State of Orissa vs M. A. Tulloch and Co.

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

Court: Supreme Court of India

Case Number: Civil Appeals No. 561 and 562 of 1962

Decision Date: 16 August 1963

Coram: N. Rajagopala Ayyangar, Bhuvneshwar P. Sinha, Raghubar Dayal, J.R. Mudholkar

In this matter the Supreme Court of India recorded that the case was styled State of Orissa versus M. A. Tulloch and Co. (and connected). The judgment was delivered on 16 August 1963 and the opinion was authored by Justice N. Rajagopala Ayyangar. The bench comprised Justice N. Rajagopala Ayyangar, Chief Justice Bhuvneshwar P. Sinha, Justice Raghubar Dayal and Justice J. R. Mudholkar. The petitioner was the State of Orissa and the respondent was M. A. Tulloch and Co., together with their connected parties. The citation of the decision appears as 1964 AIR 1284 and 1964 SCR (4) 461, with subsequent citations listed in various law reports, including D 1965 SC 117 (8), APL 1970 SC 1436 (14, 16), R 1975 SC 155 (16), RF 1976 SC 1654 (5, 24, 31), RF 1979 SC 898 (33), RF 1980 SC 1955 (41), RF 1981 SC 711 (1), RF 1990 SC 85 (26), RF 1990 SC 2072 (44), E 1991 SC 1676 (8‑14, 42‑46, 54). The statutory framework relevant to the dispute included provisions of the Constitution of India concerning the distribution of legislative powers (Article 246 (1), Seventh Schedule, List II entry 23 and List I entry 54), the General Clauses Act 1897 section 6 dealing with the meaning of “repeal”, the Orissa Mining Areas Development Fund Act 1952 (XXVII of 1952) sections 4 and 5, and the Mines and Minerals (Regulation and Development) Act 1957 (Act 67 of 1957) sections 18(1) and 18(2). The headnote explained that under a lease granted by the appellant pursuant to the Central Act 53 of 1948, the respondent, Tulloch & Co., was operating a manganese mine. Subsequently the Orissa Legislature enacted the Orissa Mining Areas Development Fund Act 1952, empowering the State Government to levy a fee intended for the development of mining areas within the State. After the provisions of that Act were brought into force, the appellant on 1 August 1960 demanded that the respondent pay the fees alleged to be due for the period July 1957 to March 1958. The respondent challenged the legality of that demand before the High Court invoking Article 226 of the Constitution. The High Court allowed the writ petition on the basis that, with the coming into force of the Central Act 1957 (Act 67 of 1957) effective from 1 June 1958, the Orissa Act should be deemed to be non‑existent for all purposes. The appellant then applied to the High Court for a review of that judgment, arguing that even if the Orissa Act of 1952 was superseded by the Central Act 67 of 1957, the liabilities that had accrued to the State before 1 June 1958 could not be extinguished because the Central Act was not retrospective. That application for review was dismissed. On behalf of the State it was submitted, inter alia, that the supersession of the Orissa Act by the Central Act amounted to a repeal; consequently section 6 of the General Clauses Act 1897 would be attracted. The Court held, first, that since the Central Act 67 of 1957 contains the requisite provisions…

In this case, the Court observed that Parliament had made a declaration under Entry 54 that the Central legislation covered the same field as the earlier 1948 Act with respect to mines and mineral development. Accordingly, the Court held that the decision in Hingir‑Rampur Coal Co. v. State of Orissa settled the issue unless there existed any material difference between the scope of Central Act 53 of 1948 and that of the 1957 Act. The Court further noted that sub‑sections (1) and (2) of section 18 of the Central Act 1957 are broader in scope and grant greater powers to the Central Government than the comparable provisions in the 1948 Act, and therefore the earlier authority was followed. The Court also explained that the presence of contradictory provisions in two statutes is not the sole test for repugnancy. If a legislature possessing superior competence expressly or impliedly intends to occupy the entire field, the laws of the other legislature, irrespective of when they were enacted, are displaced. In such a situation, inconsistency is shown simply by the existence of both statutes, not by a detailed comparison of their clauses. Applying this principle, the Court found that section 18(1) demonstrated Parliament’s intention to cover the whole field, leaving no room for the argument that inconsistency could arise only after rules were framed, and that the State Act was not superseded; the case of Ch. Tika Ramji & Ors. v. State of Uttar Pradesh [1956] S.C.R. 393 was held inapplicable. The Court further held that because Parliament’s declaration transferred the entire subject of “conservation and development of minerals” to the Union, the State lost the power it previously possessed over that subject. Consequently, the matter, to the extent of the declaration, is removed from the ambit of entry 23 of the State List, and after the 1957 Central Act there is no longer any matter in the State List to which the fee could be attached to make it valid. Finally, the Court observed that a repeal can occur through legislation that is repugnant to an earlier law, even without expressly mentioning the earlier law. Once the competence to repeal is established, it is irrelevant whether the repeal is expressed, implied, or effected by a conflicting statute. If a repeal intention is inferred, the saving provision in section 6 of the General Clauses Act applies. Assuming this interpretation of the effect of Central Act 67 of 1957, the liability for the fee that arose before 1 June 1958 would remain enforceable, and the notices demanding payment would therefore be valid.

