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PETITIONER: SIRSILK LTD. AND ANOTHER

       Vs.

RESPONDENT: TEXTILES COMMITTEE & ORS.

DATE OF JUDGMENT12/09/1988

BENCH: SEN, A.P. (J) BENCH: SEN, A.P. (J) SINGH, K.N. (J)

CITATION:  1989 AIR  317            1988 SCR  Supl. (2) 880  1989 SCC  Supl.  (1) 168 JT 1988 (4)   592  1988 SCALE  (2)975

ACT:     Textile  Committee  Act,  1963/Textile  Committee  Rules 1965:  Sections 2(g), 12(1) and  22/Rule  21--Fee-Imposition of-On  production  of  rayon yarn and  staple  fibre  yarn-- Constitutional  validity  of--Words used in  statute  to  be interpreted in popular sense. %     Statutory Construction: Provision of earlier statute can be  made  use  of for purpose  of  construing  a  subsequent statute in case of ambiquity.

HEADNOTE:     A  number  of textile mills which were  engaged  in  the business  of manufacture and sale of rayon yarn  and  staple fibre,  i.e.  man-made fibre, moved the  High  Courts  under article   226   of   the   Constitution   challenging    the constitutional validity of the fee imposed upon them by  the Textile  Committee  under rule 21 of the  Textile  Committee Rules.  1965 made by the Central Government under s.  22  of the  Textiles  Committee  Act, 1963. The  levy  of  fee  was challenged on the ground that the Textile Committee was  not rendering  any  service  to them by  way  of  inspection  or examination  of rayon yarn and that the element of quid  pro quo was totally absent.     The  High Courts of Allahabad. Andhra  Pradesh,  Gujarat and Madras upheld the validity of the levy, while the Kerala High  Court took the contrary view. The parties came  up  in appeal to this Court. Four similar petitions pending in  the High Court of Bombay were also transferred to this Court.     Before  the  Court, it was contended on  behalf  of  the textile mills (1) the rayon yarn and nylon yarn manufactured by  them was made wholly Of filaments and not of fibres  and therefore  the same are not textiles within the  meaning  of the  definition of textiles’ as contained of S.2(g)  of  the Textile  Committee Act. and hence not liable to  payment  of any fee in accordance with rule 21 of the Textile  Committee Rules; and (2) the Textiles Committee rendered no service to the  writ  petitioners  because  neither  they  needed   the services  of  the  Committee  nor the  Committee  was  in  a position to render any service to them.                                                    PG NO 880

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                                                  PG NO 881     On  behalf  of  the Revenue,  the  Additional  Solicitor General contended (I) the levy under r. 21 of the Rules  was not correlated to the power of inspection which the Textiles Committee had under s. 11  of the Act, but was relatable  to its  power to levy fees under s. 12 for the  performance  of its  functions, powers and duties under s. 4 (2) the  avowed object  and purpose of the Act, as was clear from s. 3,  was ‘quality  control’  of all textile and it would be  idle  to contend  that  rayon  yarn and nylon  yarn  which  were  but species  of  what was known as  man-made  fibres,  otherwise called  artificial silk, and had a world market,  should  be outside  the purview of the Act, (3) the Act and  the  words used therein had to be interpreted not on a technological or specialised  scientific  plane, but in a  popular  sense  as understood by experts in the sphere of the textile  industry and  the  commercial  world dealing with  it;  and  (4)  the definition  of ’textiles’ must be given a broad and  liberal construction in furtherance of the object and purpose of the Act.     Dismissing  the appeals filed by the textile  mills  and allowing the appeal filed by the Textile Committee, it was     HELD: (1) In view of the fact that in the writ petitions filled in the High Courts the textile mills had stated  that they were actually engaged in the manufacture of rayon  yarn and nylon yarn both of which. they averred, were ‘species of what  was known as man-made fibres’. their  contention  that rayon  yarn  and nylon yarn manufactured by  them  were  not ‘yarn’  and therefore did not fall within the definition  of textiles  under  s. 2(g) of the Act could  be  countenanced. [899E,-F]     (2)  There was no explicable reason for the  Legislature to have excluded rayon yarn and nylon yarn from the  purview of the definition of textiles in s.(2)(g) of the Act. In the premise,  the expression ‘textiles’ as defined in s.2(g)  of the Act has to be given a broad and liberal construction, in furtherance of the purpose and object of the Act. [901A-B]     (3)  The  Act  and the words used  therein  have  to  be interpreted not on a technological or specialised scientific plane  but in the popular sense as understood by experts  in the sphere of the textile industry and the commercial  world dealing with it. [901D-E]     (4)  The  Industries (Development and  Regulation)  Act, 1951  treats  rayon  as well as nylon as  textiles  made  of artificial  (man-made) fibres. The  Industries  (Development and Regulation) Act, 1951 and the Textiles Committee Act may properly  be  considered  to be statutes  in  pari  materia. [905b]                                                    PG NO 882     (5)  The Industries (Development and Regulation) Act  is an Act earlier in point of time, and there is no reason  why if  a  subsequent  statute by the same  Legislature  can  be pressed In aid for the purpose of interpreting, in the event of  any  doubt, the provisions of an  earlier  statute,  the earlier  statute  cannot be made use of for the  purpose  of construing,  in the event of ambiguity, the provisions of  a later statute. [905E]     (6)  Rayon  and nylon yarn are not only made  of  ’other fibre’  but  are also yarn of ’artificial silk’  within  the meaning of s. t(g) of the Act. [904D]     (7)  The  contention  that rayon  yarn  and  nylon  yarn manufactured  by the mills are made wholly of filaments  and not of fibres and therefore did not come within the  purview of  textiles as defined in s. 2(g) of the Act prior  to  its amendment  and therefore were not liable for payment of  the

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fee levied under r. 21 of the Rules, cannot prevail.[905F]     (8) The grievance of the textile mills that there is  no inspection of the rayon yarn and nylon yarn manufactured  by them  at the stage of production is belied by the fact  that there is pre-shipment inspection of the fabrics manufactured from such fibres for export. [91OB-C]     (9) When the entire proceeds of the fee are utilised  in financing  the various projects undertaken by  the  Textiles Committee, as also the inspection of all textiles  including man-made fibres and textile machinery, the appellants cannot be  heard to say that there is no reasonable and  sufficient correlation  between  the levy of the fee and  the  services rendered. [907C]     (10) When the levy of the fee is for the benefit of  the entire  textile industry, there is sufficient quid  pro  quo between the levy recovered and the services rendered to  the industry as a whole. [91OD]     (11)  The conclusion is inevitable that the levy of  the fee under r. 21 of the Textiles Committee Rules, 1965 by the Textiles Committee under sub-s. (1) of s. 12 of the Textiles Committee   Act,   1963  is   valid   and   constitutionally permissible. [912B-C]     M/s  Juggilal Kamalapat Cotton Spinning & Weaving  Mills Co. Ltd. v. The Textiles Committee, Bombay, [1972] Tax  L.R. 2104;  The Travancore Rayons Ltd. r The Textiles  Committee, ILR  (1972) Ker. 437: Sreeniwasa General Traders &  Ors.  v. State of Andhra Pradesh, [1983]-3 SC R 843 referred to.  The                                                    PG NO 883 Gwalior Rayon Silk Manufacturing (Wvg.) Co. Ltd ., Birlagram Ujjain  v.  The  Textiles Committee,  Bombay,  AIR  1980  MP 69,overruled.

JUDGMENT:    CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.  869/73, 863-64/77, 1460/80, 1281/73, and 1133-34/79.     From   the   Judgments  and  Orders   dated   22.1.1973, 18.11.1976   10.4.1980,  30.10.72  and  24.10.1978  of   the Hyderabad,  Ahmedabad,  Allahabad,  Kerala,  Allahabad  High Courts in Writ Appeal No. 154/72, Special Civil  Application No.  597/69,  598/69  F.A.F.O.  No.  235/1972,  S.C.A.   No. 13707/1972 & Special Appeal No. 3 and 4/1972.                        WITH TRANSFERRED CASE NOS. 351-52, 354-55 of 1983.     Transfer  Petition  Nos. 21, 22, 24 to 26 of  1981  from Bombay High Court.     V.C.Mahajan,  G.L.  Sanghi, N.R. Khaitan,  Alok  Sharma, Krishan  Kumar, Mrs. P. Shroff, Mrs. A.K. Verma, Joel  Peres and S.K. Jain for the Appellants in all the appeals.     V.A.  Bobde,  B.R. Agarwala, Ms. S.  Manchanda,  Dr.  D. Chandrachud  and  P  . H . Parekh  for  the  Petitioners  in Transferred Cases.     G.   Ramaswamy,  Additional  Solicitor   General,   V.C. Mahajan,  Harish  Salve, D.N. Misra, Mrs. A.K.  Verma,  T.C. Sharma  and  C.V. Subba Rao for the Respondents in  all  the appeals.     G.Ramaswamy, Additional Solicitor General, V.C. Mahajan, S.S.  Shroff,  P. Shroff, R. Sasiprabhu, T.C.  Sharma,  C.V. Subba  Rao. V.B. Desai, Bharat Sangal and Ms. Madhuri  Gupta for the Respondents in all the Transfer Cases.     P.H. Parekh and P. Narasimhan for the Intervener.     The Judgment of the Court was delivered by     SEN,  J. In all these appeals except the one by  special leave,  and the connected transferred cases brought  by  the

