Gujarat High Court
Premium Pulses Products vs Union Of India on 19 December, 2018
Author: Harsha Devani
Bench: Harsha Devani, A. P. Thaker
C/SCA/16765/2018 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 16765 of 2018
With
R/SPECIAL CIVIL APPLICATION NO. 17290 of 2018
With
R/SPECIAL CIVIL APPLICATION NO. 17573 of 2018
With
R/SPECIAL CIVIL APPLICATION NO. 17664 of 2018
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PREMIUM PULSES PRODUCTS
Versus
UNION OF INDIA
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Appearance:
MR PRASHANT MANKAD(2189) for the PETITIONER(s) No. 1
DS AFF.NOT FILED (N)(11) for the RESPONDENT(s) No. 1,2,3
MR. PARTH H BHATT(6381) for the RESPONDENT(s) No. 4
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CORAM: HONOURABLE MS.JUSTICE HARSHA DEVANI
and
HONOURABLE DR.JUSTICE A. P. THAKER
Date : 19/12/2018
COMMON ORAL ORDER
(PER : HONOURABLE MS.JUSTICE HARSHA DEVANI)
1. In all these petitions, common questions of facts and law arise, and hence, the same were taken up for hearing together and are decided by this common order.
2. In Special Civil Applications No.16765, 17290 and 17573 of 2018, the petitioners have challenged Notification No.19/2015-2020 dated 5.8.2017 and seek a direction to the respondents to allow the petitioners to import the goods in terms of the contract at Annexure-A to the respective petitions. In Special Civil Application No.17664 of 2018, the petitioner has challenged Notification No.19/2015-2020 dated Page 1 of 23 C/SCA/16765/2018 ORDER 5.8.2017, Notification No.22/2015-2020 dated 21.8.2017 and Notification No.6/2015-2020 dated 4.5.2018 issued by the second respondent Director General of Foreign Trade as well as Trade Notice No.19/2018 dated 25.10.2017 and Trade Notice No.6/2018-19 dated 11.5.2017 and seek permission to clear 15000 MT of Green Moong (3,00,000 total bags) imported from Gold Key Food Stuff Trading LIC Deira, Dubai, UAE in terms of Proforma Invoice dated 9.4.2018 being No.305/2018 and also seek permission to clear 40,000 MT Yellow Peas (total 800160 bags) and 18,500 MT Pigeon Peas (total 3,70,000 bags) imported from Shafaf Foodstuff Trading F.Z.E. Abu Dhabhi in terms of Sales Contract No.YP/18-19/110 dated 11.4.2018 and Sales Contract No.YP/18-19/109 dated 10.4.2018.
3. Since the facts in all these petitions are more or less similar, reference is made to the facts as appearing in Special Civil Application No.17573 of 2018.
4. The petitioners have entered into contracts for supply of the items mentioned for such contracts being Pigeon Peas (Toor Dal), etc. By Notification No.19/2015-2020 dated 5th August, 2017, the import export policy of items of Chapter 7 of the ITC(HS)2017, Schedule -I came to be amended and the import of items mentioned in column five thereof, which under the existing policy was free, came to be restricted under the revised import policy. Because of the sudden change in the policy decision by the Government, many traders whose businesses are based upon the import of agricultural items in view of the huge demand of such items in India, have been affected. It is the case of the petitioners that production of the agricultural items for which the petitioners have entered into Page 2 of 23 C/SCA/16765/2018 ORDER contracts with the overseas companies in India is not sufficient to meet with the demand of the consumers in India and, therefore, traders like the petitioners have to purchase such goods from overseas suppliers. Being seriously affected by the sudden change in the import policy, the petitioners would have to bear huge financial loss and the effect thereof would be to such extent that the staff recruited by the petitioners may also have to suffer, unless the restrictions imposed by the impugned notification are relaxed.
