AIR 1968 SC 1232 : (1968) 3 SCR 251

1968 (SLT SOFT) 100

SUPREME COURT OF INDIA
K. N. Wanchoo, C.J.I., M. Hidayatullah, J. C. Shah, S. M. Sikri, V.
Ramaswami, J. M. Shelat And C. A. Vaidialingam, JJ.
The Municipal Corporation of Delhi—Appellant
Versus
Birla Cotton, Spinning and Weaving Mills, Delhi and another—Respondent
Civil Appeals Nos. 1857 and 1858 of 1967, Decided on : 23-02-1968.
Delhi Municipal Corporation Act, 1957—Sections 113, 150 and 113(2)—
Constitution of India, 1950—Article 77
Counsel for the Parties:
Mr. C. K. Daphtary, Attorney General for India and Mr. H. R. Gokhale, Senior
Advocate (M/s. D. D. Chawla and K. Rajendra Chaudhuri, Advocates, with
them) , for Appellant (In both the Appeals)
Mr. A. K. Sen. Senior Advocate (Mr. B. Parthasarathy, Advocate. and. M/s. J. B.
Dadachanji and Ravinder Narain, Advocates of M/s. J. B. Dadachanji and Co.,
with him) , for Respondent No. 1 (In both the Appeals)
Mr. R. N. Sachthey, Advocate, for Respondent No 2 (In both the Appeals)
Mr. M. K Nambiyar, Senior Advocate (M/s. D. R Thandani, Dalip K Kapur and
Miss Bhuvanesh Kumari Advocates, and M /s. J. B Dadachanji and Ravinder
Narain. Advocates of M/s. J. B. Dadachanji and Co., with him) , for Intervener
No. 1
Mr N. A. Palkhiwala, Senior Advocate (M/s J. B Dadachanji and Ravinder
Narain, Advocates of M/s. J. B. Dadachanji and Co., with him) , for Interveners
Nos 2, 5 and 6, Mr Purshottam Trikamdas, Senior Advocate (Mr I N Shroff,
Advocate with him) , for Intervener No. 3
Mr. S. T. Desai, Senior Advocate (Mr. I. N. Shroff, Advocate, with him) , for
Intervener No. 4.
JUDGMENT
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-s. (1) of Section 150 of the Delhi
Municipal Corporation Act, No. 66 of 1957 (hereinafter referred to as the 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) ]. Further 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 a 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 Section 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 sub-section (3) of Section 150
the Corporation 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-section (3) of Section 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.
2. 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 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 Section 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 Section 109 (2) read with Section 150 (4) of the Act.
3. On December 3, 1966, Parliament passed the Delhi Municipal Corporation
(Validation of Electricity Tax) Act, No. 35 of 1966 thereinafter 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.
4. On February 17, l965, the Corporation passed another resolution in
pursuance of Section 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, l965. Thereafter the Corporation
passed the second resolution under Section 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.
 5. We may now refer to the grounds of the challenge. So far as 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 February 17, 1965 and
December 27, 1965, the main contention is that Section 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.
6. The High Court held, so far as the Validation Act is concerned 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
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 Section 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 before us.
7. Before we deal with the main question that has been argued before us,
namely, whether Section 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 3 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 sufferage. The total number of councillors is 80 and to these are
added 6 aldermen, 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 pubic 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, bridges, 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 firebrigade and the protection of life and
property in case of fire.
8. 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 or 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 with in 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
provisions 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.
9. 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 Section 113 of the Act. Section 113 consists
of two sub sections; 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 to say generally that in
most cases the Act has fixed 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 Section 150, which deals
with optional taxes and with which we are particularly concerned. It 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 Sec.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 specified in the order of
sanction.
(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.”
10. It will be seen that sub-section (1) of Section 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 Section 150 (1) delegates completely unguided power to the
Corporation in the matter of optional taxes and suffers from the vice of excessive
delegation and is unconstitutional.
11. 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 estimate (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 municipal
fund shall be made unless the expenditure of the same is covered by a current
budget-grant.
12. It is in the light of these provisions that we have to consider whether the
delegation made to the Corporation by Section 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 Section 150 transgressed the limits of permissible delegation.
13. 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 re, The Delhi Laws Act, 1912, (1951) SCR 747 and it was held in that
case that it could not be 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 limits of the policy and standard laid down in the law. Provided the
legislative policy is enunciated with sufficient clearness or a standard is laid
down, the courts should not interfere with the discretion that undoubtedly rests
with the legislature itself in determining the extent of delegation necessary in a
particular case.