The Court observed that the notices of demand were legally valid and that the sums specified in those notices could be recovered even though the Orissa Mining Areas Development Fund Act had been displaced by a later Union law. In reaching this conclusion, the Court referred to several authorities, namely Keshavan Madhava Menon v. State of Bombay reported in the 1951 Supreme Court Reporter at page 228, Kay v. Goodwin from 1830 reported in the 6th volume of Bing, Surtees v. Ellison reported in the 1829 volume 9 of the Bar & Crown Reports, and the case of Trust Mai Lachmi Sialkoti Bradari v. The Chairman Amritsar Improvement Trust and Others reported in the 1963 volume 1 of the Supreme Court Reporter at page 242.

This matter proceeded in the civil appellate jurisdiction as Civil Appeals numbered 561 and 562 of 1962. Both appeals arose from the judgment and order dated 18 April 1961 of the Orissa High Court in original writ cases numbered 142 and 144 of 1960. Counsel for the State of Andhra Pradesh appeared on behalf of the appellants, together with counsel for the appellants in both appeals. Separate counsel for the respondent appeared in the first appeal, and another group of counsel for the respondent appeared in the second appeal. Additionally, counsel for an intervener was also present. The judgment was delivered on 16 August 1963.

The Court noted that the two appeals were directed against a single judgment of the Orissa High Court and had been instituted after the High Court granted a certificate of fitness under Article 132(1) of the Constitution. The principal questions for determination were whether the Orissa Mining Areas Development Fund Act of 1952 (referred to as the Orissa Act) continued to operate and whether the fees imposed on mine owners under that enactment remained enforceable. Each respondent in the two appeals had earlier filed a petition before the Orissa High Court under Article 226 of the Constitution, seeking a writ of mandamus to restrain the State of Orissa and the Administrator of the Orissa Mining Areas Development Fund from applying the provisions of the Orissa Act to them. The petitions also requested that the two appellants be ordered to cancel the notices of demand that required the petitioners to pay the assessed fees and to grant an injunction preventing any further action in pursuance of those demands.

The factual background underlying these petitions was essentially the same in both cases, and the Court therefore confined its discussion to the facts of Civil Appeal 561 of 1962. The respondent in that appeal was Tulloch & Co. Private Ltd., a company incorporated under the Indian Companies Act. The company operated a manganese mine in the State of Orissa under a lease granted by the State pursuant to the provisions of the Mines & Minerals (Development & Regulation) Act, 1948 (Central Act 53 of 1948) and the rules made thereunder. While the respondent was engaged in mining activities under that lease, the State Legislature of Orissa had enacted the Orissa Mining Areas Development Fund Act 1952, under which certain areas were designated as “mining areas” and the State Government was empowered to levy a fee calculated as a percentage of the value of ore extracted at the pit mouth. The collections were intended to fund development of the mining areas. The State Government had taken the necessary steps to bring these provisions into effect and had issued demands for payment of the fees to the respondent on 1 August 1960 for the period covering July 1957 to March 1958. The present appeal concerned the enforceability of those fees.

In the present matter the respondent was operating a manganese mine in Orissa under a lease granted pursuant to the Mines and Minerals (Development and Regulation) Act, 1948. While the mining activities were in progress the State Legislature of Orissa enacted the Orissa Mining Areas Development Fund Act, 1952, which the Court will refer to as the Orissa Act. Under that legislation the State designated certain territories as “mining areas” and empowered the State Government to levy a fee calculated as a percentage of the market value of ore extracted at the pit’s mouth. The revenue collected under the fee was intended to be applied to the development of those mining areas within the State. The State Government subsequently took the necessary steps to bring the provisions of the Orissa Act into operation and, on 1 August 1960, issued demands on the respondent for payment of the fees that had become payable. The appeal before this Court concerned the fees that were due for the period from July 1957 to March 1958. When the demand was served, the respondent filed Petition 142 of 1960 before the High Court, challenging the legality of the demand and seeking the reliefs previously outlined. The learned judges of the High Court allowed the writ petition and issued directions to the second appellant in accordance with the prayers contained in the petition. Because the grounds on which the demand for fees was challenged raised substantial constitutional questions, the appellants applied to this Court for a certificate of fitness under Article 132(1) and (2); that certificate was granted and the present appeals came before the Court. The Court now sets out briefly the grounds upon which the High Court had allowed the respondent’s petition. The High Court accepted the contention that the Orissa Act had become ineffective or had been superseded by a Central enactment, namely the Mines and Minerals (Regulation and Development) Act, 1957 (Act 67 of 1957), hereinafter referred to as the Central Act, which had been brought into force on 1 June 1953. The Orissa Act had been enacted on the basis of the legislative power conferred by entry 23 of the State List, which reads “Regulation of mines and mineral development subject to the provisions of List I with reference to regulation and development under the control of the Union.” The Central Act, by contrast, had been enacted under entry 54 of the Union List, which reads “Regulation of mines and mineral development to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in the public interest.” The second section of the Central Act contained a declaration that was envisaged by the concluding words of the Union List entry. Based on these factual and legislative observations, the High Court concluded that, upon the commencement of the Central Act, the Orissa Act ceased to operate because the State’s legislative competence was withdrawn by virtue of the State List entry being subject to the Parliamentary declaration.

