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CASE NO.: Appeal (civil)  3630-3631 of 2003 Appeal (civil)  4648-4653 of 2003 Appeal (civil)  8123 of 2003 Appeal (civil)  8124 of 2003

PETITIONER: Prohibition & Excise Supdt. A.P. & Ors.          

RESPONDENT: Toddy Tappers Coop. Society, Marredpally & Ors.                                          

DATE OF JUDGMENT: 17/11/2003

BENCH: S.B. Sinha       

JUDGMENT: J U D G M E N T

S.B. SINHA,  J:

       Section 72 of the Andhra Pradesh Excise Act, 1968  provides for  rule making power.  Sub-sections (3) and (4) of Section 72 of the Act   read as under :          "(3)    Any rule under this Act  may be made with  retrospective effect and when  such a rule  is made the reasons for making the rule  shall be specified in a statement to be  laid  before both Houses of the State  Legislature.

(4)     Every rule made under this Act, shall,  immediately after it is made be laid  before each House of the State Legislature  if it is in session and if it is not in  session, in the session immediately  following for a total period of fourteen  days which may be comprised in one session  or in two successive sessions and if  before the expiration 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 in  the annulment of the rule, the rule shall,  from the date on which the modification or  annulment is notified, have effect only in  such modified form or shall stand  annulled, as the case may be, so however  that any such modification or annulment  shall be without prejudice to the validity  of anything previously done under that  rule."

       Sub-section (3) of Section 72 of the Act, therefore, confers power  on the State to give retrospective effect to rules made thereunder,  subject to the fulfillment of the legal requirements.  

The submission of Mr. K.K. Venugopal, learned Senior Counsel  appearing on behalf of the respondents, is that it was not only  mandatory to lay the said rule before both Houses of the State  Legislatures inasmuch not only reasons for making the same with

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retrospective effect are to be assigned but also approval of the Houses  was required to be obtained.

Strong reliance, in this behalf, has been placed on Union of India  etc. vs. National Hydroelectric Power Corporation Ltd. and Others etc.  [(2001) 6 SCC 307].  

 The submission of the learned counsel cannot be accepted for  more than one reason.

Laying down of a subordinate legislation before  both Houses of  the Legislature is directory in nature.   

In M/s Atlas Cycle Industries Ltd. and Others vs. The State of  Haryana [(1979) 2 SCC 196], this court noticed that there are three  different laying clauses which assure different forms depending on the  degree of control which the Legislature may like to exercise, namely, -          (i)     Laying without further procedure, (ii)    Laying subject to negative resolution, (iii)   Laying subject to affirmative resolution.

Upon considering a large number of Indian and English decisions,  it was held :

       "From the foregoing discussion, it  inevitably follows that the Legislature never  intended that non-compliance with the  requirement of laying as envisaged  by sub- section (6) of Section 3 of the Act should  render the order void.  Consequently non-laying  of the aforesaid notification fixing the maximum  selling prices of various categories of iron and  steel including the commodity in question before  both Houses of Parliament cannot result in  nullification of the notification..."    

Yet again in Quarry Owners’ Association vs. State of Bihar and  Others [(2000) 8 SCC 655], a Division Bench of this Court observed  :

"In a democratic set-up, every State Government  is responsible to its State Legislature. When  any statute requires mere laying of any  notification or rule before the legislature its  executive, viz., the State Government comes  under the scrutiny of the legislature concerned.  Every function and every exercise of power, by  the State Government is under one or the other  Ministry which in turn is accountable to the  legislature concerned. Where any document, rule  or notification requires placement before any  House or when placed, the said House inherently  gets the jurisdiction over the same, each member  of the House, subject to its procedure gets the  right to discuss the same, they may put  questions to the Ministry concerned.  Irrespective of the fact that such rules or  notifications may not be under the purview of  its modification, such Members may seek  explanation from such Ministry of their  inaction, arbitrariness, transgressing limits of  their statutory orbit on any such other matter.  Short of modification power, it has a right even  to condemn the Ministry. No doubt in the case