14. In Raj Narain, Singh Chairman, Patna Administration Committee (1955)
1 SCR 290 the same question arose and it was held that “an 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 consists in the determination of the
legislative policy and its formulation as a binding rule of conduct”.
15. In Harishankar Bagla vs. State of Madhya Pradesh, (1955) 1 SCR 380 ,
Section 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 In re, The Delhi Laws Act, (supra) 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 the 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 Section 3 of the impugned Act was not ultra
vires the legislature on the ground of excessive delegation of legislative power.
16. In the Western India Theatres Ltd. vs. Municipal Corporation of the City
of Poona, (1959) 2 Suppl. SCR 71 , 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-clause
(i) of Clause (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 on the rate-payers and that power was unguided, uncanalised and
vagrant. The delegation was upheld by this Court on the ground that Section 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.
17. In Hamdard Dawakhana (Wakf) , Lal Kuan vs. Union of India, (1960) 2 SCR
671 , this Court struck down one provision of the impugned Act as the legislature
had established no criterion or standard and had not prescribed any principle 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.
18. In Vasantlal Maganbhai Sanjanwala vs. State of Bombay, (1961) 1 SCR
341 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, (i) whether it delegates essential legislative function or power and (ii)
whether the legislature has enunciated its policy and principle for the guidance of
the delegate.”
19. In Jyoti Pershad vs. Administrator for the Union Territory of Delhi,
(1962) 2 SCR 125 , in connection with the Slum Areas (Improvement and
Clearance) Act, 1956, it was observed that “so long as the legislature indicated in
the operative provisions of the statute with certainty, the policy and purpose of the
enactment, the mere fact that the legislation was skeletal or that every detail of the
application of law to a particular case, was not laid down in 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.”
20. The last case to which reference may be made is Devidas Gopa1
Krishnan vs. State of Punjab, AIR 1967 SC 1895. There the law on the subject of
excessive delegation was summarised thus at page No. 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. Obviously it cannot
abdicate its functions in favour of another. But in view of the rnultifarious
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-burdens 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 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 hold 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.”
21. It may be added that Devi Das’s case did not differ from the Liberty
Cinema case. What was held there was that there 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.
22. 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 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 Banarsi Das Bhanot vs.
State of Madhya Pradesh, (1959) SCR 427 , 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 Section
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 Banarsi Das’s case, (supra) 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 vs. Apollo
Candle Co., Ltd., (1885) 10 AC 282. In that case Section 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 unknown 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 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.”
23. 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 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 cave have in our opinion to
be read in the context of the words of Section 133 where full guidance was
provided as to the fixation of the rate.
24. In J. W. Hampton vs. United States, (1927) 72 Law Ed 624 = 276 US
394, 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 is given for the purpose. The observation in Banarsi
Das’s case, (supra) that rates of tax are not essential features of legislation
therefore seems, with respect, to be too broadly stated, 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.
25. The next case to which reference may be made is Corporation of Calcutta
vs. Liberty Cinema, (1965) 2 SCR 477 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 Banarsi Das’s case, (supra) 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.
26. The question again arose in Municipal Board, Hapur vs. Raghuvendra
Kripal, (1966) 1 SCR 950 . 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 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
was 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, 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 eves 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
provisions 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.
27. The last case to which reference may be made is Devi Das Gopal
Krishnan, (supra) . 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, (1965) 2 SCR 477 was
distinguished in this case and it was pointed out that the needs of the State and the
purposes of the Act could not give sufficient guidance for the purpose of fixing
rates 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 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. 28. A review of these
authorities therefore leads to the conclusion that so far as this Court is concerned
the principle is well established 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 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
dead 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.
29. 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 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 he 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 provision to see that reasonable rates are fixed, it can be said that there is
guidance in the matter of fixing 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 method 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.
30. 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 powers prevails 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 he delegated by the legislature to municipal corporations [See United
States vs. City of New Orleans, (1879) 25 Law Ed. 225].
31. 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 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 a 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 case however, there has been a
large area a 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 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.
32. We have already set out S. 150 of the Act which delegates power to the
Corporations to levy any of the optional taxes at such rates as it thinks fit and
further gives power to it 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 Section 150 of the Act.
33. 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 Section 490 of the Act provides for the a
supersession of the Corporation in case it 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 in crease 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 Section
150 is exercised by the elected body there will always be a check in the form of
the members thereof having to face the 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.
34. 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 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 ` 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 Section 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 guide-lines 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 guide-line
provided by the Act beyond which the Corporation cannot go.