The law enacted by Parliament was held by the judges to render the Orissa Act void and without any legal effect from June 1 1958, for every purpose. Consequently, there was no authority to enforce or realise the fee demands at the time those demands were issued and subsequently sought to be enforced. The State challenges the correctness of this judgment in the present appeals. Before analysing the substantive issues, the Court finds it necessary to set out briefly the legislative powers that are relevant, because the decision turns on the precise wording of the entries in the Seventh Schedule to the Constitution and on the scope, purpose and effect of the State and Central statutes previously referred to. Article 246(1) reads: “Notwithstanding anything in clauses (2) and (3), Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule (in this Constitution referred to as the ‘Union List’).” The matter before the Court concerns the power of a State legislature, which is governed by clause (3) of the same article. Clause (3) provides: “Subject to clauses (1) and (2), the Legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule (in this Constitution referred to as the ‘State List’).” Turning to the Seventh Schedule, Entry 23 of the State List vests in a State legislature the authority to enact laws on the subject of “regulation of mines and mineral development subject to the provisions of List I with respect to regulation and development under the control of the Union.” The wording “subject to” indicates that the State’s power to legislate on mines and mineral development is plenary, except to the extent that a Union provision overrides it. The corresponding Union provision is Entry 54 of List I. It may be mentioned that this scheme of distribution of legislative power between the Centre and the States is not a new creation; it continues the arrangement that existed under the Government of India Act 1935, where a similar provision appeared as Item 36 of the Federal List and a corresponding entry existed in the Provincial Legislative List. There is no controversy that Parliament enacted the Central Act under the legislative authority contained in Entry 54, and that the Central Act includes a declaration required by Entry 54. Section 2 of the Central Act states: “It is hereby declared that it is expedient in the public interest that …”

In this case the Court explained that Parliament had declared, by the wording of the Central Act, that it was expedient for the Union to take under its control the regulation of mines and the development of minerals to the extent thereafter specified. The Court observed that, to the extent that the Union Government assumed control over “the regulation and development of minerals,” the legislative authority of the State Legislature under Entry 23 was correspondingly withdrawn. Consequently, any State law that relied on the power conferred by Entry 23 would, to the same extent, be superseded or become ineffective. The situation, therefore, was not merely one of direct conflict between two statutes, but rather a situation in which the State’s legislative competence was stripped away by a declaration that Parliament was empowered to make and had indeed made.

The Court further noted that the loss of legislative competence by the States would occur only to the extent that Parliament, in the public interest, had declared the regulation and development of minerals to be under Union control. Accordingly, the essential inquiry was to determine precisely that “extent,” because any legislative authority of the State that lay beyond that extent would remain intact. Since the State legislation before the Court was enacted earlier in time, the Court found it logical first to examine the State Act, to ascertain its purpose, its breadth, its scope, and the geographical area to which it applied, and only thereafter to assess how far the Central Act cut into or overlapped with the State law.

The Court described the object of the Orissa Act, as set out in its preamble, as the constitution of mining areas and the creation of a Mining Area Development Fund within the State. Under Section 3 of that Act the State Government was empowered to constitute and to alter the boundaries of such mining areas. The purpose of constituting these mining areas, the Court explained, included providing amenities such as communications, water‑supply and electricity, promoting the better development of areas where any mine was situated, and improving the welfare of residents or workers living or working in those areas.

Section 4 of the Orissa Act authorized the State Government to levy a cess or fee on all minerals extracted from any mine located in a designated mining area, subject to the condition that the rate of the cess could not exceed five per cent of the value of the minerals at the pit’s mouth. The cess was required to become payable quarterly each year, on the first day of January and on the dates specified thereafter, and it was to be calculated on the value of the minerals extracted during the three months immediately preceding each specified date.

Section 5 provided for the establishment of a Development Fund into which the cesses collected under Section 4, together with any other monies received for that purpose, would be deposited. The section also enumerated the purposes for which the Fund could be utilized, thereby setting out the scope of the State’s financial and developmental objectives in connection with mining activities.

Section 5 of the State legislation sets out a detailed list of purposes for which the Development Fund may be spent. The fund may be used, without limiting the generality of the earlier provisions, to meet the cost of measures that benefit labourers and other persons who live or work in the mining areas. Such measures include the improvement of public health and sanitation, the prevention of disease, and the establishment or upgrading of medical facilities. The fund may also finance the provision and improvement of water supplies and washing facilities, as well as the establishment or enhancement of educational facilities. In addition, the fund may be applied to raise the standard of living of the residents, which covers housing, nutrition, the amelioration of social conditions, and the provision of recreational amenities. Further, the fund may be employed for the construction or improvement of roads, tramways, railways and other forms of communication. Beyond these community‑benefit expenditures, the legislation authorises the grant of monies to any educational institute that provides technical education in mining and related subjects. The fund may also be granted, with the approval of the State Government, to the Central Government, a local authority or to the owner, agent or manager of a mine in support of any scheme that the State Government has approved for any of the Fund’s purposes. The cost of administering the Fund is also chargeable to it, which includes allowances for members of the Advisory Committee established under section 6 and the salaries, provident fund contributions, pensions, gratuities and any other allowances payable to officers appointed under section 7. Finally, the State Government may direct that any other expenditure be met from the Fund as it deems appropriate.

