Full Judgment Text
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PETITIONER:
KOTESWAR VITTAL KAMATH
Vs.
RESPONDENT:
K. RANGAPA BALIGA & CO.
DATE OF JUDGMENT:
09/12/1968
BENCH:
BHARGAVA, VISHISHTHA
BENCH:
BHARGAVA, VISHISHTHA
SHELAT, J.M.
VAIDYIALINGAM, C.A.
CITATION:
1969 AIR 504 1969 SCR (3) 40
1969 SCC (1) 255
CITATOR INFO :
RF 1977 SC 879 (13,14)
D 1986 SC 515 (106)
RF 1988 SC 740 (19)
ACT:
Travancore-Cochin Public Safety Measures Act 5 of 1950, s.
3-Validity of--Constitution of India, Art. 304(b) proviso-
Bill introduced in pre-Constitution period-Amended by Select
Committee-Moved again and passed in post-Constitution
period-President’s sanction when required-Travancore-Cochin
Vegetable Oils and Oilcakes (Forward Contracts Prohibition)
Order, 1950--Continuance of.
HEADNOTE:
The Vegetable Oils and Oilseeds (Forward Contracts
Prohibition) Order. 1119 M.E. prohibiting inter alia forward
trading in cocoanut oil, was promulgated by the Maharaja of
Cochin State in 1944. The Order continued in force under
various Cochin Laws including Proclamation 5 of 1122 and Act
8 of 1122. When the State of Cochin acceded to India and
the combined State Of Travancore-Cochin was formed, the said
proclamation 5 of 1122 and Act 8 of 1122 as also the orders
etc. passed thereunder were continued by the Travancore-
Cochin Administration an Application of Laws Act 6 of 1125.
In exercise of the powers under these laws the Travancore-
Cochin Government promulgated on 8th March 1950, the
Travancore-Cochin Vegetable Oils and Oilcakes (Forward
Contracts Prohibition) Order, 1950, whereby the prohibition
against forward trading in certain oils including cocoanut
oil was continued. Then came the Travancore-Cochin Public
Safety Measures Act 5 of 1950, which with effect from 30th
March 1950 repealed a number of enactments including
Proclamation 5 of 1112 and Act 8 of 1112, but by s. 73(2)
continued the orders etc. passed under the repealed Acts as
if they had been passed under its s. 3. The Bill relating to
Act 5 of 1950 was introduced in the State Legislature before
the passing of the Constitution, but thereafter it was
amended by the Select Committee, and the amended Bill was
moved in and passed by the Legislature in the post-
Constitution period. By Amending Act 52 of 1950, the
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Essential Supplies (Temporary Powers) Act 24 of 1946 was
extended to Part B States, and became effective in Cochin
area from August 17, 1950. Section 17(4) of the last
mentioned Act replealed Act 5 of 1950, but continued the
orders etc passed thereunder.
In 1952 the appellant entered into contracts for the
purchase of cocoanut oil on one month’s ’vaida’ through the
agency of the respondent who was a Pakka Adatia. The
contracts were entered into in territory which formerly
formed part of the State of Cochin. On the due date the
appellant failed to take delivery of the goods or to pay the
difference in price whereupon the respondent filed a suit
for damages. The appellant’s defence was that the contracts
in question, being forward contracts were in contravention
of the Prohibition Order of 1950 and therefore void and
unenforceable. The trial court -and High Court rejected
this contention and decreed the suit. The High Court took
the view that the earlier laws under which the Prohibition
Order of 1950 was passed were repealed by Act 5 of 1950 and
the Orders thereunder could not be deemed to continue under
s. 3 of the latter Act because that section Was void for
non-compliance with the proviso to Art. 304(b) of the
Constitution. In appeal by certificate to this Court the
questions that fell for
41
consideration were : (i) whether the Prohibition Order of
1950 was void on the -round that it dealt with future
markets on which Parliament had the, exclusive power to
legislate; (ii) whether s. 3 of Act 5 of 1950 fell within
the scope of Art. 304(b) of the Constitution; (iii) whether
sanction of the President was required under the proviso to
Art. 304(b) when the Bill relating to Act 5 of 1950 was
moved in the Legislature after having been amended by the
Select Committee.
HELD : (i) In the present case it was not necessary to
express any opinion on the question whether the Prohibition
Order of 1950 was void for want of legislative competence,
for if it was void it would have to be treated as non est
and the earlier Prohibition Order of 1119 would continue in
force right up to 30th March 1950. Consequently on the 30th
March 1950 either the Prohibition Order 1119 or the
Prohibition Order of 1950 must be held to have been in force
in Travancore-Cochin and to have continued in force under
Act 5 of 1950. [47 C-E; 48 E-G]
Waverly Jute Mills Co. Ltd. v. Raymon & Co. (India) Private
Ltd., [1963] 3 S.C.R. 209, referred to.