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appellants,  each of which is a company  incorporated  under the  Companies  Act,  1956  engageded  in  the  business  of manufacture  and  sale  on a very large  scale  of  textiles                                                    PG NO 884 generally  and also of rayon yarn and staple fibre, both  of which  form species of what is known as man-made fibre  i.e. artificial  silk,  there  is a common  question  as  to  the constitutional validity of a fee imposed under r. 21 of  the Textiles   Committee  Rules,  1965  made  by   the   Central Government under s. 22 of the Textiles Committee Act,  1963, by the Textiles Committee constituted under s. 3 of the Act, on  the production of rayon yarn and staple fibre i.e.  man- made fibres manufactured by them. These appeals are  against the  various  judgments  and orders of the  High  Courts  of Allahabad, Andhra Pradesh, Gujarat and Madras upholding  the validity of the levy. The remaining appeal i.e. Civil Appeal No.  1281  of 1973 is preferred by  the  Textiles  Committee against  the  judgment and order of the  Kerala  High  Court taking the view to the contrary.     The  facts in all these cases are more or less  similar. It  would  suffice for our purposes to  notice  the  salient features  thereof. To illustrate, the appellant  company  in Civil Appeal No. 869 of 1973, Messrs Sirsilk Ltd., Hyderabad is  a  manufacturer of rayon yarn and staple fibre  and  has established its factory at Sirpur Kagaznagar in the State of Andhra Pradesh for the manufacture of the aforesaid man-made fibres. The Chief Inspecting Officer, Textiles Committee  by his letter dated May 19, 1965 directed all the textile mills in  India including the appellant to send  immediately,  the monthwise statements of production for March and April  l965 and  a cheque in payment of the fees due  thereon.  However, the Association of Man-made Fibre Industry, Bombay of  which the  appellant is a member by its letter dated May 25,  1985 advised  the  textile mills to keep the payment of  fees  in abeyance, as it had made a representation dated May 26, 1965 on  behalf  of  its members to  the  Ministry  of  Commerce, Government of India and to the Textiles Commissioner.  Along with  its  letter,  the Association  forwarded  to  all  its members  a  copy of the said representation.  By  a  further letter  dated May 29, 1965, the Association advised all  the textile mills including the appellant to send a reply to the letter addressed by the Textiles Committee demanding payment of fees to the effect that the Association had already  made a  represention  to  the Ministry of  Commerce  and  to  the Textiles Commissioner and as soon as a reply was received by them, they would revert to the subject and take such  action as  might  be necessary in the circumstances. In  the  mean- while, the Textiles Committee by its letter dated August 10, 1965 made a demand for payment of the fees for the months of March to July 1965. The appellant in its reply expressed its inability   to  pay  the  fees  in  view  of   the   pending representation  made by the Association on their behalf  and more so because the Association had advised the members that                                                    PG NO 885 the  fee would become payable by the textile mills  only  in connection  with the inspection and examination and must  be commensurate with the exact quantum of services rendered  by the Committee. The appellant were however informed that  one of its members had already remitted the fees.  Consequently, the appellant paid a sum of Rs.40,186.37 p. towards the  fee for the period from March 1, 1965 to  February 28, 1966.  It however adopted to the stand that the payment of the fee was under  a  mistake and under misconception as  to  its  legal rights.  It accordingly called upon the Association to  take up the matter with the Ministry of Commerce and the Textiles

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Commissioner  and  to  lodge a strong  protest  against  the illegal  exaction of the fee by the Textiles Committee  from its  members  when, in fact, no services of  any  kind  were being rendered.     Thereafter, the Accounts Officer, Textiles Committee  by letter dated February 26, 1969 called upon the appellant  to remit a sum of RS.33,343.62 p. towards the fee in respect of production  of  rayon or staple fibre for  the  period  from March 1, 1966 to March 31, 1967. It was also advised to  pay the fee upto April 1968. In response thereto, the  appellant by  its  letter  dated February 27,  1969  stated  that  the Association had on behalf of its members addressed a  letter to   the   Secretary,   Textiles   Committee   for   certain clarifications and on receipt of the reply, the  Association would  advise  its  members  as to  the  course  of  action. Eventually,.the  Secretary, Textiles Committee by  a  letter dated  March  11, 1970, called upon the  appellant  that  it should  remit an amount of Rs.35,138.63 p. being the  amount of  fee outstanding within ten days failing which  the  said amount  would be recovered as arrears of land revenue  under s. 12(2) of the Act. Aggrieved, the appellant moved the High Court  of Andhra Pradesh under Art. 226 of the  Constitution challenging  the  validity  of the fee  and  the  threatened action  for recovery. A learned Single Judge  (Parthasarthi, J.)  by  his judgment dated January 28, 1972  dismissed  the writ petition upholding the validity of the levy of the fee. On  appeal being preferred by the appellant the judgment  of the  learned  Single Judge was upheld by  a  Division  Bench (Gopuirao  Ekbote,  CJ and Chennakesava Reddy,  J.)  by  its judgment  dated  January 22 1973. The High Court  of  Andhra Pradesh  preferred  to  follow the view  expressed  by  B.N. Lokur,  J.  of  the Allahabad High Court  in  M/s.  Juggilal Kamalapat  Cotton  Spinning Weaving Mills Co.  Ltd.  v.  The Textiles  Committee,  Bombay,  [1972]  Tax.  LR  2104,   and dissented from the view taken by Issac, J. in The Travancore Rayons  Ltd.  v. The Textile Committee, ILR  1972  Ker.  437 holding that the Textiles Committee was not entitled to levy any  fee  under  r.4  of the Rules so long  as  it  was  not rendering any service by way of inspection or examination of rayon yarn.                                                    PG NO 886     Briefly stated, the facts in transferred cases nos. 351- 352 of 1983 are these. The petitioner in the first case  the Century  Spg. & Mfg. Co, Ltd., Bombay carry on the  business of  manufacture  of rayon yarn and tyre-cord yarn,  both  of which  form species of what is popularly known as  ‘men-made rayon’,  while the petitioners in the second Messrs  Century Enka Limited, Bombay carry on the business of manufacture of nylon  filament  yarn.  By letter dated  May  25,  1968  the Accounts Officer, Textiles Committee, Bombay called upon the petitioner  the Century Spg. & Mfg. Co. Ltd. to remit a  sum of  Rs.5,89,187.46  p. as fees in respect of  production  of 29,459,373.21  kgs. of rayon yarn for the period from  March 1, 1966 to April, 30, 1968. The petitioners were also called upon  to  pay  the  fees  for  April  1968.  In  reply,  the petitioners by their letter dated June 18, 1968 stated  that the  Association  of Man- made Fibre  Industry,  Bombay  had addressed a letter to the Secretary, Textiles Committee  for certain  clarifications in the matter and on receipt of  the reply the Association would be advising its members further. Thereupon,   further  correspondence  ensued   between   the Textiles   Committee on the one hand and the Association  on the other. Thereafter, by letter dated February 20, 1969 the Secretary, Textiles Committee intimated the petitioner  that it was proposed to initiate immediate action to recover  the

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outstanding  fees  from the petitioner as  arrears  of  land revenue  as contemplated under s. 12(2) of the Act.  It  was further  stated that in order to avoid coercive  proceedings the petitioner should pay up the arrears at least upto March 31, 1967 amounting to Rs.3,19,977.11 p.; in any case  before March 1, 1969 failing which the Textiles Committee would  be constrained  to  advise the concerned Collector  to  enforce recovery of the outstanding fees as arrears of land revenue. The  petitioner accordingly moved a petition under Art.  226 of  the  Constitution before the High Court  of  Bombay  for quashing  the  impugned  notice  of  demand  dated  February 20,1969  complaining  that  they had at  no  time  made  any application  for inspection and/or examination of  the  yarn they  manufacture  nor  did  they  ever  approach  the  said Committee  to  inspect and/or examine yarn  manufactured  by them.  They averred that neither the said Committee nor  any one  on  its behalf had rendered any service  whatsoever  to them  either at their instance or otherwise. Similarly,  the petitioner Century Enka Limited moved a petition under  Art. 226 of the Constitution the High Court of Bombay  contending that  the Textiles Committee was not entitled to  demand  or recover a sum of Rs.78,553.15 p. or any other sum by way  of fees  on the nylon yarn manufactured by them, on the  ground that the element of quid pro quo was totally absent inasmuch                                                    PG NO 887 as  no  services at all were rendered by  the  Committee  to them.   These  two  writ  petitions  were  ordered   to   be transferred to this Court under Art. 139 of the Constitution and numbered as transferred cases nos. 351-352 of 1983.     Similar  are  the facts in other cases.  In  transferred case  no.354/83 Messrs Nirlon Synthetic Fibres  &  Chemicals Limited,  Bombay  carry on the business  of  manufacture  of nylon yarn and apparently paid Rs.8,820.40 p. by way of fees on the nylon yam manufactured by them in compliance with the notice  of demand issued by the Accounts  Officer,  Textiles Committee  dated  February 20, 1969. The petitioner  in  the other case transferred case no. 355/83 Messrs Garwara Nylons Limited, Bombay also carry on the business of manufacture or nylon  yarn  and  paid  Rs.51,738.89 p. by  way  of  fee  in compliance with the circular issued by the Chief  Inspecting Officer,  Textiles Committee, Bombay dated May 19, 1965  and assert  that  the  payment of the said amount  was  under  a mistake.  Both these petitioners moved the High Court  under Art. 226 of the Constitution challenging the validity of the levy  of the fee and prayed for the issue of a writ  in  the nature  of  mandamus  directing the  Textiles  Committee  to refund  the  amounts recovered from them.  Both  these  writ petitions were also transferred to this Court under Art. l39 and are numbered as transferred cases nos. 354-355/83.     In  Civil Appeals Nos. 863-864/77, the appellant  Baroda Rayon  Corporation  Limited,  Gujarat  are  engaged  in  the business  of  manufacture of rayon yarn and  paid  Rs.55,100 towards  the  fee in compliance with the  notice  of  demand issued  by  the Accounts Officer, Textiles  Committee  dated March 9, 1966 for the period from March 1. 1965 to  February 28,  1966. They were further called upon by  the  Secretary, Textiles Committee to remit a sum of Rs.39,211.26 p. towards the  arrears upto March 31, 1967. The  appellant  challenged the recovery of the said amount of Rs.55,100 as well as  the threatened demand of a further sum of Rs.39,211.26 p. by the Textiles  Committee as being ultra vires by petitions  under Art.  226  of  the Constitution before  the  High  Court  of Gujarat.  A Division Bench (S. Obul Reddy, CJ & N.H.  Bhatt, J.)  by  its  judgment dated November 18,  1976  upheld  the validity  of  the  fee and accordingly  dismissed  the  writ

