http://JUDIS.NIC.

IN SUPREME COURT OF INDIA Page 1 of 51

Vs.

RESPONDENT:
BIRLA COTTON, SPINNING AND WEAVING MILLS, DELHIAND ANOTHER

DATE OF JUDGMENT:
23/02/1968

BENCH:
WANCHOO, K.N. (CJ)
BENCH:
WANCHOO, K.N. (CJ)
HIDAYATULLAH, M.
SHAH, J.C.
SIKRI, S.M.
RAMASWAMI, V.
SHELAT, J.M.
VAIDYIALINGAM, C.A.

CITATION:
1968 AIR 1232 1968 SCR (3) 251
CITATOR INFO :
F 1970 SC1589 (7)
RF 1971 SC2100 (20)
RF 1973 SC1374 (11)
RF 1973 SC1461 (22M,450,464,566)
R 1974 SC1660 (10,16,17,35,49)
R 1975 SC1007 (14)
RF 1978 SC1457 (6)
RF 1979 SC 321 (21,22)
RF 1979 SC1475 (17,21)
RF 1981 SC 951 (3)
RF 1982 SC1126 (9)
R 1986 SC 515 (71)
R 1990 SC 560 (13)

ACT:
Delhi Municipal Corporation Act 66 of 1957 ss. 113 and 150
Power to Corporation under ss. 113(2) and 150 to levy
optional taxes subject to Central Government’s approval-if
excessive delegation and therefore ultra vires.
Delhi Municipal Corporation (Validation of Electricity Tax)
Act 35 of 1966-Whether effectively validated levy of tax
between July 1, 1959 and March 31, 1966.
Constitution of India, Art. 77-Central Government’s sanction
signed by Deputy Secretary without the words "By order of
the President" or similar words-Whether deficiency made up
by subsequent affidavit stating approval given by minister-
If Deputy Minister assigned certain work can give effective
approval-or whether matter must go to Cabinet Minister also.

HEADNOTE:
On February 9, 1959, the appellant Corporation passed a
resolution under section 150(1) of the Delhi Municipal
Corporation Act 66 of 1957 for the levy of certain taxes
including a tax on the consumption or sale of electricity.
Under s. 150(2) the Central Government sanctioned the tax
with effect from July 1, 1959 and also modified the rates of
tax. The Corporation resolved on June 24, 1959 under s.
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150(3) to determine the rates sanctioned by the Central
Government as the rates at which the tax would be leviable
for the year 1959-60. The respondent challenged the levy of
the tax by a writ petition which was allowed in appeal and
it was held, inter alia, that the Central Government could
not modify the rate,, but only withhold or grant sanction.
Parliament then passed Act 35 of 1966 to validate the levy
of the electricity tax from July 1, 1959 to March 31, 1966.
On February 17, 1965, the Corporation passed another
resolution under s. 150(1) providing for the maximum rates
for the levy of tax on electricity and after obtaining the
Central Government"s sanction, passed a second resolution on
December 27, 1965, tinder s. 150(3) fixing the maximum rates
as the actual rates. The respondents filed two writ
petitions challenging the levy of tax by the resolutions of
February 17, and December 27, 1965, and the vires of the
Validation Act. The High Court allowed the petitions
holding that though the Validation Act validated the levy
and collection of tax from July 1, 1959 to March 31, 1960 it
did not do so for the period from April 11, 1960 to March
31, 1966. it also held that section 150 suffered from the
vice of excessive delegation of legislative power and was
therefore ultra vires. The respondent appealed to this
Court.
HELD : (i) (By the Full Court) : The Validation Act 35 of
1966 validly levies and imposes tax on consumption or sale
of electricity till March 31, 1966.
(Per Wanchoo, C. J. and Shelat, J.) : The High Court was in
error in holding that levy and collection of the tax was not
validated for the
252
period from April 1, 1960 to March 31, 1966 and that the
Validation Act merely validated the fixation of the rate of
tax for that period. When section 2(1) lays down that the
rates deducible from the resolution of June 24, 1959 shall
be the actual rates of tax for the entire period from July
1, 1959 to March 31, 1966 it must be understood to sanction
the levy and collection of tax at the rates fixed. This is
implicit in the word ..actual" which governs the words
"rates of the tax". Even if there was some doubt in the
matter from the words of s. 2(1), that doubt is resolved by
the words of s. 2(2), which lays down that "all taxes on the
consumption or sale of electricity levied or collected or
purporting to have been levied or collected in pursuance of
the resolution referred to in subsection (1) shall, for all
purposes, be deemed to be, and to have always been validly
levied or connected." This clearly shows that the validation
"as not merely of the rate of tax but of levy and collection
also for the entire period from July 1, 1959 to March 31,
1966. A reading of s. 2(1) and s. 2(2) together shows that
Parliament not only validated what was done but also itself
imposed the rates deducible from the resolution of June 24.
1959 and authorised the levy and collection thereof for the
entire period from July 1, 1959 to March 31, 1966
notwithstanding anything contained in any judgment, decree
or order of any court to the contrary. 1276 H-278 B]
(ii) (Per Wanchoo, C.J. and Shelat, J.) : On a consideration
of the various provisions of the Act, it must be held that
the power conferred by section 150 of the Act on the
Corporation is not unguided and cannot be said to amount to
excessive delegation. Although the delegation made in
relation to the optional taxes under ss. 113(2) and 150 is
wide, there are sufficient guidelines, limits, controls or
safeguards provided by the legislature in view of the
following : (a) The delegation has been made to an, elected
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body responsible to the people including those who pay the
taxes; this is an important check on the elected Councillors
acting unreasonably and fixing unreasonable rates of
taxation; (b) the limit to which the Corporation can tax is
circumscribed by the need to finance the functions,’
obligatory or optional, which it has to or may undertake to
perform, under the Act. It will not be open to the
Corporation by the use of taxing power to collect more than
it needs for the functions it performs; though the mere fact
that specific purposes and functions are set out in an im-
pugned Act may not be conclusive it is one of the factors
which should be taken into account along with other relevant
factors; (c) budget estimates have to be adopted each year
as laid down in section 109 of the Act; (d) under section
150(2), the maximum rates fixed by the Corporation have to
be submitted to the Central Government for its sanction;
though therefore the legislature may not have provided that
the rates of tax shall be submitted to it for approval, the
fact that they have to be submitted to Government for
approval and the Government in its turn is responsible to
the legislature is a factor which has to be taken into
account when considering whether the delegation by section
150 of the Act is excessive or not. [275 B; 271 D; 272 D; H;
273 E]
Furthermore, should the Corporation fix rates which are
unreasonable it would always be open to the Courts to strike
down such import. Kruse Johnson, [1898] 2 Q.B.D. 91;
referred to. [274 E]
Under certain circumstances fixation of rates of taxation
can also be delegated to subordinate authorities with proper
guidance and subject to safeguards and limitations.
Pandit Banarsi Das Bhanot v. The State of Madhya Pradesh,
[1959] S,C.R. 427; considered.
253
There is a clear distinction between delegation of power to
fix the rate of a tax like sales tax to the State Government
and delegation of fixing rates of certain taxes for purposes
of local taxation. The needs of the State are unlimited and
the purposes for which the State exists are also unlimited.
On the other hand, in the case of a municipality, however
large may be the amount required by it for its purposes, it
cannot be limited, for the amount that a municipality can
spend is limited by the purposes for which it is created.
[268 D-G]
(Per Hidayatullah and Ramaswami, JJ.) : While the provisions
which have been characterised as safeguards (where found
necessary) are desirable, the proper test to apply is not
the existence of safeguards but whether the legislative will
to impose the tax is adequately expressed so as to bind
those who have to pay the tax. This requires an examination
of the policy and provisions of the Act with a view to
determining whether the legislative will is fully expressed
to invest the Municipal Corporation with the power to levy
the tax subject, of course, to a proper procedure being
evolved. [280 D, E]
The doctrine that Parliament cannot delegate its powers must
be understood in a limited way. It only means that the
legislature must not efface itself but must give the
legislative sanction to the imposition of the tax and must
keep the control in its own hands. There is no specific
provision in the Constitution which says that the Parliament
cannot delegate to certain specified instrumentalities the
power to effectuate its own will. The question always is
whether the legislative will has been exercised or not.
Once it is established that the legislature itself has
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willed that a particular thing be done and has merely left
the execution of it to a chosen instrumentality (provided
that it has not parted with its control there can be no
question of excessive delegation. If the delegate acts
contrary to the wishes of the legislature, the legislature
can undo what the delegate has done. Even the courts may be
asked to intervene when the delegate exceeds its powers and
functions. The observations and theories in American cases
cannot be applied in our country without reflection. Even
in America the doctrine is much watered down especially when
it is a question of investing municipalities with power of
such taxation. In the present case, in addition to
prescribing the mode, The legislature has kept a check by
making Government, answerable to itself, the supervising
authority. This is no,, a safeguard. but is indicative of
the exercise of the legislative will by the legislature
itself. The details of the tax are to be considered by the
supervising authority and if the tax is no’ what the
legislature intended should be imposed, the tax cannot be
imposed. [287 E-G]
As local bodies are intended to carry on local self-
government, the power of taxation is a necessary adjunct to
their other powers. They function under the supervision of
the Government. This supervision is considered necessary
because Municipal Councillors as a rule are unwilling to lax
in a manner likely to affect themselves. To insist that the
legislature should provide for every matter connected with
municipal taxation would make municipalities mere tax
collecting departments of Government and not self-governing
bodies which they are intended to be. [288 E, F]
(Per Sikri, J.) :. Parliament has full power to delegat
legislative authority to subordinate bodies. This power
flows from Act. 246 of the Constitution. The, word
exclusive" in that Article means exclusive of any other
legislature and not exclusive of subordinate body. There
is, however, one restriction in this respect and that is
also contained in Art. 246. Parliament must pass a law in
respect of an item or items of the relevant legislative
list. Negatively, this means that Parliament cannot
abdicate its functions. This was the Position under the
various Government of India
254
Acts, and the Constitution has made no difference in this
respect.[ 1309 H-3 I 0 B]
In any event however, in the, present case there is adequate
guide, or policy, in the expression "purposes of the Act" in
s. 113. The Act has pointed out the objectives or the-
results to be achieved, and taxation can be levied only for
the purpose of achieving the objectives or the results.
This is sufficient guidance especially to a self-governing
body like the Delhi Municipal Corporation. It is not
necessary to rely on the safeguards to sustain the
delegation under s. 113(2) and s. 150. [310 G]
(Per- Shah and Vaidialingam, JJ. dissenting) : Section
150(1) of the Act 66 of 1957 is void as permitting excessive
delegation of legislative authority to the Corporation.
Authority to legislate in respect of powers of local bodies
may encompass authority to confer power upon the local
bodies to tax within certain specific fields in the
appropriate list. But the power conferred by the
legislative entry cannot override the constitutional
limitations against abdication of legislative authority.
The expression "power" therefore does not include authority
to delegate the essential legislative function without
disclosing principles, policy, or standard guiding the local
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bodies in the exercise of the Dower. [302 C-D]
The vice of delegation lies not in its capacity for abuse,
but in its delegation beyond permissible limits and contrary
to the constitutional scheme. Undoubtedly delegation of the
authority to legislate is always subject to the rule that
action of the delegate which amounts to unreasonable
exercise of the powers wilt be invalid. But that does not
alter the true character of the rule against excessive
delegation of legislative authority. It cannot be said that
this rule may be departed from on the ground that the
delegate is hedged in by controls or restrictions which will
prevent it from abusing its authority. Safeguards against
abuse do not alter the character of unauthorised delegation
of legislative power. They cannot be a substitute for the
guidance which the constitutional scheme requires that the
Parliament must give to a delegate. As the validity of the
constitutional protection cannot be judged in the light of
what the character. capacity or the special aptitude of the,
delegate may be, it cannot also be adjudged in the light of
the provisions made against abuse of power.
In the present case the Act leaves it to the, Corporation by
resolution to define the maximum limits of tax to be levied,
the class or classes of persons, or description or
descriptions of articles and properties to be taxed, the
system of assessment to be adopted and the exemptions, if
any, to granted. The Act discloses by express enactment no
standard, no principle and no policy laid down by the
Parliament to guide the Corporation in levying and
collecting the optional taxes. By providing in sub-section
(2) of s. 150 that the resolution will come into force on or
from the date as may be specified in the order of sanction
of the Central Government, an overriding authority is
conferred upon the Union Executive, but that is not
substitute for, guidance. [303 C-E]
The Corporation is competent to levy tax only "for the,
purposes of the Act", and for no other purpose, and by
providing expressly what is implicit in a statute relating
to municipal taxation no guidance is furnished to the
Corporation in the exercise of the power delegated. It
cannot be held that because the delegate is a local
authority which "needs" large funds, depending upon diverse
and changing circumstances, the power conferred upon the
Corporation to adjust the tax to its varying needs may be
regarded as an adequate guide. The circumstance that the
affairs of
255
the Corporation are administered by the elected
representatives responsible the people is wholly irrelevant
in determining whether the rule against excessive delegation
may be departed from. If that exception be true, the
Parliament may justifiably delegate its power to enact laws
to other bodies merely by the expedient of constituting
those bodies from among the representatives of the people.
Case law reviewed.
(iii) (Per- Wanchoo C.J. and Shelat, J.) : There wits no
force in the contention that the sanction of the Central
Government given under section 150(2) was not in accordance
with the Constitution as it was given by a Deputy Secretary
to the Government who had no authority to do 8o. Although
the words "by the orders of the Central Government" or " by
,.he order of the President" were not used above the
signature of the Deputy Secretary and the authentication
therefore was not quite in accordance With the provisions of
Art. 77 of the Constitution, that deficiency had been made
up by the affidavit filed on behalf of the Central
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Government in which it was stated that the resolution was
approved by the then Deputy Home Minister and the Minister
in the Ministry of Home Affairs to whom the work relating to
the Corporation was assigned by the Home Minister.
Furthermore, it is not necessary where business has been
assigned by a Cabinet Minister to a Minister or a Deputy
Minister that the matter should be put before the Cabinet
Minister also after the Minister or the Deputy Minister has
approved of it in accordance with the assignment made in his
favour. [275 E-276 D]

JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 1857 and
1858 of 1967.
Appeals from the judgment and order dated October 9, 1967 of
the Delhi High Court in Civil Writ No. 105 of 1967, and Writ
Petition No. 564-D of 1966 respectively.
C. K. Daphtary Attorney-General, H. R. Gokhale, D. D.
Chawla and K. Rajendra Chaudhuri, for the appellant (in
both .,he appeals).
A. K. Sen, B. Parthasarthy, J. B.Dadachanji and Ravinder
for- respondent No. 1 (in both the appeals).
R. N. Sachthey for respondent No. 2 (in both the appeals).
M. K. Nambiyair, D. R. Thadani, Dalip K. Kapur, Bhuvanesh
Kumari, J. B. Dadachanji and Ravinder Narain, for intervener
No. 1.
N. A. Palkhivala, J. B. Dadachanji, and Ravinder Narain,
for interveners Nos. 2, 5 and 6.
Purshottam Trikaindas and I. N. Shroff, for intervener No.
3.
S. T. Desai and 1. N. Shroff, for intervener No. 4.
The Judgment of WANCHOO, C.J. and SHELAT, J. was delivered
by WANCHOO, C.J., HIDAYATULLAH, J. delivered a separate
Judgment on behalf of himself and RAMASWAMI, J., SIKRI, J.
delivered a separate Judgment. SHAH, J. delivered a
dissenting opinion on behalf of himself and VAIDIALINGAM, J.
256
Wanchoo, C.J. These two appeals on certificates granted by
the High Court of Delhi raise common questions relating to
the constitutionality of delegation of ’taxing powers to
municipal corporations and the effect of the Validation Act,
passed by Parliament, in connection with tax on the
consumption or sale of electricity levied by the Municipal
Corporation of Delhi (hereinafter referred to as the
Corporation) from July 1, 1959 to March 31, 1966. The facts
are not in dispute and may be briefly narrated. On February
9, 1959, the Corporation passed a resolution purporting to
be under sub-section (1) of s. 150 of the Delhi Municipal
Corporation Act, No. 66 of 1957. (hereinafter referred to as
this Act) for levy of three taxes, including a tax on the
consumption or sale of electricity. Section 113 of the Act
which confers powers on the Corporation to impose taxes has
divided them into two kinds, namely, obligatory taxes, which
the Corporation must impose [s. 113(1), and optional taxes
which the Corporation may impose section 113(2)1Further s.
150(1) of the Act provides that maximum rate of tax to be
levied in the case of optional taxes will be specified by
resolution of the Corporation. After the maximum rate has
thus been specified, the resolution has to be submitted to
the Central Government for sanction under s. 150(2), and if
sanctioned by Government, the rate comes into force on and
from such date as may be specified in the, Order of
sanction. Under subsection (3) of s. 150 the Corporation
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then passes another resolution determining the actual rates
at which the tax is levied and the tax comes into force on
the first day of the quarter of the year next following the
date on which such second resolution is passed. The
Corporation forwarded the resolution dated February 9, 1959
which was somewhat defective inasmuch as it did not specify
the maximum rates, but merely the rates, which were to be
enforced for the ensuing year, to Government for sanction.
