Vasantlal Maganbhai Sanjanwala vs The State Of Bombay And Others

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

Court: supreme-court

Case Number: Civil Appeals Nos. 147 and 148 of 1955

Decision Date: 25 August 1960

Coram: P.B. Gajendragadkar, Bhuvneshwar P. Sinha, J.L. Kapur, K.N. Wanchoo

The case titled Vasantlal Maganbhai Sanjanwala versus the State of Bombay and others was decided on 25 August 1960 by the Supreme Court of India. The bench comprised P B Gajendragadkar, Bhuvneshwar P Sinha, J L Kapur and K N Wanchoo. The petitioner, Vasantlal Maganbhai Sanjanwala, challenged the State of Bombay and other respondents under article 226 of the Constitution, contesting the validity of a notification issued by the Government of Bombay under section 6(2) of the Bombay Tenancy and Agricultural Lands Act, 1948 (Bombay LX VII of 1948). Section 6(1) of that Act stipulated that the maximum rent payable by a tenant could not, for irrigated land, exceed one‑fourth of the crop of the land or its value as determined in the prescribed manner, and for all other land could not exceed one‑third. Section 6(2) empowered the Provincial Government, by a notification in the Official Gazette, to fix a lower rate of maximum rent for lands situated in any particular area or on any other suitable basis it deemed fit. Acting under this power, the Government of Bombay issued a notification that set the maximum rent at a level considerably lower than the rate previously fixed. The petitioners argued that section 6(2) conferred an unguided legislative power on the Government, rendering it void for excessive delegation, and they sought to have the notification set aside. The High Court rejected their plea, prompting an appeal to this Court. The Court examined whether the provision delegated an essential legislative function and whether the legislature had provided a clear policy and guiding principle for the delegate. It noted that delegation is an inherent part of legislative power, but a legislature may not surrender its core legislative function. Before delegating subsidiary powers, the legislature must lay down a legislative policy and principles to guide the delegate’s action. The Court referred to the preamble of the Act and its substantive provisions, observing that the statute aimed to improve the economic and social condition of peasants by fixing a maximum rent and establishing a swift mechanism for determining reasonable rent. The Act specifically prescribed the method for fixing reasonable rent in section 12(3), thereby providing the necessary policy framework. Consequently, the Court held that section 6(2) did not amount to an unlawful delegation of power, even though it did not stipulate a minimum rent. The lack of a minimum rate did not render the delegation excessive. The judgment was reported as 1961 AIR 4 and 1961 SCR (1) 341 and has been cited in numerous subsequent decisions, including R 1964 SC 980, R 1965 SC 1107, RF 1967 SC 212, OPN 1967 SC 1048, R 1967 SC 1895, RF 1968 SC 1232, RF 1973 SC 1374, RF 1973 SC 1461, R 1974 SC 1660, O 1978 SC 1296, RF 1978 SC 1457, RF 1979 SC 321, R 1980 SC 350, RF 1980 SC 2181, F 1986 SC 1172, R 1990 SC 560, concerning the Agricultural Tenancy, Regulation of‑Enactment empowering Government to fix lower rate of maximum rent by notification and its validity under the Bombay Tenancy and Agricultural Lands Act, 1948, section 6(2).

The test for excessive delegation required first an assessment of whether the statute conferred essential legislative power, and second an inquiry into whether the legislature had clearly set out its policy and guiding principles for the delegate. Accordingly, the preamble of the statute and the provisions that dealt with delegation were examined. The Court referred to the earlier authorities Harishankay Bagla v. The State of Madhya Pradesh, [1955] 1 S.C.R. 288 and The Edward Mills Co. Ltd., Beawar v. State of Ajmer, [1955] 1 S.C.R. 735. The preamble and the substantive provisions of the Act demonstrated that its purpose was to improve the economic and social conditions of peasants; to achieve that purpose, the Act fixed a maximum rent payable by tenants and provided a speedy mechanism for fixing a reasonable rent. This purpose constituted the legislative policy, and given the specific provisions articulated in section 12(3) of the Act for determining reasonable rent, the Court found it impossible to conclude that the power delegated to the Provincial Government by section 6(2) was invalid on the ground of excessive delegation. The absence of a minimum rent prescribed in that section did not alter this conclusion.

