CORRECTED REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.5317 OF 2017 (Arising out of S.L.P.(C) No.29266 of 2016)

POWER MACHINES INDIA LIMITED …APPELLANT(S)

VERSUS

STATE OF MADHYA PRADESH & ORS. …RESPONDENT(S)

J U D G M E N T

ARUN MISHRA, J.

1. Leave granted.

2. This appeal has been preferred by the appellant – Power Machines

India  Ltd.,   aggrieved  by  the  judgment  and  order  dated  18.7.2016

passed  by  the  High  Court  of  Madhya  Pradesh  at  Jabalpur,  thereby

dismissing the Writ Petition filed by the appellant for declaring Rule 5 of

Madhya  Pradesh  Micro  and  Small  Enterprises  Facilitation  Council

Rules, 2006 (hereinafter referred to as “the Rules’) ultra vires, which had

been framed by the Government of Madhya Pradesh in exercise of the

power  conferred  by  section 30  read  with  section  21(3)  of  the  Micro,

Small  and  Medium  Enterprises  Development  Act,  2006  (hereinafter

referred to as “the Act of  2006”).  Rule 5 provides for recovery of  the

amount for  which award is  passed under section 18(3)  of  the Act of

2006 as arrears of land revenue thereby providing additional remedy for

recovery of the awarded sum than the one provided in section 36(1) of

the  Arbitration and Conciliation Act,  1996 (hereinafter  referred to  as

“the Act of 1996”).  

3. It is pertinent to mention that the award was passed under the Act

of 2006 by which the appellant was directed to pay awarded sum to

respondent No.3  i.e. Lakshmi Engineering Industries (Bhopal) Pvt. Ltd.

The award was passed by the Madhya Pradesh Facilitation Council for a

sum of  Rs.1,15,77,630/-  along  with  an  amount  of  Rs.1,04,96,746/-

towards interest up to 10.1.2013.  Payment of actual amount of interest

was @ three times of the bank rate as notified by the Reserve Bank of

India to be paid within 30 days of the award. The award was passed on

15.1.2014.  

4. The Collector, Noida, initiated recovery of the amount as per letter

dated  2.4.2016  issued  by  the  Madhya  Pradesh  Micro  and  Small

Enterprises Facilitation Council under the Rules. The recovery citation

was served upon the appellant on 20.4.2016 purported to be one under

the  Uttar  Pradesh Zamindari  Abolition and Land Reforms Act,  1950.

Another citation was received by the appellant on 16.5.2016 which was

issued on 20.4.2016. Thereafter, appellant filed a writ petition before the

Allahabad High Court for quashing the recovery proceedings. However,

Tehsildar of Dadri, Gautam Buddha Nagar on 23.5.2016 withdrew an

amount of Rs.1,18,78,588.14/- from the appellant’s bank account with

ICICI  Bank  pursuant  to  the  recovery  citation.  On  24.5.2016,  it  is

averred by the appellant that a further amount of Rs.2,12,33,618.57/-

was recovered from the bank account of the appellants with the State

Bank of India. The appellant filed Writ Petition [C] No.11824 of 2016 in

the High Court of Madhya Pradesh for declaring Rule 5 as  ultra vires.

The appellant filed another W.P. [C] No.12127 of 2016 for quashing the

recovery  proceedings  on  the  ground  that  the  recovery  was  not  in

compliance with Rule 5. The said writ petition questioning the rule had

been dismissed. Writ Petition [C] No.12127 of 2016 had been allowed by

the High Court of Madhya Pradesh and it permitted respondent No. 3 to

initiate recovery proceedings under the rule de novo and in accordance

with  law.  The  petition  filed  in  the  High  Court  of  Allahabad  was

dismissed in view of the fact that the aforesaid writ petition had been

allowed by the High Court of Madhya Pradesh.

5. The Tehsildar, Dadri issued fresh recovery proceedings under Rule

5 for recovery of Rs.5,29,58,937/- as per the award dated 15.1.2014.

Fresh recovery citation was served on the petitioner on 19.9.2016. The

High Court of Madhya Pradesh in the impugned judgment and order has

held that Rule 5 is not ultra vires and is in strict conformity with the Act

of 2006. Aggrieved thereby, the appeal has been preferred.   

