M/s Brajesh Stone Crusher vs State of Himachal Pradesh & Anr.

Vivek Singh Thakur, Judge

“3.

Levy of electricity duty on consumption or supply of energy.- (1) There shall be levied and paid to the State Government on the energy, generated from any source, consumed by the Board, any licensee, electricity trader or generating company or supplied by the Board, such licensee, trader or company to the consumer, a duty to be called the electricity duty, in the following manner, namely:-

(i)

domestic consumers -@ 3%,

(ii)

Non domestic non-commercial consumers -@ 3%,

(iii)

agricultural/irrigation or allied activities supply -@ 10%, consumers

(iv)

Commercial consumers -@ 8%

(v)

Industrial consumers (a) small industrial consumers -@ 9%, [(b) medium industrial consumers -@ 15% (c) large industrial consumers (above 100 KW-@ 20%] connected load)

(vi)

water pumping supply consumers -@ 10%

(vii)

bulk supply consumers -@ 10%,

(viii)

street lighting supply consumers -@ 10%,

(ix) temporary metered supply consumers -@ 4%,

(x)

other category of consumers not covered under -@ 10% and , clauses (i) to (ix) above

(xi)

In case of electrical energy generated by diesel -@ 30 paise: generating sets (or by what so ever mode) for use of construction of power projects or captive/ standby for own consumption by the licensee or consumer, electricity duty per unit :

Provided that the percentage mentioned against each categories shall be applicable on energy charges only (excluding meter rent, service charges etc.). (2) Nothing in section 3 shall apply to the consumption or sale of electricity which is-

(a)

consumed by the Government of India, State Government or sold to the Government of India or other Government(s) within the territories of Indian Union for consumption or sale by that Government or other utilities engaged in power sector; or

(b)

consumed in the construction, maintenance or operation of any railway by the Government of India or a railway company operating that railway, or sold to that Government or any such railway company for consumption in the construction, maintenance or operation of any railway; or

(c)

consumed by a licensee or by consumer generating energy for their own consumption; provided the capacity of generator does not exceed 10 KW.

(3)

For the purpose of computing the electricity duty, the consumption shown by the meter, starting after the first meter reading date, after the issuance of the notification under sub-section (1) of section 3 shall be taken into account.

….. ….. ….. ….. …..

11.

Power to exempt from payment of electricity duty.- (1) The State Government may, in public interest, by notification in the Official Gazette, exempt any licensee, consumer or person from the payment of the whole or part of the electricity duty for such period and subject to such conditions as may be specified in such notification.

(2)

The State Government may, by notification, revise the rates of electricity duty not exceeding 50% at any one time, of the rates specified under section 3.”

“2.3

Classification of Consumer The classification, tarrif and other conditions of supply applicable to each consumer category shall be as fixed by the Commission from time to time in the Tarrif Order”

“1.2.46

“Tarrif Order” means the order issued from time to time by the Commission on annual aggregate revenue requirement and retail tariff for the licensee and consumers respectively.”

“50.

The Electricity Supply Code.-The State Commission shall specify an Electricity Supply Code to provide for recovery of electricity charges, intervals for billing of electricity charges, disconnection of supply of electricity for non-payment thereof, restoration of supply of electricity, measures for preventing tampering, distress or damage to electrical plant or electrical line or meter, entry of distribution licensee or any person acting on his behalf for disconnecting supply and removing the meter, entry for replacing, altering or maintaining electric lines or electrical plants or meter and such other matters.”

“26.

It is common ground before us that Section 21 of the General Clauses Act can be invoked only if, and to the extent, if any, the context and the scheme of the Commissions of Inquiry Act so permits. The general power in Section 21 of the General Clauses Act is “to add to, amend, vary or rescind any notification” etc. In the context of reconstitution of the Commission, the power to fill any vacancy in the office of a member of the Commission is expressly provided in sub-section (3) of Section 3 of the Commission of Inquiry Act. Similarly, the power to discontinue the existence of the Commission when it becomes unnecessary can be exercised by issue of a notification in accordance with Section 7 of the Act which results in rescinding the notification issued under Section 3 constituting the Commission. Thus, the power to rescind any notification conferred generally in Section 21 of the General Clauses Act is clearly inapplicable in the scheme to the Commissions of Inquiry Act which expressly provides for the exercise of this power in relation to a Commission constituted under Section of the Act. The only material remaining general powers in Section 21 of the General Clauses Act are the power to “amend” or “vary” any notification. The extent to which the constitution of the Commission can be amended or varied by filling any vacancy in the office of a member as provided in the Commissions of Inquiry Act is also obviously excluded from the purview of Section 21 of the General Clauses Act which cannot be invoked for this purpose.

27.