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petitions.     The appellant in Civil Appeal No. 1460/80 Messrs Modipon Limited,  Meerut  are  manufacturers  of  nylon  yarn.   The Accounts  Officer,  Textiles Committee by his  letter  dated June  11,  1960 required the company to pay the  arrears  of fees for the period from March 1965 to May 1968. The company                                                    PG NO 888 brought a suit being Original Suit No. 86/70 in the Court of the  II Civil Judge, Meerut for a declaration and  perpetual injunction. In the suit it applied for grant of a  temporary injunction  under  Order XXXIX, r. 1 of the  Code  of  Civil Procedure,  1908  restraining the  Textiles  Committee  from recovering  the  fees  on the ground  that  the  nylon  yarn manufactured  by them did not fall within the definition  of ’textiles’ under s. 2(g) of the Act. The learned Civil Judge by his order dated May 12, 1972 granted ad-interim temporary injunction  but  later  vacated  the  same.  The   appellant accordingly went up in appeal to the High Court. A  Division Bench  (M.N.  Shukla & N.N. Mithal, JJ) by its  order  dated April 10, 1980 substantially disallowed the application  for temporary injunction while making a direction requiring  the learned  Civil  Judge to examine whether the  appellant  had commenced  production  since March 1968  and  therefore  the demand  for fee for the period anterior to the  commencement of the production could not possibly be sustained.     Appellants  in Civil Appeals Nos. 1133-34/79  Messrs.  J business  of  manufacture of rayon yarn under the  name  and style  of J.K. Rayon, and of nylon yarn under the  name  and style of J.K. Synthetics Limited. For the period from  March 1965 to February 1966 they paid Rs.49,372.65 p.  Thereafter, they  fell into arrears. The two companies  filed  petitions under Art. 226 of the Constitution before the High Court  of Allahabad contending inter alia that the said payments  were made under mistake without realising the implications of the Textiles  Committee  Act or the Rules, and  prayed  for  the issue  of  a writ in the nature of  mandamus  directing  the Textiles  Committee  to refund the amount  in  question.  As already  stated,  B.N. Lokur, J. in Juggilal’s case  by  his judgment  dated November 6, 1971 upheld the validity of  the levy of the fee and dismissed the writ petitions. On appeal, a Division Bench (Satish Chandra, CJ and Yashoda Nandan, J.) by  its  judgment  dated  October  24,  1978  dismissed  the appeal.     In Civil Appeal No. 1281 of 1973 the Textiles  Committee has  come  up in appeal against the judgment  of  a  learned Single Judge of the High Court of Kerala (Isaac, J.) who  by his  judgment dated March 3, 1972 in Travancore Rayons  Ltd. held  that the levy of the fee by the Committee was  without the  authority of law and so long as the Committee  was  not rendering  any service by way of inspection and  examination of  rayon  yarn  manufactured  by  Messrs  Travancore  Rayon Limited, it was not entitled to recover the same.                                                    PG NO 889     In  order  to appreciate the rival  contentions,  it  is necessary  to set out the background in which  the  Textiles Committee  was  constituted, the object and purpose  of  the Textiles  Committee Act as also the relevant  provisions  of the  said Act and the Rules made thereunder. The history  of the  legislation has been set out in  the  counter-affidavit filed  on  behalf  of  the  Textiles  Committee  and  is  as follows.     The Second world war gave a completely sheltered  market for  Indian Textiles and created an unprecedented  boom  for their  products.  They  were,  however,  for  a  variety  of reasons,  unable  to with- stand  the  severe  international

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competition  they  had to face in foreign markets  with  the return  of  normal conditions after the war.  Alive  to  the various  problems faced by the Textile Industry  in  general and   the  Cotton  Textile  Industry  in   particular,   the Government  of India took timely steps to arrest the  crisis by  adopting  various measures to safeguard  production  and export  of cotton textiles and to assure the  efficiency  of the Cotton Textile Industry. It was in this context that the Cotton  Textiles  Fund  Ordinance,  1944’  was  promulgated, establishing  a ‘Fund’ for supervising the exports of  cloth and  yarn  and  for develop- ment  of  technical  education, research and other matters in relation to the Cotton Textile Industry.  The  Cotton  Textiles Fund  Committee  which  was appointed  as  the  body to perform  the  various  functions imposed under the Ordinance did very useful work during  the period  from  1945 to 1964 for the improvement of  the  said industry  and so as to enable it to meet the competition  of foreign  textiles  in international market.  The  Ordinance, promulgated  in 1944 establishing the Cotton  Textiles  Fund Committee,  had  provisions to safeguard exports  of  Cotton Textiles  only. As more and more items of textiles  such  as wool.  silk, art silk and other man-made fibre  fabrics  and yarn started finding their way into the international market in  increasing  quantities.  it  became  necessary  for  the Government of India to create a homo- genous entity to  look after and promote the improvement and safeguard for all such textile  items. It was also necessary to take such  step  in the  case of these schemes of the Textile Industry both  for improving  standards in such industry and because  the  same were  in  many  ways connected and  inter-related  with  the Textile  Industry.  Such  action  and  inter-relation  arose because of the nature of the commodities and because in many cases  composite fibres and textiles were produced and  many units  engaged  in production of such synthetics  and  other materials were also engaged in the Cotton Textile Industry.     Parliament  accordingly enacted the  Textiles  Committee Act  (hereinafter referred to as ‘the Act’)  which  received the  assent  of the  President on December 3, 1963.  It  was                                                    PG NO 890 meant to re-enact the provisions of the aforesaid  Ordinance and  to make the same applicable to all  textiles  including all  synthetic fibres i.e. rayon yarn, staple  fibre,  nylon yarn, man-made fibre commonly known as artificial silk.     The  avowed object and purpose of the Act, as  reflected in the long title, is to provide for the establishment of  a Committee for ensuring the. quality of textiles and  textile machinery  and for matters connected therewith. S.  2(f)  of the  Act defines ‘textile machinery’ to mean  the  equipment employed  directly  or  indirectly  for  the  processing  of textile  fibre into yarn and for the manufacture  of  fabric therefrom  by weaving or knitting and to  include  equipment used  either wholly or partly for the finishing, folding  or packing  of  textiles.  S.  2(g)  defines  ‘textiles’.  This definition as originally enacted read as follows:     "2(g). ‘Textiles’ means any fabric or cloth or yarn made wholly  or in part of cotton, or wool or silk or  artificial silk or other fibre. "     By  Act No. 51 of 1973, a new definition  of  ‘textiles’ was substituted w.e .f. January 1, 1975 and it reads:     "2(.g). ’textiles’ means any fabric or cloth or yarn  or garment or and other article made wholly or in part of--     (i) cotton; or     (ii) wool;or     (iii) silk;or     (iv) artificial silk or other fibre, and includes fibre.

