# KOTESWAR VITTAL KAMATH v. K. RANGAPPA BALIGA & CO

- **Citation:** [1969] 3 S.C.R. 40
- **Court:** Supreme Court of India
- **Decided:** 1968-12-09
- **Case number:** Civil Appeal No. 693 of 1965
- **Bench:** J.M. Shelat, V. Bhargava, C. A. Vaid!Al!Ngam
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/koteswar-vittal-kamath-v-k-rangappa-baliga-co-4878
- **Pages:** 15

## Headnote

Travancore-Cochin Public ·Safety Measures Act 5 of 1950, s. 3Validity of-Constitution of India, Art, 304(b) proviso-Bill introduced
tn pre-Constitution period-Amended by Select Committee-Moved again
and passed in post·ConstUution period-President's sanction
when re·
quired-Travancore-Cochin Vegetable Oils and Oilcakes (Forward Contracts Prohibition) Order, 1950--Continuance of.
The Vegetable Oils and Oilseeds (Forward Contracts Prohibition)
Order. 111~ M.E. prohibiting inter alia forward trading in cocoanut oil,
was promulgated by the Mallaraja of Cochin State in 1944. The Order
continued in foree under various Cochin Laws including Proclamation 5
of 1122 and Act 8 of 1122. When the State of Cochin acceded to India
and the combined State of Travancore-Cochin was formed, the said proclamation 5 of 1122 and Act 8 of 1122 as also the orders etc. passed
thereunder were continued by the
Travancore-Cochin
Administration
an Application of Laws Act 6 of 1125. In exercise of the powers under
these laws the Travancore-Cochin Government
promulgated on
8th
March 1950, the Travancore-Cocbin Vegetable Oils and Oilcakes (Forward Contracts Prohibition) Order, 1950, whereby tho prohibition against
forward trading in certain oils including cOcoanut oil was continued. Then
came the Travancore-Cochin Public Safety Measures Act 5 of 1950, which
with effect from 30th March 1950 repealed a number of enactments including Proclamation 5 of 1112 and Act 8 of 1112, but by s, 73(2)
eontinued the orders etc. passed under the repealed Acts as if they had
been passed under its s. 3.
The Bill relating to Act 5 of 1950
was
introduced in the State Legislature before the passing of the Constitution,
but thereafter it was amended by the Select Committee, and the amended
Bill was moved in and passed by the Legislature in the post-Constitution
period.
By Amending Act 52 of 1950, the Essential Supplies (Temporary Powers) Act 24 of 1946 was extended to Part B States, and became
effective in Cochin area from August 17, 1950. Section 17(4) of the
last mentioned Act replealed Act 5 of 1950, but contin1ted the orders etc.
passed thereunder.
In 1952 the appellant entered into con.tracts for the purchase of cocoanut oil on one month's 'vaida' through the agency of the respondent who
was a Pakka Adatia. The contracts were entered into in territory which
formerly formed part of the State o.f Cochin. On the due date the appel·
lant failed to take deli,-ery of the goods or to pay the difference in price.
whereupon the respondent filed a suit for damages. The appellant's
defence was that the contracts in question, being forward contracts were
in contravention of the Prohibition Order of 1950 and therefore void
ond unenforceable. The trial court and High Court rejected this contention and decreed the suit. The High Court took the view that the
earlier laws under which the Prohibition Order of 1950 was passed were
repealed by Act 5 of 1950 and the Orders thereunder could '!ot
be
deemed to continue under s. 3 of the latter Act because that section w~s
void for non-compliance with the pro:viso to Art. 304(~) of the Constitution. In appeal by certificate to this Court the questions that fell for
A
B
c
D
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K, V. KAMATH V. RANGAPPA
41
A
consideration were : (i) whether the Prohibition Order of 1950 was voicl
on the ground that it dealt with future markets on which Parliament had
the exclusive power to legislate; (ii) whether s. 3 of Act 5 of 1950 fell
within the scope of Art.
304(b) of the Constitution; (iii) whether sanction, of the President was reqmred under the proviso to Art. 304(b) when
the Bill relating to Act 5 of 1950 was moved in the Legislature after
having been amended by the Select Committee.
B
HELD : (i) In the present case it was not necessary to express any
opinion on the question whether the Prohibition Order of 1950 was void
for want of legislative competence, for if it was void it would have to be
treated as non est and the earlier Prohibition Order of
1119
wo

## Text

_Characters 0–39,940 of 43,273. This is a partial read: ask again with offset=39940 for what follows._

40
KOTESWAR VITTAL KAMATH
v.
K. RANGAPPA BALIGA & CO.
December 9, 1968
[J.M. SHELAT, V. BHARGAVA AND C. A. VAID!AL!NGAM, JJ.)
Travancore-Cochin Public ·Safety Measures Act 5 of 1950, s. 3Validity of-Constitution of India, Art, 304(b) proviso-Bill introduced
tn pre-Constitution period-Amended by Select Committee-Moved again
and passed in post·ConstUution period-President's sanction
when re·
quired-Travancore-Cochin Vegetable Oils and Oilcakes (Forward Contracts Prohibition) Order, 1950--Continuance of.
