Case BriefsSupreme Court

Supreme Court: In a case where challenge was made to declare Section 50(a) of the Delhi Land Reforms Act, 1954 unconstitutional being ultra vires Articles 14, 15, 254 and 21 of the Constitution of India, the bench of Hemant Gupta and Vikram Nath*, JJ has held that all the legislations included in the Ninth Schedule to the Constitution before the Judgment in the case of Kesavananda Bharati vs. State of Kerala, 1973 (4) SCC 225 that is 24.04.1973, would stand protected under Article 31B of the Constitution and, therefore, the challenge to the validity of provisions of the 1954 Act must fail.

The Provision in question

Section 50. General order of succession from males: – Subject to the provisions of Section 48 and 52, when a Bhumidhar or Asami being a male dies, his interest in his holding shall devolve in accordance with the order of the succession given below:

a) Male lineal descendants in the male line of the descent:

Provided that no member of this class shall inherit if any male descendant between him and the deceased is alive:

Provided further that the son or sons of a predeceased on how low so ever shall inherit the share which would have devolved upon the deceased if he had been then alive:

b) Widow; c) Father; d) Mother, being a widow; e) Step mother, being a widow; f) Father’s father; g) Father’s mother, being a widow; h) Widow of a male lineal descendant in the male line of descent; i) Brother, being the son of same father as the deceased; j) Unmarried sister; k) Brother’s son, the brother having been a son of the same father as the deceased; l) Father’s father’s son; m)Brother’s son’s son; n) Father’s father’s son’s son; and o) Daughter’s son.

Grounds of challenge

(i) violation of Article 14 of the Constitution;

(ii) women being discriminated despite world over the rights of women were being empowered;

(iii) Hindu Succession Act, 1956 would prevail over the 1954 Act.

Analysis

Repugnancy – Article 254 of the Constitution

It was argued before the Court that Succession provided in 1956 Act will prevail over the succession provided in 1954 Act in view of Article 254 of the Constitution, as there is clear repugnancy. The Court rejected this submission and held that the question of repugnancy arises only if both the Parliament and the State legislature have made law with respect to any one of the matters enumerated in the Concurrent list (List III). However, in the present case two enactments of 1956 and 1954 are relatable to Entries in List III and List II respectively. Thus, no question of repugnancy would arise in view of Article 254 of the Constitution.

Special Law

The argument relating to 1956 Act being a special law and 1954 being a general law is completely misconceived as, it has been expressed by the Supreme Court as well as High Courts, on several occasions, that any State enactment relating to Agricultural land tenures is a special law.

Repeal of an enactment – Effect

The Court also rejected the contention that Section 4(2) of the 1956 Act having been deleted by an amendment in 2005, there would be no justification to apply the provisions of succession given in the 1954 Act as the same would now be governed by the 1956 Act as by virtue of Section 6 of the General Clauses Act, the repeal of an enactment would not affect the previous operation of such an enactment.

In the case at hand, the deletion of Section 4(2) took place w.e.f 09.09.2005. Therefore, the effect of the deletion can only be in respect of successions which opened on or after 09.09.2005. This is because under Section 6(b) and 6(c) of the General Clauses Act repeal cannot affect the previous operation of any enactment so repealed and cannot affect the previous operation of any enactment so repealed and cannot affect any right which may have been acquired or accrued.

In the present case, as the succession has opened prior to 09.09.2005, the rights of the descendants in terms of Section 50 became crystallized on account of the said Section read with Section 4(2) of the 1956 Act, therefore, the deletion of Section 4(2) cannot have retrospective effect.

Also, the 1954 Act is a special law, dealing with fragmentation, ceiling, and devolution of tenancy rights over agricultural holdings only, whereas the 1956 Act is a general law, providing for succession to a Hindu by religion as stated in Section 2 thereof. The existence or absence of Section 4(2) in the 1956 Act would be immaterial.

Gender Bias

While it was argued before the Court that the provisions of Section 50(a) of the 1954 Act are violative of Articles 14 and 15 of the Constitution of India as there is clear discrimination on the ground of sex, the Court held that the argument was invalidated once it was held that there can be no challenge to the 1954 Act as the said legislation is included in the Ninth Schedule of the Constitution of India.

[Har Naraini Devi v. Union of India, CIVIL APPEAL NO. 22957 OF 2017, decided on 20.09.2022]


*Judgment by: Justice Vikram Nath

Case BriefsSupreme Court

Supreme Court: The Division Bench comprising of M.R. Shah and B.V. Nagarathna, JJ., stayed the impugned order of Bombay High Court wherein the High Court had quashed the assessment order under Income Tax Act, 1961 and had further cautioned that if such orders continued to be passed, the Court will be constrained to impose substantial costs on the concerned Assessing Officer to be recovered from his/her salary.

The petitioner had impugned the assessment order dated 08-06-2021 along with the demand notice issued under Section 156 for initiating penalty proceedings under Section 274 read with Section 270A of the Income Tax Act, 1961. According to the petitioner, the assessment order had been passed without following the principles of natural justice as his request for personal hearing had not been considered and most importantly the reply/objection filed in response to the show cause notice with the draft assessment order had not been considered.

