Ruma Pal, J.@mdashI regret my inability to concur with the conclusion reached by my learned Brother, Pattanaik J, that because of the enactment of the Tobacco Board Act, 1975 by Parliament, the State Act viz., the Bihar Agricultural Produce Markets Act, 1960 in so far as it relates to levy of fee on the sale and purchase of tobacco, is invalid.
2. That the legislative power of Parliament in certain areas is para mount under the Constitution is not in dispute. What is in dispute is the limits of those areas as judicially defined. Broadly speaking Parliamentary paramountcy is provided for under Articles 246 and 254 of the Constitution. The first three clauses of Article 246 of the Constitution relate to the demarcation of legislative powers between the Parliament and the State Legislatures. Under Clause (1), notwithstanding anything contained in Clauses (2) and (3), Parliament has been given the exclusive power to make laws with respect to any of the matters enumerated in List I or the Union List in the Seventh Schedule. Clause (2) empowers the Parliament, and State Legislatures subject to the power of Parliament under Sub-clause (1), to make laws with respect to any of the matters enumerated in List III in the Seventh Schedule described in the Constitution as the 'Concurrent List' notwithstanding anything contained in Sub-clause (3). Under Clause (3) the State Legislatures have been given exclusive powers to make laws in respect of matters enumerated in List II in the Seventh Schedule described as the 'State List' but subject to Clauses (1) and (2). The three lists while enumerating in detail the legislative subjects carefully distribute the areas of legislative authority between Parliament (List I) and the State (List II). The supremacy of Parliament has been provided for by the non obstante clause in Article 246(1) and the words 'subject to' in Article 246(2) and (3). Therefore, under Article 246(1) if any of the entries in the three lists overlap, the entry in List I will prevail. Additionally some of the entries in the State List have been made expressly subject to the power of Parliament to legislate either under List I or under List III. Entries in the Lists of the Seventh Schedule have been liberally interpreted, nevertheless Courts have been wary of upsetting this balance by a process of interpretation so as to deprive any entry of its content and reduce it to 'useless lumber'. The use of the word 'exclusive' in Clause (3) denotes that within the legislative fields contained in List II, the State Legislatures exercise authority as plenary and ample as Parliament. The fact that under the scheme of our Constitution, greater power is conferred upon the center vis-a-vis the States does not mean that States are mere appendages of the center. Within the sphere allotted to them, States are supreme. The center cannot tamper with their powers. More particularly, the courts should not adopt an approach, an interpretation, which has the effect of or tends to have the effect of whittling down the powers reserved to the States".
3. Although Parliament cannot legislate on any of the entries in the State List, it may do so incidentally while essentially legislating within the entries under the Union List. Conversely, the State Legislatures may encroach on the Union List, when such an encroachment is merely ancillary to an exercise of power intrinsically under the State List. The fact of encroachment does not affect the vires of the law even as regards the area of encroachment. This principle commonly known as the doctrine of path and substance, does not amount to an extension of the legislative fields. Therefore, such incidental encroachment in either event does not deprive the State Legislature in the first case or Parliament in the second, of their exclusive powers under the entry so encroached upon. In the event the incidental encroachment conflicts with legislation actually enacted by the dominant power, the dominant legislation will prevail.
4. To return to the subject of Parliamentary supremacy. The second facet of the supremacy of Parliament is to be found in Article 254(1) which provides:
Article 254: "Inconsistency between laws made by Parliament and laws made by the Legislatures of States - (1) If any provision of a law made by the Legislature of a State is repugnant to any provision of a law made by Parliament which Parliament is competent to enact, or to any provision of an existing law with respect to one of the matters enumerated in the Concurrent List, then, subject to the provisions of Clause (2), the law made by Parliament, whether passed before or after the law made by the Legislature of such State, or, as the case may be, the existing law, shall prevail and the law made by the Legislature of the State shall, to the extent of the repugnancy, be void."
5. In other words where in due exercise of legislative powers in the Concurrent List there is an irreconcilable conflict in the legislations enacted, the Central Legislation will prevail. The doctrine of repugnancy has been developed in this context. [See:
6. The immediate question before us is whether the Tobacco Board Act, 1975 debars the States from levying market fee in respect of tobacco. In the several matters argued and heard, the main protagonists were the tobacco traders and dealers on the one hand who argue that the States cannot levy market fee on tobacco, and the market Committees on the other who contend to the contrary. The Union of India and the Tobacco Board have supported the former while the State Governments the latter. The details of the several matters which were heard by us have been noted in the opinion of Pattanaik, J. A galaxy of counsel have made submissions in support of the opposing camps. For the purpose of convenience and coherence, the diverse arguments have been clubbed together and those contending against the States competence are referred to compendiously as the appellants and their opponents as 'the respondents'. One further clarification is necessary. As the order referring the issue to this Court was passed in an appeal relating to the Bihar Agricultural Markets Act, 1960, although several other states have enacted substantially similar statutes, I will treat the Bihar Statute as representative and refer to the provisions of that Act for deciding the issues.
7. The Bihar Agricultural Produce Markets Act, 1960 (referred to hereafter as the Markets Act) was enacted by the State of Bihar and is ostensibly referable to Entry 28 of List II which gives the State legislature the exclusive power to legislate on "Markets and Fairs" read with Entry 66 of List II according to which the State Legislature may also levy fees in respect of any matter in List II except Court fees. it is true that in Belsund Sugar Company v. State of Bihar the Court proceeded on the basis that the Markets Act had been enacted by the Bihar Legislature not only under the legislative power vested in it by Entry 28 but also under Entries 26 and 27 of List II of the Seventh Schedule of the Constitution but in that case, there does not appear to have been any controversy raised on this point. Entries 26 and 27 of List II read as under:
26. Trade and commerce within the State subject to the provisions of Entry 33 of List III.
27. Production, supply and distribution of goods subject to the provisions of Entry 33 of List III."
8. It has also been argued by the respondents that the State Act is also referable to Entry 14 of List II which describes the permissible subject matter of legislation by States as:
14: Agriculture, including agricultural education and research, protection against pest and prevention of plant diseases.
9. Except for Entries 26 and 27 of List II, each of the other entries comes within the exclusive legislative domain of the States.
10. The Tobacco Board Act, 1975, on the other hand, is claimed by the appellants to be relatable solely to Entry 52 of List I which enables Parliament to legislate on "industries, the control of which by the Union is declared by Parliament by law to be expedient in the public interest". According to the appellants, the Markets Act seeks to regulate, inter-alia, the sale of various kinds of agricultural produce including tobacco. They contend that the provisions of the Markets Act could not be applied to tobacco because the Tobacco Act was enacted by Parliament under Entry 52 of List I to control and regulate everything relating to the tobacco industry from the growth of tobacco to its processing, storing, sale, manufacture, export and import.
11. It had been initially argued by the appellants that once a declaration is made in terms of Entry 52 of the Union List, the industry in respect of which the declaration is made and the entire process relating thereto becomes part of the legislative head itself and within the exclusive domain of the Parliament, and the State legislature becomes incompetent to enact any provision with regard to that industry. The submission was somewhat watered down in the reply. It was conceded that the argument was an extreme one and that the true principle was that one has to examine the actual extent of coverage by the Central enactment. The next submission was that the word 'industry' in Entry 52 of List I will have to be given a wide meaning. Passages from the Encyclopaedia Britannica were referred to, to contend that an 'industry' could be primary, secondary or tertiary. Primary industries would include agriculture, forestry, fishing, mining and the extraction of minerals etc. A secondary industry would be a manufacturing industry where raw materials supplied by primary industries are processed to manufacture consumer and non-consumer goods. A tertiary industry would be one where services were rendered such as banking, insurance, transportation, information etc. This was contrasted with the meaning of the word as defined in the Industries, Development and Regulation Act, 1951 which only deals with manufacturing industries. According to the appellants, this Court in
12. The respondents on the other hand contended that the Tobacco Act did not and could not occupy the entire legislative field relating to tobacco. According to them, despite the declaration in Section 2 of the Tobacco Act under Entry 52 of List I, the word 'industry' in the context of the Tobacco Act could not include anything more than processing and manufacturing of tobacco. Reliance was placed primarily on the decision of the Constitution Bench in
13. It was further submitted on behalf of the respondents that the question of repugnancy between the Markets Act and the Tobacco Act would not arise since Parliament was not competent to enact provisions in respect of a legislative field specifically provided for in List II. It was submitted that the legislative field under Entry 52 of List I was derived from Entry 24 of List II and Entry 24 did not cover the legislative fields otherwise specially provided for in List II. It was stated that Entry 28 could not be rendered redundant by the Central Government's legislation on commodities sold at markets and fairs by issuing a declaration under Entry 52 of List I. It was also submitted that there may be provisions in the Tobacco Act which may incidentally trench on the State's competence and as long as States have not legislated on that topic, the Tobacco Act may prevail. It was submitted that even if the Markets Act were enacted under Entries 26 and 27 of List II nevertheless this would not make the Market Act invalid as far as tobacco was concerned. It was further submitted that although Entries 26 and 27 in the State List were subject to the provisions of Entry 33 of the Concurrent List, there was no provision in Entry 33 of the concurrent List which covered tobacco. It was submitted that the issue of repugnancy did not arise because Article 254(1) only relates to repugnancy in actual legislations in respect of entries in the Concurrent List. According to the respondents, assuming that Parliament was competent to legislate in respect of tobacco, there was in fact no repugnancy between the Markets Act and the Tobacco Act as the Tobacco Act did not cover post auction sales. In any event, there could be no conflict between the Markets Act and the Central Act in Bihar Particularly having regard to the fact that Section 13 13A and 14A of the Tobacco Act had not been made operative in Bihar. Reliance has been placed upon the absence of a non-obstante clause in the Tobacco Act and the presence of Section 31 in that Act which, according to the respondents, makes it clear that the Tobacco Act was to be read as being in addition to and not in derogation of any other law. Therefore according to the respondents, even if tobacco were solely within the exclusive field of legislation by Parliament, the State Legislature could recover fees for services rendered in respect of markets where tobacco may be sold.
14. To being with, I do not think that this Bench should at all go into the question of the validity of the Tobacco Board Act, 1975 (referred to briefly hereafter as the 'Tobacco Act') even thought he issue was argued at some length by the main protagonists before us. The dispute which originally gave rise to this set of appeals is limited to the question whether the Market Committees have the authority to levy market fee under the Markets Act on the sale of tobacco and whether the provisions in the Markets Act granting Market Committees such right are repugnant to the provisions of the Tobacco Act and are therefore, unconstitutional. What has been placed before this Bench for its consideration is the correctness of the earlier decision in
15. No doubt, the States have been given notice but the focus of the arguments has been on the levy of fees on the marketing of tobacco. As the Tobacco Act covers a much larger field, a pronouncement on the validity of all the provisions dealing with a variety of activities under the Act would not be appropriate as it would perhaps pre-empt a decision on aspects other than the marketing of tobacco without hearing those who might be interested in the outcome of a decision on those provisions.
16. The starting point in any controversy dealing with apparently conflicting legislative jurisdictions is to see whether the conflict can be fairly reconciled by reading the entries to which the legislations are referable, together and "by interpreting and, where necessary, modifying the language of the one by that of the other". It is only when such resolution is not possible that the Courts should be called upon to decide the question of legislative competence. This principle has been stressed in a number of cases by the Privy Council, the Federal Court and more recently by this Court. [See; The Central Provinces and Berar Sales of Motor Spirit & Lubricants Taxation Act, 1938", 'Governor-General in Council v. Province of Madras'State of Bombay v. F.N. Balsara AIR 1951 SC 818, 822,
17. Similarly, when there is an apparent conflict between two statutes enacted in valid exercise of legislative powers under the Concurrent List, reconciliation must be attempted. Only when the differences are irreconcilable should the Courts resort to striking down a piece of legislation. [See:
18. In my view, if therefore, the issue raised in this case can be resolved by limiting our consideration to the question of conflict, if any, between the two entries in the seventh schedule of the Constitution to which the Tobacco Act and the Market Act are respectively relatable and between the provisions of the two statutes which have a bearing on the marketing of tobacco, it is unnecessary to stray into those areas which may not be necessary for the disposal of these appeals. The discussion in this opinion is therefore limited to the scope of the two entries and the allegedly conflicting provisions of the two Acts with which we are concerned.
19. The controversy in this case to a large extent turns on the meaning of the words "industry" as used in the three legislative lists. Now the power to legislate in respect of all industries has been given under Entry 24 of List II to the State Legislatures subject to Entries 7 and 52 of List I. Entries 7 and 52 of List I allow Parliament to legislate in respect of particular 'industries' - namely such industries which are declared by Parliament by law to be necessary for the defence or for the prosecution of war (Entry 7) and industries the control of which by the Union is declared by Parliament by law to be expedient in the public interest (Entry 52). Trade and commerce in, and the production supply and distribution of the products of such controlled industry have been provided for in Entry 33 of the Concurrent List wherein both Parliament and the State Legislatures are competent to legislate. A Constitution Bench of this Court in The Calcutta Gas Company (Prop.) Ltd. v. the state of West Bengal has held that the expression 'industry' in all the three lists must be given the same meaning and that since ordinarily industry is in the field of State Legislation the word must be construed in the context of the other entries in List II in such a manner so that no entry in List II is deprived of its content. In other words, the meaning of the word 'industry' is to be determined with reference to Entry 24 of List II where the power to legislate generally in respect of industries has been provided. Entries 7 and 52 are entries which specify particular industries out of this general pool. The meaning of the word 'industry' in these two entries, therefore, must necessarily be derived from the meaning which may be ascribed to the word in Entry 24 of List II.
20. The seminal decision on this process of interpretation for arriving at the definition of industry' is Ch. Tika Ramji and Ors. v. State of Uttar Pradesh and Ors. in which a Constitution Bench unanimously held.
"Industry in the wide sense of the term would be capable of comprising three different aspects: (1) raw materials which are an integral part of the industrial process, (2) the process of manufacture or production, and (3) and distribution of the products of the industry. The raw materials would be goods which would be comprised in Entry 26 of List II. The process of manufacture or production would be comprised in Entry 24 of List Ii except where the industry was a controlled industry when it would fall within Entry 52 of List I and the products of the industry would also be comprised in Entry 27 of List II except where they were the products of the controlled industries when they would fall within Entry 33 of List III."
21. The underlying rationale of Tika Ramji's definition of the word 'industry' is that the Constitution having expressly provided for particular fields of legislation in the three Lists, each field must be given a meaning. Entry 24 of List II cannot be read so as to subsume within itself the other entries in List II. It must be given a meaning which allows the other entries to survive and be defined to that extent with reference to what it is not.
22. Thus in Calcutta Gas it was held that the word 'industry' in entry 24 of List II and 7 and 52 of List I did not include gas and gas works which was in terms provided for in Entry 25. The argument in that case was that the State was incompetent to enact the Oriental Gas Company Act, 1960. under Entry 25 of List II because Parliament had passed the Industries (Development & Regulation) Act, 1951 by virtue of Entry 52 of List I. The Central Act in that case had u/s 2 declared that it was expedient in the public interest that the Union should take under its control inter-alia industries of "'fuel gas' (coal gas, natural gas and the like)". For the purpose of promoting and regulating these industries, the Central Act enabled the Central Government to investigate into the affairs of an undertaking to regulate its production, supply and distribution, and, if necessary to take over the management of the undertaking. The Court said that if the word 'industry' in Entry 24 of List II and, therefore, 52 of List I were interpreted to include 'gas and gas works' which were expressly covered by entry 25 List II, entry 25 may become redundant and it would amount to attributing to the authors of the Constitution "ineptitude, want of precision and tautology". As a result, the challenge to the State Act was negatived and the Central Act, insofar as it purported to deal with the gas industry, was held to be beyond the legislative competence of Parliament.
23. Again in
It was also held:
"though the production and manufacture of raw silk cannot be legislated upon by the State legislature in view of the provisions of the Central Act and the declaration in Section 2 thereof, that declaration and Entry 52 does not in any way limit the powers of the State legislature to legislate in respect of the goods produced by the silk industry. To interpret Entry 52 otherwise would render Entry 33 in List III of the Seventh Schedule to the Constitution otiose-and meaningless".
24. This process of defining 'industry' in Entry 24 of List II and consequently Entry 52 of List I, by eliminating from its scope the fields specifically provided for in List II or List III has been consistently followed. For example in
"Parliament cannot take over the control of industries engaged in the production and manufacture of intoxicating liquors by making a declaration under Entry 52 of List I, since the said Entry governs only Entry 24 in List II but not Entry 8 in List II."
25. In
26. A Constitution Bench in
27. Another Constitution Bench in
".....This does not mean that other entries in the State List become impotent even regarding 'gold'. The State Legislature can make laws regarding money-lending even where gold is involved under Entry 30, list II, even as it loan regulate 'gambling in gold' under Entry 34, impose sales tax on gold sales under Entry 54 regulate by municipal laws under Entry 5 and by trade restrictions under Entry 26, the type of buildings for gold ships and the kind of receipts for purchase or sale of precious metal. To multiply instances is easy, but the core of the matter is that where under its power Parliament has made a law which overrides an entry in the State List, that area is abstracted from the State List. Nothing more."
28. It is unnecessary to multiply instances of the numerous decisions which have followed the logic of Tika Ramji and accepted its conclusion that for the purposes of Entry 24 of List II and consequently Entry 52 of List I, 'industry' means "manufacture or production" and nothing more. It is sufficient to note that Tika Ramji's definition of industry has been affirmed and applied recently by a Constitution Bench in Belsund Sugar Company v. State of Bihar (supra) and is still good law. Harak Chand Banthia's case does not strike a discordant note.
29.
"The question to be considered is what is the meaning of the word "industry" in Entry 52 of List I, Entry 24 of List II and Entry 33 of List III. Whatever may be its connotation it must bear the same meaning in all these entries which are so interconnected that conflicting or different meanings given to them would snap the connection. In the Shorter Oxford English Dictionary the word "industry" is defined as "a particular branch of productive labour; a trade or manufacture." According to Webster's Third New International Dictionary (1961 edn.) the word "industry" means "(a) systematic labour especially for the creation of value; (b) a department or branch of a craft, art, business or manufacture, a division of productive and profit making labour especially one that employs a large personnel and capital especially in manufacturing; (c) a group of productive or profit making enterprises or organisations that have a similar technological structure of production and that produce or supply technically substitutable goods, services or sources of income." It was said that if the word "industries" is construed in this wide sense, Entry 27 of List II will lose all meaning and content. it is not possible to accept this contention for, Entry 27 is a general power should not be so interpreted as to nullify a particular power conferred by the same instrument. In Tika Ramji v. State of Uttar Pradesh 1956 SCR 393 the expression "industry" as defined to mean the process of manufacture or production and did not include raw materials used in the industry or the distribution of the products of the industry. it was contended that the word "industry" was a word of wide import and should be construed as including not only the process of manufacture or production but also activities antecedent thereto such as acquisition of raw materials and subsequent thereto such as disposal of the finished products of that industry. But this contention was not accepted. It was contended by Mr. Daphtary that if the process of production was to constitute "industry" a process of machinery or mechanical contrivance was essential. But we see no reason why such a limitation should be imposed on the meaning of the word "industry" in the legislative lists. Similarly it was argued by Mr. Paalkhivala that the manufacture of gold ornaments was not an industry because it required application of individual art and craftsmanship and aesthetic skill. But mere use of skill or art is not a decisive factor and will not take the manufacture of gold ornaments out of the ambit of the relevant legislative entries. It is well settled that the entries in the three lists are only legislative heads or fields of legislation and they demarcate the area over which the appropriate legislature can operate. The legislative entries must be given a large and liberal interpretation, the reason being that the allocation of subjects to the lists is not by way of scientific or logical definition but is a mere enumeration of broad and comprehensive categories. It is not, however, necessary for the purpose of this case to attempt to define the expression "industry" precisely or to state exhaustively all its different aspects. But we are satisfied in the present case that the manufacture of gold ornaments by goldsmiths in India is a "process of systematic production" for trade or manufacture and so falls within the connotation of the word "industry" in the appropriate legislative entries. It follows, therefore,e that in enacting the impugned Act Parliament was validly exercising its legislative power in respect of matters covered by Entry 52 of List I and Entry 33 of List III."
