In Maharashtra v. Central Provinces Manganese Ore, 1977 (1) SCC 643; 1976 INSC 269, In a taxation dispute, the assessee challenged an amendment to the Explanation to clause (g) of Section 2 of the Central Provinces and Berar Sales Tax Act, 1947. The amendment to the Explanation modified the regime of taxation from one concerning goods that were in the Central Provinces and Berar when the contract was made, to one covering even future goods that were in the provinces after the contract was made. The High Court invalidated the amendment on the ground that it had not secured the assent of the Governor General under Section 107 of the Government of India Act, 1935.
After the High Court declared the amendment as void, a question arose before Supreme Court as to whether the unamended Explanation to clause (g) stood revived. The assessee adopted the two-step argument concerning substitution found in Koteswar Vittal Kamath and contended that as the assent of the Governor General was not required to repeal the earlier Explanation to clause (g), the repealing step of the substitution was valid while only the insertion step of the substitution was hit by the failure to secure the Governor General’s assent under Section 107 of the Government of India Act. Therefore, the assessee contended that the unamended Explanation to clause (g) did not stand revived. Justice Beg, speaking for a Three-Judge Bench of Supreme Court rejected this contention and held:
“17. In the case before us although the word “substitution” is used in the amending Act, yet, the whole legislative process termed substitution was itself abortive. The whole of that process did not take effect as the assent of the Governor-General, required by Section 107, Government of India Act, was lacking. […]
18. We do not think that the word substitution necessarily or always connotes two severable steps, that is to say, one of repeal and another of a fresh enactment even if it implies two steps. Indeed, the natural meaning of the word “substitution” is to indicate that the process cannot be split up into two pieces like this. If the process describes as substitution fails, it is totally ineffective as to leave intact what was sought to be displaced. That seems to be the ordinary and natural meaning of the words “shall be substituted”. This part could not become effective without the assent of the Governor-General. The State Governor’s assent was insufficient.
It could not be inferred that, what was intended was that, in case the substitution failed or proved ineffective, some repeal, not mentioned at all, was brought about and remained effective so as to create what may be described as a vacuum in the statutory law on the subject matter. Primarily, the question is one of gathering the intent from the use of words in the enacting provisions seen in the light of the procedure gone through. Here, no intention to repeal, without a substitution, is deducible. In other words, there could be no repeal if substitution failed. The two were a part and parcel of a single indivisible process and not bits of a disjointed operation.”
This extracted paragraph has several strands of important reasoning. First, the Court cast doubt on whether substitution always entails two distinct steps of repeal and enactment as outlined in Koteswar Vittal Kamath Case.
Second, the Court reiterated that this two-step approach, where repeal is given effect to but insertion is not given effect to, can result in an unintended legislative vacuum.
Third, the Court highlighted that it was necessary to examine whether there was any intention to repeal without insertion. This is relevant because there may exist cases where a legislature independently seeks to repeal a provision and also enacts another provision. In such cases, it may be appropriate to differentiate the two steps if there is cogent evidence to demonstrate that independent of the enactment step, the legislature would have nonetheless repealed the provision in question. In the words of Justice Beg, is there an “intention to repeal, without a substitution”? However, absent clear legislative intent to independently repeal without substitution, where the legislature engages in substitution, it is in fact a single indivisible process and the effect of a court invalidating the amended text is to bring back the unamended text.
This is because, in the case of substitution, an inference can be made that the legislature would never have repealed the unamended text without simultaneously inserting the new amended text. Thus, to invalidate the amended text but also refuse to give effect to the unamended text would be to give effect to a third outcome that could lead to absurd consequences and was never intended by the legislature. Thus, where the intent is substitution and the inserted or amended text is declared invalid, the result is to invalidate the combined exercise of repeal and enactment and the pre-amendment provision continues in force.
DK Trivedi & Sons v. State of Gujarat, 1986 Supp SCC 20
The above approach was also adopted by a two-Judge Bench of Supreme Court in DK Trivedi & Sons v. State of Gujarat, 1986 Supp SCC 20. The case concerned three notifications issued by the state government of Gujarat under Section 15 of the Mines and Minerals (Regulation and Development) Act, 1957 (MMRD Act) specifying rates of royalty and dead rent to be paid by mining companies. Section 15(3) of the MMRD Act prohibited the state government from increasing the rates of royalty (and as a result dead rent). more than once in a period of four years. For the four-year period between 1974 and 1978, Supreme Court found that the State of Gujarat had increased the rates of royalty and dead rent in 1974 and then again impermissibly increased royalty rates in 1975 and dead rents in 1976.