The surviving question, therefore, is: Whether there is power to reconstitute the Commission by replacement or substitution of the existing member, though not provided in the Commissions of Inquiry Act by invoking the residuary power to amend or vary any notification under Section 21 of the General Clauses Act? In the first place, in a case like the present where the scheme of the Commissions of Inquiry Act does provide for amendment and variation of the notification issued under Section 3 for the purpose of reconstitution of the Commission in the manner indicated, even that power to amend or vary any notification by virtue of Section 21 of the General Clauses Act must be taken as excluded by clear implication in the sphere of reconstitution of the Commission. Moreover, the power to amend or vary cannot include the power to replace or substitute the existing composition of the Commission with an entirely new composition. Shri Shanti Bhushan submitted that the time specified in the initial notification for completing the task of the Commission is enlarged by subsequent notification and this is done in exercise of the general power available under the General Clauses Act to extend time. This submission does not support the argument of learned counsel that the general power under Section 21 of the General Clauses Act is also available to reconstitute the Commission by replacement or substitution of its sole member. The aid of Section 21 of the general Clauses Act for enlargement of time does not conflict with the context or scheme of the Commissions of Inquiry Act.

28.

The context as well as the scheme of the Commissions of Inquiry Act, 1952 clearly indicate that Section 21 of the General Clauses Act, 1897 cannot be invoked to enlarge the Government’s power to reconstitute the Commission constituted under Section 3 of the Act in a manner other than that expressly provided in the Commissions of Inquiry Act. There being no express power given by the Commissions of Inquiry Act to the appropriate Government to reconstitute the Commission of Inquiry constituted under Section 3 of the Act by replacement or substitution of its sole member and the existence of any such power being negatived by clear implication, no such power can be exercised by the appropriate Government. The scheme of the enactment is that the appropriate Government should have no control over the Commission after its constitution under Section 3 of the Act except for the purpose of filling any vacancy which may have arisen in the office of a member of the Commission apart from winding up the Commission by issuance of a notification under Section 7 of the Act if the continued existence of the Commission is considered unnecessary. The vacancy in the office of a member of the Commission may arise for several reasons, including resignation by the member, when the Government’s power to fill the vacancy under Section 3(3) of the Act can be exercised. Even though a case of implied resignation creating an implied vacancy was set up by the State of Madhya Pradesh before the High Court, that stand was rightly abandoned before us by Shri Shanti Bhushan.”

30.

Learned counsel for the petitioners have submitted that basic rule of literal and strict construction of the Act is also applicable in present case and the power, which has not been conferred under Section 3 of the Act or any other provision of the Act, cannot be construed to have been vested in the State by referring Section 21 of the General Clauses Act.

31.

In this regard, reliance has been placed on the judgment of the Apex Court in B. Premanand and Others vs. Mohan Koikal and Others, reported in (2011) 4 SCC 266, by referring following paragraphs:-

“24.

The literal rule of interpretation really means that there should be no interpretation. In other words, we should read the statute as it is, without distorting or twisting its language. We may mention here that the literal rule of interpretation is not only followed by Judges and lawyers, but it is also followed by the lay man in his ordinary life. To give an illustration, if a person says "this is a pencil", then he means that it is a pencil; and it is not that when he says that the object is a pencil, he means that it is a horse, donkey or an elephant. In other words, the literal rule of interpretation simply means that we mean what we say and we say what we mean. If we do not follow the literal rule of interpretation, social life will become impossible, and we will not understand each other. If we say that a certain object is a book, then we mean it is a book. If we say it is a book, but we mean it is a horse, table or an elephant, then we will not be able to communicate with each other. Life will become impossible. Hence, the meaning of the literal rule of interpretation is simply that we mean what we say and we say what we mean.

25.

In this connection, we may also refer to the Mimansa Rules of Interpretation which were our traditional principles of interpretation used for thousand of years by our jurists. It is deeply regrettable that in our law courts today these principles are not cited. Today, our so called educated people are largely ignorant about the great intellectual achievements of our ancestors, and the intellectual treasury which they have bequeathed to us. The Mimansa Rules of Interpretation are one of these great achievements, but regrettably they are hardly ever used in our law courts.

“13.

No tax can be imposed by any bye-law or rule or regulation unless the statute under which the subordinate legislation is made specially authorises the imposition even if it is assumed that the power to tax can be delegated to the executive. The basis of the statutory power conferred by the statute cannot be transgressed by the rule making authority. A rule making authority has no plenary power. It has to act within the limits of the power granted to it.”

“6.

After giving our anxious consideration to the contentions raised by Mr. Goswami, it appears to us that in a fiscal matter it will not be proper to hold that even in the absence of express provision, a delegated authority can impose tax or fee. In our view, such power of imposition of tax and/or fee by delegated authority must be very specific and there is no scope of implied authority for imposition of such tax or fee. It appears to us that the delegated authority must act strictly within the parameters of the authority delegated to it under Act and it will not be proper to bring the theory of implied intent or the concept of incidental and ancillary power in the matter of exercise of fiscal power. The facts and circumstances in the case of District Council of Jowai, (AIR 1986 SC 1930) are entirely different. The exercise of powers by the Autonomous Jaintia Hills Districts are controlled by the constitutional provisions and in the special facts of the case, this Court has indicated that the realisation of just fee for the a specific purpose by the autonomous District was justified and such power was implied. The said decision cannot be made applicable in the facts of this case or the same should not be held to have laid down any legal proposition that in matters of imposition of tax or fees, the question of necessary intendment may be looked into when there is no express provision for imposition of fee or tax. The other decision in Khargram Panchayat Samiti's case, (1987 (3) SCC 82) also deal with the exercise of incidental and consequential power in the field of administrative law and the same does not deal with the power of imposing tax and fee.

