliament to levy fee in respect of any of the matters in that list, but not including fee taken in any court.
Similarly entry 66 of List II enables the legislature of a State of levy fee in respect of the matters in that list, but not including fees taken in any court.
Again entry 47 of List III enables Parliament and the Legislature of a State to levy fees in respect of any of the matters in that list but not including fees in 1094 any court.
The payment of contribution by an employer towards the premium (what else is it ?) of an employee 's compulsory insurance under the falls directly within entries 23 and 24 of List IIl and it is wholly unnecessary to seek justification for it by recourse to Entry 97 of List I or Entry 47 of List III in any circumlocutous fashion.
We see no reason to brand or stamp the contribution as a tax or fee in order to seek to legitimise it.
Legitimation need not be sought fictionally from Entry 97 of List I or Entry 47 of List III when legitimation is directly derived for the charge from Entries 23 and 24 of List III.
Even if the charge is to be construed as a fee as the High Court has done, it appears to us to be justifiable on that basis too.
It is not disputed and indeed it is not capable of any controversy that services and benefits are indeed meant to be and are bound to be conferred on the employees and through them on the employer, in due course, when the scheme becomes fully operative in all areas.
For a start the scheme is confined to a few areas and though special contribution is levied from all employers wherever they be, in the case of employers who straightaway receive the benefits of the insurance scheme, their rate of contribution is higher while in the case of employers, who do not yet receive the benefits of the scheme, their rate of contribution is lower.
So far as the latter are concerned, the scheme is analogous to a deferred insurance policy which parents often take out on the lives of their children, but which are to be effective only from a future date after the children attain a certain age, though premium is liable to be paid right from the start.
Merely because the benefits to be received are postponed, it cannot be said that there is no quid pro quo.
It is true that ordinarily a return in proe senti is generally present when fee is levied, but simultaneity or contemporaneity of payment and benefit is not the most vital or crucial test to determine whether a levy is a fee or not.
In fact, it may often happen that the rendering of a service or the conferment of a benefit may only follow after the consolidation of a fund from the fee levied.
Hospitals, for instance, cannot be built in a day nor medical facilities provided right from the day of the commencement of the scheme.
It is only after a sufficient nucleus is available that one may reasonably expect a compensating return.
The question of how soon a return may be expected or ought to be given must necessarily depend on the nature of the services required to be performed and benefits required to be 1095 conferred.
In K C Sarma vs Regional Director, E S 1.
Corporation(1) it was observed: ".
It appears that the employed special contribution is not a tax but a fee.
This contribution goes to a fund known as the Employees ' State Insurance Fund which is to be utilised for the benefits to be given to the employees under the Act.
the cost of these benefits will` not be met from the general revenues of the state, but will be borne entirely from the aforesaid fund only. the employers ' contribution under the Act constitutes only a fee and not a tax The Government cannot go on levying employers ' contribution under sec.
73A of the Act without giving a service in return.
But from this it does not follow that the service must be given as soon as the contribution is made.
The object of the Act is that the benefits which it provides should become available to the employees in all factories through out India as soon as circumstances make it practicable.
Statutory bodies have to be set up, various officers have to be appointed and arrangements have to be made for providing medical help.
All these required time and money and in some areas the time required may be more than in other areas.
Chapter VA is for meeting the needs of the transitory period.
When the whole Act is brought into force in the whole of India, it would not be necessary to retain this Chapter.
Then all contributions will be made under Chapter IV.
It may be noted that Chapter VA was inserted, as pointed out above, by an amending Act only in 1951.
The object of the amendment was to make an equitable distribution of contributions by all employers.
It was not considered fair that only employers of these regions to which the benefit provisions were extended should alone make contributions and thereby help to set up a corporation.
The benefit provisions will sooner or later be extended to all areas.
Therefore, the amendment provides that employers of regions to which the benefit clauses are not extended must also make their contributions though at a lesser rate.
" As anticipated by the Assam High Court, Chapter VA has now ceased to have effect from July l, 1973, as already mentioned AIR 1962 Assam 120.
1096 by us earlier.
If the charge was to be levied as a fee, we are satisfied that there was sufficient quid pro quo.
The learned counsel for the respondent attempted to argue that simultaneity or contemperancity of levy and service were of the essence of a fee and that it had been so laid down in argument was drawn from the statement in Cheval Christians (supra) case that the benefit should not be indirect and remote The reference, there, to indirectness and remoteness was not made in connection with any delayed benefit from the point of view of time, but with reference to the very benefit itself and its connection with the levy.
We once again have to reiterate what we were forced to point out in Amar Nath Om Parkash vs State of Punjab(2) that judgments of courts are not to be construed as Acts of Parliament.
Nor can we read a judgment on a particular aspect of a question as a Holy Book covering all aspects of every question whether such questions and facets of such questions arose for consideration or not in that case.
We must however, hasten to notice that the Madras High Court in Shakti Pipe Limited vs E. S I. Corporation(3) and the Kerala High Court in Gwalior Rayon Silk Manufacturing Company v,.
section 1.
Corporation(4) have upheld the levy of special contribution as a tax.
Therefore, whether the special contribution is, to be viewed as a tax, fee or neither it has sufficient constitutional protection.
The appeal is, therefore, dismissed with costs.
A.P.J. Appeal dismissed.
(1) ; (2) ; (3) 1978 LABOUR & Ind.
