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PETITIONER: T.M. KANNIYAN

       Vs.

RESPONDENT: INCOME-TAX OFFICER, PONDICHERRY AND ANR.(With Connected Peti

DATE OF JUDGMENT: 30/10/1967

BENCH: BACHAWAT, R.S. BENCH: BACHAWAT, R.S. WANCHOO, K.N. (CJ) RAMASWAMI, V. MITTER, G.K. HEGDE, K.S.

CITATION:  1968 AIR  637            1968 SCR  (2) 103  CITATOR INFO :  RF         1970 SC1126  (16)

ACT: Constitution   of  India,  Articles  240(1)  and   Proviso,, 246--Power  of  President  to  make  Regulation  for   Union territories,    scope   of--"Peace,   progress   and    good government",  meaning of--Taxation Laws (Extension,to  Union Territories)  Regulation  (3 of 1963)--General Clauses  Act, 1897,  s.  3(58)--Definition  of  "State"  including   Union territories if repugnant to the subject and context of  Art. 246.

HEADNOTE: Parliament enacted the Pondicherry Administration Act. 1962. which    provided that all laws in force immediately  before August 19. 1962, when Pondicherry became a Union  territory, were to continue to be in force until amended or repealed by a  competent legislature or other competent authority.   The President,  in  exercise of the powers conferred on  him  by Art.  240 of the Constitution to make regulations of "peace, progress  and  good  government" of  the  Union  territories promulgated  the Tax Laws (Extension to  Union  Territories) Regulation.  1963. By this Regulation the laws in  force  in relation  to  income tax in Union territory  of  Pond:cherry were repeated  and the Indian  Income-tax Act, 1961 was made applicable.         The petitioners challenged  the rites of the Regulation. HELD: The Regulation is valid.     The  power  of the President to make  regulations  under Art.  240  is not limited to the subject of law  and  order. Authority to make regulations for "peace. progress and  good government" is a common  form  of grant of legislative power and the expression "peace, progress and good government"  is of very wide import giving wide discretion to the  authority empowered to pass laws for such purposes.  The President can make regulations with respect to a Union territory occupying the same field on which Parliament can also make laws.  Such a regulation may repeal or amend any Act made by  Parliament or  any existing law which is for the time being  applicable

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to  the  Union territory and when promulgated has  the  same force  and effect as an Act of Parliament which  applies  to that territory. [107E-108D]     Riel  v. queen. [1865] 10 A.C. 675. Chenard and  Co.  v. Joachim  Arissol,  [1949]  A.C.  127,  Attorney-General  for Saskatchewan v. Canadian Pacific Ry. Co., [1953] A.C.  59’4, King  Emperor v. Benoari Lal Sarma, [1914] L.R. 72 I.A.  57. Jogendra  Narayan Deb v.  Debendra Narayan Roy, [1942]  L.R. 69 I.A. 76 and Girindra Nath Banerjee v.  Birendra Nath Pal. [1927] I.L.R. 54 Cal. 727, referred to.     Parliament has, by virtue of Art. 246(4), power to  make laws with respect to any matter including matters enumerated in  the State List, for any part of the territory  of  India not  included in a State.  With regard to Union  territories there is no distribution of legislative power 104 and  Parliament  has plenary power to make  laws  for  those territories  on  any  subject.   Though  the  definition  of "State"  in  s.  3(58) of the General   Clauses  Act,  1897, taking   within  it  Union  territories,  applies   to   the interpretation   of   the   Constitution,   this   inclusive definition  is repugnant to the subject and context of  Art. 246.   There,   the   expression  "State"  means  the  State specified  in  the FirSt Schedule.  Parliament  can  by  law extend  the Income-tax Act, 1961, to a Union territory  with such  modifications  as it thinks fit.  The  President  can, therefore, by regulation do the same.  [108E; 109A-D] R.K. Sen v. Union, [1966] 1 S.C.R. 430, referred to.     The  power of the President to make regulations for  any of the Union territories specified in Art. 240(1) so long as no legislature is created for the territory is not  fettered by  the.  proviso  to Art. 24-0(2 ) or  limited  to  matters enumerated  in  the  State List and  the.  Concurrent  list. [110G]    It  is not necessary to make any distribution of  income- tax with  respect to Union territories, as those territories are centrally administered through the President.  [111A-B]

