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1982 (4) TMI 291 - High Court Of Karnataka

1982 (4) TMI 291 - High Court Of Karnataka - TMI - W.A. Nos. 662 to 668 of 1982 - Dated:- 2-4-1982 - D.M.Chandrashekhar And N.Venkatachala, JJ. JUDGEMENT- ( 1. ) By consent of the learned Counsel these appeals are treated as having been posted for hearing and we have heard them. ( 2. ) These seven appeals are from the common order of Puttaswamy, J., dated 2-11-1981 in W.Ps. Nos. 21048, 21756, 21973, 22587 and 23373 of 1980 and W.Ps. Nos. 1 and 7040 of 1981. The petitioners therein have presented .....

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lso prayed for issue of writs in the nature of mandamus restraining the State of Kar nataka from cnforcing the provisions of that Act against them (the petitioners). A Division Bench of this Court heard those writ petitions along with a large number of similar writ petitions. By its common order dated 24-8-1979 Hunsa Corporation v. State of Karnataka (1) that Division Bench allowed those petitions, held the Entry Tax Act, 1079 as unconstitutional, struck down the notification dated 31-5-1979 iss .....

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petitioner was M/s Hansa Corporation. The State of Karnataka did not prefer appeals from that common order dated 24-8-1970 in so far as it related to other 1589 writ petitions. The present appellants-petitioners were among the petitioners in those 1589 writ petitions. The Supreme Court by its judgment dated 25-9 1980 State of Karnataka v. M/s Hansa C orporation (2) reversed the decision of this Court, upheld the constitutional validity of the Entry TaX Act, 1979 and dismissed W. P. No. 7039 of .....

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Consumption, use or sale therein Act, 1980 (Kar. Act No. 21 of 1980) (hereinafter referred to as the Entry Tax Act, 1980) which was given retrospective effect from 8-6-1980, the date on which the Kar. Ordinance No. 5 of 1980 had been promulgated. After the Supreme Court rendered its, decision in Hansa Corporation case, the Karnataka Tax on Entry of Goods into Local Areas for Consumption use or sale therein (Repeal) Ordinance, 1980 (Kar. Ordinance No. 11 of 1980) was promulgated. That Ordinance .....

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ct. 1979 operative only from 1-10-1980. ( 4. ) After the pronouncement of the judgment of the Supreme Court in Hansa Corporation case and the repeal of Entry Tax Act, 1980, the Tax authorities issued notices under the Entry Tax Act, 1979 to the petitioners calling upon them to register themselves, to file returns and to pay the amounts of tax due by them under the Entry Tax Act, 1979. Feeling aggrieved by such notices, the petitioners presented the writ petitions out of which these appeals have .....

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damus and hence could not enforce the Entry Tax Act, 1979 against then. ( 5. ) On behalf of the State, it was contended that the judgment of the Supreme Court upholding the validity of the Entry Tax Act, 1979, was a judgment in rem and that the law declared in that judgment was binding on every Court, authority and persons, it was also con. tended that S. 3 of the Repealing Act, 1981 had rendered ineffective every judgment or Order of this Court which had held the Entry Tax Act, 1979 as uncon. s .....

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decision of this Court in the earlier batch of writ petitions except W. P. No 7039 of 1979, as no appeals had been preferred to the Supreme Court from the common order of this Court in so far as it related to 1589 writ petitions. He also contended that S. 3 of the Entry Tax Act, 1981 purporting to validate the Entry Tax Act, 1979 which had been struck down by this Court, did not succeed in validating that Act. On the other hand, the learned Government Advocate sought to support the impugned dec .....

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309 of the Constitution to give effect to an earlier order made by the Punjab Government in exercise of its executive power regulating the absorption, conditions of service, pay scales etc., of erstwhile employees of District Boards and Municipal Boards who were absorbed in the State Government service. The validity of that executive order and those rules, was challenged by one Joginder Singh and three other absorbed Government officials in four separate writ petitions on the ground that the Go .....

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The legal position resulting from the appeal having been preferred in regard to only one out of the four writ petitions and the decision of the High Court being reversed in that appeal, was explained by the Supreme Court thus.: "In our opinion, the true position arising if the present appeal by the State Government should succeed, would be that the finality of the orders passed in the other three writ petitions by the Punjab High Court would not He disturbed and that those three successful .....