On June 20, 1959, the Central Government sanctioned the tax
on consumption or sale of electricity with effect from July
1, 1959. In giving the sanction the Central Government
modified the rates. On June 23, 1959, the Standing
Committee took the Government sanction into consideration
and recommended to the Corporation that rates of tax as
sanctioned by Government be determined under sub-s. (3) of
s. 150 as the actual rates at which the tax would be
leviable for the year 1959-60. On June 24, 1959, the
Corporation resolved that the recommendations of the
Standing Committee regarding tax on consumption or sale of
electricity be approved. Then followed demands by the
Corporation on the basis of the imposition of tax from July
1, 1959.
When the tax was demanded from the respondent, it filed a
writ petition in the High Court challenging the levy of the
tax. This writ petition was dismissed by a learned Single
Judge. The
257
respondent then went in appeal, and the appeal court allowed
the appeal holding inter alia (i) that the Central
Government could not modify the rates specified in the
resolution under s. 150 (1) but could only either withhold
sanction thereto or sanction them, and (ii) that the
liability to pay tax could not commence earlier than April
1, 1960 in view of the provisions contained in s. 109(2)
read with s. 150(4) of the Act.
On December 3, 1966, Parliament passed the Delhi Municipal
Corporation (Validation of Electricity Tax) Act, No. 35 of
1966 (hereinafter referred to as the Validation Act). By
this Act, it purported to validate the levy of electricity
tax from July 1, 1959 to March 31, 1966 (both days
inclusive). In view of the Validation Act, fresh demands
were made by the Corporation on the respondent.
On February 17, 1965, the Corporation passed another reso-
lution in pursuance of s. 150(1) and this time provided
maximum rates for the levy of tax on consumption or sale of
electricity. These rates were higher than the rates fixed
by the resolution of February 9, 1959. This resolution was
submitted to Government and was sanctioned on December 8,
1965. Thereafter the Corporation passed the second
resolution under s. 150(3) of the Act resolving that the
maximum rates should be adopted as the actual rates for the
levy of tax. This resolution was passed on December 27,
1965. Then followed two writ petitions by the respondent.
By the first writ petition it challenged the levy of tax by
resolutions of February 17 and December 27, 1965, and by the
second writ petition the appellant challenged the vires of
the Validation Act.
We may now refer to the grounds of the challenge. So far s
the Validation Act is concerned, it is contended that the
Validation Act has failed in its object inasmuch as it did
not provide for the levy of tax and merely validated the
rates fixed by the resolution of June 24, 1959. Other
grounds were also stressed in this connection but it is
unnecessary to refer to them as they have not been pressed
before us. As to the attack on the resolutions dated
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February 17, 1965 and December 27, 1965, the main contention
is that S. 150 is unconstitutional inasmuch as it suffers
from the vice of excessive delegation of legislative power
and is therefore ultra vires and no tax could be levied by
the Corporation thereunder. There are some other minor
points raised in this connection to which we shall refer
later.
The High Court held, so far as the Validation Act is con-
cerned, that though it validated the levy and collection of
tax from July 1, 1959 to March 31, 1960, it failed to
validate the levy and collection from April 1, 1960 to March
31, 1966 on
258
the ground that there was no levy of tax for this latter
period, even though the rates were specified in the
Validation Act. On the question of excessive delegation,
the High Court held that s. 150 suffered from the vice of
excessive delegation of legislative power and was therefore
ultra vires. In consequence, the two writ petitions
succeeded except as to the period from July 1, 1959 to March
31, 1960. The Corporation then applied for and obtained
certificates and that is how the matter has come up before
us.
Before we deal with the main question that has been argued
before ’us, namely, whether s. 150 of the Act suffers from
the vice of excessive delegation, we may briefly refer to
certain provisions of the Act which are material for our
purposes. Section of the Act creates a Corporation from
such date as the Central Government may by notification in
the official gazette, appoint and this Corporation is
charged with the municipal government of Delhi and is to be,
known as the Municipal Corporation of Delhi. Section 7 of
the Act provides that the persons entitled to vote at
elections of councillors shall be the persons registered by
virtue of the provisions of the Constitution and the
Representation of the People Act, No. 43 of 1950, as voters
at elections to the House of the People. It will be seen
therefore that the Councillors of the Corporation are
elected by universal adult suffrage. The total number of
councillors is 80 and to these are added 6 eldermen, and
they together form the Corporation. Section 42 lays down
certain obligatory functions of the Corporation. It is not
necessary to refer to them in detail; it is enough to say
that the main obligatory functions of the Corporations are
the supply of Water for public and private purposes, the
construction, maintenance and cleansing of drains and
drainage works and of public latrines, the scavenging,
removal and disposal of filth, the construction or purchase,
maintenance, extension, management and conduct of (i) any
undertaking for the generation or supply and distribution of
electricity to the public, and (ii) any undertaking for
providing road transport services by mechanically propelled
vehicles, the establishment and maintenance of hospitals,
dispensaries and maternity and child welfare centres and
carrying out of other measures necessary for public medical
relief, the construction and maintenance of municipal
markets and slaughter houses and regulation thereof, the
construction, maintenance,, alteration and improvements of
public streets, brides, culverts, causeways and the like,
the lighting, watering and cleansing of public streets and
other public places, the establishment, maintenance of, and
aid to, schools for primary education and the maintenance of
a fire-brigade and the protection of life and property in
case of fire.
259
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Section 43 provides for optional functions of the
Corporation which it may in its discretion provide and a
large number of such functions are enumerated therein. Some
of these optional functions are : the establishment and
maintenance of, and aid to, libraries, museums, art
galleries, botanical of zoological collections, the
providing of music or other entertainments in public places
or places of public resort and the establishment of theatres
and cinemas, the construction and maintenance of (i) rest
houses, (ii) poor houses, (iii) infirmaries, (iv) children’s
homes, (v) houses for the deaf and dumb and for disabled and
handicapped children, (vi) shelters for destitute and
disabled persons, and (vii) asylums for persons of unsound
mind, the Organisation or management of chemical or
bacteriological laboratories for the examination or analysis
of water, food, and drugs for the detection of diseases or
research connected with public health or medical relief; the
provision for relief to destitute and disabled persons; the
establishment and maintenance of veterinary hospitals; the
Organisation, construction, maintenance and management of
swimming pools, public wash houses, bathing places and other
institutions designed for the improvement of public health;
the organisation and management of farms and dairies within
or without Delhi for the supply, distribution and
processing, of milk and milk products for the benefit of the
residents of Delhi; the Organisation and management of
cottage industries, handicraft centres and sales emporia;
the provision for unfiltered water supply; the improvement
of Delhi in accordance with improvement schemes approved by
the Corporation; and the provisions of housing accommodation
for the inhabitants of any area or for any class of
inhabitants.
These duties, both obligatory and optional, which have been
placed on the Corporation require large funds and for that
purpose the Corporation has been given the power to levy
taxes under S. 113 of the Act. Section 113 consists of two
subsections; ’the first sub-section provides for obligatory
taxes and they are six in number. These six taxes have been
dealt with in detail in sections 114 to 149. It is not
necessary to refer to these, sections except ’lo say
generally that in most cases the Act has fixed G a maximum
for the obligatory taxes except in the case of water tax,
scavenging tax and fire tax, the rates of which have to be
fixed at a reasonable amount by the Corporation. Then comes
s. 150, which deals with optional taxes and with which we
are particularly concerned. If reads thus :
"(1) The Corporation may, at a meeting, pass a
resolution for the levy of any of the taxes
specified in sub-section (2) of section 113,
defining the maximum rate of the tax to be
levied, the class or classes of
260
persons or the description or descriptions of
articles and properties to be taxed, the
system of assessment to be, adopted and the
exemptions, if any, to be granted.
(2) Any resolution passed under subsection
(1) shall be submitted to the Central
Government for its sanction, and if sanctioned
by that Government, shall come into force on
and from such date as may be specified in the
order of sanction.
(3) After a resolution has come into force
under subsection (2), the Corporation may,
subject to the maximum rate, pass a second
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resolution determining the actual rates at
which the tax shall be leviable; and the tax
shall come into force on the first day of the
quarter of the year next following the date on
which such second resolution is passed._
(4) After a tax has been levied in
accordance with the fore going provisions of
this section, the provisions of sub-section
(2) of section 109, shall apply in relation to
such tax as they apply in relation to any tax
imposed under sub-section (1) of section 113."
It will be, seen that sub-section (1) of s. 150 leaves it to
the Corporation, at a meeting, to pass a resolution for the
levy of any of the optional taxes by prescribing the maximum
rate. The Corporation is also given the power to fix the
class or classes of persons or the description or
descriptions of articles and properties to be taxed, for
this purpose. It has also the power to lay down the system
of assessment and exemptions, if any, to be granted. The
contention of the respondent is that s. 150 (1) delegates
completely unguided power to the Corporation in the matter
of optional taxes and suffer from the vice of excessive
delegation and is unconstitutional.
We may also refer to certain other sections which deal with
revenue and expenditure of the Corporation. Section 99
deals with the constitution of the municipal fund, in which
all moneys of the Corporation go. Section 109 provides for
adoption of budget estimates. It lays down that the
Corporation shall on or before the 31st day of March of
every year adopt for the ensuing year four budget estimates,
namely, (i) budget estimates (general), (ii) budget estimate
(electric supply), (iii) budget estimated (transport) and
(iv) budget estimate (water supply and sewage disposal).
Section 109(2) lays down that on or before the 15th day of
February of each year, the Corporation shall determine the
rates at which various municipal taxes, rates and cesses
shall be levied in the next following year. Section 102
inter alia provides that no payment of any sum out of the
261
municipal fund shall be made unless the expenditure of the
same is covered by a current budget-grant.
It is in the light of these provisions that we have to
consider whether the delegation made to the Corporation by
S. 150 in the matter of imposing optional taxes is within
the permissible limits of delegation. The contention on
behalf of the appellant is that in view of these provisions
there is sufficient guidance to the Corporation in the
matter of fixing the rates of optional taxes and levying
them on the inhabitants of the area and it cannot be said
that Parliament by enacting s. 150 transgressed the limits
of permissible delegation.
The question as to the, limits of permissible delegation of
legislative power by a legislature to a subordinate
authority has come before this Court in a number of cases
and the law as laid down by this Court is not in doubt now.
Considering the complexity of modern life it is recognised
on all hands that legislature cannot possibly have time to
legislate in every minute detail. That is why it has
been recognised that it is open to the legislature to
delegate to subordinate authorities the power to make
ancillary rules for the purpose of carrying out the
intention of the legislature indicated in the law which
gives power to frame such ancillary rules. The matter came
before this Court for the first time In The Delhi Laws Act,
1912(1), and it was held in that case that it could not be
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said that an unlimited right of delegation was inherent in
the legislative power itself. This was not warranted by the
provisions of the Constitution, which vested the power of
legislation either in Parliament or State legislatures and
the legitimacy of delegation depended upon its being used as
an ancillary measure which the legislature considered to be
necessary for the purpose of exercising its legislative
powers effectively and completely. The legislature must
retain in its own hands the essential legislative function.
Exactly what constituted essential legislative
function", it was held further, was difficult to define
in general terms, but this much was clear that the
essential legislative function must at least consist of the
determination of the legislative policy and its formulation
as a binding rule of conduct. Thus where the law passed by
the legislature declares the legislative policy and lays
down the standard which is enacted into a rule of law, it
can leave the task of subordinate legislation which by its
very nature is ancillary to the statute to subordinate
bodies, i.e., the making of rules, regulations or bye-laws.
The subordinate authority must do so within the frame-work
of the law which, makes the delegation, and such subordinate
legislation has to be consistent with the law under which
it is made and cannot go beyond the
(1) [1951] S.C.R. 747.
262
limits of the policy and standard laid down in the law.
Provided the legislative policy is enunciated with
sufficient clearness or I standard is laid down, the courts
should not interfere with the discretion that undoubtedly
rests with the legislature itself in determination the
extent of delegation necessary in a particular case.
In Raj Narain Singh v. The Chairman Patna Administration
Committee(1) the same question arose and it was held that
"air executive authority can be authorised by a statute to
modify either existing or future laws but not in any
essential feature. Exactly what constitutes an essential
feature cannot be enunciated in general terms but it is
clear that modification cannot include a change of policy.
Essential legislative function consist it the determination
of the legislative policy and its formulation as a binding
rule of conduct."
In Harishankar Bagla v. The State of Madhya Pradesh
2 s. 3. of the Essential Supplies (Temporary Powers) Act,
1946 was attacked as unconstitutional on the ground of
excessive delegation of legislative power. In that case
reliance was placed on the re in Delhi Law Act(1) where the
majority held that "the essential powers of legislation
cannot be delegated and that 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 empowered to execute the law.
Applying these principles this Court held that the Act there
impugned had laid down the principle and that principle was
the maintenance or increase in supply of essential
commodities and of securing equitable distribution and
availability at fair prices. It was further held that this
sufficiently formulated the legislative policy and the ambit
and tile character of that Act Was such that the details of
that policy could only be worked out by delegating that
power to a subordinate authority within the frame-work of
that policy. The Court therefore held that s. 3 of the
impugned Act was not ultra vires the legislature on the
ground of excessive delegation of legislative power.
In the Western India Theatres Limited v. Municipal Corpo-
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ration of the City of Poonia(4), a question arose with
respect to the Bombay District Municipal Act, 1901, which
gave power to the municipality to levy "any other tax to the
nature and object of which the approval of the Governor in
Council shall have been obtained prior to the selection
contemplated in sub-cl. (i) of cl. (a) of section 60". This
provision was attacked as unconstitutional on the ground
that the legislature had completely abdicated its function
and delegated essential legislative power to the
municipality to determine the nature of the tax to be
imposed
(1) [1955] 1 S.C.R. 290.
(2) [1951] 1 S.C.R. 380.
(3) [1951] S.C.R. 747.
(4) [1959] Suppl. 2. S.C.R. 71.
263
on the rate payers and that power was unguided, uncanalised
and vagarant. The delegation was upheld by this Court on
the ground that s. 59 authorised the municipality to impose
tax thereunder for the purposes of the Act. The Act there
under consideration defined the obligations and functions
cast upon the municipality and it was observed that taxes
could only be levied for implementing those purposes and not
for any other purpose. It was finally observed that the
impugned section did lay down the procedure which the
municipality had to follow in imposing a tax and the
legislature could not in the circumstances be said to have
abdicated its function in favour of the municipality.
In Hamdard Dawakhana (Wakf) Lal Kuan v. Union of India(1),
this Court struck down one provision of the impugned Act as
the legislature had established no criterion or standard and
had not prescribed any princple on which the particular
disease or condition was to be specified. It will be seen
that the same principle that the legislature could not
delegate unguided, power to a subordinate body was the basis
of this decision.
In Vasantlal Maganbhai Sanianwal v. The State of Bombay(1),
the question of delegation of legislative power arose. This
Court enunciated the principle thus :
"Although the power of delegation is a
constituent element of the legislative power,
it is well-settled that a legislature cannot
delegate its essential legislative function in
any case and before it can delegate any
subsidiary or ancillary powers to a delegate
of its choice, it must lay down the
legislative policy and principle so as to
afford the delegate proper guidance in
implementing the same. A statute challenged
on the ground of excessive delegation must
therefore be subjected to two tests, (1)
whether it delegates essential legislative
function or power and (2) whether the
legislature has enunciated its policy and
principle for the guidance of the delegate."
In jyoti Pershad v. The Administrator for the Union Terri-
tory of Delhi(3), in connection with the Slum Areas
(Improvement and Clearance) Act, 1956 it was observed that
"so long as the legislature india cated in the operative
provisions of the staute with certainty, the policy and
purpose of the enactment, the mere fact that ’he legislation
was skeletal or that very detail of the applicaion of law to
a particular case, was not laid down in
(1) [1960] 2 S C.R. 671. (2) [1961] 1 S.C.R. 341.
(3) [1962] 2 S.C.R. 125.
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L6Sup.C.I/68-4
264
the enactment itself or the fact that a discretion was left
to those entrusted with administering the law, afforded no
basis either for the contention that there had been an
excessive delegation of legislative power so as. to amount
to an abdication of its functions, or that the discretion
vested was uncanalised and unguided so as to amount to a
carte blanche to discriminate."
The last case to which reference may be made is Devi Das
Gopal Krishnan v. State of Punjab(1). There the law on the
subject of excessive delegation on was summarised thus at p.
1901:
"The Constitution confers a power and imposes
a duty on the legislature to make laws. The
essential legislative function is the
determination of the legislative policy and
its formulation as a rule of conduct. Ob-
viously it cannot abdicate its functions in
favour of another. But in view of the
multifarious activities of a welfare State, it
cannot presumably work out all the details to
suit the varying aspects of a complex situa-
tion. It must necessarily delegate the
working out of details to the executive or any
other agency. But there is danger inherent in
such a process of delegation. An over-
burdened legislature one controlled by a
powerful executive may unduly overstep the
limits of delegation. It may not lay down any
policy at all; it may declare its policy in
vague and general terms; it may not set down
any standard for the guidance of the
executive; it may confer an arbitrary power on
the executive to change or modify the policy
laid down by it without reserving for itself
any control over subordinate legislation.