JUDGMENT: ORIGINAL JURISDICTION: Writ Petitions Nos. 49, 60, 61 and 80 of 1967.     Writ  Petitions  under Art. 32 of  the  Constitution  of India for  the enforcement of fundamental rights.     K. Narayanaswamy and Lily Thomas, for the petitioner (in W.P. No. 49 of 1967). Sadhu Singh, for the petitioner (in W.P. No. 60 of 1967).     S.K.  Dholakia and Sadhu Singh, for the  petitioner  (in W.P. No. 61 of 1967).     S.T. Desai and Sadhu Singh, for the petitioner (in  W.P. No. 80 of 1967).     C.K.  Daphtary,  Attorney-General,  B.L.  lyengar,  R.H. Dhebar for R.N. Sachthey, for the respondents (in W.P. No 49 of 1967).     R.H.  Dhebar for R.N. Sachthey, for the respondents  (in W.Ps. Nos. 60, 61 and 80 of 1967). The Judgment of the Court was delivered by Bachawat,  J. In all these writ petitions,  the  petitioners challenge the vires of the Taxation Laws (Extension to Union Territories)  Regulation No. 3 of 1963.  The  contention  is that the President had no power to promulgate the Regulation under  Art.  240 of the Constitution.  On August  16,  1962, Pondicherry became a Union Territory.  On December 5,  1962, Parliament enacted the Pondicherry Administration Act,  1962

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(Act  No. 49 of 1962). Section 4 (1 ) of this  Act  provided that  all laws in force immediately before August  19,  1962 would continue to be in force in 105 Pondicherry  until  amended  or  repealed  by  a   competent legislature  or  other competent  authority.   Section  4(2) empowered   the   Central  Government  to   make   necessary adaptations   and   modifications   for   the   purpose   of facilitating the application of any such law in relation  to the   administration   of  Pondicherry  and   bringing   the provisions  of any such law into accord with the  provisions of  the  Constitution.  Section 7 provided that  all  taxes, duties, cesses and fees which immediately before August  19, 1962 were being lawfully levied would continue to be  levied in  Pondicherry  and to be applied for  the  same  purposes, until  other provision  was made by a competent  legislature or  other  competent  authority. After the passing  of  this Act,  the  petitioners  continued  to  be  sub.jeer  to  the existing   French laws relating to income-tax.On  March  30, 1963, the President in the exercise of the powers  conferred on  him  by Art. 240 of the  Constitution  promulgated   the impugned Regulation No. 3 of 1963.  The Regulation  extended certain  Indian  Acts  relating to taxation  to  the   Union territories  mentioned  therein.   Section  3  (2)  of   the Regulation extended the Income-tax Act, 1961, subject to the modifications  mentioned  in  Part II of  the  Schedule,  to Pondicherry  as  from April 1, 1963. Section  4(1)  provided that  any law in force in Pondicherry corresponding  to  the Income-tax Act, 1961 would stand repealed on April 1,  1963. The  petitioners  carry on business at Pondicherry  and  are being assessed to income-tax under the Income-tax Act. 1961. They  have  filed the present writ petitions  asking  for  a declaration  that the Income-tax Act, 1961 was  not  legally extended  to  Pondicherry and a direction  prohibiting   the respondents   from  implementing  that Act  in  relation  to Pondicherry.     In  the  Constitution of India  as  originally  enacted, India  was declared to be a Union of States, [Art.  1  (1)]. The States and their territories were specified in Parts  A, B and C of the First schedule [Art. 1(2)].  The territory of India  consisted  of  the territories  of  the  States,  the territories  specified  in  Part D  of  the  First  Schedule (Andaman and Nicobar Islands) and such other territories  as may be acquired, [Art. 1 (3)].  As original enacted. part VI of the Constitution dealt with Part A States, Part VII dealt with  Part B States, Part VIII dealt with Part C States  and Part  IX dealt with the territories specified in Part  D  of the  First Schedule.  The Constitution  (Seventh  Amendment) Act  passed  on  October  19, 1956  altered  the  scheme  of division  of  India  in  to   A  B  and  C  States  and  the territories  mentioned  in  Part D of  the  first  Schedule. Article  1 and the First Schedule were amended so  that  the territory  of  India would comprise the territories  of  the states,  the  Union  territories  specified  in  the   First Schedule and such other territories as may be acquired.   By cl.  30 added to Art. 66. "Union territory" was  defined  to mean any Union territory specified in the First Schedule and to include any other territory supp. C.I./68-8 106 comprised  within ’the territory of India but not  specified in that Schedule. Consequential amendments were made in Part VI  and other Parts of the Constitution.  Parts VII  and  IX were repealed. Part VIII was drastically amended. The  title of Part VIII was altered to that of "Union Territories". The

