State of Bihar vs Hiralal Kejriwal and Another

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Criminal Appeal No. 36 of 1958

Decision Date: 14 September 1959

Coram: Syed Jaffer Imam, Subba Rao J.

In this case the Court recorded that the State of Bihar was the petitioner and that Hiralal Kejriwal together with another individual were the respondents. The judgment was delivered on 14 September 1959 by a bench consisting of Justice Syed Jaffer Imam, Justice Subbarao K and Justice Syed Jaffer Imam. The citation of the decision is 1960 AIR 47 and 1960 SCR (1) 726, and it has been referenced in subsequent reports as R 1961 SC 304, R 1974 SC 366, R 1978 SC 933, and D 1980 SC 126. The matters before the Court concerned the interpretation of a statute-saving clause that had been repealed and the continuing effect, if any, of the Cotton Textiles (Control of Movement) Order 1948. The statutory provisions examined included sections 1(3) and 3(1) of the Essential Supplies (Temporary Powers) Act 1946, section 16 of the Essential Commodities Ordinance 1955, and sections 16(i)(a), 16(i)(b) and 16(2) of the Essential Commodities Act 1955. The petition was filed by special leave under Article 136 of the Constitution of India, seeking interference with a decision of the High Court that had discharged the respondent.

The Court explained that under the powers conferred by section 3 of the Essential Supplies (Temporary Powers) Act 1946 the Central Government had issued the Cotton Textiles (Control of Movement) Order 1948. Although the 1946 Act was scheduled to cease on 26 January 1955, the Central Government promulgated the Essential Commodities Ordinance 1 of 1955 on 21 January 1955, which gave the Government a power substantially similar to that in section 3 of the 1946 Act. Section 16 of the Ordinance provided that all orders made under the 1946 Act, to the extent that they could be made under the Ordinance, would continue in force, and that any appointment, licence, permit or direction issued under such orders would also remain valid. Subsequently the Essential Commodities Act 1955 repealed the Ordinance by operation of section 16(i)(a) and, through section 16(i)(b), repealed any other law in any State that regulated the production, supply, distribution, trade or commerce of an essential commodity. The savings clause in section 16(2) of the 1955 Act duplicated the saving provision found in the Ordinance. The respondent argued that the first part of section 16 of the Ordinance was narrowed by its second part, so that the provision only saved actions taken under the order and not the order itself, and that even if the order was saved by the Ordinance it was thereafter repealed by section 16(i)(b) of the 1955 Act and therefore did not continue under that Act. The Court held that the Cotton Textiles (Control of Movement) Order 1948 was indeed saved by section 16 of the Ordinance and that its continuation was further preserved by section 16(2) of the Essential Commodities Act 1955, making the order operative on 30 August 1955, the date on which the alleged offence occurred. The Court clarified that the first part of section 16 of the Ordinance saved the order and any actions performed under the order after the Ordinance came into force, whereas the second part saved actions that had been performed under the order before the Ordinance’s commencement. Consequently, the order was not extinguished by the repealing provisions of the 1955 Act.

The Court explained that the expression “any other law” appearing in section 16(i)(b) of the Essential Commodities Act, 1955 was intended to refer to any statute or rule other than the Essential Commodities Ordinance itself. Consequently, an order that was made under, or treated as having been made under, the Ordinance could not be repealed by the operation of section 16(i)(b). Such an order, however, remained saved by section 16(i)(a) of the same Act. The Court further held that the present matter did not present a suitable case for the exercise of jurisdiction under article 136 of the Constitution to interfere with the High Court’s order that discharged the accused. The offence in question had been committed more than four years earlier, and the appellant’s application to the High Court for a certificate of fitness to appeal to the Supreme Court had been filed at a considerably delayed stage. The Court observed that the accused had a reasonable basis for believing that the Order had ceased to operate following the repeal of the 1946 Act, especially in view of the divergent opinions expressed by various courts. It was also noted that the State appeared to have instituted the appeal primarily to obtain clarification of the legal position. In these circumstances, the Court concluded that there was no public interest that justified reviving a matter that had become stale.