This self effacement of legislative power in
favour of another agency either in whole or in
part is beyond the permissible limits of
delegation. It is for a Court to bold on a
fair, generous and liberal construction of an
impugned statute whether the legislature
exceeded such limits. But the said liberal
construction should not be carried by the
Courts to the extent of always trying to
discover a dormant or latent legislative
policy to sustain an arbitrary power conferred
on executive authorities. It is the duty of
the Court to strike down without any
hesitation any arbitrary power conferred on
the executive by the legislature."
It may be added that Devi Das’s(1) case did not differ from
the Liberty Cinema (2 ) case. What was held there was that
there
(1) A.I.R. [1967] S.C. 1895. (2) [1965] 2 S.C.R. 477.
265
can be no general principle that merely the needs of the
delegate can necessarily and always be a guideline. It was
further held that each statute has to be examined to find
out whether there are guidelines therein which prevent
delegation from being excessive.
It is in the light of these general principles which are
well-settled that the constitutionality of the delegation in
S. 150 has to be considered. However, as we are
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particularly concerned with the fixation of rates of a tax,
we may refer to certain cases which deal with this aspect of
the matter. In Pandit Banarsi Das Bhanot v. The State of
Madhya Pradesh(1), this Court observed as follows :
"Now the authorities are clear that it is not
unconstitutional for the legislature to leave
it to the executive to determine details
relating to the working of taxation laws, such
as the selection of persons on whom the tax is
to be laid, the rates at which it is to be
charged in respect of different classes of
goods, and the like."
The appellant relies on this observation to show that the
delegation in s. 150 of the Act cannot be said to be
excessive as the rates of tax cannot be said to be an
essential feature of the law relating to taxation. On the
other hand learned, counsel for the respondent contends that
this observation is much too wide if it means that it is
open to the legislature to delegate without any guidance
whatsoever the power to fix the rate of tax. In particular,
it is urged on behalf of the respondents that the cases
which have been referred to in support of this conclusion in
Pt. Banarsi Das case(1) do not support the proposition laid
down there if it is to be read as giving unqualified power
to fix the rate without any guidance, control or safeguard.
With respect, it seems to us that if this observation means
that it is open to the legislature to delegate the power to
fix the rate, of tax to another authority without any
qualification, guidance, control or safeguard, it is too
widely stated and does not appear to be supported by the
authorities on which it is based, though those authorities
do indicate that in certain cases it is open to the
legislature to give power to another authority to fix rates
under proper guidance, control and safeguard. Take the case
of Powell v. Apollo Candle Company Limited(1). In that case
S. 133 of the Customs Regulation Act of 1879 of New South
Wales was under attack. That section ran thus :
"Whenever any article of merchandise then un-
known to the collector is imported, which, in
the opinion of the collector or the
commissioners, is apparently a substitute for
any known dutiable article, or is
(1) [1959] S.C.R. 427.
(2) L.R. [1885] X A.C. 282.
266
apparently designed to evade duty, but
possesses Properties in the whole or in part
which can be used or were intended to be
applied for a similar purpose as such dutiable
article, it shall be lawful for the Governor
to direct that a duty be levied on such
article at a rate to be fixed in proportion to
the degree in which such unknown article
approximates in its qualities or uses to such
dutiable article; and such rate thus fixed
shall be published in a Treasury order in the
Gazette, and one other newspaper published in
Sydney, and exhibited in the long room or
other public place in the Custom House, and a
copy of all such Treasury orders shall,
without unnecessary delay, be laid before both
Houses of Parliament."
A bare perusal of the section shows that though the power
was delegated to the Governor to levy the duties, it gave
complete guidance to him in the manner of fixing the rate of
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duty and finally provided that the order passed by the
Governor would be laid before both Houses of Parliament
without unnecessary delay. The observations of the Privy
Council in that case have in our opinion to be read in the
context of the words of S. 133 where full guidance was
provided as to the fixation of the rate.
In J. W. Hampton v. United States(1), the Congress gave
power to the President to make changes in the rates provided
in the Tariff Act of 1922. That was challenged as a
forbidden delegation of legislative power to executive
authority. But the challenge was negatived by the Supreme
Court of the United States on the ground that the Congress
had laid down by legislative act an intelligible principle
to which the person authorised to fix the rate of customs
duties on imported merchandise was to conform. In that case
the President could vary the rates with the aid of his
advisers after proper investigation on the ground of
differences of cost of production in the United States and
abroad and to make such increases and decreases in rates of
duty as were found necessary to equalise the cost of
production. The limit of such change was also fixed upto 50
per centum of the rates specified in the law. This case
does not support the proposition that rates of tax can be
delegated to a subordinate authority without any guidance,
though it is an authority for the proposition that this can
be done if guidance s given for the purpose. The
observation in Banarsi Das’s case(1) the rates of tax are
not essential features of legislation therefore seems, with
respect, to be too broadly steed, though it may be admitted
that rates of taxation also can in certain circumstances be
delegated to a subordinate authority with proper guidance
and subject to safeguards and limitations in that behalf.
(1) 72 Law Ed. 624 : 276 U.S. 624.
(2) [1959] S.C.R. 427.
267
The next case to which reference may be made is Corporation
of Calcutta and Another v. The Liberty Cinema(1) where the
majority upheld the fixation of a tax on cinema shows, even
though the Calcutta Municipal Act of 1951 prescribed no
limits to which the tax could go. In that case the majority
referred to the view taken in Pandit Banarasi Das’s case(1)
and interpreted the dictum in that case to mean that the
fixation of rate can be left to a non-legislative body but
this was qualified by the observation that when the power to
fix the rate of tax was Left to another body, the
legislature must provide guidance for such fixation. In
that case the majority found guidance in various provisions
of the statute to which it is not necessary to refer, though
the minority was of the opinion that there was no guidance
therein.
The question again arose in Municipal Board, Hapur v.
Raghuvendra Kripal(3). There the U.P. Municipalities Act
No. 2 of 1916, gave power to the municipality to fix rates
of tax and provided an elaborate procedure for doing so and
also provided for sanction of Government. But one provision
of that statute raised a conclusive presumption that the
procedure prescribed had been gone through on a certain
notification being issued by Government and the question
arose whether by reason of such a conclusive presumption
there was not a delegation of essential legislative
function. In that case the majority while dealing with the
question of excessive delegation observed that the taxes in
question were local taxes for local needs for which local
enquiries had to be made and so they were left to the
representatives of the local population which would bear the
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tax. It was further observed that such taxes must vary from
town to town, from one Board to another, and from one
commodity to another. Regard being had to the democratic
set-up of the municipalities which need the proceeds of
these taxes for their own administration, (it was observed)
it as proper to leave to these municipalities the power to
impose and collect those taxes, which were pre-determined
along with a procedure for consulting the wishes of the
people concerned. Over and above that there was power given
to the State Government to check their action. In those
circumstances delegation as to the fixing of rate of tax to
the Municipal Board was upheld as permissible delegation.
The minority judgment also accepted these propositions and
observed that though generally speaking, the rate of tax was
one of the essentials of taxing power given to the.
legislature, it must be recognised that there might be
situations where the legislature might delegate to a
subordinate authority that power under proper safeguards.
It was also observed that in the matter of local taxation,
like taxation by municipal boards, district boards and
bodies of that character,
(1) [1965] 2 S.C.R. 477.
(2) [1959] S.C.R. 427.
(3) [1966] 2 S.C.R. 950.
268
there was pre-eminently a case for delegating the fixation
of the rate of tax to the local body, the reason for this
being that problems of different municipalities might be
different and one municipality might require one kind of tax
at a particular rate at a particular time while another
municipality might need another kind of tax at another rate
at some other time. It was further observed that "the
legislature can in the case of taxation by local bodies
delegate even the authority to fix the rate to the local
body provided it has taken care to specify the safeguards
for the purpose." The difference between the majority and
the minority only was that the majority thought that the
conclusive presumption raised by one of the provision was
valid while the minority thought that by reason of the
conclusive presumption all the safeguards were wiped out at
one stroke and therefore it became a case of excessive
delegation.
The last case to which reference may be made is Devi Das
Gopal Krishnan(1). This was not a case of municipal
taxation. In. this case the legislature gave power to the
State Government to fix sales tax at such rates as the State
Government thought fit. The case of Liberty Cinema(2) was
distinguished in this case and it was pointed out that the
needs of the Slate and the purposes of the Act could not
give sufficient guidance for the purpose of fixing rate of
sales tax by the State Government. There is in our opinion
a clear distinction between delegation of fixing the rate of
tax like sales tax to the State Government and delegation of
fixing rates of certain taxes for purposes of local
taxation. The needs of the State are unlimited and the
purposes for which the State exists are also unlimited. The
result of making delegation of a tax like sales tax to the
State Government means a power to fix the tax without any
limit even if the needs and purposes of the State are to be
taken into account. On the other hand, in the case of a
municipality, however large may be the amount required by it
for its purposes it cannot be unlimited, for the amount that
a municipality can spend is limited by the purposes for
which it is created. A municipality cannot spend anything
for any purposes other than those specified in the Act which
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creates it. Therefore in the case of a municipal body,
however large may be its needs, there is a limit to those
needs in view of the provisions of the Act creating it. In
such circumstances there is a clear distinction between
delegating a power to fix rates of tax, like the sales tax,
to the State Government and delegating a power to fix
certain local taxes for local needs to a municipal body.
A review of these authorities therefore leads to the
conclusion that so far as this Court is concerned the
principle is well estab-
(1) A.I.R. 1967 S.C. 1895.
(2) [1965] 2 S.C.R. 477.
269
lished that essential legislative function consists of the
determination of the legislative policy and its formulation
as a binding rule of conduct and cannot be delegated by the
legislature. Nor is there any unlimited right of delegation
inherent in the legislative power itself. This is not
warranted by the provisions of the Constitution. The
legislature must retain in its own hands the essential
B legislative functions and what can be delegated is the
task of subordinate legislation necessary for implementing
the purposes and objects of the Act. Where the legislative
policy is enunciated with sufficient clearness or a standard
is laid down, the courts should not interfere. What
guidance should be given and to what extent and whether
guidance has been given in a particular case at all depends
on a consideration of the provisions of the particular Act
with which the Court has to deal including its preamble.
Further it appears to us that the nature of the body to
which delegation is made is also a factor to be taken into
consideration in determining whether there is sufficient
guidance in the matter of delegation.
What form the guidance should take is again a matter which
cannot be stated in general terms. It will depend upon the
circumstances of each statute under consideration; in some
cases guidance in broad general terms may be enough; in
other cases more detailed guidance may be necessary. As we
are concerned in the present case with the field of
taxation, let us look at the nature of guidance necessary in
this field. The guidance may take the form of providing
maximum rates of tax upto which a local body may be given
the discretion to make its choice, or it may take the form
of providing for consultation with the people of the local
area and then fixing the rates after such consultation. It
may also take the form of subjecting the rate to be fixed by
the local body to the approval of Government which acts. F
as a watch-dog on the. actions of the local body in this
matter on behalf of the legislature. There may be other
ways, in which guidance may be provided. But the purpose of
guidance, whatsoever may be the manner thereof, is to see
that the local body fixes a reasonable rate of taxation for
the local area concerned. So long as the legislature has
made provision to achieve that reasonable rates of taxation
are fixed by local bodies, whatever may be the method
employed for this purpose- provided it is effective it may
be said that there is guidance for the purpose of fixation
of rates of taxation. The reasonableness of rates may be
ensured by fixing a maximum beyond which the local bodies
may not go. It may be ensured by providing safeguards
laying down the procedure for consulting the wishes of the
local inhabitants. It may consist in the supervision by
Government of the rate of taxation by local bodies. So long
as the law has provided a method by which the local body can
be controlled and there is
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270
provision to see that reasonable rates are fixed, it can be
said that there is guidance in the matter of fix in rates
for local taxation. As we have already said there is pre-
eminently a case for delegating the fixation of rates of tax
to the local body and so long as the legislature has
provided a me-hod for seeing that rates fixed are
reasonable, be it in one form or another, it may be said
that there is guidance for fixing rates of taxation and the
power assigned to the local body for fixing the rates is not
uncontrolled and uncanalised. It is on the basis of these
principles that we have to consider the Act with which we
are concerned.
We may, before we consider the provisions of The Act, refer
to the position prevalent in the United States of America so
far as local taxation is concerned. Even though the
doctrine of separation of Dowers Drevails in that country,
it is recognised there that delegation of power to local
authorities for fixing rates of taxes for local purposes
does not amount to excessive delegation by the legislature.
This conclusion has been reached there on the basis of
historical facts. Whenever a municipal corporation is
created, and is charged with carrying on certain specified
functions, it is necessary to provide it with funds, for
otherwise it cannot carry on the purposes for which it has
been created. The funds may be provided as grants; but the
general pattern has always been that power of local taxation
is vested in a municipal body as an essential attribute for
all the purposes of its existence. Thus in the United
States of America, even though the power of taxation belongs
exclusively to the legislative branch of the Government, it
may be delegated by the legislature to municipal
corporations : [See United States v. City of New
Orleans(1)].
Though delegation as to municipal taxation is held to be
permissible under the U. S. Constitution, it is so because
of historical reasons peculiar to that country. The
American example may not be an apt analogy but the history
of municipal Acts in our country indicates that for nearly a
century or more power of taxation has been delegated to
municipal bodies. In some Acts all taxes delegated to the
municipal bodies are compulsory; in other Acts all taxes so
delegated are optional: (see U.P. Municipalities Act). In
some cases some taxes are compulsory and some taxes are
optional as is the case in the present Act. In some cases
maximum limits are provided for some taxes and not for
others; in some cases no maximum is provided, though there
are restrictions and safeguards within which the- municipal
bodies must act. In all cases however, there has been a
large area of delegation of taxing power for local purposes
to local bodies subject to control by Government or to such
other procedural safeguards as the legislature considers
necessary in the matter of imposition of
(1) 25 L. Ed. 225.
271
taxes. According to our history also there is a wide area
of delegation in the matter of imposition of taxes to local
bodies subject to controls and safeguards of various kinds
which partake of the nature of guidance in the matter of
fixing rates for local taxation. It is in this historical
background that we have to examine ’the provisions of the
Act impugned before us.
We have already set out S. 150 of the Act which delegates
power to the Corporation to levy any of the optional taxes
at such rates as it thinks fit and further gives power to it
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to specify persons, and articles and properties on which tax
will be levied and the system of assessment to be adopted
and exemptions if any to be granted. The delegation thus
made is certainly wide and the question is whether there is
any guidance in the form already indicated to the
Corporation in carrying out the duties imposed upon it under
s, 150 of the Act.
The first circumstance which must be taken into account in
this connection is that the delegation has been made to an
elected body responsible to the people including those who
pay taxes. The councillors have to go for election every
four years. This means that if they have behaved
unreasonably and the inhabitants of the area so consider it
they can be thrown out at the ensuing elections. This is in
our opinion a great check on the elected councillors acting
unreasonably and fixing unreasonable rates of taxation.
This is a democratic method of bringing to book the elected
representatives who act unreasonably in such matters. It is
however urged that S. 490 of the Art provides for the super-
session of the Corporation in case if is not competent to
perform or persistently makes default in the performance of
the duties imposed upon it by or under the Act or any other
law or exceeds ,or abuses its power. In such a case the
elected body may be superseded and all powers and duties
conferred and imposed upon the Corporation shall be
exercised and performed by such officer or authority as the
Central Government may provide in this behalf. It is urged
that when this happens the power of taxation goes in the
hands of some officer or authority appointed by Government
who is not accountable to the local electorate and who may
exercise all the powers of taxation conferred on the elected
Corporation by the Act. This however has not happened in
the present case and we need not express any opinion on the
question whether such officer or authority would be
competent to increase the rates of taxes already fixed when
the Corporation is superseded or can impose new taxes which
were not there at the time of supersession. That is a
matter which may have to be considered when such a situation
arises; but so long as the power of taxation conferred by S.
150 is exercised by the elected body there will always be a
check in the form of the members thereof having to face the
272
electorate after every four years with the liability of
being thrown out if they act unreasonably. This check which
is inherent in an elected municipal body, must enter into
the verdict whether the delegation to such a body, even
though it is wide in extent, can be upheld on the basis that
this is a method of controlling the actions of the elected
body and setting a limit to which it can go in the matter of
taxation, even though no maximum as such is provided in the
Act.
Another guide or control on the limit of taxation is to be
found in the purposes of the Act. The Corporation has been
assigned certain obligatory functions which it must perform
and for which it must find money by taxation. It has also
been assigned certain discretionary functions. If it
undertakes any of them it must find money. Even though the
money that has to be found may be large, it is not, as we
have already indicated, unlimited for it must be only for
the discharge of functions whether obligatory or optional
assigned to the Corporation. The limit to which the
Corporation can tax is therefore circumscribed by the need
to finance the functions, obligatory or optional which it
has to or may undertake to perform. It will be not open to
the Corporation by the use of taxing power to collect more
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than it needs for the functions it performs. It cannot, for
example, raise the rate of taxation to such an extent, as to
provide a surplus which is much more than what it needs for
its existence in carrying out the functions assigned to it,
subject to its having the minimum cash balance of Rs.
