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2017 (4) TMI 928 - SUPREME COURT

2017 (4) TMI 928 - SUPREME COURT - TMI - State Government permissibility to enact Rule 5 of the Rules for recovery of the amount as arrears of land revenue - Madhya Pradesh Micro and Small Enterprises Facilitation Council Rules, 2006 - whether speedy remedy could have been provided under the Rules framed under the Act of 2006? Held that:- Section 30 of the Act of 2006 extracted above clearly authorizes the State Government to frame the rules to carry out the provisions of the Act and the power .....

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n 36(1) of the Act of 1996 which provides recovery mechanism under Order 21 of CPC as a decree, but, in the matter of providing such remedies, it is open to legislate different remedies which may be inconsistent. It is a question of electing a remedy. Election of a remedy for recovery of the amount would depend upon the choice of the award-holder. Both the provisions i.e. section 36 of the Act of 1996 as well as Rule 5 of the Rules of 2006 intend to recover the amount though by different procedu .....

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s under different rules, which are referred to above, to a judgment debtor to raise various kinds of objections to file suits and has a right to object also at various stages. No doubt that a detailed procedure is provided under the CPC. But by now it is well known that after a decree is obtained, it has become more difficult to ensure its speedy execution due to misuse of the provisions by unscrupulous judgment debtors of a detailed procedure prescribed for execution of a decree in CPC which wa .....

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it furthers the mandate of the Act. The difference between the procedure of execution of Rule 5 and that of CPC cannot be said to be unconscionable so as to attract the vice of discrimination. - Civil Appeal No. 5317 of 2017 ( Arising out of S.L.P. (C) No. 29266 of 2016 ) - Dated:- 17-4-2017 - Arun Mishra And S. Abdul Nazeer, JJ. JUDGMENT Arun Mishra, J. 1. Leave granted. 2. This appeal has been preferred by the appellant - Power Machines India Ltd., aggrieved by the judgment and order dated 18. .....

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the Act of 2006 ). Rule 5 provides for recovery of the amount for which award is passed under section 18(3) of the Act of 2006 as arrears of land revenue thereby providing additional remedy for recovery of the awarded sum than the one provided in section 36(1) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act of 1996 ). 3. It is pertinent to mention that the award was passed under the Act of 2006 by which the appellant was directed to pay awarded sum to respondent .....

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dated 2.4.2016 issued by the Madhya Pradesh Micro and Small Enterprises Facilitation Council under the Rules. The recovery citation was served upon the appellant on 20.4.2016 purported to be one under the Uttar Pradesh Zamindari Abolition and Land Reforms Act, 1950. Another citation was received by the appellant on 16.5.2016 which was issued on 20.4.2016. Thereafter, appellant filed a writ petition before the Allahabad High Court for quashing the recovery proceedings. However, Tehsildar of Dadri .....

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r W.P. [C] No.12127 of 2016 for quashing the recovery proceedings on the ground that the recovery was not in compliance with Rule 5. The said writ petition questioning the rule had been dismissed. Writ Petition [C] No.12127 of 2016 had been allowed by the High Court of Madhya Pradesh and it permitted respondent No. 3 to initiate recovery proceedings under the rule de novo and in accordance with law. The petition filed in the High Court of Allahabad was dismissed in view of the fact that the afor .....

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s submitted by Mr. P. Chidambram and Dr. A.M. Singhvi, learned senior counsel representing the appellant that Rule 5 is ultra vires, arbitrary and violative of Article 14 of the Constitution of India and is repugnant to the provisions contained in section 36 of the Act of 1996 read with the provisions contained in section 18 of the Act of 2006. It is beyond rule making power conferred under sections 21 and 30 of the Act of 2006. Once the provisions of the Code of Civil Procedure (for short, the .....

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ion of objections. In case objection is not entertained, there is a right to file a suit as provided in Order 21 Rule 58(1) of the CPC. Elaborate procedure is provided under Order 21 Rules 66, 69, 89 and 92 of the CPC with respect to sale, if required. The remedy provided under Rule 5 of the Rules does not contain the aforesaid safeguards and the amount can be recovered outrightly as arrears of land revenue. Thus, the remedy is harsh under Rule 5 and thus could not have been resorted to. It was .....

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he rule has been framed within the purview of section 30 of the Act of 2006. It is in furtherance of the objective of the Act to provide speedy recovery. There is no repugnancy with the provisions of the Act of 2006 or that of the Act of 1996. It is impermissible to provide inconsistent remedies also. In such matters there is no question of conflict of provisions. It is open to elect one of the remedies out of the available ones. 8. Before adverting to the rival submissions, it is appropriate to .....