Holding that the assessment order was issued without application of mind the Bombay High Court set aside the impugned order and also the consequential notices. The High Court observed that Sub Section 9 of Section 144B of the Act provides that any assessment made shall be non-est if such assessment is not made in accordance with the procedure laid down under this section. Therefore, the High Court held that the impugned order was non-est and directed the Assessing Officer to take steps in accordance with law.

Notably, the High Court had passed additional directions under para 9 of the order which reads as:

“Respondents are put to notice, and Mr. Sharma to circulate this order right from the Revenue Secretary to everybody in the Finance Ministry, that if such orders are continued to be passed, this Court will be constrained to impose substantial costs on the concerned Assessing Officer to be recovered from his/her salary and also direct the department to place such judicial orders in the career records of such Assessing Officer.”

Aggrieved by the aforementioned order of the High Court Union of India had approached the Supreme Court to assail the impugned High Court order contending that the High Court ought not to have entertained the Writ Petition and ought to have relegated the original writ petitioner to avail statutory remedy of appeal before the CIT(A).

It was further submitted that one of the grounds on which the High Court had set aside the assessment order was sub-section (9) of Section 144B of the Income Tax Act, 1961, irrespective of the fact that sub-section (9) of Section 144B of the Act had been deleted with effect from 01-04-2021 and the provision to declare the assessment as non est if such assessment is not made in accordance with the procedure laid down under Section 144B of the Act had been deleted. Hence, the assessment order should not have been interfere with by the High Court and the assessee, if aggrieved, should have required to prefer an Appeal before the CIT(A).

It was further submitted by the State that even the observations made by the High Court in para 9, were also not warranted in the facts and circumstances of the case, more particularly, when the entire procedure before assessment was followed and thereafter even the legislature also deleted the provision of sub-section (9) of Section 144B of the Act retrospectively with effect from 01-04-2021.

Considering the arguments of ASG, Mr. Balbir Singh, the Bench issued notice in the matter. Notably, the Bench had also ordered that the observations made by the High Court in para 9 of the impugned judgment and order be stayed.

[National Faceless Assessment Centre v. Mantra Industries Ltd., Special Leave to Appeal (C) No(s). 4906 of 2022, decided on 11-04-2022]


Appearance by:

For the Appellant: ASG Balbir Singh, AOR Raj Bahadur Yadav, Advocate Gargi Khanna, Advocate Praveena Gautam, Advocate Shyam Gopal and Advocate Chinmayee Chandra


Kamini Sharma, Editorial Assistant has put this report together 

Case BriefsSupreme Court

Supreme Court: The Division Bench of L. Nageswara Rao and Vineet Saran*, JJ., quashed the confiscation order of Customs and Central Excise Commission confiscating land, building, plant and machinery of Rathi Ispat Ltd. for lacking statutory backing. The Bench observed that the existing law only permit confiscation of goods and no land, building can be confiscated under the Central Excise Rules, 2017.

Chronology of Events

  • The Commissioner, Customs and Central Excise, Ghaziabad (Commissioner) had imposed a penalty of Rs.7,98,03,000 and confiscated the land, building, plant and machinery of Rathi Ispat Ltd. (RIL) under Rule 173Q(2) of the Central Excise Rules, 1944 on 25-11-1997.
  • However, the said order was set aside by the Customs, Excise & Gold (Control) Appellate Tribunal (now CESTAT) for being contrary to principles of natural justice, and the matter was remanded back for de novo proceedings.
  • Subsequently, subrule 2 of Rule 173Q of the Central Excise Rules, 1944, came to be omitted by a notification dated 12-05-2000.
  • In 2005, RIL availed credit from the consortium of banks with the Appellant/Punjab National Bank being the lead bank, and mortgaged all its movable and immovable properties for securing the loan.
  • By the order dated 26-03-2007, the Commissioner confirmed the demand of excise duty of Rs.7,98,02,226 and a penalty of Rs.7,98,03,000 on RIL. The Commissioner also ordered, under rule 173Q(2) of the 1944 Rules, for the confiscation of all the land, building, plant, machinery and materials used in connection with manufacture and storage.
  • Similarly, the Central Excise Commissioner, vide order dated 29-03-2007, confirmed a demand of central excise duty amounting to Rs.2,67,00,348 and Rs.74,24,332 from RIL and also imposed a penalty of Rs.3,41,24,68 and further, under rule 173Q(2) of the 1944 Rules, ordered confiscation of land, building, plant, machinery, material, conveyance etc.

RIL’s Default in Clearing the Loan

Since RIL defaulted in clearing the loan amount and had failed to liquidate outstanding dues, the Appellant bank issued notice to RIL under section 13(2) of the SARFAESI Act, 2002, however, Commissioner, Customs and Central Excise had already confiscated the property by virtue of Rule 173Q(2) of Rules, 1944. Aggrieved, the appellant bank approached the Allahabad High Court with its grievances, however dismissing the petition, the High Court held that if any property has been confiscated it vests in the state and no person can claim any right, title, or interest over it, further the High Court opined that the bank had no locus standi to challenge the order as RIL had already preferred an appeal against confiscation.