(Emphasis mine)
30. The decision cannot be read as whittling down or deviating from the reasoning or the definition of the word industry in Tika Ramji. It does not sack to do so. Indeed the Court re-affirmed the definition of industry in Tika Ramji. The observation relating to Entry 27 of List II must be understood in relation to the language of the entry which reads:
"Production, supply and distribution of goods subject to the provisions of Entry 33 of List III."
31. This provides for States to generally legislate on production, supply and distribution of goods. Entry 33 of List III deals particularly with the production, supply and distribution of the products of industries where the control of such industry by the Union is declared by law to be expedient in the public interest under Entries 7 or 52 of List I. It would not have been necessary to have especially provided for trade and commerce in, and the production, supply and distribution of the products of a controlled industry in Entry 33 of List III, had the word 'industry' in Entries 7 and 52 of List I covered the fields. Similarly had the word 'industry' in Entry 24 of List II been sufficient, why have a separate head under Entry 27 of the same list dealing with the production supply and distribution of goods unless we concede that the framers of the Constitution were guilty of ineptitude, want of precision and tautology? The concept of a 'general' and 'particular' term is necessarily relative depending upon the context in which the term is considered. Entry 27 of List II is certainly a generally entry but only in relation to Entry 33 of List III which deals with trade, commerce etc. in particular kinds of products namely the products of a controlled industry. Finally, it is clear from the passage quoted, that Banthia held that the Gold Act was legislatively competent under Entry 52 of List I because it dealt with the process of manufacture or production of gold i.e., it was within the sweep of industry as defined in Tika Ramji.
32. The appellants submission that Tika Ramji narrowly construed the word because the decision was rendered in the context of the Industrial (Development & Regulation) Act, 1951 proceeds on a Miss-appreciation of the decision. Merely because Tika Ramji found that the particular Central enactment under consideration was under Entry 33 of List III and not Entry 52 of List I does not limit or detract from its authoritative pronouncement on the scope of Entry 52 of List I. The finding in fact formed the basis of the conclusion that the provisions of the Central Act in question did not fall within Entry 52 of List I. What was construed was the ambit of Entry 52 of List I and the range of a declaration under that entry. That the declaration was contained in the Industries (Development and Regulation) Act, 1951 was inconsequential and could into colour the scope of the entry itself. It is significant that Banthia's case, which according to the appellants accepted a wider meaning of 'industry', was also a case in which the relevant declaration under Entry 52 of List I was under the Industries. (Development and Regulation) Act.
33. Banthia's case has been considered and explained in the subsequent decision of the Constitution Bench in
"...We see nothing in that decision which contradicts the position that while the Gold Control Act fell within Entry 52 of List I the State List was not totally suspended for that reason for purposes of legislating on subjects which fell within that List, but incidentally referred also to gold transactions."
34. To add to the persuasive force of their arguments, the appellants then put forward what can only be described an argument of alarm. It was contended that if a narrow view of industry were taken, then despite a declaration by Parliament under Entry 7 of List I that an industry was necessary for the purpose of defence of the country or for the prosecution of war, Parliament would not be competent to legislate on the supply of raw materials or distribution of the finished product. Such an argument is hardly relevant to a question of construction. In any case it overlooks the superior powers of Parliament under Entry 33 of List III and the overriding powers of Parliament during a national emergency including those under Articles 249 250 251 and 252.
35. To sum up: the word 'Industry' for the purposes of Entry 52 of List I has been firmly confined by Tika Ramji to the process of manufacture or production only. Subsequent decisions including those of other Constitution Benches have re-affirmed that Tika Ramji's case authoritatively defined the word 'industry' - to mean the process of manufacture or production and that it does not include the raw materials used in the industry or the distribution of the products of the industry. Given the constitutional framework, and the weight of judicial authority it is not possible to accept an argument canvassing a wider meaning of the word 'industry'. Whatever the word may mean in any other context, it must be understood in the Constitutional context as meaning 'manufacture or production'.
36. Applying the negative test as evolved in Tika Ramji in this case it would follow that the word 'industry' in Entry 24 of List II and consequently Entry 52 of List I does not and cannot be read to include Entries 28 and 66 of List II which have been expressly marked out as fields within the State's exclusive legislative powers. As noted earlier Entry 28 deals with markets and fairs and Entry 66 with the right to levy fees in respect of, in the present context, markets and fairs. Entry 52 of List I does not override Entry 28 in List II no has Entry 28 in List II been made subject to Entry 52 unlike Entry 24 of List II. This Court in Belsund Sugar (supra) has also accepted the argument that Entry 28 of List II operated in its own and cannot be affected by any legislation pertaining to industry as found in Entry 52 of List I.
37. If 'industry' does not include 'markets and fairs' it is important to define what markets and fairs connote. 'Market' may strictly be defined as "the meeting or congregating together of people for the purchase and sale of provisions or livestock, publicly exposed, at a fixed time and place". A 'fair' has been judicially defined as meaning 'a periodical concourse of buyers and sellers in a place generally for sale and purchase ..... at times or on occasion ordained by custom. The distinction between markets and fairs appears to lie in the periodicity viz. while a market may be a regular or permanent place of business, a fair is an intermittent one. At common law, fairs and markets were also franchises or rights to hold a concourse of buyers and sellers to dispose of the commodities in respect of which the franchise is given. This included the right to levy a toll or sum payable by the buyer upon sales of articles in a market. The sense in which the words has been used in Entry 28 appears to cover not only such right but the market place itself including the concourse of buyers and sellers' and the regulation of all these.
38. The word "Markets" has also found place in Entry 48 of List 1 which reads "Stock Exchanges and future markets". A Constitution Bench of this Court in
It was held that:
"Market no doubt ordinarily means a place where business is being transacted. That was probably all that it meant at a time when trade was not developed and when transactions took place at specified places. But with the development of commerce bargains came to be concluded more often that not through correspondence and t he connotation of the work 'market' underwent a corresponding expansion. In modern parlance the work 'market' has come to mean business as well as the place where business is carried on."
39. The question then is does the Markets Act fall within this definition of the word 'markets? The establishment of regulated markets had long been recognized as an imperative requirement of any ordered plan of agricultural development in this country. The objects and reasons for enacting the Bihar Markets Act, 1960 has been stated as: properly organising markets of agricultural and allied commodities to ensure that the agriculturist gets a fair share of the price paid by the consumer for his produce by attempting to do away or rigidly controlling the middle man. What was originally a source of private profit in common law, has by virtue of the Markets Act become a matter of municipal concern namely, setting up of regulated markets for the marketing of agricultural produce.
40. The provisions of the Markets Act are briefly noted. The Markets Act provides for he issuance of a notification u/s 3 by the State Government declaring its intention of regulating the purchase, sale, storage, processing of specified produce in that area. "Agricultural produce" has been defined in Section 2 (6) as:
" all produce whether processed or non-processed, manufactured or not, of Agriculture, Horticulture, Plantation, Animal Husbandry, Forest, Sericulture, Pisciculture, and includes live stocks or poultry as specified in the Schedule."
41. Tobacco has been mentioned at Item XI in the Schedule. u/s 4 the State Government declares the area specified as a market area for the purpose of the Markets Act. From the date of the declaration, u/s 4 no person or authority can establish or continue or be allowed to set up any place for the purchase,sale stores or processing of any notified agricultural produce except in accordance with the provisions of the Markets Act. u/s 5 the State Government may declare by notification any building or locality in any market area to be the principal market yard. Sections 6 to 15 and 17 to 27-A deal with the setting up of Market Committees, their constitution and functions. These Market Committees are subject to the superintendence and control of the Bihar, Agricultural Marketing Board set up u/s 33A of the Markets Act.
42. Section 15 prohibits notified agricultural produce from being bought or sold by any person at any place in the market area other than the relevant principal market yard or sub-market yard or yards established therein unless it is for retail sale, personal consumption or exempted by the Marketing Board u/s 15(1) or (2). The mode of purchase and sale specified u/s 15(20 is by means of open auction or tender system. Sub-section (2) of section 18 specifically authorise the Market Committee to issue licences to persons engaged in the processing, storage or processing of agricultural produce to operate in the market area and also to control and regulate the admission of persons into the market yard or the sub-market yards and to prosecute persons trading without a valid licence. Section 27 empowers the Market Committee to levy and collect market fee from the buyer on the agricultural produce bought or sold in the market area at specified rates. The remaining sections of the Markets Act omitted from consideration as they are not at all relevant. We are really concerned with Section 15 and more particularly Sections 27. The setting up of markets areas, markets yards and regulating use of the facilities within such area or yards by levy of market fee is a matter of local interest and would be covered by Entry 28 of List II and thus within the legislative competence of the State. If any portion of the market area or the market yards is used of the sale or purchase of tobacco, that too will be within the State's competence. To hold to the contrary would be to ignore the exclusive powers of the States to legislate in respect of Markets and fairs under Entries 28 and 66 of List II. The Markets Act does not seek to regulate either the "manufacture or production" of tobacco (assuming that agricultural produce can be manufactured) and thus does not impinge upon the Tobacco Act in so far as it is at all relatable to Entry 52 of List I. All the provisions of the Markets Act, in my views, are clearly relatable to Entry 28 of List Ii given the scope of the entry as discussed earlier. The State in the circumstances, was not incompetent to incidentally also legislate with regard to tobacco and " the semantic sweep of Entry 52 did not come in the way of the State Legislature making laws on subjects within its sphere and not directly going to the heart of the industry itself". In my opinion therefore Sections 15 and 27 of the Markets Act in pith and substance are relatable to Entries 28 and 66 of List II and have been competently enacted by the State. Incidentally it is nobody's case that the fee charged u/s 27 does not represent a quid pro quo for the services rendered and facilities afforded in the market area. It follows that Parliament is incompetent to legislate for the setting up or regulation of 'markets and fairs' within the meaning of the phrase in entry 28 of List II, even in respect of tobacco. It may of course incidentally trespass into the State legislative field, provided (1) the trespass is an inseparable apart of the provisions validly passed and (2) the State has not already fully occupied its field with conflicting statutory provisions.
43. Let us consider the scope of the Tobacco Act. The Statement of Objects and Reasons of the Tobacco Act shows that the enactment was necessary in view of the fact that India is the third largest producer of tobacco in the world, the sixth largest among the tobacco exporting countries and the second largest exporter of virginia tobacco. The manifest intention of Parliament was to take measures to ensure that the tobacco particularly virginia tobacco met the demands of the markets in India and abroad both qualitatively and quantitatively. The Act which extends to the whole of India has however not been brought entirely into force in all the States. Chapter I contains the fist three Sections. Section 1, Sub-section (3) provides for the Act coming into fore on such dates as the Central Government may, by notification in the Official Gazette, appoint; provided that different dates may be appointed for different provisions for the Act and for different States or different parts thereof. Section 2 contains the necessary declaration in terms of Entry 52 List I in relation to the tobacco industry.
44. Chapter II of the Act consists of Sections 4 to 8 and deals with the establishment and functions of the Tobacco Board. Section 8 (1) casts a duty on the Board to promote the development of the tobacco industry. Sub-section (2) prescribes some specific measures which may be taken by the Board. Those which are of relevance are noted:
"8(2) (a).....
(b) keeping a constant watch on the virginia tobacco market both in India and abroad, and ensuring that the growers get a fair and remunerative price for the same and that these are no wide fluctuations in the prices of the commodity;
(c) maintenance and improvement of existing markets, and development of new markets outside India for Indian virginia tobacco and its products and devising of marketing strategy in consonance with demand for the commodity outside India, including group marketing under limited brand names;
(cc) establishment by the Board of auction platform with the previous approval of the Central Government for the sale of virginia tobacco by registered grower or curers and functioning of the Board as an auctioneer at auction platform established by or registered with it subject to such conditions as may be specified by the Central Government.
.....
(e) regulating in other respects virginia tobacco marketing in India and export of virginia tobacco having due regard to the interests of growers, manufacturers and dealers and the nation;
(g) purchasing virginia tobacco from growers when the same is considered necessary or expedient for protecting the interests of the growers and disposal of the same in Indian or abroad as and when considered appropriate;
.....
45. Sections 10 to 15 are in Chapter III which deals with Regulation of Production and Disposal of Tobacco, for registration/licensing not only of the growers including nursery growers (Section 10 10-A) but also curers (Section 11), processors and manufactures (Section 11-A), graders and stores ( 11-B), and exporters, dealers, packers or auctioneers (Section 12).
46. Of particular relevance are Sections 13 and 13A which provide for virginia tobacco to be sold at registered auction platforms or auction platforms established by the Board, and places a duty on registered dealers and exporters to purchase tobacco only at such auction platforms. However, in those Stated in which Section 13 is not in force, u/s 13B dealers purchasing virginia tobacco must pay the full price for the whole quantity and are restricted from taking recourse to any such practice which may be specified as unfair by the Board.
47. Section 14 deals with the forms for registration and Section 15 with the power of inspection t ascertain whether the particulars in the forms are correct. Apart from these sections, according to the appellants, Section 14-A in particular occupies the field with respect to levy of fees on the sale of tobacco. It reads:
"14-A(1) Where virginia tobacco is sold at nay auction platform established by the Board under this Act, it shall be competent for the Board or for any officer of the Board authorised by it in this behalf to levy fees, for the services rendered by the Board in relation to such sale, at such rate not exceeding two percent of the value of such tobacco as the Central Government may form time to time, by notification in the Official Gazette, specify;
(2) The fees levied under Sub-section (1) shall be collected by the Board or such officer equally from the seller of the Virginia tobacco and the purchaser of such tobacco, in such manner as may be prescribed."
48. The contents of Chapter IV and V of the Act need not detain us as they deal with aspects far removed from the Markets Act. Of the last Chapter viz. Chapter VI, two Sections are noteworthy viz. Section 30(1) which allows the Central Government to suspend provisions of the Act in respect of certain territories and Section 31 which reads:
31.The provisions of this Act shall be in addition to, and not in derogation of, and not in derogation of, the provisions of nay other law for the time being in force."
49. The object of the tobacco Act is to keep a control on the quality and quantity of tobacco grown in the country with an eye on the international markets. The location of domestic markets for sale of tobacco can hardly be described as a necessary concomitant to the achievement of this object. Assuming it is, fairly read, it is possible to reconcile the allegedly conflicting provisions of the two statutes by a reasonable and practical construction of their provisions. The use of the word "markets" and marketing in the tobacco Act, including Section 8 does not mean a market in the sense the word has been used in the Markets Act. It is obvious from phrases such as 'the Virginia tobacco market', 'development of new markets outside India' etc. that the word has been used in the sense of 'sale as controlled by supply and demand; especially a demand for a commodity or service" - in this case tobacco. The Tobacco Act is not concerned so much with the 'where' but with the 'how', the tobacco is disposed of. Even when the Tobacco Act speaks of setting up of auction platforms it does not indeed it could not say where the auction platforms are to be set up.
50. Since State are exclusively competent to decide on the location of markets, the authorities under the Tobacco Act would have to comply with the municipal laws and set up the auction platforms only within the permissible areas. If the facilities afforded under the Market Act are utilised, the facilities will have to be paid for and the authorises appointed to levy and collect fees for the purpose under the Markets Act would be competent to do so. If further facilities are offered at the Auction Platforms under the Tobacco Act, fees may be levies u/s 14-A of that Act. The right to levy fees under the two acts therefore may not necessarily conflict, the levy not being in the alternative but additional. Assuming this is not possible and there is any conflict, the provisions of the Markets Act and not the Tobacco Act would prevail.
51. Even if Sections 15 and 27 of the Markets Act are not referable to Entries 28 and 66 of List II and are referable to Entries 26 and 27 of List II - nevertheless these Sections of the Markets Act do not trespass on turf reserved by Parliament under Entry 52 of List I? State legislation on the supply and distribution of goods as well as trade and commerce therein which are relatable to Entries 26 and 27, is only subject to the Central enactment if any under Entry 33 of the Concurrent List and not Entry 52 of List I. Furthermore, whether or not any portion of the Tobacco Act relater to an "industry' within the meaning of Entry 52 List I, following the logic of Tika Ramji at least those provisions relating to the disposal of tobacco are not so relatable. The declaration under Entry 52 List I does not cover these provisions and the States were free to legislate under Entries 26 27 of List II on tobacco. I do not propose to decide whether the provisions of the Tobacco act dealing with the sale of tobacco may be sustained with reference to Entry 33 of List III. It is an unnecessary exercise because the appellants did not argue this, and also because, as I have said earlier, the Constitutional validity of the provisions of the Tobacco Act has not been referred to this Bench for scrutiny.
52. Assuming that Chapter III of the Tobacco Act are covered by Entry 52 of List I, nevertheless the Parliament did not intend to invalidate nay portion of the markets Act. It has consciously clarified by section 31 that it does not intend to occupy the entire field and has 'made space' for the State legislation and made it clear the provision of the Central Act shall be in addition to and not in derogation of any other law. The Section assumes greater significance since most of the Markets Acts were in pace when the Tobacco Act was enacted. there are two ways in which such a saving clause as is contained in Section 31 of the Tobacco Act may be understood. There is the way which found favour with this Court in
53. A further compelling circumstance to uphold the levy of market fee is the fact that several provisions of chapter III of the Tobacco Act particularly those dealing with the setting up of auction platforms namely Sections 13 and 13A, and Section 14A relating to the levy of fees on the sale of tobacco have not been brought into operation in any State in Indian except for the State of Karnataka. I have already stated the reasons why the provisions relating to sale of tobacco in the Tobacco Act do not come within the definition of 'industry' and are not covered by the declaration under Entry 52 of List I. But granting or the sake of argument that the sale of tobacco comes within the definition of industry until the Central Government chooses to actually occupy the field by effective legislation, it would remain open for the State Legislature to cover that field under Entry 24 of List II. It is difficult to adopt an interpretation which would debar the States from the right to provide for the sale of tobacco only within market Areas and levy market fees although Parliament does not now and may never seek to bring Sections 13 13A and 14A into operation in those States. This view finds support in the pronouncement of a Constitution Bench in Ishwari Khetan Sugar Mills (P) Ltd. v. State of Uttar Pradesh (supra) when it was construing the impact of a declaration under Entry 52 of List I, it was said that legislation for assuming control containing the declaration under entry 52 of List I must spell out the limit of control so assumed by the declaration. Therefore, the degree and extent of control that would be acquired by Parliament pursuant to the declaration would necessarily depend upon the legislation enacted spelling out the degree of control assumed.
54. In Belsund Sugar (supra), one of the controversies raised related to a conflict between the provisions of the Markets Act and the Tea Act, 1953. There too, the Tea Act envisaged that an order might be passed u/s 30 relating to the sale and purchase f tea. The contention that the mere possibility of issuance of such a control order u/s 30 of the Tea Act was sufficient to oust the State Legislature from the field, was negatived in the following words:
"...mere possibility of issuance of any future order u/s 30(1) of the Tea Act by the Central Government in the absence of any existing express order to that effect, cannot be said to have occupied the field regarding purchase and sale of manufactured tea and fixation of maximum or minimum price thereof, or the location of such sales. These topics cannot be said to be legitimately convened by the Tea Act. Hence, the field is wide open for the State Legislature to exercise its concurrent legislative power under Entry 33 of List III for effectively dealing with these matters."
55. Therefore, even if none were to concede that there is a conflict between the provisions in the Markets Act prohibiting sale of tobacco otherwise than in a market area and the setting up of auction platforms under the Tobacco Act, and between the States power to levy market fee under the Markets Act and the levy of fee on the sale of tobacco under the Tobacco Act, at least in those States where Sections 13 13A and 14A of the Tobacco Act are not operative, the provisions of the Markets Act must prevail.
