Full Judgment Text
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PETITIONER:
T.M. KANNIYAN
Vs.
RESPONDENT:
INCOME-TAX OFFICER, PONDICHERRY AND ANR.(With Connected Peti
DATE OF JUDGMENT:
30/10/1967
BENCH:
BACHAWAT, R.S.
BENCH:
BACHAWAT, R.S.
WANCHOO, K.N. (CJ)
RAMASWAMI, V.
MITTER, G.K.
HEGDE, K.S.
CITATION:
1968 AIR 637 1968 SCR (2) 103
CITATOR INFO :
RF 1970 SC1126 (16)
ACT:
Constitution of India, Articles 240(1) and Proviso,,
246--Power of President to make Regulation for Union
territories, scope of--"Peace, progress and good
government", meaning of--Taxation Laws (Extension,to Union
Territories) Regulation (3 of 1963)--General Clauses Act,
1897, s. 3(58)--Definition of "State" including Union
territories if repugnant to the subject and context of Art.
246.
HEADNOTE:
Parliament enacted the Pondicherry Administration Act. 1962.
which provided that all laws in force immediately before
August 19. 1962, when Pondicherry became a Union territory,
were to continue to be in force until amended or repealed by
a competent legislature or other competent authority. The
President, in exercise of the powers conferred on him by
Art. 240 of the Constitution to make regulations of "peace,
progress and good government" of the Union territories
promulgated the Tax Laws (Extension to Union Territories)
Regulation. 1963. By this Regulation the laws in force in
relation to income tax in Union territory of Pond:cherry
were repeated and the Indian Income-tax Act, 1961 was made
applicable. The petitioners challenged the rites of
the Regulation.
HELD: The Regulation is valid.
The power of the President to make regulations under
Art. 240 is not limited to the subject of law and order.
Authority to make regulations for "peace. progress and good
government" is a common form of grant of legislative power
and the expression "peace, progress and good government" is
of very wide import giving wide discretion to the authority
empowered to pass laws for such purposes. The President can
make regulations with respect to a Union territory occupying
the same field on which Parliament can also make laws. Such
a regulation may repeal or amend any Act made by Parliament
or any existing law which is for the time being applicable
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to the Union territory and when promulgated has the same
force and effect as an Act of Parliament which applies to
that territory. [107E-108D]
Riel v. queen. [1865] 10 A.C. 675. Chenard and Co. v.
Joachim Arissol, [1949] A.C. 127, Attorney-General for
Saskatchewan v. Canadian Pacific Ry. Co., [1953] A.C. 59’4,
King Emperor v. Benoari Lal Sarma, [1914] L.R. 72 I.A. 57.
Jogendra Narayan Deb v. Debendra Narayan Roy, [1942] L.R.
69 I.A. 76 and Girindra Nath Banerjee v. Birendra Nath Pal.
[1927] I.L.R. 54 Cal. 727, referred to.
Parliament has, by virtue of Art. 246(4), power to make
laws with respect to any matter including matters enumerated
in the State List, for any part of the territory of India
not included in a State. With regard to Union territories
there is no distribution of legislative power
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and Parliament has plenary power to make laws for those
territories on any subject. Though the definition of
"State" in s. 3(58) of the General Clauses Act, 1897,
taking within it Union territories, applies to the
interpretation of the Constitution, this inclusive
definition is repugnant to the subject and context of Art.
246. There, the expression "State" means the State
specified in the FirSt Schedule. Parliament can by law
extend the Income-tax Act, 1961, to a Union territory with
such modifications as it thinks fit. The President can,
therefore, by regulation do the same. [108E; 109A-D]
R.K. Sen v. Union, [1966] 1 S.C.R. 430, referred to.
The power of the President to make regulations for any
of the Union territories specified in Art. 240(1) so long as
no legislature is created for the territory is not fettered
by the. proviso to Art. 24-0(2 ) or limited to matters
enumerated in the State List and the. Concurrent list.