5. It appears that by Notifications No.4/2015-2020 and 5/2015-2020 dated 25.4.2018, the import export policy came to be amended and import of the items mentioned therein, which under the existing policy was "free" came to be "restricted" under the revised policy. Such notifications were challenged before the Madras High Court by way of writ petitions being Writ Petitions No.15921 to 15924 of 2018 by different traders contending that in terms of sections 3, 5 and 6 of the Foreign Trade (Development and Regulation) Act, 1992 (hereinafter referred to as "the Act"), certain powers of the Central Government can be exercised only by the Central Government and cannot be delegated to the Director General of Foreign Trade or any other officer subordinate to him. It was the case of the petitioners therein that it is only the Central Government which can make a provision relating to the import and export with primary focus on the development and regulation of foreign trade. The Madras High Court placing reliance upon the decision of the Supreme Court in the case of Director General of Foreign Trade v. Kanak Exports, (2015) 326 ELT 26 (SC), by an ex parte order dated 28.06.2018, accepted the contentions raised in those petitions Page 3 of 23 C/SCA/16765/2018 ORDER and stayed the above referred notifications by holding that the DGFT does not have the jurisdiction to issue such notifications affecting the Import Export policy. It is further the case of the petitioners that in view of the observations made in the above order, some of the notifications converting the imported items from "free" to "restricted" have been withdrawn by the DGFT by issuing Notification No.31/15-2020 dated 29.8.2018.
6. It is the case of the petitioners that the impugned Notification No.19/2015-2020 dated 5.8.2017 (Annexure-C to the petition) has also been issued by the second respondent - Director General of Foreign Trade converting certain items from "free" to "restricted", who has no authority to issue such notification, and that in case such notification is not withdrawn, the petitioners would have to face huge financial losses. It is in the aforesaid background that the petitioners have filed the present petitions seeking the reliefs noted hereinabove.
7. Mr. Prashant Mankad, Mr. Ameer Kadri, and Mr. Vicky Mehta, learned advocates for the respective petitioners invited the attention of the court to the impugned notifications to point out that the same have been issued by the Director General of Foreign Trade. Reference was made to the provisions of section 6 of the Act to point out that sub-section (3) thereof provides that the Central Government may by Order published in the Official Gazette, direct that any power exercisable by it under the Act (other than the powers under sections 3, 5, 15, 16 and 19) may also be exercised, in such cases and subject to such conditions, by the Director General or such other officer subordinate to the Director General, as may be specified in the Order. It was submitted that, therefore, Page 4 of 23 C/SCA/16765/2018 ORDER sub-section (3) of section 6 specifically excludes delegation of power under sections 3, 5, 15, 16 and 19 to the Director General of Foreign Trade. Referring to the impugned notification, it was pointed out that such notification has been issued in exercise of powers under section 3 of the Act read with paragraphs 1.02 and 2.01 of the Foreign Trade Policy and has been issued by the Director General of Foreign Trade. It was submitted that in the light of the provisions of sub-section (3) of section 6 of the Act, the powers under section 3 of the Act cannot be delegated to the Director General of Foreign Trade, and hence, the impugned notification issued by the Director General of Foreign Trade is without any authority as the same is ultra vires the provisions of section 6 of the Act.
7.1 In support of such submission, the learned advocates placed reliance upon the interim order passed by the Madras High Court in Writ Petition No.19521 to 19524 of 2018 and allied matters wherein the court has placed reliance upon the decision of the Supreme Court in the case of Director General of Foreign Trade v. Kanak Exports (supra) wherein it has been held that sections 3, 5 and 6 of the Foreign Trade (Development and Regulation) Act have given certain powers relating to imports and exports with primary focus on the development and regulation of foreign trade only to the Central Government, such powers have to be exercised by the Central Government only and cannot be delegated to the DGFT, and has accordingly expressed the view that the impugned notifications issued by the DGFT are without jurisdiction and has stayed such notifications. It was submitted that the above decision of the Madras High Court would be squarely applicable to the facts of the present case inasmuch Page 5 of 23 C/SCA/16765/2018 ORDER as the impugned notifications have been issued by the Director General of Foreign Trade and are, therefore, illegal and without authority of law and hence, the impugned notifications deserve to be stayed.