The Court further held that, because the Act fell within the protection of Article 31‑B of the Constitution, there could be no question regarding the validity of section 6(2). Consequently, any notification issued under the authority of that section could not be challenged as violating Article 31 of the Constitution. The Court also rejected the proposition that the power delegated by section 6(2) could be exercised only once. Speaking for the Court, Justice Subba Rao observed that the essential legislative function consists of determining legislative policy and formulating it as a rule of conduct, and that the legislature cannot abdicate this function to another body. Nevertheless, in a welfare State, the legislature may need to delegate the detailed implementation of its policy to the executive or an appropriate agency. The Court warned that such delegation becomes problematic when the legislature fails to lay down any policy, formulates its policy in vague or overly general terms, provides no standards to guide the executive, or grants the executive an arbitrary power to alter the policy without retaining any control over subordinate legislation. This self‑effacement of legislative power, whether in whole or in part, exceeds the permissible limits of delegation. It is the duty of a Court to interpret a challenged statute with a fair, generous, and liberal construction to determine whether the legislature overstepped those limits, but such liberal construction must not be stretched to the point of inventing a dormant or latent legislative policy merely to justify an arbitrary executive power. The Court cited In re The Delhi Laws Act, 1912, [1951] S.C.R. 747, and the decision in Rajnarain Singh v. The Chairman as relevant authorities.

The Court referred to several earlier authorities, including Patna Administration Committee, Patna, [1955] 1 S.C.R. 290; Harishankay Bagla v. The State of Madhya Pradesh, [1955] 1 S.C.R. 380; The Edward Mills Co., Ltd., Beaway v. The State of Ajmer, [1955] 1 S.C.R. 735; and Hamdard Dawakhana v. Union of India, [1960] 2 S.C.R. 671. The Court observed that the Bombay Tenancy and Agricultural Lands Act, 1948 (LXVII of 1948) formed a complete and integrated scheme, except for section 6(2). Under the Act, the legislature set a ceiling for rent that was linked to the type of crop and the nature of the land, while the remaining provisions authorised the appropriate authorities to determine a reasonable rent within that ceiling. However, section 6(2) was described as a clear abdication by the legislature of its essential function because it transferred to the executive the power to amend section 6(1) without establishing any guiding standard. In effect, the provision allowed the government to alter the very rule that overrode all other provisions of the Act, thereby frustrating the purpose of section 6(1). The Court held that this made section 6(2) constitutionally void as an unlawful delegation of legislative power. It rejected the argument that the factors listed in section 12(3) supplied a standard for fixing the maximum rent, stating that those factors could not be read into section 6(2). The Court affirmed that a legislature cannot prescribe a vague policy and then give the executive unrestricted discretion to implement it, as such a law would conflict with the Court’s earlier decisions and be invalid.

The judgment concerned civil appeals numbered 147 and 148 of 1955, which arose from the former Bombay High Court’s order dated 30 September 1953 in Special Civil Applications 1008 and 1611 of 1953. Counsel for the appellants included V. M. Limaye, Mrs. E. Udayaratnam and S. S. Shukla, while the respondent was represented by the Additional Solicitor‑General of India, H. N. Sanyal, together with B. Ganapathy Iyer, K. L. Hathi and R. H. Dhebar. The judgment was delivered on 25 August 1960 by Justice Gajendragadkar, with Chief Justice Sinha and Justices Kapur, Gajendragadkar and Wanchoo forming the bench; Justice Subba Rao gave a separate opinion. The appellants had earlier filed two distinct petitions under Article 226 of the Constitution in the Bombay High Court, challenging the constitutional validity of section 6(2) of the Bombay Tenancy and Agricultural Lands Act, 1948 and the legitimacy of a government notification dated 17 October 1952 issued under that section. The Court noted that on 23 June 1949 the government, invoking the powers of section 6(2), had issued a notification fixing a specific maximum rent based on a fraction of the crop or its assessed value for lands situated in the schedule appended to the Act. This earlier notification was later superseded by the October 1952 notification, which prescribed a lower maximum rent rate for the same lands, a matter that formed the basis of the appellants’ challenge.

In the original notification the Government had fixed the maximum rent payable by tenants of lands situated in the areas listed in the schedule appended to the notification as one‑fifth of the crop of irrigated land and one‑fourth of the crop of any other land, or the value of such land as determined in the prescribed manner. The schedule included the area in which the appellants’ lands were located. Subsequently, on 17 October 1952, the Government exercised the same statutory power and, in a superseding notification, prescribed a lower rate of maximum rent for lands lying in the areas specified in Schedule I. The rates fixed by this later notification were substantially lower than those fixed by the earlier notification; the precise figures were not set out because the essential point was that the newer rates were considerably reduced.

By way of their petitions filed in the Bombay High Court, the appellants contended that section 6(2) of the Bombay Tenancy and Agricultural Lands Act, 1948, was beyond the authority of the legislature, and even assuming the provision to be valid, they maintained that the 1952 notification was itself invalid. Accordingly, they prayed for a writ of mandamus, or a writ in the nature of mandamus, or any other appropriate order directing the Government, the Mamlatdar of the concerned area, and the tenants to refrain from giving effect to the notification. They further sought an order directing the opponents to cancel or withdraw the impugned notification.

The High Court considered these petitions together with other companion matters that raised the same issues. After hearing the arguments, the Court dismissed the petitions, holding that section 6(2) was intra vires and that the 1952 notification was lawful and valid. Following the dismissal, the appellants obtained a certificate from the High Court and, relying on that certificate, appealed to this Court.