The judgment concerned criminal appeal number 36 of 1958, which was an appeal by special leave filed by the State of Bihar against the judgment and order dated 9 May 1957 of the Patna High Court. That High Court decision had arisen from criminal reference number 51 of 1957 and criminal revision number 323 of 1957, both of which were themselves based on the judgment and order dated 20 March 1957 of the First Additional Sessions Judge, Patna, in criminal revision number 14 of 1957. Counsel for the appellant included K P Varma and R C Prasad, while counsel for the respondents comprised H J Umrigar and B P Maheshwari. The judgment was delivered on 14 September 1959 by Justice Subbarao. The appeal challenged the High Court’s decision to set aside the criminal proceedings that had been initiated against the two respondents in the Court of Munsif-Magistrate, Patna. The respondents were the owners of the firm M/s Patna Textiles, which carried on the cotton business in Patna. On 30 August 1955 they dispatched two bales of sarees to M/s Hiralal Basudev Prasad, cloth merchants of Balia, from Patna Ghat without first obtaining a permit from the Textile Controller of Bihar. As a result, they were prosecuted under section 7 of the Essential Commodities Act, 1955, read in conjunction with section 3 of the Cotton Textiles (Control of Movement) Order, 1948, in the Court of the Munsif-Magistrate, Patna. The respondents filed a petition before that Munsif-Magistrate seeking their discharge, arguing that the Essential Supplies (Temporary Powers) Act, 1946, under which the 1948 Order had been made, had been repealed and therefore the Order no longer possessed any legal force and could not serve as a basis for prosecution. The Munsif-Magistrate rejected the petition. The Additional Sessions Judge, Patna, after reviewing the records, transmitted them to the High Court under section 438 of the Code of Criminal Procedure together with his opinion that the order of

The High Court held that the order issued by the Munsif-Magistrate was erroneous and therefore could be set aside, and it directed that the magistrate discharge the accused. The respondents also filed a revision before the High Court challenging the magistrate’s order. Both the reference and the revision were considered together by Justice Imam of the Patna High Court. Justice Imam accepted the reference and the revision, annulled the magistrate’s order and ordered the discharge of the accused, which gave rise to the present appeal. Counsel for the State argued that the order made under the Essential Supplies (Temporary Powers) Act, 1946 was preserved by section 16 of the Essential Commodities Ordinance of 1955 and by section 16(2) of the Essential Commodities Act, 1955, and consequently the accused had been validly prosecuted under the provisions of that order. Counsel for the respondents contended that the order was not saved by either of those two provisions. To appreciate the positions of the parties, it was necessary to examine the relevant statutory provisions of the 1946 Act, the 1948 Cotton Textiles (Control of Movement) Order, the 1955 Ordinance and the 1955 Act. Section 1(3) of the Essential Supplies (Temporary Powers) Act, 1946 provided that the Act would cease to have effect on the twenty-sixth day of January 1955, except with respect to acts done or omitted before that date, and that section 6 of the General Clauses Act, 1897 would apply as if the Act had been repealed by a Central Act upon its expiry. Section 3(1) of the same Act authorized the Central Government, when it deemed necessary or expedient for maintaining or increasing supplies of any essential commodity or for securing equitable distribution and fair prices, to issue an order regulating or prohibiting the production, supply, distribution, trade or commerce of that commodity. Section 3 of the Cotton Textiles (Control of Movement) Order, 1948 prohibited any person from transporting by rail, road, air, sea or inland navigation any cloth, yarn or apparel unless done under a general permit published in the Gazette of India by the Textile Commissioner or a special transport permit issued by the Textile Commissioner. The Essential Commodities Ordinance, 1955 began with the preamble stating that the Essential Supplies (Temporary Powers) Act, 1946, which conferred powers to control production, supply, distribution, trade and commerce of certain commodities, expired on the twenty-sixth day of January 1955, and that the President was pleased to promulgate the Ordinance. Section 16 of that Ordinance provided that any order made or deemed to be made under the 1946 Act and in force immediately before the commencement of the Ordinance would be deemed to have been made under the Ordinance and would continue in force, and that any appointment, licence, permit or direction issued under such an order and in force immediately before the commencement would likewise continue unless superseded by a subsequent appointment, licence, permit or direction issued under the Ordinance.

