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PETITIONER: HUKAM CHAND ETC,

       Vs.

RESPONDENT: UNION OF INDIA & OTHERS(with connected appeal)

DATE OF JUDGMENT22/08/1972

BENCH: KHANNA, HANS RAJ BENCH: KHANNA, HANS RAJ HEGDE, K.S. REDDY, P. JAGANMOHAN

CITATION:  1972 AIR 2427            1973 SCR  (1) 896  1972 SCC  (2) 601  CITATOR INFO :  RF         1974 SC1533  (14)  E          1979 SC1149  (21)  F          1980 SC1872  (4)  RF         1980 SC2181  (118)  D          1984 SC 463  (5)  R          1984 SC1415  (11)  R          1987 SC1399  (18)  R          1988 SC1263  (11)

ACT: Displaced  Persons  (Compensation and  Rehabilitation)  Act, 1954  S.40-Rule making power-Does not confer power  to  make rules retroactively. Rule making-Retroactive rule making-Provision for laying  on the Table would not prevent courts from deciding rule  ultra vires.

HEADNOTE: Rule   49  of  the  Displaced  Persons   (Compensation   and Rehabilitation) Act, 1954, framed in exercise of the  powers conferred by S.40 of the Act, provided that displaced person having  verified claim in respect of agricultural land-  had to be, as far as possible, paid compensation by allotment of agricultural  land.  By amendment No. XXXIX  dated  February 1960, the Central Government added an Explanation to rule 49 which  stated that the expression ’agricultural land’  meant agricultural land situated in a rural area.  The Explanation was  to  be  deemed always to have  been  inserted.  on  the question  whether the Central Government ,had the  power  to give retrospective effect to the Explanation. HELD  : The Central Government acted in excess of its  power in so far as it gave retrospective effect to the Explanation to rule 49. There is no provision in S.40 which, either expressly or  by necessary implication, show that the Central Government  had been  vested  with power to make  rules  with  retrospective effect.   The extent and amplitude of the rule making  power would  depend  upon and be governed by the language  of  the section.   An  authority  vested with the  power  of  making subordinate legislation has to act within the limits of  its power and cannot transgress the same. [900D]

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Cannapore  Spinning and Weaving Mills Ltd. v.  Collector  of Customs and Central Excise, Cochin and Ors. [1970] 2  S.C.R. 830, B.S. Vadera etc. v. Union of India and Others, [1968] 3 S.C.R.  575  and The Income Tax Officer.  Alleppy v.  M.  C. Ponnoose and Others etc. [1969] 2 S.C.C. 352, referred to. The  fact that the rules framed tinder the  Act have  to  be laid  before  each  House of  Parliament  would  not  confer validity on a rule if it is made not in conformity with S.40 of the Act.  The act of the Central Government in laying the rules  before Parliament would not prevent the  Courts  from scrutinizing  the validity of the rules and holding them  to be ultra vires. [902D] Craies  on Statute Law, Sixth Edition, pp. 304-306  referred to.

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeals  Nos.  1.031, 1094-1095 of 1967. Appeal  by  special leave under Article 136 and 133  of  the Constitution of India from the common judgment dated Septem- ber 13, 1966 and April 21, 1966 of the- Puniab High Court at 897 Delhi (Circuit Bench) in Letter Patent Appeal No.  60-D/1965 and   Letter   Patent  Appeal  Nos.  59-D/62   and   73-D/65 respectively and Civil Appeal No. 177 of 1968: Appeal  by  certificate from the judgment and  decree  dated April  21, 1966 of the Punjab High Court at  Delhi  (Circuit Bench) in Letters Patent Appeal No. 58-D of 1962. S.   K. Mehta, R. A. Gupta, K. R. Nagaraja and M.  Qainarud- din, for the appellants (in all the appeals). L.   N.  Sinha, Solicitor-General of India, S. P. Nayar  and B.   D. Sharma for the respondents (in all the appeals). The Judgment of the Court was delivered by Khanna,  J. This judgment would dispose of four appeals  No. 1031,  1094  and  1095 of 1967 and 177  of  1968  which  are directed  against  the judgments of the Punjab  High  Court. Appeals Nos. 1094 of 1967, 1095 of 1967 and 177 of 1968 have been  filed  on certificate of fitness granted by  the  High Court,  while  appeal No.. 1031 of 1967 has  been  filed  by special  leave.   The  common  question  which  arises   for determination  in these four appeals is whether in  exercise of  the  powers  conferred by section 40  of  the  Displaced Persons (Compensation and Rehabilitation) Act, 1954 (Act  44 of  1954) (hereinafter referred to as the Act), the  Central Government  could  amend rule 49 of  the  Displaced  Persons (Compensation  and Rehabilitation) Rules, 1955  (hereinafter referred to as the rules) with retrospective effect. Arguments have been addressed in appeal No. 177 of 1968  and it  is stated that the decision in that appeal would  govern the other appeals also. Prithvi Chand appellant in appeal No. 177 of 1968 is a  dis- placed person from West Pakistan.  He filed a petition under article  226  of the Constitution in the High Court  on  the allegation  that he was the owner of agricultural  land  and buildings in West in the Union Territory of Delhi The  claim of  the  appellant was verified in respect  of  agricultural land  for four standard acres and 9 1/2 units.  In  November 1953  the Additional Custodian of Evacuee Property.  (Rural) allotted barani agricultural land measuring 28 bighas and 16 biswas  situated  in  village Tihar  to  the  appellant  and delivered him possession thereof.  The appellant claimed  to be in possession of the land since then.  He also claimed to