Question of Law

  1. Whether the Commissioner could have invoked the powers under Rule 173(Q)(2) of Central Excise Rules, 1944 on 26-03-2007 and 29-03-2007 when on such date, the rule 173Q(2) was not on the Statue Book having been omitted w.e.f. 17-05-2000?
  2. Whether in the absence of any provisions providing for First Charge in relation to Central Excise dues in the Central Excise Act, 1944, the dues of the Excise department would have priority over the dues of the Secured Creditors or not?

Validity of Confiscation Order

The Bench noted that in the impugned order, the High Court had not considered that on the date of the confiscation orders Rule 173Q(2) stood omitted from the statute books. Rejecting the contention of the respondent that notwithstanding the omission of Section 173Q(2) from the 1944 Rules the proceedings were entitled to continue on account of Section 38A(c) and Section 38A(e) of the Central Excise Act, 1944, read along with Section 6 of the General Clauses Act, 1897 as misplaced and lacking statutory backing, the Bench opined that the proceedings initiated under the erstwhile Rule 173Q(2) would come to an end on the repeal of the said Rule 173Q(2).

The Bench followed the decision of Kolhapur Canesugar Works Ltd. v. Union of India, (2000) 2 SCC 536, wherein it had been held that Section 6 of the General Clauses Act, 1897 is applicable where any Central Act or Regulation made after commencement of the General Clauses Act repeals any enactment. It is not applicable in the case of omission of a “Rule”. Secondly, Section 38A(c) and 38A(e) of the Central Excise Act, 1944, are attracted only when “unless a different intention appears”.

Noticeably, in the instant case the legislature had clarified its intent to not restore/revive the power of confiscation of any land, building, plant machinery etc., after omission of the provisions which could be inferred from the fact that power to confiscate any land, building, plant, machinery etc. after omission had not been introduced in the subsequent Central Excise Rules, 2001, Central Excise Rules, 2002 and Central Excise Rules, 2017.

Additionally, this intent was also fortified by the fact that the newly enacted Rule 28 of the Rules of 2001, Rule 28 of the Rules of 2002 and Rule 28 of the Rules of 2017, did not provide for confiscation of any land, building, plant, machinery etc. and their consequent vesting in the Central Government, as Rule 28 only provided for vesting in the Central Government of the “Goods” confiscated by the Central Excise Authorities under the Excise Act, 1944.

Whether the dues of the Excise department create a First Charge?

In UTI Bank Ltd. v. Commissioner Central Excise, 2006 SCC Online Madras 1182, it had been held that since there is no specific provision claiming “first charge” in the Central Excise Act and the Customs Act, the claim of the Central Excise Department cannot have precedence over the claim of secured creditor, viz., the petitioner Bank. Similarly, in Union of India v. SICOM Ltd., (2009) 2 SCC 121, it was observed that prior to insertion of Section 11E in the Central Excise Act, 1944 w.e.f. 08-04-2011, there was no provision in the Act inter alia, providing for First Charge on the property of the assessee or any person under the Act of 1944.

Further, section 35 of the SARFAESI Act, 2002 inter alia, provides that the provisions of the SARFAESI Act shall have overriding effect on all other laws. Therefore, the provisions of Section 11E of the Central Excise Act, 1944 are subject to the provisions contained in the SARFAESI Act, 2002. Therefore, the Bench held that the Secured Creditor-Bank would have a First Charge on the Secured Assets.

Verdict

In the light of above, the Bench concluded that the Commissioner of Customs and Central Excise could not have invoked the powers under Rule 173Q(2) of the Central Excise Rules, 1944 on 26-03-2007 and 29-03-2007 for confiscation of land, buildings etc., when on such date, the said Rule 173Q(2) was not in the Statute books, having been omitted by a notification dated 12-05-2000. Secondly, the dues of the secured creditor, i.e. the bank, would have priority over the dues of the Central Excise Department. Accordingly, the appeal was allowed and the confiscation orders were quashed.

[Punjab National Bank v. Union of India, 2022 SCC OnLine SC 227, decided on 24-02-2022]


*Judgment by: Justice Vineet Saran 


Appearance by:

For the Appellant: Dhruv Mehta, Senior Counsel

For Union of India: K.M. Nataraj, Additional Solicitor General


Kamini Sharma, Editorial Assistant has put this report together

Case BriefsSupreme Court

Supreme Court: The Division Bench comprising of M. R. Shah* and Sanjiv Khanna, JJ., reversed the impugned order of the High Court whereby the High Court had held that education institutions run by charitable societies are exempted from payment of electricity duty. The Bench held that if the argument that all the schools/colleges or institutions, imparting education or training are exempted from electricity duty is accepted it would lead to absurd result and in that case, even the private hospitals, nursing homes, dispensaries and clinics, who are profit making entities can also claim exemption from levy of electricity duty.

