CASE ANALYSIS: Atlas Cycle Industries Ltd. And Ors Vs. The State Of Haryana

AUTHOR: Drishti Gupta, A law student at Vivekananda Institute Of Professional Studies

Name of the Case

Atlas Cycle Industries Ltd. and Ors. v. The State of Haryana

Case Number

Criminal Appeal No. 24 of 1976

Citation

AIR 1979 SC 1149; (1979) SCC (Cri) 422.

Court

Supreme Court of India

Bench

Hon’ble Justice Raja Jaswant Singh, Justice P.S. Kailasam and Justice S. Murtaza Fazal Ali.

Decided on

04th October 1978

Counsel

Appellant

Bhasker Sen, A.K. Sen, J.C. Bhatt, Fali Sam Nariman, A.B. Dowan, I.N. Shroff and H.S. Parihar, Advs.

Respondent

D. Mukherjee, E.C. Agrawala and R.N. Sachthey, Advs.

INTRODUCTION

The legislature has historically played a significant role in the formulation of policy in a democracy like India. However, due to an enormous workload, the Parliament decided to delegate a number of authorities to the executive for easy law implementation. This imposes an unavoidable duty on the legislative to supervise how the executive carries out the tasks assigned to it. It is legally required to oversee the executive and to discipline the executive for improper conduct if there is any abuse or misuse of the executive’s power. Two methods are used by the legislature to do this:

Laying of Delegated Legislation on table
Examination of Delegated Legislation by Scrutiny Committees

FACTS OF THE CASE

While conducting a spot checking of Appellant’s industry, the Development Officer, on inspection of its accounting records, discovered the purchase of premium quality iron and steel plates at a price which was higher than the ceiling price fixed by the Iron and Steel Controller. He was accordingly held for offence u/S.120B, IPC r/w S.7, Essential Commodities Act, 1955. Thereon, the charges were framed against him, which he opposed through an application u/S.251 A & 288(1), CrPC but it was dismissed by the Special Magistrate. The aggrieved appealed to High Court but gained nothing and hence, approached the Apex Court for relief.

ARGUMENTS OF THE PARTIES

Both the parties expounded the following arguments:

APPELLANT

The Appellant mainly contended that the impugned notification for fixing the maximum purchase price of iron and steel plates is void for non-compliance of the mandate of S.3(6) of Essential Commodities Act. It specifies that the Central Government has to lay any order passed by it or by its authorized officer, before the Parliament as and when it is made.

RESPONDENT

Though the respondent conceded to the contention of Appellant regarding non-laying of order before the Parliament but canvassed that the said provision is merely directory and does not require mandatory compliance. Hence, non-observance of the same won’t make the control order ultra-vires. Furthermore, the impugned notification being a control order and therefore, a delegated legislation, cannot be made to be necessarily placed before the Parliament, as it would otherwise defeat the whole object of delegating the said power to executive.

ISSUES

The Court confronted the following issues:

Whether the laying procedure embodied u/S.3(6) of the Essential Commodities Act, 1955 is obligatory?
Whether the omission to lay the notification under question before the Parliament renders it void?

JUDGEMENT OF THE COURT

The Hon’ble Court observed that the compliance of laying procedure has to be determined after due examination of all the surrounding facts and circumstances of the case. The Court is duty bound to construe the true intention of the law makers by reading the legislation as a whole and not just by looking at the use of word “shall” in the provision. Consequently, Section 3(6) of the Essential Commodities Act, 1955 was held merely to be a directory and not a mandatory provision. Thus, the impugned notification was held to be valid and the appeal was dismissed.

REASONING BEHIND THE JUDGEMENT

The Court began by reading over the relevant Act, order, and notification provisions. It was stated at the outset that the word “shall” does not determine or conclude whether a provision is mandatory or directory; rather, one must determine this by inferring the legislative intent from the design, nature, and scope of the statute, as well as the implications of choosing one course over another. The Hon’ble Court went on to say that a provision could be considered to be directive if:

a) the need of one provision for the contingency of another has not been observed; and

b) there would be general prejudice and inconvenience to the general public if the said Act of Executive were to be declared invalid for failing to comply with those two conditions.