[110G]
It is not necessary to make any distribution of income-
tax with respect to Union territories, as those territories
are centrally administered through the President. [111A-B]
JUDGMENT:
ORIGINAL JURISDICTION: Writ Petitions Nos. 49, 60, 61 and 80
of 1967.
Writ Petitions under Art. 32 of the Constitution of
India for the enforcement of fundamental rights.
K. Narayanaswamy and Lily Thomas, for the petitioner (in
W.P. No. 49 of 1967).
Sadhu Singh, for the petitioner (in W.P. No. 60 of 1967).
S.K. Dholakia and Sadhu Singh, for the petitioner (in
W.P. No. 61 of 1967).
S.T. Desai and Sadhu Singh, for the petitioner (in W.P.
No. 80 of 1967).
C.K. Daphtary, Attorney-General, B.L. lyengar, R.H.
Dhebar for R.N. Sachthey, for the respondents (in W.P. No 49
of 1967).
R.H. Dhebar for R.N. Sachthey, for the respondents (in
W.Ps. Nos. 60, 61 and 80 of 1967).
The Judgment of the Court was delivered by
Bachawat, J. In all these writ petitions, the petitioners
challenge the vires of the Taxation Laws (Extension to Union
Territories) Regulation No. 3 of 1963. The contention is
that the President had no power to promulgate the Regulation
under Art. 240 of the Constitution. On August 16, 1962,
Pondicherry became a Union Territory. On December 5, 1962,
Parliament enacted the Pondicherry Administration Act, 1962
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(Act No. 49 of 1962). Section 4 (1 ) of this Act provided
that all laws in force immediately before August 19, 1962
would continue to be in force in
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Pondicherry until amended or repealed by a competent
legislature or other competent authority. Section 4(2)
empowered the Central Government to make necessary
adaptations and modifications for the purpose of
facilitating the application of any such law in relation to
the administration of Pondicherry and bringing the
provisions of any such law into accord with the provisions
of the Constitution. Section 7 provided that all taxes,
duties, cesses and fees which immediately before August 19,
1962 were being lawfully levied would continue to be levied
in Pondicherry and to be applied for the same purposes,
until other provision was made by a competent legislature
or other competent authority. After the passing of this
Act, the petitioners continued to be sub.jeer to the
existing French laws relating to income-tax.On March 30,
1963, the President in the exercise of the powers conferred
on him by Art. 240 of the Constitution promulgated the
impugned Regulation No. 3 of 1963. The Regulation extended
certain Indian Acts relating to taxation to the Union
territories mentioned therein. Section 3 (2) of the
Regulation extended the Income-tax Act, 1961, subject to the
modifications mentioned in Part II of the Schedule, to
Pondicherry as from April 1, 1963. Section 4(1) provided
that any law in force in Pondicherry corresponding to the
Income-tax Act, 1961 would stand repealed on April 1, 1963.
The petitioners carry on business at Pondicherry and are
being assessed to income-tax under the Income-tax Act. 1961.
They have filed the present writ petitions asking for a
declaration that the Income-tax Act, 1961 was not legally
extended to Pondicherry and a direction prohibiting the
respondents from implementing that Act in relation to
Pondicherry.
In the Constitution of India as originally enacted,
India was declared to be a Union of States, [Art. 1 (1)].
The States and their territories were specified in Parts A,
B and C of the First schedule [Art. 1(2)]. The territory of
India consisted of the territories of the States, the
territories specified in Part D of the First Schedule
(Andaman and Nicobar Islands) and such other territories as
may be acquired, [Art. 1 (3)]. As original enacted. part VI
of the Constitution dealt with Part A States, Part VII dealt
with Part B States, Part VIII dealt with Part C States and
Part IX dealt with the territories specified in Part D of
the First Schedule. The Constitution (Seventh Amendment)
Act passed on October 19, 1956 altered the scheme of
division of India in to A B and C States and the
territories mentioned in Part D of the first Schedule.