The judgment then turns to the Central legislation governing mines, whose long title declares two chief objectives: the regulation of mines and the development of minerals, both under Union control. Section 2 of that Act has already been examined, while section 3, which merely defines terms, is omitted as it does not affect the analysis. Sections 4 through 10 constitute a set titled “General Restrictions on Undertaking Prospecting and Mining Operations.” Those provisions lay down the rules and regulations that govern the granting of prospecting licences and mining leases, specify the periods for which such licences or leases may be issued or renewed, and set out the royalties, fees and other charges that must be paid. The next three sections, numbered 10 to 12, deal with the procedure for obtaining prospecting licences or mining leases where the minerals vest in the Government. Sections 13 to 17 are grouped under the heading “Rules for Regulating the Grant of Prospecting Licences and Mining Leases.” Section 13, which begins this group, empowers the Central Government, by way of a notification, to make rules that regulate the grant of prospecting licences and mining leases with respect to minerals and for matters connected therewith. Sub‑section (2) of section 13 enumerates the subjects that such rules may cover, including the fixing and collection of dead rent, fines, fees or other charges and the collection of royalties in respect of prospecting licences, mining leases and minerals that are mined, quarried, excavated or collected. The provision also mentions, among other matters, the construction and maintenance of infrastructure related to mining activities.

In the judgment the Court observed that the provision previously quoted dealt with the first purpose of the Act, namely the regulation of mines, and that Section 18 introduced the other purpose of the Act, namely the development of minerals. The Court therefore found it necessary to set out in detail some of the terms of Section 18. Section 18(1) enacted that “It shall be the duty of the Central Government to take all such steps as may be necessary for the conservation and development of minerals in India, and for that purpose the Central Government may, by notification in the Official Gazette, make such rules as it thinks fit.” Section 18(2) added that, without prejudice to the generality of the foregoing power, the rules may provide for all or any of the following matters, namely … (a) (b) (c) (d) the development of mineral resources in any area. The Court further noted that Section 25 provided for the recovery of any rent, royalty, tax or other sum due to the Government under this Act or the rules made thereunder, and that such sums were to be recovered in the same manner as an arrear of land revenue. The question before the Court was whether the “extent of control and regulation” conferred by the Central Act extended to the area or subject matter covered by the Orissa Act. The counsel for the appellant advanced four points. First, the counsel contended that the object and purpose of the Orissa Act and its provisions were quite distinct from the object and purpose of the Central Act, so that the two enactments could validly coexist because they did not cover the same field. It was argued that the Orissa Act was concerned with raising a fund for providing amenities to labour and other residents in “mining areas,” whereas the Central Act was concerned solely with the development of the mineral resources of the country and not with any social purpose. Because the objects were so dissimilar, the counsel asserted that there was no common area covered by the two statutes and that the “extent of control” assumed by the Union law lay entirely outside the field occupied by the State law; consequently, there was no encroachment and the State Act continued to operate in full force. Second, the counsel argued that even if the Central Act might cover the same field in the sense that the Central Government could make rules under the Central Act for the same purposes as the Orissa Act, and even if those rules, when made, overlapped the provisions of the Orissa Act, there was still no repugnancy between the two enactments until such rules were actually made; until that moment, there was no effective and operative Central legislation covering the field occupied by the Orissa Act.

The Court observed that the authority to legislate for the imposition of fees derived from a distinct head of legislative power under the Constitution, specifically entry 96 of the Union List and entry 66 of the State List. Consequently, there was no circumstance in which the State power under entry 66 could be displaced by a Union enactment whose legislative basis lay in entry 96 of List I. Accordingly, the fee demand lawfully enacted by the State was not superseded by any Central legislation, even though the Central law fell within entry 54 of the Union List. The Court further noted that, in any event, the Central Act was neither retrospective nor retroactive and therefore could not affect rights that had already accrued to the State before the Central Act became operative on 1 June 1958. The fees that formed the basis of the challenged demands had arisen well before that date, and the Court held that those demands remained enforceable despite the subsequent repeal of the State Act after the fees had accrued. Counsel for the respondent advanced the argument that the Central Act encompassed the entire field of mineral development, a field that Parliament had declared to be appropriately under Union control. Relying heavily on section 18(1) of the Central Act, counsel emphasized the statutory duty imposed on the Central Government to take all necessary steps for the conservation and development of minerals throughout India, and the provision that the Central Government could, by notification, make any rules it deemed fit. Counsel proposed that if the Central Government, under the authority of section 18(1), issued rules providing the same amenities for mine workers that the Orissa Act had mandated, and if it also imposed a fee to fund those amenities, such rules would be ultra vires the Central Government, especially when considered together with the matters authorized for rule‑making under section 13. The Court acknowledged that the respondent’s submission possessed considerable merit and would ordinarily require a thorough and meticulous examination. However, the Court found it unnecessary to embark upon such a detailed analysis because the issue had already been resolved by a prior decision of this Court in The Hingir‑Rampur Coal Co. Ltd. and Others v. The State of Orissa and Others, wherein the same question concerning the validity of the fee demand under the Orissa Act was addressed.