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hall be executed by the Collector of the District concerned and the amount due shall be recovered as arrears of land revenue. 9. The aforesaid Rule 5 has been framed in exercise of the power conferred by the State Government to frame the rules under section 30 of the Act of 2006 which enables the State Government to make the rules. Section 30 is extracted hereunder : 30. Power to make rules by State Government.-(1) The State Government may, by notification, make rules to carry out the provisions .....

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to be or may be, prescribed under this Act. (3) The rule made under this section shall, as soon as may be after it is made, be laid before each House of the State Legislature where there are two Houses, and where there is one House of the State Legislature, before that House. Section 30 enables the State Government to make rules to carry out the provisions of the Act. The power is general and pervasive in nature. It encompasses any other matter which is to be and may be prescribed under the Act .....

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il.-(1) Notwithstanding anything contained in any other law for the time being in force, any party to a dispute may, with regard to any amount due under Section 17, make a reference to the Micro and Small Enterprises Facilitation Council. (2) On receipt of a reference under sub-section (1), the Council shall either itself conduct conciliation in the matter or seek the assistance of any institution or centre providing alternate dispute resolution services by making a reference to such an institut .....

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lternate dispute resolution services for such arbitration and the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) shall then apply to the disputes as if the arbitration was in pursuance of an arbitration agreement referred to in sub-section (1) of Section 7 of that Act. (4) Notwithstanding anything contained in any other law for the time being in force, the Micro and Small Enterprises Facilitation Council or the centre providing alternate dispute resolution services shall h .....

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cil can itself conduct reconciliation with the assistance of any institution or ADR Centre. In that case provisions of sections 65 to 81 of the Act of 1996 shall apply and in case conciliation under section 18(2) is not successful, Council shall either itself take up the dispute for arbitration or refer it to some other Centre or institution for arbitration and thereupon the provisions of the Act of 1996 shall apply. 11. Section 36 of the Act of 1996 provides that once the time for filing applic .....

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08), in the same manner as if it were a decree of the court. (2) Where an application to set aside the arbitral award has been filed in the Court under section 34, the filing of such an application shall not by itself render that award unenforceable, unless the Court grants an order of stay of the operation of the said arbitral award in accordance with the provisions of sub-section (3), on a separate application made for that purpose. (3) Upon filing of an application under sub-section (2) for s .....

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f the provisions contained in section 18(3) of the Act of 2006, the provisions contained in section 36 of the Act of 1996 are clearly applicable and it is permissible to execute the arbitral award in accordance with the procedure prescribed for execution of a decree under the CPC. 12. However, the question in the instant case is whether it was permissible to the State Government to enact Rule 5 of the Rules for recovery of the amount as arrears of land revenue and whether speedy remedy could hav .....

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on 30(1), 30(2) and 30(2)(b). The objective of the Act is to provide protection to the micro, small and medium enterprises and to facilitate their development. In order to carry out the objective of the Act speedy recovery mechanism has been provided under Rule 5 of the Rule by providing that amount awarded in an arbitral award can be recovered as arrears of land revenue. No doubt that Rule 5 is inconsistent with the provisions contained in section 36(1) of the Act of 1996 which provides recover .....

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o question of any prejudice being caused to the judgment debtor. 14. In Bihar State Co-operative Marketing Union Ltd. v. Uma Shankar Sharan & Anr. (1992) 4 SCC 196 question arose of plurality of the remedies provided under sections 40 and 48 of the Bihar and Orissa Cooperative Societies Act, 1935. Both the provisions may be attracted to a case. It was held that application of section 40 will not exclude operation of section 48. It is only a question where one of the provisions has to be opte .....

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te Cooperative Marketing Union Ltd. (supra) has laid down thus : 6. Validity of plural remedies, if available under the law, cannot be doubted. If any standard book on the subject is examined, it will be found that the debate is directed to the application of the principle of election, where two or more remedies are available to a person. Even if the two remedies happen to be inconsistent, they continue for the person concerned to choose from, until he elects one of them, commencing an action ac .....

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o-operative Societies Act, 1972. The two Acts are similar and Sections 40 and 48 of the Bihar Act and Sections 59 and 60 of the Delhi Act are in pari materia. The reported judgment followed an earlier decision of this Court in Pentakota Srirakulu v. Co-operative Marketing Society Ltd. We accordingly hold that the High Court was in error in assuming that the application of provisions of Section 48 of the Bihar Act could not be applied to the present case for the reason that Section 40 was attract .....