6. It  was submitted by Mr.  P.  Chidambram and Dr.  A.M.  Singhvi,

learned senior counsel representing the appellant that Rule 5 is  ultra

vires,  arbitrary and violative of Article 14 of the Constitution of India

and is repugnant to the provisions contained in section 36 of the Act of

1996 read with the  provisions contained in section 18 of  the  Act  of

2006. It is beyond rule making power conferred under sections 21 and

30 of the Act of 2006. Once the provisions of the Code of Civil Procedure

(for  short,  ‘the CPC’)  had been made applicable,  recovery could have

been initiated only under Order 21 of the CPC which provides adequate

safeguards  to  the  judgment  debtor.  Order  21  Rule  22  of  the  CPC

provides that in case execution is made after more than two years, delay

has to be explained. There is power with the court to stay execution

under  Order  21  Rule  26  of  the  CPC.  Order  21  Rule  58  of  the  CPC

provides for an objection to attachment of property and the procedure is

provided under Order 21 for adjudication of objections. In case objection

is not entertained, there is a right to file a suit as provided in Order 21

Rule 58(1) of the CPC. Elaborate procedure is provided under Order 21

Rules 66, 69, 89 and 92 of the CPC with respect to sale, if required. The

remedy  provided  under  Rule  5  of  the  Rules  does  not  contain  the

aforesaid  safeguards and the  amount  can be  recovered outrightly  as

arrears of land revenue. Thus, the remedy is harsh under Rule 5 and

thus could not have been resorted to. It was also strenuously urged on

behalf of the appellants that in the four States only,  i.e., West Bengal,

Madhya Pradesh, Punjab & Haryana and Andhra Pradesh recovery is

made as per the CPC provided under section 36 of Act of 1996. Thus,

there is a discriminatory provision made by the four States which is

quite  arbitrary  and  impermissible.  States  could  not  have  enacted  a

provision in derogation to what is contained in the Central legislation.

7. It was contended on behalf of the respondents that the rule has

been framed within the purview of section 30 of the Act of 2006. It is in

furtherance of the objective of the Act to provide speedy recovery. There

is no repugnancy with the provisions of the Act of 2006 or that of the

Act of 1996. It is impermissible to provide inconsistent remedies also. In

such matters there is no question of conflict of provisions. It is open to

elect one of the remedies out of the available ones.

8. Before adverting to the rival submissions, it is appropriate to refer

to  the  relevant  provisions of  Rule  5  of  the  Rules  which provides  for

recovery of the amount awarded under the Act of 2006 read with the Act

of 1996.  Rule 5 is extracted hereunder :       

“5.Recovey of amount due as arrears of land revenue:

If a buyer does not file any appeal under section 19 of the Act for setting aside any decree, award or other order made either by the Council itself or by any institution or centre or if such appeal is dismissed, in that situation such decree, award or  order  shall  be  executed  by  the  Collector  of  the  District concerned and the amount due shall be recovered as arrears of land revenue.”

  9. The aforesaid Rule 5 has been framed in exercise of the power

conferred  by  the  State  Government  to  frame  the  rules  under

section 30 of the Act of 2006 which enables the State Government

to make the rules.  Section 30 is extracted hereunder :

“30. Power to make rules by State Government.—(1) The State Government may, by notification, make rules to carry out the provisions of this Act. (2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:— (a)  the  composition  of  the  Micro  and  Small  Enterprises Facilitation  Council,  the  manner  of  filling  vacancies  of  the members and the procedure to be followed in the discharge of their  functions  by  the  members  of  the  Micro  and  Small Enterprises  Facilitation  Council  under  sub-section  (3)  of Section 21; (b) any other matter which is to be or may be, prescribed under this Act. (3) The rule made under this section shall, as soon as may be after  it  is  made,  be  laid  before  each  House  of  the  State Legislature where there are two Houses,  and where there is one House of the State Legislature, before that House.”

Section 30 enables the State Government to make rules to carry

out the provisions of  the Act.  The power is  general  and pervasive  in

nature. It encompasses any other matter which is to be and may be

prescribed under the Act,  and the Rule  is  required to be laid in the

House of the State Legislature.

10. The Act of 2006 has been enacted for the benefit of micro, small

and  medium  enterprises.  The  object  of  the  Act  is  to  provide  for

facilitating  the  promotion  and  development,  enhancing  the

competitiveness  of  micro,  small  and  medium  enterprises  and  the

matters connected therewith or incidental thereto. Section 18 of the Act

of 2006 is extracted hereunder :

“18. Reference to Micro and Small Enterprises Facilitation Council.—(1)  Notwithstanding  anything  contained  in  any other law for the time being in force, any party to a dispute may, with regard to any amount due under Section 17, make a reference  to  the  Micro  and  Small  Enterprises  Facilitation Council. (2) On receipt of a reference under sub-section (1), the Council shall either itself conduct conciliation in the matter or seek the assistance  of  any  institution  or  centre  providing  alternate dispute resolution services by making a reference to such an institution  or  centre,  for  conducting  conciliation  and  the provisions  of  Sections  65  to  81  of  the  Arbitration  and Conciliation  Act,  1996  (26  of  1996)  shall  apply  to  such  a dispute as if the conciliation was initiated under Part III of that Act. (3) Where the conciliation initiated under sub-section (2) is not successful  and  stands  terminated  without  any  settlement between the parties, the Council shall either itself take up the dispute for  arbitration or refer it  to any institution or centre providing  alternate  dispute  resolution  services  for  such arbitration  and  the  provisions  of  the  Arbitration  and Conciliation Act,  1996 (26 of 1996) shall  then apply to the disputes as if the arbitration was in pursuance of an arbitration agreement referred to in sub-section (1) of Section 7 of that Act.”