Factual Backdrop

The State of Maharashtra had preferred the instant appeal to assail the order of the High Court wherein it had held that education institutions run by charitable societies were exempted from payment of electricity duty. The High Court had set aside levy of electricity duty on the respondents- Shri Vile Parle Kelvani Mandal, a society registered under the Societies Registration Act, 1860 and also a public charitable trust registered under the Maharashtra Public Trusts Act, 1950 along with respective electricity bills levying the electricity duty on consumption of electricity charge.

The crux of dispute was that prior to 01-09-2016, the charitable education institutions were exempted from payment of electricity duty levied on the consumption charges or the energy consumption for the purposes of or in respect of a school or college or institution imparting education or training, students’ hostels, hospitals, nursing homes etc. as per Section 3(2)(iii) of the Maharashtra Electricity Duty Act, 1958. However, in the year 2018, the respective electricity supply companies levied the electricity duty pursuant to a letter from the State Government stating that as per Maharashtra Electricity Act, 2016, charitable institutions registered under the Maharashtra Public Trusts Act, 1950 for the purpose of or in respect of school or college imparting education or training in academic or technical subjects are not entitled for electricity duty exemption with effect from 01-09-2016.

Intelligible Differentia vis-a-vis Taxing Statute

The respondents contended that if the interpretation canvassed by the state is accepted then it will lead to absurdity and manifest injustice as school/colleges etc. run by the local authority will fall within the purview of Section 3(2)(iii) of 2016 Act, while those run by the statutory university or charitable institution would fall outside the ambit of Section 3(2)(iii). It was submitted that as such there is no essential difference between schools/colleges etc. run by the statutory university or institution registered under the Maharashtra Public Trusts Act, 1950 and those run by the local authority. Further, that who runs the educational institution could not be the intelligible differentia for the purpose of classification. Hence, it was submitted that Electricity Duty Act being taxing statute, it must be strictly construed and if there is any ambiguity the benefit of ambiguity must lean in favour of the assessee rather than the revenue.

On the contrary, the stand of the State was that on enactment of the Maharashtra Electricity Duty Act, 2016 which repealed the earlier the Maharashtra Electricity Duty Act, 1958, no such exemption from levy/payment of electricity duty has been provided to such charitable education institutions.

Analysis of the Statute

As per subsection (2) of Section 3 of the Act, 1958 the electricity duty was not leviable on the consumption charges or the units of energy consumed…………..by or in respect of charitable institution registered under the Bombay Public Trusts Act, 1950, for the purpose of, or in respect of, school or college imparting education or training in academic or technical subjects.

However, there are material changes under the Act, 2016. As per Section 3(2) of the 2016 Act, even the public undertakings are liable to pay the electricity duty. The Bench observed,

“Section 3(2)(iiia), which was there in 1958 Act, is now conspicuously and deliberately absent in Section 3(2) of the 2016 Act.”

Interpreting the Section 3(2)(iii), under Act, 2016, the Bench stated that electricity duty on the consumption of charges or energy consumed for the purposes of, or in respect of a school or college or institution imparting education or training, student’s, hostels………….run by any local bodies shall alone be exempted from levy of electricity duty and the State Government and Central Government are also specifically excluded from payment of electricity duty. However, the public sector undertakings are not exempted from payment of electricity Act.

Therefore, the Bench held that the language and words used in Section 3(2) are plain and simple and are capable of only one definite meaning that there is no exemption provided under the Act, 2016 from levy of electricity duty so far as the charitable education institutions are concerned.

Findings and Conclusion

In Essar Steel India Ltd. v. State of Gujarat, (2017) 8 SCC 357, it was held that the statutory conditions for grant of exemption can neither be tinkered with nor diluted. The exemption notification must be interpreted by their own wordings, and where the wordings of notification with regard the construction is clear, it has to be given effect to. Similarly, in Commr. of Customs Vs. Dilip Kumar & Co., (2018) 9 SCC 1, it was held that, in the context of exemption notification there is no new room for intendment. Regard must be to the clear meaning of the words. Claim to exemption is governed wholly by the language of the notification, which means by plain terms of the exemption clause. An assessee cannot claim benefit of exemption, on the principle that in case of ambiguity a taxing statue must be construed in his favour, for an exception or exemption provision must be construed strictly.

Hence, the Bench opined that if the submissions of the respondents is accepted that as per Section 3(2)(iii), with respect to all the schools/colleges or institutions, imparting education or training, the electricity duty is not leviable, it would lead to absurd result. In that case, even the private hospitals, nursing homes, dispensaries and clinics, who are profit making entities, can also claim exemption from levy of electricity duty. Therefore, it was held that charitable education institutions are not entitled to any exemption from levy/payment of the electricity duty from the date on which Maharashtra Electricity Duty Act, 2016 came into effect.

Consequently, the Bench concluded, the High Court had committed a grave error in setting aside the levy of electricity duty levied on the respondents. Accordingly, the impugned judgment and order were held unsustainable and thereby, quashed and set aside.