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id down by this Court." ( 7. ) On the other hand, the learned Government Advocate who appeared for the State of Karnataka strongly relied on a later decision of the Supreme Court in Makhan Lal Waza v. State of Jammu and Kashmir (4). There the facts were briefly these : An order of the Government of Jammu and Kashmir providing reservation for Muslims, Jamvi Hindus and others in making promotions to posts in the State service in the ratio of 50:40:10 was assailed before the Supreme Court as b .....

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judgment some more persons were promoted in accordance with the reservation which had been held to be unconstitutional by the Supreme Court. Instead of complying with the mandamus issued by the Supreme Court, the Government of Jammu & Kashmir continued the persons who had been so promoted. Those petitioners again presented writ petitions before the Supreme Court challenging the omission of the Government to annul those promotions. The Government sought to justify its action by pleading that .....

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as unconstitutional but also laid down that the distribution of appointments, posts or promotions made in implementation of communal policy was contrary to the constitutional guarantee of Art. 16. The law so declared by this Court was binding on the respondent State and its officers and they were bound to follow it whether the majority of the respondents were parties or not to the previous litigation". In our opinion, there is no conflict between the aforesaid two decisions of t he Supreme .....

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omotees were not parties in the earlier writ petition. Thus, the decision of the Supreme Court in Makhan Lal Waza's case (2) is diatinguishable on facts. As the material facts of the present cases are similar to those in Jcginder Singh's case (1) the law laid down by the Supreme Court in that case, is squarely applicable to these cases. ( 8. ) All the petitioners in the 1589 writ petitions which were decided in their favour and from which no appeals were preferred by the State, would hav .....

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. We shall now examine the effect of such validating provision. S. 3 of the Repealing Act, 1981, reads: "Savings etc.-The Karnataka Tax on Entry of goods into a Local Area for Consumption, use or sale therein Act, 1980 (Karnataka Act 21 of 1980) shall be deemed never to have been enacted and the Karnataka Tax on entry of Goods into a Local Area for Consumption, Use or sale therein Act, 1979 (Karnataka Act 27 of 1979; shall notwithstanding anything contained in any judgment, decree or order .....

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aw which has been declared as invalid by a Court or can render ineffective such judicial declaration, has been considered by the Supreme Court in several decisions. The law on this point has been succinctly stated thus by the Supreme Court in I. N. Saksena v. State of MP.(5). "While, in view of this distinction between legislative and judicial functions, the legislature cannot by a bare declaration, without more, directly overrule, reverse or override a judicial decision, it may, at any tim .....

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by changing their basis by legislative enactment is a well known pattern of all validating Acts. Such validating legislation which removes the causes for ineffectiveness or invalidity of actions or proceedings is not an encroachment on judicial power. In Hari Singh v. Military Estate Officer (AIR 1972 SC. 2205) a Bench of seven learned Judges of this Court laid down that the validity of a validating law is to be judged by two tests. Firstly whether the legislature possesses competence over the .....

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the State legislature had no legislative competence over the subject matter of the Repealing Act, 1981. Nor did he contend that the provisions of S. 3 of that Act violated any of the provisions of Part III of the Constitution. Hence, it is Sufficient to focus our attention to the test whether the State legislature in enating S. 3 of the Repealing Act, 1981 removed the defects which this court had, in its common order in Hansa Corporation case, found in the Entry Tax Act, 1979 and the notificati .....

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section and hence the notification dated 31-5-1979 issued by the Stale Government under that section was invalid. ( 10. ) Sri SRInivasan contended that S. 3 of the Repealing Act, 1981 merely declared that Entry Tax Act, 1979 shall be deemed always to have been valid and in force notwithstanding any judgment or order of any court and that section did not remove the two infirmities, in the Entry Tax Act, 1979 as found by this Court in Hansa Corporation case. He maintained that without removing su .....

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would have been irrefutable. But, even before the Repealing Act, 1981 was enacted, the Supreme Court had reversed the decision of this Court in Hansa Corporation case, holding, inter alia, that there were no infirmities in the Entry Tax Act, 1979. In view of the decision of the Supreme Court, it must be held that there were no infirmities in the Entry Tax Act, 1979 which required to be removed by the validating Act. When the invalidity which formed the basis of this Court's decision holding .....

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as the LIC) had arrived at a settlement with its employees on 24-1-1974 regarding the conditions of service of such employees including the bonus payable to them. That settlement was approved by the Central Government. Subsequently, the LIC., by its Circular dated 25-9-1975, directed that no bonus should be paid to its employees under the then existing provisions until further instructions, since the question of payment of bonus was being reviewed in the light of the Bonus Ordinance issued on th .....