The appellants subsequently appeared before the Court and contested, on several grounds, the constitutional validity of the Orissa Act together with the rules made under it that authorised the State to levy a cess. One of the principal grounds advanced before the Court was the contention that the Orissa Act was void because the entire field of mineral development had already been placed under Central control by the Mines and Minerals (Regulation & Development) Act, 1948, identified as Central Act 53 of 1948. Although the Central Act of 1948 was enacted before the Constitution came into force, the petitioners argued that the declaration in that enactment, which stated that “it was expedient in the public interest that the Central Government should take under its control …”, made a legislative declaration under entry 36 of the Federal List of the Government of India Act, 1935. They further asserted that such a declaration amounted to a statutory assumption of “control by the Union” within entry 54 of List I of the Seventh Schedule of the Constitution, thereby encroaching upon the legislative competence of the State Legislature. Before analysing the portion of the judgment that addresses this aspect, it is convenient to examine the Central Act of 1948 upon which the challenge to the constitutional validity of the Orissa Act was founded. Central Act 53 of 1948 was presented as legislation intended to provide for the regulation of mines and oil fields and for the development of minerals. Section 2 of that Act contained a declaration identical in form to section 2 of the later Central Act 67 of 1957, reading: “It is hereby declared that it is expedient in the public interest that the Central Government should take under its control the regulation of mines and oil fields and the development of mines to the extent hereinafter provided.” The 1948 enactment was a concise statute comprising only fourteen sections, of which section 6, titled “Power to make Rules as respects mineral development”, is particularly relevant because it empowered the Central Government, by way of notification, to issue rules for the conservation and development of minerals. Subsequent amendments effected by the later Central Act 67 of 1957 excised from the 1948 statute all provisions and references relating to “mines and minerals” and their development, leaving the earlier Act confined solely to the development of oil fields. Consequently, after those amendments, the entire body of law concerning mines and mineral development was subsumed under Central Act 67 of 1957. The petitioners maintained that, while the 1948 Act originally applied to mines and mineral development, the declaration it contained—that it was expedient for the Union to control mineral development to the extent provided—had, prior to its amendment, deprived the Orissa State Legislature of the competence to enact the Orissa Act.

The Court examined the challenge to the Orissa Act concerning the demand of a fee. Justice Gajendragkar, speaking for the Court, stated that the validity of that demand remained open to challenge. He explained that the legislative competence of the State Legislature under Entry 23 of the Seventh Schedule was limited by the provisions of List I relating to regulation and development that were placed under Union control. He further observed that this limitation required reference to Entry 1 of List I. The Court held that when the two entries were read together, the jurisdiction of the State Legislature under Entry 23 was clearly subordinate to the restriction contained in the latter part of that entry. Consequently, if Parliament had, by a Central Act, declared that the regulation and development of mines should, in the public interest, be under Union control, then the State Legislature’s jurisdiction was excluded to the extent of that declaration. In other words, a Central Act containing a declaration required by Entry 54, if covering the field occupied by the impugned State Act, rendered the State Act ultra vires. This result arose not from any direct conflict between the statutes but because the State Legislature lacked authority to enact the law. The Court noted that the limitation imposed by the latter part of Entry 23 was a limitation on the State Legislature’s own legislative competence, a point that was not in dispute. Counsel for the petitioner argued that the subject matter of the Orissa Act had already been covered by the Mines and Minerals (Regulation and Development) Act, 1948, and contended that, in view of the declaration contained in section 2 of that Act, the Orissa Act was ultra vires.

The Court then turned to the specific provisions of the 1948 Act. Section 2 of the Act contained a declaration stating that it was expedient for the Central Government to control the regulation and development of minerals. Section 4 provided that no mining lease could be granted after the commencement of the Act unless it was in accordance with rules made under the Act. Section 5 authorized the Central Government, by notification, to make rules regulating the grant of mining leases or to prohibit the grant of such leases in any mineral or area. Section 6 further empowered the Central Government, by notification in the official Gazette, to make rules for the conservation and development of minerals, and subsection 6(2) listed the matters on which such rules could be framed. Although the Court observed that, to date, the Central Government had not framed any rules concerning the levy or collection of fees, it held that this absence did not affect the analysis. If the Act was deemed to contain the declaration required by Entry 23, then that declaration unquestionably covered the field of conservation and development of minerals, a field that was identical to the field addressed by the impugned State Act. Accordingly, the Court concluded that the State Act could not be validly enacted because the relevant legislative power rested exclusively with the Union.

In this case the Court explained that Entry 23 of List I states that the legislative power of a State Legislature is limited by the provisions of List I wherever regulation and development are to be exercised under Union control. Entry 54 in the same List requires a declaration, made by Parliament through law, that the regulation and development of mines must be placed under Union control for the public interest. Consequently, when a Central Act has been enacted to provide for the conservation and development of minerals and that Act contains the necessary declaration, the State Legislature does not have the competence to pass any legislation covering the same subject‑matter that is already declared by Parliament. The Court observed that for the declaration to be effective it is not essential that rules be made or enforced; the sole requirement is a parliamentary declaration that it is expedient in the public interest to bring the regulation and development of mines within Union jurisdiction. The test, therefore, is whether the legislative declaration embraces the field in question. Applying this test, the Court found that there is no doubt that the field addressed by the impugned Act is already covered by the Central Act LIII of 1948.

The Court further noted that the validity of the impugned provision had been upheld for a specific reason. The Orissa Act was enacted after the Constitution came into force, whereas the Central Act of 1948 was a pre‑Constitution law. Because, under Entry 54, Parliament had not made the required declaration but only the earlier existing Central Legislature had acted, the 1948 Act did not fall within the scope of Entry 54, and consequently the State legislation remained operative. However, the later Central Act 67 of 1957 does contain the requisite declaration by the Union Parliament under Entry 54, and that Act covers the same field as the 1948 Act concerning mines and mineral development. The Court therefore held that, unless there is a material difference in scope and ambit between Central Act 53 of 1948 and the 1957 Act, the earlier decision resolves the dispute. Counsel for the appellant could not point to any substantive difference between the two statutes. Although it was suggested that Section 6 of the 1948 Act authorized the making of rules for levying taxes whereas the 1957 Act did not expressly empower tax imposition, the Court deemed this point immaterial because the issue concerned the power to levy a fee, which is expressly provided in Section 13 of the Central Act 1957 and is also implied by Section 25, which states: “Any rent, royalty, tax, fee or other sum due to the Government under this Act or the rules made thereunder.”