Firm A. T. B. Mehtal Majid & Co. v. State of Madras & Anr.,
[1963] Supp. 2 S.C.R. 435, distinguished
(ii) An order prohibiting Forward contracts would clearly be
an order prohibiting a class of commercial transactions
relating to an essential article which in the present case
was cocoanut oil. The conferment of power on a State
Government to prohibit such transactions clearly permits
imposition of restrictions on the freedom of trade or
commerce and therefore falls within the scope of cl. (b) of
Art. 304 of the Constitution. [49 E-F]
(iii) The High Court was wrong in holding that the Bill
relating to Act 5 of 1950 was again introduced and moved in
the legislature after being amended by the Select Committee.
Once the Bill was introduced was referred to the Select
Committee. There was therefore no question of the Bill
being introduced again after the Select Committee had sub-
mitted its report. [50 C-H]
The High Court was also wrong in holding that a Bill within
the purview of Art. 304(b) cannot be moved without the prior
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sanction of the President. In the relevant articles of the
Constitution whatever prohibition is laid down relates to
the introduction of a Bill in the Legislature. There is no
reference at any stage to a Bill being moved in a House.
The language thus used in the Constitution clearly points to
the interpretation that in the proviso to Art. 304 the word
’introduced’ refers to the Bill, while the word ’moved’
refers to the amendment. [52 B-C]
The proviso to Art. 304(b) will have to be complied with at
the initial stage of the introduction of the Bill if it is
applicable at that stage, whereas compliance will be
required either at the stage when amendments are moved in
the Select Committee, or when the Bill with amendments as
reported by the Select Committee is moved in the House for
consideration, it any amendment is covered by Art. 304,
because of the requirement that no amendment can be moved
without the previous sanction of the President. [54 D]
(iv) In the present case the original introduction of the
Bill was valid because at that stage the proviso to Art. 304
was not in force at all as
Sup CI/69- -4
42
the Constitution had, not yet come into force; while
subsequently when the Bill was pending in the State
Legislature no amendment was moved in respect of which
sanction of the President was required under the proviso.
Section 3 of Act 5 of 1950 was passed by the House as it was
contained originally in the validly introduced Bill and
cannot, therefore, be held to be void for non-compliance
with the proviso to Art. 304. This section being valid
either the Prohibition Order of 1119 or the Prohibition
Order of 1950, must be held to be validly continued in force
by this Act 5 of 1950 and to have continued to remain in
force thereafter under the proviso to s. 17(4) of the
Essential Supplies (Temporary Powers) Act 24 of 1946. Under
either of these orders the transactions entered into between
the appellant and the respondent were prohibited and having
been entered into against the provisions of law, no party
could claim any rights in respect of the contracts in the
suit. [54 D-C]
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 693 of 1965.
Appeal from the judgment and decree dated August 9, 1963 of
the Kerala High Court in Appeal Suit No. 153 of 1959.
M. C. Chagla and R. Gopalakrishnan, for the appellant.
H. R. Gokhale, R. V. Pillai and Subodh Markandeya, for the
respondent.
The Judgment of the Court was delivered by
Bhargava, J. This appeal by certificate has been filed by
Koteswar Vittal Kamath who was defendant in Original Suit
No. 12 of 1958 instituted in the Court of the Subordinate
Judge, Cochin, by the respondent-plaintiff, K. Rangappa
Baliga & Co., for recovery of damages for breach of
contracts in respect of goods, purchased by the respondent
on behalf of the appellant, of which the appellant refused
to take delivery on the due dates. There is no dispute that
the respondent was carrying on business as commission agents
and was governed by the trade usage known as Pakka Aadat
System, and the appellant under the same System was placing
orders with the respondent for purchase of goods. In the
course of these dealings, the appellant placed three orders
for purchase of 100 candies of cocoanut oil for one month’s
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vaida’ and, in accordance with those three orders, the
respondent purchased 100 candies of cocoanut oil on three
different dates, 14th February, 1952 (a) Rs. 455 per candy,
16th February, 1952 @ Rs. 477/8/- per candy and 18th
February, 1952 @ Rs. 432/8/- per candy. The period fixed
for delivery under these contracts was one month, so that
the due dates for performance of the contracts were 15th,
17th and 19th March, 1952 respectively. The appellant
refused to take delivery of the goods on the due dates. It
appears that the closing market rates on those due dates
were Rs. 330, Rs. 335 and Rs. 352/8/- respectively
4 3
which were much lower than the prices at which these con-
tracts had been entered into a month earlier. The
respondent, therefore, instituted the suit claiming the
difference in the two, sets of prices by way of damages
together with the usual commission and brokerage.