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   S.  3  of  the Act provides  for  establishment  of  the Textiles  Committee  by the Central Government. S.  4  deals with  the functions of the Committee. The functions  of  the Committee as stated in s. 4 generally are to ensure by  such measures  as it thinks fit, standard qualities  of  textiles both  for  internal marketing and export  purposes  and  the manufacture  and use of standard type of textile  machinery. It reads follows:     "4.  Functions  of the Committee--(1).  Subject  to  the provisions of this Act, the functions of the Committee shall                                                    PG NO 891 generally  be to ensure by such measures, as it thinks  fit, standard  qualities of textiles both for internal  marketing and export purposes and the manufacture and use of  standard type of textile machinery.     (2)   without  prejudice  to  the  generality   of   the provisions of sub-section (1), the Committee may--     (a)   undertake,  assist  and   encourage,   scientific, technological and economic research in textile industry  and textile machinery,     (b) promote export of textiles and textile machinery and carry on propaganda for that purpose;     (c)   establish   or   adopt   or   recognise   standard specifications for--     (i) textiles, and     (ii)  packing materials used in the packing of  textiles or  textile  machinery, for the purposes of export  and  for internal  consumption  and  affix  suitable  marks  on  such standardised varieties of textiles and packing materials;     (d)  specify the type of quality control  or  inspection which will be applied to textiles or textile machinery;     (da)  provide for training in the techniques of  quality control to be applied to textiles or textile machinery;     (e) provide for the inspection and examination of--     (i) textiles;     (ii)  textile machinery at any stage of manufacture  and also while it is in use at mill-heads;     (iii) packing materials used in the packing of  textiles or textile machinery;     (f)  establish  laboratories  and test  houses  for  the testing of textiles;                                                    PG NO 892     (g)  provide for testing textiles and textile  machinery in laboratories and test houses other than those established under clause (f);     (h)  collect  statistic for any of the  above  mentioned purposes from--     (i) manufacturers of, and dealers in, textiles;     (ii) manufacturers of textile machinery; and     (iii) such other persons as may be prescribed;     (i) advice on all matters relating to the development of textile industry and the production of textile machinery;     (j) provide for such other matters as may be prescribed.     (3)  In  the discharge of its functions,  the  Committee shall be bound by such directions as the Central  Government may,  for reasons to be stated in writing, give to  it  from time to time.     S.  7  of the Act provides for constitution  of  a  Fund called the Textiles Fund. Fees recovered under the Act  form part  of this Fund. The moneys in the Fund are  applied  for meeting  the  pay and allowances of the officers  and  other employees of the Committee and other administrative expenses of  the Committee and for carrying out the purposes  of  the Act. S. 11 confers on the Committee the power of  inspection and provides:

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   "(11) Inspection--(1) The Committee may, on  application made  to  it  or  otherwise,  direct  an  officer  specially authorised in that behalf to examine the quality of textiles or the suitability of textile machinery for use at the  time of manufacture or while in use in a textile mill and  submit a report to the Committee.     (2)  Subject to any rules made under this Act,  such  an officer shall have power to--     (a) inspect any operation carried on in connection  with the manufacture of textiles or textile machinery in relation                                                   PG NO 893 to  which  construction  particulars,  marks  or  inspection standards have been specified,     (b)  the  samples of any article or of any  material  or substance  used  in any article or process  in  relation  to which   construction   particulars,  marks   or   inspection standards have been specified;     (c) exercise such other powers as may be prescribed.     (3) On receipt of the report referred to in  sub-section (1),  the Committee may tender such advice, as it  may  deem fit  to  the manufacturer of textiles  the  manufacturer  of textile machinery and the applicant."     S.  12  provides  for levy of fees  for  inspection  and examination and reads as follows:     "12.  (1).  The Committee may levy such fees as  may  be prescribed--     (a) for inspection and examination of textiles,     (b) for inspection and examination of textile machinery.     (c)  for  any  other services which  the  Committee  may render   to  the  manufacturers  of  textile   and   textile machinery:     Provided that the Central Government may by notification in  the Official Gazette, exempt from the payment  of  fees, generally or in any particular case.     (2). Any sum payable to the Committee under sub-s. (1) may be recovered as an arrear of land revenue."     (The  section  quoted  here is as it  stood  before  its amendment by Act 51 of 1973).     S. 22(1) confers on the Central Government power to make rules  for  carrying  out  the  purposes  of  the  Act.   In particular,  s.  22(2)(e) empower he Central  Government  to make  rules providing "the scale of fees that may be  levied for inspection and examination under s. 12".                                                    PG NO 894     In  exercise  of  the powers conferred  by  s.  22,  the Central Government made the Textiles Committee Rules,  1965. A levy of fee was introduced for the first time w.e.f. March 1,  1965 by virtue of r. 21 of the Rules. The Table  forming part  of r. 21 under which the fee was levied was  in  these terms:     "21. Fee for inspection, examination and other services rendered by the Committee--     (1)  The Committee may with effect from 1st March,  1965 levy and collect for inspection and examination of  textiles and  textile  machinery  specified in col. 2  of  the  Table below, the fee specified in the corresponding entry in  col. 3 of that Table: -----------------------------------------------------------                  TABLE: Sl. Description of textiles      Fee No. and textile machinery ------------------------------------------------------------ 1           2                 3 ----------------------------------------------------------- 1. Cotton cloth where the average   6 paise for every  100

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count of yarn used in the cloth     square metres manufactu-  is less than 355                    red. 2. Cotton cloth where the average   10 paise for every 100    count of yarn used in the cloth square  metres manufa-    is less than 355. or finer        ctured. 3. Woollen yarn                     2 paise per kg. manufa-                                     ctured. 4. Man-made Cellulosic or           2 paise per kg. manuf-    non-cellulosic filament yarn     actured. 5. Man-made cellulosic fibre cut    2 paise per kg. manuf-    to staple length                 actured. 6. Textile machinery                8 paise per Rs. 100ad                                     valorem on the ex-                                     factory price of the                                     machinery manufact-                                     ured. ----------------------------------------------------------     "(2)  The Committee may levy and collect, for any  other service rendered by it to the manufacturers of textiles and                                                    PG NO 895 textile  machinery such fee as it may fix with the  approval of the Central Government."     With  effect from the 11th June, 1966, the Table of  Fee was revised to reads as under:                    TABLE ------------------------------------------------------------ Sl. Description of textiles       Fee No. and textile machinery ------------------------------------------------------------ 1              2             3 ------------------------------------------------------------ 1. Cotton cloth where                  6 paise for every the average count of                   metres manufactured. yarn used in the cloth is less than 35 s. 2. Cotton cloth where                  10 paise for every the average count of                   square metres manu- yarn used in the cloth                 factured. is 35 or finer. 3. (a) Woollen yarn                    2 paise per kg. manu- (excluding shoddy                      factured and carpet yarn) (b) Shoody and carpet                  1 paise per kg. manu- yarn                                   factured 4. (a) Man-made                        2 paise per kg. manu- cellulosic or non-                     factured cellulosic filament yarn (other than nylon filament yarn) (b)Nylon filament yarn                 6 paise per kg. manu-                                        factured 5. (a) Man-made                        1 paise per kg. manu- cellulosic fibre cut                   factured to staple length (b) Man-made non-                      2 paise per kg. manu- Cellulosic fibre                       factured cut to staple length. 6. Textile machinery                   8 paise per Rs. 100    (assembled)                         ad valorem on the                                        ex-factory price of                                        the machinery manu-                                        factured                                                    PG NO 896  7. Cotton yarn for               2 paise per kg. inspected.     export

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8. Natural silk yarn              50 paise per Rs.100 f.o.b. for fabric for export             price of the goods instec-                                   ted.     It  must be stated here that Act No. 51/73 introduced  a new  provision  S. 5A as a result of which a cess  has  been imposed  in place of a fee. Sub-s. (1) provides  that  there shall be levied and collected as a cess for the purposes  of this Act a duty of excise on all textiles and on all textile machinery manufactured in India at such rate, not  exceeding 1% ad valorem as the Central Government may, by notification in  the  Official Gazette, fix. Proviso  thereto  interdicts that  no such cess shall be levied on textiles  manufactured from out of handloom or power- loom industry. Sub-s. (2)  of s.  5A directs that the duty of excise levied  under  sub-s. (1)  shall  be in addition to any cess or duty  leviable  on textiles  or textile machinery under any other law  for  the time  being  in force. Another change brought about  was  to delete  cl. (b) of s. 12, and cl. (c) relettered as cl.  (b) and  a  proviso  were  inserted,  with  the  word’  special’ inserted  in place of the word ’other’. The new cl.  (b)  so inserted is in these terms:     (b)  for  any special service which  the  Committee  may render  to  the manufacturers or exporters of  textiles  and textile machinery;     Provided  that  no fees shall be levied  in  respect  of inspection  and examination of textiles on which a  duty  of excise is leviable under this Act:’     All  these cases pertain to the period prior to  January 1,  1975  i.e. prior to the enactment of Act 51/73.  We  are here concerned with the validity of the fee as levied  under r.  21  of  the  Rules  and  the  question  is  whether  the imposition can be justified as a fee.     We have had the benefit of hearing Shri V. M.  Tarkunde, learned counsel appearing for the appellant J.K. Cotton Spg. &  Wvg.  Mills Co. Ltd., Shri G.L. Sanghi,  learned  counsel appearing   for  the  appellant  Baroda  Rayon   Corporation Limited,  Shri  Vinod Bobde, learned counsel  appearing,  on behalf  of  Century Spg. & Mfg. Co. Ltd.  and  Century  Enka Limited,  Shri N.K. Khaitan, learned counsel  appearing  for Sirsilk Limited, Dr. Dhananjaya Chandrachud, learned counsel appearing  for Nirlon Synthetics Fibres and  Chemicals  Ltd. and  Garware  Nylons Ltd. and Shri  Krishna  Kumar,  learned                                                    PG NO 897 counsel  for Modipon Limited. The learned counsel  presented their  respective  points  of view with  much  resource  and learning.     On  behalf  of the appellants and the  petitioners,  the learned counsel put forth in substance two main contentions, namely:  (1) That rayon yarn and nylon yarn manufactured  by the  writ petitioners before the High Court i.e.  appellants and the petitioners before us, are made wholly of  filaments and  not  at all of fibres and therefore  are  not  textiles within  the  meaning  of the  definition  of  ‘textiles’  as contained in s. 2(g) of the Act accordingly are outside  the purview  of the Act and not liable to payment of any fee  in accordance  with r. 21 of the Rules as originally framed  or as it existed after its amendment w.e.f. June 11, 1966.  And (2)  That the Textiles Committee rendered no service to  the writ  petitioners  in respect of their production  of  rayon yarn  and  nylon  yarn  and hence  it  was  not  within  its competence to levy any fee on them under r. 21 of the Rules. According to the writ petitioners, in fact they do not  need the services of the Committee and the Committee is also  not in a position to render any service to them, not having even laid  down  standard specifications for the  manufacture  of