The Court noted that the provision allowed that any sum due under the terms and conditions of a prospecting licence or a mining lease could, on a certificate issued by an officer designated by the State Government through a general or special order, be recovered in the same manner as an arrear of land revenue. The Court then observed that the counsel for the appellant had argued strongly that sub‑sections (1) and (2) of section 18 of the Central Act of 1957 were broader in scope and amplitude and therefore conferred larger powers on the Central Government than the comparable provisions contained in the Act of 1948. The counsel further contended that section 18(1) of the Central Act simply imposed a duty on the Central Government “to take steps’’ for the conservation and development of the country’s mineral resources and was, in that sense, not self‑executing. According to that argument, even assuming that the powers given under section 18 could be read together with section 13 and other provisions of the Act, the Central Government would be competent to frame rules modelled on the Orissa Act for the development of mining areas, to provide for the imposition of fees, and to create a fund financed by those fees. However, the counsel pointed out that no such rules had been framed, and that until such rules were made or steps taken, the Central Act would not cover the field, leaving the Orissa Act to continue in full force. In support of this position, the counsel relied upon the Supreme Court’s decision in Ch. Tika Ramji & Ors. v. State of Uttar Pradesh & Ors., particularly the passage at page 432 which stated: “Even assuming that sugarcane was an article or class of articles relatable to the sugar industry within the meaning of section 18‑G of Act LXV of 1951, it is to be noted that no order was issued by the Central Government in exercise of the powers vested in it under that section and no question of repugnancy could ever arise because, as has been noted above, repugnancy must exist in fact and not depend merely on a possibility. The possibility of an order under section 18‑G being issued by the Central Government would not be enough. The existence of such an order would be the essential prerequisite before any repugnancy could ever arise.” The Court considered this submission to be without force and founded on a misapprehension of the correct legal position. The Court further referred to its earlier ruling in The Hingir‑Rampur Coal Co. Ltd. & Ors. v. State of Orissa & Ors., where it had held that “In order that the declaration should be effective it is not necessary that rules should be made or enforced.”

In this case the Court observed that what was required was a declaration by Parliament that it was expedient in the public interest to place the regulation of the development of mines under Union control. The Court stated that the test in such a circumstance was whether the legislative declaration covered the entire field. The Court then rejected the contention that the matter might be entirely new and therefore the argument could be entertained. It explained that repugnancy arose when two enactments, each within the competence of the respective legislatures, collided and the Constitution, either expressly or by necessary implication, assigned superiority to one legislature over the other; to the extent of the conflict, the superior enactment displaced the other. The Court further observed that two enactments could be repugnant even though compliance with each one did not necessarily require disobeying the other. It clarified that the presence of contradictory provisions was not the sole test for repugnancy. If a competent legislature with superior authority expressly or impliedly demonstrated, through its legislation, an intention to occupy the whole field, then the enactments of the other legislature—whether enacted before or after—were to be overborne on the ground of repugnancy. In such a situation, the inconsistency was shown not by a detailed comparison of the provisions but simply by the existence of both statutes. Applying this principle, the Court examined section 18(1) and concluded that Parliament's intention was to encompass the entire field of mineral development, leaving no room for the argument that until rules were framed there was no inconsistency or super‑session of the State Act. Subsequently the Court addressed an argument that, under the constitutional legislative entries—similarly to the scheme of the Government of India Act, 1935—the power to levy a fee was an independent head of legislative power in each of the three lists and not merely an incidental power derived from other entries. The argument tried to establish that even if the Union could levy a fee under the Central Act, such power would not affect or invalidate a State law imposing a fee for a similar service. The Court rejected this contention as fallacious. While acknowledging that technically the power to levy a fee appears among the entries of the three lists as an independent grant of legislative authority, the Court held that whether the power is considered incidental or independent, the validity of a fee required that the subject‑matter or the principal head of legislation to which the fee related must lie within the legislature’s competence. The Court cited the wording of the entries—“Fees in respect of any of the matters in this List”—and affirmed that this phrasing made it a prerequisite that a fee could be imposed only in respect of a matter that fell within the relevant List.

