2005 Supreme(SC) 1164

2005(6) Supreme 243
Supreme Court of India
(From Rajasthan High Court)
Ashok Bhan and S.B. Sinha, JJ.
State of Rajasthan & Ors. —Appellants
versus
Basant Nahata —Respondent
Civil Appeal No. 7800 of 2001
Decided on 7-9-2005
Counsel for the Parties :
For the Appellants : Aruneshwar Gupta and Naveen Kumar Singh, Advocate.
For the Respondent : Ms. Manjeet Chawla, Advocate.
For the State of Gujarat : Yashank Adhyaru, Sr. Advocate, Ms. Hemantika Wahi, Boby Augustine and Rutwik Panda, Advocates.
For the State of Karnataka : Sanjay R. Hegde, Anil K. Mishra and A.Rohen Singh, Advocates.
For the State of Maharashtra : U.U. Lalit, Sr. Advocate, Gautam Godara, *Ms. Pinky Anand, Advocate, (*also for State of Jharkhand), Ravindra Keshavrao Adsure, Advocates.
For the State of Meghalaya : Manish Mohan, Aman Sinha, D.K. Sinha, Advocate for Ugra Shankar Prasad, Advocate/Advocates.
For the State of Bihar : Kumar Rajesh Singh and B.B. Singh, Advocates.
For the State of Jharkhand : D.N. Goburdhun, Rajesh Pathak and Arup Banerjee, Advocates.

Important point
Section 22-A of the Registration Act as inserted by the State of Rajasthan whereby and whereunder registration of some documents have been prohibited as being ‘opposed to public policy’ is declared unconstitutional.

Headnote:(i) Registration Act—Section 22-A as amended by State of Rajasthan, Sections 17, 49, 32 and 72—Indian Contract Act, 1872—Power of Attorney Act, 1882—Section 1A—Constitutional validity of Section 22A of the Act as inserted by the Rajasthan Amendment Act and consequently the notifications—Constitutionality of Section 22A of the Registration Act as amended by State of Rajasthan as also the notifications issued challenged—Powers of State Government to declare documents registration of which is opposed to public policy—A deed of Power of Attorney presented before the Sub-Registrar for purpose of registration was refused stating that the document could not be registered in terms of the Government Notification—Notifications were said to have been issued by the State of Rajasthan u/s 22-A of the Act—Writ petitions challenging constitutionality of Section 22A of the Act—High Court declared Section 22-A of the Act as inserted by the State Government as unconstitutional—Whether Section 22A of the Act confers wide powers on the State Govt.—(Yes)—Whether High Court was justified in declaring Section 22A as unconstitutional—(Yes).

       Held : The State of Rajasthan inserted Section 17(1)(f) and (g) in the Act making the registration of agreement to sale and irrevocable power of attorney relating to transfer of immovable property in any way a compulsorily registrable document. The State went further to amend Article 23 of the Second Schedule of the Stamp Act, 1899 making an agreement to sale of immovable property and irrevocable power of attorney or any other instrument executed in the course of conveyance, etc. with possession to be deemed to be a conveyance and stamp duty is chargeable thereon accordingly. According to the State, despite such enactments sales were being made by seller on the basis of a power of attorney with a right to sell the property and such powers of attorney were being executed for an unspecified period. A transaction between two persons capable of entering into a contract which does not contravene any statute would be valid in law. The State of Rajasthan does not make such transactions illegal. The Indian Contract Act or the Power of Attorney Act have not been amended. Execution of a power of attorney per se, therefore, is not illegal. Registration of power of attorney except in cases falling under Section 17(1)(g) or 17(1)(h) is not compulsorily registrable. Sections 32 and 33 of the Indian Registration Act also do not bar any such registration. The Act only strikes at the documents and not at the transactions. The whole aim of the Act is to govern documents and not the transactions embodied therein. Thereby only the notice of the public is drawn. (Paras 56 and 57)

       Hence, Section 22-A of the Act through a subordinate legislation cannot control the transactions which fall out of the scope thereof. (Para 60)

       We have noticed hereinbefore the effect of a power of attorney under the Indian Contract Act or the Power of Attorney Act. A subordinate legislation which is not backed up by any statutory guideline under the substantive law and opposed to the enforcement of a legal right, in our opinion, thus, would not be valid. The question can be considered from another angle. A person may not have any near relative or is otherwise unable to attend the office of the Sub-Registrar or Registrar within whose jurisdictions the property is situated. He may even be out of the country. In absence of any substantive provisions contained in a parliamentary or legislative act, he cannot be refrained from dealing with his property in any manner he likes. Such statutory interdict would be opposed to one’s right of property as envisaged under Section 300A of the Constitution of India. (Paras 61 & 62)

       (ii) Administrative Law—Doctrine of separation of powers—Whether what is essentially within the exclusive domain of the judiciary can be delegated to the executive unless policy behind the same is finally laid down.

