GIRNAR TRADERS Vs. STATE OF MAHARASHTRA

JUDGEMENT

(1.) Leave granted in SLP (C) No. 9734 of 2005.

(2.) IA Nos. 4 and 5 of 2009 in civil Appeal No. 3703 of 2003 are allowed subject to just exceptions and limited to this reference.

(3.) Legalistic federalism was introduced as a technique of governance with the people of India adopting, enacting and giving unto themselves the Constitution of India on 26th November, 1949. The legislative competence of the Central and State Legislatures has been demarcated by the Constitution under Article 246, with the fields for exercise of legislative power enumerated in List I (Central List), List II (State List) and List III (Concurrent List) of Schedule VII to the Constitution of India. Power to enact laws, thus, is vested in the Parliament as well as in the State Legislative Assemblies within their respective spheres. This is the paramount source for enactment of law, i.e., direct exercise of legislative power by the respective constituents. On the issue of distribution of powers between the Centre and the State, a Constitution Bench of this Court in Federation of Hotel and taurant Association of India v. Union of India, (1989) 3 SCC 634, noticed that the constitutionality of a law becomes essentially a question of power which, in a federal constitution, turns upon the construction of the entries in the legislative lists. Interpretative process, as a tool of interpretation, introduced new dimensions to the expansion of law enacted by Legislature, through Judge made law. Amongst others, doctrines of legislation by reference and legislation by incorporation are the creation of judicial pronouncements. One of the earliest instances, where the Privy Council, then responsible for Indian Judicial system, accepted the plea of legislation by incorporation and interpreted the statute accordingly in the case of Secretary of State for India in Council v. Hindusthan Co-operative Insurance Society Ltd., AIR 1931 PC 149. This judicial pronouncement was followed in different subsequent judgments and these doctrines were analyzed in greater depth for bringing out the distinction between them. The judgment of the Privy Council was referred with approval by this Court in different judgments including Municipal Commissioner of Howrah v. Shalimar Wood Products, (1963) 1 SCR 47 Bolani Ores Ltd. v. State of Orissa, (1974) 2 SCC 777; Mahindra and Mahindra v. Union of India, (1979) 2 SCC 529; Ujagar Prints v. Union of India (1989) 3 SCC 488; U.P. Avas Evam Vikas Parishad v. Jainul Islam (1998) 2 SCC 467; Nagpur Improvement Trust v. Vasant Rao, (2002) 7 SCC 657 and Maharashtra State Road Transport Corporation v. State of Maharashtra, (2003) 4 SCC 200. The principle that was enunciated by the Privy Council in the case of Hindusthan Co-operative Insurance Society Ltd. (supra) stated, "where certain provisions from an existing Act have been incorporated into a subsequent Act, no addition to the former Act, which is not expressly made applicable to the subsequent Act, can be deemed to be incorporated in it, at all events, if it is possible for the subsequent to function effectually without the addition". Though this principle has been reiterated from time to time; with the development of law, still certain doubts were reflected in the judicial pronouncements of the courts as to the application of this principle as an absolute proposition of law. On the contrary, this principle received criticism from various quarters. The critics said that it was causing impediments in smooth operation of the later law as well as abdication of legislative power by the concerned legislative constituent. Another criticism and argument which, in fact, was even advanced before us is that while approving the principle stated by the Privy Council, the subsequent Benches have not taken into consideration the impact of the judgment of the Constitution Bench of this Court in B. Shama Rao v. Union Territory of Pondicherry, (1967) 2 SCR 650. A pertinent constitutional aspect that ought to have been brought to the notice of different Benches was that the federal structure of the Constitution had come into force which controlled governance of the country and therefore the principles, inter alia, stated by the Privy Council could not be adopted as law of universal application without appropriately modifying the stated position of law to bring it in complete harmony with the constitutional mandate. In the case of Gauri Shankar Gaur v. State of U.P., (1994) 1 SCC 92, one member of the Bench of this Court, relied upon the principle stated in Hindusthan Co-operative Insurance Society Ltd. (supra) and held that in a case of legislation by incorporation, subsequent amendment or repeal of the provisions of an earlier Act adopted cannot be deemed to have been incorporated in the adopting Act which may be true in the case of legislation by reference. This judgment was relied upon by another Bench of this Court in the case of State of Maharashtra v. Sant Joginder Singh Kishan Singh, (1995) 2 Suppl. SCC 475. The amendments in various relevant laws and introduction and application of newly enunciated principles of law resulted in varied opinions. A Bench of this Court in the case of Girnar Traders v. State of Maharashtra, (2004) 8 SCC 505 (hereinafter referred to as Girnar Traders-I) expressed certain doubts on the correctness of the law stated in the case of Sant Joginder Singh (supra) and referred the matter to a larger Bench.