In this case, the Court observed that for a fee to be valid, it must be imposed in respect of a “matter in the list”. The Court explained that if, by a declaration of Parliament, the entire subject‑matter of “conservation and development of minerals” had been transferred to Parliament, the State would lose the power it previously possessed over that subject. Consequently, the portion of the State List dealing with that matter would be removed to the extent of the declaration, and after the Central Act of 1957 there would be no longer any “matter in the List” to which the fee could be legally attached. The State further argued that the fees whose recovery was being sought had accrued before 1 June 1958 and that, because the Central Act was not made retrospective, it could not invalidate those demands. The Court noted that section 4 of the Orissa Act imposed a charge on mine owners for the payment of the fee, and that liability to pay the fee arose on a quarterly basis. The appeal concerned fees due for six quarters covering the period from 30 September 1956 to 31 March 1958, and notices demanding those fees had been served on the respondents on 1 August 1960. The State submitted that even if the Orissa Act were repealed, superseded, or rendered void by the Central Act, the right to recover the past arrears that had accrued before the repeal would remain enforceable. The Court then referred to events that had occurred after the High Court gave its judgment in the two petitions that formed the basis of the present appeals. Following that judgment, the State Government filed applications before the High Court seeking a review of the decision, arguing that even assuming the Orissa Act of 1952 was superseded by Central Act 67 of 1957, the liabilities that had arisen before 1 June 1958 could not be erased because the Central Act was not retrospective, and it asked the High Court to modify its orders accordingly. The learned judges rejected those review applications for two reasons. First, they had already granted certificates of fitness under Article 132 of the Constitution, and the issue of the Central Act’s effect on the enforceability of the dues was among the grounds raised by the State in its memoranda of appeal, meaning the question remained pending before this Court. Second, the Court observed that a previous decision of this Court in Keshavan Madhava Menon v. The State of Bombay had already held that when an earlier enactment is superseded or rendered void under Article 13 of the Constitution, actions taken under the old enactment survive only with respect to past and closed transactions, a principle that applied to the present controversy.

In this case the Court observed that when a statute is declared void under Article 13 of the Constitution, any action taken under that statute does not survive except where the transaction is completed and closed, and therefore the present dispute was covered by that principle. The Court then turned to the arguments presented in support of the contention advanced by counsel for the State. Counsel for the State argued that the replacement of the Orissa Act by the Central Act amounted to a repeal. If the substitution was a repeal, the provisions of section 6 of the General Clauses Act 1897 would apply. Section 6 provides: “Where this Act, or any Central Act or Regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made, then unless a different intention appears, the repeal shall not—(a)… (b) affect the previous operation of any enactment so repealed or anything duly done or suffered thereunder; (c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed; (d)… (e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid; and any such investigation, legal proceeding or remedy may be instituted, continued or enforced… as if the repealing Act or Regulation had not been passed.” The counsel’s interpretation of this section was two‑fold. First, it was submitted that the word “repeal” in the opening paragraph was not limited to express repeals but was broad enough to include cases of implied repeal. Second, it was argued that even if “repeal” were understood strictly as an express repeal, the principle underlying section 6 was of general application and could therefore extend to implied repeals as well. Before proceeding further, the Court found it helpful to clarify two points. The first point was that the effect of a Central Act exercising its exclusive legislative power over a field previously occupied by a competent State enactment is undisputed; the parliamentary enactment supersedes the State law and consequently effectually produces a repeal. The second point was that the legal effect of a repeal, when not subject to a saving provision such as that found in section 6 of the General Clauses Act, is also well settled. The Court quoted Tindak C.J. in Kay v. Goodwin, stating: “I take the effect of repealing a statute to be to obliterate it as completely from the records of the Parliament as if it had never been passed; and it must be considered as a law that never existed except for the purpose of those actions which were commenced, prosecuted and concluded whilst it was an existing law.” The Court noted that the same view was expressed by Lord Tenterden in Surtees v. Ellison, observing that when an Act of Parliament is repealed it must be treated, except for past and closed transactions, as if it never existed.

In this passage the Court referred to the statement that when an enactment is repealed it must be regarded, except with respect to transactions that are already completed and closed, as if it had never existed. That formulation represented the law as it stood before the United Kingdom Interpretation Act of 1890, which by section 38(2) introduced a saving provision similar to that now found in section 6 of the Indian General Clauses Act of 1897, a provision that had been quoted earlier in the judgment. The learned counsel for the respondent, Mr Setalvad, advanced a straightforward submission. He contended that the language of section 6 applied strictly to situations of express repeal. He pointed out that the present matter did not involve an express repeal; rather it concerned the supersession of a State enactment by a law that possessed, by virtue of the Constitution, a higher efficacy. Consequently, he argued, the result should be described merely as the disappearance or supersession of the State law, or at most as an instance of implied repeal. To support this view, he drew the Court’s attention to observations made in an earlier decision of this Court, Keshavan Madhava Menon v. The State of Bombay. In that case the Court examined whether the prosecution of the appellant for an alleged breach of the Indian Press (Emergency Powers) Act, 1931 could continue after the Constitution had come into force. The alleged offence had been committed before the Constitution became operative, and the prosecution that had been initiated earlier was still pending after 26 January 1950. The Court held that the provision creating the offence was void under Article 19(1)(a) read with Article 13 because it infringed a fundamental right protected by Part III of the Constitution. The issue before the Court was whether the prosecution could lawfully proceed once the offending provision was declared void. The majority answered affirmatively, reasoning that the Constitution operated prospectively and that Article 13(1) did not invalidate proceedings that had been commenced under laws valid prior to the Constitution’s commencement; to say otherwise would amount to treating the Constitution retrospectively. Accordingly, the majority concluded that there was no legal impediment to the continuation of the prosecution. Justice Fazl Ali, dissenting, after analysing the effect of a repealing statute in the absence of a saving clause and tracing the historical development of the relevant provisions in the successive General Clauses Acts in India, observed that the present position in both India and England is that a repeal no longer carries the severe effect it once did before the Interpretation Act in England or the General Clauses Act in this country. He explained that this change is attributable entirely to the explicit saving provisions introduced in those statutes. Therefore, in cases that fall outside the express language of the General Clauses Act, the older principle articulated in Kay v. Goodwin and Surtees v. Ellison continues to apply.