In this case, the Court observed that any appointment, licence, permit or direction that was made under the Essential Commodities Ordinance would remain in force until it was expressly superseded by a later appointment, licence, permit or direction issued under the same Ordinance. The Court pointed out that the Ordinance had been formally published in the Gazette of India on the twenty-first day of January in the year 1955 and that it became operational on the twenty-sixth day of the same month and year. Accordingly, any authority that had issued an appointment, licence, permit or direction prior to that commencement date continued to enjoy the effect of those authorisations, provided that no subsequent instrument issued under the Ordinance replaced them. The Court therefore stressed that the continuity of the earlier authorisations was preserved unless and until a new authorising instrument was issued under the Ordinance, thereby ensuring a seamless legal transition from the earlier regime to the new statutory framework.

The Court then turned to the Essential Commodities Act of 1955 and recited the operative provisions of that statute. Section 3(1) of the Act states: “If the Central Government is of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices, it may, by order provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein.” The Court further explained the punitive consequences laid down in Section 7(1), which provides that any person who contravenes an order made under Section 3(a) shall be punishable in two alternative ways. First, if the order is made with reference to clause (h) or clause (i) of sub-section (2) of that section, the offender may be sentenced to imprisonment for a term which may extend to one year and shall also be liable to a fine. Second, for any other order made under the same section, the imprisonment term may extend to three years, together with a fine. The provision also permits a court, if it is of the opinion that a fine alone would meet the ends of justice, to refrain from imposing imprisonment, provided that the reasons for such a decision are recorded.

Proceeding to Section 16 of the Act, the Court noted that this provision set out the repeal of earlier legal measures and also incorporated a saving clause to protect existing orders and authorisations. Sub-section (1) of Section 16 expressly repeals: (a) the Essential Commodities Ordinance, 1955; and (b) any other law that was in force in any State immediately before the commencement of the 1955 Act to the extent that such law controlled or authorised the control of the production, supply and distribution of, and trade and commerce in, any essential commodity. Despite the repeal, sub-section (2) provides that any order made or deemed to be made by any authority under any law that has been repealed, and which was in force immediately before the commencement of the 1955 Act, shall be deemed to have been made under the 1955 Act and shall continue to operate. Consequently, any appointment, licence, permit or direction issued under such an order shall remain effective until it is superseded by a new appointment, licence, permit or direction made under the 1955 Act. Sub-section (3) clarifies that the provisions of sub-section (2) are without prejudice to the provisions contained in Section 6 of the General Clauses Act, 1897, which shall also apply to the repeal of the Ordinance or any other law referred to in sub-section (1) as if the repealed enactment were still in force, thereby giving statutory effect to the saving mechanism.

Finally, the Court offered a concise summary of the legislative background preceding the 1955 Act. Under the Essential Supplies (Temporary Powers) Act of 1946, the Central Government possessed the authority to issue orders that could regulate or prohibit the production, supply and distribution of essential commodities. However, the 1946 Act itself contained a provision that stipulated its own expiry on the twenty-sixth day of January, 1955. In exercising the powers conferred by the 1946 Act, the Government had previously issued the Cotton Textile (Control of Movement) Order, 1948, which required a permit from the Textile Commissioner for the transport of cloth. As the 1946 Act approached its scheduled termination, the Government introduced the Essential Commodities Ordinance, 1955 on January 21, 1955, which replicated the regulatory powers of the 1946 Act and incorporated saving clauses for actions taken under the earlier statute. The subsequent enactment of the Essential Commodities Act, 1955 on April 1, 1955, effectively reenacted the substantive provisions of the Ordinance, preserving the continuity of governmental powers and ensuring that any orders, licences or permits issued before the transition remained valid until replaced under the new statutory scheme.