56. It now remains for me to answer the question which was referred to this Bench, namely whether ITC Ltd. v. State of Karnataka (supra) has been rightly decided. The majority opinion on the issued of legislative competence of the State Legislature was delivered by Fazal Ali, J. In striking down that part of the Karnataka Markets Act which provided for the power to levy market fee on tobacco and its products, the opinion was based on six premises, each of which do not appear to be in consonance with the law.
57. First - The Court proceeded on the basis that the Tobacco Act was wholly and solely relatable to Entry 52 of List 1. I have already given may reasons for holding that the Tobacco Act in so far as it deals with the disposal of tobacco is not within Entry 52 of List I.
58. Second - Article 246(4) was relied on to hold that Parliament had overriding power "to legislate in exceptional cases in matters appearing in the State List". Article 246(4) has no manner of application to the present dispute. It reads:
"(4) Parliament has power to make laws with respect to any matter for any part of the territory of Indian not included in a State notwithstanding that such matter is a matter enumerated in the State List."
59. The Sub-Article only deals with the power of Parliament to make laws in respect of Union Territories even in respect of matters enumerated in the State List.
60. Third - It was held to be "well settled that where tow Acts, once passed by the Parliament and the other by State Legislature collide and there was no question of harmonizing them, then the Central Legislation must previal". What is well settled is that if the Parliament and the State Legislature enact conflicting legislation in respect of the same subject matter under an Entry in the Concurrent List then only will the Central Legislation prevail. In other cases it will be a question of whether the conflicting legislation is referable to an exclusive entry under the state List or the Union List, after the determination of which, the dominant legislation will prevail.
61. Fourth - It was said that if the minority view (expressed by Mukharji-J) were accepted, it would "amount to robbing the 1975 Act of its entire content and essential import by handing over the power of legislation to the State Government which per se has been taken over by the Parliament under Article 246 by the 1975 Act". Mukharji-J had in fact followed Tika Ramji and held correctly that the Tobacco Act and Markets Act operated in their respective fields and that there was no repugnancy if both the Acts were considered in the light of their respective true nature and character. Tika Ramji and the other Constitution Bench decision following it were not even referred to by the majority.
62. Fifth - In determining the impact of Entry 52 of List I vis a viz entry 28 of List II, the majority relied on decisions dealing with Entry 54 of List I, and Entry 23 of List II. The scope of the entries are different and I agree with the view expressed in the opinion of my learned Brother Pattanaik, J that the decisions relied upon by the majority viz the
63 The final premise on which the majority based their view that the States could not levy any market fee on Tobacco, was that since the assent of the President was not taken, the Karnataka Markets Act 1980, was wholly incompetent. The view proceeds on a misinterpretation of Article 254(2), which in any event has no application to this case. Article 254(2) provides:
"(2) Where a law made by the Legislature of a State with respect to one of the matters enumerated in the Concurrent List contains any provision repugnant to the provisions of an earlier law made by Parliament or an existing law with respect to that matter, then, the law so made by the Legislature of such State shall, if it has been reserved for the consideration of the President and has received his assent, prevail in that State."
64. The language is clear. It only deals with the question of supremacy and not competence. In respect of conflicting legislation under the Concurrent List, if the State Legislation has received the assent of the President, it will prevail over the Central Legislation in that State. The Article does not provide that State Legislation without the assent of the President is incompetent.
65. In the circumstances I would hold that ITC v. State of Karnataka (Supra) was wrongly decided and would for the reasons discussed uphold the competence of the State Legislatures to levy market fee on tobacco.
Y.K Sabharwal, J.
66. The issue in these matters is about the validity and applicability of Bihar Agricultural Produce Markets Act, 1960 and the Karnataka Agricultural Produce Marketing (Regulation) Act, 1966, to the extent these State legislations deal with sale of tobacco in market areas with particular reference to the levy thereupon of market fee, after enactment of Tobacco Board Act, 1975-a parliamentary legislation. The same is the issue in respect of similar State legislations passed by State Legislatures of Uttar Pradesh and Madhya Pradesh. These issues were subject matter of decision in ITC Ltd. and Ors. v. State of Karnataka and Ors. [1985 Supp. SCC 476].
67. We are required to determine whether ITC's case is correctly decided or not. That is a decision rendered by a three Judge. Bench. The majority decided in favour of ITC. Later a Bench of two Judge expressed tentative view that the decision in ITC's case requires reconsideration. Thus, these matters are before this Bench.
68. The arguments on behalf of the appellants contending that ITC has been correctly decided have been led by Mr. Shanti Bhushan followed and supported by other learned counsel appearing for Union of India and the Tobacco Board. On behalf of the State of Bihar and other parties contending the ITC has not been correctly decided, the arguments were led by Mr R.K. Dwivedi followed and supported by other learned counsel appearing for other States and Market Committees.
69. The answer to the question--Whether ITC is correctly decided or not depends upon the scope of Entry 52 in Union List of the Seventh Schedule of the Constitution of India with particular reference to the meaning of the expression 'Industries' in the said entry as also in Entry 24 of the State List of the Seventh Schedule of the Constitution.
70 In ITC's case the majority held that the provisions of the Karnataka Agricultural Produce Marketing (Regulation) Act, 1966 are repugnant to the parliamentary legislation, the Tobacco Board Act, 1975 and, therefore, tobacco is liable to be removed from the Schedule of that enactment. Expressing the minority view, Sabyasachi Mukharji, J held that the State legislation and the Tobacco Board Act, 1975 can co-exist.
71. The first question to be determined is can State legislation and Tobacco Board Act co-exist in respect of sale of Tobacco in the market areas within the framework of Agricultural Produce Marketing Acts - the State legislations under consideration? If our answer to this question is that the two legislations can co-exist, in that event it may not be necessary to go into the aspect of legislative competence. If, however, our answer is that the State legislations and the parliamentary legislation are incapable of reconciliation and the two cannot co-exist, in that case, the next question that would require determination will be about the validity of the State legislations.
72. In the proposed judgment, Hon'ble Mr. Justice Pattanaik has come to the conclusion that the Agricultural Produce Markets Act and the Tobacco Board Act are in direct collision with each other and cannot be allowed to be operated simultaneously.
73. The State legislations and parliamentary legislations cannot co-exist is apparent from various provisions of the two legislations. To illustrate in this regard, reference may be made on one hand to Section 4(2) of Bihar Act and similar provision in other State legislations and on the other to the provisions of Section 13 of the Tobacco Board Act in States wherein this section has been enforced and also to Section 8(2)(cc). Reference can also be made to Rule 32 of the Tobacco Board Rules, 1976 framed in exercise of powers conferred by Section 32 of the Tobacco Board Act regarding purchase of Virginia tobacco in comparison to Section 15 of Bihar Act requiring the agricultural produce, which tobacco is, to be brought to the market yard and sold by means of an auction or tender to the highest bidder. The power of the Tobacco Board to purchase from growers as provided in Rule 32 cannot co-exist with sale by auction or tender. Even in regard the price and manner of payment, licensing and auction procedure under two legislations and Rules made thereunder show that they cannot co-exist. In this regard reference can also be made to the Tobacco Board (Auction) Rules, 1984 and Tobacco Board (Auction) Regulation, 1984. It is evident that the compliance with the provisions of one would involve non-compliance of the provisions of the other. The provisions of the two legislations have been referred to in the judgment of Brother Pattanaik, J. I am in respectful agreement with the opinion of Justice Pattanaik that the two cannot operate and co-exist simultaneously. In this view, the question about the legislative competence of the State Legislatures will have to be examined.
74. In ITC's case , two learned judge have held the State legislation to be invalid. The power of State Legislature per se to legislate in respect of sale of tobacco in market areas and levy of market fee, in view of Article 246(3) read with Entries 14, 28 and 66 of the State List, is not in dispute. The dispute has, however, arisen as according to ITC, on declaration as contemplated by Entry 52 of the Union List having been made by the Parliament in Section 2 of the Tobacco Board Act, 1975, and as a result of various provisions in that Act, the field of sale of tobacco which is said to be integral part of tobacco industry has been transferred from Entry 24 of the State List to Entry 52 of the Union List -- Entry 24 being subject to the provisions of Entries 7 and 52 of the Union List. The contention is that in this view, the State Legislature is deprived of competence to legislate in the field of sale of tobacco in market area and levy market fee. Under these circumstances, the competence of the State Legislature to legislate in regard to sale of tobacco would depend upon the answer to the question whether under Entry 52 of the Union List, the Parliament is competent or not to legislate in respect of sale of raw tobacco. If the answer to the question is that the Parliament is competent, in that eventually, the State legislation will have to be invalidated for want of legislative competence. The answer to the question would, however, depend upon the scope of the expression 'Industries' as deployed in Entry 52 of the Union List and Entry 24 of the State List. If we find that the expression ' Industries' is wide enough to include the raw material of the industry and the Parliament is, thus competent to enact law under Entry 52 of the Union List, in respect of raw material, the Parliament having supremacy as provided in Article 246(1), the parliamentary legislation, namely, the Tobacco Board Act would hold the field and the State legislation invalidated. The dispute in this case is not about parliamentary supremacy as none has doubted it in view of Article 246(1) of the Constitution but is whether Parliament has competence at all to legislate in respect of raw tobacco or it falls within the competence of State. If we hold that while legislating in the field of industry as provided in Entry 52 of the Union List, the Parliament is not competent to legislate in respect of the field anterior to industry, i.e. its raw material and can legislate only in respect of the process of manufacture or production, in that eventuality, the State legislation will have to be held to be constitutional, intra vires and applicable.
75. In the proposed judgment, Justice Pattanaik has held that the word 'industry' in Entry 52 of the Union List cannot be given restricted meaning so as to exclude from its purview the subject of legislation coming within Entry 27 or Entry 14 of List II and thus, the parliamentary legislation, namely, the Tobacco Board Act, 1975 is constitutionally valid and consequently, the State legislations entitling the Market Committee to levy fee for sale and purchase of raw tobacco within the market area will not be operative so far as the produce of tobacco is concerned and that the majority judgment in the ITC's case is correctly decided. I express my respectful dissent with the view expressed by Justice Pattanaik on this aspect and thus this separate judgment.
76. The Parliament and Assemblies draw power to legislate from the provisions of the Constitution of India. We are concerned here with Article 246. Article 246(1) of the Constitution provides that notwithstanding anything in Clauses (2) and (3), Parliament has exclusive power to make laws with respect to any of the matters enumerated in List 1 in the Seventh Schedule. The said List is referred to in the Constitution as the 'Union List'.
77. Entry 52 in the Union List is Industries, the control of which by the Union is declared by Parliament by law to be expedient int he public interest'. In respect of field covered by this Entry, the parliament has enacted the Tobacco Board Act, 1975. Section 2 of the Tobacco Board Act contains the declaration that it is expedient in the public interest that the Union should take under its control the Tobacco industry.
78. Article 246(2) provides that notwithstanding anything in Clause (3), Parliament and, subject to Clause (1), the Legislature of any State also, have power to make laws with respect to any of the matters enumerated in List III in the Seventh Schedule. The said List is referred to in the Constitution as the "Concurrent List".
79. Article 246(3) provides that subject to Clauses (1) and (2), the Legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule. The said List is referred to in the Constitution as the "State List".
80 In exercise of power under Article 246(3), various State Legislature have enacted Agricultural Produce Marketing Acts for regulating sale and purchase of the agricultural produce and levying market fee within the framework of those Acts which, inter alia, permit levy and collection of market fee. The tobacco under the Acts in question has been notified as an agricultural produce.
81. In ITC's case , by majority, it was held that the Tobacco industry having been taken over by the Central Government under Entry 52 of the Union List by enactment of Tobacco Board Act, the State Legislature ceases to have any jurisdiction to legislate for that filed and therefore, the provisions of the Karnataka Agricultural Produce and Marketing Act entitling the market committee to levy market fee in respect of sale and purchase of Tobacco within the market area collide with Tobacco Board Act. Thus, the State Act so far as it relates to Tobacco was struck down. The minority view was that both the State and the Central Act can operate in their respective fields and there is no repugnancy if both the acts are considered in the light of their respective true nature and character.
82. The majority judgment in ITC's case for the view that it took principally relied upon the two Constitution Bench decisions of this Court in State of Orissa v. M.A. Tulloch and Co. (1962) 4 SCR 461 and
83. The minority view, however, was that there is nothing in the State Act or in the Rules which indicate that it is inconsistent with or cannot be operated along with the marketing regulations and both the Acts can operate in their respective fields and there is no repugnancy if both the Acts are considered in the light of their true nature and character.
84. In ITC's case the challenge was to the constitutional validity of the Karnataka Agricultural Produce Marketing (Regulation) (Amendment) Act, 1980. By the amending Act, tobacco was enumerated as an agricultural produce for the purposes of the Karnataka Agricultural Produce Marketing (Regulation) Act, 1966. The High Court was of the view that the Tobacco Board Act did not cover the marketing o tobacco in its entirety but only covered a part of the area of the topic of marketing of tobacco and that the two legislations, namely, the Tobacco Board Act, 1975 and the Karnataka Agricultural Produce Marketing (Regulation) Act, can co-exist and operate cumulatively. The further view expressed by the High Court was that any intention of the superior legislature to cover the whole field to make a comprehensive law with regard to marketing of tobacco was not manifest in the legislation.
85. The contention canvassed before this Court in ITC's case was that in view of the Central Act, the State Legislature was not competent to bring into fold of the State Act, the tobacco, the matter being covered by Entry 52 of the Union List of Seventh Schedule of the Constitution of India. The precise question in ITC's case was as to whether in respect of marketing of tobacco, the State Government was entitled to legislate or whether in view of the fact that there was a declaration under Entry 52 of the Union List, the State Legislature had no competence to legislate on tobacco and as such the impugned legislation was ultra vires.
86. In the minority opinion, Mukharji, J. noticed that the karnataka Agricultural Produce Marketing (Regulation) Act, 1966 deals with the subject of market in Entry 28 read with Entry 66 of List II and that it had to be borne in mind that Entry 28 is not subject to withdrawal to List I by Parliament. The State Act is not on a subject in List III nor is the Central Act a law relating to any subject in List III. It was concluded that, therefore, there cannot be any question of repugnancy. The nature and character of the Acts, namely, Karnataka Agricultural Produce Marketing (Regulation) Act, 1966 and the Central Act was noticed and it was held that it is fully manifest that both the Acts can operate in their respective fields. Further in the minority opinion it was observed that while giving due weight to center's supremacy in the matter of legislation, the States' legitimate sphere of legislation should not be unnecessarily whittled down because that would be unwarranted by the spirit and basic purpose of the constitutional division of powers-not merely allocation of power by the Constitution but invasion by parliamentary legislations. While it is true that in the spheres very carefully delineated the Parliament has supremacy over State Legislatures, supremacy in the sense that in those fields, parliamentary legislation would hold the field and not the State legislation -but to denude the State Legislature of its power to legislate where the legislation in question in pith and substance i.e. in its true nature and character, belongs to the State field, one should be chary to denude the State of its powers to legislate and mobilize resources - because that would be destructive of the spirit and purpose of India being a Union of States. States must have power to raise and mobilize resources in their exclusive fields. The Marketing Act is essentially an Act to regulate the marketing of agricultural produce. Justice Mukharji said that "it must, therefore, be held that the State Act should prevail. One should avoid corroding the State's ambit of powers of legislation which will ultimately lead to erosion of India being a Union of State.".
87. The majority opinion was expressed by Justice S. Murtaza Fazal Ali with whom Justice A. Varadarajan concurred. In the majority opinion after noticing the crucial point for determination i.e. whether the Karnataka State had any jurisdiction to encroach upon the limits of Entry 52 of the Union List, relying inter ali upon the decisions in the cases of Tulloch, Baijnath Kadio , it was concluded that once the center takes over an industry under Entry 52 of List I of the Seventh Schedule and passes an Act to regulate the legislation, the State Legislature ceases to have any jurisdiction to legislate in that field and if it does so, that legislation would be ultra vires the powers of the State Legislature. It was further observed that acceptance of the minority opinion would rob the Central Act of its entire content and essential import by handing over he power of legislation to the State Government which per se had been taken over by the Parliament under Article 246 by enacting the Tobacco Board Act, 1975. In the majority opinion reliance was placed on the following passage of Baijnath Kadio's case as extracted at page 174 as under.
"It is open to Parliament to declare that it is expedient in the public interest that the control should rest in Central Government. To what extent such a declaration can go is for Parliament to determine and this must be commensurate with public interest. Once this declaration is made and the extent laid down, the subject of legislation to the extent laid down becomes an exclusive subject for legislation by Parliament. Any legislation by the State after such declaration and trenching upon the field disclosed in the declaration must necessary be unconstitutional because that field is abstracted from the legislative competence of the State Legislature. This proposition is also self-evident that no attempt was rightly made to contradict it."
88. The majority opinion has not noticed the Constitution Bench's decision in the case of
89. The decision in the cases of Baijnath Kadio and Tulloch have also been relied upon by Mr. Shanti Bhushan. Reliance has also been placed by learned counsel on The
90. On behalf of the State Governments and the Agricultural Produce marketing Committees strong reliance has been placed on Tika Ramji's case. What is the ratio of these decisions, we will now examine.
91. Before considering the affronted decisions, it would be appropriate to make it clear that in these matters it has to be kept in view that this Court is not examining a case where the field of legislation is on concurrent list to which Article 246(2) applies. This Court is also not considering the case of an incidental trenching of field by one or the other legislature. The Court is concerned with the question of legislative competence. We are examining a case where what has been questioned is the legality of legislation is respect of a field on the State List to which Article 246(3) applies. The validity and applicability of the State legislations in respect of a field of legislation on State List has come under a cloud on account of a legislation passed by the Parliament in respect of field of legislation under Entry 52 of the Union List, namely, the Tobacco Board Act, 1975. It is on account of this legislation containing declaration as contemplated by Entry 52 of the Union List that doubts have arisen about the validity and applicability of State legislation about the sale of agricultural produce of tobacco in market areas and levy thereupon of market fee which aspect are on field of legislation on the State List (Entries 14, 27, 28 and 66). Entry 24 of the State List is subject to Entries 7 and 52 of List I. We are not concerned in these matter with Entry 7. The question here is as to the effect of transfer of field of legislation under Entry 24 of the State List to the Union List (Entry 52), on other fields in the State List, namely, fields of legislation under Entries 14, 27, 28 and 66 and what is fact can be transferred.
92. Baijnath Kadio was a case which considered the validity of the State legislation on the ground of being beyond the State legislative power n view of the declaration by the Parliament in Mines and Minerals (Regulation and Development) Act. 1957 and contemplated by Entry 54 of List I of the Seventh Schedule to the Constitution. Section 2 of the Central legislation declared that it is expedient in the public interest that the Union should take under its control the Regulation of mines and the development of minerals to the extent provided therein.
93. Entry 54 of the Union List speaks both of regulation of mines and minerals development and Entry 23 of the State List is subject to Entry 54. It was held that it was open to the Parliament to declare that it is expedient in the public interest that the control should rest with the Central Government. To what extent such a declaration can go is for the Parliament to determine and this must be commensurate with public interest. Once this declaration is made and that extent laid down the subject of legislation to the extent laid down becomes an exclusive subject for the legislation by the Parliament. Any legislation by the State after such declaration trenching upon the field disclosed in the declaration must necessarily be unconstitutional because that field is abstracted from the legislative competence of the State Legislature. For its view the Constitution Bench followed earlier Constitution Bench decisions in the cases of Hingir and Tulloch . These two cases also dealt with the scope of Entry 54 of List I viz-a-viz Entry 23 of List II. The majority opinion in ITC as already noticed, followed Baijnath Kadio and extracted in its judgment the passage as aforesaid.