The Vegetable Oils and Oilseeds (Forward Contracts Prohibition)
Order. 111~ M.E. prohibiting inter alia forward trading in cocoanut oil,
was promulgated by the Mallaraja of Cochin State in 1944. The Order
continued in foree under various Cochin Laws including Proclamation 5
of 1122 and Act 8 of 1122. When the State of Cochin acceded to India
and the combined State of Travancore-Cochin was formed, the said proclamation 5 of 1122 and Act 8 of 1122 as also the orders etc. passed
thereunder were continued by the
Travancore-Cochin
Administration
an Application of Laws Act 6 of 1125. In exercise of the powers under
these laws the Travancore-Cochin Government
promulgated on
8th
March 1950, the Travancore-Cocbin Vegetable Oils and Oilcakes (Forward Contracts Prohibition) Order, 1950, whereby tho prohibition against
forward trading in certain oils including cOcoanut oil was continued. Then
came the Travancore-Cochin Public Safety Measures Act 5 of 1950, which
with effect from 30th March 1950 repealed a number of enactments including Proclamation 5 of 1112 and Act 8 of 1112, but by s, 73(2)
eontinued the orders etc. passed under the repealed Acts as if they had
been passed under its s. 3.
The Bill relating to Act 5 of 1950
was
introduced in the State Legislature before the passing of the Constitution,
but thereafter it was amended by the Select Committee, and the amended
Bill was moved in and passed by the Legislature in the post-Constitution
period.
By Amending Act 52 of 1950, the Essential Supplies (Temporary Powers) Act 24 of 1946 was extended to Part B States, and became
effective in Cochin area from August 17, 1950. Section 17(4) of the
last mentioned Act replealed Act 5 of 1950, but contin1ted the orders etc.
passed thereunder.
In 1952 the appellant entered into con.tracts for the purchase of cocoanut oil on one month's 'vaida' through the agency of the respondent who
was a Pakka Adatia. The contracts were entered into in territory which
formerly formed part of the State o.f Cochin. On the due date the appel·
lant failed to take deli,-ery of the goods or to pay the difference in price.
whereupon the respondent filed a suit for damages. The appellant's
defence was that the contracts in question, being forward contracts were
in contravention of the Prohibition Order of 1950 and therefore void
ond unenforceable. The trial court and High Court rejected this contention and decreed the suit. The High Court took the view that the
earlier laws under which the Prohibition Order of 1950 was passed were
repealed by Act 5 of 1950 and the Orders thereunder could '!ot
be
deemed to continue under s. 3 of the latter Act because that section w~s
void for non-compliance with the pro:viso to Art. 304(~) of the Constitution. In appeal by certificate to this Court the questions that fell for
A
B
c
D
F
G
H
K, V. KAMATH V. RANGAPPA
41
A
consideration were : (i) whether the Prohibition Order of 1950 was voicl
on the ground that it dealt with future markets on which Parliament had
the exclusive power to legislate; (ii) whether s. 3 of Act 5 of 1950 fell
within the scope of Art.
304(b) of the Constitution; (iii) whether sanction, of the President was reqmred under the proviso to Art. 304(b) when
the Bill relating to Act 5 of 1950 was moved in the Legislature after
having been amended by the Select Committee.
B
HELD : (i) In the present case it was not necessary to express any
opinion on the question whether the Prohibition Order of 1950 was void
for want of legislative competence, for if it was void it would have to be
treated as non est and the earlier Prohibition Order of
1119
would
continue in force right up to 30th March 1950. Conse.quently on
the
30th March 1950 either the Prohibition Order 1119 or the Prohibition
Order of 1950 must be held to have been in force in Travancore-Cochin
C
and to h~ve continued in force under Act 5 of 1950. [47 C-E; 48 E--0]
D
E
H
Waverly Jute Mills Co. Ltd. v. Raymon & Co. (India) Private Lid.,
[1963] 3 S.C.R. 209, referred to.
Firm A. T. B. Meht•b Majid & Co. v. State of Madras
&
Anr.,
[1963] Supp. 2 S.C.R. 435, distinguished
(ii) An order prohibitin~ Forward contracts would
clearly be
an
order prohibiting a class of commercial transactions relating to an essen·
tial ar:ticle which in the present case was cocoanut oil. The conferment
of power on a State Government to prohibit such transactions clearly per·
mits imposition of restrictions on the freedom of trade or commerce and
therefore falls within the scope of cl. (b) of Art. 304 of the Constitution.
[49 E--Fl
(iii) The High Court was wrong in holding that the Bill relating to
Act 5 of 1950 was again introduced and moved in the legislature after
being amended by the Select Olmmittee. Once the Bill was introduced
in December 1949 it remained pending in the legislature even when it
was referred to the Select Committee.