The suit was resisted on various grounds, but we are con-
cerned with one of those grounds which has been canvassed
before us in this appeal. This plea taken on behalf of the
appellant was that all these three contracts were Forward
Contracts and were void and unenforceable, because they were
made in contravention of the prohibition contained in the
Travancore Cochin Vegetable Oils and Oilcakes (Forward
Contract Prohibition) Order, 1950 (hereinafter referred to
as "the Prohibition Order of 1950"). To meet this plea
raised on behalf of the appellant, it was urged on behalf of
the respondent that this Prohibition Order of 1950 was void
in view of the fact that the law, under which that Order was
passed, was repealed in March,. 1950 and its continuance by
the repealing law did not save its validity, because the
provision of that law, under which it was deemed to continue
in force, was itself void. We shall presently explain in
detail the situation as to the laws relating to this subject
which prevailed in Travancore-Cochin from time to time; but
it may here be mentioned that this plea of the respondent
was accepted by the trial Court as well as the High Court of
Kerala. As a result of this view taken by those courts, the
suit for damages was held to be maintainable, so that the
trial Court decreed the suit for a sum of Rs. 18,750 with
interest thereon at 6 per cent per annum, and that decree
was upheld by the High Court. It is against this decision
of the High Court that the present appeal has been brought
to this Court; and the only question argued before us has
been confined to the validity of the contracts, the breach
of which was the cause of’ action for the claim of damages
by the respondent.
The contracts, which were the subject-matter of the dispute,
were entered into between the parties at Mattancherry which
was situated in the territory of Cochin State before India
achieved Independence. On the 18th February, 1940, the
Maharaja of Cochin, who was exercising sovereign powers in
the State, made a Proclamation No. 8 of 1115 applying the
provisions of the Defence of India Act No. 35 of 1939
together with the rules and all amendments to the Act and
the rules mutatis mutandis in Cochin State. Another
provision in the Proclamation also brought into force all
the rules and notifications issued under the Defence of
India Act. There was also a provision that even the rules
or notifications issued in future would automatically apply
in the State. Under the Defence of India Act and the
44
rules framed thereunder, Vegetable Oils and Oilcakes
(Forward Contracts Prohibition) Order, 1944 was passed by
the territory of British India and, consequently, as a
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result of Proclamation 8 of 1115, it came into force in the
State of Cochin. Subsequently, however, the Maharaja, under
that Proclamation 8 of 1115, passed the Vegetable Oils and
Oilcakes (Forward Contracts Prohibition) Order, 1119
(hereinafter referred to as "the Prohibition Order of 1119")
on the 14th April, 1944. This Order, thus, superseded the
earlier Order which had been passed for British India and
which had become applicable in Cochin State as a result of
Proclamation 8 of 1115. The Prohibition Order of 1119, in
clause 3, laid down that "no person shall, after the
specified date for any article to which this Order applies,
enter into any forward contract in that article." The Order
applied, inter alia, to cocoanut oil, which was the subject-
matter of the three contracts, the breach of which was the
cause of action in the suit. Thereafter, on the 27th
September, 1946, the Maharaja promulgated the Cochin
Essential Articles Control and Requisitioning Powers
Proclamation 3 of 1122, and under clause 9 of this
Proclamation, the orders already made by the ,Cochin
Government under the Defence of India Act and Rules, as
applied by Proclamation 8 of 1115, were continued in force,
so that the Prohibition Order of 1119 continued to remain in
force. On the same date, the Maharaja also promulgated the
Temporary Emergency (Powers) Proclamation 5 of 1122, and,
under clause 2 of this Proclamation, the Defence of India
Act and the Rules were continued in force in the State of
Cochin together with all orders and notifications issued
under the provisions of that Act and the Rules. This was
followed by the ,Cochin Essential Articles Control and
Requisitioning Powers Act 8 of 1122 promulgated on the 4th
January, 1947. Under section 9 of this Act, again, all the
rules and orders made under the Defence of India Act or
under the Rules were continued in force in the State of
Cochin. This was the position of the law in the State of
Cochin before India achieved Independence.
Subsequently, the State of Cochin acceded to India and a
combined State of Travancore-Cochin came into existence.