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have  spent more than Rs. 3,000/- on effecting  improvements on  the land.  On July 10, 1959 the Settlement  Officer-cum- Managing Officer issued notice to the appellant stating that he was not entitled to the transfer of the land allotted  to him as it was included in 8--L172Sup.CI/73 898 urban limits and was of the value of more than Rs. 10,000/-. The  appellant  was  called  upon  to  show  cause  why  the allotment  of land, except in respect of one  Khasra  number valued  below Rs. 10,000/- be not cancelled.  The  appellant preferred  objections against the proposed action,  but  his objections  were  rejected.   The  allotment  of  land   was cancelled, except in respect of one Khasra number, viz.  No. 1489. measuring 4 bighas 16 biswas, which was valued At  Rs. 9,680/-.  Appeal filed by the appellant was dismissed by the Assistant  Settlement Commissioner on October 21.,  1959  on the  ground  that it was time barred.   The  appellant  then filed a writ petition in the High Court. The  writ petition was dismissed by learned Single Judge  on the  ground that the departmental counsel had stated  during the  course of arguments that the department was willing  to give  the  benefit of the new rules to  the  appellant.   In Letters  Patent filed by the appellant controversy  centered on  the point as to what was the effect of  the  Explanation added  to rule 49.  Rule 49 as it originally stood  read  as under               "49.  Compensation normally to be paid in  the               form of land.               Except as otherwise provided in this, chapter,               a  displaced person having verified  claim  in               respect of agricultural land shall, as far  as               possible, be paid compensation by allotment of               agricultural  land.  Provided that  where  any               such person wishes to have his claim satisfied               against property other than agricultural land,               he  may purchase such property by bidding  for               it  at an open auction or by tendering for  it               and  in such a case the purchase price of  the               property   shall  be  adjusted   against   the               compensation  due on this verified  claim  for               agricultural  land  which shall  be  converted               into cash at the rate specified in Rule 56."               In 1960 the following explanation was added to               the above rule:               "Explanation  :-In this rule and in the  other               rules   of   this  chapter,   the   expression               ’agricultural    land’    shall    mean    the               agricultural land situated in a rural area." The amendment was given a retrospective effect by  providing that  the explanation was to be deemed always to  have  been inserted : vide amendment No. XXXIX dated February 11,  1960 made  by the Central Government acting under section  40  of the  Act.  The case set up on behalf of the respondents  was that  in  view of the Explanation,  which  incorporated  the policy laid down in an earlier 899 press note, the land which could be allotted under the above rule  was  only rural land and not land  situated  in  urban area.   As the land in dispute was situated in  urban  area, and was of the value of more than Rs. 10,000/-, the same, it was  submitted, could be transferred only by means  of  sale and  not  by  means  of  allotment.   As  against  that  the contention advanced on behalf of the appellant was that  the Explanation  to  rule 49 could not  be  given  retrospective