There was therefore no question
of the Bill being introduced again after the Select Committee had submitted its report. [50 C-HJ
The High Court was also wrong in holding that a Bill within the
purview of Art. 304(b) cannot be moved without the prior sanction of
the President. In the relevant articles of the Constitution whatever prohibition is laid down relates to the intro~uction of a Bill in the Legislature. There is no reference at any stage to a Bill being moved in, a
House. The language thus used in the Constitution clearly points to
the interpretation that in the proviso to Art. 304 the word 'introduced'
refers to the Bill, while the word 'moved' refers
to
the
amendment.
[52 B-CJ
The proviso to Art. 304(b) will have to be compl!ed with at the
initial stage of the introduction of the Bill if it is applicable at that stage,
whereas compliance will be required either at the stage when amendments
are moved in the Select Committee, or when the Bill with amendments as
reported by the Select Committee is moved in the House for consideration
if any arnendment is covered by Art. 304, because of the
requiremcni
that n.o amendment can be moved \.Vithout the previous sanction of the
President. [54 DJ
(iv) In the present case the original introduction of the Bill was valid
because at that stage the proviso to Art. 304 was not in force at all as
/Sup.Cl/69-4
42
SUPREME COURT REPORTS
(1969] 3 S.C.R.
the Constitution had. not yet come into force; while subsequently when
the Bill was pending in the State Legislature no amendment was moved
in respect of which sanction of the President was
required
under
the
proviso.
Section 3 of Act 5 of 1950 was passed by the House as it
was con1ained originally in the validly introduced Bill and cannot, therefore, be held to be void for oon-compliance with the proviso to Art. 304.
This section being valid either the Prohibition Order of 1119 or the. Prohibition Order of 1950, must be held to be validly continued in force by
this Act 5 of 1950 and to have continued to remain in force thereafter
under the proviso to s. 17 ( 4) of the Essential Supplies
(Temporary
Powers) Act 24 of 1946.
Under either of these orders the trans:ictions
entered into betwe'!n the appellant and the respondent were prohibited
and having bC;en entered
into against
the provisions
of
law,
no
pa'rty could claim any rights in respect of the
contracts
in
the
suit.
[54 D-{;)
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 693 of
1965.
Appeal from the judgment and decree dated August 9, 1963
of the Kerala High Court in Appeal Suit No. 153 of 1959.
M. C. Chagla and R. Gopalakrishnan, for the appellant.
H. R. Gokhale, R. V. Pillai and'Subodh Markandeya, for the
respondent.
The Judgment of the Court was delivered by
Bhargava, J.
This appeal by certificate has been filed by
Koteswar Vittal Karnath who was defendant in Original Suit No.
12 of 1958 instituted in the Court of the Subordinate Judge,
Cochin, by the respondent-plaintiff, K. Rangappa Baliga & Co.,
for recovery of damages for breach of contracts in respect of
goods, purchased by the respondent on behalf of the appellant.
of which the appellant refused to take delivery on the due dates.
There is no di_spute that the respondent was carrying on business
as commission agents and was governed by the trade usage known
a;S Pakka Aadat System, and the appellant under the same System
was placing orders with the respondent for purchase of goods.
In the course of these dealings, the appellant placed three orders
for purchase of 100 candies of cocoanut oil for one month's
'vaida' and, in accordance with those three orders, the respondent purchased· 100 candies of cocoanut oil on three different
dates, 14th February, 1952 @ Rs. 455 per candy, 16th February, 1952 @ Rs. 477/8/- per candy and 18th February, 1952
. .,, Rs. 432/8/- per candy. The period fixed for delivery under
these contracts was one month, so that the due dates for performance of the contracts were 15th, 17th and 19th March, 1952
respectively. The appellant refused to take delivery of the goods
on the due dates.
It appears that the closing market rates on
those due dates were Rs. 330, Rs. 335 a;nd Rs. 352/8/- respectively
A
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K. v. KAMATH v. llANGAPPA (Bhargava, I.)
4 3
which were much lower thapi. the prices at which these contracts had been entered into a month earlier. The respondent,
therefore, instituted the suit claiming the difference in the two
sets of prices by way of damages together with the usual co¥1~
mission and brokerage.
: ,
The suit was resisted on various grounds, but we are concerned with one of those grounds which has been canvassed before us in this appeal. This plea taken on behalf of the appellant was that all these three contracts were Forward Contracts
and were void and unenforceable, because they were made in
contravention of the prohibition contained in the TravancoreCochin Vegr~table Oils and Oilcakes (Forward Contract Prohibition) Order, 1950 (hereinafter referred to as "the Prohibition
Order of 1950"). To meet this plea raised on behalf of the
appellant, it was urged on behalf of the respondent that this
Prohibition Order of 1950 was void in view of the fact that the
law, under which that Order was passed, was repealed in March,
1950 and its continuance by the repealing law did not save its
validity, because the provision of that law, under which it was
deemed to continue in force, was itself void. We shall presently
explain in detail the situation as to the laws relating to this
subject which prevailed in Travancore-Cochin from time to time;
but it may here be mentioned that this plea of the respondent
was accepted by the trial Court as well as the High Court of
Kerala. As a result' of this view taken by those courts, the suit
for damages was held to be maintainable, so that the trial Court
decreed the suit for a sum of Rs. 18,750 with interest thereon
at 6 per cent per annum, and that decree was upheld by the
High Court. It is against this decision of the High Court that
the present appeal has been brought to this Court; and the only
question argued before us has been confined to the validity of
the contracts, the breach of which was the cause "Of action for
the claim of damages by the respondent.