(4) Notwithstanding anything contained in any other law for the  time  being  in  force,  the  Micro  and  Small  Enterprises Facilitation Council or the centre providing alternate dispute resolution  services  shall  have  jurisdiction  to  act  as  an Arbitrator  or  Conciliator  under  this  section  in  a  dispute between the supplier located within its jurisdiction and a buyer located anywhere in India. (5) Every reference made under this section shall be decided within a period of ninety days from the date of making such a reference..”

Section 18(1)  of  the  Act  of  2006 provides that  the  dispute with

respect to any amount due under section 17 may be referred to the

Facilitation Council.  On reference  being made,  the Council  can itself

conduct  reconciliation  with  the  assistance  of  any  institution or  ADR

Centre.  In that case provisions of sections 65 to 81 of the Act of 1996

shall  apply  and  in  case  conciliation  under  section  18(2)  is  not

successful, Council shall either itself take up the dispute for arbitration

or  refer  it  to  some  other  Centre  or  institution  for  arbitration  and

thereupon the provisions of the Act of 1996 shall apply.  

11. Section 36 of the Act of 1996 provides that once the time for filing

application to set aside an arbitral award under section 34 has expired,

the same shall be enforced in accordance with the provisions of the CPC

as if it were a decree of the court. Section 36(1) is extracted hereunder :

“36.  Enforcement.—  (1)  Where  the  time  for  making  an application to set aside the arbitral award under section 34 has expired, then, subject to the provisions of sub-section (2), such award shall be enforced in accordance with the provisions of

the Code of Civil Procedure, 1908 (5 of 1908), in the same manner as if it were a decree of the court. (2)  Where an application to set  aside the arbitral award has been filed in the Court under section 34, the filing of such an application shall not by itself render that award unenforceable, unless the Court grants an order of stay of the operation of the said  arbitral  award  in  accordance  with  the  provisions  of sub-section  (3),  on  a  separate  application  made  for  that purpose. (3) Upon filing of an application under sub-section (2) for stay of the operation of the arbitral award, the Court may, subject to such conditions as it may deem fit, grant stay of the operation of such award for reasons to be recorded in writing: Provided that the Court shall, while considering the application for grant of stay in the case of an arbitral award for payment of money, have due regard to the provisions for grant of stay of a money  decree  under  the  provisions  of  the  Code  of  Civil Procedure, 1908 (5 of 1908).”

No doubt about  it  that  by virtue  of  the  provisions contained in

section 18(3) of the Act of 2006, the provisions contained in section 36

of the Act of 1996 are clearly applicable and it is permissible to execute

the  arbitral  award  in  accordance  with  the  procedure  prescribed  for

execution of a decree under the CPC.

12. However,  the  question  in  the  instant  case  is  whether  it  was

permissible to the State Government to enact Rule 5 of the Rules for

recovery of the amount as arrears of land revenue and whether speedy

remedy could have been provided under the Rules framed under the Act

of 2006, notwithstanding the remedy as provided in section 36 of the

Act of 1996 for executing the arbitral award as a decree in accordance

with the provisions of the CPC, while providing remedy the State has

exceeded its ken of powers.

13. Section 30 of the Act of 2006 extracted above clearly authorizes the

State Government to frame the rules to carry out the provisions of the

Act and the power is general,  as is apparent from reading of  section

30(1), 30(2) and 30(2)(b). The objective of the Act is to provide protection

to  the  micro,  small  and  medium  enterprises  and  to  facilitate  their

development.  In  order  to  carry  out  the  objective  of  the  Act  speedy

recovery mechanism has been provided under Rule 5 of  the Rule  by

providing that amount awarded in an arbitral award can be recovered as

arrears of land revenue. No doubt that Rule 5 is inconsistent with the

provisions contained in section 36(1) of the Act of 1996 which provides

recovery mechanism under Order 21 of CPC as a decree, but, in the

matter  of  providing  such  remedies,  it  is  open  to  legislate  different

remedies  which  may  be  inconsistent.  It  is  a  question  of  electing  a

remedy. Election of a remedy for recovery of the amount would depend

upon the choice of the award-holder. Both the provisions i.e. section 36

of  the Act of  1996 as well  as Rule 5 of  the Rules of  2006 intend to

recover  the  amount  though  by  different  procedures.  Intendment  of

provisions is same. There is no question of any prejudice being caused

to the judgment debtor.

14. In  Bihar  State  Co-operative  Marketing  Union  Ltd.  v.  Uma

Shankar Sharan & Anr. (1992) 4 SCC 196 question arose of plurality

of the remedies provided under sections 40 and 48 of the Bihar and

Orissa  Cooperative  Societies  Act,  1935.  Both  the  provisions  may  be

attracted to a case. It was held that application of section 40 will not

exclude operation of section 48. It is only a question where one of the

provisions has to be opted. This Court has further held that when two

remedies  are  provided  under  a  statute  even  if  inconsistent,  would

continue to be in operation until one of them is elected for application.

Even if the two remedies happen to be inconsistent, they continue for

the person concerned to choose from, until he elects one of them, for

commencing an action. As no action under section 40 was taken, this

Court held that section 48 was available to the appellant for recovery of

the loss. This Court in Bihar State Cooperative Marketing Union Ltd.