[State of Maharashtra v. Shri Vile Parle Kelvani Mandal, 2022 SCC OnLine SC 18, decided on 07-01-2022]


*Judgment by: Justice M. R. Shah


Appearance by:

For the State: Sachin Patil, Advocate

For the Respondents: Shekhar Naphade, Senior Advocate


Kamini Sharma, Editorial Assistant has put this report together 

Case BriefsSupreme Court

Supreme Court: The bench of Dr. DY Chandrachud* and MR Shah. JJ has held that the proceedings instituted before the commencement of the Consumer Protection Act 2019 on 20 July 2020 would continue before the fora corresponding to those under the Consumer Protection Act 1986 (the National Commission, State Commissions and District Commissions) and not be transferred in terms of the pecuniary jurisdiction set for the fora established under the Act of 2019.

Background

The material provisions of the Consumer Protection Act 2019 came into force on 20 July 2020. The appellants instituted a consumer case against real estate developers before the National Consumer Disputes Redressal Commission on 18 June 2020 under the Consumer Protection Act 1986 . The NCDRC by its order dated 30 July 2020 dismissed the consumer case on the ground that after the enforcement of the Act of 2019, its pecuniary jurisdiction has been enhanced from rupees one crore to rupees ten crores. The appellants’ review petition was also dismissed by the NCDRC on 5 October 2020. In the present case, the claim of Rs. 2.19 crores is below the enhanced pecuniary jurisdiction of the NCDRC.

This gave rise to the issue as to whether a complaint which was filed and registered under the Act of 1986, before the new Act of 2019 came into force, has to be entertained under the provisions of the erstwhile legislation. In anticipation of the enforcement of the Act of 2019, an administrative notice was issued by the NCDRC on 17 July 2020 to allow the functioning of its registry for fresh filings on 18 July 2020, since the new law was to come into force on 20 July 2020.

Analysis

Impact of a change in forum on pending proceedings and retrospectivity

After considering a number of precedents that have interpreted the impact of a change in forum on pending proceedings and retrospectivity, the following position of law emerged:

“a change in forum lies in the realm of procedure. Accordingly, in compliance with the tenets of statutory interpretation applicable to procedural law, amendments on matters of procedure are retrospective, unless a contrary intention emerges from the statute.”

Section 107 of the Act of 2019

  • Section 107(1) of the Act of 2019 repeals the Act of 1986.
  • Section 107 (2) has saved “the previous operation” of any repealed enactment or “anything duly done or suffered thereunder to the extent that it is not inconsistent with the provisions of the new legislation”.
  • Section 107(3) indicates that the mention of particular matters in sub-Section (2) will not prejudice or affect the general application of Section 6 of the General Clauses Act.

Section 6 of the General Clauses Act

Section 6 of the General Clauses Act provides governing principles with regard to the impact of the repeal of a central statute or regulation. These governing principles are to apply, “unless a different intention appears”. Clause (c) of Section 6 inter alia stipulates that a repeal would not affect “any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed”. The right to pursue a validly instituted consumer complaint under the Act of 1986 is a right which has accrued under the law which was repealed.

Clause (c) of Section 6 has the effect of preserving the right which has accrued. Clause (e) ensures that a legal proceeding which has been initiated to protect or enforce “such right” will not be affected and that it can be continued as if the repealing legislation has not been enacted. The expression “such a right” in clause (e) evidently means the right which has been adverted to in clause (c).

“The plain consequence of clause (c) and clause (e), when read together is twofold: first, the right which has accrued on the date of the institution of the consumer complaint under the Act of 1986 (the repealing law) is preserved; and second, the enforcement of the right through the instrument of a legal proceeding or remedy will not be affected by the repeal.”

However, considering that right to a forum is not an accrued right, the question whether the pending legal proceedings are required to be transferred to the newly created forum by virtue of the repeal would still persist.

While Section 6(e) of the General Clauses Act protects the pending legal proceedings for the enforcement of an accrued right from the effect of a repeal, this does not mean that the legal proceedings at a particular forum are saved from the effects from the repeal.

Object of the Act of 2019

There is no express language indicating that all pending cases would stand transferred to the fora created by the Act of 2019 by applying its newly prescribed pecuniary limits.

The Act of 2019 is enacted to provide “for protection of the interests of consumers” and has taken note of the evolution of consumer markets by the proliferation of products and services in light of global supply chains, ecommerce and international trade.

“New markets have provided a wider range of access to consumers. But at the same time, consumers are vulnerable to exploitation through unfair and unethical business practices. The Act has sought to address “the myriad and constantly emerging vulnerabilities of the consumers. The recurring theme in the new legislation is the protection of consumers which is sought to be strengthened by procedural interventions such as strengthening class actions and introducing mediation as an alternate forum of dispute resolution.”

In this backdrop, something specific in terms of statutory language – either express words or words indicative of a necessary intendment would have been required for mandating the transfer of pending cases.