The contracts, which were the subject-matter of the dispute,
were entered into between the parties at Mattancherry which was
situated in the territory of Cochin State before India achieved
Inde~endence. On the .1,8th Febr~ary, 1940, the Maharaja of
Cochm, who was exerc1smg sovereign powers in the State made
a Proclamation No. 8 of 1115 applying the provisions 'of the
Defence of India Act No. 35 of 1939 together with the rules and
all amendments to the Act and the rules mutatis mutandis in
Cochin State.
Another provision
in the
Proclamation also
brought into force all the rules and notifications issued under
the Defence of India Act. There was also a provision that even
the rules or notifications issued in future would automatically
apply in the State.
Under the Defence of India Act and the
SUPREME COURT REPORTS
(1969) 3 S.C.R.
rules framed thereunder, Vegetable Oils and Oilcakes (Forward
Contracts Prohibition) Order, 1944 was passed by the territory
of British India and, consequently, as a result of Proclamation
8 of 1115, it came into force in the State of Cochin.
Subsequently, however, the Maharaja, under that Proclamation 8 of
1115, passed the Vegetable Oils and Oilcakes (Forward Contracts Prohibition) Order, 1119 (hereinafter referred to as "the
Prohibition Order of 1119") on the 14th April, 1944.
This
Order, thus, superseded the earlier Order which had been passed
for British India and which had become applicable in Cochin
State ·as a result of Ptoclamation 8 of 1115.
The Prohibition
Order of 1119, in clause 3, laid down that "no person shall,
after the specified date for any article to which this Order applies, enter into any forward contract in that article." The Order
applied, inter alia, to cocoanut oil, which was the subject-matter of the three contracts, the breach of which was the cause of
action in the suit.
Thereaft.er, on the 27th September, 1946,
the Maharaja promulgated the Cochin Essential Articles Control
and 1'.equisitioning Powers Proclamation 3 of 1122, and under
clause 9 of this Proclamation, the orders already made by the
·Cochin Government under the Defence of India Act and Rules,
as applied by Proclamation 8 of 1115, were continued in force,
so that the Prohibition Order of 1119 continued to remain in
force.
On the same date, the Maharaja also promulgated the
Temporary Emergency (Powers) Proclamation 5 of 1122, and,
under clause 2 of this Proclamation, the Defence of India Act
and the Rules were continued in force in the State of Cochin
together with all orders and notifications issued under the provisions of that Act and the Rules.
This was followed by the
Cochin Essential Articles Control and Requisitioning Powers Act
8 of 1122 promulgated on the 4th January, 1947. Under section
9 of this Act, again, all the rules and orders made under the
Defence of India Act or under the Rules were continued in force
in the State of Cochin. This was the position of the law in the
State of Cochin before India achieved Independence.
Subsequently, the State of Cochin acceded to India and a
combined State of Travancore-Cochin came into existence.
Thereafter, the Travancore-Cochin Administration and Application of Laws Act 6 of 1125 was passed and came into force
in the State of Travancore-Cochin with effect from 28th December, 1949. This Act defined "Existing law of Travancore" and
"Existing law of Cochin".
The latter expression included "any
Proclamation, Act, law, order., bye-law, rule, regulation or
notification in force on the appointed day (which was lst July,
1949) in any portion of the territories of the State of TravancoreCochin which immediately before the appointed day formed the
territory of the State of Cochin.
By section 4 (1) of this Act,
A
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G
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K. V. KAMATH v. llANGAPPA (Bhargava, J,)
4S
A the existing laws of Cochin were continn•d in force until altered,
amended, or repealed by the Legislatuu: of the State of Travancore-Cochin or other competent authority in that p6rtion of
the territories of the State of Travancore-Cochin which previously
formed the territory of the State of Cochin.
Thus, under this
Act, the Temporary Emergency (Powers) Proclamation 5 of
•
1122, .and the Cochin Essential Articles Control and Requistioning
Powers Act 8 of 1122 were continued in force.
At the sam~
time, the Public Safety Measures Ordinance 5 of 1125 was also
promulgated. It was in exercise of the powers conferred by these
laws that the Travancore-Cochin Government promulgated the
Prohibition Order of 1950 on the 8th March, 1950. Lastly, the
C
Travancore-Cochin Public Safety Measures Act 5 of 1950 (hereinafter referred to as "Act 5 of 1950") came into force on the
30th March, 1950. This Act, by s. 73 ( 1), repealed a number
of enactments, including the Cochin Temporary (Emergency
Powers) Proclamation 5 of 1122, and the Essential Articles
Control and Requisitioning Powers Act 8 of 1122.