35. Another limit and guide-line 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 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 guide-line 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.
36. Then there is the provision in Section 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 Section 150. We have a parliamentary 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 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 Section 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 guide lines, limits, controls or safeguards provided by the legislature
in the matter of the exercise of the power of taxation under Section 150 of the Act
by the Corporation. The legislature cannot in the circumstances be said to have
abdicated its power for 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 budget and fix rates of taxation; hut 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
entrusted 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 keeping 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 safeguards and controls
provided in the Act, procedural and otherwise, it is difficult to hold that the power
of taxation conferred on it is either uncanalised, arbitrary or without guidance or
policy.
37. 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 vs. Johnson, (1898) 2 QB 91 in connection with a
bye-law made by a county 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 held that 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 bye-law 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 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 is control in the court to strike down such an unreasonable
impost.
38. On a careful consideration therefore of the various provisions of the Act
we must hold that the power conferred by Section 150 of the Act on the
Corporation is not unguided in the circumstances and cannot be said to amount to
excessive delegation.
39. 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
consumption 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.
40. 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 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 not quite in accordance with the
provisions of Article 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 relating 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 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 opinion that the sanction has been given by the Central
Government as required by the Act.
41. 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-section (1) shall, for all purposes, be deemed to be,
and to have always been, validly levied or collected.
42. The argument which found favour with the High Court was that the
words of Section 2 only validated the levy and collection of tax for the year
ending March 31; 1960 and no further though the 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
upto March 31, 1966, the levy of the tax was not validated for the whole period by
Section 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, l966 is concerned. We are of opinion that
the High Court was in error in holding that the levy and collection 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 Section 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, l959 was passed was validated. It was on this ground that
the High Court held that the Validation Act validated the levy and collection of
tax at the rates fixed for the period from July 1, 1959 to March 31, 1960 The High
Court seems to have overlooked the second part of Section 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 Ist
day of July 1959 and up to and 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 Section
2 (1) , Parliament has clearly approved the rates deductible 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 Section 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 Section 2
(1) , that doubt is resolved by the words of Section 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
period from April 1, 1980 to March 31, 1966. We may go further and say that as
we read Section 2 (1) and Section 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.
43. 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.
44. Hidayatullah, J—(also on behalf of Ramaswami 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) 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 Section 150.
“150. Imposition of other taxes.
(1) The Corporation may, at a meeting, pass a resolution for the levy of any
of the taxes specified in sub-section (2) of S. 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 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.”
45. 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.
46. 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 Section 150 (1) stating the maximum
rate of tax. This resolution was approved by Government and a second resolution
was then adopted under Section 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.
47. The learned Chief Justice in his judgment has upheld the validity of the
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.
48. On the other point we agree with the conclusions of the learned Chief
Justice that the other appeal must also be allowed. 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 Sections 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 Section 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.
49. The charge here is that the power to impose the tax granted by Sections
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 the Parliament. This contention is raised because of the
gloss put upon the Delhi Laws Act case, (1951) SCR 747 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.
50. The Delhi Laws Act case, (1951) SCR 747 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 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 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 secumdana 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 the Delhi Laws Act case, (1951) SCR 747, particularly in AIR 1967
SC 1895 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 own will completely leaving the
application of the law to those circumstances which the legislature has already
predetermined.
51. 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.
52. But in our opinion, this matter goes further. Whether a legislature can
confer on a Municipal Corporation a power to levy a tax and how, is a very
different question from that which was resolved in the Delhi Laws Act case,
(1951) SCR 747 . 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 legislatures 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 delegates non potest delegare. We shall now discuss these two
questions.
53. 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. All 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, Jalan Trading Co. (Private) Ltd. vs.
Mill Mazdoor Union, (1967) 1 SCR 15 at page No. 59 , 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 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:
“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 “safeguards’’- See (1955) 1 SCR 380 . In
(1955) l SCR 290, the power to modify existing statutes was recognised provided
no essential feature was changed. In (1959) 2 Suppl. SCR 71 , 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 case, (1960) 2 SCR 671. the selection of diseases or conditions was
left to the Executive but was held not to be an instance of excessive delegation. In
(1959) SCR 427 , 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 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.”
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 (1885) 10 AC 282. 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 case, (1952) 2 SCR 477 the
rate of a tax was not considered a part of the essential legislative function.
54. 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 (1879) 25 Law Ed. 225 at page No. 226 may usefully be cited:
“The position that the power of taxation belongs exclusively 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 stream, or on a harbour 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 towards their
construction. The number and variety of works which may be authorised, 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
without the power of taxation would be a body without life, incapable of acting,
and serving no useful purpose.”