(supra) has laid down thus :

“6. Validity  of  plural  remedies,  if  available  under  the  law, cannot  be  doubted.  If  any  standard  book  on  the  subject  is examined, it  will  be found that the debate is directed to the application  of  the  principle  of  election,  where  two or  more remedies are available to a person. Even if the two remedies happen  to  be  inconsistent,  they  continue  for  the  person concerned  to  choose  from,  until  he  elects  one  of  them, commencing an action accordingly. In the present case there is no such problem as no steps under Section 40 were ever taken by the appellant. The provisions of Section 48 must, therefore, be held to be available to the appellant for recovery of the loss.

7. Our view that a matter which may attract Section 40 of the Act  will  continue to  be  governed by Section 48 also  if  the necessary  conditions  are  fulfilled,  is  consistent  with  the decision  of  this  Court  in  Prem  Jeet  Kumar v.  Surender Gandotra arising under the Delhi Co-operative Societies Act, 1972. The two Acts are similar and Sections 40 and 48 of the Bihar Act and Sections 59 and 60 of the Delhi Act are in pari materia. The reported judgment followed an earlier decision of this Court in  Pentakota Srirakulu v.  Co-operative Marketing Society Ltd. We accordingly hold that the High Court was in error in assuming that the application of provisions of Section 48 of the Bihar Act could not be applied to the present case for the reason that Section 40 was attracted.”

It  is  apparent  from  the  aforesaid  dictum  of  this  Court  that

providing of  plural  remedies is valid when two or more remedies are

available to a person even if inconsistent, they are valid. It is for the

person to elect one of them and there is no question of repugnancy in

providing such remedy.  

15. In “Principles of Statutory Interpretation” by Justice G.P. Singh, 14th

Edn. while dealing with the question of inconsistency and repugnancy,

it has been observed that harmonious construction has to be adopted

and  the  principle  that  special  provision  excludes  the  application  of

general provision has not been applied when two provisions deal with

the remedies for the reason that the validity of plural remedies cannot

be  doubted,  even if  the  two remedies  are  inconsistent,  court  has  to

harmonize the provisions. Following discussion has been made :

“(b)   Inconsistency  and  repugnancy  to  be  avoided;

harmonious construction It has already been seen that a statute must be read as a

whole and one provision of the Act should be construed with reference to other provisions in the same Act so as to make consistent enactment of the whole statute.  Such a construction has  the  merit  of  avoiding  any  inconsistency  or  repugnancy either within a section or between a section and other parts of the statute.  It is the duty of the courts to avoid “a head on clash” between two sections of the same Act and, “whenever it is  possible to do so, to construe provisions which appear to conflict so that they harmonise”. Accordingly, the provisions of the Maharashtra Regional  and Town Planning Act,  1966, were read together by the Supreme Court and after noting the purpose  of  the  Act.   The  Act  was  held  not  to  envisage  a situation of conflict, and therefore, the edges were required to be ironed out to read those provisions of the Act which were slightly incongruous, so that all of them are read in consonance with the object of the Act, which is to bring about orderly and planned development.  It should not be lightly assumed that “Parliament had given with one hand what it took away with the other”.  The provisions of one section of a statute cannot be used to defeat those of another “unless it is impossible to effect reconciliation between them”.  The same rule applies in regard to sub-sections of a section.  In the words of Gajendragadkar, J. “The sub-sections must be read as parts of an integral whole and as  being interdependent;  an attempt  should  be made in construing them to reconcile them if it is reasonably possible to do so, and to avoid repugnancy”.  As stated by Venkatarama Aiyer, J., “The rule of construction is well settled that when there  are  in  an  enactment  two  provisions  which  cannot  be reconciled with each other, they should be so interpreted that, if  possible,  effect  should be given to both.   This is  what is known as the rule of harmonious construction”.  That, effect should be given to both, is the very essence of the rule.  Thus a construction that reduces one of the provisions to a “useless lumber” or  dead letter” is not  harmonious construction.   To harmonise is not to destroy.  A familiar approach in all such cases is to find out which of the two apparently conflicting provisions is more general and which is more specific and to construe the more general one as to exclude the more specific. The question as to the relative nature of the provisions general or special has to be determined with reference to the area and

extent  of  their  application  either  generally  or  specially  in particular situations. The principle is expressed in the maxims Generalia specialibus non derogant,  and Generalibus specilia derogant.  If a special provisions is made on a certain matter, that matter is excluded from the general provision.  Apart from resolving  conflict  between  two  provisions  in  the  Act,  the principle can also be used for resolving a conflict between a provision in the Act and a rule made under the Act.  Further, these principles have also been applied in resolving a conflict between  two  different  Acts  and  two  provisions  in  the Constitution added by two different Constitutions Amendment Acts and in the construction of statutory rules and statutory orders.  But the principle, that a special provision on a matter excludes the application of a general provision on that matter, has  not  been  applied  when  the  two  provisions  deal  with remedies,  for validity of plural remedies cannot be doubted. Even  if  the  two  remedies  happen  to  be  inconsistent,  they continue for  the person concerned to choose from. Until  he elects one of them.”