However,
the order passed under those Acts or continued by those Acts
•
.were, bys. 73(2) of Act 5 of 1950, further continued in force
and were to be deemed to have been made and were to have
effect as if they had been made under this Act 5 of 1950. The provision, under which they were to be deemed to be made and to
have effect, was section 3 of this Act. It was in these circumstances that the validity of s. 3 of Act 5 of 1950 was challenged
E
in the trial Court and in the High Court. The High Court has
declared s. 3 to be void, while holding that s. 73 is valid. The
High Court concluded as a result that the various orders and
notifications, including the Prohibition Orders of 1119 and 1950.
ceased to be in force, so that there was no prohibition at ,ti!
invalidating forward contracts after the 30th March, 1950.
It
F
was on this view that the contracts, which were the basis of
the claim of the respondent, were held to be valid justifying
the passing of the decree for damages for breach of those contracts.
The question, in these circumstances, which falls for
determination in this appeal is whether the High Court was right
in holding that s. 3 of Act 5 of 1950 is void.
G
In this connection, our attention was also drawn by learned
counsel for the appellant to the E.ssential Supplies (Temporary
Powers) Act 24 of 1946, to which reference was not made by
the High Court. This Act was amended by the Essential Supplies
(Temporary Powers) Amendment Act 52 of 1950 and a new
sub-section ( 4) was introduced in section 17 to the following
H
e1lect :-
" ( 4) H immediately before the day on which this
Act comes into force in a Part B State, there is in force
46
SUPREME COURT REPORTS
[1969] 3 S.C.R.
in that State any law which cocresponds to this Act,
such corresponding law shall. on that day stand repealed in so far as it relates to any of the essential commodities governed by this Act ;
Provided that any order made and in force immediately before that day in the said State shall continue
in force and be deemed to be an order made under this
Act, and all appointments made, licences or permits
granted, and directions issued, under any such order
and in force immediately before that day shall likewise
continue in force, and be deemed to be made, granted
or issued in pursuance of this Act."
Tho Essential Supplies (Temporary Powers) Act 24 of 1946, by
tho same Amending Act 52 of 1950, was exteaded to the whole
of India except the State of I ammu & Kashmir, but with a
direction that it shall come into force in a Part B State to which
the Act extends only . on such date as the Central Government
may, by notification in the Official Gazette, appoint in this behalf,
and different dates ma!' be appointed for different Part B States.
In exercise of this power conferred on the Central Government,
a notification was issued on 17th August, 1950, S.R.O. 391
appointing 17th day of August, 1950 as the date on which that
Act was directed to come into forc.e in all Part B States to which
it extended.
This notification was published in the Gazette of
India Extraordinary Part II-Section 3.
The result was that,
under the principal clause of s. 17'( 4) of this Act 24 of 1946,
Act 5 of 1950, which was in force in Travancore-Cochin on
the 17th August, 1950, stood repealed; but rules, orders and
notifications under that Act, or which continued in force under
that Act, were to further continue in force under the proviso to
s. 17(4) notwithstanding the repeal of Act 5 of 1950. Thus,
in the year 1952, when the contracts in suit were entered into,
tho Essential Supplies (Temporary Powers) Act 24 of 1946 was
in force in Travancore-Cochin, and only those orders made earlier could be held to be effective which had been continued by
this Act and the previous Acts applicable in that State.
The question of validity of the contracts, in these circumstances, will clearly depend on whether future contracts in cocoanut oil were prohibited by any Jaw or orders· or notifications
which continued in force in 1952 after the Essential Supplies
(Temporary Powers) Act 24 of 1946 had come into force in the
State of Travancore-Cochin on 17th August, 1950. This opens
the question whether any prohibitory order was validly in force
on the 17th August, 1950. In tum, the answer to this question
will depend on whether a valid prohibitory order was in force
on 30th March, 1950 which could continue in force under s.
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47
73(2) of Act 5 of 1950. The only two earlier prohibitory orders
were the Prohibition Order of 1119 and the Prohibition Order
of 1950. On this aspect, reliance was placed on behalf of the
respondent on the circumstance that, under Entry 48 of List I
of the Seventh Schedule to the Constitution, the Parliament had
the exclusive power to legislate on the subject of stock exchangei
and future markets, and this Court has already held in Waverly
Jute Mills Co. Ltd. v. Raymon & Co. (India) Private Ltd.(')
that a legislation on Forward Contracts would be a legislatioa
on future markets, so that a State Legislature is not competent
to legislate in respect of Forward Contracts under its power of
legislation coqterred by Entry 26 of List II which relates to trade
and commerce within the State.
On this basis, it was argued
that the State Government, on 8th March, 1950, was not competent to i.ssue the Prohibition Order of 1950, as that Order was
very clearly a piece of legislation on forward contracts.