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effect as the Central Government had no power to amend  rule 49  retrospectively.   This  contention  on  behalf  of  the appellant did not find favour with the learned judges of the High Court.  Reference in this context was made to the  fact that  the rules made under section 40 of the Act had  to  be laid under sub-section (3) of that section before each House of  Parliament  for a period of 30 ,days for  annulment  and modification,  if so considered proper.  In the  result  the appeal was dismissed. Mr.  Mehta on behalf of the appellants in the  four  appeals has  argued in this Court that rule 49 could not be  amended with retrospective effect and that the Explanation added  to the  rule  could not operate from a date prior  to  that  on which  it  was  added  as a result  of  amendment  made  in, February 1960.  The view taken by the High Court,  according to the learned counsel, was incorrect.  As against that, the learned Solicitor General has canvassed for the  correctness of  the view taken by the High Court and has submitted  that the  Central Government could give retrospective  effect  to the  Explanation  added  to rule 49.  In  our  opinion,  the contention advanced by Mr. Mehta is well founded. Rules have been framed by the Central Government in exercise of the powers conferred by section 40 of the Act.  According to  subsection (1) of that section, the  Central  Government way, by notification in the official gazette, make rules  to carry out the purposes of the Act.  Sub-section (2) mentions the  matters  in  respect  of  which  the  rules  may  make, provisions without prejudice to the generality of the  power conferred  by  sub-section (1).  Sub-section  (3)  reads  as under:               "(3) Every rule made under this section  shall               be  laid  as soon as may be after it  is  made               before each House of Parliament while it is in               session for a period of thirty days which  may               be   comprised  in  one  session  or  in   two               successive  sessions and if before the  expiry               of  the session in which it is so laid or  the               session  immediately  following,  both  Houses               agree in making any modification in the  rule,               or both Houses agree that the rule should  not               be made, the rule shall thereafter have effect               only in such modified form or be of no effect,               as the case may               900               be, so however, that any such modification  or               annulment  shall be without prejudice  to  the               validity  of  anything previously  done  under               that rule." Perusal  of  section  40 shows that although  the  power  of making  rules to carry out the purposes of the Act has  been conferred   upon  the  Central  Government,  there  is-   no provision  in the section which may either expressly  or  by necessary implication show that  the Central Government  has been  vested  with power to make  rules  with  retrospective effect.   As it is section 40 of the Act which empowers  the Central  Government to make rules, the rules would  have  to conform  to that section.  The extent and amplitude  of  the rule  making power would depend upon and be governed by  the language  of the section.  If a particular rule were not  to fall  within  the  ambit and purview  of  the  section,  the Central  Government in such an event would have no power  to make  that  rule.   Likewise, if there was  nothing  in  the language  of  section 40 to empower the  Central  Government either expressly or by necessary implication, to make a rule retroactively,  the  Central Government would be  acting  in

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excess  of its power if it gave retrospective effect to  any rule.   The  underlying principle is that  unlike  Sovereign Legislature which has power to enact laws with retrospective operation,  authority  vested  with  the  power  of   making subordinate legislation has to act within the limits of  its power   and  cannot  transgress  the  same.    The   initial difference  between subordinate legislation and the  statute laws lies in the fact that a subordinate law making body  is bound by the terms of its delegated or derived authority and that  court of law, as a general rule, will not give  effect to  the  rules,  thus made, unless satisfied  that  all  the conditions precedent to the validity of the rules have  been fulfilled (see Craies on Statute Law,p. 297 Sixth Edition). The learned Solicitor General has not been able to refer to anything  in  section  40 from which power  of  the  Central Government to make retrospective rules may be inferred.   In the  absence of any such power, the Central  Government,  in our view, acted in excess of its power in so far as it  gave retrospective  effect to the Explanation to rule-  49.   The Explanation,    in   our   opinion,   could   not    operate retrospectively  and would be effective for the future  from the, date it was added in February 1960. In the case of Cannapore Spinning and Weaving Mills Ltd.  v. Collector of Customs and Central Excise, Cochin and  Ors.(1) this Court dealt with an explanation which had been added by the  Central Government in purported exercise of  the  power vested  under  the  Central  Excise  and  Salt  Act,   1944. Question arose (1)  [1970] 2 S.C.R. 830 901 whether  the  explanation had a retrospective  effect.   The Court  referred in this context to the rule making power  of the Central Government under the aforesaid Act and observed:               "Dr.  Seiyed Muhammad, learned Counsel for the               department did not support the impugned demand               on  the  basis  of  the  retrospective  effect               purported   to   have  been.  given   to   the               explanation referred to earlier by the notifi-               cation  dated February 16, 1963  (Exh.   P-12)               for   obvious   reasons.   The   rule   making               authority  had not been vested with the  power               under the Central Excise and Salt Act to  make               rules  with retrospective  effect.   Therefore               the retrospective effect purported to be given               under Exh.  P-12 was beyond the powers of  the               rule  making authority." In  the  case of The Income Tax Officer, Alleppy  v.  M.  C. Ponnoose  and  Others  etc.(1)  this  Court  dealt  with   a notification  dated  August  14, 1963  which  empowered  the revenue officials, including the Tehsildar, to exercise  the powers  of a tax recovery officer under the Income Tax  Act, 1961  in  respect of arrears.  The  notification  was  given retrospective    effect.    Question   which    arose    for determination was whether the State Government could  invest the  Tehsildar with such powers retrospectively.   Answering this question in the negative, this Court observed :               "The  Parliament can delegate its  legislative               power within the recognised limits.  Where any               rule  or regulation is made by any  person  or               authority  to  whom  such  powers  have   been               delegated by the Legislature it may or may not               be possible to make the same so as to give re-               trospective operation.  It will depend on  the               language  employed in the statutory  provision               which  may  in express terms or  by  necessary