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be adopted and the principle that special provision excludes the application of general provision has not been applied when two provisions deal with the remedies for the reason that the validity of plural remedies cannot be doubted, even if the two remedies are inconsistent, court has to harmonize the provisions. Following discussion has been made : (b) Inconsistency and repugnancy to be avoided; harmonious construction It has already been seen that a statute must be read as a whole and one prov .....

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. Accordingly, the provisions of the Maharashtra Regional and Town Planning Act, 1966, were read together by the Supreme Court and after noting the purpose of the Act. The Act was held not to envisage a situation of conflict, and therefore, the edges were required to be ironed out to read those provisions of the Act which were slightly incongruous, so that all of them are read in consonance with the object of the Act, which is to bring about orderly and planned development. It should not be lig .....

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nably possible to do so, and to avoid repugnancy . As stated by Venkatarama Aiyer, J., The rule of construction is well settled that when there are in an enactment two provisions which cannot be reconciled with each other, they should be so interpreted that, if possible, effect should be given to both. This is what is known as the rule of harmonious construction . That, effect should be given to both, is the very essence of the rule. Thus a construction that reduces one of the provisions to a us .....

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rticular situations. The principle is expressed in the maxims Generalia specialibus non derogant, and Generalibus specilia derogant. If a special provisions is made on a certain matter, that matter is excluded from the general provision. Apart from resolving conflict between two provisions in the Act, the principle can also be used for resolving a conflict between a provision in the Act and a rule made under the Act. Further, these principles have also been applied in resolving a conflict betwee .....

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ned to choose from. Until he elects one of them. 16. Thus, the submission raised by learned senior counsel on behalf of the appellant that Rule 5 is inconsistent and repugnant to the provisions of section 36 of the Act of 1996 cannot withstand judicial scrutiny and is liable to be rejected on the anvil of the aforesaid reasoning. 17. This Court while considering the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) i .....

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ther the SARFAESI Act was uncalled for and a superimposition of an undesired law in the light of operation of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 in the field. This Court has laid down that given the level of indebtedness and NPAs on the balance-sheets of banks and financial institutions, the time taken for recovery of debts via the civil courts, the importance of liquid and solvent banks and financial institutions to economic progress, especially in the prese .....

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s upheld. In the instant case, the recovery of arrears of land revenue has been resorted to after adjudication process when arbitral award had been passed and when it is not objected to within the time prescribed under section 34 of the Act of 1996. Thus, the procedure cannot be said to be illegal or arbitrary in any manner and cannot be said to be violative of Article 14 of the Constitution, as contended by the appellant. On the basis of aforesaid reasoning it is clear that Code of Civil Proced .....

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e is obtained, it has become more difficult to ensure its speedy execution due to misuse of the provisions by unscrupulous judgment debtors of a detailed procedure prescribed for execution of a decree in CPC which was never envisaged. Thus, providing a speedy recovery by way of arrears of land revenue, in fact, was the need of the day and Rule 5 has been rightly enacted to ensure speedy recovery and to ensure that small, micro and medium industries do not suffer. 19. We find no force in the subm .....

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t element of the legislative power as a whole under Article 245 of the Constitution and other relative Articles and when the Legislatures enact laws to meet the challenge of the complex socio-economic problems, they often find it convenient and necessary to delegate subsidiary or ancillary powers to delegates of their choice for carrying out the policy laid down by the Acts as part of the Administrative Law. The Legislature has to lay down the legislative policy and prin-ciple to afford guidance .....

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CR 747 has laid down the principle that the Legislature must retain in its own hands the essential legislative functions and what can be delegated is the task of subordinate legislation necessary for implementing the purposes and objects of the Act concerned. 25. In Avinder Singh v. State of Punjab, [1979] 1 SCC 137, Krishna Iyer, J. laid down the following tests for valid delegation of legislative power. These are : "(1) the legislature cannot efface itself : (2) it cannot delegate the ple .....

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elf." 26. The principle which, therefore, emerges out is that the essential legislative function consists of the determination of the legislative policy and the Legislature cannot abdicate essential legislative function in favour of another. Power to make subsidiary legislation may be entrusted by the Legislature to another body of its choice but the Legislature should, before delegating, enunciate either expressly or by implication, the policy and the principles for the guidance of the del .....