Thereafter, the Travancore-Cochin Administration and Appli-
cation of Laws Act 6 of 1125 was passed and came into force
in the State of Travancore-Cochin with effect from 28th
December, 1949. This Act defined "Existing law of
Travancore" and "Existing law of Cochin". The latter
expression included "any Proclamation, Act, law, order, bye-
law, rule, regulation or notification in force on the
appointed day (which was 1st July, 1949) in any portion of
the territories of the State of Travancore-Cochin which
immediately before the appointed day formed the territory of
the State of Cochin. By section 4(1) of this Act,
45
the existing laws of Cochin were continued in force until
altered, amended, or repealed by the Legislature of the
State of Travancore-Cochin or other competent authority in
that portion of the territories of the State of Travancore-
Cochin which previously formed the territory of the State of
Cochin. Thus, under this Act, the Temporary Emergency
(Powers) Proclamation 5 of 1122, and the Cochin Essential
Articles Control and Requistioning Powers Act 8 of 1122 were
continued in force. At the same time, the Public Safety
Measures Ordinance 5 of 1125 was also promulgated. It was
in exercise of the powers conferred by these laws that the
Travancore-Cochin Government promulgated the Prohibition
Order of 1950 on the 8th March, 1950. Lastly, the
Travancore-Cochin Public Safety Measures Act 5 of 1950
(hereinafter referred to as "Act 5 of 1950") came into force
on the 30th March, 1950. This Act, by s. 73(1), repealed a
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number of enactments, including the Cochin Temporary
(Emergency Powers) Proclamation 5 of 1122, and the Essential
Articles. Control and Requisitioning Powers Act 8 of 1122.
However, the order passed under those Acts or continued by
those Acts were, by s. 73(2) of Act 5 of 1950, further
continued in force and were to be deemed to have been made
and were to have effect as if they had been made under this
Act 5 of 1950. The provision, under which they were to be
deemed to be made and to have effect, was section 3 of this
Act. It was in these circumstances that the validity of s.
3 of Act 5 of 1950 was challenged in the trial Court and in
the High Court. The High Court has declared s. 3 to be
void, while holding that s. 73 is valid. The High Court
concluded as a result that the various orders and
notifications, including the Prohibition Orders of 1119 and
1950. ceased to be in force, so that there was no
prohibition at all invalidating forward contracts after the
30th March, 1950. It was on this view that the contracts,
which were the basis of the claim of the respondent, were
held to be valid justifying the passing of the decree for
damages for breach of those contracts. The question, in
these circumstances, which falls for determination in this
appeal is whether the High Court was right in holding that
s. 3 of Act 5 of 1950 is void.
In this connection, our attention was also drawn by learned
counsel for the -appellant to the Essential Supplies
(Temporary Powers) Act 24 of 1946, to which reference was
not made by the High Court. This Act was amended by the
Essential Supplies (Temporary Powers) Amendment Act 52 of
1950 and a new sub-section (4) was introduced in section 17
to the following effect :-
" (4) If immediately before the day, on which
this Act comes into force in a Part B State,
there is in force
46
in that State any law which corresponds to
this Act, such corresponding law shall on that
day stand repealed in so far as it relates to
any of the essential commodities governed by
this Act :
Provided that any order made and in force
immediately before that day in the said State
shall continue in force and be deemed to be an
order made under this Act, and all
appointments made, licences or permits
granted, and directions issued, under any such
order and in force immediately before that day
shall likewise continue in force, and be
deemed to be made, granted or issued in
pursuance of this Act."
The Essential Supplies (Temporary Powers) Act 24 of 1946, by
the same Amending Act 52 of 1950, was extended to the whole
of India except the State of Jammu & Kashmir, but with a
direction that it shall come into force in a Part B State to
which the Act extends only on such date as the Central
Government may, by notification in the Official Gazette,
appoint in this behalf, and different dates may be appointed
for different Part B States. In exercise of this power
conferred on the Central Government, a notification was
issued on 17th August, 1950, S.R.O. 391 appointing 17th day
of August, 1950 as the date on which that Act was directed
to come into force in all Part B States to which it
extended. This notification was published in the Gazette of
India Extraordinary Part II-section 3. The result was that,
under the principal clause of S. 17(4) of this Act 24 of
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1946, Act 5 of 1950, which was in force in Travancore-Cochin
on the 17th August, 1950, stood repealed; but rules, orders
and notifications under that Act, or which continued in
force under that Act, were to further continue in force
under the proviso to S. 17(4) notwithstanding the repeal of
Act 5 of 1950. Thus, in the year 1952, when the contracts
in suit were entered into, the Essential Supplies (Temporary
Powers) Act 24 of 1946 wasin force in Travancore-Cochin and
only those orders made earlier could be held to be effective
which had been continued by this Act and the previous Acts
applicable in that State.
The question of validity of the contracts, in these
circumstances, will clearly depend on whether future
contracts in cocoanut oil were prohibited by any law or
orders or notifications which continued in force in 1952
after the Essential Supplies (Temporary Powers) Act 24 of
1946 had come into force in the State of Travancore-Cochin
on 17th August, 1950. This opens the question whether any
prohibitory order was validly in force on the 17th August,
1950. In turn, the answer to this question will depend on
whether a valid prohibitory order was in force on 30th
March, 1950 which could continue in force under S.