“One can imagine the serious hardship that would be caused to the consumers, if cases which have been already instituted before the NCDRC were required to be transferred to the SCDRCs as a result of the alteration of pecuniary limits by the Act of 2019. A consumer who has engaged legal counsel at the headquarters of the NCDRC would have to undertake a fresh round of legal representation before the SCDRC incurring expense and engendering uncertainty in obtaining access to justice. Likewise, where complaints have been instituted before the SCDRC, a transfer of proceedings would require consumers to obtain legal representation before the District Commission if cases were to be transferred. Such a course of action would have a detrimental impact on the rights of consumers. Many consumers may not have the wherewithal or the resources to undertake a fresh burden of finding legal counsel to represent them in the new forum to which their cases would stand transferred.”

Hence, it would be difficult to attribute to Parliament, whose purpose in enacting the Act of 2019 was to protect and support consumers with an intent that would lead to financial hardship, uncertainty and expense in the conduct of consumer litigation.

Data on pendency of cases

Data drawn from annual reports of the Union Ministry of Consumer Affairs indicates pendency from financial year 2015-16 to financial year 2019-20 indicates that as on 31 October 2019, 21,216 cases were pending before the NCDRC and 1,25,156 cases were pending before the SCDRC. Many of these cases would have to be transferred if the view which the developer propounds is upheld.

“This will seriously dislocate the interests of consumers in a manner which defeats the object of the legislation, which is to protect and promote their welfare. Clear words indicative of either an express intent or an intent by necessary implication would be necessary to achieve this result. The Act of 2019 contains no such indication.”

Hence, the legislature cannot be attributed to be remiss in not explicitly providing for transfer of pending cases according to the new pecuniary limits set up for the fora established by the new law, were that to be its intention.

Conclusion

All proceedings instituted before 20 July 2020 under the Act of 1986 shall continue to be heard by the fora corresponding to those designated under the Act of 1986 and not be transferred in terms of the new pecuniary limits established under the Act of 2019.

[Neena Aneja v. Jai Prakash Associates Ltd., 2021 SCC OnLine SC 225, decided on 16.03.2021]


*Judgment by: Justice Dr. DY Chandrachud

Know Thy Judge| Justice Dr. DY Chandrachud

Appearances before the Court by:

For appellants: Advocate P Vinay Kumar

For respondent: Senior Advocate Krishnan Venugopal

Op EdsOP. ED.

Law is a game of words — this quote holds true when courts are presented with the challenging task of differentiating between terms which sometimes appear to have a similar connotation. For example, the words ‘repeal’ ‘substitute’ and ‘omission’ have different tenor in a literal sense but tend to denote a similar meaning when used in the context of any amendment of law. While the words themselves may not cause a conflict, it’s the consequences of the amendment on the rights and liabilities of the parties that have led to the courts differentiating between these terms. In the aforementioned backdrop, we will discuss the way the Supreme Court has dealt with these three terms used by the legislature while amending any law and whether the conflict between these words continues to be a cause of melee in interpretation.

One of the earliest authorities which brought up the question of ‘at odds interpretation’ between ‘repeal’ and ‘omission’ is the five-Judge Bench judgment of the Supreme Court in Rayala Corporation (P) Ltd. v. Director of Enforcement, New Delhi[1]. The question which arose for consideration before the Supreme Court in this case was if Rule 132-A of the Defence of India Rules, 1952 (the DI Rules) was omitted by a notification of the Ministry of Home Affairs dated 30th March 1965, can a prosecution in respect of an offence punishable under that Rule be instituted on 17th March, 1968 when the Rule itself had ceased to exist?

The Court brought to the fore Section 6 of the General Clauses Act, 1897 (the GC Act) for the purpose of distinguishing between the terms ‘repeal’ and ‘omission’ since Section 6 saves the power of prosecution and punishment for acts committed in a repealed legislation. The Court while differentiating the two terms held that:

“Section 6 of the General Clauses Act cannot obviously apply on the omission of Rule 132-A of the DI Rules for the two obvious reasons that Section 6 only applies to repeals and not to omissions, and applies when the repeal is of a Central Act or Regulation and not of a Rule.”                                                        

(emphasis supplied)

The Supreme Court in the above judgment did not discuss the two terms ‘repeal’ and ‘omission’ before coming to the said conclusion. There is no discussion on how the two terms are separate and whether they can be used interchangeably.

Rayala Corporation case came for consideration before the five-Judge Bench of Supreme Court in Kolhapur Canesugar Works Ltd.v. Union of India[2]. In this case the Court dealt with the definitions of ‘Central Act’, ‘enactment’, ‘regulation’, ‘rule’ as defined in Sections 3(7), 3(19), 3(50) and 3(51) respectively in the General Clauses Act and held that Section 6 only applies to Central Act and regulations. The Court further stated that —

When the Legislature by clear and unambiguous language has extended the provision of Section 6 to cases of repeal of a ‘Central Act’ or ‘regulation’, it is not possible to apply the provision to a case of repeal of a ‘rule’….Section 6 is applicable where any Central Act or Regulation made after commencement of the General Clauses Act repeals any enactment. It is not applicable in the case of omission of a “rule“.”                                                                                            

(emphasis supplied)