Article 1 and the First Schedule were amended so that the
territory of India would comprise the territories of the
states, the Union territories specified in the First
Schedule and such other territories as may be acquired. By
cl. 30 added to Art. 66. "Union territory" was defined to
mean any Union territory specified in the First Schedule and
to include any other territory
supp. C.I./68-8
106
comprised within ’the territory of India but not specified
in that Schedule. Consequential amendments were made in Part
VI and other Parts of the Constitution. Parts VII and IX
were repealed. Part VIII was drastically amended. The title
of Part VIII was altered to that of "Union Territories". The
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amended Art. 239 provided for the administration of Union
territories by the President acting through an administrator
to be appointed by him. The amended Art. 240 was in these
terms:
"240. Power of President to make
regulations for certain Union territories.--(
1 ) The President may make regulations for the
peace, progress and good government of the
Union territory of--
(a) the Andaman and Nicobar Islands;
(b) the Laccadive, Minicoy and Amindivi
Islands.
(2) Any regulation so made may repeal or
amend any Act made by Parliament or any
existing law which is for the time being
applicable to the Union territory and, when
promulgated by the President, shall have the
same force and effect as an Act of Parliament
which applies to that territory."
The amended Art. 241 dealt with High Courts for Union
territories. Article 242 relating to Coorg was repealed.
Article 240 (1) and the First Schedule were amended from
time to time. The Constitution (Fourteenth Amendment) Act
passed on December 28, 1962 amended the First Schedule and
Art. 240 and added Art. 239A. Article 239A and the amended
Art. 240 are in these terms:
"239A. (1 ) Parliament may by law create
for any of the Union territories of Himachal
Pradesh, Manipur, Tripura, Goa, Daman and Diu,
and Pondicherry--
(a) a body, whether elected or partly
nominated and partly elected, to function as a
Legislature for the Union territory, or
(b) a Council of Ministers,or both with such
constitution, powers and functions, in each
case, as may be specified in the law.
(2) Any such law as is referred to in
clause (1) shall not be deemed to be an
amendment of this Constitution for the
purposes of article 368 notwithstanding that
it contains any provision which amends or has
the effect of amending this Constitution.
107
240. (1) The President may make
regulations for the peace, progress and good
government of the Union territory of-
(a) the Andaman and Nicobar Islands;
(b) the Laccudive, Minicoy and Amindivi
Islands;
(c) Dadra and Nagar Haveli;
(d) Gao, Daman and Diu;
(e) Pondicherry:
Provided that when any body is created
under article 239A to function as a
Legislature for the Union teriyaki of Goa,
Daman and Diu or Pondicherry, the
President shall not make any regulation for
the peace, progress and good government of
that Union territory with effect from the date
appointed for the first meeting of the
Legislature.
(2) Any regulation so made may repeal
or amend any Act made by Parliament or any
existing law which is for the time being
applicable to the Union territory and, when
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promulgated by the President, shall have the
same force and effect as an Act of Parliament
which applies to that territory."
Regulation No. 3 of 1963 was made by the President in
the exercise of the power conferred on him to make
regulations for the peace, progress and good government of
the Union territories. The contention that under Art. 240
the President can make regulations limited to the subject of
law and order only cannot be accepted. The grant of
legislative power to make laws, regulations or ordinances
for British dependencies has long been expressed in the
common form of that of making laws, regulations or
ordinances for "peace and good government" of the territory
or similar objects such as "peace, order and good
government", "peace, welfare and good government" and
"peace, progress and good government" of the territory..
Instances of this common form of grant of legislative
power to legislatures and authorities in India are s. 42 of
the Indian Councils Act, 1861, ss. 71, 72, 80A of the
Government of India Act, 1915, s. 72 of the ninth Schedule
and s. 92(2) of the Government of India Act,1935. Such a
power was held to authorise the utmost discretion of
enactment for the attainment of peace, order and good
government of the territory and a Court will not enquire
whether any particular enactment made in the exercise of
this power, in fact, promotes those objects, Riel v.
Queen), Chenard and Co. v. Joachim Arissol(2). The words
"peace, order and good government" and
(1) [1885] 10 A.C. 675, 678-679.
(2) [1949] A.C. 127, 132.
108
similar expressions are words of very wide import giving
wide discretion to the authority empowered to pass laws for
such purposes, Attorney-General for Saskatchewan v.