The Court explained that, under section 3 of the Essential Supplies (Temporary Powers) Act, 1946, the Central Government exercised its authority by issuing the Cotton Textile (Control of Movement) Order, 1948. That Order prohibited any person from transporting cloth or other specified articles without first obtaining a permit from the Textile Commissioner. The 1946 Act was scheduled to cease to operate on 26 January 1955. In anticipation of that expiry, the government promulgated an Ordinance on 21 January 1955 which conferred on the Central Government a power that was essentially the same as the power provided by section 3 of the 1946 Act. The Ordinance also contained saving provisions intended to preserve certain actions that had been taken under the 1946 Act. Subsequently, on 1 April 1955, Parliament enacted a new statute that virtually reproduced the provisions of the Ordinance, thereby continuing the same power that the Central Government had exercised under section 3 of both the 1946 Act and the Ordinance. The new Act likewise incorporated clauses for repeal and saving. Accordingly, the Court identified the precise question before it: on the date when the alleged offence was committed, was the 1948 Order, which formed the basis of the prosecution, still in effect, or had it terminated because the 1946 Act had ceased to operate? The Court noted that, as a general rule, an order made under an Act loses its legal force once the enactment expires. However, the respondents argued that the order survived the expiration of the 1946 Act by virtue of the saving clauses contained in both the Ordinance and the subsequent Act. In principle, the order would have lapsed on 26 January 1955 unless it was saved by section 16 of the Ordinance; without such a saving provision, the saving clause of the later Act could not apply to it.

The Court then set out its analytical framework, stating that the issue should be examined from two angles: first, whether section 16 of the Ordinance preserved the operation of the Order; and second, if the Ordinance did preserve it, whether subsection 2 of section 16 in the later Act granted the Order an additional period of validity. Section 16 of the Ordinance was divided into two parts. The first part declared, “any order made or deemed to be made under the Essential Supplies (Temporary Powers) Act, 1946, and in force immediately before the commencement of this Ordinance shall, in so far as such order may be made under this Ordinance, be deemed to be made under this Ordinance and continue in force.” The Court observed that the condition required for this provision to operate was satisfied, because the order issued under section 3 of the 1946 Act could also be made under section 3 of the Ordinance. Consequently, by the express language of the provision, the order was to be treated as an order made under the Ordinance and therefore to remain in force after the Ordinance came into effect. The respondents, however, contended that the second part of section 16 narrowed the broad wording of the first part. The second part affirmed that the order would continue in force and further provided that “any appointment made, licence or permit granted or direction issued under any such order and in force immediately before such commencement shall continue in force unless and until it is superseded by any appointment made, licence or permit granted or direction issued under this Ordinance.” The Court noted that the argument that the second part became redundant if the order itself continued was unpersuasive, because both parts of the section were intended to operate together. To ascertain the meaning of the provision, the Court emphasized that no part could be omitted; the entire section must be read as a whole and the two parts must be reconciled. The Court concluded that the first part unmistakably mandated the continuation of the order notwithstanding the repeal of the 1946 Act, and therefore the order did not automatically cease on 26 January 1955.