       Held : A thing which itself is so uncertain cannot be a guideline for any thing or cannot be said to be providing sufficient framework for the executive to work under it. Essential functions of the legislature cannot be delegated and it must be judged with touchstone of Article 14 and Article 246 of the Constitution of India. It is, thus, only the ancillary and procedural powers which can be delegated and not the essential legislative point. The contention raised on behalf of the Appellants herein that the State, being higher authority, having been delegated with the power of making declaration in terms of Section 22-A of the Act, would not be abused is stated to be rejected. Such a question does not arise herein as the provision has been held to be ultra vires Articles 14 and 246 of the Constitution of India. (Paras 67 and 68)

       (iii) Administrative Law—Legislative Policy—Scope of judicial review—A legislative policy must conform to provisions of the constitutional mandates—Even otherwise a policy decision can be subjected to judicial review. (Para 69)

       (iv) Administrative Law—Delegated Legislation—Legislative function —Necessity of legislature’s delegating its powers in favour of the executive—Criteria or standard to be laid down so as to enable the delegatee to act within the framework of the statute—Constitution of India—Article 245.

       Held : The necessity of the legislature’s delegating its powers in favour of the executive is a part of legislative function. It is a constituent element of the legislative power as a whole under Article 245 of the Constitution. Such delegation of power, however, cannot be wide, uncanalised or unguided. The legislature while delegating such power is required to lay down the criteria or standard so as to enable the delegatee to act within the framework of the statute. The principle on which the power of the legislature is to be exercised is required to be disclosed. It is also trite that essential legislative functions cannot be delegated. The procedural powers are, therefore, normally left to be exercised by the executive by reason of a delegated legislation. (Paras 20 and 21)

       There cannot be any doubt whatsoever that the court shall not invalidate a legislation on the ground of delegation of essential legislative function or on the ground of conferring unguided, uncontrolled and vague powers upon the delegate without taking into account the preamble of the Act as also other provisions of the statute in the event they provide good means of finding out the meaning of the offending statute. (Para 32)

       So it is only when the language is itself capable of more than one meaning, then the preamble or the statement of objects and reasons can be looked into and not when something is not capable of given a precise meaning as in case of ‘Public policy’. Even if the Statement of Objects and Reasons is looked into to ascertain its meaning then also there is nothing therein which can be said to be related to morality or public policy. We have, furthermore, not been shown as to how the preamble or any other provisions of the Act would provide for any guideline in construing Section 22-A of the Act. The principal contention raised on behalf of the counsel for the Appellants, as noticed hereinbefore, is that the terminology ‘opposed to public policy’ itself provide for such guidelines. (Para 34)

       (v) Words and Phrases—Words ‘Public policy’—Powers of judiciary to determine as to the factors of public policy—Registration Act—Section 22-A as inserted by State of Rajasthan—Indian Contract Act, 1872 —Section 23.

       Held : The words ‘Public policy’ or ‘opposed to public policy’, inter alia, find reference in Section 23 of the Indian Contract Act, Section 7(1)(b)(ii) of Foreign Awards (Recognition and Enforcement) Act, 1961, Section 3(1) of U.P. (Temporary Control of Rent and Evictions) Act, 1947 and Section 34(2)(b)(ii) of Arbitration and Conciliation Act, 1996. By reason of the said provisions the judiciary has been conferred with power to determine as to the factors of public policy which may form the basis for interference with a contract or award. It may not be necessary for us to deal with extensively the case laws dealing with the relevant provisions of the said statutes but it would not, in our opinion, be correct to contend that public policy is capable of being given a precise definition. What is ‘opposed to public policy’ would be a matter depending upon the nature of the transaction. The pleadings of the parties and the materials brought on record would be relevant so as to enable the court to judge the concept as to what is for public good or in the public interest or what would be injurious or harmful to the public good or the public interest at the relevant point of time as contra-distinguished from the policy of a particular government. A law dealing with the rights of a citizen is required to be clear and unambiguous. Doctrine of public policy is contained in a branch of common law, it is governed by precedents. The principles have been crystallized under different heads and though it may be possible for the courts to expound and apply them to different situations but it is trite that the said doctrine should not be taken recourse to in ‘clear and incontestable cases of harm to the public though the heads are not closed and though theoretically it may be permissible to evolve a new head under exceptional circumstances of a changing world’. (Paras 38 to 41)