“12.

The Government while framing rules under the Bihar Money Lenders Act, 1938 fixed the upper limit for the loans which the money lenders could lend though the Act nowhere provided for the fixing of such upper limit. In Sant Saran Lal v. Parsuram Soha, AIR (1966) SC 1852 it was held that the rule making power of the Government does not extend to the fixing of such a limit as it was not empowered by the Act.

13.

It is very common for the legislature to provide for a general rule making power to carry out the purpose of the Act. When such a power is given, it may be permissible to find out the object of the enactment and then see if the rules framed satisfy the test of having been so framed as to fall within the scope of such general power confirmed. If the rule making power is not expressed in such a usual general form then it shall have to be seen if the rules made are protected by the limits prescribed by the parent Act, (See : Sant Saran Lal & Anr. v. Parsuram Sahu AIR 1966 SC 1852. From the provisions of the Act we cannot spell out any legislative intent delegating expressly, or by necessary implication, the power to enact any prohibition on transfer of land. We are also in agreement with the submission of Shri Anil Divan that by placing complete prohibition on transfer of land subservient to tea estates no purpose sought to be achieved by the Act is advanced so also such prohibition cannot be sustained. Land forming part of tea estate including land sub-servient to tea plantation have been placed beyond the ken of the Act. Such land is not to be taken in account either for calculating area of surplus land or for calculating area of land which a person may retain as falling within ceiling limit. We fail to understand how a restriction on transfer of such land is going to carry out any purpose of the Act. We are fortified in taking such view by the Constitution Bench decision of this Court in Maharao Sahib Shri Bhim Singhji v. Union of India Ors., [1981] 1 SCC 166 whereby sub-section (1) of section 27 of the Urban Land (Ceiling and Regulation) Act, 1976 was struck down as invalid insofar as it imposed a restriction on transfer of any urban or urbanisable land with a building or a portion only of such building which was within the ceiling area. The provision impugned therein imposed a restriction on transactions by way of sale, mortgage, gift or lease of vacant land or buildings for a period exceeding ten years, or otherwise for a period of ten years from the date of the commencement of the Act even though such vacant land, with or without building thereon, fell within the ceiling limits. The Constitution Bench held (by majority) that such property will be transferable without the constraints mentioned in sub-section (1) of Section 27 of the said Act. Their Lordships opined that the right to carry on a business guaranteed under Article 19(1)(g) of the Constitution carried with it the right not to carry on business. It logically followed, as a necessary corollary, that the right to acquire, hold and dispose of property guaranteed to citizens under Article 19(l)(f) carried within it the right not to hold any property. It is difficult to appreciate how could a citizen be compelled to own property against his will though he wanted to alienate it and the land being within the ceiling limits was outside the purview of section 3 of the Act and that being so the person owning the land was not governed by any of the provisions of the Act. Reverting back to the case at hand, the learned counsel for the State of Himachal Pradesh has not been able to satisfy us as to how such a prohibition as is imposed by the impugned amendment in the Rules helps in achieving the object of the Act.”

“21.

That leaves one more question to be considered. Mr. Goyal argues that the Act is confiscatory in (character and must be struck down as being a colorable piece of legislation, and in support. of this argument he suggests that the rates prescribed by the Schedule are so heavy that the assessees would virtually have to part with their properties within a short time in order to bear the burden of the tax. This plea raises the question as to whether a taxing statute can be challenged on the ground that the burden of tax imposed by it is unreasonably high or excessive. We have already seen that the provisions of Art. 31(2) cannot be invoked in challenging the validity of a taxing statute on the ground that the tax levied is unreasonably high and we have also noticed that if the taxing statute does not contravene any other fundamental right guaranteed by part III, it would normally be treated as a valid law by whose authority tax can be collected without infringing Art. 31(1). Though the validity of a taxing statute cannot be challenged merely on the ground that it imposes an unreasonably high burden, it does not follow that a taxing statute cannot be challenged on the ground that it is a colourable piece of legislation and as such, is a fraud on the legislative power conferred on the Legislature in question. If, in fact, it is shown that the Act which purports to be a taxing Act is a colourable exercise of the legislative power of the Legislature, then that would be an independent ground on which the Act can be struck down. Colourable exercise of legislative power is not a legitimate exercise of the said power and as such, it may be open to challenge. But such a challenge can succeed not merely by showing that the tax levied is unreasonably high or excessive, but by proving other relevant circumstances which justify the conclusion that the statute is colourable and as such, amounts to a fraud.”

“25.