16. Thus, the submission raised by learned senior counsel on behalf of

the  appellant  that  Rule  5  is  inconsistent  and  repugnant  to  the

provisions of  section 36 of the Act of 1996 cannot withstand judicial

scrutiny  and  is  liable  to  be  rejected  on  the  anvil  of  the  aforesaid

reasoning.    

17. This Court while considering the provisions of Securitisation and

Reconstruction of Financial Assets and Enforcement of Security Interest

Act, 2002 (SARFAESI Act) in Mardia Chemicals Ltd. & Ors. v. Union

of  India (2004)  4  SCC  311  has  held  that  secured  interest  can  be

enforced  without  intervention  of  the  court.  This  Court  has  also  laid

down that there is a presumption of constitutionality in favour of the

legislation. While considering presumption in favour of such legislation

it would be necessary to see that the person aggrieved gets a fair deal at

the hands of those vested with power under such legislation. This Court

also considered the question whether the SARFAESI Act was uncalled

for and a superimposition of an undesired law in the light of operation of

the  Recovery  of  Debts  Due  to  Banks  and Financial  Institutions  Act,

1993  in  the  field.  This  Court  has  laid  down that  given  the  level  of

indebtedness and NPAs on the balance-sheets of banks and financial

institutions, the time taken for recovery of debts via the civil courts, the

importance  of  liquid  and  solvent  banks  and  financial  institutions  to

economic progress, especially in the present day global economy with a

need to give up old and conventional methods of financing and recovery

of  debts,  and the failure of  the 1993 Act  to bring about the desired

results, it could not be said that a step taken towards securitization of

debts and to evolve means for faster recovery of NPAs was not called for.

This Court has also laid down that  primacy is  to be given to public

interest over private interest. Thus, the provision of recovery outrightly,

without recourse to the Civil Court,  was upheld. In the instant case, the

recovery  of  arrears  of  land  revenue  has  been  resorted  to  after

adjudication process when arbitral award had been passed and when it

is not objected to within the time prescribed under section 34 of the Act

of 1996. Thus, the procedure cannot be said to be illegal or arbitrary in

any  manner  and  cannot  be  said  to  be  violative  of  Article  14  of  the

Constitution, as contended by the appellant.  On the basis of aforesaid

reasoning it  is clear that Code of Civil  Procedure cannot be the only

remedy.  It is open to legislate recovery mechanism without interference

of Civil Court.   

18. The submission was raised on behalf of the appellant that Order 21

of the CPC provides more safeguards under different rules, which are

referred  to  above,  to  a  judgment  debtor  to  raise  various  kinds  of

objections to file suits and has a right to object also at various stages.

No doubt that a detailed procedure is provided under the CPC. But by

now it is well known that after a decree is obtained, it has become more

difficult to ensure its speedy execution due to misuse of the provisions

by unscrupulous judgment debtors of  a detailed procedure prescribed

for  execution of  a  decree  in  CPC which was  never  envisaged.  Thus,

providing a speedy recovery by way of arrears of land revenue, in fact,

was the need of the day and Rule 5 has been rightly enacted to ensure

speedy recovery and to ensure that small, micro and medium industries

do not suffer.  

19. We find no force in the submission that the recovery procedure as

arrears of land revenue is harsh. It is quite reasonable and is provided

in  various  enactments  for  recovery  of  the  sums due.  The  procedure

cannot be said to be illegal, arbitrary, onerous or harsh in any manner.

20. Learned counsel appearing on behalf of the appellant has placed

reliance  on  the  decision  in  Agricultural  Market  Committee  v.

Shalimar Chemical Works Ltd. (1997) 5 SCC 516 which has been laid

down thus :

“24. The power of delegation is a constituent element of the legislative  power  as  a  whole  under Article  245 of  the Constitution  and  other  relative  Articles  and  when  the Legislatures enact laws to meet the challenge of the complex socio-economic  problems,  they  often  find  it  convenient  and necessary  to  delegate  subsidiary  or  ancillary  powers  to delegates of their choice for carrying out the policy laid down by the Acts as part of the Administrative Law. The Legislature has to lay down the legislative policy and prin-ciple to afford guidance for carrying out the said policy before it delegates its subsidiary  powers  in  that  behalf  (See: Vasantlal  Maganbhai Sanjanwala v. The State of Bombay and Others, [1961] 1 SCR 341.  This  Court  in  another  case,  namely, The  Municipal Corporation of Delhi v. Birla Cotton, Spinning and Weaving Mills, Delhi and Another, AIR (1968) SC 1232 as also in an earlier  decision  in  In  Re  : The  Delhi  Laws  Act,  1912,  The Ajmer-Merwara (Extension of Laws) Act, 1947, and The Part C States (Laws) Act, 1950, [1951] SCR 747 has laid down the principle that 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 concerned. 25. In Avinder Singh v. State of Punjab, [1979] 1 SCC 137, Krishna  Iyer,  J.  laid  down  the  following  tests  for  valid delegation of legislative power. These are : "(1) the legislature cannot efface itself : (2) it cannot delegate the plenary or the essential legislative function; (3)  even  if  there  be  delegation,  Parliamentary  control  over

delegated  legislation  should  be  a  living  continuity  as  a constitution-al necessity." It was further observed as under :

"While what constitutes an essential feature cannot be delineated in detail it certainly cannot include a change of  policy.  The  legislature  is  the  master  of  legislative policy and if the delegate is free to switch policy it may be usurpation of legislative power itself."

