SECTION 21 OF GENERAL CLAUSES ACT 1897 HAS NO APPLICATION TO VARY OR AMEND OR REVIEW A QUASI JUDICIAL ORDER

[Mr. M. GOVINDARAJAN]

Section 21 of General Clauses Act, 1897 gives powers to issue, to include to add to, amend or vary or rescind notifications, orders, rules  or bye laws.  This section provides that where, by any  Central Act or Regulations a power to issue notifications, orders, rules or bye-laws is conferred, then that power includes a power, exercisable in the like manner and subject to the like sanction and conditions (if any), to add to, amend, vary or rescind any notifications, orders, rules or bye-laws so issued.

The provisions of the General Clauses Act, 1897 apply to all the Central Acts, and Regulations/Rules made there under by virtue of this section of power exercisable in the like manner under any of such Acts, Regulations or Rules includes, subject to the like sanction and conditions, if any, power to add to, amend vary or rescind any Act or Rules or Regulations so made.

In ‘Government of Andhra Pradesh v. Y.S. Vivekananda Reddy’ - 1994 (9) TMI 360 - ANDHRA PRADESH HIGH COURT, it was held that the State Government cannot invoke this section of the Act for withdrawal of consent if the strength of the consent so granted for sub lease the lessee executed sub-lease deed and on the culmination of such consent and changing the conditions irrevocably from the one existing at the time of grant of such consent.

In ‘State of Bihar V. D.N. Ganguly’- 1958 (8) TMI 53 - SUPREME COURT, the Supreme Court held that the Government has no power to cancel or supersede a reference made under section  10(1) of the Industrial Disputes Act, 1947.

In ‘State of Madhya Pradesh V. Ajay Singh’ – 1992 (11) TMI 285 - SUPREME COURT it was held that the application of section 21 of the General Clauses Act has no application to amend or rescind or vary a notification to amend or rescind or vary a notification issued under section 3 of the Commissioners of Enquiry Act for reconstituting the commission by replacement or substitution of its sole member except applicable for a limited purpose for extending the time for completing the inquiry.

In ‘Hari Shankar Jain V. Sonia Gandhi’ –  2001 (9) TMI 1124 - SUPREME COURT it was held that while construing the provisions of the Citizenship Act, that the certificate of registration of citizenship issued section 5(1)(c) of the Citizenship Act cannot be cancelled by the authority granting the registration by recourse to section 21 of the General Clauses Act

In ‘Indian National Congress (I) V. Institute of Social Welfare’ – 2002 (5) TMI 847 - Supreme Court Of India the Supreme Court, while construing the provisions of Representation of People Act, held that the Election Commission, cannot, by recourse to section 21 of General Clauses Act, deregister or cancel the registration of a political party under Section 29A of the Act for the decision of Commission to register a political party under section 29A(7) of the Act is quasi judicial in nature.

In ‘Industrial Infrastructure Development Corporation (Gwalior) M.P. Limited V. Commissioner of Income Tax’ – 2018 (2) TMI 1220 - SUPREME COURT OF INDIA the appellant is a State Government undertaking to develop and assist the State in the development of industrial growth centers/areas, to promote, encourage and assist the establishment, growth and development of industries in the State of M.P.,   The appellant filed an application to the Commissioner of Income Tax for registration under section 12A of the Act. Since the appellants were engaged in public utility activity which was for a charitable purpose under section 2(15) of the Act, they were entitled to claim registration under section 12A of the Act.  The appellant also filed delay condonation petition since the application was filed belatedly.  The Commissioner of Income Tax condoned the delay and granted the registration on 13.04.1999.

On 27.11.2000 the Commissioner issued a show cause notice to the appellant stating therein as to why the registration certificate granted to the appellant under Section 12A be not cancelled.  The show cause notice has set out the reasons for the proposal of cancellation of the certificate.  The appellant filed reply to the show cause notice.  The Commissioner, since did not satisfy with the reply filed by the appellant, cancelled the certificate.

Aggrieved against this order, the appellant filed a rectification application under section 154 of the Act contending that the order of the Commissioner cancelling the registration contains an error apparent and therefore requested to rectify or/and recall the order.   It was contended that once the Commissioner granted the registration certificate under section 12A, he has no power to cancel the certificate granted to the appellant.  The Commissioner rejected the rectification application holding that there was no error in the order passed by him.

The appellant filed an appeal before the Income Tax Appellate Tribunal.  The Appellate Tribunal allowed the appeal filed by the appellant.  Against the order of the Appellate Tribunal the Revenue filed appeal before the High Court.  Before the High Court the Revenue contended the following-

• The Commissioner has jurisdiction to grant registration to a trust or institution under section 12A of the Act and that itself implies that the Commissioner of Income Tax has also jurisdiction to cancel the same;
• Section 246(h) provides for appeal against the order cancelling the registration granted under section 12A of the Act.Hence this also implies that the Commissioner has jurisdiction to cancel the registration certificate under section 12AA of the Act;

The appellant submitted the following before the High Court-

• Section 12AA(ii) was introduced by way of amendment in the Act with effect from 01.10.2004;
• Prior to this amendment the Commissioner had no jurisdiction to cancel the registration granted by it;
• Section 246 of the Act will not be applicable as the section is applicable in respect of cancellation of registration of firms under section 186(2) of the Act.

The High Court allowed the appeal filed by the Revenue and set aside the order passed by the Appellate Tribunal and restored the order of the Commissioner.  The High Court held that section 21 of the General Clauses Act is the source of power to pass cancellation of the certificate granted by the Commissioner when there is no express power available under section 12A of the Act.

Against the order of High Court the appellant filed the present appeal before the Supreme Court.  The Supreme Court considered the following questions to decide the appeal-

• Whether the Commissioner of Income Tax has express power to cancel/withdraw/recall the registration certificate once granted by him under section 12A of the Act and if so, under which provision of the Act?
• Whether the grant of certificate by the Commissioner is his quasi judicial function and, if so, its effect on exercise of his power of cancellation of such grant of registration certificate?
• Whether section 21A of the General Clauses Act can be applied to support the order of cancellation of the registration certificate granted by the Commissioner under Section 12A, in case if it is held that there is no express power of cancellation of registration certificate available to the Commissioner under Section 12A of the Act? and
• What is the effect of the amendment made in section 12AA introducing sub clause (3) by the Finance Act, 2004 with effect from 01.10.20014 conferring express power on the Commissioner to cancel the registration certificate granted to the appellant under section 12A of the Act?

The Supreme Court held that the Commissioner of Income Tax had no express power of cancellation of the registration certificate once granted by him under Section 12A till 01.10.2004 and also for the following reasons-

• There was no express provision in the Act vesting the Commissioner with the power to cancel the registration certificate granted under section 12A of the Act;
• The order passed under Section 12A by the Commissioner is a quasi judicial order and being quasi judicial in nature, it could be withdrawn/recalled only when there was express power vested in him under the Act to do so.In this case there was no such express power.
• The functions exercisable by the Commissioner under section 12A are neither legislative and nor executive but they are essentially quasi judicial in nature.
• A quasi judicial order can be generally varied or reviewed when obtained by fraud or when such power is conferred by the Act or Rules under which it is made.
• For this reason section 21 of General Clauses Act is not applicable to this case.

The Supreme Court allowed the appeal filed by the appellant.