It is noteworthy that after the decision under appeal, the Act was substantially amended in 1956. The amended Act, by virtue of its new section 8, now governs both the maximum and minimum rent, incorporating the provisions of the impugned notification and adding a further requirement that rent shall not be less than twice the assessed amount. Consequently, the specific issue raised in the present appeals no longer bears significant importance, affecting at most a few pending landlord‑tenant disputes concerning rent payable for periods before 1956. However, at the time the certificate was granted, the questions raised by the appellants were of general importance. The Court will first examine section 6 of the Act.

The Court began by outlining the relevant statutory provisions. Section six, subsection one of the Act stipulated that, irrespective of any private agreement, customary usage, court decree, court order or any other law, the ceiling rent that a tenant could be required to pay for leasing land was limited. For irrigated land the maximum rent could not exceed one‑fourth of the crop produced on that land, and for all other types of land the maximum rent could not exceed one‑third of the crop or, alternatively, the value of the land as determined according to the method prescribed by the Act. Section six, subsection two authorized the Provincial Government, by way of a notification published in the official gazette, to set a lower rate of the maximum rent for tenants holding lands situated in a particular area, or to establish such a lower rate on any other basis that the Government deemed appropriate.

In the appeals before the Court, the appellant’s counsel argued that subsection two suffered from an unlawful delegation of legislative authority. The argument advanced was that the power conferred on the Provincial Government was unlimited and lacked any prescribed channel or parameters, thereby providing no guidance for the exercise of that power. Further, the counsel contended that the Legislature, while granting such wide authority to the delegate for fixing a lower maximum rent, had failed to prescribe any minimum rent, a step that the legislature ought to have taken. The High Court, however, had held that the delegation contained in subsection two fell within acceptable limits and that the challenge to the constitutional validity of the provision could not succeed.

Turning to the principles governing delegation, the Court observed that a substantial body of its own decisions has firmly established that delegation of power is an integral component of the legislative function as a whole. In contemporary practice, legislatures frequently encounter complex socioeconomic problems that require them to delegate subsidiary or ancillary powers to appropriate bodies in order to implement the policy articulated in the primary legislation. The Court noted that the extent of permissible delegation is now well‑settled. While the legislature may delegate subsidiary powers, it cannot relinquish its essential legislative function. It must define the legislative policy and principles and must provide sufficient guidance for the execution of that policy before delegating any subsidiary authority.

The Court quoted the observations of Chief Justice Mahajan in Harishankar Bagla v. State of Madhya Pradesh, emphasizing that “the Legislature cannot delegate its function of laying down legislative policy in respect of a measure and its formulation as a rule of conduct. The Legislature must declare the policy of the law and the legal principles which are to control any given cases, and must provide a standard to guide the officials or the body in power to execute the law.” Accordingly, when a statute is challenged on the ground of excessive delegation, the Court must examine whether the impugned delegation involves an essential legislative function and whether the legislature has clearly stated its policy, principles, and guidance for the delegate. The Court indicated that the test applied in the Bagla case would be employed for this purpose.

In the matter before it, the Court explained that it must first examine the statements contained in the preamble of the statute and determine whether those statements provide a satisfactory foundation for concluding that the legislature has set out the legislative policy and principle with sufficient accuracy and clarity. The Court held that when the preamble successfully enunciates such policy and principle, it alone can satisfy the requirements of the relevant tests for determining the validity of a delegation. Nonetheless, the Court emphasized that each case also requires a careful assessment of the specific provisions of the Act that relate to the delegation in question, and that the ultimate determination of whether the delegation is intra vires must be made by applying the appropriate tests to those provisions. In this connection, the Court referred to its own decision in The Edward Mills Co. Ltd., Beawar v. State of Ajmer (1) [1955] 1 S.C.R. 735, 750, where the validity of a notification issued under the Minimum Wages Act XI of 1948 was challenged on the ground that the delegation provided by section 27 of that Act might be unconstitutional. The Court described the scheme of the Minimum Wages Act, noting that a schedule attached to the Act listed the employments to which the Act applied, while section 7 empowered the appropriate Government to add any employment to either part of the schedule if it was of the Government’s opinion that a minimum wage should be fixed for that employment. This addition could be effected by issuing a broad‑based notification, after which the schedule would, for the purposes of the State, be deemed to have been amended accordingly. The challengers argued that the Act failed to set out any legislative policy governing the selection of employments to be included in the schedule, that no principles or standards were prescribed, and therefore the delegation was unfettered and un‑canalised. The Court rejected this argument, observing that the legislative policy was evident from the face of the Act itself. As Justice Mukherjea, J., then observed, “What the Act aims at is the statutory fixation of minimum wages with a view to obviate the chance of exploitation of labour.” He added that the legislature unmistakably intended the Act to apply not to every industry but only to those industries where, because of unorganised labour, lack of proper regulatory arrangements, or other causes, the wages of labourers were exceptionally low. The Court further noted that conditions of labour vary across different circumstances and from State to State, and that the suitability of including a particular trade or industry in the schedule depends on a variety of facts that are not uniform and are best determined by the authority charged with administering the particular State. This purpose, the Court explained, underlies the delegation of power to the appropriate Government under section 27, and it was on this basis that the challenge to the validity of section 27 was repelled.