94. A significant aspect to take note of is that Tika Ramji's case has not been considered in Hingir's case . The reason for it seems to be that one set of cases consider the scope of Entry 54 viz-a-viz Entry 23 and to that category belong the cases of Hingir, Tulloch and Baijnath Kadio . The other set of cases consider the scope of Entry 52 of Union List viz-a-viz Entry 24 of the State List and to that category belong the cases of Tika Ramji and other cases following Tika Ramji .
95. Relying upon Ishwari Khetan's case Mr. Shanti Bhushan contends that Entry 52 has been equated with Entry 54 of the Union List.
96. Both sides have relied upon the case of Ishwari Khetan . Let us examine that case. In Ishwari Khetan's case the contention urged was that the Parliament has made the Industrial (Development and Regulation) Act, 1951 (for short, 'the IDR Act') in Entry 52 List I declaring control of sugar industry and that industry goes out of Entry 24 of List II and, therefore, State Legislature is denuded of legislative powers in respect of sugar industry and impugned legislation was with respect to acquisition of sugar undertaking is sugar industry. The Attorney General and contended that the power to acquire property was derived from Entry 42 of List III. Ishwari Khetan's case involved the determination or scope of Entry 52 of List I and Entry 24 of List II only. The scope of these entries with respect to Entries 26 and 27 of List II and Entry 33 of List III did not fall for consideration. Further in paragraphs 7, 8 and 11 of Ishwari Khetan's case the Constitution Bench repeatedly pointed out that a declaration in Entry 52 of List I denudes the power of State Legislature to legislate under Entry 24 List II only. It was noticed that the sugar was a declared industry. The question posed was that "is it, however, correct to say that once a declaration is made as envisaged by Entry 52 List I, that industry as a whole is taken out of Entry 24 of List II"? The answer given by the Constitutional Bench was that it is not correct to say that once a declaration is made in respect of an industry that industry as a whole is taken our of Entry 24 List II. It was said that the industry as a legislative head is found itself placed in Entry 24 of List II. The State Legislature can be denied legislative power under Entry 24 to the extent Parliament makes declaration under Entry 52 and by such declaration, Parliament acquired power to legislate only in respect of those industries in respect of which declaration is made and to that extent as manifested by legislation incorporating the declaration and not more. The Bench further said that the legislative power of the State under Entry 24 List II is eroded only to the extent the control is assumed by the Union pursuant to the declaration and the State Legislature which is otherwise competent to deal with industry under Entry 24 List II can deal with that industry in exercise of other powers enabling it to legislate under different heads set out in List II and List III and this power cannot be denied to the State. The extent of parliamentary legislation was seen only to determine how much is taken out from Entry 24 List II and not for the purposes of laying down any principle that the Parliamentary legislation has to be seen to determine the extent of control and the denudation of the power of the State Legislature to the extent the control is laid down by the Parliament. Further it was held that despite the parliamentary legislation the State Legislature can deal with industry in exercise of other powers in different entries in List II and List III and that power cannot be denied to the State In this case the Court was examining whether the law of acquisition of sugar undertaking was referable to Entry 24 List II or Entry 42 List III. It was concluded that the acquisition of the property was referable to Entry 42 List III. The scope of the industry did not fall for examination in Ishwari Khetan's case . There is no discussion on the interpretation of expression 'industry' and that probably is the reason why Tika Ramji's case has not been referred to. The reliance on Baijnath Kadio's case in Ishwari Khetan's case was to show the denudation of States' power being limited to the extent of control. While Baijnath Kadio's case dealt with Entry 23 List II, Ishwari Khetan's case dealt with Entry 24 List II. The subject matter of the other entries was not in issue in this decision. The structure in Entry 54 of List I was not equated with that of Entry 52 List I as contended by Mr. Shanti Bhushan. This decision does not adopt the mines and minerals cases for the purposes of considering the scope of Entry 52 of List I. In our view, the cases of mines and minerals are not of much assistance while examining the scope of Entry 52 of List I.
97. In
98. Tika Ramji's case is required to be examined in some detail since that has been a bone of serious and elaborate submissions. In that case, the challenge by the Sugarcane growers hailing from several villages of State of U.P. was to the validity of the UP Sugarcane (Regulation of Supply and Purchase) Act, 1953 and notifications issued thereunder. A short history of legislation enacted by the center as well as the province of U.P. in regard to Sugar and Sugarcane was noticed.
99. It was noticed that on 8th April, 1932, the Central Legislature passed the Sugarcane Industry (Protection) Act, 1932. As a result of this Act, there was a rapid rise in number of sugar factories as also a large expansion in the cultivation of sugarcane. To regulate the price at which sugarcane intended to be used in the manufacture of sugar might be purchased by or for the factories, the Central Legislature enacted on 1st May, 1934 the Sugarcane Act, 1934. The fixing of minimum price for the purchase of sugarcane intended for use in any factory in any controlled area was left to the Provincial Governments which were empowered to make rules for the purpose of carrying into effect the objects of the Act including the organisation of growers of sugarcane into Co-operative Societies for the sale of sugarcane to factories.
100. With the coming into operation of the Government of India Act, 1935, there was distribution of legislative power between the Dominion Legislature and the Provincial Legislatures and agriculture (Entry No. 20), trade and commerce within the Province (Entry No. 27) and production, supply and distribution of goods, development of industries subject to the provision in List I with respect to development of certain industries under Dominion control (Entry No. 29) were included in List II, namely, the Provincial Legislative List. Entry No. 34 in List I was "Development of industries where development under Dominion control is declared to be in the public interest".
101. The result of above distribution of legislative power was that the entire subject matter of the Sugarcane Act, 1934 was left with the Provincial legislative list. It was left that this Act was not sufficiently comprehensive for dealing with the problems of sugar industry. Therefore, it was found necessary to replace it so as to provide for better organisation of cane supplies to sugar factories. The U.P. Legislature accordingly enacted on 10th February, 1938, the U.P. Sugar Factories Control Act, 1938 to provide for licensing of the sugar factories and for regulating the supply of sugarcane intended for use in such factories and the price at which it may be purchased and for other incidental matters and repealed the Sugarcane Act, 1934. The 1938 Act was to remain in force initially upto 30th June, 1947 but the period was extended to 30th June, 1952 and then to 30th June, 1952.
102. On intervention of Section World War, a proclamation of emergency was issued by the Governor General u/s 102 of the Government of India Act, 1935. The Dominion Legislature acquired the power to make laws for the Provinces with respect to any of the matters enumerated in the Provincial Legislative List. The proclamation of emergency was to operate until revoked by a subsequent proclamation and the laws made by the Dominion Legislature were to have effect until the expiration of period of six months after the proclamation had ceased to operate. The Defence of India Act and the Rules made thereunder occupied the filed. Sugar was made a controlled commodity in the year 1942 and its production and distribution as well as the fixation of sugar prices were regulated by the Sugar Controller thereafter. The proclamation of emergency was revoked on 1st April, 1946 and the laws made by Dominion Legislature in the field of the Provincial Legislative List were to cease to have effect after 30th September, 1946. On 26th March, 1946, the British Parliament enacted the India (Central Government and Legislature) Act, 1946, Section 2(1)(a) whereof provided that notwithstanding anything in the Government of India Act, 1935, the Indian Legislature shall during the period mentioned in Section 4 thereof have powers to make laws with respect to the following matters:
"(a) trade and commerce (whether or not within a Province) in, and the production, supply and distribution of, cotton and woollen textiles, paper (including newsprint), foodstuffs (including edible oil seeds and oils), petroleum and petroleum products, spare parts of mechanically propelled vehicles, coal, iron, steel and mica,..."
103. Acting under the power reserved to it under the aforesaid Section 2(1)(a), the Central Legislature enacted on 19th November, 1946, the Essential Supplies (Temporary Powers) Act, 1946 to provide for the continuance during the limited period of powers to control production, supply and distribution of, and trade and commerce in, certain commodities. The Governor General issued a Notification on 3rd March, 1947 the effect whereof was to continue the Act till 31st March, 1948. On 18th July, 1947, however, Indian Independence Act was passed under which the Governor General passed an order which substituted the words "Dominion Legislature" for "Both Houses of Parliament" in the proviso to Section 4 of India (Central Government and Legislature) Act, 1946 and also introduced a new Section 4(a) by way of adoption providing that the powers of the Dominion Legislature shall be exercised by the Constituent Assembly. By passing of the Resolution by the Constituent Assembly, the life of the Act was extended and later on Constitution coming into force, the Parliament was invested with power under Article 369 for a period of five years to make laws with respect to the following matters as if they were enumerated in the Concurrent List.
"(a) trade and commerce within a State in, and the production, supply and distribution of,.... foodstuffs (including edible oil seeds and oil),....' The life of the Act was accordingly extended from time to time upto 26th January, 1955 by Acts passed by Parliament.
104. Food crops under the aforesaid 1946 Act were defined as including corps of sugarcane.
105. The Central Government in exercise of powers conferred upon it by Section 3 of the 1946 Act, promulgated the Sugar and Gur Control Order, 1950, inter alia, empowering it to prohibit or restrict the export of sugarcane from any area; to direct that no gur or sugar shall be manufactured from sugarcane except under and in accordance with the conditions specified in the licence issued in this behalf. There was also power to fix minimum price in exercise whereof the Central Government from time to time issued notifications fixing the minimum price to be paid by the producers of sugar for sugarcane purchased by them.
106. On 31st October, 1951, Parliament enacted the Industries (Development and Regulation) Act, 1951 to provide for the development and regulation of certain industries. By Section 2 of the Act, it was declared that it was expedient in the public interest that the Union should take in its control the industries specified in the First Schedule. That Schedule included the industry engaged in the manufacture or production of Sugar.
107. The U.P. Legislature enacted the impugned Act. The object of this enactment was stated to be as follows:
"With the promulgation of the Industries (Development and Regulation) Act, 1951 with effect from 8th May, 1952, the regulation of the sugar industry has become exclusively as Central subject. The State Government are now only concerned with the supply of sugarcane to the sugar factories. The Bill is being introduced in order to provide for a rational distribution of sugarcane to factories, or its development on organized scientific lines to protect the interests of the cane growers and the industry and to put the new Act permanently on the Statute Book."
108. In exercise of the rule making power conferred by the impugned Act, the U.P. Government made rules and also promulgated the U.P. Sugarcane Supply and Purchase Order, 1954. All these related to the supplies and purchase of sugarcane in U.P.
109. Challenging vires of the State Act one of the submissions made in Tika Ramji's case before the Constitution Bench was:
"(1) That the State of U.P. had no power to enact the impugned Act as the Act is with respect to the subject of industries the control of which by the Union is declared by Parliament by law to be expedient in the public interest within the meaning of Entry 52 of List I and is, therefore, within the exclusive province of Parliament. The impugned Act is, therefore, ultra vires the powers of the State Legislature and is a colourable exercise of legislative power by the State."
110. It was urged that the word 'industry' was a word of very wide import and included not only the process of manufacture or production but also of things which were necessarily incidental to it, viz., the raw materials for the industry as also the products of that industry and would, therefore, include within its connotation the production, the supply and distribution of raw materials for that industry which meant sugarcane i n relation to sugar industry and, therefore, insofar as the impugned Act purported to legislate in regard to sugarcane which was a necessary ingredient in the production of sugar, it was a colourable exercise of legislative power by the State, ostensibly operating in its own filed within Entry 27 of List II but really trespassing upon the field of Entry 52 of List I.
111. True, the challenge was to the vires of the State legislation and not to the parliamentary legislation but at the same time the entire basis of challenge was that in respect of the sugarcane, only Parliament had the power to legislate on account of the filed being covered under Entry 52 of List I, the Sugar industry having been included in that Entry and the connotation of industry being very wide to include in it raw material, i.e., sugarcane as well. Thus, the exclusive power of Parliament to legislate was urged as the main ground to seek invalidation of the State legislation -- the filed of sugarcane not being available to the State Legislature to legislate.
112. In view of the controversy as aforesaid, the fact that the validity of the parliamentary legislation was not in issue in Tika Ramji's case, does not in any manner, affect the ratio of that decision. The point for determination in that case was substantially the same as in the present case, namely, the scope of the expression 'industries' in Entry 52 of List I and Entry 24 of List II. There also the point was to adopt a narrow or wide interpretation of the expression 'industry'. Further, the fact that it was a case of a manufacturing industry under IDR Act also does not affect the ratio of the case. The interpretation placed in Tika Ramji's case cannot be confined to industry falling under IDR Act alone. There is neither any express or implied indication in that decision to limit the interpretation nor there is any valid reason to so limit it.
113. Like Tika Ramji's case, in these matters, the challenge is to the State legislations on the ground that in view of Entry 52 of List I, on enactment of Tobacco Board Act, 1975, the State Legislature loses competence to legislate in respect of sale of tobacco and, therefore, the existing State legislations will have no applicability and, thus, the legislations in respect of marketing under Entry 28 of List II would have no applicability insofar as it concerns the agricultural produce 'tobacco'.
114. The opposite contention is that under Entry 14 of the State List the State is competent to legislate in respect of agricultural produce and tobacco is an agricultural produce; setting up of markets in respect of this produce under Entry 28 and levying thereupon the fee under Entry 66 and subject to Entry 33 of List III production, supply and distribution of goods (Entry 27) are all State subjects and that under Entry 52 of List I, the Parliament's competence is only to legislate in respect of industry which would not include in its ambit the raw material of the industry and that the process of sale of agricultural produce of tobacco in markets and levying thereupon market fee can never be part of industrial process which is only manufacture and production. The contention of Mr. Dwivedi is that State's activity in question is not an industrial activity and, therefore, it is outside the ambit of Entry 24 of State List and Entry 52 of the Union List.
115. In Tika Ramji's case, the precise argument to challenge the State enactment was that the expression 'industries' should be construed as including not only the process of manufacture or production but also activities antecedents thereto such as acquisition of raw material and subsequent thereto such as disposal of the finished products of that industry. It was urged in that case that the process of acquiring raw materials was an integral part of the industrial process and was, therefore, included in the connotation of the word 'industry' and when the Central Legislature was invested with the power to legislate in regard to sugar industry on account of declaration as postulated by Entry 52 of List I, that legislative power included also the power to legislate in regard to the raw material of the sugar industry, that is sugarcane, and the production, supply and distribution of sugarcane was, by reason of its being the necessary ingredient in the process of manufacture or production of sugar, within the legislative competence of the Central Legislature.
116. The petitioners in Tika Ramji's case in support of the wide construction to be placed upon the expression 'industry' also relied upon various decisions interpreting the said term in relation to the Industrial Disputes Act. Dealing with those cases in Tika Ramji's case this Court said:
"What we are concerned with here is not the wide construction to be put on the term 'industry' as such but whether the raw materials of an industry which form an integral part of the process are within the topic of 'industry' which forms the subject matter of item 52 of List I as ancillary or subsidiary matters which can fairly or reasonably be said to be comprehended in that topic and whether the Central Legislature while legislating upon sugar industry could, acting within the sphere of Entry 52 of List I, as well legislate upon sugarcane."
117. This Court said that if the legislation with regard to sugarcane came within the exclusive province of the Central Legislature under Entry 52 of List I, the enactment passed by the Provincial Legislature would be ultra vires. It was said :
"If both the Central Legislature and the Provincial Legislature were entitled to legislate in regard to this subject of production, supply and distribution of sugarcane, there would arise no question of legislative competence of the Provincial Legislature in the matter of having enacted the impugned Act. The conflict, if any, arose by reason of the interpretation which was sought to be put on the two Entries, Entry 52 of List I and Entry 27 of List II put in juxtaposition with each other. It was suggested that Item 52 of List I comprised not only legislation in regard to sugar industry but also in regard to sugarcane which was an essential ingredient of the industrial process of the manufacture or production of sugar and was, therefore, ancillary to it and was covered within the topic. If legislation with regard to sugarcane thus came within the exclusive province of the Central Legislature, the Provincial Legislature was not entitled to legislate upon the same by having resort to Entry 27 of List II and the impugned Act."
118. Dealing with the argument of wide import of the expression 'industries' in Tika Ramji's case it was held that 'industry' in its wide sense of the term would be capable of comprising three different aspects : (1) raw materials which are an integral part of the industrial process, (2) the process of manufactures or production, and (3) the distribution of the products of the industry. After noticing these different aspects of the term 'industry', it was held that "the raw materials would be goods which would be comprised in Entry 27 of List II". In respect of the second category of process of manufacture or production and the third aspect of distribution of the product of the industry, the Court held :
"The process of manufacture or production would be comprised in Entry 24 of List II except where the industry was a controlled industry when it would fall within Entry 52 of List I and the products of the industry would also be comprised in Entry 27 of List II except where they were the products of the controlled industries when they would fall within Entry 33 of List III."
119. The Court further held that "In no event could the legislation in regard to sugar and sugarcane be thus included within Entry 52 of List I".
120. Thus, rejecting the contention that the expression 'industries' in Entry 52 of List I is wide enough to take into its compass the power to legislate in respect of raw material said to be an integral part of the industrial process, the Court repelled the plea of the State Act being ultra vires, the same being covered by the subject of sugar industry control whereof have been declared by the Parliament by law to be expedient in the public interest under the exclusive domain of Parliament.
121. In
122. On the facts of the case and in view of the conclusions of the Constitution Bench on other aspect, it was not considered necessary to attempt to define the expression 'industry' precisely or the State exhaustively all its ingredients but following Tika Ramji's case, it was assumed that the expression 'industry' means only production or manufacture. In Calcutta Gas, which considers Entry 52 of List I and Entry 24 of List II, the Bench said that ordinarily 'industry' is in the field of the State legislation and in all the entries it must be given the same meaning and cited with approval Tika Ramji's case in the following words:
"In Tika Ramji v. State of Uttar Pradesh, the expression 'industries' is defined to mean the process of manufacture or production and does not include the raw materials used in the industry or the distribution of the products of the industry. It was contended that the word 'industry' was a word of wide import and should be construed as including not only the process of manufacture or production but also activities antecedent thereto such as acquisition of raw materials and subsequent thereto such as disposal of the finished products of that industry. But that contention was not accepted."
123. Mr. Shanti Bhushan, however, contends that once field is covered by Entry 52 by issue of requisite declaration and the Parliament has actually covered the field by enacting a legislation, with regard to that extent the industry including all facets of such an industry -- whether it is the raw materials or the products of that industry, the State Legislature will have no power to legislate. The contention is that the expression 'industries' in Entry 52 of the Union List comprises in it all its aspects commencing from procurement of raw material and upto disposal of final product of that industry and not only the process of manufacture or production. The submission of learned counsel is that if the expression 'industries' in the entries under consideration is not given such interpretation, it would denude the Parliament of real object of control of such industry in public interest which is of paramount importance. As against this, the contention of the other side is that the acceptance of the viewpoint propounded by Mr. Shanti Bhushan would mean denuding the State Legislature the power to legislate in respect of fields covered under various entries under the State List which are not made subject to any other entry and that the acceptance of contention of Mr. Shanti Bhushan would have the effect of rewriting the Constitution. I agree. The intention of the Constitution makers was not to make Entries 14, 27, 28 and 66 subject to Entry 52 of the Union List. The acceptance of viewpoint propounded by Mr. Shanti Bhushan will have that effect. Therefore, the expression 'industries' cannot be interpreted in the manner suggested.
124. True, the parliamentary legislation has supremacy as provided under Article 246(1) and (2). This is of relevance when field of legislation is on concurrent list. While maintaining parliamentary supremacy, one cannot give go by to the federalism which has been held to be a basic feature of the Constitution (See
125. The Constitution of India deserves to be interpreted, language permitting, in a manner that it does not whittle down the powers of State Legislature and preserves the federalism while also upholding the central supremacy as contemplated by some of its articles.
126. In this background, let us also briefly notice the constitutional history and structural inter-relationship in respect of relevant entries as they existed in Government of India Act, 1935 and as they now exist in the Seventh Schedule. Entries 27 and 29 on the State List in the Government of India Act, 1935 were as under:
"Item 27. Trade and commerce within the province; markets and fairs; money lending and money lenders.