4,00,000 as provided in the Act at the end of a year. This
is in our opinion another check which will guide the
Corporation in fixing its rates of tax under s. 150 after
taking into account the yield from obligatory taxes. Though
the mere fact that specific purposes and functions are set
out in an impugned Act may not be conclusive-it is one of
the factors which should be taken into account along with
other relevant factors. It cannot therefore be said that
there is no guidance to the Corporation in the matter of
fixing rates of optional taxes, though it must be admitted
that a large discretion is left to it in this behalf. Even
so there are limits to which the Corporation can go in
fixing these taxes and those limits like the maximum fixed
for obligatory taxes are the guidelines within which the
taxing power of the Corporation with respect to optional
taxes must be exercised. This power is exercised by the
Corporation after debate by the elected representatives of
the local area which the Corporation administers. In such
circumstances we think that there is a limit and guidelines
provided by the Act beyond which the Corporation cannot go.
Another limit and guideline is provided by the necessity of
adopting budget estimates each year as laid down in s. 109
of the Act. That section provides for division of the
budget of the
273
Corporation into four parts i.e., general, electricity
supply, transport, water and sewage disposal. The budget
will show the revenue and expenditure and these must balance
so that the limit of taxation cannot exceed the needs of the
Corporation as shown in the budget to be prepared under the
provisions of the Act. These four budgets are prepared by
four Standing Committees of the Corporation and are
presented to the Corporation where they are adopted after
debate by the elected representatives of the local area.
Preparation of budget estimates and their approval by the
Corporation is therefore another limit and guideline within
which the power of taxation has to be exercised. Even
though the needs may be large, we have already indicated
that they cannot be unlimited in the case of the
Corporation, for its functions both obligatory and optional
are well defined under the Act. Here again there is a limit
to which the taxing power of the Corporation can be
exercised in the matter of optional taxes as well, even
though ,there is no maximum fixed as such in the Act.
Then there is the provision in s. 150 itself which says that
the maximum rates fixed by the Corporation at its meeting
by a resolution have to be submitted to the Government for
its sanction and without such sanction there can be no
imposition of tax. As we have already stated the
legislature has made Government the watch-dog to control the
actions of the Corporation in the matter of fixing rates and
other incidents of the taxes and that is also a check to see
that reasonable rates are fixed by the Corporation when it
proceeds to impose taxes under s. 150. We have a par-
liamentary system of government in which the Government is
responsible to the legislature. That is also a circumstance
which may be taken into account in considering the check
imposed by the Act upon the taxing power of the Corporation,
namely, that the rates fixed by it have to be sanctioned by
Government which in its turn is responsible to
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Parliament. Though therefore the legislature may not have
provided that the rates of tax shall be submitted to it for
approval, the fact that it has provided that such rates
shall be submitted to Government for approval and the
Government in its turn is responsible to the legislature is
a factor which has to be taken into account when considering
whether the delegation by S. 150 of the Act is excessive
or not. It stands to reason that Government which is
responsible to the legislature would act with care and
circumspection when exercising its function as the watch-dog
on behalf of the legislature on the taxing power conferred
by the legislature on the Corporation. Under these
circumstances we do not think that it can be said that there
are no guidelines, limits, controls or safeguards provided
by the legislature in the matter of the exercise of the
power of taxation under s. 150 of the Act by the
Corporation. The legislature cannot in the circumstances be
said to have abdicated its power for
274
it has indicated the taxes which the Corporation can impose.
The Corporation cannot go beyond the taxes the imposition of
which has been entrusted to it by the legislature. In the
case of obligatory taxes, the legislature itself has
provided the maximum in some cases or the fixation of
reasonable rates in other cases like water, tax, scavenging
tax or fire tax. In the case of optional taxes, however,
greater freedom has been left to the Corporation to arrange
its budgets and fix rates of taxation; but this freedom is
circumscribed and guided and controlled under the various
provisions of the Act which we have already referred to and
which must be taken to limit the taxing power of the
Corporation even though no specific maximum has been fixed
in the Act for optional taxes. It seems to us therefore
that considering that the power is en. trusted to the
elected representatives of the local area who are liable to
go for election before the local electorate every four.
years, the nature of guide given by the Act is sufficient
for the purpose of kepping the Corporation within limits.
In such circumstances, considering the constitution and set
up of the municipal corporation, its need for finance to
carry out the functions entrusted to it, its elective
character, its responsibility to the electors, the safe-
guards and controls provided in the Act, procedural and
otherwise, it is difficult to hold that the power of taxa-
tion conferred on it is either uncanalised, arbitrary or
without guidance or policy.
Finally there is another check on the power of the
Corporation which is inherent in the matter of exercise of
power by subordinate public representative bodies, such as
municipal boards. In such cases if the act of such a body in
the exercise of the power conferred on it by the law is
unreasonable, the courts can hold that such exercise is void
for unreasonableness. This principle was laid down as far
back as 1898 in Kruse v. Johnson(1) in connection with a
bye-law made by a count council. In that case the county
council made a certain bye-law and its validity was
challenged on the ground that it was unreasonable. The Court
heldthat a bye-law could be struck down on the ground of
unreasonableness but took pains to point out that in
determining the validity of a bye-law made by a public
representative body, such as a county council, the court
ought to be slow to hold that the byelaw was void for
unreasonableness. The Court further held that" a bye-
law so made out ought to be supported unless it is
manifestly partial and unequal in its operation between
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different classes, or unjust, or made in bad faith, or
clearly involving an unjustifiable interference with the
liberty of those subject to it." The same principle would
apply to the fixation of rates of taxation and if per chance
the Corporation fixes rates which are unreasonable, there
(1) [1898] 2 Q.B.D. 91.
275
is control in the court to strike down such an unreasonable
impost.
On a careful consideration therefore of the various
provisions of the Act, we must hold that the power conferred
by s. 150 of the Act on the Corporation is not unguided in
the circumstances and cannot be said to amount to excessive
delegation.
This brings us to two minor points raised before us. It is
urged that the tax was imposed on the production of
electricity and not on consumption as required by the Act
and as provided in item 53, List II of the Seventh Schedule
to the Constitution. We cannot accept this contention. The
resolution which was, passed on February 9, 1959, shows that
the tax was imposed inter alia on the consumption of
electricity by a person generating it for his own
consumption. The words used in the resolution are somewhat
inapt but the meaning in our opinion is quite clear, namely
that a tax at the rate of 5 n.p. per KWHR is imposed on the
constitution of electricity on a person generating it for
his own consumption. The tax is thus on the consumption of
electricity where it is generated by a person for his own
consumption and not on the production of electricity.
Then it is urged that the sanction by Government was not in
accordance with the provisions of the Constitution and that
in this case the sanction was given by the Deputy Secretary
to Government who obviously had no authority to do so. We
are of opinion that there is no force in this contention.
The order conveying sanction specifically says that "the
Central Government hereby sanctions the resolution passed by
the Municipal Corporation of Delhi under sub-section (1) of
section 150." It is true that the order is signed by the
Deputy Secretary but that does not mean F that it was the
Deputy Secretary who sanctioned the rates. It is also true
that the words "by the order of the Central Government" or
"by the order of the President" are not there above the
signature of the Deputy Secretary and the authentication
therefore is no quite in accordance with the provisions of
Art. 77 of the Constitution, but that deficiency has been
made up by the affidavit filed on behalf of the Central
Government in which it is stated that the resolution was
approved by the then Deputy Home Minister and the Minister
in the Ministry of Home Affairs to whom the work relation to
the Corporation was assigned by the Home Minister. Reliance
in this connection was placed on the Government of India
(Allocation of Business) Rules, 1961, passed on January
14, 1961 to the effect that "in relation to the business
allotted to a Minister, another Minister or Deputy Minister
may be associated to perform such functions as may be
assigned to him." That in our opinion clearly means that a
Cabinet Minister may
276
be assisted in the performance of functions allotted to him
by another Minister or Deputy Minister. It is not necessary
where, business has been assigned by a Cabinet Minister to a
Minister or a Deputy Minister that the matter should be put
before the Cabinet Minister also after the Minister or the
Deputy Minister has approved of it in accordance with the
assignment made in his favour. We are therefore of the
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opinion that the sanction has been given by the Central
Government as required by the Act.
That takes us to the question of validation. The Validation
Act was passed in December 1966 and section 2 thereof with
which we are concerned reads thus:-
"(1) Notwithstanding anything contained in
section 150 read with sub-section (2) of
section 109 of the Delhi Municipal Corporation
Act, 1957, the resolution of the Delhi
Municipal Corporation dated the 24th June,
1959, passed under sub-section (3) of section
150 aforesaid, insofar as the said resolution
relates to the determination of the rates at
which tax shall be leviable on the consumption
or sale of electricity shall be deemed to have
been passed in accordance with law and The
rates specified in the said resolution in
respect of tax on the consumption or sale of
electricity shall be deemed to be, and to have
been, the actual rates of the tax under the
said Act with effect on and from 1st day of
July 1959 and up to and inclusive of the 31st
day of March, 1966.
(2) Notwithstanding anything contained in
any judgment, decree or order of any court to
the contrary, all taxes on the consumption or
sale of electricity levied or collected or
purporting to have been "levied or collected
in pursuance of the resolution referred to in
sub- F section (1) shall, for all purposes, be
deemed to be, and to have always been, validly
levied or collected. "
The argument which found favour with the High Court was that
the words of S. 2 only validated the levy and collection of
tax for the year ending March 31, 1960 and no further,
though the G section in terms refers to the period from July
1, 1959 to March 31, 1966. The contention, which was
accepted by the High Court, was that though fixation of rate
of tax was validated up to March 31, 1966, the levy of the
tax was not validated for the whole period by S. 2 of the
Validation Act. The same argument was raised before us in
support of the contention that the Validation Act failed in
its purpose so far as the period from April 1, 1960 to March
31, 1966 is concerned. We are of opinion that the High
Court was in error in holding that the levy and collec-
277
tion was not validated for the period from April 1, 1960 to
March 31, 1966 and that the Validation Act merely validated
the fixation of rate of tax for that period. Section 2(1)
which is said to have failed in validating the levy and
collection of tax for the period from April 1, 1960 to March
31, 1966 is in two parts. In the first place it validates
the resolution of the Corporation dated June 24, 1959 by
which rates were fixed under s. 150(3) for the year ending
March 31, 1960. As the High Court says-and rightly so this
means that everything that went before the resolution of
June 24, 1959 was passed was validated. It was on this
ground that the High Court held that ’he Validation Act
validated the levy and collect-on of tax at the
rates fixed for the period from July 1, 1959 to March 31,
1960. The High Court seems to have over-looked the second
part of s. 2(1) which lays down that the rates specified in
the resolution of June 24, 1959 in respect of tax on the
consumption or sale of electricity under the Act with effect
on and from the 1st day of July, 1959 and up to and
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inclusive of the 31st day of March, 1966 shall be deemed to
be, and to have been, the actual rates of the tax. By this
part of s. 2(1), Parliament has clearly approved the rates
deducible from the resolution of June 24, 1959 as the actual
rates of tax for the entire period from July 1, 1959 to
March 31, 1966. This could only be to validate the levy and
collection of tax at that rate for that period, for
otherwise we can see no sense in the Validation Act. It is
however said that the words "at which tax shall be levied
and collected" do not appear after the words "the actual
rates of the tax" in s. 2(1) and therefore the section must
be taken to have validated the rates only. It has neither
provided for levy and collection of tax nor validated its
levy and collection for the period mentioned therein. It
seems to us that when s. 2(1) lays down that the rates
deducible from the resolution of June 24, 1959 shall be the
actual rates of tax for the entire period from July 1, 1959
to March 31, 1966, it must be understood to sanction the
levy and collection of tax at the rates fixed. This to our
mind is implicit in the word "actual" which governs the
words "rates of the tax". We may add that even if there was
some doubt in the matter from the words of s. 2 (1), that
doubt is resolved by the words of s. 2(2), which lays down
that "all taxes on the consumption or sale of electricity
levied or collected or purporting to have been levied or
collected in pursuance of the resolution referred to in sub-
section (1) shall, for all purposes, be deemed to be and to
have always been validly levied or collected." This clearly
shows that the validation was not merely of the rate of tax
but of levy and collection also for the entire period from
July 1, 1959 to March 31, 1966. We cannot therefore agree
with the High Court that only the rates of tax were
validated and not levy and collection thereof for the
278
period from April 1, 1960 to March 31, 1966 We may go fur-
ther and say that as we read S. 2(1) and s. 2(2) together it
seems to us that Parliament not only validated what was done
but also itself imposed the rates deducible from the
resolution of June 24, 1959 and authorised the levy and
collection thereof for the entire period from July 1, 1959
to March 31, 1966 notwithstanding anything contained in any
judgment, decree or order of any court to the contrary.
We therefore allow the appeals, set aside the order of the
High Court insofar as it is against the appellant and
dismiss the writ petitions. No order as to costs
throughout.
Hidayatullah, J.-The Delhi Municipal Corporation in exercise
of powers under its constituent Act has levied a tax on the
consumption, sale or supply of electricity. This power is
expressly conferred by the Delhi Municipal Corporation Act,
1957 (66 of 1957). Section 113(2)(d) and (3) reads :
"(2) In addition to taxes specified in sub-
section (1) the corporation may, for the
purposes of this Act, levy any of the
following taxes, namely:
(d) a tax on the consumption, sale or supply
of electricity.
(3) The taxes specified in sub-section (2)
shall be levied, assessed and collected in
accordance with the provisions of this Act and
the bye-laws made thereunder".
The Act provides further in S. 150:
"150. Imposition of other taxes.
(1) The Corporation may, at a meeting, pass
a resolution for the levy of any of the taxes
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specified in sub-section (2) of section 113,
defining the maximum rate of the tax to be
levied, the class or classes of persons or the
description or descriptions of articles and
properties to be taxed, the system of
assessment to be adopted and the exemptions,
if any, to be granted.
(2) Any resolution passed under sub-section
(1) shall be submitted to the Central
Government for its sanction, and if sanctioned
by that Government, shall come into force on
and from such date as may be specified in the
order of sanction.
(3) After a resolution has come into force
under sub-section (2), the Corporation may,
subject to the
279
maximum rate, pass a second resolution
determining the actual rates at which the tax
shall be leviable, and the tax shall come into
force on the first day of the quarter of the
year next following the date on which such
second resolution is passed.
(4) After a lax has been levied in
accordance with the foregoing provisions of
this section, the provisions of sub-section
(2) of section 109, shall apply in relation to
such tax as they apply in relation to any tax
imposed under sub-section (1) of section 113".
On February 9, 1959 the Municipal Corporation passed a
resolution stating the rate at which the tax would be
levied. The resolution was submitted to the Central
Government for its approval. The Central Government
modified the rate by enhancing it. On June 23, 1959 the
Standing Committee of the Corporation recommended the rate
sanctioned by the Government as the actual rate to be
imposed. The Corporation then resolved on June 24, 1959
that the tax was imposed at that rate.
The respondent challenged the imposition of the tax by a
Writ petition in the Punjab High Court. A learned single
Judge dismissed the petition but on appeal in the High Court
the decision was reversed. It was held that the Central
Government lacked power to alter the rate. On December 3,
1966, Parliament passed the Delhi Municipal Corporation
(Validation of Electricity Tax) Act, purporting to validate
the rate of tax. On February 17, 1965, the Municipal
Corporation passed another resolution under S. 150(1)
stating the maximum rate of tax. This resolution was
approved by Government and a second resolution was then
adopted under s. 150(3) naming the maximum rate as the
actual rate. This was on December 27, 1965. Two writ
petitions were filed by the respondent in the High Court of
Delhi. The first questioned the imposition of the tax by
the resolutions of February 17 and December 27, 1965 and the
second questioned the legality of the Validation Act. These
petitions succeeded and the present appeals followed.
The learned Chief Justice in his judgment has upheld the
validity of "lie Validation Act. As we are of opinion that
the earlier resolutions were also legal, we need say nothing
about the Validation Act. We agree, however, that the
Validation Act cannot be questioned. The learned Chief
Justice has Adequately answered the objections and although
we might have stated our reasons separately we do not find
it necessary to do so. We agree that the relevant appeal
must be allowed.
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On the other point we agree with the conclusions of the
learned Chief Justice that the other appeal must also be
allowed.
L6Sup.C. I /68-5
280
In our opinion, the Delhi Municipal Corporation was legally
invested with the power to levy the electricity tax. We are
satisfied that there is no flaw in the conferral of power on
the Municipal Corporation by s. 113 and 150 of the Act and
the resolutions passed thereunder. The objection in this
connection is that the parliamentary Act itself is invalid
inasmuch as it amounts to an excessive delegation of
essential legislative functions by Parliament to an outside
body. The learned Chief Justice has upheld S. 150 by
pointing out certain in built safeguards in the Act which,
in his view, save it from being characterised as a piece of
excessive delegation. With all due respects we think this
is not the only approach to the problem. We do not wish to
be understood as saying that the conferral of a power of
taxation on Municipalities must always be accompanied by a
detailed enumeration in the constituent Act of the rate of
the tax, the persons to be taxed, the manner of the levy and
collection, before it can be said that there are sufficient
safeguards. Nor do we think that these matters cannot be
left to the determination of the Municipal Corporation
subject, of course. to such controls as the legislature may
think necessary to effectuate its own will. While the
provisions which have been characterised as safeguards
(where found necessary) are desirable the proper test to
apply is not the existence of safeguards but whether the
legislative will to impose the tax is adequately expressed
so as to bind those who have to pay the tax. This requires
an examination of the policy and provisions of the Act with
a view to determining whether the legislative will is fully
expressed to invest the Municipal Committee with the power
to levy the tax subject, of course, to a proper procedure
being evolved. We shall briefly indicate reasons which
compel us to give our opinion separately.