47
73(2) of Act 5 of 1950. The only two earlier prohibitory
orders were the Prohibition Order of 1119 and the
Prohibition Order of 1950. On this aspect, reliance was
placed on behalf of the respondent on the circumstance that,
under Entry 48 of List 1 of the Seventh Schedule to the
Constitution, the Parliament had the exclusive power to
legislate on the subject of stock exchanges and future
markets, and this Court has already held in Waverly Jute
Mills Co. Ltd. v. Raymon & Co. (India) Private Ltd.(1) that
a legislation on Forward Contracts would be a legislation on
future markets, so that a State Legislature. is not
competent to legislate in respect of Forward Contracts under
its power of legislation conferred by Entry 26 of List II
which relates to trade and commerce within the State. On
this basis, it was argued that the State Government, on 8th
March, 1950, was not competent to issue the Prohibition
Order of 1950, as that Order was very clearly a piece of
legislation on forward contracts. It appears to us that, in
the present case, we need not express any final opinion on
this question. If it is held that the Government of
Travancore-Cochin was competent to pass this Prohibition
Order of 1950, because the power was derived under Act 8 of
1122 which was validly in force in the State on 8th March,
1950, then that would be- the Order which would continue in
force under s. 73 (2) of Act 5 of 1950. On the other hand,
if it be held that the State Government could not
competently pass the Prohibition Order of 1950, because it
was a piece of legislation on forward contracts, that Order
would have to be treated as void and non est. Thereupon,
the earlier Prohibition Order of II 19 would continue in
force right up to 30th March, 1950. Act 8 of 1122 had
continued in force the Prohibition Order of 1119 with the
qualification that it was to remain in force until it was
superseded or modified by the competent authority under the
provisions of this Act 8 of 1122. When the Prohibition Or-
der of 1950 was purported to be issued on 8th March, 1950,
it was not laid down that it was being issued so as to
supersede the earlier Prohibition Order of 1119. If it had
been a valid Order, it would have covered the same field as
the Prohibition Order of 1 1 19 and, consequently, would
have been the effective Order under which the rights and
obligations of parties had to be governed. On the other
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hand, if it be held to be void, this Order will not have the
effect of superseding the earlier Order of 1119. Learned
counsel for the respondent, however, urged that the
Prohibition Order of 1119 cannot, in any case, be held to
have continued after 8th March, 1950, if the principle laid
down by this Court in Firm A.T.B. Mehtab Majid & Co. v.
State of Madras and Another ( 2 ) is applied. In that case,
rule 16 of the Madras General Sales Tax (Turnover &
Assessment) Rules,
(1) [1963] 3S.C.R.209.
(2) [1963] Supp. 2S.C.R.435.
48
1939 was impugned. A new r. 16 was substituted for the old
r. 16 by publication on September 7, 1955, and this new rule
was to be effective from 1st April, 1955. The Court held
that the new r. 16(2) was invalid, because the provisions of
that rule contravened the provisions of Art. 304(a) of the
Constitution. Thereupon, it was urged before the Court
that, if the impugned rule be held to be invalid, the old r.
16 gets revived, so that the tax assessed on the basis of
that rule will be good. The Court rejected this submission
by holding that :
"Once the old rule had been substituted by the
new rule, it ceases to exist and it does not
automatically get revived when the new rule is
held to be invalid."
On that analogy, it was argued that, if we hold that the
Prohibition Order of 1950 was invalid, the previous
Prohibition Order of 1119 cannot be held to be revived.
This argument ignores the distinction between supersession
of a rule, and substitution of a rule. In the case of Firm
A. T.B. Mehtab Majid & Co(1), the new r. 16 was substituted
-for the old r. 16. The process of substitution consists of
two steps. First, the old rule is made to cease to exist
and, next, the new rule is brought into existence in its
place. Even if the new rule be invalid, the first step of
the old rule ceasing to exist comes into effect, and it was
for this reason that the Court held that, on declaration of
the new rule as invalid, the old rule could not be held to
be revived. In the case before us, there was no
substitution of the Prohibition Order of 1950 for the
Prohibition Order of 1119. The Prohibition Order of 1950
was promulgated independently of the Prohibition Order of
1119, and because of the provisions of law it would have had
the effect of making the Prohibition Order of 1119
inoperative if it had been a valid Order. If the
Prohibition Order of 1950 is found to be void ab initio, it
could never make the Prohibition Order of 1119 inoperative.