Item 29. Production, supply and distribution of goods; development of industries, subject to the provisions in List I with respect to the development of certain industries under Federal control."
127. Now, in Seventh Schedule part of Entry 27 is in Entry 26 of the State List; Markets and fairs is Entry 28 of List II; Money lending and money lenders (Entry 30 List II); Production, supply and distribution of gods subject to the provisions to Entry 33 of List III (Entry 27 List II); Industries subject to the provisions of Entries 7 and 52 of List I (Entry 24, List II). It would, thus, be seen that under 1935 Act, both production, supply and distribution of goods as well as development of industries were subject to the provisions of List I as provided in Entry 29. Our Constitution makers, however, bifurcated Entry 29 into two parts. Industries were put in Entry 24 of List II subject to the provisions of Entries 7 and 52 of List I. The production, supply and distribution of goods was put in Entry 27 of List II and made subject to Entry 33 of List III. The acceptance of the argument of Mr. Shanti Bhushan would mean that no object was sought to be achieved by such a bifurcation. It is clear that two entries have been separated. One made subject to the provisions of Entry 33 of List III and the other subject to the provisions of Entries 7 and 52 of List I. Therefore, to interpret the expression 'industry' to include in it the aspect of raw material would mean that by the same analogy the subject matter of production,supply and distribution of goods should also be included therein and in fact that was the argument of Mr. Shanti Bhushan. Would the acceptance of that argument not negate the will of the Constitution makers. I think it would. Therefore, the argument cannot be accepted. The same argument would equally apply to Entry 14 of List II in respect of agriculture which is not subject to any List. It would so become if we accept the contention of Mr. Shanti Bhushan. Further, earlier when the Parliament felt the need to control raw material, it included "raw jute and raw cotton" in Entry 33, List III by Constitution Third Amendment Act, 1954. Even Article 369 indicates that agricultural raw material is in the State List for it refers to raw cotton, cotton seed and edible oil seeds and seeks to temporarily place it, by fiction, in the concurrent list to enable Parliament to make laws. The expression 'industries' in Entry 24, List II or Entry 52, List I, cannot be interpreted in a manner that would make other entries of List II of the Seventh Schedule subject to Union control, which in fact they are not. Wherever it was intended to be made subject to such control, whether of List I or that of List III, it was said so. A perusal of List II shows that whenever a particular entry was intended to be made subject to an entry in List III, it has been so stated specifically. Therefore, an interpretation which tends to have the effect of making a particular entry subject to any other entry, though not so stated in the entry, deserves to be avoided unless that be the only possible interpretation. We do not think that such an interpretation on the entries in question, namely, Entry 52 of the Union List and Entry 24 of the State List deserves to be placed.
128. The principles of interpretation are well settled. There is no doubt that the entries in the lists in the Seventh Schedule do not provide competence or power to legislate on the legislature for which the source of power is contained in Article 246 of the Constitution. In deciding question of legislative competence, it has to be kept in view that the Constitution is not required to be considered with a narrow or pedantic approach. It is not to be construed as a mere law but as a machinery by which laws are made. The interpretation should be broad and liberal. The entries only demarcate the legislative field of respective legislature and do not confer legislative power as such and if it is found that some of the entries overlap or in conflict with the other, an attempt to reconcile such entries and bring about a harmonious construction is the duty of the court. When, however, reconciliation is not possible, as here, then the court will have to examine the entries in relation to legislative power in the Constitution.
129. The subject matter of the issue here is about the interpretation of Entry 52 in List I of the Seventh Schedule. It requires the Parliament to make a declaration by law identifying an industry, the control of which by the Union is expedient in the public interest. Under the said entry only an 'industry' can be declared as an industry, the control whereof by the Union is regarded as expedient in public interest. It is, therefore, implicit that if an activity cannot be regarded as industry, Entry 52 will have no applicability to that activity. The question is about the concept of 'industry' in Entry 52 of List I. As already stated, the entries in the Legislative List have to be construed in the widest sense cannot be disputed but it has also to be borne in mind that such construction should not make other entries totally redundant. The meaning of the word 'industry' in various dictionaries reliance on which was placed by Mr. Shanti Bhushan, is not of any assistance while considering the constitutional meaning of the said term. There may not be any embargo to limitation on the power of the Parliament to enact the law in respect of activities other than manufacturing activities but that power is non-existence in Entry 52 of List I. It may be elsewhere. Reference in this regard can be made to Entry 33 of List III including in its ambit food stuff and certain raw materials. Tobacco, however, is admittedly not a food stuff.
130. The validity of certain other acts such as the Cardomom Act, 1965, The Central Silk Board Act, 1958, The Coffee Act, 1942, The Rubber Act, 1947, The Tea Act, 1953, The Coir Industry Act, 1953 and the Coconut Development Board Act, 1979 reference whereof was made by Mr. Shanti Bhushan need not be examined for purposes of considering the legislative competence of the impugned State legislations. The legislative competence of Parliament to legislate these statutes is not in issue before this Court and, therefore, we do not think it necessary to examine the question of legislative competence only from academic view point insofar as these legislations are concerned. However, prima facie, there is no substance in the apprehension expressed by Mr. Shanti Bhushan that narrow approach of the concept of 'industry' would make these acts beyond the legislative competence of the Parliament and make them ultra vires. As, when and it these acts are challenged, the question of legislative competence would be examined. Further, it may be noted that two out of the aforesaid legislations, namely, the Coffee Act, 1942 and The Rubber Act, 1947 are pre-Constitution enactments made under the Government of India Act, 1935 where the entries were different. Item 29 of List II of the said Act has already been reproduced above. In respect of the Coir Industry Act, on examination of the provisions contained therein, it may be possible to urge that the statute deals with the process of manufacturing and does not seek to control plantation and preservation of the coconut trees or the production of the coconut. The Central Silk Board Act has been dealt with by this Court in the case of
131.
132. Reliance has been placed by Mr. Shanti Bhushan on the following passage from Banthia's case:
"But we are satisfied in the present case that the manufacture of gold ornaments by goldsmiths in India is a 'process of systematic production' for trade or manufacture and so falls within the connotation of the word 'industry' in the appropriate legislative entries. It follows, therefore, that in enacting the impugned Act Parliament was validly exercising its legislative power in respect of matters covered by Entry 52 of List I and Entry 33 of List III."
133. The contention of learned counsel is that in Harakchand Ratanchand Banthia's case, the process of systematic production for trade or manufacture has been held to fall within the connotation of the word 'industry' in the appropriate Legislative Entry and the argument that if the word 'industry' is construed in the wide sense, Entry 27 of List II will lose all meaning and content was rejected. The submission is that the same approach deserves to be adopted in the present case as well. The above approach was adopted after finding the activity to be manufacture or production and, therefore, falling within the connotation of 'industry'. In Banthia's case, the Constitution Bench, in fact, cited with the approval Tika Ramji's case and referred thereto as under:
"In Tika Ramji v. State of Uttar Pradesh the expression 'industry' was defined to mean the process of manufacture or production and did not include raw materials used in the industry or the distribution of the products of the industry."
134. In Banthia's case, the Court was considering the validity of the Act, the object whereof was to control production, manufacture, supply, distribution, use and possession of, and business in, gold, ornaments and articles of gold and for matters connected therewith or incidental thereto. There is no provision in the Gold (Control) Act, 1968 regulating the manner in which the primary gold would be extracted from the earth. The Act does not concern itself with the extraction of primary gold. The question therein was as to whether the work of goldsmiths was a handicraft requiring application of skill and whether the art of making gold ornaments was not in 'industry' within the meaning of Entry 52, List I. In that case, the question was not whether dealing with the raw material of industry would come or not, within the concept of industry'. Further, the Court observed that it is not necessary to attempt to define the expression 'industry' precisely or to state exhaustively all its different aspects. On the facts of the case, the Constitution Bench held that the process or systematic production of gold ornament by goldsmiths for trade or manufacture falls within the connotation of the word 'industry' in the appropriate Legislative Entry. The decision in Tika Ramji's case was not departed from. In fact it was referred to. An attempt to adopt the definition of the word 'industry' in the Industrial Disputes Act was repelled. The contention accepted was that the manufacture of gold ornament was an 'industry' within the meaning of Entry 52, List I. This decision is not of any assistance for determining whether sale of tobacco process can come within the of the tobacco industry so as to fall within the ambit of the word 'industry' in Entry 52 of List I and Entry 24 of List II. The observation in Banthia's case that Entry 27 of List II was a general entry made in the context of manufacture of gold ornaments by goldsmiths falling within the ambit of the word 'industry' as contained in Entry 24 of List II and Entry 52 of List I. Banthia's case does not express any opinion on the scope of the word 'industry' in Entry 52 of List I and Tika Ramji's case still holds the field when it says that the expression 'industry' would mean the process of manufacture or production and would not include any raw material used in an industry or the distribution of the products of industry.
135 Mr. Shanti Bhushan has also placed reliance on another decision of the Constitution Bench in the case of
"It must inevitably happen from time to time that legislation, though purporting to deal with a subject in one list, touches also on a subject in another list, and the different provisions of the enactment may be so closely intertwined that blind adherence to a strictly verbal interpretation would result in a large number of statutes being declared invalid because the Legislature enacting them may appear to have legislated in a forbidden sphere."
136. Reliance was also placed on the observations of Justice Hidayatullah in
Those observations are:
"It is equally well-settled that the power to legislate on a topic of legislation carries with it the power to legislate on an ancillary matter which can be said to be reasonably included in the power given."
137. We have no difficulty in accepting the aforesaid observations made by Sir Maurice Gwyer, Chief Justice and Hidayatullah, J (as the then was) but it has to be borne in mind that the question for determination in Chaturbhai M. Patel's case was regarding true nature and character or the pith and substance of the impugned Act, namely, Sections 6 8 9 and 10 of the Central Excuse and Salt Act, 1944 and Rules 140 to 148, 150, 171 to 181, 215 and 226 of the Central Excise Rules, the constitutional validity whereof was under challenge. The Constitution Bench was considering the constitutional validity of a fiscal measure to levy and realise duty on tobacco. The contention was that Section 6 and 8 of the impugned Act and rules made thereunder were beyond the legislative Competence of the Central Legislature under the Government of India Act, 1935. The Court was examining the question whether the impugned Act is a law with respect to matters enumerated in item 45 of List I under the 1935 Act or to the matters enumerated in Items 27 and 29 of List II. Entries 27 and 29 have already been reproduced above. They dealt with the power of the State to legislate in respect of trade and commerce, markets and fairs, money lending and money-lenders. Item 29 dealt with power to legislate in respect of production, supply and distribution of goods, development of industries, subject to the provisions in List I with respect to the development of certain industries under the Federal control. The question was whether the impugned Act in pith and substance relate to duties of excise on tobacco as contained in Item 45 or it falls within the boundaries of Items 27 and 29 of the Provincial List. Referring to the decision of the Federal Court, it was held that in the interpretation of the scope of these items, widest possible amplitude must be given to the words used and each general word must be held to extend to ancillary or subsidiary matters which can be fairly said to be comprehended in it. On examination of the provisions of the Central Excise Act, the Court came to the conclusion that various provisions of the Act and the Rules were essentially connected with the levying and collection of the excise duty and in its true nature and character the Act remains one that falls under Item 45 of List I and the incidental trenching upon the provisional field of Items 27 or 29 would not affect the constitutionality because the extent of invasion of the provisional field may be a circumstance to determine the true pith and substance but once that question is determined, the Act would fall on the side of central field and not that of the Provincial field. It is, thus, evident that since in pith and substance the matter pertained to excise duty, it fell under Item 45 of List I and the non-tax entries in Item 27 or 29 could not be invoked. In the Constitution also, Entry 84 relates to duty of excise on tobacco and other goods manufactured or produced in India.
138. Referring to the argument of the petitioner based on Rule 181 which dealt with revocation and suspension of licenses and empowered the licencing department to revoke or suspend a licence under certain circumstances and the argument that it was the field under the province of the provincial legislature, the Court said that this rule may have an indirect effect of depriving an owner of a bonded warehouse from the privilege of keeping such a warehouse but that does not mean that the object of the Act is not imposition, collection or realization of duty of excise. The rule was held to be "a mean of making the realization of duty effective and necessarily incidental to effectual legislation for collection of duties". In the present case, there is no question of any incidental trenching. It cannot be said that the law relating to sale of tobacco in market area is incidental to law regarding tobacco as enacted by Tobacco Board Act. The decision in Chaturbal M. Patel's case, in our opinion, has no relevance for the present purpose and so also the decision in the case of
139. In
"The edifice of exclusive parliamentary jurisdiction so built stood on shifting sands. The semantic sweep of Entry 52 did not come in the way of the State legislature making laws on subjects within its sphere and not directly going to the heart of the industry itself."
140. The submission of Mr. Shanti Bhushan, who appeared in Ganga Sugar Corporation's case also, to reconsider Tika Ramji's case was rejected. The Court said:
"Tika Ramji notwithstanding, the contention was advanced by Shri Shanti Bhushan that 'industry' was a pervasive expression, ambient enough to embrace raw materials used for the industry and so, sugar industry, as a topic of legislation, vested in Parliament exclusive power to legislate on sugar-cane supplies to sugar factories, and pursuing this expansionist logic, any taxation on supplies of cane to mills would be legislation on sugar industry. Ergo the Purchase Tax Act was a usurpation by the U.P. legislature breaching the dykes of Article 246(1) read with Entry 52 of List I. He expanded on the theme by urging that any legislation which affected sugar industry by taxing its raw materials was one with respect to that industry. The Tika Ramji ratio is diametrically opposed to this reasoning and a ruling which has stood the field so long has been followed by another Constitution Bench as late as 1973 in the
141. The Court further held that:
" 'industry' as a legislative topic is of large and liberal import; true. But what peripherally affects cannot be confused with what goes to the heart. An acquisition of land for sugar mills or of sugar mills may affect the industry but is not an action in the legislative field forbidden for the States (See the Kannan Devan Hills Produce Company Ltd. case). Sales Tax on raw materials going to a factory may affect the costing process of the manufacture but is not legislation on industrial process or allied matters affect topics reserved for Parliament a situation of reductio ad absurd may be reached."
(emphasis supplied is ours)
142. The effect of acceptance of the submission of Mr. Shanti Bhushan may also denude the State of its power to legislate even in respect of sales tax on tobacco. Such a contention was specifically rejected in Ganga Sugar Corporation's case.
143. In the
144. In
145. The acceptance of the argument of Mr. Shanti Bhushan would make various Entries in the State List otiose and meaningless and subject to Entry 52 of List I despite the fact that the entries are not so worded.
146. In
"Aluminium industry is scheduled industry under the control of the Government of India as declared by Industries Development and Regulation Act and hence falls under Entry 52 of List I of VIIth Schedule of the Constitution. Therefore, the policy of Government of India amounts to direction issued to the State Government which they are bound to obey. Consequently the agreement of 1976 is an agreement protected by a law coming under Entry 52 of List I, terms of which cannot be varied by a law enacted by a State by virtue of the power conferred by the Concurrent List (List III of VIIth Schedule). The amending Act should be construed in such a way as not to impinge on or detract from the law, statutory order or constitutional direction of the Central Government, otherwise the said amending Act will lack legislative competence."
147. The High Court relying upon the decision in Tika Ramji's case, where the concept of industry as a topic of legislation was explained, repelled the aforesaid contention. The decision and reasoning given by the High Court upholding the vires of the amending Act relating to the concept of industry as explained in Tika Ramji's case were upheld by this Court.
148. In
"Applying the principles propounded by the apex Court in the cases mentioned above, it is apparent that the State Legislature is competent to make law in respect of the subject industries under Entry 24 of the List II subject to Entries 7 and 52 of List I of the Seventh Schedule and is further competent to enact law on the subject "trade and commerce within the State and Production, supply and distribution of goods," under Entry 26 and Entry 27 of List II subject to Entry 33 of List III of Seventh Schedule of the Constitution. But on declaration under Entry 52 of List I by Parliament in respect of the industries the control of which by the Union is by law held to be expedient in the public interest, three consequences flow. Firstly, on declaration by Parliament in respect of controlled industries the power of State Legislature to legislate under Entry 24 of List II shifts of Entry 52 of List I to the extent of control provided in the Act. The second result which follows upon declaration is that the power to enact law by State Legislature under Entry 26 and Entry 27 of the List II of Seventh Schedule becomes part of Entry 33 of List III which is a concurrent list. Third consequence that follows on declaration is that the products of the controlled industries would fell within Entry 33 of List III.
The controversy before me, if examined seeing the constitutional debate, history of legislation, structure and design of the relevant entries and also keeping in view the basic structure of the Constitution, the only irresistible conclusion is that Section 18G of the IDR Act is referable to Entry 33 of List III of the Seventh Schedule. Since the power to enact in respect of production, supply and distribution of the products of the controlled industries being a concurrent subject, the U.P. Legislature is competent to enact the Adhiniyam of 1964."
149. The structure and scope of Entry 54 of the Union List and Entry 23 of the State List and their inter-relationship is substantially different from the scope and structure of Entry 24 of the State List and Entry 52 of the Union List. The Entry relating to of mines and minerals has in it both the industry of mines and its product minerals and, therefore, on a declaration both miens and minerals get embedded in Entry 54 of the Union List. Therefore, it has been consistently held by this Court, that by declaration under Entry 54, the Parliament evinces an intention to occupy the whole field.
150. In my view the Full Bench rightly held that the cases relating to miens and minerals relied upon in support of the challenge to the State legislation were of no assistance. The Full Bench decision was approved by this Court in
151. In
152. In Belsund Sugar Co. Ltd. one of the contentions urged was that under the IDR Act, in public interest, Union of India had taken over the control of the wheat industry as specified in the First Schedule to the Act and consequently and transaction of purchase and sale of the product of that industry cannot be regulated by the State Act. The Constitution Bench noticed that the Parliament in exercise of its legislative power under Entry 52 of List I of the Seventh Schedule had enacted the IDR Act and flour industry is listed as one of the scheduled industries under the caption "Food-processing Industries". The Bench said that the production of wheat as a raw material or its sale is not covered by the said Act and, consequently, so far as wheat as 'agricultural produce' is concerned, it is outside the sweep of the IDR Act. The question still remained whether the sale of flour or any other product out of wheat can be said to be covered by the sweep of the IDR Act. It was noticed that the Central Government had not promulgated any statutory order u/s 18G covering the field. The Court rejected the contention that mere existence of a statutory provision in the Act enabling the Central Government to issue such order would be sufficient to occupy the field contemplated by the provision. while examining the decision in Hingir-Rampur Coal Company's case on which reliance was placed by the appellants, the Constitution Bench held that it has to be kept in view that any legislation in exercise of legislative power under Entry 54 of List I would enable the Parliament to regulate mines and the minerals development by taking them under the control of the Union in Public interest. Thus, all aspects of the mining industry would be covered by the general sweep of such a declaration. But it was noticed that the IDR Act was enacted under Entry 52. It was held that the scheme of Entry 54 of the Union List read with Entry 23 of the State List was entirely different from the scheme of Entry 52 of List I read with Entry 24 of List II with which the Court was concerned in that case. On conjoint reading of these two entries, the ratio of the decision in Hingir-Rampur Coal Company's case, it was held, cannot be effectively pressed into service.
153. As already noticed, the majority decision in ITC case for the view it took had placed reliance on Baijnath Kadio which followed Hingir-Rampur Coal Company's case.