The provision stipulates that an order shall remain in effect until it is replaced by any appointment, licence, permit or direction issued under the Ordinance. Some counsel argued that if the original order continues, the second clause of the section becomes unnecessary because any appointment, licence, permit or direction made under the original order would automatically remain valid, making the enactment of the second clause of section sixteen superfluous. They further contended that this reasoning creates an inconsistency, because if the argument were accepted the first clause would also be redundant; the same outcome could be achieved by enacting only the second clause and omitting the first altogether. The Court observed that when interpreting a statutory provision it is impermissible to disregard any part of it; the entire section must be read as a whole and the two parts must be reconciled. The Court found no ambiguity in the first part of the section. In clear and unambiguous language the first part declares that the order will continue in force despite the repeal of the earlier Act, and then it lists certain actions that were carried out under that order and that were in force immediately before the Ordinance commenced, stating that those actions will continue because the order itself continues. The term “accordingly”, meaning consequently, indicates that the listed actions persist only because the order persists; they are dependent on the order’s continuance. While some suggested that this interpretation imposes a tautology on the legislature and should be rejected, the Court’s examination showed that the second part is not truly redundant as it initially appears. Section sixteen of the Ordinance provides that the order made under the 1946 Act remains effective until a new order is issued under the Ordinance, covering two time spans: the period up to the Ordinance’s commencement and the period thereafter. The first part therefore gives life to the original order, allowing actions authorised under it to be performed after the Ordinance comes into force. However, a question arises whether actions performed in the past under that order are preserved merely by the order’s continuance, or whether those past actions are covered by the phrase “the order shall continue in force”. The second part appears to have been inserted to resolve this difficulty or, at the very least, to eliminate any uncertainty. Accordingly, the section saves both the order and the actions previously taken under it. Consequently, the order was saved and a prosecution authorised by the order could lawfully proceed after the Ordinance became effective. Nonetheless, it was argued that the order saved by section sixteen of the Ordinance was lost when that Ordinance was repealed and therefore did not continue under the subsequent Act.

In this case, the Court examined the contention that the order was not continued under the Act. The contention relied on sections 16(1) and 16(2) of the Act. Section 16 contains three sub-sections, but the argument focused only on sub-sections (1) and (2). Sub-section (2) reproduces the provision that had been contained in section 16 of the Ordinance. The argument asserted that section 16(1)(b) of the Act shows that the order was not saved by that provision. Under section 16(1)(a), the Essential Commodities Ordinance, 1955, is repealed, and under section 16(1)(b) “any other law in force in any State immediately before the commencement of this Act in so far as such law controls or authorizes the control of the production, supply and distribution of, and trade and commerce in, any essential commodity” is also repealed. The counsel argued that the order falls within the phrase “any other law” in clause (b), and therefore, when the order is repealed under clause (b), it is unreasonable to hold that it is restored by sub-section (2). In other words, the legislature cannot be said to have intended to repeal an order under one sub-section and to revive it under another. The Court observed a fallacy in that reasoning. The words “any other law” in section 16(1)(b) can only refer to laws other than the Essential Commodities Ordinance mentioned in clause (a). It is acknowledged that many states have laws other than the Ordinance that regulate essential commodities. An order made or deemed to be made under the Commodities Ordinance, 1955, cannot be described as a law other than the Essential Commodities Ordinance under which it was created. Such an order is already captured by clause (a) of section 16(1), and therefore clause (b) does not apply to it. Accordingly, the Court could not give an interpretation of sub-section (2) that differed from the interpretation it had already given to the provisions of section 16 of the Ordinance. For the reasons set out in interpreting the Ordinance, the Court held that, under section 16(2), both the order and the acts listed in its second part survived the expiry of the Ordinance and continued in force under the Act. Consequently, the prosecution launched against the accused under section 3 of the order was deemed valid. Nevertheless, counsel for the respondents argued that this matter was not suitable for interference under article 136 of the Constitution, noting that the alleged offence had been committed on 30 August 1955, more than four years earlier, and that the varying opinions expressed by the courts indicated a plausible justification for a reasonable belief on the part of the accused.

In this matter the Court observed that the order under discussion had failed to survive the termination of the 1946 Act. The High Court’s order dismissing the application for leave to appeal to the Supreme Court was found to have been made in violation of rule 28 of the Patna High Court Rules, which mandates that such an application be filed immediately after the judgment is delivered. The affidavit submitted in support of the delayed application offered only the explanation that the appellant had not provided the necessary instructions, and the High Court judge correctly rejected that explanation as insufficient to justify a belated filing. In the present application for special leave before this Court, it was asserted that the High Court had rejected the application for a certificate, yet the specific grounds for that rejection were not disclosed. The State appeared to have pursued the appeal primarily to obtain clarification of the legal position. The Court further expressed the view that the matters involved were considerably stale and that there was no public interest compelling the revival of such an old dispute. Consequently, the Court concluded that it was appropriate to refrain from exercising its discretionary jurisdiction in this case and therefore dismissed the appeal. The appeal was consequently dismissed.