The charge here is that the power to impose the tax granted
by ss. 113 and 150 amounts to an excessive delegation of
essential legislative functions without adequate control or
guidance of Parliament and, therefore, the grant is beyond
the competence of Parliament. This contention is raised
because of the gloss put upon the Delhi Laws Act(1) case in
some subsequent cases which seem to carry the observations
in that case to fields which, perhaps, were not in the minds
of the Judges who gave the Advisory opinion. In those
fields other considerations apply which unfortunately have
been overlooked more particularly when the question is of
investing a Municipal Corporation with the authority to levy
taxes.
The Delhi Laws Act(1) case was concerned with certain
legislation which conferred a general power on the Executive
Government to apply any Act in force in British India, to
certain
(1) [1951] S.C.R. 747.
281
areas with such modifications, amendments, restrictions
(involving repeal of laws already in force) as the Executive
Government might consider expedient or necessary. The
Executive Government was not contained in its discretion by
any direction on the subject. This made it free to choose
any law and to modify it as it thought fit before applying
it and incidentally to repeal such laws as were already in
force in those areas. The general observations in the case
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were that the proposed measures there considered in several
respects amounted to the effacing of the legislature and the
setting up of a parallel legislature. The issue obviously
was a narrow and a special one. It concerned direct
legislation in an area by imposition of laws at the hands of
the Executive. The legislature gave too free a hand to the
Executive. The Advisory opinion ought, therefore to be read
secumdam subjectam materiam and need not be extended to
those cases in which the legislature outlines the entire
policy of the municipal administration and keeping the
control in its own hands authorises the Municipal Committee
to levy taxes which it itself determines and sanctions. How
deeply must the policy of a law be searched, of course,
depends upon the kind of the law and its purpose. This
obvious point has got lost in the application of this Delhi
Laws Act(1) case, particularly in Devidas Gopal Krishnan v.
State of Punjab(1) where it received an extension to fields
to which the observations could not logically extend. In
other cases many points were evolved to get over the
difficulties of accepting those observations simpliciter.
The observations were, of course, not statutory
prescriptions. The result is that the courts seem to
struggle to discover what have been variously described as
the policy of the law, the guidance, the safeguards, the
limits, the standards and the restrictions. These attempts
merely show that what is intended to be found out is whether
the legislature has expressed its own will in unequivocal
terms so as to make the law a binding rule of conduct. The
several expressions here enumerated do not, of course, mean
the same thing. Nor can it be said that an aggregate of all
of them must clearly, appear from the impugned statute
because if they do there will be no need for the agent. The
agent is then only an executing authority and not acting in
aid of the legislature which is the underlying principle on
which delegated legislation is upheld. The result as
noticeable from case to case has been somewhat strange. A
search has been made in the various Acts from the policy of
law as stated in the preamble to the operative parts, from
the positive directive enactments to what may be considered
as mere policy statement to sustain the law. No search
appears to have been made from the standpoint whether the
legislature has or has not expressed its
(1) [1951] S.C.R. 747.
(2) A.I.R. 1967 S.C. 1895.
282
own will completely leaving the application of the law to
those circumstances which the legislature has already pre-
determined.
The learned Chief Justice resolves the present controversy
by highlighting the provisions which indicate that there are
"safeguards", "guidelines" and "limits" in the Municipal
Corporation Act. In reaching his conclusion the learned
Chief Justice emphasises that there are ’safeguards
sufficient’ to enable the Municipal Corporation to validly
impose the tax. If any such " safeguards" (as to which we
do not consider it necessary to express an opinion here)
were necessary, it is sufficient to point out that the
scheme of the Municipal Act as a whole, the functions the
Municipality is expected to perform, the resources it must
have, the gradation of compulsory taxes, their limits, the
control of Government and various other provisions, furnish
a sufficient answer. They are safeguards enough to sustain
the Act.
But, in our opinion, this matter goes further. Whether a
legislature can confer on a Municipal Corporation a power to
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levy a tax and how, is a very different question from that
which was resolved in the Delhi Laws Act(1) case. It
involves a consideration of what our Constitution enables to
be done under the relevant legislative entry and the nature
of the Municipal administration. It must be resolved on the
basis of sovereignty which the legislative entries are
intended to confer.
The entry in question is Entry No. 5 in the State List. It
reads :-
"5. Local government, that is to say, the
constitution and powers of municipal
corporations, improvement trusts, district
boards, mining settlement authorities and
other local authorities for the purpose of
local self-government or village
administration."
Under this entry power is given to the legislature to create
self governing units. It has always been understood, as we
shall show presently, that such self-governing units must
have resources for their own administration and duties.
There are only two methods by which money can be made
available: one is to give them a grant; and the other is to
allow them to raise funds by fees and taxes. The second
method is generally followed and the legislaiures in India
on times out of number have invested these local self-
governing units with powers of taxation. No such
legislation has been questioned on the ground that it
offends against the competency of the legislature. It is
now contended that such exercise of power by the legislature
offends against the doctrine of separation of powers and
also is hit by the maxim delegatus non-potest delegare. We
shall now discuss these two questions.
(1) [1951] S.C.R. 747.
283
Our Constitution no doubt divides the functions of the State
between three organs of the Government but it does not make
a clean-cut division of the functions of these three organs
as do some other Constitutions. For example, the
Constitution of Massachusetts carries the provision-
"the legislative departments shall never
exercise the executive and judicial powers, or
either of them; the executive shall never
exercise the legislative and judicial powers,
or either of them; the judicial shall never
exercise the legislative and executive powers,
or either of them."
Even the Constitution of the United States in Article I
section (1) provides :
"Section 1. AR legislative powers herein
granted shall be vested in a Congress of the
United States, which shall consist of a Senate
and House of Representative."
The Australian Constitution also makes a much more rigid cut
between the three organs. By reason of such provisions the
theory of separation of powers advanced by Montesquieu (who
regarded the separation of powers as the best feature of the
British Constitution) has played a great part. Montesquieu,
of course, was not quite right in imagining that there was a
complete separation of powers in England. The other theory,
which has played a part flows from the maxim already quoted.
In the Bonus case of Jalan Trading Co. Private Ltd. v. Mill
Mazdoor Union(1) we had the occasion to say that that theory
was wrongly understood. We may recall here what we then
said
"This doctrine, it has been accepted on all
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hands was originated by the glossators and got
introduced into English Law by a misreading of
Bracton as a doctrine of agency and was
applied by Coke in decisions to prevent the
exercise of judicial power by another agency
and later received its present form in the
United States."
This theory has been discountenanced even in America where
in spite of a somewhat rigid separation of powers delegated
legislation is permitted in various fields. No doubt the
Donoughmore Committee in England recommended that delegation
should be put within bounds. But the example of the United
States is to the contrary. The question was examined by the
Moreland Commission, the Brownlow Committee and the Acheson
Committee. They permitted the delegation of ancillary
powers to instrumentalities other than the legislatures.-
The Donoughmore Committee had before it the opinion of the
First Parliamentary Counsel in these words :
(1) [1967] 1 S.C.R. 15 at 59.
284
.lm15
". . . it would be impossible to produce the amount and the
kind of legislation which Parliament desires to pass and
which the people of this country are supposed to want, if it
became necessary to insert in the Acts of Parliament
themselves any considerable portion of what is now left to
delegated legislation."
Therefore, in England and America many writers (for example,
Lowell) have pointed out that previously English and
American statutes were over-burdened with details and tried
to provide in advance for all matters. Things have now
changed. Delegated legislation is now held "inevitable" and
the criticism of it is only because of ’nostalgic yearnings
for an era that had passed’. The result is noticeable in
England, America, Australia, Canada and in our country.
Take any statute and it will be found that quite a lot of
things are left to be done by some other instrumentality.
The rule making power, ’the appointed day’ clauses, the
provisions for extending the Act, for granting exemptions
and so on and so forth are to be met with everywhere.
Otherwise, how can one justify the controls which have come
into existence in India ? The Gold Control Order sprang from
the Defence of India Act without there being any statement
in the Defence of India Act of any "guidelines" or
"safeguards". The Essential Supplies (Temporary Powers)
Act, 1946 was sustained by reading the preamble without
making a search for "guidelines", "limits" or "safeguard"-
see Harishankar Bagla v. The State of Madhya Pradesh(1). In
Rai Narain Singh v. The Chairman Patna Administration
Committee (2), the power to modify existing statutes was
recognised provided no essential feature was changed. In
Western India Theatres Ltd. v. Municipal Corpn. of the City
of Poona(3), a general provision that the Municipality may
impose " any other tax" to the nature and object of which
the approval of the Governor-in-Council was obtained was
held valid only because the tax was imposed "for the
purposes of the Municipality." In Hamdard Dawakhana(4) case
the selection of diseases or conditions was left to the
Executive but was held not to be an instance of excessive
delegation. In Pandit Banarsidas Bhanot v. The State of
Madhya Pradesh(5), it was observed :
"Now the authorities are clear that it is not
unconstitutional for the legislature to leave
it to the executive to determine details
relating to the working of taxation laws, such
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as the selection of persons on whom the tax is
to be laid, the rates at which it is to be
charged in respect of different classes of
goods and the like."
(1) [1955] 1 S.C.R. 380.
(2) [1955] 1 S.C.R. 293.
(3) [1959] 2 Supp. S.C.R. 71.
(4) [1960] 2 S.C.R. 671.
(5) [1959] S.C.R. 427.
285
This was justified on the ground that in doing this the
legislature could not be considered to have lost its perfect
control since it retained the power to interpose its own
authority. The principle was accepted on the basis of the
decision of the Judicial Committee in Powell v. Apollo
Candle Co. Ltd.(1). The learned Chief Justice has expressed
that the case was wrongly read but with all due respects it
has always been understood in this sense. Lastly in Liberty
Cinema ( 2 ) case the rate of a tax was not considered a
part of the essential legislative function.
These cases in themselves cover the present matter. The
principle now advocated that the legislature must itself
impose the tax by laying down the rate, the persons to be
affected and the manner of levy and collection when it
concedes power to Municipal Corporation appears to be a
novel doctrine which has not been accepted even in the land
where the doctrine about delegated legislation took its
birth. It is not necessary to clog this judgment by many
citations but an extract from United States
v. City of New Orleans(1) may usefully be cited :
"The position that the power of taxation
belongs exelusively to the legislative branch
of the government, no one will controvert.
Under our system it is lodged nowhere else.
But it is a power that may be delegated by the
Legislature to municipal corporations, which
are merely instrumentalities of the State for
the ’Better administration of the government
in matters of local concern. When such a
corporation is created, the power of taxation
is vested in it as an essential attribute, for
all the purposes of its existence, unless its
exercise be in express terms prohibited. For
the accomplishment of those purposes, its
authorities, however limited the corporation,
must have the power to raise money and control
its expenditure. In a city, even of small
extent, they have to provide for ’the
preservation of peace, good order and health,
and the execution of Such measures as conduce
to the general good of its citizens; such as
the opening and repairing of streets; the
construction of sidewalks, sewers and drains;
the introduction of water, and the
establishment of a fire and police department.
In a city like New Orleans, situated on a
navigable streami, or on a harbor of a lake or
sea, their powers are usually enlarged, so as
to embrace the building, of wharves and docks
or levees for the benefit of commerce, and
they may extend also to the construction of
roads leading to it, or the contributing of
aid
(1) [1885] 10 A.C. 282.
(2) [1952] 2 S.C.R. 477.
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(3) 25 L. Ed. 225 at 226.
286
towards their construction. The number and
variety of works which may be authorized,
having a general regard to the welfare of the
city or its people, are mere matters of
legislative discretion. All of them require
for their execution considerable expenditure
of money. Their authorization without
providing the means for such expenditure would
be an idle and futile proceeding. Their
authorization, therefore, implies and carries
with it the power to adopt the ordinary ’means
employed by such bodies to raise funds for
their execution, unless such funds are
otherwise provided. And the ordinary means in
such cases is taxation. A municipality with-
out the power of taxation would be a body
without life, incapable of acting, and serving
no useful purpose."
It is argued that in America this is held to fall outside
excessive delegation because of the history of the municipal
corporations in that country. There is no essential
difference between the United States and India in this
respect. Municipal Corporations have a hoary past in our
country also. The first Municipal Corporation was created
in India by a Royal Charter in 1687 at Madras. In 1726
three Charters established Municipal Corporations at Bombay
Calcutta and Madras. Since then scores of statutes have
established municipalities all over India. The Conservancy
Act X of 1842, which applied to Bengal, allowed
municipalities to tax houses. The Act remained a dead
letter. But in 1882 Lord Rippon’s Government passed the
well-known Resolution extending Local Self-Government in
India and the municipalities have since been accepted as a
limb of local self-government. Every Municipal Act (whether
for a single municipality or for a group) contains almost
identical provisions regarding taxation. It is one of the
attributes of the local self-government. The various
Constitutions which have governed us have always included
the power to set up local self-government and provided that
it must be financed and must have the power of raising
funds. Therefore the constituent Acts have almost in every
instance provided for raising of funds through taxes in the
local areas subject to control of Government. Today the
entry in the Constitution also recognises this power in the
legislature. The provisions about taxes have followed the
same method as in the Delhi Municipal Corporation Act.
Sometimes the provision enables public opinion to be
elicited before the tax is imposed but this is not an
invariable rule. The exercise of the power has not been
questioned as it has been in recent years.
We are concerned here with Parliament which by a concen-
tration of all the powers of legislation derived from all
the three Legislative Lists becomes the most competent and
potent legisla-
287
ture it is possible to erect under our Constitution. The
doctrine that it is a delegate of the people which coloured
certain American decisions does not arise here. It has been
discarded also in America. The old plea that the Indian
legislatures were delegates of the British Parliament and
therefore could not delegate further, (rejected in a string
of cases by the Judicial Committee), is not open today. The
doctrine that Parliament cannot delegate its powers,
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therefore, must be understood in a limited way. It only
means that the legislature must not efface itself but must
give the legislative sanction to the imposition of the tax
and must keep the control in its own hands. There is no
specific provision in the Constitution which says that the
Parliament cannot delegate to certain specified
instrumentalities the power to effectuate its own will. The
question always is whether the legislative will has been
exercised or not. Once it is established that the legis-
lature itself has willed that a particular thing be done and
has merely left the execution of it to a chosen
instrumentality (provided that it has not parted with its
control) there can be no question of excessive delegation.
If the delegate acts contrary to the wishes of the
legislature the legislature can undo what the delegate has
done. Even the courts, as we shall show presently, may be
asked to intervene when the delegate exceeds its powers and
functions. The observations and theories culled from Ameri-
can cases cannot be applied in our country without
reflection. Even in America the doctrine is much watered
down especially when it is a question of investing
municipalities with power-of such taxation. Parliament,
when it confers such powers, cannot be said to abdicate or
efface itself unless it can be said that it has lost its
control over the action of the delegate. In the present
case, in addition to prescribing the mode, it keeps a check
by making Government, answerable to itself, the supervising
authority. This is not a safeguard in the sense in which
the matter has been accepted in the opinion of the learned
Chief Justice, but is indicative of the exercise of the
legislative Will by the legislature itself. The details of
the tax are to be considered by the supervising authority
and if the tax is not what the legislature intended should
be imposed, the tax cannot be imposed.
It is no use comparing compulsory taxes with optional taxes
in the Municipal Corporation Act. Even in the compulsory
taxes rsee for example s. 114(1) (a) (b) (c) much of what
may, otherwise, be described as essential is left to the
determination of the Municipal Corporation. The percentage
in each case is not named and has been left to the
determination of the Municipal Corporation. No standards
are prescribed nor are there any restrictions to ensure that
the percentage will-not be unduly high. No doubt in some of
the taxes limits are fixed but even below the maximum
288
limit or between the maxima and minima there is still a
broad discretion in the Municipal Corporation. In making
bye-laws there is no direction, guidance or safeguards
except the approval of the Government. If section 150 is to
be questioned the other sections must equally be bad. If
the Corporation cannot be ,trusted to do this and the
vesting of the power in it is illegal it must be so in the
other cases. The respondents, however, do not criticise the
compulsory taxes as bad. There is nothing to show in what
order the optional taxes are to be chosen and imposed.
Further, there is no indication of the proportion which the
compulsory taxes must bear between themselves. There is no
difference in principle between what is intended to be done
by s. 150 and that which is to be done by s. 114 and several
other sections. In fact, s. 150 is mild when compared with
some ,of the other sections. We cannot agree, to the
proposition which has been urged before us that s. 150 is
excessive delegation when these sections are not
characterised as excessive, delegation.