The definition of the expressions "local authority" and "person interested" are inclusive and not exhaustive. The difference between exhaustive and inclusive definitions has been explained in P. Kasilingam v. P.S.G. College of Technology (1995) Supp 2 SCC 348 in the following words: (SCC p. 356, para 19)

“19 …..A particular expression is often defined by the Legislature by using the word `means' or the word `includes'. Sometimes the words `means and includes' are used. The use of the word `means' indicates that "definition is a hard-and-fast definition, and no other meaning can be assigned to the expression than is put down in definition". (See : Gough v. Gough (1891) 2 QB 665 (CA) Punjab Land Development and Reclamation Corpn. Ltd. v. Presiding Officer, Labour Court (1990) 3 SCC 682, SCC p. 717, para 72.) The word `includes' when used, enlarges the meaning of the expression defined so as to comprehend not only such things as they signify according to their natural import but also those things which the clause declares that they shall include. The words "means and includes", on the other hand, indicate "an exhaustive explanation of the meaning which, for the purposes of the Act, must invariably be attached to these words or expressions". [See: Dilworth v. Commissioner of Stamps 1899 AC 99 (Lord Watson); Mahalakshmi Oil Mills v. State of A.P. (1989 1 SCC 164, SCC p. 170 para 11] The use of the words "means and includes" in Rule 2(b) would, therefore, suggest that the definition of `college' is intended to be exhaustive and not extensive and would cover only the educational institutions falling in the categories specified in Rule 2(b) and other educational institutions are not comprehended. Insofar as engineering colleges are concerned, their exclusion may be for the reason that the opening and running of the private engineering colleges are controlled through the Board of Technical Education and Training and the Director of Technical Education in accordance with the directions issued by the AICTE from time to time."

26.

In Bharat Cooperative Bank (Mumbai) Ltd. v. Employees Union (2007) 4 SCC 685, this Court again considered the difference between the inclusive and exhaustive definitions and observed: (SCC p. 695, para 23)

“23 …..When in the definition clause given in any statute the word "means" is used, what follows is intended to speak exhaustively. When the word "means" is used in the definition it is a "hard-and-fast" definition and no meaning other than that which is put in the definition can be assigned to the same. On the other hand, when the word "includes" is used in the definition, the legislature does not intend to restrict the definition: it makes the definition enumerative but not exhaustive. That is to say, the term defined will retain its ordinary meaning but its scope would be extended to bring within it matters, which in its ordinary meaning may or may not comprise. Therefore, the use of the word "means" followed by the word "includes" in the definition of "banking company" in Section 2(bb) of the ID Act is clearly indicative of the legislative intent to make the definition exhaustive and would cover only those banking companies which fall within the purview of the definition and no other."

“List II, Entries 53 and 54, how to be read

22.

We now come to the question on the interpretation of Entry 53 in List II of Seventh Schedule. It provides for taxes on the consumption or sale of electricity. The word 'sale' as occurring in Entry 52 came up for the consideration of this Court in Burmah Shell Oil Storage & Distributing Co.India Ltd. Vs. The Belgaum Borough Municipality 1963 Supp.(2) SCR

216.

It was held that the act of sale is merely the means for putting the goods in the way of use or consumption. It is an earlier stage, the ultimate destination of the goods being "use or consumption". We feel that the same meaning should be assigned to the word 'sale' in Entry 53. This is for a fortiorari reason in the context of electricity as there can be no sale of electricity excepting by its consumption, for it can neither be preserved nor stored. It is this property of electricity which persuaded this Court in Indian Aluminium Co. case to hold that in the context of electricity, the word 'supply' should be interpreted to include sale or consumption of electricity. Entry 53 should therefore be read as “taxes on the consumption or sale for consumption of electricity”.

23.

With these two things in mind, namely, that electricity is goods, and that sale of electricity has to be construed and read as sale for consumption within the meaning of Entry 53, the conflict, if any, between Entry 53and Entry 54 ceases to exist and the two can be harmonized and read together. Because electricity is goods it is covered in Entry 54 also. It is not disputed that duty on electricity is tax. Tax on the sale or purchase of goods including electricity but excluding newspapers shall fall within Entry 54 and shall be subject to provisions of Entry 92A of List I. Taxes on the consumption or sale for consumption of electricity within the meaning of Entry 53 must be consumption within the State and not beyond the territory of the State. Any other sale of electricity shall continue to be subject to the limits provided by Entry 54. Even purchase of electricity would be available for taxation which it would not be if electricity was not includible in the meaning of the term “goods”. A piece of legislation need not necessarily fall within the scope of one entry alone; more than one entry may overlap to cover the subject-matter of a single piece of legislation. A bare consumption of electric energy even by one who generates the same may be liable to be taxed by reference to Entry 53 and if the State Legislature may choose to impose tax on consumption of electricity by the one who generates it, such tax would not be deemed to be a tax necessarily on manufacture or production or a duty of excise, as held by Constitution Bench in Jiyajeerao Cotton Mills Ltd., Birlanagar, Gwalior Vs. State of M.P. 1962 Supp.(1) SCR 282. A mere consumption of goods (other than electricity), not accompanied by purchase or sale would not be taxable under Entry 54 because it does not provide for taxes on the consumption and Entry 53 does not speak of goods other than electricity. Thus in substance Entries 53 and 54 can be and must be read together and to the extent of sale of electricity for consumption outside the State, the electricity being goods, shall also be subject to provisions of Entry 92A of List I. This, in our opinion, is the best way of reading the two entries. In C.P. Motor Spirit Act re., AIR 1939 FC 131, it was held that two entries in the lists may overlap and sometimes may also appear to be in direct conflict with each other. It is then the duty of this Court to reconcile the entries and bring about harmony between them. The Court should strive at searching for reasonable and practical construction to seek reconciliation and give effect to all of them. If reconciliation proves impossible the overriding power of Union Legislature operates and prevails. Gwyer, C.J. observed: (AIR p. 7)

"A grant of the power in general terms, standing by itself, would no doubt be construed in the wider sense; but it may be qualified by other express provisions in the same enactment, by the implication of the context, and even by considerations arising out of what appears to be the general scheme of the Act."

