1965 Supreme(SC) 188

SUPREME COURT OF INDIA
P.B. GAJENDRAGADKAR, C.J.I., K.N. WANCHOO, M. HIDAYATULLAH, J.C. SHAH AND S.M. SIKRI, JJ.
Jaora Sugar Mills (P) Ltd., Appellant
Versus
The State of M.P. and others, Respondents.
1. Diamond Sugar Mills Ltd., 2. Shri Changdeo Sugar mills Ltd., 3. Sriram Shahkari Sakhar Karkhana Ltd., 4. The Parvana Sakhari Sakhar Karkhana Ltd., 5. The State of U. P., Interveners.
Civil Appeal No. 531 of 1964. 417
Advocates appeared
Mr. G. S. Pathak, Senior Advocate, (M/s. Rameshwar Nath, S. N. Andley and P. L. Vohra, Advocates of M/s. Rajendra Narain and Co., with him), for Appellant: Mr. M. Adhikari, Advocate General for the State of Madhya Pradesh (Mr. I. N. Shroff, Advocate, with him), for Respondents. Mr. G. S. Pathak, Senior Advocate, (Mr. B. Dutta, Advocate, and M/s. J. B. Dadachanji O. C. Mathur and Ravindra Narain, Advocates of M/s. J. B. Dadachanji and Co., with him), for Interveners Nos. 1 and 2, M/s. V. M. Limaye, and S. S. Shukla, Advocates, for Intervener No. 3, Mr. G. S. Pathak, Senior Advocate, (M/s. B. Dutta and S. N. Vakil, Advocates, and M/s. J. B. Dadachanji, O. C. Mathur and Ravinder Narain, Advocates of M/. J. B. Dadachanji and Co., with him), for Intervener No. 4 Mr. C. B. Agarwala, Senior Advocate, (Mr. O. P. Rana, Advocate, with him), for Intervener No. 5.

Headnote:(1) Constitutional of India-Arts. 246 and 248-colourable legislation-when statute is challenged on ground of its being colourable legislation, transgressing of legislative powers has to be established.

       Where a challenge to a statute is made on the ground that it is a colourable legislation what has to be proved to the satisfaction of the Court is that though the Act is within the legislative competence of the Legislature in question, in substance and in reality it covers a field which is outside its legislative competence. The idea conveyed by the expression "colourable legislation" is that although apparently a Legislature in passing a Statute purported to act within the limits of its powers, yet in reality it transgressed those powers, the transgression being veiled by what appears, on proper examination, to be a mere pretence or disguise. AIR 1953 SC 375 referred to. [Para 16]

       (2) Constitution of India-Arts. 246 and 248-topic not included in State List-Parliament cannot confer legislative competence on State legislature.

       Where a topic is not included in the List dealing with the legislative competence of State Legislatures, Parliament cannot by making a law, attempt to confer such legislative competence on State Legislatures. [Para 13]

       (3) Sugar-cane (Regulation of Supply and Purchase) Act, (M.P.)-S.23-Sugarcane (Regulation of Supply and Purchase) rules, 1959 (M.P.)-Rr. 45, 47-recovery of cess by Madhya Pradesh State validated-validating Act is not unconstitutional.

       The imposition of sugarcane cess under the provisions of the Madhya Pradesh Sugar-cane (Regulation of Supply and Purchase) Act, 1958 was held to be invalid. Thereupon Parliament passed the Sugarcane Cess (Validation) Act, 1961, to the effect that the cesses shall be deemed to have been validly imposed, assessed or collected, in accordance with the law." The validity of this Act of Parliament was challenged on the grounds that it was colourable legislation, that the Act had sought to validate the invalid State statute passed without legislative competence and that it was not passed for the purpose of the Union of India since the recoveries of cess retrospectively authorised by it were not likely to go in the Consolidated Fund of India under Article 266 of the Constitution.

       Held: The Act was not open to challenge as a colourable legislation. What Parliament had done was not to validate the invalid State statutes but to make a law concerning the cess covered by those statutes and to provide that the said law has come into operation retrospectively. The command, under which the cess would be deemed to have been recovered, would be a command of Parliament, because of the relevant sections, notifications, orders and rules have been adopted by the Parliamentary statute itself. The Parliament was competent to make law in respect of the cess in question, to apply the provisions of such a law to the different States and to make them retrospective in operation. Normally it would be inappropriate and illegitimate to hold an enquiry in the manner in which the funds raised by an Act would be dealt with when the Court is considering 'the validity of the Act itself. Validity of the Act must be judged in the light of the legislative competence of the Legislature which passes the Act and may have to be examined in certain cases by reference to the question as to whether the fundamental rights of citizens have been improperly contravened or other considerations which may be relevant in that behalf. Parliament can in exercise of its legislative competence pass a law retrospectively validating the collection by converting their character from collections made under the State statutes to that made under its own statutes operating retrospectively under Article 248 read with Entry 97 in List I of Seventh Schedule. 1964 JLJ 263 affirmed on this point. [Paras 14, 18]

       (4) Sugarcane (Regulation of Supply and Purchase) Act, 1959 (M. P.)S. 21-demand of commission for period when Cane Development Council not in existence-cannot be made.

       During the period for which the demand for the commission payable to the Cane Development Council was made, the Council was not in existence and no service whatsoever was done during that period, the demand was invalid 1964 JLJ 263 reversed on this point. [Para 19]