Local bodies are subordinate branches of governmental acti-
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vity. They are democratic institutions managed by the
representatives of the people. They function for public
purposes and take away a part of the government affairs in
local areas. They are political sub-divisions and agencies
which exercise a part 6f State functions. As they are
intended to carry on local self,government the power of
taxation is a necessary adjunct to their Other powers. They
function under the supervision of the Government. This
supervision is considered necessary, because Municipal
Councillors as a rule are unwilling to tax in a manner
likely to affect themselves. House-holders seek to transfer
burdens to tradesmen and vice-versa. To insist that the
legislature .Should provide for every matter connected with
municipal taxation would make municipalities mere tax
collecting departments of Government and not self-governing
bodies which they are intended to be. Government might as
well collect the taxes and make them available to the
municipalities. That is not a correct reading of the
history of Municipal Corporations and other selfgoverning
institutions in our country.
The tax has not been challenged as unreasonable. If it had
been it might have been necessary to consider it from
another angle. The delegation to the Municipal Corporation
of the power to levy taxes and fees is for the purpose of
its own duties under the Act. The power must be reasonably
exercised for attainment of those purposes. These purposes
include supply of water, running of transport services,
lighting of streets and their maintenance, conservancy,
establishment of hospitals and so on. The interrelation of
taxes with expenditure has to be maintained. This relation
must be reasonable. Suppose it were
289
to become unreasonable. Is there no remedy ? Now the rule
regarding reasonableness of bye laws was laid down in Kruse
v. Johnson(1). This rule has been universally accepted and
applied in India and elsewhere.
The same rule is applied to fees and taxes imposed by the
Municipal bodies. Since illustrative cases were not cited
at the Bar it is not necessary to give a full list. A few
representative cases, selected by us at random may be seen
in Mewa Ram v. Municipal Board, Mathura (2) Corporation of
Madras v. Spencer & Co. Ltd ( 3 ) V. M. Raghavalu v.
Corporation of Madras(4), Municipal Corporation of Rangoon
v. Sooratee Bara Bazar Col. Ltd.(5), Municipal Council,
Kumbakonam v. Balli Bros.(6). Nor is the reasonableness of a
tax open to question in relation to municipalities alone.
It was even considered in relation to legislatures by the
Judicial Committee in Attorney General of Alberta v.
Attorney General of Canada(7). An unreasonable tax can be
considered by the courts but it must be a clearly exorbitant
tax which goes so high as to be extortionate.
We do not agree that our view will make it easy for the
legislatures to name a tax and leave it to be imposed by the
Executive at its sweet will. These horrible imaginings need
not detain us because neither does this flow from our view
nor it is possible that such action will go unchallenged.
The position of self-governing bodies is different from that
of the Executive.
For these reasons we agree with the learned Chief Justice
that the tax was validly imposed and the appeal in relation
to it must be allowed. We agree in the order regarding
costs proposed by him.
Shah, J. The facts which give rise to the appeals have been
set out in the judgments just delivered, and need not be
repeated.
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Two principal questions arise for determination in these
appeals :
(1) Whether the Delhi Municipal Corporation
(Validation of Electricity Tax) Act 35 of 1966
effectively imposes liability to pay tax on
consumption or sale of electricity for the
period April 1, 1960 to March 31, 1966; and
(2) Whether ’by enacting s. 150(1) of the
Delhi Municipal Corporation Act 66 of 1957
which confers authority upon the Corporation
by resolution to levy tax
(1) [1898] 2 Q.B. 91.
(2) I.L.R. 1939 Allahabad 770.
(3) I.L.R. 52 mad. 764.
(4) I.L.R. 53 Mad. 722.
(5) I.L.R. 5 Rang. 139.
(6) A . ].R. 1931 Mad. 497.
(7) A.I.R. 1939 P.C. 53, 57.
290
in respect of the optional taxes specified in
S. 113(2), the Parliament has violated the
rule against excessive delegation of
legislative authority.
Sub-section (1) of s. 113 of Act 66 of 1957 requires the
Corporation to levy for the purposes of the Act six named
taxes-(a) property taxes; (b) a tax on vehicles and animals;
(c) a theatre tax; (d) a tax on advertisements other than
advertisements published in the newspapers; (e) a duty on
the transfer of property; and (f) a tax on buildings payable
along with the application for sanction of the building
plan. By sub-s. (2) the Corporation is authorised, in
addition to the taxes specified in sub-s. (1), to levy for
the purposes of the Act any of the following taxes, namely
(a) an education cess;
(b) a local rate on land revenues;
(c) a tax on professions, trades, callings
and employments;
(d) a tax on the consumption, sale or supply
of electricity;
(e) a betterment tax on the increase in
urban land values caused by the ’execution of
any development or improvement work;
(f) a tax on boats; and
(g) tolls.
By sub-s. (3) it is provided that the taxes specified in
sub-s. (1) and sub-s. (2) shall be levied, assessed and
collected in accordance with the provisions of the Act and
the bye-laws made thereunder. The Act proceeds by ss. 114
to 149 to make detailed provisions in respect of the taxes
set out in s. 113(1) about the levy and imposition of taxes,
the system of assessment, and maximum rates or the standards
to guide the determination of the rates of taxes and
incidental matters. In respect of the optional taxes it is
provided in s. 150 of the Act that :
"(1) The Corporation may, at a meeting, pass a
resolution for the, levy of any of the taxes
specified in sub-section (2) of section 113,
defining the maximum rate of the tax to be
levied, the class or classes of persons or the
description or descriptions of articles and
properties to be taxed, the system of
assessment to be adopted and the exemptions,
if any, to be granted.
(2) Any resolution passed under sub-section
(1) shall be submitted to the Central
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Government for its sanction, and if sanctioned
by that Government, shall come into force on
and from such date as may be specified in the
order of sanction.
291
(3) After a resolution has come into force
under sub-section (2), the Corporation may,
subject to the maximum rate, pass a second
resolution determining the actual rates at
which ’the tax shall be leviable; and the tax
shall come into force on the first day of the
quarter of the year next following the date on
which such second resolution is passed.
(4) After a tax has been levied in
accordance with the foregoing provisions of
this section, the provisions of sub-section
(2) of section 109, shall apply in relation to
such tax as they apply in relation to any tax
imposed under sub-section (1) of section 113."
There is, it is manifest, a significant difference in the
schemes relating to the levy and imposition of compulsory
and optional taxes, fixation of rates and systems of
taxation. Sections 114 to 149 set out elaborate provisions
relating to the maximum rates of tax to be levied, the class
or classes of persons or the description or descriptions of
articles and properties to be taxed, the system of
assessment to be adopted and the exemptions, if any, to be
granted. In s. 114 the property taxes are divided under
four heads : water tax, scavenging tax, fire tax and general
tax. The rates of water tax, scavenging tax and fire tax
are to be such percentages of the rateable value of lands
and buildings as the Corporation may deem reasonable for
providing water supply, for providing scavenging services
and for the conduct and management of the Fire Service
Undertaking. The Parliament has, besides specifying the
persons liable to tax and the system of assessment also set
out standards or guidelines for determining the rates of
tax. The general tax which is leviable in addition is to be
not less than ten per cent and not more than twenty per cent
of the rateable value of lands and buildings within the
urban areas and such lower rates in the rural areas as may
be determined by the Corporation. Sections 114 to 135 enact
a complete code relating to the levy of property taxes.
Schedules 3 to 6 to the Act set out the maximum rates which
may be charged as tax on vehicles and animals, theatretax
and taxes on advertisements and buildings, and by diverse
provisions in Ch. VIII the persons or properties to be
charged are specified and the mechanism of assessment is
prescribed. The Act also prescribes the maximum rate of
duty on transfer of property leviable in the form of a
surcharge on the duty imposed by the Indian Stamp Act.’ But
in respect of optional taxes the Parliament has merely
enumerated the taxes in sub-s. (2) of S. 113, and has
provided by sub-s. (3) of s. 113 that the taxes specified in
sub-s. (2) shall be levied, assessed and collected in
accordance with the provisions of the Act and the bye-laws
made thereunder.
292
Section 109 deals with the adoption of the annual budget
estimates of the Corporation. It is provided by the first
subs of s. 109 that the Corporation shall, on or before the
31st day of March of every year, adopt for the ensuing year
the budget estimates of the income and expenditure of the
Corporation to be received and incurred on account of the
municipal government of Delhi, Delhi Electric Supply
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Undertaking, Delhi Transport Undertaking and Delhi Water
Supply and Sewage Disposal Undertaking. By sub-s. (2) it is
enacted that on or before the 15th day of February of each
year the Corporation shall determine the rates at which
various municipal taxes, rates and cesses shall be levied in
the next following year and save as otherwise provided in
the Act the rates so fixed shall not be subsequently altered
for the year for which they have been fixed. By s. 110
power is reserved to the Corporation to alter the budget
estimates in certain circumstances and in the manner
provided therein.
The scheme of levy and imposition of taxes reading ss. 113
to 150 with the provisions relating to the adoption of
budget estimates, is that the Corporation determines in the
first instance the rates at which the municipal taxes, rates
and cesses may be levied in the next following year and then
prepares the budget estimates in the light of the estimate
of income and expenditure. The compulsory taxes have to be
levied subject to the limits or standards prescribed in that
behalf by the Statute : in respect of the optional taxes the
Corporation is left free to pass a resolution to levy all or
any of the optional taxes, prescribing the maximum rates,
system of assessment, the incidence of taxation and
exemptions, if any. Having noticed the relevant statutory
provisions we may deal with the effect of the Validating Act
35 of 1966. The High Court was of the view that by merely
fixing the rates of tax on consumption or sale of
electricity, for the period April 1, 1960 to March 31, 1966,
the Parliament had not effectively imposed liability upon
the tax payers to pay that tax. The first Subsection of s.
2 of the Validating Act consists of two parts. It commences
with the non obstante clause and proceeds to enact-(a) that
the resolution of the Corporation dated June 24, 1959,
insofar as it relates to the determination of the rates at
which tax shall be leviable on the consumption or sale of
electricity shall be deemed to have been passed in
accordance with law; and (b) that the rates specified in the
said resolution in respect of tax on the consumption or sale
of electricity shall be deemed to be, and to have, been, the
actual rates of tax under the Act "with effect on and from
the 1st day of July, 1959 and upto and inclusive of the 31st
day of March, 1966". The non-obstante clause plainly
governs both the parts of s. 2 ( 1 ). It is clear that it
was the intention of the Parliament to declare that
notwithstanding anything contained in s. 150(2) and s.
109(2) of Act 66 of 1957, the resolution dated
293
June 24, 1959, purporting to be made under s. 150(3) shall
be deemed to be in accordance with law insofar as it relates
to the rates of electricity tax. The effect of the first
part of sub-s. (1) of s. 2 is therefore to impose liability
on the consumption or sale of electricity purported to be
levied under the resolution of the Corporation under s.
150(3). The High Court has accepted that position.
By the second part of sub-s. (1) of s. 2 liability is
imposed for payment of tax for the period April 1, 1960 to
March 31, 1966, at the same rate, that is the rate which was
adopted by the resolution dated June 24, 1959. The function
of both the parts is to, impose liability for tax levied
under resolution of the Corporation under s. 150 (2). It is
true that the second part does not expressly levy tax for
the period to which the rates were extended, but by sub-s.
(2) the Parliament has provided that all taxes on the_- con-
sumption or sale of electricity "levied or collected or
purporting have been levied or collected in pursuance of the
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resolution dated June 24, 1959, shall, for all purposes, be
deemed to be, and to have always been, validly levied or
collected." The Corporation had year after year passed
resolutions in purported exercise of authority under s.
150(1) of the Corporation Act for the levy of tax on
consumption or sale of electricity, and by virtue of s. 2(1)
of the Validating Act notwithstanding anything contained in
s. 150 and sub-s. (2) of s. 109 the rates under the
resolution dated June, 24, 1959, were to be deemed the rates
for the years 1960-61 to 1965-66.
Sub-section (2) of s. 2 of the Validating Act in terms deems
the tax levied or collected in pursuance of the resolution
referred to in sub-s. (1). The resolution referred to in
sub-s. (2) is the resolution dated June 24, 1959; the rates
prescribed by that resolution are by the terms of sub-s. (1)
made rates of tax on the consumption or sale of electricity
for the period July 1, 1959 to March 31, 1966; and the tax
is deem to be validly levied and collected for the entire
period. if the view which found favour with the High Court
be correct, the taxes collected by or paid to’ the Corpo-
ration would not be liable to be refunded by the
Corporation, suits filed for refund of tax may not be
instituted or continued, for the tax already paid, and the
acts and proceedings taken in pursuance of the resolution
will be deemed to be done in accordance with law, but there
being no levy of tax, liability for payment of tax for the
period referred to in sub-s. (1) of s. 2 could be enforced
This could not have been the intention of the Parliament.
The Parliament was faced with the decision of the Punjab
High Court that the levy of the tax pursuant to the
resolution dated June 24, 1959, passed by the Corporation
which undoubtedly was restricted to the year 1959-60 was
invalid, because the Union.
294
Government had modified the rates fixed under the resolution
of the Corporation under s. 150(1) for the year 1959-60.
Before the High Court decided the dispute, several years had
elapsed and the tax was collected on the footing that the
resolution dated June 24, 1959, and the resolutions
subsequently passed were valid. If the Parliament intended
to enact an Act only for validating the levy of tax under
the resolution dated June 24, 1959, it was plainly
unnecessary to enact the, second part of s. 2 (1 ). The
decision of the High Court which necessitated the enactment
of the Validating Act was undoubtedly the judgment of the
Punjab High Court which related only to the. validity of the
resolution levying tax for the year 1959-60, but that is not
a round for implying that ,’lie Parliament was seeking to
validate the levy of tax only for the year 1959-60.
We may turn now to the second question on which the argument
was mainly advanced. It was conceded by the AttorneyGeneral
that under our Constitutional scheme, the Parliament cannot
abdicate its essential legislative functions and set up
another authority or body to perfom essential legislative
functions either generally or in respect of a particular
head of legislation or even in respect of a part of the
subject-matter of that particular head. Again the power to
enact subordinate or ancillary legislation to carry out the
details of parliamentary Acts may undeniably be invested in
other bodies. The increasing complexity of modern
administration, the difficulty of passing complicated
measures through the method of parliamentary debate and
discussion, and the number of details and technical matters
which must of necessity be provided for in statutes, have
led to an increase in the practice of entrusting power to
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executive or other agencies to make subsidiary or ancillary
legislation. By entrusting that power to another body, the
Parliament does not delegate its essential legislative
functions.
But the authority to entrust subsidiary or ancillary power
is not unrestricted : the power cannot be conferred upon a
delegate without setting out some principle, policy, or
standard which is to guide the delegate in discharging its
delegated functions. If the Parliament lays down by
legislative act adequate guidance, whatever form it takes,
and the delegate is required to conform to that guidance,
entrustment of authority to the delegate to make su ordinate
legislation will be upheld. The power of delegating
legislative authority cannot, however, be extended to
investment of authority in another body in respect of
matters relating to principle or policy of legislation, to
the amendment of Parliamentary Acts so as to affect the
substance thereof or to investment in the executive power
when no guidance or standard is laid down in that behalf or
to authorize the executive to encroach upon the judicial
power of the State.
295
In Panama Refining Company v. A. D. Ryan(1), Hughes, C.J.,
pronouncing the majority opinion of the Supreme Court of the
United States observed:
"The Congress manifestly is not permitted to
abdicate, or to transfer to others, the
essential legislative functions with which it
is thus vested. Undoubtedly legislation must
often be adapted to complex conditions
involving a host of details with which the
national legislature cannot deal directly.
The Constitution has never been regarded as
denying to the Congress the necessary
resources of flexibility and practicality,
which will enablo it to perform its function
in laying down policies and establishing
standards, while leaving to selected instru-
mentalities the making of subordinate rules
within prescribed limits and the determination
of facts to which the policy as declared by
the legislature is to apply. Without capacity
to give authorizations of that sort we should
have the anomaly of a legislative power which
in many circumstances calling for its exertion
would be but a futility. But the constant
recognition of the necessity and validity of
such provisions, and the wide range of
administrative authority which has been
developed by Means of them, cannot be allowed
to obscure the limitations of the authority to
delegate, if our constitutional system is to
be maintained."
Again Chief Justice Hughes observed: (at p.
426)
"Applying that principle, authorizations given
by Congress to selected instrumentalities for
the purpose of ascertaining the existence of
facts to which legislation is directed, have
constantly been sustained. Moreover, the
Congress may not only give such authorizations
to determine specific facts but may establish
primary standards, devolving upon others the
duty to carry out the declared legislative
policy, that is, as Chief Justice Marshall
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expressed it, "to fill up the details" under
the general provisions made by the
Legislature."
The observations of the Judicial Committee of the Privy
Council made in Archibald G. Hodge v. The Queen(1) in
relation to the nature of delegated powers exercisable by
the local legislature of the self-governing dominions do not
imply a different rule. In Archibald G. Hodge’s case(1) the
Judicial Committee observed that the local legislature was
competent under s. 92 of the British North America Act,
1867, to make Regulations in the nature of police or
municipal regulations of a merely local character for the
good government of taverns. It was contended that assuming
that
(1) 293 U.S. 388 : 79 . d. 446.