55. 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 I882 Lord
Ripon’s Government passed the wellknown 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.
56. We are concerned here with Parliament which by a concentration of all
the powers of legislation derived from all the three Legislative Lists becomes the
most competent and potent legislature 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, 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 legislature 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 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. 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 oft 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.
57.It is no use comparing compulsory taxes with optional taxes in the
Municipal Corporation Act. Even in the compulsory taxes [see for example
Sections 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 limit or between the maxima and minima
there is still a broad discretion in the Municipal Corporation. In making byelaws
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 Section 150 and
that which is to be done by Section 114 and several other sections. In fact, Section
150 is mild when compared with some of the other sections. We cannot agree to
the proposition which has been urged before us that Section 150 is excessive
delegation when these sections are not characterised as excessive delegation.
 58. Local bodies are subordinate branches of governmental activity. 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 of
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 self-government institutions in our country.
59. 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 inter-relation of taxes with expenditure has to be
maintained. This relation must be reasonable. Suppose it were to become
unreasonable. Is there no remedy? Now the rule regarding reasonableness of bye-
laws was laid down in 1898-2 QB 91. This rule has been universally accepted and
applied in India and elsewhere.
60. 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 vs. Municipal Board, Muttra, ILR (1939) All 770,Corporation of
Madras vs. Spencer and Co. Ltd., ILR 52 Mad 764, S. M. V. Raghavalu vs.
Corporation of Madras, ILR 53 Mad 722, Municipal Corporation of Rangoon vs.
Sooratee Bara Bazar Co Ltd., ILR 5 Rang 139 , Municipal Council Kumbakonam
V. Ralli Bros., AIR 1931 Mad 497. 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 vs.
Attorney-General of Canada. AIR 1939 PC 53 at page No. 57. 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.
61. 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.
62. 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.
63. Shah, J—The facts which give rise to the appeals have been set out in the
judgment just delivered, and need not be repeated.
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
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 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 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.”
64. 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, theatre-tax 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.
65. Section 109 deals with the adoption of the annual budget estimates of the
Corporation. It is provided by the first sub-s. 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 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.
66. 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.
67. 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 sub-section 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,
l959, 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 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.
68. 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 consumption or sale of electricity
“levied or collected or purporting to have been levied or collected in pursuance of
the 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.
69. 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-section (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 deemed to be a 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 Corporation 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.
70. 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 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 resolution, 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 ground for implying
that the Parliament was seeking to validate the levy of tax only for the year 1959-
60.
71. We may turn now to the second question on which the argument was
mainly advanced. It was conceded by the Attorney-General that under our
Constitutional scheme, the Parliament cannot abdicate its 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 legislative functions and
set up another authority or body to perform essential 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 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.
 72. 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 subordinate 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.
73. In Panama Refining Co. vs. A. D Ryan, (1935) 293 U. S. 388 = 79 Law
Ed .446, 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 dead directly. The
Constitution has never been regarded as denying to the Congress the necessary
resources of flexibility and practicability, which will enable it to perform its
function in laying down policies and establishing standards, while leaving to
selected instrumentalities 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
“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
such may not only give 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 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 vs. The Queen, (1883) 9 AC 117 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, (supra)
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 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 legislative 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 “delegatus 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 resolutions 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.
74. The Judicial Committee in re The Initiative and Referendum Act, 1919
AC 935 struck down the Initiative and Referendum Act (6 Geo. 5, c. 59,
Manitoba) on the ground that it would compel the Lieutenant-Governor 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 severable, the Colonial
Laws Validity Act, 1865, could not be applied to validate any part of the Act.
75. Opinion in this Court has with the passage of time become crystallized.
In re The Delhi Laws Act, 1912, (1951) SCR 747 two views were broadly
propounded. Patanjali Sastri, J., was of the view that the Indian Parliament acting
within the limits circumscribing its legislative power, is intended to have 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 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 Courts 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.
76. 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 socalled 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.
77. 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 Constitution 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 not legislate but will leave it to another to legislate
on that subject, there is abdication of legislative authority.
78. Mukherjea, J. was of the opinion that the legislature must retain in its
own hands the essential legislative functions 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.
79. 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 vs. Burah (1878) 5 Ind App. 178 (PC) , 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.
80. 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.
81. In (1955) 1 SCR 290, Bose, J., attempted to summarise the effect of the
various opinions expressed in the Delhi Laws Act case 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.
