TMI Blog1965 (4) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... rivate Limited liability Company incorporated under the Indian Companies Act. Its registered office is it Jaora within the premises of the Sugar Mills owned by it. The appellant manufactures sugar and carries on the business, inter alia, of the production and sale of the said commodity since 1955 when it was incorporated. The sugarcane season for the manufacture of sugar generally covers the period December to March, and the sugarcane crushing season usually begins on the 1st of October and ends on the 30th June. Respondent No. 1, the State of Madhya Pradesh, enacted the Madhya Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 195 8 (No. 1 of 1959) (hereinafter called 'the Madhya Pradesh Act'). Section 23 of the said Act made a sugarcane cess payable as prescribed by it. Rules 60 to 63 of the Madhya Pradesh Sugarcane (Regulation of Supply Purchase) Rules, 1959, made under the said Act, provide for the method of collection of cess. Section 21 of the said Act prescribes for the payment of commission to the Cane Development Council which was proposed to be constituted under s. 5. Rules 45 to 47 prescribe the quantum of commission payable to the said Council and refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and as such, the impugned section was not open to any effective challenge. In the result, S. 21 was upheld. This decision was pronounced on January 30, 1962. It appears that as a result of the decision of this Court in the case of Diamond Sugar Mills([1961] 3 S.C.R. 242), the U.P. Sugarcane Cess (Validation) Act, 1961 was passed by the Central Legislature on March 21, 1961 (No. IV of 1961), and it received the assent of the President the same day. It may be mentioned that the decision of this Court in the case of Diamond Sugar Mills(2) was pronounced on December 13, 1960, and Parliament thought that it was necessary to validate the imposition and collection of cesses made under the said Act and so, the U.P. Sugarcane Cess (Validation) Act, 1961 was passed. Parliament, however, realized that there were several other State Acts which suffered from the same infirmity, and so, on September 11, 1961, the Act with which we are concerned in the present proceedings, was passed. It has also received the assent of the President the same day. This Act purports to validate the imposition and collection of ceases on sugarcane under ten different Acts passed by the Legislatures of seven d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istence, a demand could be made with a view to provide for the constitution of the said Council and thus enable it to afford service and assistance to the mills like the appellant. That is why the High Court rejected the, appellant's contentions in that behalf and dismissed its writ petition. This judgment was pronounced on September 24, 1963. The appellant then applied for and obtained a certificate from the High Court and it is with the said certificate that it has come to this Court by appeal. That is how the principal question which arises for our decision is whether the High Court was right in holding that the Act is constitutionally valid. A subsidiary question also falls to be decided and that has relation to the demand for commission for the year 1959-60. The Constitutional position with regard to the legislative competence of the State Legislatures on the one hand, and the Central Legislature on the other in respect of the cess in question is not in doubt. We have already referred to the decision of this Court in Diamond Sugar Mills([1961] 3 S.C.R. 242), and in view of the said decision, it is obvious that the cess in question was outside the legislative competence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tte. Section 2 is a definition section; S. 2(a) defines cess as meaning the cess payable under any State Act and includes any sum recoverable under any such Act by way of interest or penalty. Section 2(b) defines a State Act as meaning any of the ten Acts specified by it which were in force in the seven respective States from time to time, by way of amendment or adaptation. Then the ten State Acts are enumerated under this sub-section. Section 3 is the validating section, and it is necessary to read it. Its heading is validation of imposition and collection of cesses under State Acts. It reads thus :- 3. (1) Notwithstanding any judgment, decree or order of any Court, all cesses imposed, assessed or collected or purporting to have been imposed, assessed or collected under any State Act before the commencement of this Act shall be deemed to have been validly imposed, assessed or collected in accordance with law, as if the provisions of the State Acts and of all notifications, orders and rules issued or made thereunder, in so far as such provisions relate to the imposition, assessment and collection of such cess had been included in and formed part of this section and this sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lone and uphold the validity of the remaining part of the Statute. But where an impugned Act passed by a State Legislature is invalid on the ground that the State Legislature did not have legislative competence to deal with the topic covered by it, then even Parliament cannot validate such an Act, because the effect of such attempted validation, in substance, would be to confer legislative competence on the State Legislature in regard to a field or topic which, by the relevant provisions of the Schedules in the Constitution, is outside its jurisdiction. This position is not and cannot be