Canadian Pacific Ry. CO.(1) King Emperor v. Benoari Lal
Sarma(2). In Jogendra Narayan Deb v. Debendra Narayan
Roy(3) Sir George Rankin said that the words have reference
to the scope and not to the merits of the legislation.
Girindra Nath Banerjee v. Birendra Nath Pal(4), he said that
"these words are used because they are words of the widest
significance and it is not open to a Court of law to
consider with regard to any particular piece of legislation
whether in fact it is meritorious in the sense that it will
conduce to peace or to good government. It is sufficient
that they are words which are intended to give, subject to
the restrictions of the Act, a legislating power to the body
which it invests with that authority." Article 240 of the
Constitution confers on the President a general power of
making regulations for the peace, progress and good
government of the specified Union territories. In exercise
of this power, the President may make a regulation repealing
or amending any Act made by Parliament or any existing law
which is for the time being applicable to the Union
territory. The regulation when promulgated by the President
has the stone force and effect as an Act of Parliament which
applies to that territory. The President can thus make
regulations on all subjects on which Parliament can make
laws for the territory.
Parliament has plenary power to legislate for the Union
territories with regard to any subject. With regard to
Union territories there is no distribution of legislative
power. Article 246(4) enacts that "Parliament has power to
make laws with respect to any matter for any part of the
territory of India not included in a State notwithstanding
that such matter is a matter enumerated in the State List."
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In R.K. Sen v. Union(3) it was pointed out that having
regard to Art. 367, the definition of "State" in s. 3(58) of
the General Clauses Act, 1897 applies for the interpretation
of the Constitution unless there is anything repugnant in.
the subject or context. Under that definition, the
expression "State" as respects any period after the
commencement of the Constitution (Seventh Amendment) Act,
1956 "shall mean a State specified in the First Schedule to
the Constitution and shall include a Union territory.’ But
this inclusive definition is repugnant to the subject and
con text of Art. 246. There, the expression "State" means
the State specified in the First Schedule. There is a
distribution of legislative power between Parliament and the
legislatures of the States Exclusive power to legislate with
respect to the matters enumerated in the State List is
assigned to the legislatures of the States esta
(1) [1953] A.C. 594, 613-614.’
(2) [1914] L.R. 72 I.A. 57, 72.
(3) [1942] L.R. 69 I.A. 76, 90.
(4) [1927] I.L.R. 54 Cal. 727, 738,
(5) [1966] 1 S.C.R. 430, 433.
109
blished by Part V1. There is no distribution of legislative
power with respect to Union territories. That is why
Parliament is given power by Art. 246(4) to legislate even
with respect to matters enumerated in the State List. If
the inclusive definition of "State" in s. 3(58) of the
General Clauses Act were to. apply to Art. 246(4),
Parliament would have no power to legislate for the Union
territories with respect to matters enumerated in the State
List and until a legislature empowered to legislate on those
matters is created under Art. 239A for the Union
territories, there would be no legislature competent to
legislate on those matterS; moreover, for certain
territories such as the Andaman and Nicobar Islands no
legislature can be created under Art. 239A, and for such
territories there can be no authority competent to legislate
with respect to matters,enumerated in the State List. Such
a construction is repugnant to the subject and context of
Art. 246. It follows that m view of Art. 246(4), Parliament
has plenary powers to make laws for Union territories on all
matters. Parliament can by law extend the Income-tax Act,
1961 to a Union territory with such modifications as it
thinks fit. The President in the exercise of his powers
under Art. 240 can make regulations which have the same
force and effect as an Act of Parliament which applies to
that territory. The President can therefore by regulation
made under Art. 240 extend the Income-tax Act, 1961 to that
territory with such modifications as he thinks lit.
The President can thus make regulations under Art. 240
with respect to a Union territory occupying the same field
on which Parliament can also make laws. We are not
impressed by the argument that such overlapping of powers
would lead to. a clash between the President and Parliament.
The Union. territories. are centrally administered through
the President acting through an administrator. In the
cabinet system of Government the President acts on the
advice of the Ministers who are responsible Parliament.