The Attorney General conceded that there was doubt as to whether section 6 of the General Clauses Act applied where a repeal occurred by implication, and affirmed that the law concerning the effect of the expiry of a temporary statute remained unchanged because section 6 of the General Clauses Act and section 38(2) of the Interpretation Act applied only where an Act was expressly repealed. Counsel for the State, Mr Setalvad, submitted that this concession represented an explicit decision in his favour. The Court, however, indicated that it was not prepared to accept that submission except as the foundation of a dissenting judgment. The Court noted that the question of the effect of an implied repeal had arisen in several earlier cases before this Court but had remained unresolved, for example in the judgment of Trust Mai Lachhmi Sialkori Bradari v. The Chairman, Amritsar Improvement Trust and Ors. (3). Consequently, the issue was res integra and required determination on principle.

At the outset, the Court observed a fundamental distinction between the effect of the expiry of a temporary statute and the effect of a repeal by a later enactment; the present discussion was limited to the repeal of a statute that remained in force up to the date of its repeal. The first issue to be examined was the meaning of the term “repeal” in section 6 of the General Clauses Act—whether it was confined to cases of express repeal or whether the expression was broad enough to include implied repeals. The Court cited the authorities (1) [1830] 6 Bing. 576, (2) [1819] 9 B.& C. 750, and (3) [1963] 1 S.C.R. 242 in relation to this enquiry.

In addressing the question, the Court referred to a passage in Craies on Statute Law, Fifth Edition, pages 323‑324, which appeared to indicate that the corresponding provision, section 38 of the English Interpretation Act, dealt only with express repeals. On page 323 the text read: “In Acts passed in or since 1890 certain savings are implied by statute in all cases of express repeal, unless a contrary intention appears in the repealing Act.” The following page continued: “It had been usual before 1889 to insert provisions to the effect above stated in all Acts by which express repeals were effected. The result of this enactment is to make into a general rule what had been a common statutory form, and to substitute a general statutory presumption as to the effect of an express repeal for the canons of construction hitherto adopted.” The Court noted, however, that no explicit decision on this point existed in England or, as far as could be ascertained, in the United States.

Unconstrained by precedent, the Court said it must inquire into the principle underlying the saving clause in section 6. It stated that the manifest principle was that every later enactment which supersedes an earlier one or puts an end to the earlier law is presumed to intend the continuation of rights accrued and liabilities incurred under the superseded enactment, unless the later enactment contains sufficient express or implied indications that it intends to wholly extinguish the earlier law.

In this case, the Court observed that when a later statute terminates an earlier legal regime, the law presumes that the later enactment intends to preserve any rights that had already accrued and any liabilities that had arisen under the earlier statute, unless the later enactment contains clear express or implied indications that it intends to completely erase the previous legal position. The Court then considered whether this presumption should be applied only when the later statute uses a specific wording that expressly states that the earlier law has been repealed. It explained that the doctrine of implied repeal rests on the principle that a newer statute does not need to employ particular words or a special drafting form to declare that an earlier statute is repealed; rather, if the newer legislation demonstrates a legislative intention to supersede the earlier law by the very provisions it contains, the law treats the earlier enactment as repealed even though the word “repeal” is absent. The Court asked whether, given that legislative intent to supersede is the foundation of implied repeal, it would be inconsistent to attribute to the later statute the same intention that section 6 presumes when the word “repeal” is expressly employed. It noted that a fundamental rule of statutory construction holds that there is no substantive distinction between an express provision and a provision that is necessarily implied; the only difference lies in the form, not in the intention or the substantive effect. Accordingly, a repeal may be effected by legislation that is in conflict with the earlier law, even without any explicit reference to the earlier act, because once the legislature has the competence to repeal, it matters little whether the repeal is expressed directly, inferred, or achieved through contradictory provisions. The Court concluded that, on the basis of this reasoning, it is both logical and consistent with the principles underlying implied repeal to ascribe to a legislature that brings about a repeal by implication the same intention that would accompany an express repeal. Consequently, when a legislature is deemed to have intended a repeal, the Court held that the saving provision contained in section 6 should also attach, since the interpretative rules of the General Clauses Act represent the basic assumptions underlying statute drafting. Applying this reasoning to the Central Act 67 of 1957, the Court reasoned that if the liability to pay the fee that formed the basis of the demand notices had arisen before 1 June 1958, then those notices remained valid and the sums claimed could be recovered, even though the Orissa Act had been displaced by the superior central legislation.

The Court remarked that the statute which formed the basis of the dispute had been enacted by the Union Parliament, and that this fact governed the legal position of the parties. In light of that observation, the Court held that the appeals which had been filed against the earlier determination must be allowed. By allowing the appeals, the Court consequently ordered that the writ petitions which had been pending before the Court be dismissed as a result of the appellate decision. The Court further observed that the appellants had not succeeded in establishing the substance of their principal contentions, and therefore their main submissions were deemed to have failed. Because the appellants’ principal arguments were not accepted, the Court decided that no order concerning the award of costs should be made in favour of either side. Accordingly, the Court concluded that the appeals were allowed and the writ petitions stood dismissed, with the matter being resolved without any costs being imposed on the parties.