The Court noted that power to make rules under the Act was expressly delegated to the appropriate Government by section 27, and that this delegation had been upheld against a challenge to its validity. It observed that the Act was unquestionably a benevolent measure, having introduced provisions for agrarian reform that the Legislature deemed overdue. The preamble, the Court said, demonstrated that the purpose of the Act was, among other things, to improve the economic and social condition of peasants and to ensure that land was used fully and efficiently for agriculture. In furtherance of that purpose, the Act incorporated several provisions designed to protect the interests of tenants. Section 6, which the Court had already set out, prescribed the maximum rent that a tenant could be required to pay and authorized a reduction of that maximum in accordance with conditions specific to particular areas.

Section 7 provided that, subject to the maximum rate fixed under section 6, the rent payable by a tenant would be the amount agreed between the landlord and the tenant; if no agreement or usage existed, or if a dispute arose concerning the reasonableness of the agreed or customary rent, the rent would be determined as a reasonable amount in accordance with the procedure laid down in the Act. The Court therefore concluded that even when a rent is agreed or fixed by usage, a tenant’s challenge to its reasonableness must be resolved by the mechanism provided by the statute, resulting in the determination of reasonable rent. Section 8 dealt with the conversion of crop‑share rent into cash payments. Section 9 barred a landlord from demanding rent in the form of service or labour and required the landlord to seek, from the Mamlatdar, an order to commute such rent into cash. Section 10 required the landlord to refund any excess rent that had been collected from the tenant. Section 11 prohibited the landlord from extracting from the tenant any cess, rate, vero, huk, tax or any other service charge other than the lawful rent due on the land. Section 12 empowered either the tenant or the landlord to apply to the Mamlatdar for an enquiry to fix reasonable rent; the Mamlatdar, in exercising this power under subsection 12(3), had to consider the factors listed in that subsection, namely (a) the rental values of lands used for similar purposes in the locality, (b) the agricultural profits of comparable lands in the locality, (c) the prevailing prices of crops and commodities in the locality, (d) the improvements made to the land by either the landlord or the tenant, (e) the assessment payable in respect of the land, and (f) any other factors that may be prescribed. The Court clarified that the final clause referring to “other factors” must be interpreted narrowly, applying only to factors of the same kind as those enumerated immediately before it. Finally, section 13 set out the circumstances under which rent could be suspended or remitted and specified the conditions that must be satisfied for such remission or suspension to be granted.

It was observed that the essential provisions of the Act were intended to give relief to tenants by fixing a ceiling on the rent they had to pay and by creating a quick mechanism for hearing their complaints about unreasonable rent demanded by landlords. In light of this overall policy, which is evident from the wording of the provisions, the Court had to examine whether the power given to the Provincial Government by section 6(2) suffered from the defect of excessive delegation. In general terms, section 6(2) authorises the Government to set a lower maximum rent for a particular area. The judgment noted that the Act already permits an individual tenant to apply to the Mamlatdar for the fixation of a reasonable rent under section 12, and that section 12(3) lists the specific factors that the Mamlatdar must consider when fixing that rent. The Legislature was aware that many tenants in the State were poor, ill‑educated and often helpless, and therefore might be unable to file separate applications under section 12. For this reason, it thought it necessary to give the Provincial Government the authority to fix a reduced rate of the maximum rent for tenants in designated areas. In effect, what the Mamlatdar could accomplish in individual cases could be achieved on a larger scale by the Government for all tenants within a defined locality.

The Court explained that, provided the legislative policy is clearly expressed in the relevant sections and the factors for determining a reasonable rent are already specified in section 12(3), it is difficult to accept the contention that section 6(2) leaves the Provincial Government with unfettered discretion. When the Government decides on a lower maximum rent for a particular area, it must adopt a basis that is suitable to the conditions of that area. Because agricultural conditions differ from one locality to another, the task of fixing a reduced maximum rent must be addressed by taking into account the unique features and circumstances of each area. Consequently, the statute deliberately left a degree of latitude to the Government so that it could choose an appropriate basis for each area. The term “suitable” was interpreted to mean appropriate to the area, having regard to other provisions of the Act, such as sections 6(1) and 12. The judgment also acknowledged that the power to fix a lower rent exists, but it is exercised within the framework set by the Act.

