STATE OF MAHARASHTRA Vs. R M D CHAMARBAUGWALIA

JUDGEMENT

(1.) PETITIONERS No. 2 carried on the activity of running a crossword competition in Bombay prior to August 1948. After August 1948, they transferred their activity to the State of Mysore and they carried on that activity after obtaining the necessary license from that State. The registered office of the petitioners is situated in Bangalore. They own and run a weekly newspaper called the Sporting Star. This paper is printed and published in Bangalore and it contains a crossword prize competition called the R. M. D. C. Crosswords for which entries are received from various parts of India including the State of Bombay. The petitioners have agents and depots in various places in the territory of India, including the State of Bombay, to collect entry forms and fees for being forwarded to the petitioners at Bangalore. The petitioners advertise their crossword prize competition in various publications in various places in India including the State of Bombay. The Legislature of the State of Bombay passed the Act, being Act 30 of 1952, which amended Act 54 of 1948, by which they purported to tax the gross receipts of petitioners No. 2 from the residents of Bombay who had submitted entries for the crossword competition, and by this Act also the Legislature imposed certain restrictions upon the manner in which petitioners No. 2 should carry on their activity in the State of Bombay. The petitioners by tins petition contended that the provisions in the Act taxing petitioners No. 2 and also" imposing restrictions upon their activity was 'ultra vires' of the State Legislature, The petition was heard by Desai J. who held that certain provisions of the Act were 'ultra vires'. The State of Bombay has now come in appeal.

(2.) SEVERAL questions of the utmost importance both to the citizen and to the State have been agitated at the Bar. It may be that it is possible to dispose of tin's appeal on a very narrow ground, but both Mr. Seervai on behalf of the State of Bombay and Mr. Manekshaw on behalf of the petitioners have asked us to decide the various questions which were raised in the Court below, because both parties are anxious that they should get a final and authoritative opinion on questions of this importance. We are told that the matter will ultimately be agitated before the Supreme Court and it is desirable that the Supreme Court should have the view of this Court on these various questions that have been discussed before us. Ordinarily we would have been most reluctant to decide questions which do not directly arise for our determination. A Court like an individual should only cross a hurdle when it reaches it and there is always time enough to decide questions as and when they directly arise for our determination. But in view, as we said, of the importance of the questions and in view of the desire of both the petitioners and the State, we have departed from the ordinary principle which we follow in these matters and we have heard arguments at some length and we also propose to give our opinion on the various questions raised at the Bar.

(3.) THE first question that arises for our consideration is with regard to the legislative competence of the State Legislature to enact this Act. In our opinion, the correct principle which should be applied in order to ascertain whether the State Legislature is competent to pass an impugned piece of legislation is in the first place to look at the Lists annexed to the Seventh Schedule of the Constitution in order to determine whether the Legislature has legislated upon a topic within its competence. If it has legislated upon a topic not within its competence, then the legislation is clearly 'ultra vires' and no further question arises. But even if it has legislated upon a topic within its competence, the next question that must arise is whether there is a territorial nexus between the subject-matter and the State. The competence of the State Legislature arises by virtue of the provisions of Article 245 and Article 246 (8) of the Constitution, and the State Legislature has the competence to make laws mentioned in the relevant Lists for the whole or any part of the State. Therefore not only is the legislative competence confined to the topics mentioned in the Lists, but it is also confined to legislating with regard to the whole or any part of the State. If the Legislature legislates in respect of a topic mentioned in the relevant list and the legislation goes beyond the State, then it would not be competent legislation, because then the Legislature is not legislating for the whole or any part of the State but it is legislating beyond its jurisdiction. If therefore a person affected by the legislation were to challenge it on the ground that he is affected by the legislation, although he or his business or the transaction in which he is engaged has no connection with the State at all, then it would be open to the Court to say that the legislation is extraterritorial in its effect. If then these two tests are satisfied that the legislation is competent in the sense that it is covered by a topic mentioned in the relevant list and also it is not extra-territorial, then the third question to be considered is whether the Constitution has placed any restrictions upon the power of the Legislature to legislate on that particular topic, because, as we shall presently point out, the scheme of the Constitution is with regard to many topics that after conferring legislative competence upon the State Legislature it has placed certain restrictions upon it contained in various articles of the Constitution.