And again he said” AIR p. 8)

"[A]n endeavour must be made to solve it, as the Judicial Committee have said, by having recourse to the context and scheme of the Act, and a reconciliation attempted between two apparently conflicting jurisdictions by reading the two entries together and by interpreting, and, where necessary, modifying the language of the one by that of the other. If needed such a reconciliation should prove impossible, then and only then, will the non-obstante clause operate and the federal power prevail." In Calcutta Gas Co. Ltd. Vs. The State of W.B., 1962 Supp (3) SCR 1, the Constitution Bench has held that the same rules of construction apply for the purpose of harmonizing an apparent conflict between two entries in the same list.”

“53.

Article 245 of the Constitution of India vests the Parliament with power of legislation on all matters enumerated in List I and also the matters enumerated in List III of the Seventh Schedule of the Constitution of India. The State Legislature, however, has the exclusive right to legislate matters specified in the Entries contained in List II.

54.

Federal supremacy no doubt recognizes that the State's power to legislate with regard to any matters in List III would be subject to any Act of the Parliament; however, Clause (3) of Article 246 of the Constitution of India gives the legislature of the State an exclusive power with respect to any matters in List II, subject to restriction imposed in the entry itself, as for example, Entries 1, 2, 12, 13, 17, 22, 23, 24, 32 and 33. Entry 53 of List II does not contain any such restriction and has not been made subject to any of the entry made in List I or List III.

55.

Various entries in the three Lists provide for the fields of legislation. They are, therefore, required to be given a liberal construction inspired by a broad and generalize spirit and not in a pedantic manner. A clear distinction is provided for in the scheme of the Lists of the Seventh Schedule between the general subjects of legislation and heads of taxation. They are separately enumerated. Taxation is treated as a distinct matter for purposes of legislative competence vis-`-vis the general entries. Clauses (1) and (2) of Article 248 of the Constitution of India also manifests the aforementioned nature of the entries of the List, and, thus, the matter relating to taxation has been separately set out. The power to impose tax ordinarily would not be deduced from a general entry as an ancillary power. In List II, entries 1 to 44 form one group providing for the legislative competence of the State on subjects specified therein, whereas entries 45 to 63 form another group dealing with taxation. We, however, do not mean to suggest that in regard to the validity of a taxation statute, the same, by itself, would be a determinative factor as in a case where the Parliament may legislate an enactment under several entries, one of them being a tax entry.

“21... Though the validity of a taxing statute cannot be challenged merely on the ground that it imposes an unreasonably high burden, it does not follow that a taxing statute cannot be challenged on the ground that it is a colourable piece of legistation and as such, is a fraud on the legislative power conferred on the legislature in question. If, in fact, it is shown that the Act which purports to be a taxing Act is a colourable exercise of the legislative power of the legislature, then that would be an independent ground on which the Act can be struck down. Colourable exercise of legislative power is not a legitimate exercise of the said power and as such, it may be open to challenge. But such a challenge can succeed not merely by showing that the tax levied is unreasonably high or excessive, but by proving other relevant circumstances which justify the conclusion that the statute is colourable and as such, amounts to a fraud."

“28 Recourse to the said principles, however, would be resorted to only when there exists direct conflict between two provisions and not otherwise. Once it is held that the law made by Parliament and the State Legislature occupy the same field, the subsequent legislation made by the State which had received the assent of the President of India indisputably would prevail over the parliamentary Act when there exists direct conflict between two enactments. Both the laws would ordinarily be allowed to have their play in their own respective fields. However, in the event there does not exist any conflict, the parliamentary Act or the State Act shall prevail over the other depending upon the fact as to whether the assent of the President has been obtained therefor or not. (See Bharat Hydro Power Corpn. Ltd. v. State of Assam)"

“94 The principle of "reading down" a provision refers to a legal interpretation approach where a court, while examining the validity of a statute, attempts to give a narrowed or restricted meaning to a particular provision in order to uphold its constitutionality. This principle is rooted in the idea that courts should make every effort to preserve the validity of legislation and should only declare a law invalid as a last resort.

95.

When a court encounters a provision that, if interpreted according to its plain and literal meaning, might lead to constitutional or legal issues, the court may opt to read down the provision. Reading down involves construing the language of the provision in a manner that limits its scope or application, making it consistent with constitutional or legal principles.

96.

The rationale behind the principle of reading down is to avoid striking down an entire legislation. Courts generally prefer to preserve the intent of the legislature and the overall validity of a law by adopting an interpretation that addresses the specific constitutional concerns without invalidating the entire statute.

97.

It is a judicial tool used to salvage the constitutionality of a statute by giving a provision a narrowed or limited interpretation, thereby mitigating potential conflicts with constitutional or legal principles.

98.