disputed. If it is shown that the impugned Act purports to do nothing more than validate the invalid State Statutes, then of course, such a validating Act would be outside the legislative competence of Parliament itself. Where a topic is not included within the relevant List dealing with the legislative competence of the State Legislatures, Parliament, by making a law, cannot attempt to confer such legislative competence on the State Legislatures. The difficulty in accepting Mr. Pathak's argument, however, arises from the fact that the assumption on which the whole argument is founded, is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctive in operation. His whole contention is based on what he records to be the true scope and effect of s. 3. If the construction which he places on s. 3 is rejected, the argument about the invalidity of the Act must likewise be rejected. The same contention has been placed before us by Mr. Pathak in another form. He suggests that the Act in question is a colourable piece of legislation. His case is that when Parliament realised that as a result of the invalidity of different State Statutes the respective States were faced with the problem of refunding very large amounts to the persons from whom the cesses were recovered, it has passed the present Act not for the purpose of levying a cess of its own, but for the purpose of enabling the respective States to retain the amounts which they have illegally collected. This aspect of the matter, says Mr. Pathak makes the Act a colourable piece of legislation. We are not impressed by this argument. The challenge to the validity of a Statute on the ground that it is a colourable piece of legislation is often made under a disconnection as to what colourable legislation really means. As observed by Mukherjea J., in K. C. Gajapati Narayan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution of revenues between the Union and the States which is provided for by the relevant Articles contained in Part XII of the Constitution and he has relied more particularly on the provisions of Act. 266. Article 266, no doubt, provides for two different Consolidated Funds and Public Accounts, one in relation to India and the other in relation to the respective States. it reads thus:- 266. (1) Subject to the provisions of article 267 and to the provisions of this Chapter with respect to the assignment of the whole or part of the net proceeds of ,certain taxes and duties to States, all revenues received by the Government of India, all loans raised by that Government by the issue of treasury bills, loans or ways and means advances and all moneys received by that Government in repayment of loans shall form one consolidated fund to be entitled the Consolidated Fund of India , and all revenues received by the Government of a State, all loans raised by that Government by the issue of treasury bills, loans or ways and means advances and all moneys received by that government in repayment of loans shall form one consolidated fund to be entitled the Consolidated Fund of the State . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll we are consider- ing at this stage is whether even on the assumption made by Mr. Pathak, it would be permissible for him to contend that the Act which is otherwise valid, is rendered invalid because the funds in question will not go into the Consolidated Fund of India. L7Sup.165-6 In truth, this argument again proceeds on the basis that Parliament has passed the Act not for the purpose of treating the recoveries made as those under its provisions retrospectively enacted, but for the purpose of validating the said recoveries as made under the invalid State Acts; and we have already pointed out that s. 3 completely negatives such an assumption. Therefore, we do not think that Mr. Pathak is right in contending that the provisions of the Act are invalid in any manner. It would thus be seen that though Mr. Pathak presented his argument in three different forms, in substance his grievance is very simple. He says that s. 3 of the Act does not purport to act prospectively; it acts merely retrospectively and its effect is just to validate collections illegally made in pursuance of invalid statutory provisions enacted by State Legislatures. So. the crucial question is: if collections a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is plainly illegal to recover such a fee for a period during which the council did not exist at all and could have rendered no service whatever. It is well settled that the imposition of a fee is generally supported on the basis of quid pro quo, and so, it is urged that the impugned recovery for the year 1959-60 is plainly without any quid pro quo and as such, cannot be enforced. The High Court did not accept this argument, because it held that the doctrine of quid pro quo did not require that actual service must be rendered first before a fee can be levied or demanded. In support of this view, the High Court has relied upon certain observations made by this Court in H. H. Sudhindra Thirtha Swamiar v. Commissioner for Hindu Religious and Charitable Endowments, Mysore([1963] Supp. 2 S.C.R. 323), While rejecting the contention which was raised before this Court in that case that the levy prescribed by S. 76(1) of the Madras Religious Endowments Act, 1951 (No. XIX of 1951) was invalid, Shah, J., who spoke for the Court observed: A levy in the nature of a fee does not cease to be of that character merely because there is an element of compulsion or coerciveness present in it, nor is i ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