The Court observed that a reasonable rent granted to the Mamlatdar under section 12 was nevertheless subject to the authority of the Provincial Government provided by section 6(2). Nevertheless, the Court considered that it would be difficult to hold that the factors prescribed to guide the Mamlatdar were entirely irrelevant when the Provincial Government exercised its power under section 6(2). Accordingly, after giving due regard to the legislative policy expressed in the preamble of the Act and to the other relevant provisions previously mentioned, and after considering the guidance laid down for fixing a reasonable rent in section 12(3), the Court concluded that the power delegated to the Provincial Government by section 6(2) could not be said to suffer from the defect of excessive delegation. The Court further noted that the absence of a prescribed minimum rent did not materially alter this conclusion.

Subsequently, counsel for the petitioner contended that even if section 6(2) were valid, the notification under challenge was invalid because it contravened Article 31 of the Constitution. Counsel acknowledged that the Act itself was protected by Article 31B, being listed in the Ninth Schedule, but argued that the notification effectively amended the provisions of section 6(1) and therefore amounted to fresh legislation to which Article 31B could not apply. The Court found no substance in this line of argument. It held that if section 6(2) was valid, the exercise of the power conferred on the Provincial Government could not be treated as fresh legislation that violated Article 31. Moreover, because the Act was saved by Article 31B, section 6(2) likewise enjoyed the protection of that article, and the power conferred on the Provincial Government was therefore validly exercised. Consequently, a notification issued under that power could not be challenged on the ground that it infringed Article 31.

The next argument raised by counsel was that the notification should be deemed invalid because the authority to issue a notification under section 6(2) was exhausted when the Government issued the first notification on 23 June 1949. This argument was premised on the assumption that the power granted by section 6(2) could be exercised only once. Counsel sought support for that position by pointing out that the words “from time to time,” which appeared in the corresponding provision of the earlier tenancy legislation in the State, were omitted from section 6(2). Counsel also relied on the fact that those words were included in section 8(1) of the present Act. According to counsel, the omission of the phrase from section 6(2), contrasted with its inclusion in section 8(1), indicated that the legislature intended the power under section 6(2) to be exercised only a single time. The Court considered this argument fallacious. While the Court acknowledged that it was difficult to discern why the legislature had chosen not to use the expression “from time to time” in section 6(2) while using it in section 8(1), the Court indicated that in construing section 6(2) the omission of those words did not support the contention that the power was limited to a single exercise.

In this case the Court observed that it was plainly necessary to give effect to section 14 of the Bombay General Clauses Act 1904. That provision states that whenever a Bombay statute enacted after the commencement of the General Clauses Act confers a power on any Government, the said power may be exercised from time to time as circumstances require. Accordingly, when section 6(2) of the Bombay Tenancy and Agricultural Lands Act is read in the light of section 14, it follows that the authority to issue a notification under section 6(2) is not limited to a single occasion but may be exercised whenever the situation demands. The Court also noted that section 14 of the earlier General Clauses Act 1897 similarly provides that any power granted by a Central Act or Regulation may be exercised from time to time unless the legislation shows a different intention. Because the Bombay General Clauses Act contains a specific provision directly relevant to the issue, the Court found it unnecessary to rely on the central statute. Nevertheless, even if the central provision were applied, the Court held that there was no indication of any contrary intention by the Legislature when it enacted section 6(2); thus the power could be exercised repeatedly.

The Court further reasoned that the Legislature, by prescribing a maximum rent in section 6(1), intentionally allowed that maximum to be modified, demonstrating that the fixation of a maximum rent was not intended to be immutable. Consequently, if a single notification were sufficient under section 6(2), the same logic would require that further notifications could be issued when circumstances change. The Court emphasized that the determination of agricultural rent depends on numerous uncertain factors that vary from place to place and over time, making it unreasonable to claim that the Legislature intended to fix the maximum rent only once, or even twice as conceded by counsel. Therefore, the argument that the power to issue a notification had been exhausted was rejected. The Court also dismissed the final contention that the phrase “any particular area” should be interpreted in the same way as in section 298(2)(a) of the Government of India Act 1935; this argument was described as far‑fetched and without merit. In the result, the appeals were dismissed with costs. Justice Subbarao, after reviewing the judgment of Justice Gajendragadkar, expressed regret that he could not agree with his fellow judge on the constitutional validity of section 6(2) of the Bombay Tenancy and Agricultural Lands Act, noting that the factual background had been fully set out in the earlier judgment.