(2) [1883] 9 A.C. 117.
L6Sup.C.1/68-6
296
the local legislature of Ontario Province had power to
legislate to the full extent of the resolutions passed by
the License Commissioners, and to have enforced the
observance of their enactments by penalties and
imprisonment, the Imperial Parliament had conferred no
authority upon the local legislature to delegate those
powers to the License Commissioners or any other persons,
and therefore the power conferred upon the Imperial
Parliament on the local legislature could be exercised in
full by the local legislature alone and no body else. The
Judicial Committee rejected that contention on the ground
that the maxim "delegates non potest delegare" had no
application within the limits of subjects and areas
prescribed by s. 92 as the Imperial Parliament in the
plenitude of its power possessed and could bestow. Within
those limits of subjects and areas the local legislature was
supreme, and had the same authority as the Imperial
Parliament, or the Parliament of the Dominion, would have
had under like circumstances to confide to a municipal
institution or body of its own creation authority to make
bye-laws or resolution as to subjects specified in the
enactment, and with the object of carrying the enactment
into operation. and effect. The Judicial Committee regarded
the power to make the bye-laws as ancillary to legislation,
that without it an attempt to provide for varying details
and machinery to carry them out might become oppressive or
absolutely fail, that entrustment of a limited discretionary
authority to others has many illustrations of its necessity
and convenience, and that the legislature by "committing
important regulations to agents or delegates" does not
efface itself.
The Judicial Committee in In re The Initiative and
Referendum Act(1) struck down the Initiative and Referendum
Act (6 Geo. 5, c. 59, Manitoba) on the ground that it would
compel the Lieutenant-Govemor to submit a proposed law to a
body of voters totally distinct from the legislature of
which he is the constitutional head and would render him
powerless to prevent it from becoming an actual law if
approved by those voters. The offending provisions of the
Act being so interwoven with its scheme as not to be sever-
able, the Colonial Laws Validity Act, 1865, could not be
applied to validate any part of the Act.
Opinion in this Court has with the passage of time become
crystalized. In re The Delhi Laws Act, 1912(2) two views
were broadly propounded. Patanjali Sastri, J., was of the
view that the Indian Parliament acting within the limits
circumscribing its legislative powers, intended to have
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plenary powers of legislation as large and of the same
nature as those of the British Parliament, and no
constitutional limitation on the delegation of legislative
power to a subordinate unit was to be found in the
Constitution
(1 )[1919] A.C. 935.
(2) [1951] S.C.R. 747.
297
Acts. The Indian Parliament is therefore competent to make
a law delegating legislative power, both quantitatively and
qualitatively as is the British Parliament, and in the
absence of any constitutional inhibition, delegation of
legislative power, however extensive, could be made so long
as the delegating body retained its own legislative power
intact. But for the effacement of its power a positive
enabling provision in the constitutional document was
required. The learned Judge further observed that the Court
cannot strike down an Act of Parliament as unconstitutional
merely because the Parliament decides in a particular
instance to entrust its legislative power to its appointed
instrumentality, however repugnant such entrustment may be
to the democratic process. Fazl Ali and S. R. Das, JJ.,
expressed views though not identical closely approximating
that-opinion.
On the other hand Kania, C.J., was of the opinion that the
essentials of legislative function are the determination of
the legislative policy and its formulation as a rule of
conduct. If the legislature having made its laws leaves the
details for working out and for carrying an enactment into
operation to another subordinate agency or to some executive
officer, there is no delegation of legislative power. While
the so-called delegation which empowers the making of rules
and regulations has been recognised as ancillary to
legislative power, the Constitution Acts in India do not
recognise a general power in the legislature to abdicate
legislative authority. Abdication of its powers by a
legislature need not necessarily amount to complete
effacement of itself : it may be partial. If full powers to
do everything that the legislature can do are conferred on a
subordinate authority, although the legislature retains the
power to control the action of the subordinate authority by
recalling such power by or repealing the Acts passed by the
subordinate authority, there is still an abdication or
effacement of the legislature conferring such power.
Mahajan, J., agreed with Kania, C.J. According to him not
only the nature of legislative power, but the very existence
of representative government depends on the doctrine that
legislative powers cannot be transferred. The legislature
cannot substitute the judgment, wisdom and patriotism of any
other body, for those to which alone the people have seen
fit to confide this sovereign trust. Unless the power of
the delegation is expressly given by the Constitution, the
Legislature cannot delegate its essential legislative
function to any other body, and since the Indian Constitu-
tion does not give such a power to The Legislature it has no
power to delegate the essential legislative functions to any
other body and that abdication by a legislative body need
not necessarily amount to complete effacement. When in
respect of a subject in the Legislative List the legislative
body says in effect that it will
298
not legislate but will leave it to another to legislate on
that subject, there is abdication of legislative authority.
Mukherjea, J., was of the opinion that the legislature must
retain in its own hands the essential legislative functions
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which consist in declaring the legislative policy and laying
down the standard which is to be enacted into a rule of law
and what can be delegated is the task of subordinate
legislation which by its very nature is ancillary to the
statute which delegates the power to make it. Provided the
legislative policy is enunciated with sufficient clearness
or a standard is laid down, the Courts may not interfere
with the discretion that undoubtedly rests with the
legislature itself in determining the extent of delegation
necessary in a particular case.
Bose, J., without definitely committing himself to either
view, observed that the Indian Parliament may legislate
along the lines of the judgment of the Judicial Committee in
Queen v. Burah(1), that is to say, it can leave to another
person or body the introduction or application of laws which
are, or may be, in existence at that time in any part of
India which is subject to the legislative control of
Parliament, whether those laws are enacted by Parliament or
by a State Legislature set up by the Constitution, and that
he saw no reason for extending the scope of legislative
delegation beyond the confines which have been hallowed for
so long.
Since opinion in that case was delivered, in several cases
brought before this Court, the extent of the power which the
Legislature possesses to delegate legislative authority was
discussed. A brief summary of some of those cases may be
attempted.
In Rajnarain Singh v. The Chairman, Patna Administration
Committee, Patna and Anr.(2) Bose, J., attempted to
summarise the effect of the various opinions expressed in
the Delhi Laws Act case(1), and speaking for a unanimous
Court observed that an executive authority can be authorised
by a statute to modify either existing or future laws, but
not in any essential features. Exactly what constitutes an
essential feature cannot be enunciated in general terms, but
it is clear that modification cannot include a change of
policy. Essential legislative function consists in the
determination of the legislative policy and its formulation
as a binding rule of conduct. Modifications which are
authorised are limited to local adjustments or changes of
minor character and do not mean or involve any change of
policy or change in the Act.
In Harishankar Bagla v. The State of Madhya Pradesh (4) in
dealing with the validity of cl. 3 of the Cotton Textile
(Control of Movement) Order, 1948, promulgated by the
Central Govern-
(1) 5 I.A. 178. (2) [1955] 1S.C.R. 290.
(3) [1951] S C.R. 747. (4) [1955] IS.C R. 380.
299
ment under S. 3 of the Essential Supplies (Temporary Powers)
Act, 1946, it was observed that 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, and
where the Legislature has laid down such a principle in the
Act and that principle is the maintenance or increase in
supply of essential commodities and of securing equitable
distribution and availability at given prices, the exercise
of the power was valid.
Within the framework of the case law so far developed, Ven-
katarama Aiyar J., in Pandit Banarsi Das Bhanot v. The State
of Madhya Pradesh & Ors.(1) speaking for the majority
observed
"...... the authorities are clear that it is
not unconstitutional for the legislature to
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leave it to the executive to determine details
relating to the working of taxation laws, such
as the selection of persons on whom the tax is
to be laid, the rates at which it is to be
charged in respect of different classes of
goods, and the like."
The learned Judge held that the power conferred on the State
Government by s. 6(2) of the Central Provinces and Berar
Sales Tax Act, 1947, to amend the Schedule relating to
exemptions was in consonance with the accepted legislative
practice relating to the topic and was not unconstitutional.
In The Western India Theatres Ltd. v. Municipal Corporation
of the City of Poona ( 2 ) it was held that by enacting in
S. 59(1) (xi) of the Bombay District Municipal Act, 1901,
that the Municipality may levy "any other tax" to the nature
and object of which The approval of the Governor-in-Council
shall have been obtained prior to the selection the
Legislature has not abdicated to the Municipality its
legislative authority. Since the section authorised the
imposition of taxes alone as were necessary for the purpose
of the Act, the taxes could, it was held by the Court, be
levied only for implementing those purposes and for no
others, and delegation on that account was not unguided.
In Vasantlal Maganbhai Sanjanwala v. The State of Bombay and
Ors.(3) the validity of s. 6(2) of the Bombay Tenancy
and .Agricultural Lands Act 67 of 1948 which authorised the
Provincial Government by notification in the Official
Gazette to fix a lower rate of the maximum rent payable by
the tenants of lands situate in any particular area or to
fix such rate on any other suitable basis as it thought fit
fell to be determined. Speaking for the majority of the
Court, Gajendragadkar, J., observed that although the power
of delegation was a constituent element of
(1) [1959] S.C.R. 427. (2) [1959] Supp. 2 S.C.R. 71.
(3) [1961] S.C.R. 341.
300
legislative power, the legislature cannot delegate its
essential legislative function in any case and before it can
delegate any subsidiary or ancillary powers to a delegate of
its choice, it must lay down the legislature policy and
principle so as to afford the delegate proper guidance in
implementing the same.
In Corporation of Calcutta and Anr. v. Liberty Cinema(1), it
was held that the Calcutta Municipal Corporation had power
to levy fee pursuant to a resolution, in exercise of the
power under s. 548(2) of the Calcutta Municipal Act, 1951,
at such rates as may from time to time be fixed by the
Corporation. It was observed by the majority that the
fixing of the rate of a tax not be in of the essence of
legislative power may ’be left to a non-legislative body,
but when it is so left to another body the legislature must
provide guidance for such fixation, and that in the case
before the Court there was sufficient guidance in the Act
for determining the rate of the levy under S. 548.
Two recent cases may also be noticed : In B. Shama Rao v.
Union Territory of Pondicherry (2 ) this Court held that a
statute which extended the Act passed by another Legislature
as it stood immediately before the date on which it was to
be brought into force by a notification issued by the
Government was "void and still-born", because the
Legislature in enacting the Act in that manner had totally
abdicated its legislative functions and had surrendered it
in favour of another Legislature.
In M/s. Devi Das Gopal Krishan v. State of Punjab
and OrS.(2), Subba Rao C.J. speaking for the Court observed
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in dealino, with a case under the Punjab General Sales Tax
Act, 1948
"The Constitution confers a power and imposes
a duty on the legislature to make laws. The
essential legislative function is the
determination of the legislative policy and
its formulation as a rule of conduct. Obvi-
ously it cannot abdicate its functions in
favour of another. But in view of the
multifarious activities of a welfare State, it
cannot presumably work out all the details to
suit the varying aspects of a complex
situation. It must necessarily delegate the
working out of details to the executive or any
other agency. But there is a danger inherent
in such a process of delegation. An over-
burdened legislature or one controlled by a
powerful executive may unduly overstep the
limits of delegation. It may not lay down any
policy at all; it may declare its policy in
vague and general terms; it may not set down
(1) [1965] 2 S.C.R. 477.
(2) A.I.R. 1967 S.C. 1480
(3) A.I.R. 1967 S.C. 1895,1901.
301
any standard for the guidance of the
executive; it may confer an arbitrary power on
the executive to change or modify the policy
laid down by it without reserving for itself
any control over subordinate legislation.
This self effacement of legislative power in
favour of another agency either in whole or in
part is beyond the permissible limits of
delegation."
On a review of the cases the following principles appear to
be well-settled : (i) Under the Constitution the Legislature
has plenary powers within its allotted field; (ii) Essential
legislative function cannot be delegated by the Legislature,
that is, there can be no abdication of legislative function
or authority by complete effacement, or even partially in
respect of a particular topic or matter entrusted by the
Constitution to the Legislature; (iii) Power to make
subsidiary or ancillary legislation may however be entrusted
by the Legislature to another body of its choice, provided
there is enunciation of policy, principles, or standards
either expressly or by implication for the guidance of the
delegate in that behalf. Entrustment of power without
guidance amounts to excessive delegation of legislative
authority; (iv) Mere authority to legislative on a
particular topic does not confer authority to delegate its
power to legislate on that topic to another body. The power
conferred upon the Legislature on a topic is specifically
entrusted to that body, and it is a necessary intendment of
the constitutional provision which confers that power that
it shall not be delegated without laying down principles,
policy, standard or guidance to another body unless the
Constitution expressly permits delegation; and (v) the
taxing provisions are’ not exception to these rules.
It was asserted that the doctrine of excessive delegation of
legislative power is inapplicable to the conferment of
taxing power on local authorities. It was said that the
power to tax is in its essence a sovereign power of the
State, and since a Municipal Corporation exercises auxiliary
authority in the important business of local self-
government, in exercising the power to tax for limited
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municipal purposes, it is not acting as a delegate, but on
behalf of the State. We are unable to accept the broad
proposition that when authority is conferred upon a local
authority by the Legislature to tax, the local authority
exercising power so conferred acts as an agent of the-State.
A local authority is undoubtedly an instrument of the State
in the matter of local government restricted to a particular
area in which it functions. By investing a local authority
with powers of legislation for administration of the Act
relating to local government, sovereign power of the State
is entrusted to the body for limited purpose : but the
entrustment of power is as a delegate, and must in our view
be within the
302
limits of permissible entrustment consistent with the
constitutional scheme. The power of the State to legislate
in matters of taxation within the allotted field is plenary,
but in entrusting that power to a local authority the
legislature cannot confer unguided authority.
In our judgment, the constitutional power to legislate in
respect of a particular topic such as local government-in
Entry 5 List II of the Seventh Schedule-does not carry with
it the power to delegate the legislative functions of the
State. Entry 5 List II. confers upon the State the
authority to legislate in respect of local government that
is to say, the constitution and powers of municipal
corporations, improvement trusts, district boards, mining
settlement authorities and other local authorities for the
purpose of local self-government or village administration.
Authority to legislate in respect of powers of local bodies
may encompass authority to confer power upon the local
bodies to tax within certain specific fields in the
appropriate list But the power conferred by the legislative
entry cannot override the constitutional
limitations .against abdication of legislative authority.
The expression "power" therefore does not include authority
to delegate the essential legislative function without
disclosing principles, policy, or standard guiding the local
bodies in the exercise of the power.
Again the guidance which saves delegation from the vice of
,excessiveness may be express or may be implied : and the
extent ,of the guidance must be determined by the subject-
matter of legislation and the power entrusted. But, in our
judgment, the delegation cannot be upheld, merely because of
the special status, character, competence or capacity of the
delegate or by reference to the provisions made in the
statute to prevent abuse by the delegate of its authority.
The question is one of the restriction upon the power of the
legislative body to delegate the power of legislation and
that restriction is not removed because the delegate is a
high dignitary of the State or is especially versed in a
particular branch of administration or has special
information or is in a position to collect that information,
or is not likely to abuse its authority. The Constitution
entrusts the legislative functions to the legislative branch
of the State, and directs that the functions shall be
performed by that body to which the Constitution has
entrusted and not by some one else to whom the Legislature
at a given time thinks it proper to delegate the function
entrusted to it. A body of experts in a particular branch of
undoubted integrity or special competence may probably be in
a better position to exercise the power of legislation in
that branch, but the Constitution has chosen to invest the
elected representatives of the people to exercise the power
of legislation, and not to such bodies of ,experts. Any
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attempt on the part of the experts to usurp, or
303
of the representatives of the people to abdicate the
functions vested in the legislative branch is inconsistent
with the constitutional scheme. Power to make subordinate
or ancillary legislation may undoubtedly be conferred upon a
delegate, but the Legislature must in conferring that power
disclose the policy, principles or standards which are to
govern the delegate in the exercise of that power so as to
set out a guidance. Any delegation which transgresses this
limit infringes the constitutional scheme.
It is necessary then to consider whether in the present case
the Parliament has disclosed any policy, principles,
standards or guidance in conferring authority upon the
Corporation to fix the rates of tax selected by the
Corporation out of the list contained in s. 113 (2), to
select persons to be rendered liable to tax, the system of
assessment to be adopted and the exemptions, if any, to be
granted. The Act leaves it to the Corporation by resolution
to define the maximum limits of tax to be levied, the class
or classes of persons, or descriptions or descriptions of
articles and properties to be taxed, the system of
assessment to be adopted and the exemptions, if any, to be
granted. The Act discloses by express enactment no
standard, no principle and no policy laid down by the
Parliament to guide the Corporation in levying and
collecting the optional taxes. By providing in sub-s. (2)
of s. 150 that the resolution will come into force on or
from the date as may be specified in the order of sanction
of the Central Government, an overriding authority is
conferred upon the Union Executive, but that is not a
substitute for guidance. Counsel for the Corporation and
some interveners contended that the Act contained some
indications of policy and principles governing the exercise
of the power to tax. They relied upon the use of the
expression "for the purposes of this Act" in S. 1 13 (2) and
contended that this was sufficient guidance to the
Corporation. The Corporation is undoubtedly competent to
levy tax only for the purposes of the Act, and for no other
purpose and by providing expressly what is implicit in a
statute relating to municipal taxation no guidance is
furnished to the Corporation in the exercise of the power
delegated. Even if the expression "for the purposes of this
Act" were not used in s. 113(2), the Corporation could not
levy or collect taxes for purposes other than those for
which it is set up by the Act. The Corporation is a
statutory body charged with municipal administration. It is
a body corporate with power to acquire, hold and dispose of
property in its name, and is charged with municipal
government, and can exercise its powers only for the
purposes of the Act, and for no other purpose. Again by the
use of the expression "for the purposes of this Act" no
principle, policy, or standard is disclosed in the matter of
the rates of tax, liability of persons, objects or
transactions to be taxed, and the scheme or system of
taxation to be adopted.