7.2 Next it was submitted that the object of the statute is to increase the imports in the larger public interest and the Government is supposed to take such steps which would increase the imports. According to the learned advocates, the Union of India is putting the businesses of the petitioners in a precarious position by first permitting free import of items in which the petitioners deal with, and thereafter suddenly issuing notifications restricting such items causing serious prejudice to the petitioners and similarly situated person. It was further submitted that in case of certain item, the notification restricting import of certain items came to be issued and was thereafter withdrawn for a very short period of about twenty four hours. It is alleged that such window of twenty four hours has been provided to facilitate some big import players to import their goods and thereafter, restrictions have been re-imposed by reissuing the very notification. Two such companies are Agro Processing India Private Limited and Shah Nanji Nagji Export Private Limited. It was submitted that thus, the respondents are treating import agencies in a discriminatory manner for the reasons best known to them which cannot be stated to be bona fide. It was, accordingly, urged that the petitions deserve consideration and interim relief be granted by staying the impugned notification in the interest of justice.
8. Opposing the petitions, Mr. Parth Bhatt, learned senior Page 6 of 23 C/SCA/16765/2018 ORDER standing counsel for the respondents, invited the attention of the court to the impugned notification to point out that the notification has been issued by the Central Government in exercise of powers under section 3 of the Act and that such notification has merely been authenticated by the Director General of Foreign Trade in accordance with the rules of business. Reference was made to the order dated 24.3.1993 of the Government of India, Ministry of Commerce granting status of ex officio Additional Secretary to the Government of India to the Director General of Foreign Trade so as to enable him to authenticate Orders/Notifications/Other Instruments in the name of the Central Government under the provisions of the Foreign Trade (Development and Regulation) Act, 1992. The attention of the court was further invited to the notification dated 16.2.2002 issued by the Ministry of Home Affairs in exercise of powers conferred by clause (2) of Article 77 of the Constitution and in supersession of the Authentication (Orders and other Instruments) Rules, 1958 whereby it is provided that all orders and other instruments made and executed in the name of the President shall be authenticated by the persons named therein. Reference was made to item No.12 thereof which reads thus:
"in the case of orders and other instruments relating to the Directorate General of Foreign Trade, by the Director General of Foreign Trade, or the Additional Director General of Foreign Trade, or the Export Commissioner or Joint Director General of Foreign Trade;"
8.1 It was pointed out that, therefore, the impugned notification has merely been authenticated by the Director Page 7 of 23 C/SCA/16765/2018 ORDER General of Foreign Trade whereas the same has been issued by the Central Government in exercise of powers under section 3 of the Act, and hence, the contention that the same has been issued by the DGFT in exercise of delegated powers is misconceived in fact and law.
8.2 It was submitted that article 77 of the Constitution of India provides for authentication of orders and other instruments made and executed in the name of the President in such manner as may be specified in the rules. Accordingly, the Government of India, Authentication (Orders and other Instruments) Rules, 2002 (hereinafter referred to as the "Authentication Rules") have been framed in exercise of the powers conferred by clause (2) of article 77 of the Constitution whereby the DGFT is appointed as a signing/authenticating authority on behalf of the Central Government in case of orders and other instruments relating to the Directorate General of Foreign Trade. It was submitted that the decision to issue the impugned notification has been taken by the Central Government and the DGFT has only authenticated the notification on behalf of the Central Government in accordance with the Authentication Rules. It was submitted that, therefore, the main fundamental basis on which the impugned notification has been challenged being misconceived, the petitions are devoid of any merit and deserve to be dismissed.
9. In rejoinder, the learned advocates for the petitioners submitted that the DGFT is an independent authority appointed under section 6 of the Foreign Trade (Development and Regulation) Act. Sub-section (3) of section 6 clearly stipulates that the DGFT cannot exercise powers under Page 8 of 23 C/SCA/16765/2018 ORDER sections 3, 5, 15, 16 and 19 of the Act. Consequently, the power to issue notification under these sections is vested only in the Central Government. It was submitted that when powers under sections 3, 5, 15, 16 and 19 of the Act cannot be delegated to the DGFT, as a necessary corollary it follows that notifications issued in exercise of such powers also cannot be authenticated by the DGFT. It was submitted that authentication of notifications issued in exercise of powers under sections 3, 5, 15, 16 and 19 of the Act by the DGFT would be in violation of the provisions of sub-section (3) of section 6 of the Act. It was submitted that the order dated 24.3.1993 relied upon on behalf of the respondents clearly states that the DGFT is enabled to authenticate Orders/Notifications/Other Instruments in the name of the Central Government under the provisions of the Foreign Trade (Development and Regulation) Act, 1992. Thus, even the authentication powers i.e. to authenticate Orders/Notifications are required to be exercised within the purview of the Act.