It appears to us that, in the present case, we need not express any
final opinion on this question. If it is held that the Government
of Travancore-Cochin was competent to pass this Prohibition
Order of 1950, because the power was derived under Act 8 of
1122 which was validly in force in the State on 8th March, 1950,
then that would be the Order which would continue in force
under s. 73(2) of Act 5 of 1950. On the other hand, if it
be held that the State Government could not competently pass
the Prohibition Order of 1950, because it was a piece of le~
lation on forward contracts, that Order would have to be treated
as void and non est. Thereupon, the earlier Prohibition Order
of 1119 would continue in force right up to 30th March, 1950.
Act 8 of 1122 had continued in force the Prohibition Order of
1119 with the qualification that it was to remain in force until
it was superseded or modified by the competent authority under
the provisions of this Act 8 of 1122. When the Prohibition Order of 1950 was purported to be issued on 8th March, 1950, it
was not laid down that it was being issued so as to supersede
the earner Prohibition Order of 1119. If it had been a valid
Order, it would have covered the same field as the Prohibition
Order of 1119 and, consequently, would have been the efiective
Order under which the rights and obligations of parties had to
be governed. On the other hand, if it be held to be void this
Order will not have the effect of superseding the earlier Order
of 1119.
L~ai;n;ed counsel for the respondent, however, urged
that the Pro~1b1t10n Order of 1119 cannot, in any case, be held
to have continued after 8th March, 1950, if the principle laid
down by this Court in Firm A .T.B. Mehtab Majid & Co. v. State
of Madras and Another(') is applied.
In that case, rule 16 of
the Madras General Sales Tax (Turnover & Assessment) Rules,
(I) [1963) 3 S.C.R. 209.
(2) [1963) Supp.
2 S.C.R. 435.
48
SUPREME COURT REPORTS
[1969] 3 S.C.R.
1939 was impugned.
A new r. 16 was substituted for the old
r. 16 by publication on September 7, 1955, and this new rule
was to h.e effective from 1st April, 1955. The Court held that
the new r. 16(2) was invalid, because the provisions of that rule
contravened the provisions of Art. 304 (a) of the Constitution.
Thereupon, it was urged before the Court that, if the impugned
rule be held to be invalid, the old r. 16 gets revived, so that
the tax assessed on the basis of that rule will be good. The Court
rejected this submission by holding that :
"Once the old rule has been substituted by the new
rule, it ceases to exist and it does not automatically get
revived when the new rule is held to be invalid."
On that analogy, it was argued that, if we hold that the Prohibition Order of 1950 was invalid, the previous Prohibition Order
of 1119 cannot be held to be revived.
This argument ignores
the distinction between supersession of a rule, and ·substitution of
a rule. In tbil case of Firm A .T.B. Mehtab Majid & Co('), the
new r. 16 was substituted for the old r. 16.
The process of
substitution consists of two steps.
First, the old rule is made
to cease to exist and, next, the new rule is brought into existence in its place. Even if the new rule be invalid, the first step
of the old rule ceasing to exist comes into effect, and it was for
this reason that the Court held that, on declaration of the new
rule as invalid, the old rule could not be held to be revived.
In the case before us, there was no substitution of the Prohibition
Order of 1950 for the Prohibition Order of 1119. The Prohibition Order of 1950 was promulgated independently of the
Prohibition Order of 1119, and because of the provisions of law
it would have had the effect of making the Prohibition Order of
1119 inoperative if it had been a valid Order. If the Prohibition
Order of 1950 is found to be void ab initio, it could never make
the Prohibition Order of 1119 inoperative.
Consequently, on
the 30th March, 1950, either the Prohibition Order of 1119 or
the Prohibition Order of 1950 must be held to have been in force
in Travancore-Cochin, so that the provisions of s. 73(2) of
Act 5 of 1950 would apply to' that Order and would continue it
in force. This further continuance after Act 5 of 1950, of course,
depends on the validity of section 3 of Act 5 of 1950, because
s. 73 (2) purported to continue the Order in force under that section, so that we proceed to examine the argument relating to the
validity of s. 3 of Act 5 of 1950.
The validity of this section is challanged on the ground that
it is hit by the prohibition laid down in clause (b) of Art. 304
of the Constitution and is not protected by the proviso to that
article. The relevant provisions of that article are as follows :-
(I) [1963) Supp. 2 S.C.R. 435.
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"304. Notwithstanding anything in article 301 or
article 303, the Legislature of a State may by law-
( a)
and
(b) irD.pose such reasonable restrictions on the
freedom of trade, commerce or inter-course with or
within that State as may be required in the public interest :
Pro•1ided that no Bill or amendment for the purposes of clause (b) shall be introduced or moved in
the Legislature of a State without the previous sanction
of the President."
The first point that was urged by learned Counsel for the
appellant was that s. 3 of Act 5 of 1950 did no~ require C?mpliance with the proviso, because it was not a piece of legislation for purposes of clause (b) of Art. 304;
but we are
unable to see any force in this submission.
It is enough to
refer to clause (f) of section 3(2) which is the provision undei:
which a Prohibition Order relating to Forward Contracts could:
have been passed, and the Prohibition Order of 1119 or the
Prohibition Order of 1950 can be held to be continued in force.