The proviso to Art. 240(1) lays down the condition for the
cesser of power of the President to make regulations under
Art. 240(1). The power of the President to make regulations
for the Union territory of Goa, Daman and Diu or Pondicherry
ceases when a legislature for the territory is created with
effect from the date appointed for the first meeting of the
legislature. But until such a legislature is created, the
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President retains his full power to make regulations for
those territories. The proviso does not act as a fetter on
the general power of the President to make regulations for
the Union territory while no legislature for that territory
is brought into. existence. The proviso does not enact, as
is suggested by the petitioners, that the power of the
President is confined
110
to making laws with respect to the matters enumerated in
the State List and the Concurrent List. The argument is
that a legislature created under Art. 239A can be authorised
to pass laws with respect to those matters only and having
regard to. the proviso to Art. 240(1) the President’s power
to make regulations under Art. 240 is similarly
circumscribed. As a matter of fact, the Government of Union
Territories Act, 1963 created local legislatures for the
Union territories of Himachal Pradesh, Manipur. Tripura,
Goa, Daman and Diu and Pondicherry and s. 18 of the Act
conferred on those legislatures power to make laws for those
territories with respect to the matters enumerated in the
State List or the Concurrent List. Assuming that the
local legislature created under Art. 239A can be authorised
to make laws with respect only to the matters enumerated in
the State List or the Concurrent List, it does not follow
that the power of the President to make regulations under
Art. 240 is so limited. By the express words of Art. 240,
the President can make regulations for the peace, progress
and good government of the specified Union territories. Any
regulation so made may repeal or amend any Act made by
Parliament and applicable to that territory. When
promulgated by the President the regulation has the same
force and effect as an Act of Parliament applicable to that
territory. This general power of the President to make
regulations extends. to all matters on which Parliament can
legislate. It may be recalled that Art. 239A and the
proviso to Art. 240(1) were inserted by the Constitution
(Fourteenth Amendment) Act. Under Art. 240 as it stood after
the Constitution (Seventh Amendment) Act and before the
enactment of the Constitution (Fourteenth Amendment) Act, it
could not be contended that the general power of the
President to make regulations under Art. 240(1) was limited
to matters enumerated in the State List and the Concurrent
List. The position was not changed by the insertion of Art.
239A and the proviso to Art. 240(1) by the Constitution
(Fourteenth Amendment) Act. Moreover, Art. 239A does not
authorise Parliament to create legislatures for the Union
territories of the Andaman and Nicobar Islands, Laccadive,
Minicoy and Amindivi Islands and Dadra and Nagar Haveli. It
is clear, therefore, that the power of the President to make
regulations with respect to those territories is not limited
by the proviso to Art. 240( 1 ). We are satisfied. -that
the proviso to Art. 240(1) on its true construction does not
fetter the power of the President to make regulations for
any of the Union territories specified in Art. 240(1)
including Pondicherry as long as no Legislature is created
for the territory.
It was suggested that there is no provision for the
distribution of the income-tax attributable to Union
territories and therefore the President could not extend the
Income-tax Act, 1961 to the Union territories. If this
argument were sound, even Parliament
111
could not extend the Income-tax Act to the Union
territories. Moreover, the argument overlooks Art. 270 which
shows that the income-tax attributable to Union territories
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forms part of the Consolidated Fund of India. It is not
necessary to make any distribution of income-tax with
respect to Union territories as those territories are
centrally administered through the President.
There is no force in the contention that the President
cannot make a law with respect to income-tax in the absence
of an express grant of such a power. There is distribution
of legislative power between the Centre and the States and
consequently distinct grants of taxing power are made in the
legislative lists. With respect to Union territories, there
is no distribution of legislative power. For the Union
territories, Parliament has plenary powers to make laws and
the President has general powers to make regulations. In
the exercise of his powers under Art. 240, the President
could make Regulation No. 3 of 1963 extending the Income-tax
Act, 1961 and other laws to the Union territories.
The petitions are dismissed with costs, one hearing fee.
Y.p. Petitions dismissed.
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