In B.R. Enterprises v. State of U.P. & Ors. reported in (1999) 9 SCC 700, this Court observed that the principles such as “Reading Down” emerge from the concern of the courts towards salvaging a legislation to ensure that its intended objectives are achieved. The relevant observations read as under: - (SCC pp. 764-64, para 81)

“81.. It is also well settled that first attempt should be made by the courts to uphold the charged provision and not to invalidate it merely because one of the possible interpretations leads to such a result, howsoever attractive it may be. Thus, where there are two possible interpretations, one invalidating the law and the other upholding, the latter should be adopted. For this, the courts have been endeavouring, sometimes to give restrictive or expansive meaning keeping in view the nature of legislation, maybe beneficial, penal or fiscal etc. Cumulatively it is to subserve the object of the legislation. Old golden rule is of respecting the wisdom of legislature that they are aware of the law and would never have intended for an invalid legislation. This also keeps courts within their track and checks individual zeal of going wayward. Yet in spite of this, if the impugned legislation cannot be saved the courts shall not hesitate to strike it down. Similarly, for upholding any provision, if it could be saved by reading it down, it should be done, unless plain words are so clear to be in defiance of the Constitution. These interpretations spring out because of concern of the courts to salvage a legislation to achieve its objective and not to let it fall merely because of a possible ingenious interpretation. The words are not static but dynamic. This infuses fertility in the field of interpretation. This equally helps to save an Act but also the cause of attack on the Act. Here the courts have to play a cautious role of weeding out the wild from the crop, of course, without infringing the Constitution. For doing this, the courts have taken help from the Preamble, Objects, the scheme of the Act, its historical background, the purpose for enacting such a provision, the mischief, if any which existed, which is sought to be eliminated. …” (Emphasis supplied)

99.

A similar view was reiterated by this Court in its decision in Calcutta Gujarati Education Society & Anr. v. Calcutta Municipal Corpn. & Ors. reported in (2003) 10 SCC 533, wherein this Court observed that the rule of “Reading Down” is only for the limited purpose of making a provision workable so as to fulfil the purpose and object of the statute. The relevant observations read as under: (SCC p. 552, para 35)

“35.

The rule of “reading down” a provision of law is now well recognised. It is a rule of harmonious construction in a different name. It is resorted to smoothen the crudities or ironing out the creases found in a statute to make it workable. In the garb of “reading down”, however, it is not open to read words and expressions not found in it and thus venture into a kind of judicial legislation. The rule of reading down is to be used for the limited purpose of making a particular provision workable and to bring it in harmony with other provisions of the statute. It is to be used keeping in view the scheme of the statute and to fulfil its purposes.”…”

(Emphasis supplied)

100.

Thus, the principle of ‘Reading Down” a provision emanates from a very well settled canon of law, that is, the courts while examining the validity of a particular statute should always endeavour towards upholding its validity, and striking down a legislation should always be the last resort.

“Reading Down” a provision is one of the many methods, the court may turn to when it finds that a particular provision if for its plain meaning cannot be saved from invalidation and so by restricting or reading it down, the court makes it workable so as to salvage and save the provision from invalidation. Rule of “Reading Down” is only for the limited purpose of making a provision workable and its objective achievable.”

“15.

… In considering the validity of a statute the presumption is in favour of its constitutionality and the burden is upon him who attacks it to show that there has been a clear transgression of constitutional principles. For sustaining the presumption of constitutionality the court may take into consideration matters of common knowledge, matters of common report, the history of the times and may assume every state of facts which can be conceived. It must always be presumed that the Legislature understands and correctly appreciates the need of its own people and that discrimination, if any, is based on adequate grounds. It is well settled that courts will be justified in giving a liberal interpretation to the section in order to avoid constitutional invalidity. These principles have given rise to rule of reading down the sections if it becomes necessary to uphold the validity of the sections.” (emphasis supplied)

“255.

It is thus clear that the doctrine of reading down or of recasting the statute can be applied in limited situations. It is essentially used, firstly, for saving a statute from being struck down on account of its unconstitutionality. It is an extension of the principle that when two interpretations are possible — one rendering it constitutional and the other making it unconstitutional, the former should be preferred. The unconstitutionality may spring from either the incompetence of the legislature to enact the statute or from its violation of any of the provisions of the Constitution. The second situation which summons its aid is where the provisions of the statute are vague and ambiguous and it is possible to gather the intentions of the legislature from the object of the statute, the context in which the provision occurs and the purpose for which it is made. However, when the provision is cast in a definite and unambiguous language and its intention is clear, it is not permissible either to mend or bend it even if such recasting is in accord with good reason and conscience. In such circumstances, it is not possible for the court to remake the statute. Its only duty is to strike it down and leave it to the legislature if it so desires, to amend it. What is further, if the remaking of the statute by the courts is to lead to its distortion that course is to be scrupulously avoided. One of the situations further where the doctrine can never be called into play is where the statute requires extensive additions and deletions. Not only it is no part of the court's duty to undertake such exercise, but it is beyond its jurisdiction to do so.”

(emphasis supplied)

“323.