9.1 It was contended that the DGFT is a statutory authority appointed under the provisions of the Foreign Trade (Development and Regulation) Act and is not by itself the Central Government and therefore, it is not permissible for him to authenticate orders passed in exercise of powers vested in the Central Government. It was also contended that the Authentication Rules 2002 authorise the DGFT to authenticate Orders/notifications which are administrative in nature. It was contended that the impugned notification directly amends the Exim policy which is not in the nature of an administrative decision, and hence, the DGFT has no power to authenticate the same. In support of such submission, reliance was placed Page 9 of 23 C/SCA/16765/2018 ORDER upon the decision of the Supreme Court in the case of Shell Exports (Kandla) v. Union of India, (2016) 12 SCC 641.
9.2 Reference was made to section 19 of the Act which bears the heading, "Power to make rules" and more particularly to sub-section (3) thereof which provides that every rule and every order made by the Central Government under the Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or the Order or both Houses agree that the rule or the Order should not be made, the rule or the Order as the case may be, shall thereafter have effect only in such modified form or be of no effect, as the case may be, so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or the Order. It was submitted that the provisions of sub-section (3) of section 19 have not been complied with insofar as the Notification dated 16.2.2002 and the Order dated 24.3.1993 are concerned and, hence, neither of the documents would have any legal effect.
9.3 It was, accordingly, urged that the contention that the DGFT has merely authenticated the order does not merit acceptance and that the petitions deserve consideration and interim relief as prayed for deserves to be granted.
10. The Notification No.19/2015-2020 dated 5.8.2017 as well Page 10 of 23 C/SCA/16765/2018 ORDER as other notifications have been called in question mainly on the ground that the Director General of Foreign Trade has no authority to exercise powers under section 3 of the Act inasmuch as such power is vested in the Central Government; while sub-section (3) of section 6 of the Act provides that the Central Government may delegate powers exercisable under the Act to the DGFT, sections 3, 5, 15, 16 and 19 have been specifically excluded therefrom, which means that such powers cannot be delegated. In support of such submission, reliance has been placed upon the decision of the Supreme Court in Director General of Foreign Trade v. Kanak Exports (supra) wherein the court has held that for the purpose of carrying out the objectives of the Act which includes implementation of the policy, the Central Government is authorized to appoint DGFT as per section 6 of the Act. The main functions of the DGFT are advising the Central Government and formulation of the policy and he is also responsible for carrying out the said policy. Sub-section (3) of section 6 of the Act provides that the Central Government may delegate its powers exercisable under the Act; however, the powers under sections 3, 5, 15, 16 and 19 are specifically excluded which means that these powers cannot be delegated. Thus, power to announce the policy and to amend the same remains with the Central Government. Likewise, the power of make rules under section 19 which vests with the Central Government cannot be delegated. The court, accordingly, held that the public notice dated 28.1.2004 issued by the DGFT whereby it excluded four items was ultra vires.
11. While the contention that the Central Government has no powers under sub-section (3) of section 6 of the Act to Page 11 of 23 C/SCA/16765/2018 ORDER delegate powers under sections 3, 5, 15, 16 and 19 to the DGFT is concerned, there can be no quarrel with the same, inasmuch as, the section itself is clear and unambiguous and provides that powers other than the powers under sections 3, 5, 15, 16 and 19 can be delegated to the Director General. Evidently, therefore, the Director General of Foreign Trade cannot be delegated the powers under the aforesaid sections. It is in this backdrop that the validity of the impugned notification is required to be examined.