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rayon yarn or nylon yarn. It was submitted that there was no correlation  between  the   fee  charged  and  the   service rendered  by the Committee and there is complete absence  of the element of quid pro quo, legally essential for levying a fee.     Shri G. Ramaswamy, learned Additional Solicitor General, on the other hand, during his lucid and forceful submissions repelled the arguments. He submitted that the levy under  r. 21  of  the  Rules  was  not  correlated  to  the  power  of inspection  which the Textiles Committee had under s. 11  of the  Act, but was relatable to its power to levy fees  under s.  12  for  the performance of its  functions,  powers  and duties  under s. 4. He contended that the avowed object  and purpose  of  the  Act as is clear from  s.  3  was  ‘quality control’  of all textiles, and it would be idle  to  contend that rayon yarn and nylon yarn which are but species of what is  known  as man-made fibres, otherwise  called  artificial silk  and has a world market, should be outside the  purview of  the Act. He cautioned that we have to bear in mind  that the  Act  is  not  a  scientific  treatise  on  organic  and inorganic  chemistry  but is an Act by  Parliament  for  the benefit of the indigenous textile industry so that it may be able to hold its own in a fiercely competitive international market.  He  therefore contends that the Act and  the  words used  therein have to be interpreted not on a  technological or  specialised scientific plane, but in a popular sense  as understood by experts in the sphere of the textile  industry the commercial world dealing with it. The learned Additional                                                   PG NO 898 Solicitor General questioned the correctness of the decision rendered  by  the Madhya Pradesh High Court in  The  Gwalior Rayon Silk Manufacturing (Wvg.) Co. Ltd., Birlagram,  Ujjain v.  The Textiles Committee, Bombay & Anr., AIR (1980) MP  69 as also its interpretation  of the definition of  ‘textiles’ in  s.  2(g) of the Act prior to its amendment  by  Act  No. 51/73  as not including viscose staple fibre.  According  to him, the whole approach of the High Court in Gwalior Rayon’s case in adopting a literal construction of the definition of textiles’  in s. 2(g) of the Act prior to its amendment  was totally   unsupportable.  A  literal  construction  of   the definition of ‘textiles’ in s. 2(g) of the Act prior to  its amendment,  it is said, would lead to a manifest  absurdity. If  that  view  of the Madhya Pradesh  High  Court  were  to prevail,  it is urged that the whole purpose and  object  of the  Act would be frustrated. The definition of textiles  in s.  2(g)  prior to its amendment must be given a  broad  and liberal  construction  in  furtherance  of  the  object  and purpose of the Act. The learned Additional Solicitor General also  placed before us a wealth of material showing  that  a huge   infra-structure  has  been  built  by   the   Central Government  over  the years and it has  invested  crores  of rupees  to make the establishment of the Textiles  Committee under  s.  3 of the Act meaningful with a view  to  maintain quality control on all textiles including man-made fibres or artificial  silk  which have a world  market.  Finally,  the learned  Additional Solicitor General strongly  relied  upon the  decision of this Court in Sreeniwasa General Traders  & Ors. v. State of Andhra Pradesh & Ors., [1983] 3 SCR 843 for the  submission  that  the validity of the levy  has  to  be sustained  as  there is broad  co-relationship  between  the imposition  of  the  fee  and the  nature  of  the  services rendered to the entire textile industry. We shall deal  with the   contentions  advanced  by  learned  counsel  for   the appellants and the petitioners in seriatim.     As to the first contention that the rayon yarn and nylon

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yarn manufactured by the appellants and the petitioners were filaments  and not fibres and therefore did not fall  within the  ambit of the definition of textiles in s. 2(g)  of  the Act  prior to its amendment, Shri khaitan  who,first  argued the  case  of  Sirsilk Limited and  more  particularly  Shri Tarkunde  appearing  on behalf of J.K. Cotton  Spg.  &  Wvg. Mills Co. Ltd., followed by Shri Krishna Kumar appearing for Modipon  Limited  placed strong reliance on  scientific  and technological material explaining the manufacturing  process of  rayon yarn and nylon yarn to contradistinguish the  same from  fibres.  The  learned  Additional  Solicitor   General rightly  drew  our  attention  to  the  averments  made   in paragraph  1 of the writ petitions before the High Court  in which  each  of  the  appellants  and  the  petitioners  has specifically  averred that they are manufacturers of  rayon,                                                    PG NO 899 and  submitted  that they cannot be heard to  say  that  the product   manufactured  by  them  was  not  rayon  made   of artificial  silk  or fibre. The contention  of  the  learned Additional Solicitor General must prevail. The averments  in paragraph 1 of the writ petitions are more or less the same. We  need  only reproduce paragraph 1 of  the  writ  petition filed by Messrs Sirsilk -Limited, and it reads:     "The  petitioners  are a  Limited  Company  incorporated under  the  Indian  Companies  Act  and  are  having   their Registered   office  at  Himayatnagar,   Hyderabad-29.   The Petitioners,   inter   alia,  carry  on  the   business   of manufacture  of  rayon yarn and staple fibre both  of  which form species of what is popularly known as "man made  yarn". For  the purpose of manufacturing the aforesaid  yarns,  the petitioners   have  established  their  factory  at   Sirpur Kagaznagar." To  the  same  effect are the averments  made  in  the  writ petitions filed by the appellants M/s. J.K. Cotton  Spinning &  Weaving Co. Ltd., M/s. Baroda Rayon Corporation Ltd.  and M/s. Modipon Ltd. as well as by the petitioners M/s. Century Spinning  & Manufacturing Co. Ltd.. Century Enka Ltd.,  M/s. Nirlon  Synthetic Fibres & Chemicals Ltd. and  M/s.  Garware Nylons Ltd. On their own showing, the appellants as well  as the  petitioners are actually engaged in the manufacture  of rayon  yarn  and  nylon yarn both of  which  they  aver  are species  of  what is known as man-made fibres . In  view  of this undisputed factual position, the contention that  rayon yarn and nylon yarn manufactured by them are ‘filaments’ and not  fibre’ or that they are not yarn’ and therefore do  not fall within the definition of textiles under s. 2(g) of  the Act prior to its amendment, cannot be countenanced.     The  main thrust of the argument of learned counsel  for the appellants and the petitioners that rayon yarn and nylon yarn manufactured by the appellants and the petitioners  are not  fibres  but filaments, stems from the decision  of  the Madhya  Pradesh  High  Court  in  The  Gwalior  Rayon   Silk Manufacturing  (Wvg.)  Co. Ltd., Birlagram,  Ujjain  v.  The Textile  Committee,  Bombay (supra). In  the  decision,  the Madhya  Pradesh High Court assumes that a fibre in order  to answer  the description of yarn, in the ordinary  commercial sense  must  be  a spun strand meant  for  use  in  weaving, knitting  or  rope-making. It proceeds upon the  basis  that although viscose staple fibre was manufactured out of  fibre but it had to be subjected to various other operations  such                                                    PG NO 900 as  blending,  carding,  combing or  hackling  and  spinning before fibre could be converted into yarn. Upon that  basis, the Madhya Pradesh High Court held that viscose staple fibre manufactured by the Gwalior Rayon Silk Manufacturing  (Wvg.)