This judgment neither deals with the distinction between the terms omission and repeal, nor were any arguments regarding the same raised before the Bench. It simply deals with the applicability of Section 6 of the GC Act in context of the rules and upholds Rayala Corporation judgment. But reading between the lines of  Kolhapur Canesugar judgment, it can be said that it makes no distinction between repeal and omission. In para 37 of the judgment, the Court states that —

37. The position is well known that at common law, the normal effect of repealing a statute or deleting a provision is to obliterate it from the statute book as completely as if it had never been passed, and the statute must be considered as a law that never existed. To this rule, an exception is engrafted by the provisions of Section 6(1). If a provision of a statute is unconditionally omitted without a saving clause in favor of pending proceedings, all actions must stop where the omission finds them, and if final relief has not been granted before the omission goes into effect, it cannot be granted afterwards. Savings of the nature contained in Section 6 or in special Acts may modify the position. Thus the operation of repeal or deletion as to the future and the past largely depends on the savings applicable.[3]

                    (emphasis supplied)

From the emphasised[4] lines above, it can be seen that the Court uses the term repeal, omission and deletion interchangeably. This is also inferable that in case a provision is omitted, Section 6 may change the position which is contrary to what  Rayala Corporation judgment says. Rayala Corporation clearly states that Section 6 of GCA is only applicable to the matters of repeal. So even though it upheld Rayala Corporation judgment, it did not distinctly lay out the distinction between the two terms.

Further, both the cases (Kohlapur Canesugar and Rayala Corporation) have not considered Section 6-A of the GCA which has been reproduced hereinafter —

6-A. Repeal of Act making textual amendment in Act or Regulation.—Where any [Central Act] or Regulation made after the commencement of this Act repeals any enactment by which the text of any [Central Act] or Regulation was amended by the express omission, insertion or substitution of any matter, then, unless a different intention appears, the repeal shall not affect the continuance of any such amendment made by the enactment so repealed and in operation at the time of such repeal.”

This argument was raised in  General Finance Co.v. Assistant Commissioner of Income Tax, Punjab[5], to state that the earlier two judgments neither discussed the distinction between the two terms, nor they considered Section 6-A of the GC Act. It was further argued that the use of the words ‘repeals by express omission, insertion or substitution’ will cover different aspects of repeal; that this is a further legislative indication that ‘omission’ also amounts to a ‘repeal’ of an enactment.” However, the Court rejected the argument in light of the above two five-Judge Bench judgments of the Supreme Court and also refused to refer the matter to a larger Bench.

In fact, another judgment of the Supreme Court in Gammon India Ltd. v. Spl. Chief Secretary[6]while dealing with repeal and implied repeal echoed the reasoning that when the intention of legislature is to repeal, the use of words will not make any difference in resorting to Section 6 of the GC Act. The Court held that “Where an intention to effect a repeal is attributed to a legislature then the same would attract the incident of saving found in Section 6.”

The matter was however finally dealt in length in a two-Judge Bench judgment of Fibre Boards (P) Ltd., Bangalore v. Commissioner of Income Tax, Bangalore[7], where the Court stated that the view in Rayala Corporation needs a reconsideration for omission of a provision results in abrogation or obliteration of that provision in the same way as it happens in repeal. The Court discussed the two terms and concluded that “it is clear that repeals may take any form and so long as a statute or part of it is obliterated, such obliteration would be covered by the expression “repeal” in Section 6 of the General Clauses Act.

The Court then went ahead and nullified the effect of the above five-Judge Bench judgment with respect to difference between repeal and omission. The Court held that:

“31…once it is found that Section 6 itself would not apply, it would be wholly superfluous to further state that on an interpretation of the word “repeal”, an “omission” would not be included. We are, therefore, of the view that the second so-called ratio of the Constitution Bench in Rayala Corporation (P) Ltd.[8] cannot be said to be a ratio decidendi at all and is really in the nature of obiter dicta.” [9]      

(emphasis supplied)

The Court even declared that the two five-Judge Bench decisions (Rayala Corporation and Kolhapur Canesugar) were per incuriam as they did not consider Section 6-A of the GC Act. The Court with this effect held that:

“33. A reading of this section would show that a repeal by an amending Act can be by way of an express omission. This being the case, obviously the word “repeal” in both Section 6 and Section 24 would, therefore, include repeals by express omission. The absence of any reference to Section 6-A, therefore, again undoes the binding effect of these two judgments on an application of the ‘per incuriam’ principle.”[10]

The same two-Judge  Bench  of Fibre Boards case, once again after a month decided the present issue in detail in Shree Bhagwati Steel Rolling v. Commissioner of Central Excise[11] and held that delete and omit are used interchangeably, so that when the expression repeal refers to delete, it would necessarily take within its ken an omission as well. The Court further observed that all these expressions only go to form and not to substance. It also reiterated its stand in Fibre Boards case and held that “This again does not take us further as this statement of the law in Rayala Corporation[12] is no longer the law declared by the Supreme Court after the decision in the Fibre Boards case.”[13]