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             implication empower the authority concerned to               make  a rule or regulation with  retrospective               effect.   But where no such language is to  be               found it has been held by the courts that  the               persons  or authority  exercising  subordinate               legislative  functions  cannot  make  a  rule,               regulation  or bye-law which can operate  with               retrospective effect." Reference  was  made in the above cited case to  an  earlier decision  of  this Court in B. S. Vadera etc.  v.  Union  of India  &  Others(2)  wherein  it  had  been  observed   with reference  to rules framed under the proviso to article  309 of  the  Constitution that those rules, could be  made  with retrospective operation.  Yadera’s case was distinguished on the ground that the view expressed therein was (1) [1969] 2 S.C.R. 352. (2) [1968] 3 S.C. R. 575. 902 based  upon the language employed in the proviso to  article 309 that any rules so made shall have effect subject to  the provisions of any such Act.  It was also observed :               "As    the    Legislature    can     legislate               prospectively as well as retrospectively there               can  be  hardly any justification  for  saying               that the President or the Governor should  not               be able to make rules in the same manner so as               to   give   them  prospective   as   well   as               retrospective  operation.  For  these  reasons               the ambit and content of the rule making power               under  article 309 can furnish no  analogy  or               parallel to the present case." We are, therefore, of the opinion that the Explanation added to rule 49 in the present case cannot be given retrospective operation. The fact that the rules framed under the Act have to be laid before  each House of Parliament. would not confer  validity on a rule if it is made not in conformity with section 40 of the Act.  It would appear from the observations on pages 304 to  306 of the Sixth Edition of Craies on Statute  Law  that there are three kinds of laying :               (i)   Laying without further procedure               (ii)  Laying subject to negative resolution               (iii) Laying     subject    to     affirmative               resolution. The  laying referred to in sub-section (3) of section 40  is of  the  second  category  because  the  above   sub-section contemplates  that  the  rules  would  have  effect   unless modified  or annulled by the Houses of Parliament.  The  act of  the Central Government in laying the rules  before  each House  of Parliament would note however, prevent the  courts from scrutinising the validity of the rules and holding them to be ultra vires if on such scrutiny the rules are found to be beyond the rule making power of the Central Government. It has also been submitted by the learned Solicitor  General that  in case this Court finds that the Explanation to  rule 49 could not be given retrospective effect, the appeals  may be allowed and the impugned orders about the cancellation of the allotment in favour of the appellants may be set  aside. It has also been stated that this Court need not go in these appeals  into  the question as to whether the  allotment  in favour of the appellants could be cancelled under some other provision of law. We accordingly accept the appeal, set aside the judgment  of the  High  Court  and  quash  the  order  relating  to   the cancellation

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903 of  allotment  of  the lands in dispute  in  favour  of  the appellants.   The appellants shall be entitled to  costs  of this Court as well as those incurred in the High Court.  One hearing fee.  Court fee in appeal No. 177 of 1968 should  be realised from the appellants in that appeal. K.B.N.                                                Appeal allowed. 904