The judge stated that a repetition of the previously narrated facts was unnecessary and that expressing a view on the point in issue would suffice. The counsel representing the appellants challenged the constitutional validity of section 6(2) of the Bombay Tenancy and Agricultural Lands Act, arguing that the provision exceeded the permissible bounds of delegated legislation. Before addressing the question of whether section 6(2) was valid, the judge found it appropriate to briefly outline the relevant principles governing the doctrine of delegated legislation. He observed that the Supreme Court had firmly established the scope of this doctrine in several earlier decisions, making a fresh, exhaustive survey of the subject matter redundant. Consequently, the judge said he would limit himself to gathering the pertinent excerpts from the Court’s own rulings in order to identify the underlying principle of the doctrine. He identified the leading authority on the subject as the decision in In re The Delhi Laws Act, 1912, reported in the first volume of the All India Reports. In that case, the Central Legislature had authorized the executive, while remaining under legislative control, to apply laws at its discretion to a territory that also fell within the legislative jurisdiction of the Centre. The validity of that delegation was later challenged on the ground that the legislature possessed no authority to confer legislative powers upon the executive. Seven judges examined the issue and each authored a separate opinion, exploring the various facets of the matter in detail. The judge noted that he was not required to re‑extract the core conclusion of that case because Justice Bose had already set it out clearly in the later case of Rajnarain Singh v. Chairman, Patna Administration Committee, Patna. Justice Bose, after delineating the seven different forms of authority granted to the executive in the Delhi Laws Act case, summarised the majority view on the present question on page 301, stating that an executive body may be empowered to amend either existing or future statutes, but not to alter any essential feature of those statutes. He added that the exact meaning of “essential feature” could not be defined in universal terms and that the earlier judgments showed some disagreement on this point, yet all agreed that essential features could not encompass a change of policy. The Rajnarain Singh case concerned section 3(1) of the Patna Administration Act, 1915 (Bihar and Orissa Act 1 of 1915) as amended by the Patna Administration (Amendment) Act, 1928 (Bihar and Orissa Act IV of 1928), and involved a notification issued by the Governor of Bihar that extracted section 194 from the Bihar and Orissa Municipal Act, 1922, altered it, and then extended the altered provision to the Patna Administration and Patna Village areas. Justice Bose, after highlighting the distinction between the Rajnarain Singh decision and the Delhi Laws Act case, observed on page 303 that even a modification of an entire statute could not be permitted if it effected an essential change in the Act or altered its policy, and that a partial modification could not be allowed to achieve the same result.

In this passage the Court observed that just as a complete change in policy cannot be effected by altering an entire enactment, a partial modification of a statute likewise cannot be allowed to achieve such a change. The Court revisited this principle in the case of Harishankar Bagla v. State of Madhya Pradesh, where it examined the reach of the earlier Delhi Laws Act decision. The Chief Justice, Mahajan, explained that the majority judgment in the Delhi Laws Act case had firmly established that the core powers of legislation are not subject to delegation. In effect, the legislature may not delegate its essential function of formulating legislative policy and translating that policy into enforceable rules. The legislature is required to set out the policy underlying a law, to articulate the legal principles that will govern individual instances, and to provide a standard that will guide the officials or bodies tasked with implementing the law. Thus, the essential legislative act consists of choosing a policy and formally enacting it as a binding rule of conduct. Later, in The Edward Mills Co., Ltd., Beawar v. State of Ajmer, Justice Mukherjea, speaking for the Court, reiterated that a legislature cannot dispose of its essential functions by transferring them to an external authority; the primary duty of law‑making must remain with the legislature, although it may employ delegation as a subsidiary or ancillary measure. The most recent authority on this point was Hamdard Dawakhana v. Union of India, where the Court considered whether section 3(d) of the Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954, went beyond the permissible scope of delegated legislation. Justice Kapur clarified that once the legislature has set out the broad principles of its policy within the statute, it may permit the administrative authority to fill in the details. By means of delegated legislation, the delegate completes the law by providing specifics that lie within the limits prescribed by the parent statute. In the case of conditional legislation, the legislature exercises its power conditionally, leaving to an external authority the discretion to determine the timing, manner, and geographic extent of implementing the legislation. Applying this framework to the facts before it, the learned judge described the impugned wording as vague, noting that Parliament had failed to establish any criteria, standards, or principles for specifying particular diseases or conditions in the Schedule, nor had it indicated which facts or circumstances should be considered for inclusion. Consequently, the power to specify diseases and conditions was held to exceed the permissible limits of delegated legislation.

In this case, the Court observed that the power granted by section 3(d) exceeded the permissible boundaries of valid delegation. The Court noted that it was unnecessary to multiply decisions or to elaborate the subtle distinction between delegated legislation and conditional legislation. The Court then summarised the law on the subject, stating that the Constitution both confers a power upon and imposes a duty upon the legislature to make laws. The essential legislative function, according to the Court, is the determination of legislative policy and its formulation as a rule of conduct, and the legislature cannot abdicate this function in favour of another body. However, the Court recognised that a welfare State cannot work out every detail of complex situations and therefore must delegate the working out of details to the executive or another agency. The Court warned that a danger inherent in delegation is that an over‑burdened legislature or one dominated by a powerful executive may overstep the limits of delegation. Such an overstep may occur when the legislature lays down no policy at all, declares its policy in vague and general terms, fails to set any standard to guide the executive, or confers an arbitrary power on the executive to change or modify the policy without reserving any control over subordinate legislation. The Court described this self‑effacement of legislative power in favour of another agency, whether in whole or in part, as beyond the permissible limits of delegation. The Court held that it is for a Court to apply a fair, generous and liberal construction to an impugned statute to determine whether the legislature exceeded those limits. Yet the Court cautioned that such liberal construction should not be carried so far as to always discover a dormant or latent legislative policy merely to sustain an arbitrary power conferred on an executive authority. The Court affirmed its duty to strike down without hesitation any arbitrary power that the legislature has conferred on the executive.