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inafter referred to as the Modification Act) came into force. The LIC withdrew the appeal before the Division Bench stating that there was no need to proceed with that appeal. The result, was that the judgment of the learned single Judge became final. S. 3 of the Modification Act provided as follows : "Notwithstanding anything contained in the Industrial Disputes Act, 1947, the provisions of the settlement in so far as they relate to the payment of an annual cash bonus to every class III an .....

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n Act, 'the LIC could not claim to be absolved from the obligation imposed by the judgment to carry out the writ of mandamus and that the LIC., was bound to obey the mandamus and to pay the bonus. The reasoning of Bhagawati, J., who delivered the majority judgment, was as follows : "Here, the judgment given by the Calcutta High Court, which is relied upon by the petitioners, is not a mere declaratory judgment holding an impost or tax to be invalid, so that a validation statute can remov .....

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as the judgment stands, it cannot be disregarded or ignored and it must be obeyed by the Life Insurance Corporation". ( 12. ) Strong reliance was also placed by Sri Srinivasan on the unreported decision of the Supreme Court in A. V. Nanchane v. Union of India (1) and connected writ petitions. There, the facts were these : After the decision of the Supreme Court in Modem Mohan Pathak v. Union of India (6) the LIC., issued a notification under S. 49 of the Life Insurance Corporation Act, 1956 .....

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such rate as the Corporation may think fit and on such terms and conditions as it may specify as regards the eligibility for such bonus". The effect of that amendment was to annul cash bonus in terms of the settlement of 1974. Such amendment was challenged in a writ petition before the Allahabad High Court which allowed that petition. From that decision, the LIC preferred an appeal which was dismissed by the Supreme Court. Thereafter, the Life Insurance Corporation (Amendment) Ordinance, 19 .....

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bove rules, was chaJlen- ged in W. P. No. 501 of 1981 and connected petitions before the Supreme Court. In the meanwhile, the Ordinance was replaced by an Act. It was contended on behalf of the petitioners therein that the provisions of the amendment Act of 1981 could not nullify the effect of the writ issued by the Supreme Court in appeal from the decision of the Allahabad High Court and the connected cases, directing the LIC to give effect to the terms of the 1974 settlement relating to bonus- .....

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v. Union of India (1) and connected writ petitions, are distinguishable on facts from the present cases. As pointed out by the Supreme Court in M.M. Pathak's case (4) the judgment of the single judge of the Calcutta High Court was not merely a declaratory judgment, but had given effect to the right of the petitioners therein to get the cash bonus under the settlement of 1974 and the High Court had issued a mandamus directing the LIC to pay the amount of such bonus. Likewise, in A. V, Ncnchan .....

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ly a mandamus was issued directing the State Government and its officers and servants to forbear from enforcing the provisions of the Act against the petitioners therein. The present cases are similar to Prithvi Cotton Mills Ltd., v. Broach Borough Municipality (8) in which the facts were these : In Patel Hargordhahdas v. Municipal Commissioner Ahamadabad (9), the levy of property tax by the Municipality on buildings and lands on the basis of capital value thereof, was held to be invalid, since .....

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of any court, no tax assessed or purported to have been assessed by a Municiplity on the basis of a capital value of a building or land and imposed, collected and recovered by the Municipality at any time before the commencement of the validation Act, shall be deemed to have been invalidly assessed, imposed, collected or recovered and the imposition, collection and recovery of the tax so assessed shall be valid and shall be deemed always to have been valid and shall not be called in question mer .....

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osed tax on buildings and lands on the basis of the capital value and if the tax had already been imposed, such imposition of the tax was valid notwithstanding the declaration by the Supreme Court that such imposition was incompetent. Bhagawati J added that it was clearly permissible for the legislature to validate the imposition of tax declared as invalid, because, in doing so the legislature did not seek to reverse the decision of the Supreme Court on the interpretation of the word 'rate&# .....

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in Prithvi Cotton Mills case (%), as pointed out by Bhagawati, J., in M. M. Pathak's case (6), suggest that a court's decision may cease to be binding when the conditions on which it was based, are so fundamentally altered that the decision could not have been given in the altered circumstances. In the present case, the conditions on which the decision of this court in Hansa Corporation, was based, namely, that non-exemption of petty dealers from the Entry Tax was violative of Art. 19(1 .....

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