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laid down that the legislature has to lay down the legislative policy to delegate for carrying out the said policy. What can be delegated is the task of the subordinate legislation necessary for implementing the purposes and objects of the Act. In the instant case by exercising the rule making power conferred under Section 30, the purpose of the Act of 2006 is being protected. The rule intends to implement the object. It cannot be said that authority has been exceeded nor it can be said that the .....

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ot extend the scope or general operation of the enactment but power is strictly ancillary. This Court has laid down thus: 13. It may be noted that under Paragraph 8, the Chairman or the Speaker of a House is empowered to make rules for giving effect to the provisions of the Tenth Schedule. The rules being delegated legislation are subject to certain fundamental factors. Underlying the concept of delegated legislation is the basic principle that the legislature delegates because it cannot directl .....

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and promote that object, while at all times remaining true to it. That is the rule of primary intention. Power delegated by an enactment does not enable the authority by regulations to extend the scope or general operation of the enactment but is strictly ancillary. It will authorise the provision of subsidiary means of carrying into effect what is enacted in the statute itself and will cover what is incidental to the execution of its specific provision. But such a power will not support attempt .....

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nstitutional provisions. Similarly, the rules should be interpreted consistent with the aforesaid principle. In our opinion Rule 5 of the Rules being a remedial provision is ancillary. It is open to provide for an additional speedier remedy so as to carry out the objective of the Act. 22. Reliance has also been placed on a decision of this Court in B.K. Srinivasan & Ors. v. State of Karnataka & Ors. (1987) 1 SCC 618 in which this Court considered the question that subordinate legislation .....

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Union of India etc. (2011) 8 SCC 274 in which this Court has laid down thus : 66. Statutes delegating the power to make rules follow a standard pattern. The relevant section would first contain a provision granting the power to make rules to the delegate in general terms, by using the words to carry out the provisions of this Act or to carry out the purposes of this Act . This is usually followed by another sub-section enumerating the matters/areas in regard to which specific power is delegated .....

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numerated topics in Section 23(1-A) may not empower the Central Government to make the impugned rule (Rule 44-I), making of the rule can be justified with reference to the general power conferred on the Central Government under Section 23(1), provided the rule does not travel beyond the scope of the Act. But even a general power to make rules or regulations for carrying out or giving effect to the Act, is strictly ancillary in nature and cannot enable the authority on whom the power is conferred .....

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to ban use of non-iodised salt for human consumption. Thus, provision of Rule 44-I of Prevention of Food Adulteration Rules, 1955 was held to be ultra vires. Rule 44-I was wholly outside the scope of the Act. It was held not to be a rule made or required to be made to carry out the provisions of the Act having regard to its object and the scheme whereas the position in the instant case is juxtaposed. Hence the decision is of no help to the appellants. 24. Similarly reliance has been placed on a .....

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360 in which it has been laid down that when subordinate legislation is in conflict with the Parent Act then it must give way to the substantive statute. The principle has no application in the case of remedial statutory provisions as plurality of inconsistent remedies can always be provided and only one remedy has to be chosen. In Avinder Singh & Ors. v. State of Punjab & Ors. (1979) 1 SCC 137, it has been laid down that a delegate is not free to switch policy laid down by the Legislat .....

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rocedure also advances the course of justice. The matter has to be judged from the point of view of the ordinary reasonable man and not from the point of view of the Government. The ordinary reasonable man would say, when the stakes are heavy and serious charge of evasion of income-tax are made against him, why one person similarly placed should have the advantage substantially of the procedure prescribed by the Indian Income Tax Act, while another person similarly situated be deprived of it. Th .....

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the Act for making the investigation under its provisions is of a summary and drastic nature. It constitutes a departure from the ordinary law of procedure and in certain important aspects is detrimental to the persons subjected to it and as such is discriminatory. The substantial differences in the normal procedure of the Income Tax Act for catching escaped income and in the procedure prescribed by Act 30 of 1947, were fully discussed by this Court in Suraj Mal Mohta v. Sri A.V. Visvanatha Sast .....

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l to the appellants. Once adjudication of dues has been made it was expected of the appellant to honour it after lapse of time under Section 34 of Act of 1996. 28. The decision in Maganlal Chhaganlal (P) Ltd. v. Municipal Corporation of Greater Bombay & Ors. (1974) 2 SCC 402 has also been referred to in which this Court has laid down thus : 14. To summarise: Where a statute providing for a more drastic procedure different from the ordinary procedure covers the whole field covered by the ordi .....

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