12. A perusal of the impugned notification reveals that by virtue of such notification the Central Government, in exercise of powers conferred by section 3 of the Act read with paragraphs 1.02 and 2.01 of the Act as amended from time to time, has amended the import policy of items of Chapter 7 of ITC(HS)2017, Schedule-1 (Import Policy) as provided thereunder. On a plain reading of the notification, it is clear that powers under section 3 of the Act have been exercised by the Central Government, and it is the Central Government which has amended the import policy. At the same time it can also be seen that such amendment bears the signature of the Director General of Foreign Trade, which is the root cause of the dispute raised in these petitions. On behalf of the respondents it has been contended that the import policy has been amended by the Central Government in exercise of powers under section 3 of the Act and that the DGFT has only authenticated the same in accordance with the Authentication Rules. In support of such submission, a notification dated 16th February, 2002 of the Ministry of Home Affairs whereby an order made by the President on 16.01.2002 has been published for general information has been placed on record, Page 12 of 23 C/SCA/16765/2018 ORDER whereby in exercise of powers conferred under clause (2) of Article 77 of the Constitution, rules called the Authentication (Orders and other Instruments) Rules, 2002 have been framed. Rule 2 thereof provides that all orders and other instruments made and authenticated in the name of the President shall be authenticated, and specifies the persons who may authenticate the same. Item No.12 therein provides that in case of orders and other instruments relating to the Directorate General of Foreign Trade, by the Director General of Foreign Trade, or the Additional Director General of Foreign Trade, or the Export Commissioner or Joint Director General of Foreign Trade. Thus, the Authentication Rules specifically empower the Director General of Foreign Trade to authenticate instruments relating to the Directorate General of Foreign Trade. A perusal of the impugned notification reveals that the same has been issued by the Government of India, Ministry of Commerce and Industries, Department of Commerce, Directorate General of Foreign Trade. Thus, by the impugned notification the amendment made by the Central Government in the import policy in exercise of powers under section 3 of the Act has been notified which relates to the Directorate General of Foreign Trade, accordingly, the same is authenticated by the Director General of Foreign Trade. Therefore, it is crystal clear that the DGFT has not exercised powers under section 3 of the Act but has merely authenticated an order which relates to the Directorate General of Foreign Trade in accordance with the Authentication Rules. The contention that the impugned notification has been issued by the DGFT in exercise of powers under section 3 of the Act, and is, therefore, ultra vires sub-section (3) of section 6 of the Act, does not merit acceptance.
Page 13 of 23 C/SCA/16765/2018 ORDER13. On behalf of the petitioners, it has been contended that the Authentication rules merely permit authentication of administrative orders and not executive orders. In the opinion of this court, such submission deserves to be stated only to be rejected. Article 77 of the Constitution provides for the "Conduct of business of the Government of India". Sub-clause (1) thereof provides that all executive action of the Government of India shall be expressed to be taken in the name of the President. Sub-clause (2) thereof provides that, Orders and other instruments made and executed in the name of the President shall be authenticated in such manner as may be specified in rules to be made by the President, and the validity of an order or instrument which is so authenticated shall not be called in question on the ground that it is not an order or instrument made or executed by the President. The notification dated 16.2.2002 publishes the Authentication Rules which have been framed in exercise of powers conferred by clause (2) of article 77 of the Constitution, which provides for execution of orders and other instruments made in the name of the President. The Authentication Rules do not envisage the authentication of only administrative orders but of all executive orders of the Government of India. The contention that the authentication by the DGFT can be only in respect of administrative orders, is, therefore, not in consonance with the provisions of clause (2) of article 77 of the Constitution.
14. Insofar as reliance placed upon the interim order passed by the Madras High Court referred to hereinabove whereby the impugned notification has been stayed is concerned, it appears Page 14 of 23 C/SCA/16765/2018 ORDER that since the order was passed ex parte, the Order made by the President in exercise of powers conferred under clause (2) of the Constitution of India whereby powers of authentication of Orders and other instruments have been vested in the DGFT has not been brought to the notice of that court and the court has proceeded on the footing that it is the DGFT which has exercised powers under section 3 of the Act. Hence, the said interim order does not come to the aid of the petitioners.