In Craies Statute Law (7th edn., Chapter 5 at page 64) it is stated that where the words of an Act are clear, there is no need for applying any of the principles of interpretation which are merely presumptions in cases of ambiguity in the statute. The safer and more correct course of dealing with the question of construction is to take the words themselves and arrive, if possible, at their meaning without in the first place referring to cases. Where an ambiguity arises to supposed intention of the legislature, one of the statutory constructions, the court propounded, is the doctrine of reading down. Lord Reid in Federal Steam Navigation Co. v. Department of Trade and Industry [(1974) 2 All ER 97, 100] (as also extracted by Cross Statutory Interpretation, Butterworths' edition, 1976 at page 43 in proposition 3) has stated thus:

‘’… the Judge may read in words which he considers to be necessarily implied by words which are already in the statute and he has a limited power to add to, alter or ignore statutory words in order to prevent a provision from being unintelligible, absurd or totally unreasonable, unworkable or totally irreconcilable with the rest of the statute.’

324.

At p. 92 of the Cross Statutory Interpretation, the author has stated that:

‘The power to add to, alter or ignore statutory words is an extremely limited one. Generally speaking it can only be exercised where there has been a demonstrable mistake on the part of the draftsman or where the consequence of applying the words in their ordinary, or discernible secondary, meaning would be utterly unreasonable. Even then the mistake may be thought to be beyond correction by the court, or the tenor of the statute may be such as to preclude the addition of words to avoid an unreasonable result.’

Therefore, the Doctrine of Reading Down is an internal aid to construe the words or phrase in statute to give reasonable meaning, but not to detract, distort or emasculate the language so as to give the supposed purpose to avoid unconstitutionality.

*** *** *** ***

“81.

… Thus, where there are two possible interpretations, one invalidating the law and the other upholding, the latter should be adopted. For this, the courts have been endeavouring, sometimes to give restrictive or expansive meaning keeping in view the nature of legislation, may be beneficial, penal or fiscal etc. Cumulatively it is to subserve the object of the legislation. Old golden rule is of respecting the wisdom of legislature that they are aware of the law and would never have intended for an invalid legislation. This also keeps courts within their track and checks individual zeal of going wayward. Yet in spite of this, if the impugned legislation cannot be saved the courts shall not hesitate to strike it down. Similarly, for upholding any provision, if it could be saved by reading it down, it should be done, unless plain words are so clear to be in defiance of the Constitution. These interpretations spring out because of concern of the courts to salvage a legislation to achieve its objective and not to let it fall merely because of a possible ingenious interpretation. The words are not static but dynamic. This infuses fertility in the field of interpretation. This equally helps to save an Act but also the cause of attack on the Act. Here the courts have to play a cautious role of weeding out the wild from the crop, of course, without infringing the Constitution. For doing this, the courts have taken help from the Preamble, Objects, the scheme of the Act, its historical background, the purpose for enacting such a provision, the mischief, if any which existed, which is sought to be eliminated……….” (emphasis supplied)

“12.

It is true that any provision of an enactment can be read down so as to erase the obnoxious or unconstitutional element in it or to bring it in conformity with the object of such enactment. Similarly, a rule forming part of executive instructions can also be read down to save it from invalidity or to bring it in conformity with the avowed policy of the Government. When courts find a rule to be defective or violative of the constitutional or statutory provision, they tend to save the rule, wherever possible and practical, by reading it down by a benevolent interpretation, rather than declare it as unconstitutional or invalid. But such an occasion did not arise in this case as there was no challenge to the validity of Rule 5 and the parties were not at issue on the validity of the said Rule. We are therefore of the view that in the absence of any challenge to the Relief Fund Rules and an opportunity to the State Government to defend the validity of Rule 5, the High Court ought not to have modified or read down the said Rule.”

“61.

Reading down the provisions of a statute cannot be resorted to when the meaning thereof is plain and unambiguous and the legislative intent is clear. The fundamental principle of the ‘reading down’ doctrine can be summarised as follows. Courts must read the legislation literally in the first instance. If on such reading and understanding the vice of unconstitutionality is attracted, the courts must explore whether there has been an unintended legislative omission. If such an intendment can be reasonably implied without undertaking what, unmistakably, would be a legislative exercise, the Act may be read down to save it from unconstitutionality. The above is a fairly well-established and well-accepted principle of interpretation which having been reiterated by this Court time and again would obviate the necessity of any recall of the huge number of precedents…”

“100.

Thus, the principle of ‘Reading Down’ a provision emanates from a very well-settled canon of law, that is, the courts while examining the validity of a particular statute should always endeavour towards upholding its validity, and striking down a legislation should always be the last resort. “Reading Down” a provision is one of the many methods, the court may turn to when it finds that a particular provision if for its plain meaning cannot be saved from invalidation and so by restricting or reading it down, the court makes it workable so as to salvage and save the provision from invalidation. Rule of ‘Reading Down’ is only for the limited purpose of making a provision workable and its objective achievable.

101.

The High Court in its impugned order resorted to reading down Rule 9(5) of the SARFAESI Rules not because its plain meaning would result in the provision being rendered invalid or unworkable or the statute’s objective being defeated, but because it would result in the same harsh consequence of forfeiture of the entire earnest-money deposit irrespective of the extent of default in payment of balance amount.