154. Further in Belsund Sugar Company, the Constitution Bench cited with approval the decision in SEIL case and reiterated that merely because industry is controlled by a declaration u/s 2 of the IDR Act enacted by Entry 52 of the Union List, the State Legislature would not be denied of its power to regulate the products of such an industry by exercise of its legislative power under the State List. It would be useful to extract para 119 of Belsund Sugar Company's case as under:
"However, so far as the IDR Act is concerned, it is enacted under Entry 52 of the First Schedule which deals with industries in general. Simultaneously in the State List itself there is Entry 24 which deals with industries subject to the provisions of Entries 7 and 52 of List I. Consequently, the products of such controlled industries would necessarily not be governed by the sweep of the general legislation pertaining to such industries as per Entry 52 of the Union List. The aforesaid Constitution Bench judgment was not concerned with any State legislation enacted under Entry 24. On the contrary, it dealt with legislation of the Union Parliament under Entry 54 of the Union List read with Entry 23 of the State List. The scheme of the aforesaid legislative entries is entirely different from the scheme of Entry 52 of the List I read with Entry 24 of List II with which we are concerned. On a conjoint reading of the aforesaid two entries, therefore, the ratio of the decision of the Constitution Bench in the aforesaid case cannot be effectively pressed into service by Shri Ranjit Kumar for supporting his contention. In this contention, we may usefully refer to a decision of this Court in SIEL Ltd. where one of us, Sujata v Manohar J. was a member. It has rightly distinguished the ratio of the Constitution Bench decision in the case of Hingir Rampur Coal Co. Ltd. and taken the view that merely because an industry is controlled by a declaration u/s 2 of the IDR Act enacted by Entry 52 of the Union List, the State Legislature would not be denied of its powers to regulate the products of such an industry by exercise of this legislative powers under Entry 24 of the State List. In that case the question was whether the U.P. Sheera Niyantran Adhiniyam, 1964 could be said to be repugnant to the Molasses (Control) Order issued by the Central Government u/s 18-G of the IDR Act imposing restrictions on the sale of molasses and fixing the maximum price of molasses. Answering the question in the negative, it was held that the term 'industry' in Entry 24 would not take within its ambit trade and commerce or production, supply and distribution of goods which are within the province of Entries 26 and 27 of List II. Similarly, Entry 52 in List I which deals with industry also would not cover trade and commerce in, or production, supply and distribution of the products of those industries which fall under Entry 52 of List I. For the industries falling in Entry 52 of List I, these subjects are carved out and expressly put in Entry 33 of List III. It was also held that since the Molasses (Control) Order of 1961 passed by the Central Government in exercise of powers conferred by Section 18-G was not extended at any point of time to the State of U.P. or the State of Bihar, the question of repugnancy between the Molasses Control Order, 1961 and the U.P. Sheera Niyantran Adhiniyam, 1964 does not arise. Consequently, it must be held that in the absence of a statutory order promulgated u/s 18-G of the IDR Act, it cannot be said that the field for regulation of sale and purchase of products of the flour industry like atta, maida, suji, bran, etc. would remain outside the domain of the State Legislature."
(emphasis supplied is ours)
155. The principles aforesaid would equally apply to Entries 14, 27, 28 and 66 of List II. It may further be noticed that in para 170 of Belsund Sugar Company's case , the Constitution Bench reiterates the view expressed in Tika Ramji's case as also in SIEL's case affirming Full Bench of the Allahabad High Court in M/s. Shriram Industrial Enterprises (supra).
156. In view of the above, I see no compelling reason either on account of any binding precedent in the form of a earlier Constitution Bench judgment, history and background of the framing of the Constitution or the words used in various Entries or the language of any Article in the Constitution of India, to take a view which will result in denuding the power of State Legislatures to legislate not in respect of field of legislation under Entry 24 but field of legislation covered by other entries on State List on making of declaration under Entry 52 of the Union List. The Constitution Bench judgment in the case of Tika Ramji and other decisions following it confine the field of legislation of industries to 'the process of manufacture or production' and not to 'raw materials' which may be integral part of industrial process or to the 'distribution of the product of the industry'.
In view of the aforesaid, I conclude as under:
1. The State legislations and the Tobacco Board Act, 1975 to the extent of sale of tobacco in market area cannot co-exist.
2. The State Legislatures are competent to enact legislations providing for sale of agricultural produce of tobacco in market area and for levy and collection of market fee on that produce.
3. The Parliament is not competent to pass legislation in respect of goods enumerated in aforesaid conclusion No. 2 while legislating in the field of legislation covered by Entry 52 of the Union List under which the Parliament can legislate only in respect of industries, namely, 'the process of manufacture of production' as held in Tika Ramji's case. The activity regarding sale of raw tobacco as provided in the Tobacco Board Act cannot be regarded as 'industry'.
4.
157. Leave in special leave petitions granted. For the aforesaid reasons, the State legislations are held to be valid pieces of legislation. The appeals and the writ petition are disposed of accordingly. Parties to bear their own costs.
Brijesh Kumar, J.
158. I have the privilege of going through the judgments, separately prepared by my esteemed colleagues Brother G.B. Pattanaik, Brother Y.K. Sabharwal, and Mrs. Ruma Pal, J.J.
159. In all the three judgment, the facts as well as the relevant provisions of the law and the decisions on the subject have been very elaborately and lucidly discussed. Hence, it would not be necessary to go into those matters all again. The main question, however, which has been considered is as to whether the case ITC Ltd. v. State of Karnataka 1985 Supp. 1 S.C.R. 145 has been correctly decided or not. In the above cited case, it has been held that once Tobacco Industry, in the public interest, was declared as such under Entry 52 of List 1 of VIIth Schedule of the Constitution, the State Legislature ceased to be competent to legislate on the subject viz. Tobacco Industry, in conflict with the laws made by the Parliament, namely, the Tobacco Board Act 1975. The State Act of Karnataka levying market fee on sale of tobacco in the market area was thus held to be invalid. The whole legislative field in relation to the subject of tobacco including its sale as an agricultural produce was held to have vested in the Parliament. While holding so reliance was placed on the decisions of this Court reported in
160. Different States namely Bihar, U.P., Tamil Nadu and others have similar State Legislations levying market fee on sale of agricultural produce including Tobacco. The same question arose for consideration in respect of these States as well, in one way or the other.
161. Brother Pattanaik, in his judgment has found that the ITC Case (Supra) has been correctly decided, though reasons for holding so were slightly different than the reasons on the basis of which the judgment was rendered in the ITC case . It has been further held that once Parliament takes over the control of a particular industry in the interest of the said industry as well as in the national interest, the control should be effective and should be in such a manner that the desired object can be achieved. Therefore, whole legislative field was open to the Parliament to legislate on the subject of tobacco industry including growing of tobacco as well as its sale and purchase. It has also been held that in any case, entrenching into the legislative field of an entry in the other list on a matter which may be ancillary or incidental thereto, would not invalidate the legislation. On the other question it has been found that the two Acts namely Tobacco Board Act 1975 and the State Agricultural Produce Marketing Act cannot operate simultaneously.
162. Brother Sabharwal, J., has broadly held that the decision in
163. As noticed earlier the majority view in the ITC Case (Supra) has been upheld in the judgment of Brother Pattanaik, on slightly different reasoning and the decisions of this Court in M.A. Tullock and Baij Nath Kedia (Supra) dealing with legislation on Mining and relied upon in the majority judgment of ITC case (supra) have been found to be not relevant for the decision. It is true, while legislating on any subject covered under an entry of any list, there can always be a possibility of entrenching upon or touching the field of legislation of another entry of the same List or another List for matters which may be incidental or ancillary thereto. In such eventually, inter alia, broad and liberal interpretation of an entry in the list may certainly be required. An obsolute or watertight compartmentalization of heads of subject for legislation may not be possible but at the same time entrenching into the field of another entry cannot mean its total sweeping off even though it may be in the exclusive List of heads of subjects for legislation by the other Legislature. As in the present case the relevant heads of subject in List II, other than entry 24, cannot be made to practically disappear from List II and assumed to have crossed over in totality to List I by virtue of declaration of Tobacco Industry under entry 52 of List I, in the guise of touching or entrenching upon the subjects of the list II.
164. I therefore, append my full agreement with the conclusions and judgment of Brother Sabharwal J. on all points.
THE COURT
In keeping with the conclusions of the majority, expressed in the judgments of Sabharwal, Ruma Pal and Brijesh Kumar, JJ., it is held that:
(1) ITC's case [1985 Supp. (1) SCC 476] was not correctly decided.
(2) The State legislatures are competent to enact legislation providing for the levy and collection of a market fee on the sale of tobacco in a market area. Consequently, the Market Acts enacted by the States are valid.
(3) The State legislations and the Tobacco Board Act, 1975, to the extent that they relate to the sale of tobacco in market areas, cannot co-exist and the former prevail over the latter.
The appeals and the writ petition are disposed of accordingly. No order as to costs.
Pattanaik, J.
165. Leave granted in all the Special Leave Petitions.
166. I.T.C. Limited filed a writ petition under Article 226 and 227 of the Constitution of India before the Patna High Court against an order of assessment passed by the Agricultural Produce Market Committee, Monghyr, demanding a sum of Rs. 25,87,072/-, inter alia on the ground that the purchase of unprocessed tobacco leaves from the growers, being the subject matter of the levy, the Market Committee has no power to levy and collect fee. The stand taken before the High Court was that tobacco leaves neither having been bought or sold within the market area and the power to levy and collect market fee u/s 27 of the Bihar Agricultural Produce Markets Act, being on the Agricultural produce bought or sold in the market area, the Market Committee was not entitled to levy market fee. The Division Bench however without entering into the aforesaid controversy, came to the conclusion that no clear notice appears to have been given to the company to produce the records for the purpose of satisfying the Market Committee that the tobacco leaves in question were either not processed or exported from the market area and, therefore, the company must be given afresh opportunity of adducing all the relevant documents before the Market Committee to escape the presumption arising out of proviso to Section 27 of the Act. The High Court having remitted the matter to the Market Committee for passing a fresh assessment order, the company has approached this Court, which is the subject matter in Civil Appeal No. 6453 of 2001 arising out of SLP (Civil) No. 12374/84. When the SLP was listed before a Bench of this Court in February, 1987, the judgment of this Court in I.T.C. Ltd. etc. v. State of Karnataka , reported in 1985 Supp. (1) S.C.R. 145 had been placed. The Bench tentatively being of the view that the decision of this Court requires reconsideration directed that the matter be placed before a Constitution Bench of five Judges and that is how the matter has been placed before the Constitution Bench. Subsequent to the Bihar case, similar cases arising out of judgment of other High Courts on being assailed before this Court, those cases also have been tagged on to this case. When this batch of cases had been earlier listed before a Constitution Bench and arguments had been advanced on behalf of company, the Court felt that it would be appropriate to issue notice to the Attorney General and the Advocate Generals of all the States, as most of the States have their State Act called the Agricultural Produce Market Act and pursuant to the order of this Court dated 10th of April, 2001, notices were issued to Advocate Generals of all the States as well as to the Ld. Attorney General, whereafter this case has been heard by this Bench.
167. Different State Legislatures have enacted Agricultural Produce and Markets Act for regulating sale and purchase of the agricultural produce within the market area and for levy and collection of market-fee. Parliament having declared that it is expedient in the public interest that Union should take under its control the tobacco industry, enacted the Tobacco Board Act, 1975 which is an Act to provide for the development of tobacco industry under the control of the Union Government. Under the Agricultural Produce Markets Act, the State Government having notified 'tobacco' as an agricultural produce, the purchase and sale of tobacco is to be regulated under the provisions of the State Act and the Market Committee has the right to levy and collect market-fee on such sale and purchase of the notified agricultural produce viz. the tobacco. In a case arising from the State of Karnataka, this Court by a majority of 2:1, came to hold that the tobacco industry having been taken over by the Central Government under Entry 52 of List I and having passed the Tobacco Board Act, the State Legislature ceases to have any jurisdiction to legislate in that field and, therefore, the provisions contained in the Karnataka Act, entitling the Market Committee to levy market-fee in respect of sale and purchase of tobacco within the market area directly, collides with the Tobacco Board Act, 1975 and as such the State Act so far as it relates to tobacco was struck down. The minority view expressed by Justice Mukherjee was however to the effect that both Acts can operate in their respective fields and there is no repugnancy if both the Acts are considered in the light of their respective true nature and character. The majority view relied upon the decisions of this Court in
168. The other matter, arising out of the judgment of Patna High Court is one filed by Agricultural Produce Market Committee, against a similar order as in Civil Appeal No. 6453 of 2001, remanding the matter for making a fresh assessment order, after issuing notice to the ITC. So far as Civil Appeals arising out of the judgment of Allahabad High Court is concerned, the Division Bench of Allahabad High Court followed the judgment of this Court in ITC v. The State of Karnataka 1985 Supp l. SCC 476, and held that Mandi Samiti cannot charge a market fee on sale and purchase of Tobacco, and consequently Krishi Utpadan Mandi Samiti has preferred the appeals in question. Civil Appeal No. 3872 of 1990 also arises out of a judgment of Allahabad High Court and the Tobacco Merchants' Association and Ors., are the appellants. The Full Bench of Allahabad High Court considered the constitutional validity of U.P. Krishi Utpadan Mandi Adhiniyam, 1964, and came to hold, that the Adhiniyam permitting levy and collection of fee u/s 17(iii), in so far as it applies to tobacco, is not repugnant to the provisions of Tobacco Board Act and further held that the decision of the Supreme Court in Ram Chander Kailash Kumar v. State of U.P. is binding, notwithstanding the subsequent decision of the Supreme Court in the case of ITC v. State of Karnataka (supra), and therefore, the Tobacco Merchants' Association has assailed the legality of the aforesaid Full Bench decision. So far as the State of Tamil Nadu is concerned, the Tamil Nadu Agricultural Marketing Board has assailed the judgment of the Division Bench of the High Court as the High Court followed the judgment of this Court in the ITC case and held that the State Legislature has no legislative power or competence to notify tobacco for the purpose of control and regulation and levy market fee under the provisions of Tamil Nadu Regulation Act, 1959. In fact the High Court held that the ratio of majority opinion in ITC case squarely applies and, therefore, the State Legislature of Tamil Nadu has no legislative power to notify or provide for notifying tobacco for the purpose of control, regulation and levy of fee or other charges under the provisions of Tamil Nadu Agricultural Produce Markets Act, 1959.
169. Jayalakshmi Tobacco Company filed a Civil Writ Petition No. 8614 of 1982 under Article 32, challenging the constitutional validity of certain provisions of Karnataka Agricultural Produce Marketing (Regulation) Act, 1966, on the ground that in view of Tobacco Board Act, 1975 and Tobacco Association Act, 1975, the entire field regarding the development to tobacco industry including the marketing of tobacco was occupied and the State legislation is repugnant to the Central Act.
170. So far as 12 appeals arising out of the judgments of Madhya Pradesh High Court are concerned, the High Court of Madhya Pradesh followed the judgment of this Court in the ITC case and held that the Market Committee will not be entitled to realise any market fee in relation to the trade with regard to tobacco since the Market Committee Act is repugnant to the Tobacco Board Act. It may be stated that though the Writ Petition had been filed challenging the constitutional validity of the State Act, the High Court held the M.P. Krishi Utpadan Mandi Adhiniyam 1972 as amended by M.P. Krishi Utpadan Mandi Sanshodhan Adhiniyam, 1986 to be valid.
171. Mr. Shanti Bhushan, learned senior counsel appeared for ITC, and argued, that the majority view in the decision of ITC case is correct and once Parliament has made a law relating to tobacco industry, which provides for the manner and place of sale as well as levy of fee on the sale, the Market Committee Act enacted by the State Legislature, providing levy of fee for sale of the tobacco within the market area will be repugnant to the Central law, and therefore, the State Act, so far as it deals with tobacco, must be held to be ultra vires.
172. Mr. Rakesh Dwividi, the learned senior counsel, appearing for the State of Bihar, on the other hand contended that the majority decision in the case must be held to the contrary to several Constitutional Bench decisions of this Court starting from
173. Mr. Shanti Bhushan, learned senior counsel appearing for the ITC Ltd. Contended, that Entry 52 of List I of the VIIth Schedule of the Constitution requires the Parliament to make a declaration by law identifying an industry, the control of which is expedient to be taken over by the Union in the public interest. Once such a declaration is made by the Parliament, the entire gamut would be within the legislative competence of Parliament to make law, and the very industry having been made the subject of legislation, the Parliament gets exclusive power under Article 246(1) of the Constitution. Article 246(1) itself being, notwithstanding anything in Clauses 2 and 3 of such Article, once Parliament makes a law in relation to control of an industry in respect of which a declaration has been made, the State Legislature will be denuded of its power to make any law in respect of that industry. Mr. Shanti Bhushan contends, that every Entry in the Legislative List has to be construed in its widest sense, as was held by this Court in
"It must inevitably happen from time to time that legislation, though purporting to deal with a subject in one list, touches also on a subject in another list, and the different provisions of the enactment may be so closely interwined that blind adherence to a strictly verbal interpretation would result in a large number of statutes being declared invalid because the legislature enacting them may appear to have legislated in a forbidden sphere"
174. approved the same and held that it was a correct method of interpreting the various items in different lists. Mr. Shanti Bhushan also pointed out that in the aforesaid judgment the Constitution Bench followed the earlier observations of Hon'ble Hidaytullah, J. in the case of
"It is equally well settled that the power to legislate on a topic of legislation carries with it the power to legislate on an ancillary matter which can be said to be reasonably included in the power given".
175. According to the learned counsel, it would be within the competence of the Central Legislature to provide for matters which may otherwise fall within the competence of the State legislature if the are necessarily incidental to effective legislation by the Central legislation on a subject of legislation expressly within its power. According to Mr. Shanti Bhushan, if the expression 'industry' is construed in the wide sense, in which it was construed by this Court in the Constitution Bench judgment of Harakchand (supra) then the provisions of Tobacco Board Act of 1975 would certainly be within the legislative competence of parliament, notwithstanding the fact that some of those provisions may touch upon subjects contained in the State Lists. The learned counsel, in this connection also placed reliance on a recent decision of this Court in the case of
176. According to Mr. Shanti Bhushan, the learned senior counsel, the majority judgment in ITC case, no doubt, relied upon the decisions of this Court in
177. Mr. Nageshwar Rao, learned senior counsel appearing for the Tobacco merchants' Association, reiterated all that had been argued by Mr. Shanti Bhushan, and placing reliance upon several authorities submitted, that the Tobacco Board Act being a special Act, enacted by Parliament for controlling the tobacco industry and making provision therein, relating to growing of tobacco and purchase or sale of tobacco, which have direct nexus with the tobacco industry, the general provisions of the Agricultural Produce market Act will have to give way to the Tobacco Board Act, and therefore, the Market Committee would have no power to levy market fee by taking recourse to the provisions of the Market Committee Act on the purchase and sale of tobacco within a market area.