Under s. 3(2)(f), power is conferred on the State Government
to make an order which may provide for regulating or prohibiting
any class of commercial or financial transactions relating to any
essential article which, in the opiinion of the Government, are,
or if unregulated are likely to be, detrimental to public interest.
An Order prohibiting Forward Contracts would clearly be an
Order prohibiting a class of commercial transactions relating to
an essential article which, in this case, was cocoanut oil. The
conferment of power on a State Government to prohibit such
transactions clearly permits imposition of restrictions on the freedom of trade or commerce and, therefore, falls within the scope
of clause (b) of Art. 304 of the Constitution.
This argument
advanced on behalf of the appellant must, consequently, be rejected. However, the question that has to be further examined
is whether this Act 5 of 1950 was void, because the provisions
of th~ proviso to ~rt. 3~4 were attr~cted and the Act was passed without complying with the requtrements of the proviso.
It appears that the Bill, which emerged ultimately as Act 5
of 1950, was first introduced in the Legislative Assembly of the
State on 13th December, 1949, and was referred to a Select
Committee on 14th December, 1949. That was at a time when
the Constitution had not come into force and there was no
requirement under the Government of India Act 1935 which'
was applicable, similar to that laid down by the' provis~ to Art.
t -
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SUPREME COURT REPORTS
[1969] 3 S.C.R.
304.
The Bill was subsequently modified and re-drafted by
the Select Committee and was presented before the Assembly on
23rd March, 1950 after the Constitution had come into force.
The Minister-in-charge moved that the Bill be taken into consideration, whereupon discussion on the Bill proceeded and it was
finally pass"ed by the Assembly on 29th March, 1950: The Bill
recejved the assent of the Raj Pramukh of the State aQd was
brought into force, having been published by notification dated
30tli March, 1950. The point urged on behalf of the appellant
was that the Bill was introduced ·in the State Legislature on a
date prior, to the date of the Constitution when Art. 304 and the
proviso to it had not come into force,
so that no prior sanction of, the President was required for introduction of the Bill.
The Bill havi,ng been validly introduced remained pending in
the State Legislature under Art. 3 8 9 and the proceedings taken
in the Legislature· before the Constitution came into force were
to be deemed to have been taken in the Legislature of the State
which became seized of the Bill after the enforcement of the
Constitution. It was further urged that no amendment was moved in the State Legislature after the Constitution came into force
which could be hit by the restriction laid down.in Art. 304(b) of
the Constitution.
The material provisions, including s~tion 3
were enacted in the original form in which the Bill had already
been introduced in December, 1949. In these circumstances, it
was submitted that no occasion arose for complying with the
requirements of the proviso.
The Bill was validly introduced
without the previous sanction of the President and no amendment
was moved subsequently to that Bill requiring the President's
'anction after the Constitution came into force, so that Act 5 of
1950 as passed by the Legislature on 29th March, 1950 and
brought into force on 30th March, 1950 cannot be held to be
void for non-compliance with the requirements of the proviso to
Art. 304.
On behalf of the respondent, however, reliance was placed
on the view expressed by the High Court in the judgn:ient under
appeal that the mere fact that the Bill was originally introduced
on a date prior to the date of the Constitution will not save s. 3
from the operation of the proviso to clause (b) of Art. 304.
The High Court relied on the fact that' it was only subsequent
to the coming into force of the Constitution that the Bill in its
final form as redrafted by the Select Committee was introduced
and moved in the State Legislatt:re.
We are unable to accept
the view taken by the High Court.
Once the Bill was validly
introduce.d in December, 1949, it remained pending in the Legislature even when it was referred to the Select Committee. There
was, therefore, no question of the Bill being introduced again
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after the Select Committee had submitted its report. Even if the
Bill was modified and redrafted by the Select Committee, that
will make no difference.
That would be a modification and
redrafting of the Bill at a stage when the Bill was still pending
in the Legislature, so that there would be no fresh introduction
of the modified or redrafted Bill.
The High Court, in this connection, relied on two earlier
decisions of the same Court in George v. State of TravancoreCochin, (') and State v. Philipose Philip('). In fact, the High
Court, in the present case, expressed its decision in almost the
same language as was contained in the case of George v. State(').
In the second case of State v. Philipose Philip('), this aspect was
not clearly discussed.
The point, however, was considered in
detail by a Full Bench of that High Court in Ulanannan Mathai
v. State('). The High Court interpreted the expression "No Bill
or amendment shall be introduced or moved" in the proviso as
requiring that the Bill should neither be introduced nor mov~
without the prior sanction of the President, and, since in the
case of Act 5 of 1950, the Bill was moved for consideration,
without the prior sanction of the President, on 23rd March,
1950, after the Constitution had come into force, there had
been non-compliance with the proviso.
The Court rejected the
contention put forward before it that what the proviso really stipulates is that no Bill "shall be introduced" or ~·amendment moved" in the Legislature of a State without the previous sanction of
the President. That argument was advanced on the basis of the
maxim 'Reddendo singula singulis' which, according to Black's
Interpretation of Laws, means :
"'Where a sentence in a statute contains several antecedents and several consequences, they are to be read
distributively; that is to say, each phrase or expression
is to be referred to its appropriate object."