82. In (1955) 1 SCR 380 in dealing with the validity of Cl. 3 of the Cotton
Textile (Control of Movement) Order, 1948, promulgated by the Central
Government under Section 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.
83. Within the frame-work of the case law so far developed, Venkatarama
Aiyar J. in (1959) SCR 427 speaking for the majority observed:
“........ 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 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.
84. In (1959) 2 Suppl. SCR 71 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 Council
shall have been obtained prior in 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.
 85. In (1961) 1 SCR 341 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 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
legislative policy and principle so as to afford the delegate proper guidance in
implementing the same.
86. In (1965) 2 SCR 477 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 being 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.
87. Two recent cases may also be noticed:In B. Shama Rao vs. Union
Territory of Pondicherry, AIR 1967 SC 1480 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 stillborn”, 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.
88. In AIR 1967 SC 1895 at page No. 1901 Subba Rao, C. J., speaking for
the Court observed in dealing 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. Obviously 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 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”.
89. 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 legislate 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.
90. 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
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 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.
91. 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.
92. 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 attempt on the part of the
experts to usurp, or 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.
93. 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 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. 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. 113 (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 Section 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.
94. 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
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.
95. It was also said that the standards or guidance furnished by the Act for
exercising the delegated authority are to be found in the “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, (supra) , which we have already referred.
Sarkar, J., speaking for the majority of the Court observed at page No. 494 of
SCR:
“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 (1959) 2 Suppl. SCR 71 ; (1961) 1 SCR 341; Union of India vs.
Bhana Mal Gulzari Mal, (1960) 2 SCR 627 (1955) 1 SCR 380 . 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 an adequate
guide.
 96. 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, (supra) 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.
97. In Devidas Gopalkrishnan’s case (1967) 3 SCR 557 , 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 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.
98. 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 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 us 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 matter
on which no opinion need be expressed. It may suffice to state that such
entrustment of legislative power without guidance is inconsistent 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 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 delegates 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.
99. 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 representatives of the people.
100. It may also be noticed that under Section 490 of the Delhi Municipal
Corporation Act, 1957, in certain eventualities the Central 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
representatives of the people.
101. 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.
102. 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. 113 (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.
103. It was also said that it is impossible for the Legislature, having regard to
the serving 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 Section 113 is made subject to
clear and precise provisions providing for principles, policy and standards. It is
only in respect of the optional taxes set out in sub-sec. (2) of Section 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 rate to be a guidance,
must not be wholly related to the demands of the Corporation, the capacity of the
tax-payers to bear the liability and the other relevant matters.
104. Reliance was sought to be placed upon the minority judgment of this
Court in (1966) 1 SCR 950 . The primary question which fell to be determined in
that case related to the validity of Section 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 Section 135 (3) did not shut out
all enquiry by Courts. The Court incidentally considered the question whether the
enactment of Section 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 page No. 970 of
SCR:
“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-
eminently 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. 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.
105. Turning to the terms of Section 113 (2) of the Act, we are of the opinion
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 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 on those matters is always subject to the
rule that the action of the delegates which amounts to unreasonable exercise of the
power will be invalid. But that does not alter the true character of the rule against
excessive delegation of legislative authority.
106. In our view, the provisions of Section 150 (1) in so far 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.
107. Sikri, J—I have had the advantage of reading the judgments prepared by
the learned Chief Justice, Hidayatullah, 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.
108. Apart from authority, in my view Parliament has full power to delegate
legislative authority to subordinate bodies. This power flows, in my judgment,
from Art. 246 of the Constitution. The word “exclusive” means exclusive of any
 other legislature and not exclusive of any subordinate body. There is,
however, one restriction in this respect and that is also contained in Article 246.
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 verious Government of India Acts, and the
Constitution has made no difference in this respect. I read (1883) 9 AC 117 and
(1885) 10 AC 282 as laying down that legislatures 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 (1883) 9 AC 117 the words “ancillary to legislation” are mentioned
but if we examine Ss. 4 and 5 of the Liquor 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 qualifications and other matters
will find no guidance in Section 4 or Section 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.
109. The case of 1919 AC 935 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.
110. 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.
111. But assuming I am bound by authorities of this Court to test the validity
of Section 113 (2) (d) and Section 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 Section 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 safe-guards mentioned by the learned Chief Justice to
sustain the delegation.
112. There is no need to think that delegations of the present type will lead to
arbitrary taxation or rules. First, we must have faith 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 by-laws or the rules framed under
the delegated power being challenged as unreasonable.
113. 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.
Appeals allowed.
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