Keeping those principles in mind, the Court proceeded to examine the provisions of the Act to ascertain whether section 6(2) conformed to the law laid down by the Court. For the purpose of the present analysis, the Court set aside section 6(2) and gave a brief, broad notice of the scheme of the Act. The Court observed that the preamble of the Act indicated that its main object was to improve the economic and social conditions of peasants and to ensure the full and efficient use of land for agricultural purposes. The preamble also showed that the Act was not intended to be a confiscatory measure, but rather to regulate the relationship between landlord and tenant, particularly with respect to the rent payable by the tenant to the landlord. The Court then turned to section 6(1), where the legislature, in clear terms, fixed the maximum rent payable by a tenant, taking into account the nature of the land. The Court noted that for irrigated land the maximum rent was fixed at one‑fourth of the crop of such land, and for other land the maximum rent was fixed at one‑third of the crop or its value as determined in the prescribed manner. The Court explained that the remainder of the Act was to be worked out subject to the maximum rent fixed under section 6(1).

In this case, the Court explained that the Act fixes the maximum rent as the value, determined in the prescribed manner, of the crop, which constitutes the ceiling for any rent payable. All other provisions of the Act are to operate within that ceiling established by section 6(1). Section 7 permits the landlord and the tenant to agree on a rent rate, provided that such agreed rate does not exceed the maximum rent fixed under section 6(1). Section 8 empowers the Provincial Government to issue notifications that convert rent payable in kind into cash rent; if the State Government has not prescribed a commutation rate, the Mamlatdar may determine the cash amount in accordance with the prescribed procedure. Sub‑section 3 of section 6 bars a landlord from recovering rent by way of a share of the crop or by demanding any amount beyond the cash rent fixed through commutation. Section 9 obliges a landlord who receives rent in the form of service or labour to apply to the Mamlatdar for conversion of that rent into cash. Section 10 makes a landlord liable to pay compensation to a tenant who violates any of the provisions of sections 6, 7, 8 or 9. Section 11 prohibits a landlord from levying any cesses other than the rent lawfully due in respect of the land. Section 12 allows a tenant to apply to the Mamlatdar for fixation of a reasonable rent for the land in his possession; subsection 12(3) enumerates the factors that the Mamlatdar must consider when fixing such rent, and the order of fixation remains effective for five years. The Act also contains a provision for reduction of rent where, during the five‑year period, floods or other causes beyond the tenant’s control render the land wholly or partially unfit for cultivation. Section 13 requires a landlord to suspend or remit the rent payable by the tenant if the landlord’s own payment of land revenue to the Government is suspended or remitted. An appeal against the Mamlatdar’s order lies with the Collector. In summary, the Act provides for a ceiling rent fixed by the Government, a reasonable rent that may be fixed by the Mamlatdar, and a rent that the parties may agree upon; however, both the agreed rent and the reasonable rent may not exceed the statutory maximum. The Act includes explicit provisions for reduction or remission of rent in appropriate circumstances, but it does not grant any right of appeal or revision to the Government concerning the fixation of reasonable rent, leaving the Government without a role in that specific determination. Consequently, apart from section 6(2), the scheme of the Act is self‑contained and integrated, with the legislature fixing the maximum rent based on the nature of the land and the remaining provisions enabling the appropriate authorities to fix a reasonable rent subject to that maximum.

Section 6(2) of the Act states that the Provincial Government may, by publishing a notification in the Official Gazette, fix a lower rate of the maximum rent payable by tenants of lands situated in any particular area, or may fix such rate on any other suitable basis that it deems fit. The provision therefore gives the Government two alternative powers: firstly, to set a lower maximum rent for a defined geographical area, and secondly, to set a lower maximum rent on any other basis that it considers appropriate. The wording of the section contains three flexible terms: “lower rate”, “particular area” and “any other suitable basis”.

On a plain reading, the legislature has not prescribed any policy or any standard to guide the Government in lowering the maximum rent fixed under section 6(1). This omission raises several important questions. What is the limit of the lower rate that the Government is authorised to fix? How far may the “particular area” extend for the purpose of fixing that rate? What conditions existing in a particular area would justify a reduction of the maximum rent? Even if there are circumstances that could justify a reduction, on what basis should the Government decide the amount of reduction? The presence of the disjunctive “or” between “particular area” and “may fix” and the qualifier “other” preceding “suitable basis” indicates that the condition of the land in a specific area could itself be a ground for fixing a lower rent. However, the mere situation of land in a particular area does not, by itself, provide an objective basis for determining a specific rate of maximum rent.