26.  The  principle  which,  therefore,  emerges  out  is  that  the essential legislative function consists of the determination of the  legislative  policy  and  the  Legislature  cannot  abdicate essential  legislative  function  in  favour  of  another. Power  to make  subsidiary  legislation  may  be  entrusted  by  the Legislature to another body of its choice but the Legislature should,  before  delegating,  enunciate  either  expressly  or  by implication, the policy and the principles for the guidance of the delegates. These principles also apply to Taxing Statutes. The effect of these principles is that the delegate which has been authorised to make subsidiary Rules and Regulations has to work within the scope of its authority and cannot widen or constrict  the  scope  of  the  Act  or  the  policy  laid  down thereunder. It cannot, in the garb of making Rules, legislate on the field covered by the Act and has to restrict  itself to the mode of implementation of the policy and purpose of the Act.”

This Court has laid down that the legislature has to lay down the

legislative policy to delegate for carrying out the said policy. What can be

delegated  is  the  task  of  the  subordinate  legislation  necessary  for

implementing the purposes and objects of the Act. In the instant case by

exercising  the  rule  making  power  conferred  under  Section  30,  the

purpose  of  the  Act  of  2006  is  being  protected.  The  rule  intends  to

implement  the  object.  It  cannot  be  said  that  authority  has  been

exceeded nor it can be said that the scope of the Act has been widened

or  constricted  under  the  garb  of  rule  making  power.  Object  of  both

provisions is to ensure recovery.

21. Reliance has also been placed on a decision of this Court in  Dr.

Mahachandra  Prasad  Singh  v.  Chairman,  Bihar  Legislative

Council & Ors. (2004) 8 SCC 747 in which this Court has observed

that delegated legislations are subject to certain fundamental factors.

The  delegatee  is  not  intended to  travel  wider  than the  object  of  the

legislature. A delegatee cannot extend the scope or general operation of

the enactment but power is strictly ancillary. This Court has laid down

thus:

“13. It may be noted that under Paragraph 8, the Chairman or the Speaker of a House is empowered to make rules for giving effect to the provisions of the Tenth Schedule. The rules being delegated legislation are subject to certain fundamental factors. Underlying the  concept  of  delegated  legislation  is  the  basic principle  that  the  legislature  delegates  because  it  cannot directly exert its will in every detail. All it can in practice do is to lay down the outline. This means that the intention of the legislature,  as  indicated  in  the  outline  (that  is  the  enabling Act),  must  be  the  prime guide to  the meaning of  delegated legislation and the extent of the power to make it.  The true extent of the power governs the legal meaning of the delegated legislation. The delegate is not intended to travel wider than the object of the legislature. The delegate’s function is to serve and promote that object, while at all times remaining true to it. That is the rule of primary intention. Power delegated by an enactment  does  not  enable  the  authority  by  regulations  to extend the scope or general operation of the enactment but is strictly ancillary. It will authorise the provision of subsidiary means of  carrying into effect  what  is  enacted in  the statute itself and will cover what is incidental to the execution of its

specific provision. But such a power will not support attempts to widen the purposes of  the Act,  to  add new and different means of carrying them out or to depart from or vary its ends. (See Section 59 in chapter “Delegated Legislation” in Francis Bennion’s  Statutory  Interpretation,  3rd  Edn.)  The  aforesaid principle will apply with greater rigour where rules have been framed  in  exercise  of  power  conferred  by  a  constitutional provision.  No rules can be framed which have the effect  of either enlarging or restricting the content and amplitude of the relevant constitutional provisions. Similarly, the rules should be interpreted consistent with the aforesaid principle.”

In our opinion Rule 5 of the Rules being a remedial provision is

ancillary. It is open to provide for an additional speedier remedy so as to

carry out the objective of the Act.

22. Reliance has also been placed on a decision of this Court in B.K.

Srinivasan & Ors. v. State of Karnataka & Ors. (1987) 1 SCC 618 in

which this Court considered the question that subordinate legislation,

in  order  to  take  effect,  must  be  published  or  promulgated  in  some

suitable  manner.  Where  the  parent  statute  prescribes  the  mode  of

publication  or  promulgation  that  mode  must  be  followed.  Mode  of

publication of  subordinate legislation should be reasonable,  which is

necessary,  only  then  it  will  take  effect.  The  question  was  entirely

different. Even otherwise procedure for recovery of land revenue is quite

reasonable.  