Consequently, on the 30th March, 1950, either the
Prohibition Order of 1119 or the Prohibition Order of 1950
must be held to have been in force in Travancore-Cochin, so
that the provisions of s. 73 (2) - of Act 5 of 1950 would
apply to that Order and would continue it in force. This
further continuance after Act 5 of 1950, of course, depends
on the validity of section 3 of Act 5 of 1950, because s.
73(2) purported to continue the Order in force under that
section, so that we proceed to examine the argument relating
to the validity of s. 3 of Act 5 of 1950.
The validity of this section is challenged on the ground
that it is hit by the prohibition laid down in clause (b) of
Art. 304 of the Constitution and is not protected by the
proviso to that article. The relevant provisions of that
article are as follows
(1) [1963] Supp. 2 S.C.R. 435.
49
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"304. Notwithstanding anything in article 301
or article 303, the Legislature of a State may
by law-
(a)...............................................;a
nd
(b)impose such reasonable restrictions on the
freedom of trade, commerce or inter-course
with or within that State as may be required
in the public interest :
Provided that no Bill or amendment for the
purposes of clause (b) shall be introduced or
moved in the Legislature of a State without
the previous sanction of the President."
The first point that was urged by learned Counsel for the
appellant was that s. 3 of Act 5 of 1950 did not require
compliance with the proviso, because it was not a piece of
legislation for purposes of clause (b) of Art. 304; but -we
are unable to see any force in this submission. It is
enough to refer to clause (f) of section 3(2) which is the
provision under which a Prohibition Order relating to
Forward Contracts could have been passed, and the
Prohibition Order of 1119 or the Prohibition Order of 1950
can be held to be continued in force. Under s. 3 (2) (f),
power is conferred on the State Government to make an order
which may provide for regulating or prohibiting any class of
commercial or financial transactions relating to any
essential article which, in the opinion of the Government,
are, or if unregulated are likely to be, detrimental to
public interest. An Order prohibiting Forward Contracts
would clearly. be an Order prohibiting a class of commercial
transactions relating to an essential article which, in this
case, was cocoanut oil. The conferment of power on a State
Government to prohibit such transactions clearly permits
imposition of restrictions on the freedom of trade or
commerce and, therefore, falls within the scope of clause
(b) of Art. 304 of the Constitution. This argument advanced
on behalf of the appellant must, consequently, be rejected.
However, the question that has to be further examined is
whether this Act 5 of 1950 was void, because the provisions
of the proviso to Art. 304 were attracted and the Act was
passed without complying with the requirements of the
proviso.
It appears that the Bill, which emerged ultimately as Act 5
of 1950, was first introduced in the Legislative Assembly of
the State on 13th December, 1949, and was referred to a
Select Committee on 14th December, 1949. That was at a time
when the Constitution had not come into force and there was
no requirement under the Government of India Act, 1935,
which was applicable, similar to that laid down by the
proviso to Art.
50
304. The Bill was subsequently modified and re-drafted by
the Select Committee and was presented before the Assembly
on 23rd March, 1950 after the Constitution had come into
force. The Minister-in-charge moved that the Bill be taken
into consideration, whereupon discussion on the Bill
proceeded and it was finally passed by the Assembly on 29th
March, 1950. The Bill received the assent of the Raj
Pramukh of the State and was brought into force, having
been published by notification dated 30th March, 1950. The
point urged on behalf of the appellant was that the Bill
was introduced in the State Legislature on a date prior to
the date of the Constitution when Art. 304 and the proviso
to it had not come into force, so that no prior sanction of
the President was required for introduction of the Bill.
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The Bill having been validly introduced remained pending in
the State Legislature under Art. 389 and the proceedings
taken in the Legislature before the Constitution came into
force were to be deemed to have been taken in the
Legislature of the State which became seized of the Bill
after the enforcement of the Constitution. It was further
urged that no amendment was moved in the State Legislature
after the Constitution came into force which could be hit by
the restriction laid down in Art. 304(b) of the
Constitution. The material provisions, including section 3
were enacted in the original form in which the Bill had
already been introduced in December, 1949. In these
circumstances, it was submitted that no occasion arose for
complying with the requirements of the proviso. The Bill
was validly introduced without the previous sanction of the
President and no amendment was moved subsequently to that
Bill requiring the President’s sanction after the
Constitution came into force, so that Act 5 of 1950 as
passed by the Legislature on 29th March, 1950 and brought
into force on 30th March, 1950 cannot be held to be void for
non-compliance with the requirements of the proviso to Art.
304.