Cases 410 11 (4) 1975 LABOUR & Ind. Cases 1395.

summary:
The Employee ' State Insurance Act 1948, a social welfare legislation in tune with the Directive Principles of State Policy contained in Articles 41, 42 and 43 OF the Constitution, was enacted to provide for certain benefits to employees in the case of sickness, maternity and employment injury and to make provisions for certain other matters in relation thereto.
the Act directly falls under Entries 23 and 24 of List III of the Vllth Schedule of the Constitution, which are, social security and social insurance, employment and unemployment", and "welfare of labour including coDditioDs of work, provident funds, employers liability, workmen 's compensation, invalidity and old age pensions and maternity benefits".
The Act applies to all factories including factories belonging to the Government other tban seasonal factorics Chapter Il provides for the establishment of the Employees ' State Insurance Corporation, to bo a body corporate, for administering the scbeme of Employees ' State Insurance.
Section 26 provides for the establishment of a Fund called the Employees ' State Insurance Flmd.
Section 28 lists the purposes for which the Fund may be expended.
Chapter IV provides for the manner of insurance of ull the employGes in factories or ostablishments to which tho Act applios 1086 and the payment of contribution for that purpose.
The contribution payable in rcspect of an employce shall comprise contributioll payable by the employer called employer 's contribution aad contribution payble by the employee called employee 's contribution.
The contribution has to be paid at tbe rates specified in the first schcdule.
SeCtiOD 46 specifies the benefits to which the iosured persons,their dependats and others shall be entitled.
The scheme under tbe Act could only be implemonled by stagos, and, thelefore, ' trnnsitory provisioDs" were made by introduction of Chapter V A by section 20 of Act No. 53 of 1951, which provided for tbe payment by the principal employer of a special contribution which shall be in lieu of the employer 's contribution payable under Chapser IV in the case of factories or establishments situate in areas iD which the provisions of both Cbapters IV and V are in force.
The provisioas or Chapter V A, however, ceased to have effect on and from July 1, 1973.
The appellant compaoy wa9 foemed in 1964 and started production Ihe same year.
The appellant company was exemptcd from Ihe provisiona of Chapter V A until the provisions of Chapter V of the Act were enforced in the area where the appellaDt 's factory was situaled.
This exemption was withdrawn with effect from May 31, 1969.
The appellant company ques tioned its liability to pay special contribution under Cbapter V A of the Act under Article 2 '6 of the Constitution.
The High Court disrDissed the Detition .
In the appeal to this Court it was contended that Ihe contribution payable under Chapter V A is a fee and its levy is illegal as the Act does not contemplate the rendering of any service or the conferment of any benefit to the appellant company or its employees as quJd pro quo for the pay mcnt.
and the DrOVisionS of Chapter V A are, therefore, ultra vires Dismissing the appeal. ^ HELD: 1.
The payment of contribution by an employer towards the premium of an employee 's compulsory insurance under the Employee ' State Insurance Act falls directly within Entrics 23 and 24 of List III of the VIIth Schedulo and it is wholly unnecessary to seek justification fot it by recourso to Entry 91 of List 1 or Entry 47 of List III in aDg circumlocutous fashioD. [1094A B] 2.
These contributions or for example coDtribulions to Provident Funds or payment of other benefits to worlcers cannot be labelled as taxes or fees.
They are neither taxes nor fees.
They donot require to be labelled as taxes or fees to recoive ligitimation.
[1093E '] 3.
( Even if tho charge is to be con trucd as a fee it is justifiable on that basis also as there was sufflcient quid pro quo.
[1096A] 3.
(ii) Services and bonefits are indeed meant to be and are bound to be conferrcd oo the employees and throngh them on the employer, in due course.
when tbe scheme becomes fully operative in all areas.
For a start the scheme is confined to a few aroas and though special contribution is 1087 levied from all employers wherever they be, in the case of employers who A straightaway receive the beoefits of the insurance scheme, their rate of contribution is bigher while in the case of employ rs, who do not yet receive the benets of the scheme, their rate of contribution is lower.
For the latter the scheme is analogous to a deferred insurance policy.
Morely because the benefits to be receive are postponed, it cannot be said that there is no quid pro quo Ordinarily a return in presenti is generally present when fee is levied, but simultaeity or contemporaneity of payment is not the most vital or crucial test to determine whether a levy is a fee or not.
In fact, it may often happen that the rendering of a service or the conferment of a benefit may only follow after the consolidation of a fund from the fee levied.
It is only after a sufficient nucleus is available that one may reasonably except a compensating re(urn.
The question of how soon a return may be expected or ought to be given must necessarily depend on the nature of the services required to be performed and benefits required to be conferred [1094D H] Basant Kumar vs Eagle Rolling Mills; , 6 SCR 913, referred lo.
K. C. Sarma vs Regional Director, E. section I Corporation, AIR 1962 ASSAM 120, followed.
The observations in the case of Kewal Krishan that the benefit should not be indirect and remote was not made in connection with any delayed benefit from the point of view of time, but with reference to the very benefit itself and its connection with the levy.
The judgments of Courts are not to be construed as Acts of Parliament.
Nor can a Judgment on a particular aspect of a question be read as a Holy Book covering all aspects of every question whether such questions arose for consideration of not in that case.
[1096B C] Kewal Krishan vs State of Punjab; , destinguished.
Amar Nath Om Parkash VS.
State of Punjab; , , relied on.