15. Another contention raised on behalf of the petitioner is that the provisions of sub-section (3) of section 19 of the Act which provides for laying the every rule and every order made by the Central Government under the Act, before each House of Parliament, have not been complied with. Since such contention which is a factual one, was raised only at the stage of arguments, it was not possible for the learned counsel for the respondents to state one way or the other as to whether the same has been complied with and since there was urgency on the part of the petitioners, the court did not deem it fit to adjourn the matter for verification of this aspect. In this regard reference may also be made to illustration (e) of section 114 of the Indian Evidence Act which provides that the court may presume that judicial and official acts have been regularly performed. It may also be apposite to refer to the decision of the Supreme Court in Atlas Cycle Industries Ltd. v. State of Haryana, (1979) 2 SCC 196, wherein the court has dealt with the requirement of laying the delegated legislation made by the subordinate law making authorities or subordinate executive instrumentalities before both the Houses of Parliament. The relevant portion of the decision is extracted hereunder:
Page 15 of 23 C/SCA/16765/2018 ORDER21. Now, the policy and object underlying the provisions relating to laying the delegated legislation made by the subordinate law making authorities or orders passed by subordinate executive instrumentalities before both Houses of Parliament being to keep supervision and control over the aforesaid authorities and instrumentalities, the "laying clauses" assume different forms depending on the degree of control which the Legislature may like to exercise. As evident from the observations made at pp. 305 to 307 of the 7th Edn. of Craies on Statute Law and noticed with approval in Hukam Chand v. Union of India, (1972) 2 SCC 601, there are three kinds of laying which are generally used by the Legislature. These three kinds of laying are described and dealt with in Craies on Statute Law as under:
"(i) Laying without further procedure,
(ii) Laying subject to negative resolution,
(iii) Laying subject to affirmative resolution.
(i) Simple laying.--The most obvious example is in Section 10(2) of the 1946 Act. In earlier days, before the idea of laying in draft had been introduced, there was a provision for laying rules etc. for a period during which time they were not in operation and could be thrown out without ever having come into operation (compare Merchant Shipping Act, 1894, Section 417; Inebriates Act, 1898, Section 21) but this is not used now.
(ii) Negative resolution.--Instruments so laid have immediate operative effect but are subject to annulment within forty days without prejudice to a new instrument being made. Thephraseology generally used is "subject to annulment in pursuance of a resolution of either House of Parliament". This is by far the commonest form of laying. It acts mostly as a deterrent and sometimes forces a Minister (in Sir Cecil Carr's phrase) to "buy off opposition" by promising some modification.
(iii) Affirmative resolution.--The phraseology here is normally no order shall be made unless a draft has been laid before Parliament and has been approved by a resolution of each House of Parliament. Normally, no time limit is fixed for obtaining approval -- none is necessary because the Government will naturally take the earliest opportunity of bringing it up for approval -- but Section 16(3) of the Housing (Financial and Miscellaneous Page 16 of 23 C/SCA/16765/2018 ORDER Provisions) Act, 1946 did impose a limit of forty days. An old form (not much used nowadays) provided for an order to be made but not to become operative until a resolution of both Houses of Parliament had been obtained. This form was used in Section 10(4) of the Road Traffic Act, 1930 [cf. Road Traffic Act, 1960, Section 19(3)] .... The affirmative resolution procedure necessitates a debate in every case. This means that one object of delegation of legislation (viz. saving the time of Parliament) is to some extent defeated. The procedure therefore is sparingly used and is more or less reserved to cases where the order almost amounts to an Act, by effecting changes which approximate to true legislation (e.g. where the order is the meat of the matter, the enabling Act merely outlining the general purpose) or where the order replaces local Acts or provisional orders and, most important of all, where the spending, etc. of public money is affected.
Sometimes where speedy or secret action is required (e.g. the imposition of import duties), the order is laid with immediate operation but has to be confirmed within a certain period [cf. Import Duties Act, 1958, Section 13(4)]. This process of acting first and getting approval after has also been adopted in the Emergency Powers Act, 1920 under which a state of emergency can be proclaimed and regulations made. The proclamation must be immediately communicated to Parliament and does not have effect for longer than a month; but it can be replaced by another proclamation. Any regulations made under the proclamation are to be laid before Parliament immediately and do not continue in force after the expiration of seven days from the time when they are so laid unless a resolution is passed by both Houses providing for their continuance."
