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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

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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

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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

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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

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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.

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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.”

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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.

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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

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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 :

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“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.

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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

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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

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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.”

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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

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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

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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.   

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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

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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

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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 :

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“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

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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.

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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

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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.

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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,

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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.

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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

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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

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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

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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

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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  Advocates  on  Record  Welfare

Association within six weeks.   

……………………….J. (ARUN MISHRA)

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

NEW DELHI APRIL 17, 2017