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amended  Art. 239 provided for the administration  of  Union territories by the President acting through an administrator to  be appointed by him.  The amended Art. 240 was in  these terms:                     "240.   Power  of  President   to   make               regulations for certain Union  territories.--(               1 ) The President may make regulations for the               peace,  progress  and good government  of  the               Union territory of--               (a) the Andaman and Nicobar Islands;               (b)   the  Laccadive,  Minicoy  and   Amindivi                             Islands.                     (2) Any regulation so made may repeal or               amend  any  Act  made  by  Parliament  or  any               existing  law  which  is for  the  time  being               applicable  to the Union territory  and,  when               promulgated  by the President, shall have  the               same force and effect as an Act of  Parliament               which applies to that territory." The  amended  Art.  241 dealt with  High  Courts  for  Union territories.   Article 242 relating to Coorg  was  repealed. Article  240  (1) and the First Schedule were  amended  from time  to time.  The Constitution (Fourteenth Amendment)  Act passed  on December 28, 1962 amended the First Schedule  and Art. 240 and added Art. 239A.  Article 239A and the  amended Art.  240  are in these terms:                     "239A. (1 ) Parliament may by law create               for  any of the Union territories of  Himachal               Pradesh, Manipur, Tripura, Goa, Daman and Diu,               and Pondicherry--                  (a)  a  body,  whether  elected  or  partly               nominated and partly elected, to function as a               Legislature for the Union territory, or               (b)  a Council of Ministers,or both with  such               constitution,  powers and functions,  in  each               case, as may be specified in the law.                     (2)  Any such law as is referred  to  in               clause  (1)  shall  not be  deemed  to  be  an               amendment   of  this  Constitution   for   the               purposes  of article 368 notwithstanding  that               it contains any provision which amends or  has               the effect of amending this Constitution.               107                       240.   (1)  The  President  may   make               regulations  for the peace, progress and  good               government of the Union territory of-               (a) the Andaman and Nicobar Islands;               (b)   the  Laccudive,  Minicoy  and   Amindivi               Islands;                    (c)  Dadra and Nagar Haveli;                    (d)  Gao, Daman and Diu;                    (e)  Pondicherry:                      Provided that when any body is  created               under   article   239A  to   function   as   a               Legislature  for  the Union teriyaki  of  Goa,               Daman    and   Diu   or    Pondicherry,    the               President  shall not make any  regulation  for               the  peace,  progress and good  government  of               that Union territory with effect from the date               appointed   for  the  first  meeting  of   the               Legislature.                      (2)  Any regulation so made may  repeal               or  amend  any Act made by Parliament  or  any               existing  law  which  is for  the  time  being               applicable  to the Union territory  and,  when

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             promulgated  by the President, shall have  the               same force and effect as an Act of  Parliament               which applies to that territory."     Regulation  No. 3 of 1963 was made by the  President  in the  exercise  of  the  power  conferred  on  him  to   make regulations  for the peace, progress and good government  of the  Union territories. The contention that under  Art.  240 the President can make regulations limited to the subject of law  and  order  only  cannot  be accepted.   The  grant  of legislative  power to make laws, regulations  or  ordinances for  British  dependencies has long been  expressed  in  the common   form  of  that  of  making  laws,  regulations   or ordinances for "peace and good government" of the  territory or  similar  objects  such  as  "peace,  order   and    good government",  "peace,  welfare  and  good  government"   and "peace,  progress  and good government" of  the  territory.. Instances  of   this  common form of  grant  of  legislative power to legislatures and authorities in India are s. 42  of the  Indian  Councils  Act, 1861, ss. 71,  72,  80A  of  the Government  of India Act, 1915, s. 72 of the ninth  Schedule and  s. 92(2) of the Government of India Act,1935.   Such  a power  was  held  to  authorise  the  utmost  discretion  of enactment  for  the  attainment of  peace,  order  and  good government  of  the territory and a Court will  not  enquire whether  any  particular enactment made in the  exercise  of this  power,  in  fact, promotes   those  objects,  Riel  v. Queen), Chenard and Co.  v.  Joachim  Arissol(2).  The words "peace, order and good government" and (1) [1885] 10 A.C. 675, 678-679. (2) [1949] A.C. 127, 132. 108 similar  expressions  are words of very wide  import  giving wide discretion to the authority empowered to pass laws  for such   purposes,  Attorney-General  for   Saskatchewan    v. Canadian   Pacific  Ry.  CO.(1) King Emperor v. Benoari  Lal Sarma(2).   In  Jogendra  Narayan Deb  v.  Debendra  Narayan Roy(3) Sir George Rankin said that the words have  reference to  the  scope and not  to  the merits of  the  legislation. Girindra Nath Banerjee v. Birendra Nath Pal(4), he said that "these  words are used because they are words of the  widest significance  and  it  is  not open to a  Court  of  law  to consider with regard to any particular piece of  legislation whether in fact it is meritorious in the sense that it  will conduce  to peace or to good government.  It  is  sufficient that  they are words which are intended to give, subject  to the restrictions of the Act, a legislating power to the body which  it invests with that authority." Article 240  of  the Constitution  confers  on the President a general  power  of making   regulations  for  the  peace,  progress  and   good government of the specified Union territories.  In  exercise of this power, the President may make a regulation repealing or  amending any Act made by Parliament or any existing  law which  is  for  the  time  being  applicable  to  the  Union territory.  The regulation when promulgated by the President has the stone force and effect as an Act of Parliament which applies  to  that territory.  The President  can  thus  make regulations  on  all subjects on which Parliament  can  make laws for the territory.     Parliament has plenary power to legislate for the  Union territories  with  regard to any subject.   With  regard  to Union  territories there is no distribution  of  legislative power.  Article 246(4) enacts that "Parliament has power  to make  laws  with respect to any matter for any part  of  the territory  of India not included in a State  notwithstanding that such matter is a matter enumerated in the State  List."