The Court then went on to define three kinds of laying procedure, generally employed by the legislature to keep a check on delegated legislation, which were also reiterated in latter judgements and are as follows:

Laying without further procedure: This is the simple laying where the delegated legislation comes into force immediately after laying before legislature. It casts a duty upon executive to merely notify the legislature of the delegated legislation so formulated and therefore, is simply of directory character.
Laying subject to negative resolution: In this laying method, delegated legislation becomes effective as soon as it’s presented to the legislature, but it can be nullified within forty days if either House of Parliament decides to annul it.
Laying subject to affirmative resolution: This refers to a positive laying approach, where delegated legislation takes effect only after both Houses of Parliament have given their approval. While there’s no specified time limit, it’s expected that the legislature acts promptly. However, the mandatory adherence and time-consuming process can undermine the core purpose of delegated legislation. Therefore, it’s recommended to use this method sparingly, especially when the delegated legislation essentially constitutes drafting the Act itself.

The Court determined that Section 3(6) of the Act merely instructs the administration to put an order before Parliament after carefully examining it. It is not susceptible to affirmative or negative decision, and the Parliament is in no way given the authority to revoke an order enacted in accordance with S. 3. Furthermore, the disputed provision makes no mention of a deadline for adhering to the laying method. Last but not least, it makes no provision for penalties for non-compliance. As a result, the provision in question allows for straightforward laying and is hence purely directory in nature.

ANALYSIS

India’s administrative law isn’t specifically codified, which also applies to the process of presenting delegated legislation to the legislature. However, it is usually seen as the rule in India. Through the current case, the honourable Justices Raja Jaswant Singh, P.S. Kailasam, and S. Murtaza Fazal Ali defined many legal principles in this regard. While examining the legislative intent behind the creation of this regulation, the Apex Court placed a lot of attention on how the term “shall” should be interpreted in S.3(6) of the Essential Commodities Act. This explanation, in my opinion, is a good way to express the required nature of a law as the word “shall” is typically construed extremely strictly. The judges did a truly great job of carrying out their duty to interpret the law by taking into account the facts and circumstances of the case that was before them.

If we take a closer look at how laws like the Penal Code, family law, corporation law, etc. are implemented in a nation, we see that it is through the threat of punishment for disobeying them. It serves as a motivator for the public to observe these laws as required. In this particular case, the Court correctly emphasised that a section is referred to as a directory when its non-observance carries no penalty or consequences. The Court used the DK Krishnan case, in which the legislative objective was explored, to bolster their position. When it is stated in the cited instance that the legislature would have stipulated in the Act that the delegated law must be compelled to be placed before the Parliament, that statement is entirely acceptable. For instance, the Emergency Powers Act of 1920 required that a proclamation be written and presented to Parliament before a rule could be made. The rules must be presented to the Parliament for approval after they have been created by the government, and approval must be given within seven days of the regulations’ release. The resolutions would stop if that happened. Therefore, the laying procedure is specified in the Act if the legislature thinks it necessary. Since the legislature just created simple laying in this instance, the section is merely of a directory type.

According to the principles of natural justice, laws are created for the general good of the populace. Therefore, it shouldn’t hinder or impede them in any way because doing so would be detrimental. For instance, a trade-related delegated law is deemed ultra-vires simply for failing to follow the proper procedure. People who traded in the meanwhile would lose money, making their lives difficult. Therefore, it would be fair for such a legislation to just serve as a guideline as its invalidation would likely prejudice the general populace.

Even while I agree with the Apex Court’s reasoning and decision, it is based on a fallacy. Since the statute contains a clause requiring orders to be presented to Parliament, it has some permanent significance and must be abided by while delegated legislation is being used. Due to the fact that the two Houses are the final arbiters of law in Indian democracy, the notification and orders should be submitted to them even though the provision is necessary or merely a recommendation.

CONCLUSION

After a rigorous examination of this case, the question of the consequences of failing to establish the delegated legislation is still open. It has been noted in numerous judicial rulings that this depends on the pertinent laying procedure clause and the way the law makers have written it. It is seen as mandatory if it is accompanied with a condition, either before or after. If the opposite is true, the phrase is purely advisory and the delegated legislation takes effect as soon as it is included in its scope.

Scrutiny Committees have a vital role because the laying provision is typically a directory in most instances. The rules and regulations created by the executives must be carefully examined to ensure that the power of delegated legislation is being used in a proper and fair manner. This would serve the dual function of saving the legislature’s time and effort, which could otherwise be devoted towards more intricate and important work, and helping to keep a Parliamentary check on executives in order to prevent any arbitrariness and disorderly use of authority.