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Co. Ltd. was made wholly of filaments and therefore was  not fibre  and hence was not yarn and accordingly did  not  fall within the meaning of the expression textiles as defined  in s.  2(g)  of the Act. We are afraid, we cannot  accept  this line of reasoning.     The  Madhya  Pradesh  High Court was  clearly  wrong  in giving to the expression ’textiles’ in s. 2(g) of the Act  a narrow  and restricted meaning. The reasoning of the  Madhya Pradesh  High  Court  is best stated in the  words  of  G.P. Singh, CJ. speaking for himself and C.P. Sen, J:     "According  to  this  definition,  textiles  meant  "any fabric or cloth or yarn made wholly or in part of cotton, or wool or silk, or artificial silk or other fibre". The use of the  word  ‘means’  in  the definition  gives  rise  to  the inference of its being restrictive and exhaustive.  Further, it is clear that what was embraced by the definition  before 1st January 1975 was any fabric or cloth or yarn and not any fibre.  The definition made a distinction between  yarn  and fibre.  The same distinction appears in Section 2(f) in  the definition  of  ‘textile  machinery’  which  expression   is defined  to mean the equipment employed "for the  processing of textile fibre into yarn ..   ". The Act does not  contain any  definition of ’yarn’ and hence it has to be  understood in  its  ordinary sense to mean ’any fibre, or  wool,  silk, flax,  cotton,  nylon etc. spun into  strands  for  weaving, knitting   or   making   thread".   [Webster’s   New   World Dictionary]."      The learned Chief Justice then added: "A fibre in order to answer the description of ‘yarn’ in the ordinary  commercial sense must be a spun strand  meant  for use in weaving, knitting or rope-making Commr. of Sales  Tax U.P. v. Sarin Textile Mills, AIR 1975 SC 1262 at p. 1263. It is  true that yarn is manufactured out of fibre but  various operations  such as blending, carding, combing  or  hackling and spinning have to be performed for converting fibre into’ yarn  (See the New Encyclopaedia Britannica,  15th  Edition, Vol. 18, p. 173.)"                                                    PG NO 901     There  was no explicable reason for the  legislature  to have excluded rayon yarn and nylon yarn from the purview  of the  definition of textiles in s. 2(g) of the Act  prior  to its amendment. The expression ‘textiles’ has been defined in s. 2(g) of the Act in a way as to include not only yarn  but also  man-made fibres or artificial silk. In  the  premises, the  expression ‘textiles’ as defined in s. 2(g) of the  Act has  to  be  given  a broad  and  liberal  construction,  in furtherance of the purpose and object of the Act.     The  Madhya Pradesh High Court was clearly in  error  in construing  the expression ‘textiles’ as defined in s.  2(g) of  the  Act,  prior  to  its  amendment  in  a  narrow  and restricted   sense.  The  particular  words  used   by   the legislature i.e. the terms ‘yarn, man-made fibres, otherwise known as artificial silk’ had to be understood according  to the  common commercial understanding of the terms used,  and not  in their scientific or technical sense. The High  Court failed  to  bear in mind that the Act is  not  a  scientific treatise  on  organic  or  inorganic  chemistry  but  is  an enactment   by  the  Parliament  for  the  benefit  of   the indigenous textile industry, so that it may be able to  hold its  own in a fiercely competitive international market.  In these circumstances, the Act and the words used therein have to  be  interpreted not on a  technological  or  specialised scientific  plane but in the popular sense as understood  by experts  in  the  sphere of the  textile  industry  and  the commercial  world  dealing with it. We find  no  discernible

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reason for Parliament to have left out man-made fibres  like viscose  staple fit re. rayon yarn and nylon yarn  from  the purview of the definition of textiles in s. 2(g) of the  Act prior  to its amendment particularly when  synthetic  fibres have  a world market and India has entered into  competitive international trade in all textiles in a large way.     We    were   referred   to    several    Encyclopaedias, authoritative  treatises,  text-books and hand  books  viz., Encyclopaedia  Britannica,  both Micropaedia  and  the  15th Edn., ‘Textile Terms and Definitions’, 5th Edn. published by the  Textile  Institute, Manchester in 1963,  1968  Book  of American Society for Testing and Materials, Part 24, Mercury Dictionary  of Textile Terms, Standard Handbook of  Textiles by  A.J.  Hall, Handbook of Textile Fibres, 4th Edn.  by  J. Gordon  Cook, Manmade Fibres by Mark-Atlas and Cernia,  Vol. 2,  Textile Fibres by Mathews, 6th Edn. and Survey  of  Man- made Fibre Industry by Dr. A.S. Kapur. These  Encyclopaedias and  technological  books contain a  wealth  of  information collected  by knowledgeable, and distinguished men who  have acquired  distinction in their own spheres of  academic  and are made use of not only by our own Courts but by Courts  of                                                    PG NO 902 other countries where English language is in vogue.     The words ‘fibre’ and ‘filament’ are not defined  either in the Act or the Rules thereunder. The meaning assigned  to ‘fibre’  in  Webster’s New Twentieth Century  Dictionary  of English  Language, 2nd Edn. is a "filament and  thread  like part  of a substance as a filament of spun glass,  wool,  or hornblende".   Even   a  ‘filament’,   according   to   this Dictionary,  consequently constitutes  ‘fibre’.  ‘Artificial silk’, according to the Oxford Concise Dictionary, 6th Edn., 1976 means rayon.     In  Encyclopaedia  Britannica 14th Edn. Vol. 7,  p.  257 under the heading ‘Fibres, Man-made’, the following  passage occurs:     "Man-made  fibre  consists of two broad  grounds,  based upon  the origin of the fibre-forming substance.  The  first group, of which rayon and acedate are examples, are produced by   modifying  natural  fibre-forming  materials  such   as cellulose.  The second group, frequently  called  synthetics and  including  such  fibres as  nylon  and  polyester,  are produced from synthetic chemicals .......       "     Again  there  occurs  a passage at p. 260  of  the  same volume in the following terms:     "In man-made fibres, the importance of rayon is  similar to that of cotton among the natural fibres."     Under   the   heading  Synthetic   fibres"   sub-heading "Polyamide fibres’’ at p. 263 it is stated:     "Polyamides  are  polymers, or chain-like  structure  of linked molecular units, containing recurring amide groups as integral  parts  of  the  main  polymer  chains.   Synthetic polyamide fibres form nylon, a major textile fibre."     In  Encyclopaedia Britannica, Vol. 18 under the  heading "Development of the textile industry" sub-heading production of yarn’, at p. 172, we notice the following passage:     "Yarn   is  a  strand  composed  of  fibres,   filaments (individual  fibres of extreme length), or other  materials, either  natural  or  man-made,  suitable  for  use  in   the construction of interlaced fabrics. such as woven or knitted types."                                                    PG NO 903     This  passage  again  indicates  that  in  the   textile industry  ‘filaments’ are  treated as individual  fibres  of extreme length.     Similarly, in Chamber’s Encyclopaedia, Vol. 5 at p. 613,

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the term ‘fibre’ is explained thus:     "Fibre, a term used for a thread-like element of  animal or  vegetable tissue .......and any thread or filament  used in the manufacture of textile materials. The range of fibres used   for  making  fabrics  was  restricted  to   naturally occurring  substances  until the  introduction  of  man-made fibres. These include regenerated fibres, such as those made from  cellulose, and truly synthetic fibres, such as  nylon, Terylene, and Courtelle."     At  p.  616  of  the  same  volume  under  the   heading "Artificial Fibres", it is stated:     "Artificial fibres can be divided into two main  groups; regenerated and synthetic. In the first class a further sub- division  can be made between fibres made  from  regenerated cellulose,  i.e. viscose, acetate and  cuprammonium  protein such  as Fibrolane. Fibres in the second class are  strictly synthetic  in the sense that they are built up  from  simple chemical  compounds  into the  complex  molecular  structure required.  They are classified according to  their  chemical composition: polyamides (nylon and perlorn) ..........     In  Encyclopaedia Britannica, Micropaedia, Vol. VIII  at P.  442  under  the heading ‘rayon’  the  following  passage occurs:     "Rayon, generic term for man-made textile fibre produced from the plant substance cellulose. Developed in an  attempt to  produce silk chemically, the fibre was originally  known by such terms as artificial silk and wood silk, but in  1924 it  was given the coined name rayon.  Anitrocellulose  type, first produced commercially in France in 1891 in the form of a nitrocellulose fibre, it was later discontinued because of its high flammability. Rayon is described as a  re-generated fibre  because  the  cellulose  is  converted  to  a  liquid compound  and then back to cellulose in the form  of  fibre. The  cellulose, obtained from soft woods or from  the  short fibres  adhering  to cotton seeds (linters),  is  chemically                                                    PG NO 904     treated  to form a solution that is forced through  tiny holes  in a nozzle (spinnerets). This process of  forcing  a solution  through  spinneret holes is called  spinning;  the same  term is applied to the production of yarn by  twisting together  fibres  that may be of  natural  man-made  origin. Emerging  in the form of filament, a fibre of great  length, the rayon is hardened by drying in air or by chemical means. The  filament  is sometimes out into shorter  pieces  having uniform length, called staple, and twisted together to  make yarn.                                        (Emphasis supplied)     The passages quoted above clearly show that even in  the sphere of textile technology distinction between ‘fibre’ and ‘filament’ has reached a vanishing point. They further  show that  both  nylon and rayon are ‘artificial  silk’  yarn  in contra-distinction  to genuine silk. We  accordingly  uphold the  view expressed by the High Courts of Allahabad,  Andhra Pradesh,  Gujarat and Madras and hold that rayon  and  nylon yarn are not only made of ’other fibre’ but are also yarn of ‘artificial silk’ within the meaning of s. 2(g) of the  Act. The  view to the contrary by the Madhya Pradesh  High  Court does not lay down correct law.     Other considerations lead us to the same conclusion. The Industries (Development and Regulation) Act, 1951 enacted by Parliament  received the assent of the President on  October 31,  1951. In the Statement of Objects and Reasons  appended to the Bill which became the Act. it is stated:     "The  Bill brings under Central control the  development and  regulation  of a number of  important  industries,  the