The expression “suitable basis” in the alternative clause is so vague that, in practice, it gives the Provincial Government an unfettered and arbitrary discretion. The standard of “suitability” is left to the Government’s own judgment, meaning that the legislature, in the clearest terms, has delegated its essential function to the executive without laying down any guiding standard. Effectively, this allows the Government to amend the effect of section 6(1). For example, the legislature may fix the maximum rent payable by a tenant to his landlord at a certain amount X; the Mamlatdar, after conducting an enquiry, may fix a reasonable rent Y that is lower than X; and then the Government, exercising the power under section 6(2), could arbitrarily fix a further reduced amount Z that is far below the reasonable rent Y. Such a scenario would defeat the entire scheme intended by the legislature.

Moreover, the Government could choose to apply the power to a very small, confined area containing only a few landlords and reduce the maximum rent to the lowest possible level. In that event, the Act could be used as an expropriatory measure, contrary to the legislative intention. Recognising the apparent arbitrariness on the face of section 6(2), counsel for the respondents attempted to derive a legislative formula from the preamble to section 6(1) and from section 12(3) of the Act, seeking to impose a reasonable standard on the Government’s discretion.

The Court examined the statute and observed that it could locate no indication of any legislative policy concerning the manner in which a lower rate of maximum rent should be fixed either in the pre‑amble of the Act or in section 6(1). While the Court acknowledged that section 6(1) itself articulated a clear policy for fixing the maximum rent on an identifiable basis, it held that the language of section 6(2) effectively reversed that policy. In the wording of section 6(2) the legislature appeared to say, in substance, “the maximum rent for irrigated lands and other lands has been fixed on the basis of a definite share of the crop of such lands, but the Government may reduce that maximum rent on any basis it chooses.” The Court noted that, although section 6(1) was intended to override other provisions of the Act, section 6(2) derogated from section 6(1) itself. Consequently, section 6(2) could be exercised in a manner that frustrated the very object of section 6(1). In effect, the Court found that the operation of section 6(1) was rendered subordinate to the power conferred by section 6(2), thereby compromising the legislative intent embodied in section 6(1).

The Court then turned to the argument concerning section 12(3). It was submitted that the factors listed in that subsection provided a standard for the Government to use when fixing the maximum rent, and that the appropriate basis for fixation was one of those factors. The Court rejected that submission, stating that the Act did not expressly or by necessary implication prescribe such a standard. The criteria for fixing rent under section 13 were described by the Court as a guide for the Mamlatdar to determine reasonable rent, and that sub‑clause was expressly made subject to section 6. This relationship demonstrated that the maximum rent fixed by the Government was distinct from the reasonable rent. The Court explained that, where reasonable rent determined on the basis of all or some of the factors in section 12(3) exceeded the maximum rent fixed by the Government on any suitable basis, the statutory maximum rent would prevail over the reasonable rent. Because the maximum rent superseded reasonable rent, the factors governing reasonable rent need not govern the fixation of maximum rent. Accordingly, the Court held that it was not permissible to read the factors in section 12(3) into section 6(2). On a proper reading of the Act, the Court could not discover any legislative standard that would enable the Provincial Government to fix a lower rate of maximum rent. The provision that conferred such an arbitrary power on the Provincial Government without laying down any legislative standard was therefore beyond the permissible limits of delegation. The Court also considered the contention advanced by counsel for the State that the legislature’s policy was to prevent rack‑renting and to fix a reasonable rent, and that any exercise of power under section 6(2) must be guided by that policy. The Court described this as an extreme contention; if accepted, it would allow Parliament and legislatures to confer absolute and unguided powers on the executive, thereby undermining the doctrine of the rule of law. The Court warned that permitting a legislature to set only a broad policy in general terms while granting the executive arbitrary discretion would effectively end the rule‑of‑law safeguards.

The judgment observed that the preamble to the statute declared that the legislation was intended to fix a maximum rent, and it could have granted the Government an unrestricted authority to determine appropriate rents according to the circumstances of each individual case. The Court noted that a law conferring such an absolute power could not be considered valid. It further explained that when judicial decisions state that the legislature must set out a legislative policy and express it as a rule of conduct, the reference is not to a vague or general statement of policy. Instead, the reference is to a clear and definite policy that directs and limits the powers given to the executive for the purpose of implementing that policy. Accordingly, the Court concluded that section 6(2) of the Act was void because it exceeded the permissible limits of legislative delegation. On that basis, the Court held that the appeals should be allowed and that costs should be awarded. However, the Court’s final order recorded that, in view of the majority judgment, the appeals were to be dismissed with costs.