~e Court based its decision on the view that, if the interpretation urged before it was accepted, it would be possible to introduce a Bill which required no Presidential sanction, get it amended by a Select Committee in such a way as to n!ake it require the
Presidential sanction in case it was originally introduced in the
amen~ed form and then pass it into law, and thus escape the
necessity for the prior Presidential sanction provided by Art. 304
of the Constitution. It was held that there can be no doubt that
such a result could never have been intended by the makers of
the Constitution. In our opinion, the High Court did not correctly a~preciate the position. The language of the proviso cannot be mterpreted in the manner accepted by the High Court
(l) A.1.R. 1954 Tra-Co. 34.
(2) A.l.R.1954 Tra·Co. 257.
(3) A.l.R. 1955 Tm-Co. 82.
52
SUPREME COURT REPORTS
[1969] 3 S.C.R.
without doing violence to the ~ules of construction. Ii bo'.h the
words "introduced" or "moved" are held to refer to the Bill, it
must necessarily be held that both those words will also refer to
the word "amendment". On the face of it, there can be no
question of introducing an amendment. Amendments are moved and then, if accepted by the House, incorporated in the
Bill before it is passed.
There is further an indication in the
Constitution itself that wherever a reference is made to a Bill,
the only step envisaged is introduction of the Bill. There is no
reference to such a step as a Bill being moved. The articles, of
which notice may be taken in this connection, are Articles 109,
114, 117, 198 and 207. In all these Articles, whatever prohibition is laid down relates to the introduction of a Bill in the
Legislature. There is no reference at any stage to a Bill being
moved in a House. The language thus used in the Constitution
clearly points to the interpretation that, even in the proviso to
Art. 304, the words "introduced" refers to the Bill, wliil.e the
word "moved" refers to the amendment.
So far as the danger of evasion of this proviso envisaged by
the High Court is concerned, it appears that the High Court
ignored the circumstance that, even when the Bill is before a
Select Committee, it continues to be pending in the House, so
that, if it is modified or redrafted, there is amendment of the
Bill at that stage, If an amendment is introduced at that stage
while it is under consideration of the Select Committee, the
proviso may become applicable and, for a valid proposiil to introduce such an amendment in the Select Committee, prior sanction of the President will be necessary.
In this connection, we may take notice of the Rules of Procedure and Conduct of Business fa Lok Sabha, because we have
been assured by learned counsel for parties that the Rules of
Procedure for the State Legislature in Travancore-Cochin were
similar.
The Rules of Procedure we are referring to are those
which were adopted by the Lok Sabha on 28th March, 1957.
Rules 64 to 73 deal with tl)e introduction and publication of
Bills, and Rules 74 to 78 with motions after introduction of
Bills. Rules relating to amendments to clauses, etc. and consideration of Bills are Nos. 79 to 92. Rule 65(2) ensures compliance with the proviso to Art. 304 of the Constitution where
it is applicable by laying down that :
"If the Bill is a Bill which under the Constitution
cannot be introduced without the previous sanction or
recommendation of the ,President,
the member shall
annex to the notice such sanction or recommendation
conveyed through a Minister, and the notice shall not
be valid until this requirement is complied with."
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.,
Similarly, Rule 81 deals with the proctdure when an amendment
is moved by laying down that :
"If any member desires
to move an amendment
which under the Constitution cannot be moved without the previous sanction or recommendation of the
President, he shall annex to the notice required by
these rules such sanction or recommendation conveyed
through a Minister and the notice shall not be valid until this requirement is complied with."
Thus, the requirement of previous sanction of the President. under
the proviso to Art. 304 has to be satisfied by producing the
sanction either before introducing the Bill or before moving the
amendment, as the case may be.
Rules relating to Select Committees on Bills are Nos. 298
to 305, amongst which Rule 300 is of importance and may be
reproduced :
"300. ( 1) If notice bf a proposed amendment has
not been given before the day on which the Bill is taken
up by the Select Committee, any member may object
to the moving of the amendment and _such objection
shall prevail unless the Chairman allows
the am~
ment to be moved.
( 2) In other respects, the procedure in a Select
Committee shall, as far as practicable, be the same as
is followed in the House during the consideration stage
of a Bill, with such adaptations, whether by way of
modification, addition or omission, as the Speaker may
consider necessary or convenient."
This Rule makes it clear that, before a Bill can be modified
or redrafted by the Select Committee, amendments have to be
moved by
the members of the Committee and
when any
amendment is moved, the procedure in the Select Q>mmittee is
to be the same as is followed in the House during the considera·
tion stage of a Bill as far as practicable, though subject to such
adaptations as the Speaker may consider necessary or convenient.
This Rule, thus, envisages that the requirement of r. 81
in
respect of an amendment moved in the House will have to be
complied with when a similar amendment is moved in the Select
Committee.