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In  R.K.  Sen  v. Union(3) it was pointed  out  that  having regard to Art. 367, the definition of "State" in s. 3(58) of the General Clauses Act, 1897 applies for the interpretation of  the Constitution unless there is anything repugnant  in. the   subject  or  context.   Under  that  definition,   the expression   "State"  as  respects  any  period  after   the commencement  of the Constitution (Seventh  Amendment)  Act, 1956 "shall mean a State specified in the First Schedule  to the  Constitution and shall include a Union territory.’  But this  inclusive definition is repugnant to the  subject  and con  text of Art. 246.  There, the expression "State"  means the  State  specified  in the First Schedule.   There  is  a distribution of legislative power between Parliament and the legislatures of the States Exclusive power to legislate with respect  to  the  matters enumerated in the  State  List  is assigned to the legislatures of the States esta  (1) [1953] A.C. 594, 613-614.’  (2) [1914] L.R. 72 I.A. 57, 72.  (3) [1942] L.R. 69 I.A. 76, 90.  (4) [1927] I.L.R. 54 Cal. 727, 738,  (5) [1966] 1 S.C.R. 430, 433. 109 blished by Part V1.  There is no distribution of legislative power  with  respect  to Union  territories.   That  is  why Parliament  is given power by Art. 246(4) to legislate  even with respect  to  matters enumerated in the State List.   If the  inclusive  definition  of "State" in s.  3(58)  of  the General  Clauses  Act  were  to.  apply   to  Art.   246(4), Parliament  would have no power to legislate for  the  Union territories with respect to matters enumerated in the  State List and until a legislature empowered to legislate on those matters   is   created  under  Art.  239A  for   the   Union territories,  there  would be no  legislature  competent  to legislate   on   those  matterS;   moreover,   for   certain territories  such  as  the Andaman and  Nicobar  Islands  no legislature  can  be created under Art. 239A, and  for  such territories there can be no authority competent to legislate with respect to matters,enumerated in the State List.   Such a  construction is repugnant to the subject and  context  of Art. 246.  It follows that m view of Art. 246(4), Parliament has plenary powers to make laws for Union territories on all matters.   Parliament can by law extend the Income-tax  Act, 1961  to  a Union territory with such  modifications  as  it thinks  fit.   The President in the exercise of  his  powers under  Art.  240 can make regulations which  have  the  same force  and effect as an Act of Parliament which  applies  to that  territory.  The President can therefore by  regulation made under Art. 240 extend the Income-tax Act, 1961 to  that territory with such modifications as he thinks lit.     The  President can thus make regulations under Art.  240 with  respect to a Union territory occupying the same  field on  which  Parliament  can  also  make  laws.   We  are  not impressed  by the argument that such overlapping  of  powers would lead to. a clash between the President and Parliament. The  Union. territories. are centrally administered  through the  President  acting  through an  administrator.   In  the cabinet  system  of  Government the President  acts  on  the advice of the Ministers who are  responsible Parliament. The  proviso to Art. 240(1) lays down the condition for  the cesser  of power of the President to make regulations  under Art. 240(1).  The power of the President to make regulations for the Union territory of Goa, Daman and Diu or Pondicherry ceases when a legislature for the territory is created  with effect from the date appointed for the first meeting of  the legislature.   But until such a legislature is created,  the