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activities  of which affect the country as a whole  and  the development of which must be governed by economic factors of all India import ..     The Bill confers on Government power to make rules for the registration of existing undertakings, for  regulating  the  production  and  development  of   the industries  in  the  Schedule  and  for  consultation   with Provincial Governments on these matters."     The  First  Schedule of this Act sets  out  the  various industries  which it declared that it was expedient  in  the public  interest  that  the  Union  should  take  under  its control.  Cl.  (7) of Item No. 19 which  bears  the  heading "Chemicals  (other  than Fertilisers)" is  "man-made  fibres including regenerated cellulose-rayon, nylon and the  like." Cl.  (5)  of Item No. 23 which bears the  heading  "Textiles (including  those dyed, printed or otherwise processed)"  is "made wholly or in part of synthetic, artificial  (man-made)                                                    PG NO 905 fibres,  including  yarn and hosiery of such  fibres."  This Parliamentary  Act  thus treats rayon as well  as  nylon  as textiles made of artificial (man-made) fibres.     The  Industries (Development and Regulation) Act,  1951, and the Textiles Committee Act, with which we are concerned, may  properly be considered to be statutes in pari  materia. According to Sutherland:     "Statutes  are  considered  to be  in  pari  materia  to pertain  to the same subject-matter when they relate to  the same  person or things, or to the same class of  persons  or thing,  or  have the same purpose or  object  (Statutes  and Statutory Construction, Vol. 2, p. 535, 3rd Edn. )"     The object of either of these two Acts is to protect and to assist in the development of Textile Industry inter alia. "Assistance in ascertaining the meaning of an enactment  may be  obtained  by  comparing is language with  that  used  in earlier  statutes relating to the same subject"  (Craies  on Statute  Law,  P.  140,  1971  Edn.)  Maxwell-also  in  "The Interpretation of Statutes" ( 1976 Edn. p. 66) states that:     "light  may  be thrown on the meaning of a phrase  in  a statute  by  reference to a specific phrase  in  an  earlier statute dealing with the same subject-matter."     The Industries (Development and Regulation) Act, 1951 is an Act earlier in point of time and we see no reason why  if a subsequent statute by the same Legislature can be  pressed in aid for the purpose of interpretating in the event of any doubt,  the  provisions of an earlier statute,  the  earlier statute cannot be made use of for the purpose of construing, in  the  event  of  ambiguity, the  provisions  of  a  later statute.     For all these reasons the contention that rayon yarn and nylon   yarn   manufactured  by  the  appellants   and   the petitioners  are made wholly of filaments and not of  fibres and  therefore did not come within  the purview of  textiles as defined in s. 2(g) of the Act prior to its amendment  and therefore they were not liable for payment of the fee levied under r. 21 of the Rules, cannot prevail.     The  various  activities  undertaken  by  the   Textiles Committee  for the development of the textile  industry  and the  promotion  of  textile  exports  which  have   expanded considerably,  and the duties entrusted to the Committee  to ensure  the quality of all textiles whether made  wholly  or partly  of  cotton  wool, silk, artificial  fibre  or  silk, particularly   when  Indian  Textiles  by  and   large   and artificial silk or man-made fibres like rayon yarn,  viscose staple  fibres  and nylon yarn as well as  fabrics  made  of artificial  silk, are facing ever increasing competition  in                                                    PG NO 906

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the international market from other exporting countries like Japan, China etc. and the production and export of  textiles having  substantially increased, the legislature thought  it necessary to make adequate provision and accordingly created a  Textiles  Fund  under  s.  7  of  the  Act  to  meet  the expenditure of the Textiles Committee which necessarily  has to  be  on  a larger scale. At the time  when  the  Textiles Committee  was  established  under  s.  3,  the  legislature accordingly  provided  for the establishment of  a  Textiles Fund constituted under s. 7 of the Act from out of which the expenditure of the Committee has to be defrayed. Sub-s. ( 1) of s. 7 provides that the Committee shall have a Fund to  be called the Textiles Fund and there shall be credited thereto various  items specified in cls. (a) to (d), apart from  all the  moneys  standing to the credit of the  Cotton  Textiles Fund  established under the repealed Ordinance,  immediately before  the date on which the Textiles Committee came to  be established,   which   by  virtue  of  s.   24(2)(a)   stood transferred  to  and formed part of the Textiles  Fund,  and such  sums  of  money as the Central  Government  after  due appropriation made by Parliament in that behalf, pays to the Committee  in each financial year by way of grant,  loan  or otherwise   for  purposes  of  enabling  the  Committee   to discharge  its functions under the Act. There are  only  two other sources of income. One of the main sources of revenue, as indicated in cl. (c), is the income derived from the levy of  the  fee under r. 21 of the Rules, and  the  other  that indicated  in  cl.  (d)  viz. all  moneys  received  by  the Committee  by  way of grant, gift,  donation,  contribution, transfer  or otherwise. After the imposition of the duty  of excise  as a cess by s. 5A of the Act introduced by Act  No. 51/73,  the  income derived from such cess  becomes  another source.  Sub-s. (2) of s. 7 provides that the moneys in  the Fund shall be applied for (a) meeting the pay and allowances of  the  officers and other employees of the  Committee  and administrative  expenses of the  Committee,  and  (b) carrying  out  the purposes of the Act. Sub-s. (3) of  s.  7 provides  that all moneys in the Fund shall be deposited  in the  State Bank of India or be invested in such  securities, as may be approved by the Central Government.     From  these provisions, it is amply clear that  all  the income  derived from the levy of the fee under r. 21 of  the Rules  has to be credited to the Textiles Fund and the  said income  is  utilised  in defraying the  expenditure  of  the Textiles  Committee in carrying on its manifold  duties.  No part   of  the  fee  levied  under  r.  21  goes  into   the Consolidated  Fund of India. It is only by s. 5F  introduced by Act No. 51/73 which provides that proceeds of the duty of excise  collected  under  s.  5A  reduced  by  the  cost  of collection  as determined by the Central  Government,  shall                                                    PG NO 907 first be credited to the Consolidated Fund  of India and the Central  Government  may, after due  appropriation  made  by Parliament  by  law, pay to the Committee from out  of  such proceeds,  such  sums of money as it thinks  fit  for  being utilised  for  the  purposes of the Act.  We  are  not  here concerned with the duty of excise recovered as a cess  under s.  5A  but only with the question whether levy of  the  fee under  r.  21  is  sustainable as a fee.  That  is  to  say, whether-  there is sufficient quid pro quo between the  levy of  the  fee  and the services rendered.  It  has  not  been suggested  that any part of the fees levied under r. 21  can be  diverted to any other purpose. When the entire  proceeds of  the fee are utilised in financing the  various  projects undertaken by the Textiles Committee, as also the inspection

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of  all  textiles  including  man-made  fibres  and  textile machinery, the appellants cannot be heard to say that  there is no reasonable and sufficient correlation between the levy of the fee and the services rendered. The learned Additional Solicitor   General  drew  our  attention  to  the   various averments  made in the counter-affidavit filed on behalf  of the  Textiles Committee as well as the Government  of  India showing the extent of income from the fee levied under r. 21 and the expenditure of Textiles Committee in each  financial year. From the material on record it is amply clear that the levy  of  the fee under r. 21 is not commensurate  with  the expenditure incurred by the Textile Committee. It is not  in dispute that the Textiles Committee has over the years built up  a  huge infrastructure and the  Central  Government  has spent crores of rupees to make the legislation effective and meaningful and to bring about an overall improvement in  the quality  and  standard of the  textiles  including  man-made fibres  or artificial silk so that our country may  continue to  retain  its  rightful place in the  world  market  in  a fiercely competitive international trade.     For  a proper appreciation of the point involved, it  is necessary  to  set down the activities of the  Committee  in discharge of its functions conferred upon it by s. 4 of  the Act.  The Committee with a view to maintaining and  stepping up the export of Indian Textiles, has introduced a number of pre-shipment  inspection  schemes covering a wide  range  of textiles to ensure that only quality textiles and yarns  are exported  from  India. Inspection and certification  of  Art Silk  and Wollen Textiles have also been undertaken  by  the Committee  in pursuance of various Export Incentive  Schemes introduced  by  the  Government  from  time  to  time.   The Committee has set up an Inspectorate with a  large technical staff  qualified  in  the  various  disciplines  of  textile technology.  The Inspectorate has carried out inspection  of various  types of textiles large quantities.  Inspection  of mill-made  cotton  cloth and mill-made cloth yarn  has  been                                                    PG NO 908 made  compulsory  and export thereof without  a  certificate issued  by the Committee has been banned. In order to  carry out   the  inspection  as  expeditiously  and  smoothly   as possible,  the Committee besides its head office  at  Bombay has  established its regional offices at fourteen  different textile centres, namely, at Ahmedabad, Amritsar,  Bangalore, Calcutta,  Coimbatore,  Indore,  Kanpur,  Ludhiana,  Madras, Madurai,  Nagpur,  New Delhi, Sholapur  and  Surat.  Besides these,  wherever  necessary, the Committee  staff  are  also attached  to  the textile mills at other  places  to  render immediate  service to the mills and exporters on  the  spot. The  learned Additional Solicitor General placed  before  us the  counter-affidavit  of  Shri  C.G.  Shivdasani,   Acting Secretary of the Textiles Committee. It is averred under the heading ’Inspection’ that for ensuring standard qualities of textiles  and to satisfy that they have the  characteristics necessary for satisfactory performance, necessary tests such as  identification  of  fibres,  fibre  composition,   fibre finances,  shrinkage,  chemical degradation,  resistance  to milldew  and fungus etc. are carried out quite often by  the Committee. A statement showing the income and expenditure of the Textiles Committee for the period commencing from  March l,  1965  and  ending with March 31, 1971  as  well  as  the estimated  budget for the years 1971-72 to 1973-74  are  set out  to verify the ratio between the fee collected  and  the expenditure incurred for achieving the object and purpose of the Act. The statements are as detailed below:     EXPENDITURE  AND  FEES REALISED DURING THE  PERIOD  FROM