The decision in Fibre Boards and Shri Bhagwati Mills though rendered by two-Judge Bench, nullified the earlier Constitution Bench judgments by routing through the principle of per incuriam. It is a welcoming judgment as it finally clarifies that practically there exist no difference between the two terms. A plain reading of these words — repeal, omission and substitute will convey more or less the same meaning – that it is a form of ‘amendment’. The Supreme Court in Bhagat Ram Sharma v. Union of India [14] echoed the same view and held that:

“It is a matter of legislative practice to provide while enacting an amending law, that an existing provision shall be deleted and a new provision substituted. Such deletion has the effect of repeal of the existing provision. There is no real distinction between ‘repeal’ and an ‘amendment’.”[15]

Similarly, in the case of the word ‘substitute’, the Supreme court in Ramkanali Colliery of BCCL v. Workmen by Secy., Rashtriya Colliery Mazdoor Sangh[16] , the Supreme Court held that:

“If there is both repeal and introduction of another provision in place thereof by a single exercise, the expression “substituted” is used. Such deletion has the effect of the repeal of the existing provision and also provides for introduction of a new provision. In our view there is thus no real distinction between repeal and amendment or substitution in such cases.”[17]

Despite the above judgments holding that practically there exists no difference between these words, the interpretation of the terms continues to lock horns as there are huge consequences on the rights and liabilities of the parties due to amendments. The conflict arises when the legislature does not provide a ‘saving clause’ or it leaves doubt as to the future course of action in case of an amendment. The ‘intention’ of the legislature does not become apparent at the time of amendment which leaves it for the Court to ‘interpret’ the legislative intent and policy behind such repeal, omission and substitution.

The latest challenge has arisen due to the 2018 amendment[18] in the Prevention of Corruption Act, 1988 which has ‘substituted’ Section 13(1), opening a series of challenges before the Court to decide on the fate of the proceedings already conducted or pending as per the pre-amended Prevention of Corruption Act. In an order passed on May 22nd 2020 in Madhu Koda v. State[19], the Delhi High Court declined to grant the benefit of the amendment to Madhu Koda, convicted under the PC Act but the question is still open before the Supreme Court. This time the Court will have an opportunity to comprehensively consider the previous judgments on the effect of repeal, omission, substitution and read coherently with the relevant provisions of the General Clauses Act.


* Jatin Sehgal, Partner of Kred Jure Law Firm, New Delhi

**Advocate practising in Delhi courts

[1] (1969) 2 SCC 412

[2] (2000) 2 SCC 536     

[3] Kolhapur Canesugar Works Ltd. v. Union of India, (2000) 2 SCC 536 at p. 551

[4] Herein italicised.

[5] (2002) 7 SCC 1  

[6] (2006) 3 SCC 354  

[7] (2015) 10 SCC 333  

[8] (1969) 2 SCC 412 

[9] (2015) 10 SCC 333 at p. 354

[10] Fibre Boards (P) Ltd. v. CIT, (2015) 10 SCC 333 at p. 355

[11] (2016) 3 SCC 643   

[12] (1969) 2 SCC 412 

[13] Ibid at p. 658

[14] 1988 Supp SCC 30 

[15] Ibid at p. 40, para 17

[16] (2001) 4 SCC 236 

[17] Ibid at p. 240

[18] Prevention of Corruption (Amendment) Act, 2018  

[19] 2020 SCC OnLine Del 599  

Case BriefsSupreme Court

Supreme Court: The Bench of J. Chelameswar and Abhay Manohar Sapre, JJ said that no right or liability can be created by a repealing enactment, which is inconsistent with the rights and obligations conferred under the repealed Act unless the repealing enactment makes an express declaration to that effect or adopts some other technique known to law to achieve that purpose. Giving retrospective effect to the repealing enactment is one of the techniques by which the legislature seeks to achieve that purpose.

The Court was hearing the matter relating to removal of the chairman of the Mehsana District Co-operative Milk Producers Union Ltd under Section 76-B of the Gujarat Co-operative Societies Act, 1961 for the period of 6 years.  Originally the Section provided for disqualification only for four years. But the “four years” period was substituted by “six years” period by the Gujarat Co-operative Societies (Amendment) Act, 2015. Hence, the question before the Court was whether the period of disqualification of six years is consistent with law.

The Court noticed that Section 7 of the Gujarat General Clauses Act, 1904 provides that where an enactment is repealed by a subsequent enactment, the repeal does not normally affect any investigation or legal proceedings in respect of any right, privilege, obligations, liability, penalty, forfeiture or punishment and any legal proceeding initiated during the currency of the repealed enactment could be continued as if the repealing Act has not been passed. It was further explained that repeal could be either of the entire enactment or a part of it. Substitution of parts of an enactment is nothing but pro tanto to repeal those parts.

It was held that normally when an enactment is repealed, any action initiated under that enactment dealing its currency should lapse because the authority of law for action initiated under an enactment ceases to exist on its repeal rendering the continuation of action without authority of law. However, Section 7 of the General Clauses Act seeks to preserve various rights and obligations acquired or incurred under repealed enactments. [Vipulbhai Mansingbhai Chaudhary v. State of Gujarata, 2017 SCC OnLine SC 410, decided on 17.04.2017]