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President  retains  his full power to make  regulations  for those territories.  The proviso does not act as a fetter  on the  general power of the President to make regulations  for the Union territory while no legislature for that  territory is brought into. existence.  The proviso does not enact,  as is  suggested  by  the petitioners, that the  power  of  the President is confined 110 to  making laws with respect to the matters  enumerated   in the  State  List and the Concurrent List.  The  argument  is that a legislature created under Art. 239A can be authorised to  pass laws with respect to those matters only and  having regard to. the proviso to Art. 240(1) the President’s  power to   make   regulations   under  Art.   240   is   similarly circumscribed.  As a matter of fact, the Government of Union Territories  Act,  1963 created local legislatures  for  the Union  territories  of Himachal Pradesh,  Manipur.  Tripura, Goa,  Daman  and Diu and Pondicherry and s. 18  of  the  Act conferred on those legislatures power to make laws for those territories  with respect to the matters enumerated  in  the State  List  or  the Concurrent List.   Assuming  that   the local  legislature created under Art. 239A can be authorised to make laws with respect only to the matters enumerated  in the  State List or the Concurrent List, it does  not  follow that  the power of the President to make  regulations  under Art.  240 is so limited.  By the express words of Art.  240, the  President can make regulations for the peace,  progress and good government of the specified Union territories.  Any regulation  so  made  may repeal or amend any  Act  made  by Parliament   and   applicable  to  that   territory.    When promulgated  by  the President the regulation has  the  same force and effect as an Act of Parliament applicable to  that territory.   This  general power of the  President  to  make regulations extends. to all matters on which Parliament  can legislate.   It  may  be recalled that  Art.  239A  and  the proviso  to  Art. 240(1) were inserted by  the  Constitution (Fourteenth Amendment) Act. Under Art. 240 as it stood after the  Constitution  (Seventh Amendment) Act  and  before  the enactment of the Constitution (Fourteenth Amendment) Act, it could  not  be  contended  that the  general  power  of  the President to make regulations under Art. 240(1) was  limited to  matters enumerated in the State List and the  Concurrent List. The position was not changed by the insertion of  Art. 239A  and  the proviso to Art. 240(1)  by  the  Constitution (Fourteenth  Amendment) Act.  Moreover, Art. 239A  does  not authorise  Parliament to create legislatures for  the  Union territories  of the Andaman and Nicobar Islands,  Laccadive, Minicoy and Amindivi Islands and Dadra and Nagar Haveli.  It is clear, therefore, that the power of the President to make regulations with respect to those territories is not limited by the proviso to Art. 240( 1 ).  We  are  satisfied.  -that the proviso to Art. 240(1) on its true construction does not fetter  the power of the President to make  regulations  for any  of  the  Union territories  specified  in  Art.  240(1) including  Pondicherry as long as no Legislature is  created for the territory.     It  was  suggested that there is no  provision  for  the distribution   of  the  income-tax  attributable  to   Union territories and therefore the President could not extend the Income-tax  Act,  1961  to the Union  territories.  If  this argument were sound, even Parliament 111 could   not   extend  the  Income-tax  Act  to   the   Union territories. Moreover, the argument overlooks Art. 270 which shows that the income-tax attributable to Union  territories

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forms  part  of the Consolidated Fund of India.  It  is  not necessary  to  make  any  distribution  of  income-tax  with respect  to  Union  territories  as  those  territories  are centrally administered through the President.     There  is no force in the contention that the  President cannot make a law with respect to income-tax in the  absence of an express grant of such a power.  There is  distribution of  legislative power between the Centre and the States  and consequently distinct grants of taxing power are made in the legislative lists. With respect to Union territories,  there is  no  distribution  of legislative power.  For  the  Union territories, Parliament has plenary powers to make laws  and the  President has general powers to make  regulations.   In the  exercise  of his powers under Art. 240,  the  President could make Regulation No. 3 of 1963 extending the Income-tax Act, 1961 and other laws to the Union territories. The petitions are dismissed with costs, one hearing fee. Y.p.                                   Petitions dismissed. 112