On behalf of the respondent, however, reliance was placed on
the view expressed by the High Court in the judgment under
appeal that the mere fact that the Bill was originally
introduced on a date prior to the date of the Constitution
will not save s. 3 from the operation of the proviso to
clause (b) of Art. 304. The High Court relied on the fact
that it was only subsequent to the coming into force of the
Constitution that the Bill in its final form as redrafted by
the Select Committee was introduced and moved in the State
Legislature. We are unable to accept the view taken by the
High Court. Once the Bill was validly introduced in
December, 1949, it remained pending in the Legislature even
when it was referred to the Select Committee. There was,
therefore, no question of the Bill being introduced again
51
after the Select’ Committee had submitted its report. Even
if the Bill was modified and redrafted by the Select
Committee, that will make no difference. That would be a
modification and redrafting of the Bill at a stage when the
Bill was still pending in the Legislature, so that there
would be no fresh introduction of the modified or redrafted
Bill.
The High Court, in this connection, relied on two earlier
decisions of the same Court in George v. State of
Travancore-Cochin,(1) and State v. Philipose Philip(2). In
fact, the High Court, in the present case, expressed its
decision in almost the same language as was contained in the
case of George v. State(1). In the second case of State v.
Philipose Philip (2 ) this aspect was not clearly
discussed. The point, however, was considered in detail by
a Full Bench of that High Court in Ulahannan Mathai v.
State(3). The High Court interpreted the expression "No
Bill or amendment shall be introduced or moved" in the
proviso as requiring that the Bill should neither be
introduced nor moved without the prior sanction of the
President, and, since in the case of Act 5 of 1950, the Bill
was moved for consideration, without the prior sanction of
the President, on 23rd March, 1950, after the Constitution
had come into force, there had been non-compliance with the
proviso. The Court rejected the contention put forward
before it that what the proviso really stipulates is that no
Bill "shall be introduced" or "amendment moved" in the
Legislature of a State without the previous sanction of the
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President. That argument was advanced on the basis of the
maxim ’Reddendo singula singulis’ which, according to
Black’s Interpretation of Laws, means :
"Where a sentences in a statue contains
several an tecedents and several consequences,
they are to be read distributively; that is to
say, each phrase or expression is to be
referred to its appropriate object."
The Court based its decision on the view that, if the
interpretation urged before it was accepted, it would be
possible to introduce a Bill which required no Presidential
sanction, get it amended by a Select Committee in such a way
as to make it require the Presidential sanction in case it
was originally introduced in the amended form and then pass
it into law, and thus escape the necessity for the prior
Presidential sanction provided by Art. 304 of the
Constitution. It was held that there can be no doubt that
such a result could never have been intended by the makers
of the Constitution. In our opinion, the High Court did not
correctly appreciate the position. The language of the
proviso cannot be interpreted in the manner accepted by the
High Court
(1) A.I.R. 1954 Tra-Co. 34. (2) A.I.R. 1954 Tra-Co.
257.
(3) A.I.R. 1955 Tra-Co. 82.
52
without doing violence to the rules of construction. If
both the words "introduced" or "moved" are held to refer to
the Bill, it must necessarily be held that both those words
will also refer to the word "amendment". On the face of it,
there can be no question of introducing an amendment.
Amendments are moved and then, if accepted by the House,
incorporated in the Bill before it is passed. There is
further an indication in the Constitution itself that
wherever a reference is made to a Bill, the only step
envisaged is introduction of the Bill. There is no
reference to such a step as a Bill being moved. The
articles, of which notice may be taken in this connection,
are Articles 109, 114, 117, 198 and 207. In all these
Articles, whatever prohibition is laid down relates to the
introduction of a Bill in the Legislature. There is no
reference at any stage to a Bill being moved in a House.
The language thus used in the Constitution clearly points to
the interpretation that,- even in the proviso to Art. 304,
the words "introduced" refers to the Bill, while the word
"moved" refers to the amendment.
So far as the danger of evasion of this proviso envisaged by
the High Court is concerned, it appears that the High Court
ignored the circumstance that, even when the Bill is before
a Select Committee, it continues to be pending in the House,
so that, if it is modified or redrafted, there is amendment
of the: Bill at that stage. If an amendment is introduced
at that stage while it is under consideration of the Select
Committee, the proviso may become applicable and, for a
valid proposal to introduce such an amendment in the Select
Committee, prior sanction of the President will be-
necessary.
In this connection, we may take notice of the Rules of
Procedure and Conduct of Business in Lok Sabha, because we
have been assured by learned counsel for parties that the
Rules of Procedure for the State Legislature in Travancore-
Cochin were similar. The Rules of Procedure we are
referring to are those which were adopted by the Lok Sabha
on 28th March, 1957. Rules 64 to 73 deal with the
introduction and publication of Bills, and Rules 74 to 78
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with motions after introduction of Bills. Rules relating to
amendments to clauses, etc. and consideration of Bills are
Nos. 79 to 92. Rule 65(2) ensures compliance with the
proviso to Art. 304 of the Constitution where it is
applicable by laying down that:
"If the Bill is a Bill which under the
Constitution cannot be introduced without the
previous sanction or recommendation of the
President, the member shall annex to the
notice such sanction or recommendation
conveyed through a Minister, and the notice
shall not be valid until this requirement is
complied with."