22. Now at p. 317 of the aforesaid Edition of Craies on Statute Law, the questions whether the direction to lay the rules before Parliament is mandatory or merely directory and whether laying is a condition precedent to their operation or may be neglected without prejudice to the effect of the rules are answered by saying that "each case must depend on its own circumstances or the wording of the statute under which the rules are made". In the instant case, it would be noticed that sub- section Page 17 of 23 C/SCA/16765/2018 ORDER (6) of Section 3 of the Act merely provides that every order made under Section 3 by the Central Government or by any officer or authority of the Central Government shall be laid before both Houses of Parliament, as soon as may be, after it is made. It does not provide that it shall be subject to the negative or the affirmative resolution by either House of Parliament. It also does not provide that it shall be open to the Parliament to approve or disapprove the order made under Section 3 of the Act. It does not even say that it shall be subject to any modification which either House of Parliament may in its wisdom think it necessary to provide. It does not even specify the period for which the order is to be laid before both Houses of Parliament nor does it provide any penalty for non-observance of or non-compliance with the direction as to the laying of the order before both Houses of Parliament. It would also be noticed that the requirement as to the laying of the order before both Houses of Parliament is not a condition precedent but subsequent to the making of the order. In other words, there is no prohibition to the making of the orders without the approval of both Houses of Parliament. In these circumstances, we are clearly of the view that the requirement as to laying contained in sub-section (6) of Section 3 of the Act falls within the first category i.e. "simple laying" and is directory not mandatory. We are fortified in this view by a catena of decisions, both English and Indian. In Bailey v. Williamson, 1873 LR VII QB 118, where by Section 9 of the Parks Regulations Act, 1872 passed on June 27, 1872 "to protect the royal parks from injury, and to protect the public in the enjoyment of those royal parks and other royal possessions for the purpose of innocent recreation and exercise" it was provided that any rules made in pursuance of the first schedule to the Act shall be forthwith laid before both Houses of Parliament, if Parliament be sitting, or if not, then within three weeks after the beginning of the then next ensuing session of Parliament; and if any such rules shall be disapproved by either House of Parliament within one month of the laying, such rules, or such parts thereof as shall be disapproved shall not be enforced and rules for Hyde Park were made and published on September 30, 1872 when Parliament was not sitting and in November 18, 1872, the appellant was convicted under Section 4 of the Act for that he did unlawfully act in contravention of Regulation 8 contained in the first Page 18 of 23 C/SCA/16765/2018 ORDER Schedule annexed thereto by delivering a public address not in accordance with the rules of the said Park but contrary to the Statute, and it was inter alia contended on his behalf that in the absence of distinct words in the statute stating that the rules would be operative in the interval from the time they were made to the time when Parliament should meet next or if Parliament was sitting then during the month during which Parliament had an opportunity of expressing its opinion upon them, no rule made as supplementing the schedule could be operative so as to render a person liable to be convicted for infraction thereof unless the same had been laid before the Parliament, it was held overruling the contention that the rules became effective from the time they were made and it could not be the intention of the Legislature that the laying of the rules before Parliament should be made a condition precedent to their acquiring validity and that they should not take effect until they are laid before and approved by Parliament. If the Legislature had intended the same thing as in Section 4, that the rules should not take effect until they had the sanction of the Parliament, it would have expressly said so by employing negative language."
"24. In Jan Mohammad Noor Mohammad Bagban v. State of Gujarat, AIR 1966 SC 385, where it was urged by the petitioner that the rules framed by the Provincial Government in 1941 in exercise of the powers conferred on it under Section 26(1) of the Bombay Agricultural Produce Markets Act (22 of 1939) had no legal validity as they were not laid before each of the Houses of the Provincial Legislature at the session thereof next following as provided by sub-section (5) of Section 26 of the Act, this Court rejected the contention and upheld the validity of the said rules. The following observations made in that case by Shah, J. (as he then was) on behalf of the Constitution Bench are opposite:
"The rules under Act 22 of 1939 were framed by the Provincial Government of Bombay in 1941. At that time there was no Legislature in session, the Legislature having been suspended during the emergency arising out of World War II. The session of the Bombay Legislative Assembly was convened for the first time after 1941 on May 20, 1946 and that Page 19 of 23 C/SCA/16765/2018 ORDER session was prorogued on May 24, 1946. The second session of the Bombay Legislative Assembly was convened on July 15, 1946 and that of the Bombay Legislative Council on September 3, 1946 and the rules were placed on the Assembly Table in the second session before the Legislative Assembly on September 2, 1946 and before the Legislative Council on September 13, 1946. Section 26(5) of Bombay Act 22 of 1939 does not prescribe that the roles acquired validity only from the date on which they were placed before the Houses of Legislature. The rules are valid from the date on which they are made under Section 26(1). It is true that the Legislature has prescribed that the rules shall be placed before the Houses of Legislature, but failure to place the rules before the Houses of Legislature does not affect the validity of the rules, merely because they have not been placed before the Houses of the Legislature. Granting that the provisions of sub-section (5) of Section 26 by reason of the failure to place the rules before the Houses of Legislature were violated, we are of the view that sub-section (5) of Section 26 having regard to the purposes for which it is made, and in the context in which it occurs, cannot be regarded as mandatory. (Emphasis supplied.) The rules have been in operation since the year 1941 and by virtue of Section 64 of Gujarat Act 20 of 1964 they continue to remain in operation."