178. Mr. Rakesh Dwivedi, learned senior counsel, who led the main argument by contending that the Parliament had no competence to make the Tobacco Board Act in its entirety, particularly in relation to growing and raw-materials of the tobacco industry, appearing for the State of Bihar contended, that the subject matter 'industry' in Entry 52 of List 1 of the VIIth Schedule cannot be construed to be all pervasive and the Constitution Bench of this Court in Tikaramji (supra) conclusively held that the raw-materials which are integral part of the industrial process cannot be included in the process of manufacture or production. According to Mr. Dwivedi, the Court should construe a particular entry in the Schedule in a manner so that the other Entries in the Schedule will not be otiose. Consequently, the raw-materials would be goods which would comprised in Entry 27 of List II and the manufacturing process or production would come within the ambit of expression 'industry' in Entry 24 of List II. Entry 24 of List II being subject to Entry 52 of List I, when Parliament makes a law in respect of an industry in exercise of its power referable to Entry 52 of List I then that expression cannot be wider than the word 'industry' in Entry 24 of List 2. It would, therefore, be given a restricted meaning to the expression 'industry', as was done by this Court in Tikaramji's case, which was followed in Calcutta Gas, Kannan Devan Hills and Ganga Sugar Corporation. According to Mr. Dwivedi, even in the case of
179. Dr. A.M. Singhvi, appearing for the Agricultural Produce Market Committee, Munger, on an analysis of different entries made in List I, List II and List III of the Seventh Schedule submitted that there are as many as nine entries in List II out of 66 entries which are specifically made subject to List I. 3 of the entries in List II are subject to list III. Entry 24 of list II however is subject to entry 52 of list I. According to the learned counsel, wherever the Constitution intended that the entries in list II were to be made subject to entries in list I, it was specifically and clearly so provided. Where however an entry in list II is not subject to list I or list III, then the power of the State legislature to legislate with regard to that matter is supreme. The Bihar Agriculture Markets Act, being relatable to entries 14 to 28 of list II, which is not subject to any entry either in List I or List III, the same must be held to be supreme and there would be no fetter on the power of the State Legislature to make the Agricultural Produce Markets Act. With reference to the expression "subject to List I" in
180. Mr. G.L. Sanghi, the learned senior counsel, appearing for Mandi Samiti in Madhya Pradesh batch of appeals, submitted that in the case in hand, relevant enquiry should be whether the State Act is within the exclusive subject matter of the State Legislature under Entry 28 of List II. According to him, there is no irreconcilable clash between the two Acts, which is also apparent from the mandate of Section 31 of the Central Act. The object and purpose of the State Act being establishment of market places and the same object having been achieved by the various provisions providing for large scale infrastructural establishment and provision of a large variety of services, the State Act rightly requires those who avail these services to pay the requisite market fee and also in order to provide for appropriate control, to take licenses wherever a market functionary desires to function within the market bard or market area. The provisions of Tobacco Board Act, more specifically Section 8 however mandates that the Board has to apply its mind to provide appropriate measures including the measure of setting up an auction platform and since the auction platform has to have a location, the Board cannot but think it fit to establish such platform within the market area. Such a step will be consistent with the mandate of Section 31 and, therefore, it will not be in derogation of the State Act. The amendment introduced in Tobacco Board Act, according to Mr. Sanghi is achieved by the enforcement of the amending Act which exhausts itself by merely introducing the amending provisions into the parent Act so that the requirement of Sub-section (1) of Section 3 of the Parent Act, namely bringing into force the newly added Sections will have to be complied with. Thus the amended sections as well as Section 13 of the Act having not been enforced within the State of Madhya Pradesh, there cannot be any inconsistency or repugnancy between the two Acts assuming that bringing into force all the said Sections may create some inconsistency. According to Mr. Sanghi, the objects of the Tobacco Board Act being development of Tobacco Industry, more particularly in respect of virginia tobacco, is not in any manner defeated by the provisions of the State Act and the object of the State Act are not defeated by the existing or even non-enforced provisions of the Tobacco Board Act. In this view of the matter, according to Mr. Sanghi, the minority view in ITC case must be held to be correct and both the Central Act and the State Act should be permitted to operate in their own sphere.
181 Mr. A.K. Ganguli, the learned senior counsel, appearing for the Tamil Nadu Agricultural Marketing Board, analysed the provisions of Article 246(3) of the Constitution and contended that the expression "subject to" appearing in Article 246(3) has reference to those entries in List II which provides that the subject matter of said entries are subject to the provisions contained in certain specified entries appearing in either List I or List III as for example Entry 2 in List II provides Police (including railways and village police) subject to the provisions of Entry 2A of List I. Similar provisions are found in several entries. In List II like Entry 17, 22, 24, 26, 27, 32, 33, 37, 54, 57 and 63 but only three entries in List II namely Entries 13, 23 and 50 do not specify any entry in List I or List III subject to which the said entries would remain operative but restrict the scope of these entries by a general reference to the provisions contained in List I or List III. Therefore, in respect of all other entries in List II, the State Legislature enjoys the exclusive power to enact laws and consequently, if the State Act has been enacted under Entry 28 of List II, the State Act must be allowed to operate. The contention that Parliament enjoys superior legislative powers with regard to subject matters enumerated in List II, according to Mr. Ganguli, would hold good only in respect of those entries in List II which expressly provide that the subject matter thereof are subject to the matters dealt with in various entries in List I. But that principle cannot be extended to the subject matters covered by other entries in List II. Placing reliance on the provision of Section 100 of the Government of India Act, 1935 which corresponds to Article 246 of the Constitution which was interpreted by Sulaiman, J in Subrahmanyam Chettiyar v. Muttuswamy Grounder, reported in 1940 FCR 188, which has been approved by the Constitution Bench in the case of
182. Mr. Malhotra, the learned senior counsel, appearing for the Tobacco Board though initially proceeded with the arguments that both Acts could be reconciled but later on categorically submitted that the Central Legislation must prevail. According to him the Tobacco Industry got lifted from Entry 24 of List II to Entry 52 of List I and the same must be held to be a special Act dealing with tobacco industry right from the stage of growing till it is exported. This being a special Act and the Market and Fairs under Entry 28 being a general entry and Agriculture under entry 14 of List II being a general entry, the special Act enacted by the parliament must prevail and there is no question of lack of competence of the Parliament to enact the law. In support of this contention reliance was placed on the Constitution Bench decision of this Court in
183. The learned Additional Solicitor General Mr. Trivedi appearing for the Attorney General of India placed before us the process of manufacture of tobacco and indicated how tobacco is grown commercially. To emphasise on the issue he contended that the tobacco industry having been notified to be a 'controlled industry' it will be a disaster if the Parliament is held to have no competence to make law in relation to growing of tobacco or processing of raw tobacco. According to the learned Additional Solicitor General the trade and commerce in product of control industry being covered by Entry 33 of List I, the legislative power of the State is subordinate to the power of the Parliament in respect of List III. He further contended that the constitution itself has specifically put down entries in List II in which the power is expressed in general terms but is made subject to the provisions of entries in either list I or list III. Consequently, no anomaly will arise in holding exclusive power with the Parliament in respect of the subject coming under any entry in List I. He further contended that Tobacco Board Act covers the entire field of tobacco industry and is within the competence of Parliament under Entry 52 of List I. Tikaramji was a case which concerned only with a part of the industry namely manufacture of sugar. The observations made in
184. Though several counsel have raised contentions in different forms as indicated earlier, but essentially the following questions arise for our determination:-
1. Whether the Tobacco Board Act enacted by the Parliament under Entry 52 of List I can be held to be constitutionally valid and within the legislative competence of the Parliament, so far as the provisions contained in the same in relation to the growing of tobacco and sale of raw-materials, and this in turn would depend upon the question whether the word 'industry' used in Entry 52 of List I should be given a restricted meaning;
2. Even if the Tobacco Board Act is held to be constitutionally valid and the Agricultural Produce Market Act is also held to be constitutionally valid and within the powers of the State Legislature, so far as purchase and sale of tobacco within the market area is concerned, whether both the Acts can be allowed to operate, as was held by the minority judgment in ITC case;
3. If there is a repugnancy between the two then whether the Central Act would prevail, as was held by the majority judgment in ITC case.
185. But before considering several elaborate arguments advanced on these issues, it may be noticed that the Constitution of India itself defines the political authority, locates the sources of political power and also indicates how the power has to be exercised setting out the limits on its own use. The rules relating to the distribution of legislative power by providing the legislative heads for the Parliament to make law in respect of subjects enumerated in List I, and similarly enumerating the subjects in List II with respect to which the State Legislature can frame law, in fact constitutes the heart of the federal scheme of the Constitution. But the Constitution Makers having found that the need for power sharing devices between the Central and the State must be subordinated to the imperatives of the State's security and stability propelled the thrust towards centralization and by using non obstante clause under Article 246 the federal supremacy is achieved. Article 246 of the Constitution deals with the distribution of legislative powers as between the Union and the State Legislature, with reference to the different Lists in the 7th Schedule. The various entries in 3 Lists of the 7th Schedule are not powers of legislation but the fields of legislation. The entry in the List and legislative heads and are of enabling character. They are designed to define and limit the respective areas of legislative competence of the Union and the State Legislature. It is a well recognised principle that the language of Entry should be given a widest scope and each general word should be interpreted to extend to all ancillary or subsidiary matters which can fairly and reasonably be comprehended in it. The Entries in the Lists should be read together without giving a narrow or restricted meaning to any of them. Powers of the Union and the State Legislatures are both expressed in precise and in definite terms and, therefore, there can be no reason in such a case in giving broader interpretation to one rather than to the other. It is only when an apparent overlapping occurs the doctrine of 'pith and substance' has to be applied to find out the true nature of legislation and the Entry within which it would fall. When different entries in the same List crop up for consideration the usual principle followed is that each particular entry should relate to a separate subject or group of subjects and every attempt should be made to harmonise different entries and to discard a construction which will render any of the entries ineffective.
186. Coming to the case in hand, the relevant entries which arise for our consideration are Entries 52 of List I, Entry 24 of List II and Entry 28 of List 2. Under Entry 52 of List 1 Tobacco Board Act has been enacted by Parliament and under Entry 28 of List II the Agricultural Produce Market Act has been framed by the State Legislature. Incidentally, also Entry 7 of List 1 and Entries 14 and 27 of List 2 crop up for consideration. It would, therefore, be appropriate to indicate those Entries hereunder:
"LIST - I
Entry 7 - Industries declared by Parliament by law to be necessary for the purpose of defence or for the prosecution of war.
Entry 52 - Industries, the control of which by the Union is declared by Parliament by law to be expedient in the public interest.
LIST - II
Entry 24 - Industries subject to the provisions of (entries 7 and 52) of List I.
Entry 27 - Production supply and distribution of goods subject to the provisions of entry 33 of List III; and
Entry 28 - Markets and fairs."
187. Though the State Legislature has power to make law in relation to any industry under Entry 24 of List II, but the said Entry itself being subject to the provisions of Entries 7 and 52 of List I, once Parliament makes a declaration by law identifying an industry, the control of which is taken over by the Union in the public interest, then the State Legislature is denuded of its competence to make any law in respect of that industry, notwithstanding its competence under Entry 24 of List II. The industry in question having been identified and necessary declaration to that effect being made in terms of Entry 52 of List I then over that subject the Parliament gets exclusive power to make laws under Article 246(1) of the Constitution. The Tobacco Board Act having been enacted by the Parliament under Article 246(1) of the Constitution and the law in question being referable to Entry 52 of List I, the moot question that arises for adjudication is, what is the extent and ambit of the expression 'industry' used in Entry 52. As has been stated earlier, the expression 'industry' has been used in Entry 24 of List II and Entry 7 and Entry 52 of List I. In deciding the legislative competence of the Parliament in enacting Tobacco Board Act and in making provision therein in relation to the growing of tobacco as well as sale of tobacco in the places specified therein, and on terms and conditions mentioned therein, the moot question is whether the word 'industry' would be given a wide meaning so as to bring within its ambit all that is necessary for the industry, including the raw material as well as the growing of the raw material, as contended by Mr. Shanti Bhushan, or a restricted meaning would be given to the same on the basis of the observations made by this Court in Tikaramji's case and followed in several other authorities, as contended by Mr. Dwivedi. In the majority judgment of this Court in ITC case (1985) Supp. 1 SCR 145, the majority view expressed by Hon'ble Fazal Ali, J. came to hold that the center having taken over an industry under Entry 52 of List I and having passed the Act to regulate the legislation, and the said legislation having covered the entire field, the State Legislatures ceases to have any jurisdiction to legislate in that field, and if it does so, then the State Legislation would be ultra vires of the powers of the State Legislature. Even the minority view expressed by Hon'ble Justice Sabyasachi Mukherjee also accepts the recognised principle of Parliamentary supremacy in the field of legislation engrafted in Article 246. The learned Judge also held that the words in a constitutional document conferring legislative powers should be construed most liberally and in their widest amplitude, following the judgment of this Court in
188. In the Constitution Bench decision of this Court in
"It is well settled that the entries in the three lists are only legislative heads or fields of legislation and they demarcate the area over which the appropriate legislature can operate. The legislative entries must be given a large and liberal interpretation, the reason being that the allocation of subjects to the lists is not by way of scientific or logical definition but is a mere enumeration of broad and comprehensive categories."
189. The Court ultimately came to the conclusion that the manufacture of gold ornaments by goldsmith in India is a process of systematic production for trade or manufacture and so falls within the connotation of the word "industry" in the appropriate legislative Entries. At Page 490 of the aforesaid Judgment, while construing as to what is the meaning of the word "Industry" in Entry 52 of List I and Entry 24 of List II, it referred to the definition of "industry" in Shorter Oxford English Dictionary as well as the meaning of the said word in Webster's Third New International Dictionary and the contention raised on behalf of the applicant that if the word "industry" is construed in this wide sense, then Entry 27 of List II will lose all meanings and contents, was not accepted by the Court. It is, thus clear that the Court did apply the theory that widest amplitude and meaning should be given to the entries in the legislative lists. Further the contention of the applicant that the legislation in fact is a legislation under Entry 27 of List II, dealing with "Production, supply and distribution of goods" and being a special entry, the contents of Entry should be excluded from the expression "industry" in Entry 52, was not accepted and rejected.
190. In
"45. Duties of Excise on Tobacco and other goods manufactured or produced in India except:-
(a) alcoholic liquors for human consumption
(b) opium, Indian hemp and other narcotic drugs and narcotics, non-narcotic drugs;
(c) medical and toilet preparations containing alcohol or any substance included in sub-paragraph (b) of this entry.
Item 27. Trade and commerce within the province; markets and fairs, money lending and money lenders."
Item 29. Production, supply and distribution of goods; development of industries, subject to the provisions in List I with respect to the development of certain industries under Federal control."
191. A bare look at those Entries and on being compared with the Entries in list II of the Seventh Schedule of the Constitution of India, it appears that Entry 27 of the State List under the Government of India Act now comprises of Entries 26 and 28 of List II of the Seventh Schedule and Entry 29 of the State List in the Government of India Act is now combined in Entry 27 of the State List relating to production, supply and distribution of goods and also Entry 24 of List II namely development of Industries. In the aforesaid Constitution Bench decision, a passage from the judgment of the Federal Court reported in (1940) F.C.R. 188 was quoted, which may be extracted hereunder:
"It must inevitably happen from time to time that legislation, though purporting to deal with a subject in one list, touches also on a subject in another list, and the different provisions of the enactment may be so closely interwined that blind adherence to a strictly verbal interpretation would result in a large number of statutes being declared invalid because the legislature enacting them may appear to have legislated in a forbidden sphere."
192. The Constitution Bench approved the aforesaid if Judgment of the Federal Court and referring to the judgment of this Court in the
"It is equally well-settled that the power to legislate e on a topic of legislation carries with it the power to legislate on an ancillary matter which can be said to be reasonably included in the power given."
193. The Court ultimately held that the Federal Legislature did have the competence to make provisions in Sections 6 and 8 of the Central Excise & Salt Act under Entry 45 of List of the Government of India Act, 1935 and observed thus:
"It is within the competence of the Central legislation to provide for mater which may otherwise fall within the competence of the Provincial legislature if they are necessarily incidental to effective legislation by the Central legislature on a subject of legislation expressly within its power."
194. This indicates that the Court has all along been construing a particular legislative Entry to give wide connotation possible and in that case, it was held while legislating upon an industry, Parliament would be entitled to legislate also on the raw materials of that industry which is an ancillary to the industry and there should not be any limitation in interpreting the expression "industry" to denude the power of the Parliament and thereby make the law ineffective. In the aforesaid judgment of this Court, it has been held:
"Looking at the scheme of the Act, its object and purpose its true nature and character and the pith and substance the conclusion in inevitable that the Act was within the legislative competence of the Central legislature and although there may be certain matters otherwise within the legislative competence of the provincial legislature they are necessarily incidental to effective legislation by the Central legislature. The various provisions of the Act and the Rule made thereunder were, in our opinion, essentially connected with the levying & collection of excise duty and in its true nature and character the Act remains one that falls under item 45 of List I and the incidental trenching upon the provincial filed of items 27 or 29 would not affect its constitutionality because the extend of invasion of the provincial filed may be a circumstances to determine the true pith and substance but once that question is determined the Act, in our opinion, would fall on the side of the Central field and not that of the provincial field."
195. In
"It is well settled that widest amplitude should be given to the language of the entries in three Lists but some of these entries in different lists or in the same list amy override and sometimes may appears to be in direct conflict with each other, then and then only comes the duty of the court to find the true intent and purpose and to examine the particular legislation in question. Each general word should be held to extend to all ancillary or subsidiary matters which can fairly and reasonably be comprehended in it. In interpreting an entry it would not be reasonable to import any limitation by comparing or contrasting that entry with any other in the same list."
196. In
"We are dealing with an entry in a Legislative List. The entries should not be read in a narrow or pedantic sense but must be given their fullest meaning and the widest amplitude and be held to extend to all ancillary and subsidiary matters, which can fairly and reasonably be said to be comprehended in them."
197. As has been stated earlier, even in his minority judgment in ITC case, Justice Mukherjee had observed:
"It is well settled that the cardinal rule of interpretation is that the words should be read in their ordinary natural and grammatical meaning. But words in a constitutional document conferring legislative powers should also be construed most liberally and in their widest amplitude."
198. In view of the aforesaid rules of interpretation as well as the Constitution Bench decision referred to above, it is difficult for us to accept the contention of Mr. Dwivedi that the word "industry" in Entry 52 of List I should be given a restricted meaning, so as to exclude from its purview the subject of legislation coming within entry 27 or Entry 14 of List II. Bearing in mind the constitutional scheme of supremacy of Parliament, the normal rule of interpretation of an Entry in any of the list in the Seventh Schedule of the Constitution, the object of taking over the control of the tobacco industry by the Parliament, on making a declaration as required under Entry 52 of List I and on examining the different provisions of the Tobacco Board Act, we see no justification for giving a restricted meaning to the expression "industry' in Entry 52 of List I, nor do we find any justification in the contention of the counsel appearing for the States and also different Market Committees that the provisions contained in Tobacco Board Act dealing with the growing of tobacco as well as making provisions for sale and purchase of tobacco, must be held to be beyond the legislative competence of the Parliament, as it does not come within the so-called narrow meaning of the expression "industry" on the ground that otherwise it would denude the State Legislature of its power to make law dealing with market under Entry 28, dealing with agriculture under Entry 14 and dealing with goods under Entry 27 of List II. Such an approach of interpretation in our considered opinion would be against the very scheme of the constitution and supremacy of the Parliament and such an approach towards interpreting the power sharing devices in relation to entries in List I and List II would be against the thrust towards centralization. In our considered opinion, therefore, the word "industry' in Entry 52 of List I should not be given any restricted meaning and should be interpreted in a manner so as to enabling the Parliament to make law in r elation to subject mater which is declared and whose control has been taken over to bring within its sweep any ancillary matter, which can be said to be reasonably included within the power and which may be incidental to the subject of legislation,so that the Parliament would be able to make an effective law. So constructed and on examining different provisions of the Tobacco Board Act, we do not find any lack of legislative competence with the Parliament so as to enact any of the provisions contained in the said Act, the Act in question having been enacted by the Parliament on a declaration being made of taking over of the control of the Tobacco industry by the Union and the Act the intended for the development of the said industry.