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where the House is entrusted with power to  annul, modify or approve any rule, it plays a  positive role and has full control over it, but  even where the matter is merely placed before  any House, its positive control over the  executive makes even mere laying to play a very  vital and forceful role which keeps a check over  the State Government concerned. Even if  submission for the appellants is accepted that  mere placement before a House is only for  information, even then such information,  inherently in it makes the legislature to play  an important role as aforesaid for keeping a  check on the activity of the State Government.  Such placement cannot be construed to be non  est. No act of Parliament should be construed to  be of having no purpose. As we have said, mere  discussion and questioning the Ministry  concerned or authority in the House in respect  of such laying would keep such authority on  guard to act with circumspection which is a  check on such authority, specially when such  authority is even otherwise answerable to such  legislature..."                  It was further observed :         "We also find there are few provisions in  our Constitution which require mere laying  before Parliament. Article 151 requires laying  of the report of the Comptroller and Auditor  General of India before each House of Parliament  and with reference to the State, to be laid  before the legislature of the State. Article  338(5) requires placing of the report of the  Commission before each House of Parliament and  with reference to the State Government, under  sub-article (7) it is required to be laid before  the legislature of the State. Though they are  mere provisions for mere laying before  Parliament, but it is always open to any Member  of the House to discuss and comment on the said  report."  

It was, inter alia, concluded : "(d) Requirement of mere placement of the rules  or the notifications before the State  Legislature is also one of the forms of check on  the State Government to exercise its powers as a  delegatee."  

Sub-section (3) of Section 72 of the Act merely provides for  laying down the rules before both the houses of the Legislature with the  reasons for giving a retrospective effect.  The said provision does not  speak of the necessity to obtain permission or prior approval therefor  by the houses of the Legislature.  Only in the event the Legislature is  not satisfied with the sufficiency or otherwise of the reasons assigned,   it may direct that the same would operate prospectively. Sub-sections  (3) and (4) of Section 72 must be read in such a manner that both may be  given effect to. Sub-section (3) deals with only a special situation,  whereas sub-section (4) is general in nature.  In the event, a negative  resolution is adopted the Rules will cease to have the force of law.   Difference between sub-sections (3) and (4) of Section 72 lies in the  fact that whereas in case the rule is given retrospectivity, the members  of both the houses of the Legislature shall be apprised of the reasons  therefor, whereas in case of the rule which is prospective in nature,

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simple laying down before both the Houses would serve the statutory  object.     

In National Hydroelectric Power Corporation (supra), this Court  was dealing with a different type of rule making power, viz. Section 16  of the Water (Prevention and Control of Pollution) Cess Act, 1977 which  reads as under : "16. Power to amend Schedule I. - (1) The  Central Government may, by notification in the  Official Gazette, add to Schedule I any industry  having regard to the consumption of water in the  carrying on of such industry and the consequent  discharge thereof resulting in pollution of any  stream and thereupon Schedule I shall, subject  to the provisions of sub-section (2), be deemed  to be amended accordingly.  (2) Every such notification shall be laid before  each House of Parliament, if it is sitting, as  soon as may be after the issue of the  notification, and if it is not sitting, within  seven days of its reassembly and the Central  Government shall seek the approval of Parliament  to the notification by a resolution moved within  a period of fifteen days beginning with the day  on which the notification is so laid before the  House of the People, and if Parliament makes any  modification in the notification or directs that  the notification should cease to have effect,  the notification shall thereafter have effect  only in such modified form or be of no effect,  as the case may be, but without prejudice to the  validity of anything previously done  thereunder."  

       In that case, therefore, laying of the Rules before both the  Houses was held to be subject to affirmative resolution.   