23. Reliance has been placed on Academy of Nutrition Improvement

& Ors. v. Union of India etc. (2011) 8 SCC 274 in which this Court

has laid down thus :

“66. Statutes  delegating  the  power  to  make  rules  follow  a standard  pattern.  The  relevant  section  would  first  contain  a provision granting the power to make rules to the delegate in general terms, by using the words “to carry out the provisions of this Act” or “to carry out the purposes of this Act”. This is usually  followed  by  another  sub-section  enumerating  the matters/areas in regard to which specific power is delegated by using  the  words  “in  particular  and without  prejudice  to  the generality of the foregoing power, such rules may provide for all  or  any  of  the  following  matters”.  Interpreting  such provisions, this Court in a number of decisions has held that where power is conferred to make subordinate legislation in general  terms,  the  subsequent  particularization  of  the matters/topics has to be construed as merely illustrative and not  limiting  the  scope  of  the  general  power.  Consequently, even if the specific enumerated topics in Section 23(1-A) may not empower the Central Government to make the impugned rule  (Rule  44-I),  making  of  the  rule  can  be  justified  with reference  to  the  general  power  conferred  on  the  Central Government under Section 23(1), provided the rule does not travel beyond the scope of the Act.

“But even a general power to make rules or regulations for carrying out or giving effect to the Act,  is  strictly ancillary in nature and cannot enable the authority on whom the  power  is  conferred  to  extend  the  scope  of general operation of the Act.  Therefore,  such a power ‘will not support attempts to widen the purposes of the Act, to add new and different means to carrying them out, to depart from or vary its terms’.”

Considering the question of power of food authority under section

7(iv)  to  ban a food article  in interest of  public  vis-à-vis power of  the

Central Government under section 23 to make rule, it was held that the

Central Government cannot exercise power under section 23 to ban use

of non-iodised salt for human consumption. Thus, provision of Rule 44-I

of  Prevention of  Food Adulteration Rules,  1955 was held  to  be  ultra

vires. Rule 44-I was wholly outside the scope of the Act. It was held not

to be a rule made or required to be made to carry out the provisions of

the Act having regard to its object and the scheme whereas the position

in the instant case is juxtaposed. Hence the decision is of no help to the

appellants.

24. Similarly reliance has been placed on a decision of this Court in

General  Officer  Commanding-in-Chief  &  Anr.  v.  Dr.  Subhash

Chandra Yadav & Anr. (1988) 2 SCC 351. Rules were framed enabling

the transfer of one Cantonment Board’s employee to another. It was held

that  service  was  not  transferable  as  such  Rule  5  was  ultra  vires of

section 280(2)(c) of the Cantonments Act, 1924. On facts the case has

no application.  

25. Reliance  has  also  been  placed  on  International  Airports

Authority of India v. K.D. Bali & Anr. (1988) 2 SCC 360 in which it

has been laid down that when subordinate legislation is in conflict with

the Parent Act then it  must give way to the substantive statute.  The

principle has no application in the case of remedial statutory provisions

as plurality of inconsistent remedies can always be provided and only

one remedy has to be chosen. In  Avinder Singh & Ors. v. State of

Punjab & Ors. (1979) 1 SCC 137, it has been laid down that a delegate

is not free to switch policy laid down by the Legislature.  On the anvil of

the aforesaid reasons, the decision is of no utility to the cause espoused.

26. Reliance has also been placed on Suraj Mall Mohta & Co. v. A.V.

Visvanatha Sastri  & Anr. (1955)  1 SCR 448 in which it  has  been

observed that if  persons dealt with by the impugned Act are deprived of

the substantial and valuable privileges which they would otherwise have

if  they  were  dealt  with  under  the  Indian  Income-Tax  Act,  in  that

situation  it  is  no  defense  to  say  that  discriminatory  procedure  also

advances the course of justice. The matter has to be judged from the

point of view of the ordinary reasonable man and not from the point of

view of the Government. The ordinary reasonable man would say, when

the stakes are heavy and serious charge of evasion of income-tax are

made against  him, why one person similarly  placed should have the

advantage   substantially  of  the  procedure  prescribed  by  the  Indian

Income Tax Act, while another person similarly situated be deprived of

it.  The ratio  of  said decision has no application to  the  instant case,

provision in question being remedial one and no substantial or valuable

privilege is being deprived of by Rule 5. It is only procedural provision

and intends to simplify the procedure of execution, once arbitral award

is passed.         

27. Reliance has also been placed on  Shree Meenakshi Mills Ltd.,

Madurai etc. v. Sri A.V. Visvanatha Sastri & Anr. AIR 1955 SC 13 in

which this Court has laid down thus :

“3. The  procedure  prescribed  by  the  Act  for  making  the investigation under its provisions is of a summary and drastic nature.  It  constitutes  a  departure  from  the  ordinary  law  of procedure and in certain important aspects is detrimental to the persons  subjected  to  it  and  as  such  is  discriminatory.  The substantial differences in the normal procedure of the Income Tax Act  for  catching  escaped  income  and  in  the  procedure prescribed by Act  30 of  1947,  were  fully  discussed by this Court in  Suraj Mal Mohta v.  Sri A.V. Visvanatha Sastri AIR 1954 SC 545 and require no further discussion here.”