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1.3.1965 T O 31.3.71 Accounting Revenue     Capital      Market Fees Year       Expenditure Expenditure  Research Realised            on Inspectorate. on Inspectorate. March 1965  00.89 lakhs   --lakhs  0.08 lakhs-lakhs 1965-66     17.71"        0.64 "   2.00"      21.90" 1966-67     23.05"        1.28"    2.32"      44.00" 1967-68     24.29"        0.91"    2.05"      30.38" 1968-69     24.73"        0.60"    2.66"      34.79" 1969-70     28.95"        1.87"    3.82"      32.39" 1970-71     34.62"        3.14"    4.55"      29.79" ------------------------------------------------------------ Total:--   154.24"        8.44"    17.48"     193.25" ------------------------------------------------------------                                                    PG NO 909 STATEMENT SHOWING THE ESTIMATED REVENUE AND CAPITAL EXPENDITURE AND REVENUE FOR THE YEARS 1971 72 TO 1973-74 Year       Estimated Revenue Capital Expenditure  Estimated            Expenditure on     on Inspectorate     Fees              Inspectorate. Realisable ------------------------------------------------------------ 1971-72(RE) 37.35 lakhs        22.66 lakhs           53.35 lakhs 1972-73(BE)  43.78"             19.93"               53.76" 1973-74      52.00"             30.00"               55.00" ------------------------------------------------------------ Total        133.13 "           72.59"               162.11" --------------------------------------------------------------      Under  the heading ‘Collection of Fees’, the  necessary averments  are there showing that the entire amount of  fees levied and collected under r. 21 of the Rules is utilised in meeting the expenses of the Committee on account of pay  and allowances  of  the  officers and  other  employees  of  the Committee and for carrying out the purposes of the  Act. The following  is  the table showing the fees  realisable,  fees actually   realised  and  the  total  expenditure   of   the Inspectorate  during the period from April 1, 1965 to  March 31, 1971: ----------------------------------------------------------- Period  Fees        Fees        Total Expenditure on the         Realisable  Realised    Inspectorate, (in lakhs) ------------------------------------------------------------ 1.3.65 to 31.3.71 Rs.290.51   Rs.193.25   Revenue    Rs.154.24                                 Capital    Rs.8.44                                 Total      Rs.162.68 (Actuals) 1.4.71 to 31.3.72 Rs.53.35    Rs.31.03    Revenue    Rs.37.35                                 Capital    Rs.22.66                                 Total      Rs.60.61 (Revised Estimate) 1.4.72 to 31.3.72 Rs. 53.76   Rs.31.00    Revenue Rs.43.73         (Estimated) Capital     Rs.19.93                     Total       Rs.63.71 (Budget Estimates) ------------------------------------------------------------ Total   Rs.397.62   Rs.255.28   Rs.286.40 ------------------------------------------------------------                                                    PG NO 910     On  these  facts, there is no doubt  whatever  that  the entire proceeds of the amount collected by way of fee  under r. 21 of the Rules are spent in carrying on the functions of

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the  Textiles  Committee.  It cannot  be  doubted  that  the activities of the Committee in furtherance of the object and purpose of the Act are to ensure the quality of all textiles whether  made  wholly  or  partly  of  cotton,  wool,  silk, artificial  fibre  or silk. The functions of  the  Committee should generally be to ensure standard qualities of textiles for  internal as well as external marketing and  manufacture and use of standard type of textile machinery. The grievance of  the  appellants  and the petitioners that  there  is  no inspection of the rayon yarn and nylon yarn manufactured  by them  at the stage of production is belied by the fact  that there is pre-shipment inspection of the fabrics manufactured from  such fibres for export. The provision for the levy  of fees  for  inspection and examination of textiles  under  s. 12(1)(a)  of the Act or the levy of the fee under r.  21  of the  Rules cannot be challenged on the ground that there  is no  reasonable relationship between the levy of the fee  and the services rendered by the Committee to the entire textile industry to which the appellants and the petitioners  before us  owning large textile mills belong. When the levy of  the fee is for the benefit of the entire textile industry, there is  sufficient quid pro quo between the levy recovered  from the appellants and the petitioners and the services rendered to the industry as a whole. In the premises, the  principles laid  down by this Court in Sreeniwasa General  Traders  are clearly  attracted.  One of us (Sen, J.)  speaking  for  the Court had observed:     "The traditional view that there must be actual quid pro quo  for a fee has undergone a sea change in the  subsequent decisions.  The  distinction between a tax and  a  fee  lies primarily  in  the fact that a tax is levied as  part  of  a common  burden,  while a fee is for payment  of  a  specific benefit  or  privilege  although the  special  advantage  is secondary  to  the primary motive of  regulation  in  public interest.  If the element of revenue for general purpose  of the State predominates, the levy becomes a tax. In regard to fees  there is, and must always be, correlation between  the fee  collected and the service intended to be  rendered.  In determining  whether a livy is a fee, the true test must  be whether  its  primary  and essential purpose  is  to  render specific services to a specified area or class; it may be of no consequence that the State may ultimately and  indirectly be benefitted by it. The power of any legislature to levy  a fee is conditioned by the fact that it must be by and large                                                    PG NO 911 a   quid  pro  quo  for  the  services  rendered.   However, correlationship  between the levy and the services  rendered or  expected  is  one  of  general  character  and  not   of mathematical exactitude. All that is necessary is that there should  be a "reasonable relationship" between the  levy  of the  fee and the services rendered. If authority  is  needed for  this  proposition,  it is to be found  in  the  several decisions  of  this Court drawing a  distinction  between  a ‘tax’  and  a ‘fee’. See The Commissioner,  Hindu  Religious Edowments, Madras v. Sri Lakshmindra Thirtha Swamiar of  Sri Shirur Mutt [1954] SCR 1005; H.H. Sudhundra Thirtha  Swamiar v.   Commissioner   for  Hindu  Religious   and   Charitable Endowments,  Mysore,  [1963] Suppl. 2 SCR 302;  The  Hingir- Rampur  Coal Co. Ltd. v. State of Orissa, [1961] 2 SCR  537; H.H.  Shri Swamiji of Shri Admar Mutt v. Commissioner  Hindu Religious and Charitable Endowments Department, [1980] 1 SCR 368;  South Pharmaceuticals and Chemicals, Trichur v.  State of  Kerala,  [1982] 1 SCR 519 and Municipal  Corporation  of Delhi v. Mohd. Yasin, [l963] 2 SCR 999.     There is no generic difference between a tax and a free.

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Both   are   compulsory  exactions  of   money   by   public authorities.  Compulsion  lies in the fact that  payment  is enforceable  by  law  against  a  person  in  spite  of  his unwillingness or want of consent. A levy in the nature of  a fee   does not cease to he of that character merely  because there is an element of compulsion or coerciveness present in it. nor is it a postulate of a fee that it must have  direct relation to the actual service rendered by the authority  to each  individual who obtains the benefit of the service.  It is  now  increasingly  realised  that  merely  because   the collections  for   the  services  rendered  or  grant  of  a privilege  or licence are taken to the consolidated fund  of the  State  and  not  separately  appropriated  towards  the expenditure  for  rendering  the service is  not  by  itself decisive.  Presumably,  the attention of the  Court  in  the Shirur  Mutt  case  was  not drawn to  Article  226  of  the Constitution.  The Constitution nowhere  contemplates it  to be an essential element of fee that it should be credited to a separate fund and not to the consolidated fund. It is also increasingly  realised that the element of quid pro  quo  in the strict sense is not always a sine qua non for a fee.  It is  needless to stress that the element of quid pro  quo  is not necessarily absent in every tax."                                                    PG NO 912 See also M/s. Amar Nath Om Prakash & Ors. v. State of Punjab &   Ors.,  [1985] 2 SCR 72; City Corporation of  Calicut  v. Thachambalath  Sadalinan & Ors., [1985] 2 SCR  1009;  I.T.C. Ltd.  & Ors. v. State of Karnataka & Ors., (per Fazal Ali  & Mukharji, JJ) ( 1985) SUPP1. SCR 476 and Om Parkash  Agarwal & Ors. v. Giri Raj Kishori & Ors., [1986] 1 SCR 149.     Viewed   from  this  perspective,  the   conclusion   is inevitable  that  the  levy of the fee under r.  21  of  the Textiles  Committee  Rules, 1965 by the  Textiles  Committee under  sub-s.  (1) of s. 12 of the Textiles  Committee  Act, 1963 is valid and constitutionally permissible.     All  the appeals and connected writ petitions  filed  by the textile mills in India must fail and are dismissed  with costs.  Civil  appeal  No. 1281 of  1973  preferred  by  the Textile Committee, Bombay against the judgment and order  of the  Kerala  High  Court dated March  3,  1979,  is  however allowed and the writ petition filed by the respondent,  M/s. Travancore Rayons Limited is dismissed with costs. R.S.S.