Interpreting the said provision, it was observed :

"...Mere perusal of sub-section (2) shows that  there has to be a positive act of approval by  Parliament to the issuance of the notification  before it can be held that Schedule I has been  amended. Merely laying the notification before  each House of Parliament is not sufficient  compliance within the provisions of Section  16(2). There is of course no time-limit within  which the Houses of Parliament are required to  pass a resolution once the Central Government has  sought approval as contemplated by sub-section  (2), but in the present case the pleadings  disclose that no such approval was in fact sought  for."  

                                               (Emphasis sought for)

The said observations, thus, must be held to be confined to the  fact of the matter obtaining therein. In that case it was found as of  fact that the rule had never been placed before the Legislature and,  thus, there was even no substantial compliance of the law.  The Bench,  however, did not consider the effect of the directory nature of such a  provision, in the light of the decision of this Court in M/s Atlas Cycle  Industries (supra) and Quarry Owners’ Association (supra). The Court  further did not notice the difference between the expressions ’approval’

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and ’permission’.  Section 16 of the Water Act, construction whereof was  in question did not use the expression ’prior approval’.  The word  ’approval’ indicates that an Act which has already been made and is  required to be approved whereas in the case of ’permission’, the  situation would be different.  This aspect of the matter has been  considered by this Court in High Court of Judicature for Rajasthan vs.  P.P. Singh and Another [(2003) 4 SCC 239] stating :      

"When an approval is required, an action holds  good. Only if it is disapproved it losses its  force. Only when a permission is required, the  decision does not become effective till  permission is obtained. (See U.P. Avas Evam  Vikas Parishad and Another v. Friends Coop.  Housing Society Ltd and Another [(1995) Supp (3)  SCC 456].  In the instant case both the  aforementioned requirements have been  fulfilled."

Furthermore, in the instant case, the respondents have not been  criminally proceeded against.  They have merely incurred a civil  liability.  Such a liability could be fastened on them irrespective of  Rule 24 of the A.P. Excise (Arrack and Toddy Licenses General  Conditions) Rules, 1969  inasmuch in terms of the conditions of licence  as also the Act and the Rules framed thereunder, the licensees are  required to carry on their business in  liquor which would mean the  liquor free from all types of adulteration. Such goods should be fit for  human consumption and not hazardous to health. For the said purpose, it  was not necessary for the State to strictly adhere to Rule 24 of the  Rules inasmuch the right of an accused in terms of Articles 20 and 21 of  the Constitution of India would not be attracted in such a case.  Even  if Rule 24 as amended is held to have no retrospective effect, such a  provision must be held to be directory and non-compliance thereof would  not vitiate the proceedings for suspension of the licnece as even in  such a case, it would be open to the respondents herein to get the  sample tested by any other private laboratory of their choice for the  purpose of showing that the allegations made against them are wrong.   The respondents, thus, in no manner are prejudiced.  They in the  proceedings initiated against them would be entitled to raise all other  defences.     

By reason of such a rule no  substantive right of the appellants  is affected inasmuch licences granted to the licensees are subject to  the terms and conditions laid down therein whereby strict adherence to  the provisions of the Act or the Rules framed thereunder would be  implicit.

Furthermore, admittedly the laboratories owned by the State did  not have the requisite facilities for testing drugs.  A Licensee having  regard to public health cannot be permitted to escape his liabilities  only because certain testing facilities are not available in the State  Laboratories.  We have no doubt in our mind that considering the matter  from that angle, Rule 24 must be held to be directory in nature.      

I may further observe that the observations made in the  accompanying judgment of Dr. Lakshmanan, J. to the effect that it is  also a settled law by a catena of decisions of this Court that no  citizen has got any fundamental right for the trade in liquor and  it is  for the Government to evolve the excise policy and implement the same in  the interest of the public and safeguard the public may not have much  relevance in the fact situation obtaining herein and more so when the  said question is pending consideration before the Constitution Bench.

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Subject to the aforementioned, I respectfully agree with the  conclusion arrived at by Brother Lakshmanan, J. that the appeals be  allowed.