"26. In State v. Karna, 1973 24 RLW 487, where the very question with which we are concerned in the present case cropped up in connection with the Rajasthan Foodgrains (Restrictions on Border Movement) Order, 1959, a bench of Rajasthan High Court said as follows:
"It is important to note that laying the Order before both the Houses of Parliament is not a condition precedent for bringing into force the Order All that sub-section (6) provides is that every Order made under Section 3 of the Essential Commodities Act by the Central Government or by any officer or authority of the Central Government shall be laid before both the Houses of Parliament, as soon as may be, after it is made. It is significant that the Page 20 of 23 C/SCA/16765/2018 ORDER Order is valid and effective from the date it is duly promulgated. Even the limit or period within which it must be placed before the Parliament has not been specified. It is, therefore, not possible to hold that sub-section (6) of Section 3 of the Essential Commodities Act is mandatory. If the Legislature intended that in order to provide an adequate safeguard it was necessary to make the said provision mandatory it could have done so in express words. We are, therefore, of the opinion that the Order cannot be considered as invalid merely because the State was not able to put on record proof of the fact that the Order was laid before both the Houses of Parliament."
27. In Mathura Prasad Yadava v. Inspector General, Railway Protection Force, Railway Board, New Delhi, (1974) 19 MPLJ 373, where it was contended that Regulation 14 of the Railway Protection Force Regulations, 1966 made under Section 21 of the Railway Protection Force Act (23 of 1957) was invalid as it was not laid before both Houses of Parliament as required by sub-section (3) of Section 21 of the Act, it was held:
"What then is the consequence of failure to lay the regulation? ... A correct construction of any particular laying clause depends upon its own terms If a laying clause defers the coming into force of the rules until they are laid, the rules do not come into force before laying and the requirement of laying is obligatory to make the rule operative so the requirement of laying in a laying clause which requires an affirmative procedure will be held to be mandatory for making the rules operative, because, in such cases the rules do not come into force until they are approved, whether with or without modification, by Parliament. But in case of a laying clause which requires a negative procedure, the coming into force of the rules is not deferred and the rules come into force immediately they are made. The effect of a laying clause of this variety is that the rules continue subject to any modification that Parliament may choose to make when they are laid; but the rules remain operative until they are so modified. Laying clauses requiring a negative procedure are, Page 21 of 23 C/SCA/16765/2018 ORDER therefore, construed as directory. The matter is put beyond controversy by the decision of the Supreme Court in Jan Mohd. v. State of Gujarat. Our conclusion, therefore, is that the laying requirement enacted in Section 21(3) of the Act is merely directory: It logically follows that failure to lay Regulation 14 has no effect on its validity and it continues to be effective and operative from the date it was made."
16. Sub-section (3) of section 19 of the Act reads thus:
"(3) Every rule and every Order made by the Central Government under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or the Order or both Houses agree that the rule or the Order should not be made, the rule or the Order, as the case may be, shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or the Order."
On a plain reading of sub-section (3) of section 19 of the Act, it is evident that the requirement as to the laying of the order before both Houses of Parliament is not a condition precedent but subsequent to the making of the order. In other words, there is no prohibition to the making of the orders without the approval of both Houses of Parliament. Under the circumstances, apart from a bare assertion, there is nothing to show that the provisions of sub-section (3) of section 19 of the Act have not been satisfied, even otherwise, the contention based upon non-compliance with the provisions of sub-section (3) of section 19 of the Act deserves to be rejected.
Page 22 of 23 C/SCA/16765/2018 ORDER18. In the light of the above discussion, the challenge to the validity of the impugned notifications, fails. Consequently, the petitions also fail, and are, accordingly, dismissed. Notice is discharged in each of the petitions, with no order as to costs.
(HARSHA DEVANI, J) (A. P. THAKER, J) Z.G. SHAIKH Page 23 of 23