In  said  case,  there  was  substantial  difference  in  the  normal

procedure of the income-tax Act for catching escaped income and in the

procedure  prescribed by  Act  30 of  Taxation on Income (Investigation

Commission)  Act,  1947.  The  classification  made  was  held  to  be

impermissible without any rationale. Such is not the situation in the

instant  case.  The procedural  provision of  recovery of  arrears  of  land

revenue  cannot  be  said  to  be  prejudicial  to  the  appellants.   Once

adjudication of dues has been made it was expected  of the appellant to

honour it after lapse of time under Section 34 of Act of 1996.

28. The  decision  in  Maganlal  Chhaganlal  (P)  Ltd.  v.   Municipal

Corporation of Greater Bombay & Ors. (1974) 2 SCC 402 has also

been referred to in which this Court has laid down thus :

“14.  To summarise:  Where  a  statute  providing  for  a  more drastic procedure different from the ordinary procedure covers the  whole  field  covered  by  the  ordinary  procedure,  as  in

Anwar Sarkar’s case and Suraj Mall Mohta’s case without any guidelines as to the class of cases in which either procedure is to be resorted to, the statute will be hit by Art.14.  Even there, as mentioned in  Suraj Mall Mohta’s case  (supra) a provision for appeal may cure the defect. Further, in such cases if from the preamble and surrounding circumstances,  as  well  as  the provisions of the statute themselves explained and amplified by  affidavits,  necessary  guidelines  could  be  inferred  as  in Saurashtra case  (supra) and  Jyoti Pershad’s case  (supra) the statute will not be hit by Art.14.  Then again where the statute itself covers only a class of cases as  in Haldar’s case (supra) and Bajoria’s case (supra) the statute will not be bad.  The fact that in such cases the executive will choose which cases are to be tried under the special procedure will not affect the validity of  the  statute.   Therefore,  the  contention  that  the  mere availability of two procedures will vitiate one of them,  that is the special procedure, is not supported by reason or authority.”

In  Maganlal  Chhaganlal  (supra),  this  Court  considered  the

alternative  procedure  for  eviction  of  unauthorized  occupants  on

Government premises; one by suit and the other by summary procedure

alleged  to  be  more  drastic  and  onerous  under  Chapter   V-A  of  the

Bombay Municipal Corporation Act, 1888 or the Bombay Government

Premises Act, 1955.

The procedure for recovery of land revenue envisaged under Rule 5

of  the  Rules  could  not  be  said  to  be  discriminatory,  it  being  quite

reasonable procedure. It cannot be said to be harsh or drastic but is

quite a reasonable procedure and it furthers the mandate of the Act. The

difference between the procedure of execution of Rule 5 and that of CPC

cannot  be  said  to  be  unconscionable  so  as  to  attract  the  vice  of

discrimination.

29. Resultantly, the appeal is found to be without any merit and the

same is hereby dismissed. IA No. 6 of 2017 has been filed for de-freezing

the bank account of the appellant. In case, the appellant has deposited

the  amount  of  Rs.5,29,58,937/-  as  per  the  fresh  recovery  citation

No.484002 and the interest as well, till the date when the amount was

deposited, it would be open to the concerned Tehsildar to de-freeze the

account on being satisfied that the amount has been so deposited. The

cost  is  quantified  at  Rs.50,000/-  to  be  deposited  in  Supreme  Court

Advocates on Record Welfare Trust within six weeks.   

……………………….J. (ARUN MISHRA)

............................J.   (S. ABDUL NAZEER)     

NEW DELHI APRIL 17, 2017

ITEM NO.1A                 COURT NO.12               SECTION IVA (For Judgment)                S U P R E M E  C O U R T  O F  I N D I A                        RECORD OF PROCEEDINGS Civil Appeal No.5317/2017 @ Petition(s) for Special Leave to Appeal (C) No(s).29266/2016 (Arising out of impugned final judgment and order dated  18/07/2016  in WP No. 11824/2016 passed by the High Court Of  M.P. at Jabalpur) POWER MACHINES INDIA LIMITED                       Petitioner(s)                                 VERSUS STATE OF MAHDYA PRADESH & ORS.                     Respondent(s) (With appln. (s) for directions and exemption from filing c/c of the  impugned judgment and exemption from filing O.T. and permission to  file additional documents and office report)

Date : 17/04/2017 This petition was called on for pronouncement    of judgment today.

For Petitioner(s) Mr. Mayank Pandey,Adv.                       For Respondent(s) Mr. Purushaindra Kaurav, AAG.

Mr. Arjun Garg, Adv. Ms. Anuradha Mishra, Adv. Mr. Manish Yadav, Adv. Mr. Pulkit Tare, Adv.                     

Hon'ble Mr. Justice Arun Mishra pronounced the judgment of  the Bench comprising His Lordship and Hon'ble Mr. Justice S.  Abdul Nazeer.

Appeal is dismissed with cost quantified at Rs.50,000/- to  be deposited in Supreme Court Advocates on Record Welfare Trust  in terms of the Signed Reportable Judgment.  

   (B.Parvathi)             (Tapan Kr. Chakraborty) Court Master Court Master      

       (Signed Reportable Judgment is placed on the file)