199. The main prop of the argument advanced by Mr. Dwivedi is the decision of this Court in Tikaramji which was followed in Calcutta Gas, Kanandevan and Ganga Sugar Corporation, all of which are Constitution Bench decisions. In Tikaramji, no doubt the Constitution Bench of this Court held that the raw materials which are integral part of the industrial process, cannot be included in the process of manufacture or production and thus "industry" within the meaning of Entry 52 of List I under which the Parliament makes a law, would not bring within its sweep the raw materials. The aforesaid observations had been made in connection with sugar industry and sugar-cane. According to Mr. Dwivedi, the majority decision in ITC case, cannot be sustained, since the earlier constitution Bench decision of this Court in Tikaramji, Calcutta, Gas, Kanandevan and Ganga Sugar Corporation have not noticed. Mr. Dwivedi's further contention is that a legislative Entry in any List should be so interpreted so as not to denude another entry in the same list or in any other list and, therefore, it is necessary to give a restricted meaning to the expression "industry" occurring in Entry 24 of List 2 as well as Entry 52 of List 1. According to Mr. Divedi, while examining the constitutionality of the Market Committee Act referable to Entries 26, 27 and 28 of List II vis-a-vis the Sugar-cane Act referable to Entry 33 of List III in Belsund Sugar, this Court has held that the Market Committee Act should be subject to Sugarcane Act. Applying the same principle, it would be logical to hold that the raw tobacco, which would be a produce of agriculture and consequently a raw material for the tobacco industry would continue to be with in the exclusive domain of the State legislature and the Parliament is incompetent to make any legislation in relation to either growing to tobacco or sale and purchase to tobacco. It would therefore, be necessary to examine what really this Court in Tikaramji has held. At the outset, it may by noticed that in none of these cases, relied upon by Mr. Dwivedi, namely Tikaramji, Calcutta Gas, Kanandevan and Ganga Sugar, the competence of Parliament to make any law referable to Entry 52 of List I had not been questioned. In Tikaramji, the question for consideration was whether the At passed by the State Legislature and notification issued thereunder is repugnant to the Parliament Act and notification issued thereunder. On examining the provisions of the State Act namely the Sugarcane Act, the Court held that the said law concerns solely with the regulation of supply and purchase of sugarcane and in no way trenched upon the jurisdiction of the center with regard to sugar and on scrutiny of Section 18-G of the Industries (Development and Regulation) Act, the Court held that the Act, more specifically Section 18-G did not cover sugarcane nor even the Parliament's intention to cover the entire field could be inferred. The Court was required to find out the meaning of the expression " any article or class or articles relatable to any scheduled industry" used in Section 18-G and it held that it did not refer to the raw materials but only to the finished products. The Court went into the object to the central Act which was equitable distribution and availability of manufactured articles at fair prices. The argument that had been advanced in that case was that the Sugarcane Act enacted by the State Legislature though appears to be a legislation in regard to sugarcane required for use in sugar factory but in pith and substances and its true nature is a legislation in regard to sugar industry which had been declared under the Industries (Development and Regulation Act and control of the industry had been taken over by the Union. Negativing that contention and on examining the contents of Entry 24 of List IInd Entry 27 of the said List II, the Court observed that the controlled industries were relegated to Entry 52 of List I which was the exclusive province of Parliament leaving the other industries within Entry 24 of List II. In that case, the Court was not required to examine the content and scope of the expression "industry" in Entry 52 of List I and in fact the Court observed that it was concerned with as to whether the raw materials of an industry which form an integral part of the process are within the topic of "industry" which form the subject matter of Item 52 of List I. The Central legislation which was under consideration in that case as well as the notifications issued by the Central Government were held to have been enacted by the Parliament in exercise of the legislative power conferred upon it by Entry 33 of List III and was an exercise of concurrent jurisdiction and once the law is made by the Parliament in the exercise of its concurrent jurisdiction, then it would not deprive the Provincial Legislature of similar powers which they had under he Provincial Legislative List. It is important to notice the findings of the Court in that case:
"It follows as a necessary corollary that even though sugar industry was a controlled industry, none of these Acts enacted by the center was in exercise of its jurisdiction under Entry 52 of List I."
200. Whatever observations the Court made on which Mr. Dwivedi placed strong reliance, therefore, cannot be made use of indicating the ambit and contents of the expression "industry" under Entry 52 of List I. When the Court observed that the terms "industry" which would be capable of comprising three different aspects: (i) raw materials which are an integral part of the industrial process, (ii) the process of manufacture or production and (iii) the distribution of the products of the industry, and held that raw materials should be goods which would be comprised of Entry 27 of List II and the process of manufacture or production would be comprised in Entry 24 of List II, except where the industry was a controlled industry when it would fall under Entry 52 of List I, the Court was obviously not examining the contents of the expression "industry" under Entry 52 of List I and that is why the Court observed that the legislation which was enacted by the center in regard to sugar and sugarcane could fall within Entry 52 of List I. When the legislation in question that was under consideration was held not to be legislation under Entry 52 of List I, the question of applying the ratio in the case of Tikaramji, in the context of Parliament's power to make a law under Entry 52 of List I and the content and scope of such law or the scope and content of the expression "industry" under Entry 52 of List I cannot have any application and consequently, on the basis of the judgment of this Court in Tikaramji, it cannot be contended that the expression "industry" in Entry 52 of List I must have a restricted meaning. It is further apparent from the conclusion of the Court in that case when it refused to import the pith and substance argument, holding that the same cannot be imported for the simple reasons that both the center as well as the State Legislatures were operating in the concurrent field and, therefore, there was no question of any trespass upon the exclusive jurisdiction vested in the center under Entry 52 of List I. In other words in Tikaramji, neither this Court was called upon to examine the content of the expression "industry" under Entry 52 of List I nor the relevant Central law which was under consideration had been enacted with reference to power under Entry 52 of List I. This being the position, we do not find much force in the submission of Mr. Dwivedi that the conclusion recorded by the majority view in ITC case is vitiated, as it had not noticed observations of the Constitution Bench decision in Tikaramji. In our opinion, it would be wholly inappropriate for this Court to apply the observations made in Tikaramji's case with regard to raw materials of "industry". The Court in Tikaramji's case having not been called upon to determine the question whether the expression "industry" in Entry 52 of List I should be given a restricted meaning at all is contended by Mr. Dwivedi, it would be wholly inappropriate to import the observations in Tikaramji for construing the ambit and content of the subject head of legislation "industry" under Entry 52 of List I. Since the Court was examining the provisions of Industries (Development and Regulation) Act, which regulated the manufacturing process until Section 18-G was brought in amendment in the year 1953 and the Industries (Development and Regulation) Act did not purport to regulate the trade and commerce in the raw materials namely sugarcane and the Court n fact was scrutinizing whether the State Act enacted by the State Legislature could be held to be repugnant to the Central Legislators it found that there exits no repugnancy and the two Acts cover two different fields and would co-exists. In this view of the mater any observations or conclusion of the Court in Tikaramji will be of no assistance to us arriving at a decision as to whether the term "industry" in Entry 52 of List I would have a restricted meaning or would have a wide meaning, which is the normal interpretation of every entry in the respective lists. In Calcutta Gas case, no doubt Tikaramji, had been followed and the Court was examining the two competing entries in list II itself of the Seventh Schedule of the Constitution namely Entry 24 and 25. While Entry 24 of List II is "industry" Entry 25 is 'Gas and Gas works' and the question therefore was whether law made by the State legislature on the subject head 'Gas and gas works' would prevail over a law made by the State legislature over the subject "industry" and the Court held that ;Gas works being a special subject head, law made thereunder would prevail over any law made under the general head "industries". It may be observed that in the Calcutta Gas case (1962 Supp. S.C.R.1) at page 17, it has been held "It is not necessary in this case to attempt to define the expression "industry" precisely or to state exhaustively all its ingredients." In view of the aforesaid observations, we fail to understand how this decision can be pressed into service for ascertaining the true import and content of the expression "industry' which is the subject head under consideration in the case in hand. Coming to the decision of this Court in
201. It is no doubt true that in
The two other decisions which require to be noticed by us are the case of
"It is true the Silk Board Act purports to control the raw silk industry in the territory of India. But, as pointed out by the High Court inn the light of the earlier decisions of this Court therein referred to, the control of the industry vested in Parliament was only restricted to the aspect of production and manufacture of silk yarn or silk. It did not obviously take in the earlier stages of the industry, namely, the supply of raw materials."
202. According to Mr. Dwivedi this decision lends support to his contention that the Industry in Entry 52 of List I will have to be given a restricted meaning, and as such, it would not cover either the growing of tobacco or dealing with sale and purchase of raw tobacco. As has been held by us earlier, the power of the State Legislature gets denuded to the extent the Central Legislation occupies the filed in respect of the controlled industry, the control of which has been taken over by the Parliament on a declaration being made. If after taking over the control of the industry in exercise of its legislative competence under Entry 52 of List I, the Parliament while making a law did no make any provision in relation to the supply of raw material, then merely because the control of the industry has been taken over, the State's power to make legislation in relation to the supply of raw-material would not get denuded. But that does not mean that the Parliament cannot make any law in relation to any other aspect other than the aspect of production and manufacture of the industry. In other words, the contention of Mr. Dwivedi that the Parliament's competence to make any law in respect of the legislative head 'industry' in Entry 52 of List I would entitle the Parliament to make a law only with respect to the production and manufacture and not any earlier stage cannot be accepted to be correct, and the aforesaid decision of this Court cannot be held to have laid down the law in that way. So far as Belsund Sugar Company's case is concerned, the question for confederation was, whether the provisions of the Bihar Agricultural Produce Markets Act would at all be applicable for levy of market fee in respect of sale and purchase of sugar cane, in view of the special provisions contained in the Bihar Sugar cane Regulation of Supply and Purchase Act, 1981. The Market Committee act was also a State Legislation purported to have been enacted under Entries 26, 27 and 28 of List II. The Sugar cane Regulation of Supply and Purchase Act purported to be a legislation enacted in Entry 33 of List III. The Court held that in view of the special Act dealing with sale and purchase of sugar cane the general Act, namely, the Market Committee Act will have no application at all, and therefore, the levy of market fee by the Market Committee was held to be invalid. On examining different provisions of the two Acts the Court also held that there consists direct conflict between the two Acts and that conflict could be avoided only if it is held that the Market Act being a general Act covering all types of the agricultural produce and the Sugar Cane Act, which also deals with an agricultural produce like sugar, being a special enactment laying down an independent exclusive machinery for regulating sale, purchase ad storage of such a commodity under a special Act, then the special Act would prevail over the general Act for that commodity and by necessary implication will take the said commodity out of the sweep of the general Act. This decision, in our considered opinion is not an authority for the proposition that the expression 'industry' in Entry 52 of List I should be given a restricted meaning, as contended by Mr. Dwivedi. In that case also the extreme contention that there exists possibility of issuance of control order by the Central Government would denude the State Legislature of its authority to make a law in respect of any matter coming under any of the Entries in List II was not accepted. But at the same time it is difficult for us to construe the aforesaid decision of having laid down a ratio that in dealing with a central Legislating in relation to a controlled industry, the control of which has been taken over by a declaration made by law, enacted by Parliament would not clothe the Central Legislature to make any law other than production or manufacture of the industry in question. Belsund Sugar (supra) by no stretch of imagination can be construed to have even remotely held that eh word 'industry' ought to receive a restricted meaning. The said decision, therefore does not support the contention of Mr. Dwivedi, appearing for the State of Bihar as well as for the State of Karnataka. Mr. Shanti Bhushan, learned senior counsel, no doubt argued with vehemence that the principle enunciated in
203. Mr. Dwivedi placed reliance on the Full Bench decision of Allahabad High Court in SIEL's case (supra), but in view of our conclusions already arrived at, the aforesaid Full Bench decision must be held not to have been correctly decided. It is also difficult for us to accept the submission of Dr. Singhvi, learned senior counsel appearing for the Market Committee of Monghyr, that if the subject head of legislation in List II is not subject to the corresponding Entry in List I then the power of State Legislature to legislate with regard to that matter is paramount and supreme, and therefore, the Market Committee Act being relatable to Entries 14 and 28 of List II, which are not subject to any of the Entries of List I, the Market Committee act must be allowed to prevail. In out considered opinion, the aforesaid approach to consider the validity of a law made by the Parliament or a law made by the State legislature is not a correct approach. The Entries merely being the subject head of the legislation and the power to make law having emanated from Article 246, if a particular law made by Parliament comes within the legislative competence of the Parliament with reference to any of the Entries in List I then the State legislature would not have the competence to make law with respect to that subject with reference to some other Entries in List II. It is of course true, that Courts while examining the competing legislations would make an attempt and see whether both the legislations could operate, and that question we will deal later. But the contention that Entries 14 and 28 of List II not being subject to any Entry under List I and the Market Committee Act being relatable to Entries 14 and 28 of List II the same should be allowed to operate notwithstanding the wide meaning to the word 'industry' in Entry 52 of List I and the Parliament has already taken over the control of the industry and has made law in that respect cannot be sustained. In the context of our conclusions on the question of he import and extent of expression 'industry' in Entry 52 of List I it is not necessary to examine the other contentions of Dr. Singhvi that whether the theory of occupied field is relevant only in case of law made with reference to Entries in List III. We are also not persuaded to agree with the submission of Dr. Singhvi that the Market Committee Act can still be operative and the Market fee could be levied by the Market Committee under the State Act for services provided by it on the principle of quid pro quo even if the Court comes to the conclusion that the Tobacco Board Act is a valid piece of legislation enacted by the Parliament and that Act also has made necessary provision of r growing of tobacco as well as purchase and sale of tobacco. We are also unable to sustain the argument of Mr. Sanghi, learned senior counsel appearing for Krishi Mandi in the Madhya Pradesh batch of appeals, that the enquiry in the case should be whether the State legislature had the legislative competence to enact the Market Committee Act under 28 of List II. His other submission on the question that there is no irreconcilable clash between the two Acts and the meaning of Section 31 of Tobacco Board Act will be considered while considering the different provisions of the two Acts. Mr. Ganguli, learned senior counsel appearing for the Tamil Nadu Agricultural Marketing Board also submitted in the same manner as Dr. Singhvi and relied upon Article 246(3) of the Constitution. But in our considered opinion Article 246(1) itself being notwithstanding anything in Clauses 2 and 3 of the said Article the submission of Mr. Ganguli is devoid of any force. The elaborate submissions of Mr. Ganguli in relation to the decisions of this Court in Baij Nath Kedia, M.A. Tulloch, India Cement and Orissa Cement, all of which dealt with mining legislations are not necessary to be dealt with inasmuch as we have not relied upon the principles enunciated in those decisions, even though Mr. Shanti Bhushan pressed those decisions in support of his contention.
204. In the aforesaid premises, we are of the considered opinion that the Tobacco Board Act enacted by the Parliament under Entry 52 of List I is constitutionally valid and all the provisions therein, including the provisions relating to growing of Tobacco and sale and purchase of tobacco are within the legislative competence of the Parliament. We are also further of the opinion that the word 'industry' in Entry 52 of List I cannot be given a restricted meaning, particularly when a conspectus of all the decisions interfering Entry in any of the Lists of the Constitution including he minority view of Mukherjee, J. in ITC case is to the effect that the Entries in the List should be given liberal and generous construction and it is well accepted cardinal rule of interpretation that the words in constitutional document, conferring legislative powers should be construed most liberally and in their widest amplitude.
205. Coming to the second question, it is no doubt true as a matter of principle of construction that in the event there are two competing legislations, one by the Parliament and one by the State, the court would make an endeavour if both the legislations could be allowed to be operated upon. But on examining the provisions of the two Acts, if it is found that the Central legislation and the State legislation come in collision with each, then question of allowing both of them to operate would not arise. In such an event, the Central legislation would prevail, provided the said legislation is otherwise constitutionally valid namely the Parliament had the legislative competence to enact the legislation in question. From the aforesaid stand point, if we examine the different provisions of the Tobacco Board Act, more particularly Sections 3 8 and 32 and the provisions of the Agricultural Produce Markets Act, more particularly Section 4(2) thereof as well as Section 15, which is said to be the heart and soul of the Markets Act in Belsund's case, the conclusion is irresistible that the two Acts come in direct collision with each other and it is difficult to reconcile the provisions of both the Acts. Necessarily, therefore, the Tobacco Board Act having been enacted by the Parliament and making all provisions in relation to the tobacco industry including the provisions for growing of tobacco as well as sale and purchase of raw tobacco, in accordance with the procedure prescribed under the said Act, the provisions of the Agricultural Produce Markets Act, entitling the Market Committee to levy fee for sale and purchase of raw tobacco within the market area will not be operative, so far as the produce 'tobacco' is concerned. In other words, Central Act would prevail and would govern the entire gamut of tobacco industry. It is also important to bear in mind that when parliament decides to take over the control of a particular industry in the interest of the said industry as well as in the national interest, the control should be effective and should be in such a manner that the desired object can be achieved. Necessarily therefore, legislation ought to be made providing control over the growing of tobacco as well as on its sale and purchase, which alone would subserve the very purpose for which the control of the industry has been taken over by the Parliament. In this view of the matter, we hold that the Tobacco Board Act and the Agricultural Produce Markets Act, collide with each other and cannot be allowed to be operated simultaneously. Necessarily, therefore, the Tobacco Board Act would prevail and the Agricultural Produce Markets Act, so far as it relates to levy of fee for sale and purchase of tobacco within the market area must be held to go out of the purview of the said Act.
206. Coming to the third question posed by us in view of the inconsistency and repugnancy between the two Acts, as already stated, it is the Central Act that would prevail and in our opinion, the majority judgment in the ITC case has been correctly decided, though the reasons for the same given by us may be slightly different than the reasons which persuaded the learned Judges to have the conclusion in the ITC case.
207. In view of our conclusion on the three issues, the impugned judgment of the Patna High Court, remitting the matter to the Market Committee for passing a fresh assessment order is set aside and it is held that the sale and purchase of tobacco within the market area of any Market Committee would not be subjected to the provisions of the Bihar Agricultural Produce Markets Act. Civil Appeal No. 6453 of 2001 is accordingly allowed.
208. Civil Appeal No. 3872 of 1990, filed by the Krishi Utpadan Mandi Samiti against the Division Bench Judgment of Allahabad High Court stands dismissed.
209. We also set aside the Full Bench decision of the Allahabad High Court and the appeal filed by the Tobacco Merchant's Association, assailing the legality of the Full Bench decision of the Allahabad High Court is allowed. Similarly, the Judgment of the Division Bench of the High Court of Madras, which follows the majority view of this Court in ITC case, is upheld and the appeals filed by the State of Tamil Nadu as well as the Tamil Nadu Agricultural Marketing Board are dismissed.
210. Civil Writ Petition filed by the Jayalakshmi Tobacco Company under Article 32, registered as Civil Writ Petition No. 8614 of 1982, challenging the validity of the provisions of Karnataka Agricultural Produce Marketing (Regulation) Act, stands disposed of and the said Act, enacted by the State legislation of Karnataka must be held to be invalid, so far as the provisions authorising levy of fee on sale and purchase of tobacco within the market area is concerned.
211. The twelve appeals filed against the Judgment of Madhya Pradesh High Court are dismissed and the Judgment of the Division Bench of Madhya Pradesh High Court is upheld.
212. In different appeals arising out of the judgment of the Madhya Pradesh High Court, interim stay had been granted by different Benches on 27.4.88, 2.5.88, 17.8.88 and 5.10.88. By these orders, the Court had stayed the operation of the judgment, without any condition. All these orders stood modified by order dated 27.2.89, when the Court passed the following order:
".....There will no recovery of arrears due. There will also be no stay of the refund collected if any. The amount collected may be refunded within four months from this date. In future there will be no stay of recovery of market-fee found due and payable from the date of the High Court's judgment. It is, however, made clear that if the parties have filed objection against the levy, the objection shall be disposed of in accordance with law before the recovery is restored. In case, ultimately if the respondents succeed then the amount collected will be refunded by the appellants along with the interest @ 12% per annum. In case the appellants succeed then the respondents undertaken to pay the arrears of market-fee along with the interest @ 12% per annum from the date of the payment."
213. Now that the judgment of the High Court is being upheld and the appeals are being dismissed, the question for consideration would be as to whether the said order of stay dated 27.2.1989 should be modified or the order should be allowed to operate and the collected market-fee would be (sic) to be refunded with interest @ 12% per annum in accordance with the order dated 27.2.1989. Having regard to the facts and circumstances and the resources of the Market Committee, we think it appropriate to modify the said order dated 27.2.1989 and direct that the Market-fee already collected from the sale and purchase of tobacco within the market area by the Mandi Samiti, need not be refunded. But at the same time, the Market Committee will not be entitled to collect the same, even for any past period, if the same has not already been collected.