102.

However, harshness of a provision is no reason to read down the same, if its plain meaning is unambiguous and perfectly valid. A law/rule should be beneficial in the sense that it should suppress the mischief and advance the remedy. The harsh consequence of forfeiture of the entire earnest-money deposit has been consciously incorporated by the legislature in Rule 9(5) of the SARFAESI Rules so as to sub-serve the larger object of the SARFAESI Act of timely resolving the bad debts of the country. The idea behind prescribing such a harsh consequence is not illusory, it is to attach a legal sanctity to an auction process once conducted under the SARFAESI Act from ultimately getting concluded.” (emphasis supplied)

“(12)

Nor does the decision of this Court in The State of Madras v. Gannon Dunkerley & Co., (Madras) Ltd. lend support to the argument so widely advanced by the learned counsel. That case has nothing to do with the fixation of rates of taxes. There section 6(1) of the Madras General Sales Tax Act, 1939, as amended by Madras Act 25 of 1947, provided that no tax will be payable on any sale of goods specified in the schedule to it. Section 6(2) of that Act authorised the State Government to amend the schedule by notification. The amendment of the Schedule by the State Government was challenged on the ground that section 6(2) was invalid as it was a delegation of the essential power of legislation ,of the State Government. Venkatarama Ayyar, J., speaking for the Court, in rejecting that contention, observed thus :

“Now, the authorities are clear that it is not unconstitutional for the legislature to leave it to the executive to determine details relating to the working of taxation laws, such as the selection of persons on whom the tax is to be laid, the rates at which it is to be charged in respect of different classes of goods, and the like."

It is not necessary to scrutinize the correctness of this statement, having regard to the decisions relied upon, for this Court in 1965-2 SCR 477: (AIR 1965 SC 1107) accepted it, but made it clear that such a power to fix the rates must be supported by some reasonable guidance given under the Act whereunder the said power was conferred. Nor the observations of Rajagopala Ayyangar, J., in the said decision speaking for the minority, lend support to the contentions of the respondents.

13.

The decision in Vasantlal Maganbhai Sanjanwala v. The State of Bombay, 1961-1 SCR 341: (AIR 1961 SC 4) raised the question whether section 6(2) of the Bombay Tenancy and Agricultural Lands Act, 1948 (Bom. LXVII of 1948), which enabled the Government to fix the rent payable by a tenant within the maximum limits prescribed thereunder, was valid. When it was argued that it was bad because of excessive delegation, this Court sustained it on the basis of a legislative policy disclosed by Section 12(3) of the Act.

14.

In Union of India v. Messrs. Bhana Mal Gulzari Mal, 1960-2 SCR 627: AIR 1960 SC 475) this Court rejected the contention that caluse 11B of Iron and Steel (Control of Production & Distribution) Order, 1941, whereunder the Central Government was authorised to issue notification fixing the maximum price of steel, was void on the ground of excessive -delegation, as it found that the said clause only further canalized the policy disclosed in Ss. 3 and 4 of the Act.

15.

Further citation is unnecessary, for the principle of excessive delegation is well settled and the cases are only illustrations of the application of the said principle. The law on the subject may briefly be stated thus :

“The Constitution confers a power and imposes a duty on the legislature to make laws. The essential legislative function is the determination of the legislative policy and its formulation as a rule of conduct. Obvi- ously it cannot abdicate its functions in favour of another. But in view of the multifarious activities of a welfare State, it cannot presumably work out all the details to suit the varying aspects of a complex situation.It must necessarily delegate the working out of details to the executive or any other agency. But there is a danger inherent in such a process of delegation. An overbur- dened legislature or one controlled by a powerful executive may unduly overstep the limits of delegation. It may not lay down any policy at all; it may declare its policy in vague and general terms; it may not set down any standard for the guidance of the executive; it may confer an arbitrary power on the executive to change or modify the policy laid down by it without reserving for itself any control over subordinate legislation. This self effacement of legislative power in favour of another agency either in whole or in part is beyond the permissible limits of delegation. It is for a Court to hold on a fair, generous and liberal construction of an impugned statute whether the legislature exceeded such limits. But the said liberal on struction should not be carried by the Courts to the extent of always trying to discover a dormaint or latent legislative policy to sustain an arbitrary power conferred on executive authorities. It is the duty of the Court to strike down without any hesitation any arbitrary power conferred on the executive by the legislature.”

See 1961-1 SCR 341 at pp. 356-357: (AIR 1961 SC 4 at pp.11-12.”

“130.

It is the basic principle of legal jurisprudence that an enactment is void for vagueness if its prohibitions are not clearly defined. Vague laws offend several important values. It is insisted or emphasised that laws should give the person of ordinary intelligence a reasonable opportunity to know what is prohibited, so that he may act accordingly. Vague laws may trap the innocent by not providing fair warning. Such a law impermissibly delegates basic policy matters to policemen and also judges for resolution on an ad hoc and subjective basis, with the attendant dangers of arbitrary and discriminatory application. More so uncertain and undefined words deployed inevitably lead citizens to "steer far wider of the unlawful zone ... than if the boundaries of the forbidden areas were clearly marked".