53
Similarly, Rule 81 deals with the procedure when an
amendment is moved by laying down that :
"If any member desires to move an amendment
which under the Constitution cannot be moved
without the previous sanction or
recommendation of the President, he shall
annex to the notice required by these rules
such sanction or recommendation conveyed
through a Minister and the notice shall not be
valid until this requirement is complied
with."
Thus, the requirement of previous sanction of the President
under the proviso to Art. 304 has to be satisfied by
producing the sanction either before introducing the Bill or
before moving the amendment, as the case may be.
Rules relating to Select Committees on Bills are Nos. 298 to
305, amongst which Rule 300 is of importance and may be
reproduced :
"300. (1) If notice of a proposed amendment has not been
given before the day on which the Bill is taken up by the
Select Committee, any membermay object to the moving of the
amendment and -such objection shall prevail unless the
Chairman allows the amendment to be moved.
(2) In other respects, the procedure in a Select Committee
shall, as far as practicable, be the same as is followed in
the House during the consideration stage of a Bill, with
such adaptations, whether by way of modification, addition
or omission, as the Speaker may consider necessary or
convenient."
This Rule makes it clear that, before a Bill can be modified
or redrafted by the Select Committee, amendments have to be
moved by the members of the Committee and when any amendment
is moved, the procedure in the Select Committee is to be
the same as is followed in the House during the
consideration stage of a Bill as far as practicable, though
subject to such adaptations as the Speaker may consider
necessary or convenient. This Rule, thus, envisages that the
requirement of r. 81 in respect of an amendment moved in
the House will have to be complied with when a similar
amendment is moved in the Select Committee Learned counsel
appearing for the respondent urged that, in interpreting r.
300, we should not enlarge its scope so as to include in it
the applicability of such Rules as r. 81 which, according to
him, can only be attracted when an amendment is moved in the
House of the Legislature itself. Even if this submission
were to be accepted by us, it appears that it will not be
possible to evade the applicability of the proviso to Art.
304, because, when the Bill as reported by the Select
54
Committee comes before the House again, the Minister-in-
charge or the member moving the Bill will have to move the
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Bill for consideration in the House. At that stage, when he
moves the Bill for consideration of the House in the
modified or redrafted form the move made by him will amount
to moving the original Bill with the amendments reported by
the Select Committee. In such a case, obviously r. 81 would
apply at that stage, so that, before the modified or amended
Bill is moved in the House for consideration, the sanction
of the President will have to be produced if the
modification or redraft has the result of incorporating an
amendment covered by the proviso to Art. 304. In these
circumstances, we do not think that the language of the
proviso requires to be interpreted in the manner accepted by
the Full Bench of High Court of Travancore-Cochin in the
case of Ulahannan Mathai v. State(1). The proviso will have
to be complied with at the initial stage of the introduction
of the Bill if it is applicable at that stage, whereas
compliance will be required either at the stage when
amendments are moved in the Select Committee, or when the
Bill as reported by the Select Committee,is moved in the
House for consideration, because of the requirement that no
amendment can be moved without the previous sanction of the
President. In the present case, the original introduction
of the Bill was valid, because, at that stage, the proviso
to Art. 304 was not in force at all as the Constitution had
not yet come into force; while, subsequently, when the Bill
was pending in the State Legislature, no amendment was moved
in respect of which sanction of the President was required
under the proviso. Section 3 of Act 5 of 1950 was passed by
the House as it was contained originally in the validly
introduced Bill and cannot, therefore, be held to be void
for noncompliance with the proviso to Art. 304. This section
being valid, either the Prohibition Order of 1119 or the
Prohibition Order of 1950 must be held to have been validly
continued in force by this Act 5 of 1950 and to have
continued to remain in force thereafter under the proviso to
s. 17(4) of the Essential Supplies (Temporary Powers) Act 24
of 1946. Under either of those Orders, the transactions
entered into between the appellant and the respondent were
prohibited and, having been entered into against the
provisions of law, no party can claim any rights in respect
of the three contracts in suit. The claim for damages for
breach of those contracts by the respondent against the
appellant was, therefore, not maintainable.
The appeal succeeds and is allowed with costs
throughout. The decree passed by the High Court is set aside
and the suit is dismissed.
G.C. Appeal allowed.
(1) A.I.R. 1955 Tra-Co. 82.
5 5