304
It was then urged that the delegate being the Corporation
which is traditionally associated with the exercise of
functions in the sphere of local government, it has the same
powers which the State has within the limited field allotted
to it, and therefore when the Legislature of the State
confers upon the Corporation the power to tax, it is not in
substance delegating any legislative function, but investing
the Corporation with the State’s power to tax. As we have
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already observed, the power to tax vested in the State is
because of the exigencies of administration invested for
limited purposes in local bodies, but the investment is as a
delegate of, and not as an agency of, the State.
It was also said that the standards or guidance furnished by
the Act for exercising the delegated authority are to ’be
found in "the needs of the Corporation", and "needs of the
Corporation" are of necessity an adequate guidance. Strong
reliance in that behalf was placed upon the judgment of this
Court in the Liberty Cinema’s case(1), which we have already
referred. Sarkar, J., speaking for the majority of the
Court observed at p. 494 :
"It seems to us that there are various
decisions of this Court which support the
proposition that for a statutory provision for
raising revenue for the purposes of the
delegate, as the section now under
consideration is, the needs of the taxing body
for carrying out its functions under the
statute for which alone the taxing power was
conferred on it, may afford sufficient
guidance to make the power to fix the rate of
tax valid."
The learned Judge proceeded to derive the principle stated
by him from the decisions in The Western India Theatres Ltd
v. Municipal Corporation of the City of Poona(1); Vasantlal
Maganbhai Sajanwala v. The State of Bombay (3) ; Union of
India v. Bhana Mal Gulzari Mal(1); Harishankar Bagla v. The
State of Madhya Pradesh(2). But the cases cited did not
make the needs of the taxing body a test for determining
whether guidance was furnished to the delegate in exercising
the power to tax. While we agree with the view expressed by
Sarkar, J., that in the case of a self-governing local
authority with taxing power, a large amount of flexibility
in the guidance to be provided for the exercise of that
power must exist, we are unable to hold that because the
delegate is a local authority which "needs" large funds,
depending upon diverse and changing circumstances, the power
conferred upon the Corporation to adjust the tax to its
varying needs may be regarded as in adequate guide.
(1)[1965] 2 S.C.R. 477. (2) [1959] Supp. 2 S.C.R. 71. (3)
[1961] S.C.R. 341. (4) [1960] 2 S.C.R. 627.
(5) [1955] 1 S.C.R. 380.
305
If the needs of a local body be an indication of guidance,
the rule against excessive delegation of legislative
authority is reduced to a varnishing paint. The requirement
of a large degree of flexibility in the matter of municipal
taxation can in any event be no guidance in determining the
persons, properties or transactions, which are to be taxed
and the system of taxation to be adopted. Failure to give a
guidance in respect of all these matters exposes the
legislation to the vice ’of excessive delegation. In the
Liberty Cinema’s case(1) the Corporation was invested with
the power to fix the rates : the persons who were liable to
pay the tax, and the system of assessment were easily
determinable by the scheme of the Act and no question of
exemption fell to be determined.
In M/s. Devidas Gopal Krishnan’s case 2 Subba Rao, C.J.
speaking for the Court observed
"The argument of the learned Counsel (for the
State) that such a policy could be gathered
from the constitutional provisions cannot be
accepted, for, if accepted, it would destroy
the doctrine of excessive delegation. It
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would also sanction conferment of power by
Legislature on the executive Government
without laying down any guidelines in the
Act."
The Court was concerned with the delegation of uncontrolled’
power to the executive Government to fix rates of sales tax.
In, our judgment, in the case of a statute delegating taxing
power to a municipality, the same rule applies and a
guideline cannot be inferred from the constitutional
provision conferring power to tax.
It was also said that the action of the Corporation in
levying and imposing optional taxes is subject to a two-fold
control : (1) the Act expressly prescribes that the
resolution of the Corporation shall be sanctioned by the
Central Government before it becomes effective; and (2) that
the act of levying tax together with all incidental matters
is entrusted to a body of elected representatives of the
people who are responsible to the electorate. We do not
think that the existence of either of these controls
warrants a departure from the rule against excessive
delegation. They may probably operate as effective
safeguards against abuse. But the Constitution has
entrusted the power of legislation to the Parliament and has
also imposed a restriction against delegation of its
authority without setting out, guidance to the delegate; the
Parliament cannot by providing against abuse of its
functions by its delegate reduce the rigour of the rule
against excessive delegation of’ authority. The rule
against excessive delegation of legislative,power is a
restriction upon the power of Parliament : whether in a
given instance the rule is violated must depend on the
nature
(1) [1965] 2 S.C.R. 477.
(2) A.I.R. 1967 S.C. 1895,1901.
306
and the extent of delegation and not by the application of
the test that delegation of authority to some other body may
more ,effectively administer the Act. If the argument that
by imposition of controls which ensure that the power
delegated will not be abused by the Corporation is regarded
as determinative of the policy or principle guiding the
Corporation, it may be open to the Legislature in many other
cases e.g. in statutes relating to Income-tax Wealth-tax,
Sales-tax and the like, to delegate the power to tax
including the fixation of rates, persons, objects and
transactions to be charged, the system of taxation to be
adopted and other related matters to persons of
unimpeachable credit and undoubted technical competence,
with avenues and means for collecting The necessary
information and for acting upon it. Whether that scheme of
levying a tax may, on practical considerations be deemed
better suited to effective administration of the taxing Acts
than the vote of the elected representatives of the people
is a matte-,,on which no opinion need be expressed. It may
suffice to state that such entrustment of legislative power
with-out guidance is in consistent with the basic concept on
which our constitutional scheme is founded. Our
Constitution-makers have entrusted the power of legislation
to the elected representatives of the people so that the
power is exercised not only in the name of the people but by
the people. The rule against excessive delegation of
legislative authority is a necessary postulate of the
sovereignty of the people. It is not claimed to be nor
intended to be a panacea against the shortcomings of public
administration. Governance of the State in manner
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determined by the people through their representatives being
of the essence of our form of government, the plea that a
substitute scheme for governance through delegate; may be
more effective is destructive of our political structure.
If it be remembered that legislation on a given topic is
intended to be a declaration of the popular will relating to
the administration of that topic in the larger public
interest, the futility of the argument that a delegate of
the Legislature which is invested with the power to
determine and announce the popular will, may either because
of its special competence, or because of controls on it will
be as good as, or even better than, the legislature, becomes
obvious.
The circumstance that the affairs of the Corporation are
administered by the elected representatives responsible to
the people is in our judgment, wholly irrelevant in
determining whether the rule against excessive delegation
may be departed from. If that exception be true, the
Parliament may justifiably delegate its power to enact laws
to other bodies merely by the expedient of constituting
those bodies from among the representative of the people.
It may also be noticed that under s. 490 of the Delhi
Municipal Corporation Act’, 1957, in certain eventualities
the Central
307
Government may supersede the Corporation for such period as
may be specified in the order. When the order of
supersession is passed all councillors and aldermen vacate
their offices and during the period of supersession of the
Corporation, all powers and duties conferred and imposed
upon the Corporation are exercisable and performable by such
officer or authority as the Central Government may appoint
in that behalf, and that would include power of taxation.
Certainly during the period that the Corporation remains
under supersession, the power to tax would be exercised’ by
a nominee of the Central Government and not by the represen-
tatives of the people.
The Parliament has undoubtedly at any given time power to,
withdraw the delegated power in favour of the Corporation.
But by retaining authority to withdraw power from the
delegate, no. principles, policy, or standards governing the
delegate are set out. If an express provision which ensures
against abuse is not a substitute for guidance in another
garb, the power of the Parliament to, withdraw authority
will not for the like reason be a substitute.
It was then said that there has been a long standing
practice. in the Indian Legislatures for conferring upon the
Corporations and Municipalities power to tax in the form in
which it is conferred by s. 1 1 3 (2). But the issue of
constitutional validity of the provisions under challenge
cannot be permitted to be clouded by reference to a
practice, assuming that it is of a long duration. We have
not thought it necessary to, and it would be impossible for
us to examine all the statutes under which the power has, it
is claimed, been conferred upon the Corporations or
Municipalities in the form in which it has been conferred by
s. 113(2) of the Act.
It was also said that it is impossible for the Legislature,
having regard to the varying needs of the Municipalities to
lay down any guidance, principles or policy to govern them
in the imposition of diverse taxes. But that argument has,
in our judgment little substance. In the Delhi Municipal
Corporation Act, 1957, the imposition of major taxes set out
in sub-s. (1) of s. 113 is made subject to clear and precise
provisions providing for principles. policy and standards.
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It is only in respect of the optional taxes set out in sub-
s. (2) of s. 113 that no such guidance is disclosed. It was
also urged that fixing a maximum rate is not any guidance,
because it would be possible for the Legislature to fix a
maximum rate which is wholly unrelated to the realities, and
the formal requirement of guidance may, by prescribing that
unreal maximum, be complied with. But it is not suggested
that in all cases by fixing a maximum rate, a guidance would
be deemed to be supplied. Fixing of maximum rate which
prevents the Corporation or Municipality from levying a tax
at a rate higher than that
308
rate, to be a guidance, must not be wholly unrelated to the
demands of the Corporation, the capacity of the tax-payers
to bear the liability and the other relevant matters.
Reliance was sought to be placed upon the minority judgment
,of this Court in Municipal Board, Hapur v. Raghuvendra
Kripal and Ors. (1). The primary question which fell to be
determined in that case related to the validity of s. 135(3)
of the U.P. Municipalities Act 2 of 1916, which shut out all
enquiry into the regularity of the procedure by which tax
has been imposed after the sanction of the Government to a
resolution of the Municipality selecting a tax for
imposition had been obtained. It was held by the majority
that the rule of conclusive evidence in s. 135 (3) did not
shut out all enquiry by courts. The Court incidentally con-
sidered the question whether the enactment of s. 135 (3)
amounted to delegation of legislative power to tax insofar
as the rate and incidence were concerned and in the minority
judgment it was ,observed that the Legislature may delegate
to a subordinate authority the power ’to fix rates under
proper safeguards, and ’it is not necessary to specify all
the situations under which this can be ,done. It was
observed at p. 970 :
"But there can be no doubt that in the matter
of local taxation like taxation by municipal
boards, district boards and bodies of that
character there is pre-eminertly a case for
delegating the fixation of the rate of tax to
the local body, be it a municipal board or a
district board or some other board of that
kind. The reason for this is that problems of
different municipalities or districts may be
different and one municipality may require one
kind of tax at a particular rate at a
particular time while another municipality may
need another kind of tax at another rate at
some other time. Therefore, the legislature
can in the case of taxation by local bodies
delegate even the authority to fix the rate to
the local body provided it has taken care to
specify the safeguards in the form of
procedural provisions or such other forms as
it considers necessary in the matter of fixing
the rate."
If thereby it is meant that the rule against excessive
delegation of legislative power may be departed from on the
ground that the delegate is hedged in by controls or
restrictions which will prevent it from abusing its
authority, we are unable to agree. Safeguard% against abuse
do not alter the character of unauthorised delegation of
legislative power. They cannot be a substitute for the
guidance which the Constitutional Scheme requires that the
Parliament must give to a delcgate. As the validity of the
constitutional protection ,cannot be judged in the light of
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what the character, capacity or
(1) [1966] 1 S.C.R. 950.
309
special aptitude of the delegate may be, it cannot also be
djudged in the light of the provisions made against abuse of
power
Turning to the terms of S. 113(2) of the Act, we are of the
pinion that the Parliament has not set out the limits of the
tax which will be levied, persons from whom or the
transactions on which the taxes will be levied, the system
of taxation which will be adopted, and the exemptions, if
any, which will be granted. All these matters are left to
the Corporation. In possible cases such a power is capable
of the grossest abuse. We may, however, hasten to observe
that the vice of delegationlies not in its capacity for
abuse, but in its delegation beyond permissible limits and
contrary to the constitutional scheme. Undoubtedly
delegation of the authority to legislate on those mat ers is
always subject to the rule that the action of the delegate
which amounts to unreasor able exercise of the powers will
be invalid. But that does not alter the true character of
the rule against excessive delegation of legislative
authority.
In our view, the provisions of S. 150(1) insofar as they
leave to the Corporation to fix the maximum rates of tax to
be levied, class or classes of persons, or the description
or description of ,Articles and properties to be taxed, the
system of assessment to be adopted and the exemptions if any
to be granted are invalid. We hold that the Validating Act
35 of 1966 validly levies and imposes tax on consumption or
sale of electricity till March 31, 1966. It will however be
declared that S. 150(1) is void as permitting excessive
delegation of legislative authority to the Corporation.
Sikri, J. I have had the advantage of reading the judgments
prepared by the learned Chief Justice Hidayatuilah, J., and
Shah, J. I agree with the learned Chief Justice that the
appeals be allowed and with the order regarding costs. I
further agree with the reasons given by him for holding (a)
that the tax was imposed on consumption of electricity (b)
that the sanction by Government was in accordance with the
provisions of the Constitution, and (c) that the Validation
Act validated the levy and collection for the period April
1, 1960, to March, 1966. But as I hold different views as
to the powers of legislatures in India, I would briefly
indicate them.
Apart from authority in my view Parliament has full power to
delegate legislative authority to subordinate bodies. This
power flows, in my judgment, from At. 246 of the
Constitution. The word "exclusive" means exclusive of any
other legislature and not exclusive of any subordinate body.
There is, however, one resriction in this respect and that
is also contained in Art. 246.
310
Parliament must pass a law in respect of an item or items of
the relevant list. Negatively this means that Parliament
cannot abdicate its functions. It seems to me that this was
the position under the various Government of India Acts, and
the Constitution ha,, made no difference in this respect. I
read Hodge v. R.(1) and Power v. Appollo Candle Co.(1) as
laying down that legislature like Indian legislatures had
full power to delegate legislative authority to subordinate
bodies. In the judgments in these cases no such word as
"policy" "standard" or "guidance" is mentioned. It is true
that in Hodge v. R.(1) the words ’ancillary to legislation’
are mentioned but if we examine ss. 4 and 5 of the Liquor
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License Act, 1877, it would be found that no guidance is
contained in these sections for defining the conditions and
qualifications requisite to obtain tavern licenses, for
limiting the number of tavern and shop licenses, and the
nature of the penalty to be imposed for the infraction
thereof. Any person drafting these conditions and qualifi-
cations and other matters will find no guidance in S. 4 or
S. 5 of the Liquor License Act. It is, however, true that
the objective to be achieved is given in the Act and the
words "ancillary to legislation" in the context must mean
ancillary to the objective underlined in the legislation.
The case of In re : The Initiative and Referenidum Act(3)
provides an instance of abdication of functions by a
legislature. No inference can be drawn from this case that
delegations of the type with which we are concerned amount
to abdication of functions.
The question then arises : Is the Delhi Municipal
Corporation Act, 1957, a law with respect to any of the
items in List II ? The answer is plainly in the affirmative.
I can see no sign of abdication of its functions by
Parliament in this Act. On the contrary Parliament has
constituted the Corporation and prescribed its duties and
powers in great detail.
But assuming I am bound by authorities of this Court to rest
the validity of s. 113 (2) (d) and s. 150 of the Act by
ascertaining whether a guide or policy exists in the Act, I
find adequate guide or policy in the expression "purposes of
the Act" in s. 113. The Act has pointed out the objectives
or the results to be achieved and taxation can be levied
only for the purpose of achieving the objectives or the
results. This, in my view, is sufficient guidance
especially to a self-governing body like the Delhi Municipal
Corporation. It is not necessary to rely on the-safeguards
mentioned by the learned Chief Justice to sustain the
delegation.
There is no need to think that delegations of the present
type will lead to arbitrary taxation or rules. First, we
must have faith
(1) 9 A.C 117.
(2) 10 A.C. 282.
(3) [1919] A.C. 935.
311
in our representative bodies and secondly, I agree with the
learned Chief Justice and Hidayatullah, J., that in suitable
cases taxation in pursuance of delegated powers by a
Municipal Corporation can be struck down as unreasonable by
Courts. If Parliament chooses to delegate wide powers it
runs the risk of the bye-laws or the rules framed under the
delegated power being challenged as, unreasonable.
ORDER
In accordance with the opinion of the majority, the appeals
are allowed, the order of the High Court is set aside in so
far as it is against the appellant and the writ petitions
filed by the respondent are dismissed. There will be no
order as to costs, throughout.
R.K.P.S.
6Sup. Cl/68-7
312