The Court struck down these subsequent enhancements as violative of Section 15(3) of the MMRD Act. A question then arose, as to whether after invalidating these subsequent notifications, the rate of royalty and dead rent under the last valid notification of 1974 stood revived or not. Justice DP Madon, writing for the Bench, cited the decision in Central Provinces Manganese Ore with approval and held:
“72. The position before us is the same. It was not the intention of the Government of Gujarat that even if the new schedule of royalty substituted by the 1975 Notification was void and inoperative Schedule I as substituted by the 1974 Notification nonetheless stand repealed. It was equally not the intention of the Government of Gujarat that even if the rates of dead rent substituted in Schedule II by the 1976 Notification were void and inoperative, the rates of dead rent as substituted by the 1974 Notification would nonetheless stand repealed.
If the contention in this behalf were correct, it would lead to the startling result that on and from the date of the coming into force of the 1975 Notification no royalty was payable in respect of minor minerals and that on and from the date of the coming into force of the 1976 Notification no dead rent was payable in respect of any leased area. The rates in Schedule I and Schedule II were intended to be substituted by new rates. The intention was not to repeal them in any event. If the substitutions effected by the 1975 and 1976 Notifications were invalid, such substitutions were equally invalid to repeal the 1974 Notification. The result is that the 1974 Notification continued to be operative both as regards the rates of royalty and the rates of dead rent until they were validly substituted with effect from April 1, 1979, by the 1979 Notification.”
The above extract comports with the reasoning in Central Provinces Manganese Ore. The two-Judge bench observed that it could never have been the intention of the Government of Gujarat to independently repeal the existing 1974 rates of royalty and dead rent when it substituted them by subsequent notifications enhancing the rates. This is doubly evident from the fact that the government had enhanced the rates of royalty and dead rent. Therefore, it cannot be presumed that the Government ever independently intended to repeal the 1974 notification which would have led to a cessation in the collection of revenue. This being the position, the result of invalidating the subsequent notifications while simultaneously giving effect to repeal of the 1974 Notification would lead to an absurd result which was never intended by the government.
Thus, rather than breaking down the process of substitution into two distinct steps of repeal and enactment and analysing the effect of the invalidation disjunctively, in Central Provinces Manganese Ore and DK Trivedi & Sons, the Court asks whether it is plausible that the legislature intended to independently repeal the substituted provision. In the absence of clear evidence of such legislative intent, the process of substitution is invalidated in its entirety and the original, unamended provision continues to have legal force.
Supreme Court Advocates-On-Record Association v. Union of India, 2016 (5) SCC 1; 2015 INSC 285 (“NJAC Decision”)
Although the decisions of Central Provinces Manganese Ore and DK Trivedi & Sons were rendered by a three-Judge Bench and a two-Judge Bench of Supreme Court respectively, they were also endorsed by a Constitution Bench of five judges of Supreme Court in Supreme Court Advocates-On-Record Association v. Union of India , 2016 (5) SCC 1; 2015 INSC 285 (“NJAC Decision”).
In the NJAC Decision, a Constitution Bench of Supreme Court was seized of a challenge to the Ninety-Ninth Constitutional (Amendment) Act, 2014. The amendment replaced the collegium-led system of appointing judges with a National Judicial Appointments Committee. The Constitution Bench invalidated the ninety-ninth amendment as violating the basic structure. However, the Union of India contended that upon the invalidation of the ninety-ninth amendment, the earlier collegium-led system of judicial appointments would not revive because Article 124(2) in its original form (upon which the collegium-led system is based) had been repealed by the ninety-ninth amendment.
A majority of four judges in the NJAC Decision all rejected this argument and held that the earlier system of judicial appointments would stand revived upon the invalidation of the ninety ninth amendment. The opinion of Justice JS Khehar (as the learned Chief Justice then was) expressly relied on the decision in Central Provinces Manganese Ore. The learned Judge held:
“412.10 What needs to be kept in mind as we have repeatedly expressed above is that the issue canvassed in the judgements relied upon [by the Solicitor General of India ] was the effect of a voluntary decision of a legislature in amending or repealing an existing provision. That position would arise, if Parliament had validly amended or repealed an existing constitutional provision. Herein, the impugned constitutional amendment has definitely the effect of substituting some of the existing provisions of the Constitution, and also, adding to it some new provisions.
Naturally substitution connotes that the earlier provision ceases to exist and the impugned constitutional amendment by a process of judicial review has been set aside. Such being the position, whatever be the cause and effect of the impugned constitutional amendment, the same will be deemed to be set aside and the position preceding the Amendment will be restored. It does not matter what are the stages or steps of the cause and effect of the Amendment, all the stages and steps will stand negated, in the same fashion as they were introduced by the Amendment, when the amended provisions are set aside.”
Justice Khehar endorsed the approach whereby the invalidation of an amendment would also reverse any repeals brought about by the amendment. The learned Judge rejected the approach of disaggregating the process of substitution into the two steps of repeal and enactment. When Parliament acted to substitute one provision with the other, it cannot be said to have intended to independently repeal the original provision absent clear evidence to the contrary. Where no intention to independently repeal the existing provision of law is to be found, the effect of invalidating a substitution is that the entirety of the substitution stands at nullity. In the NJAC Decision, Justice Khehar also opined on the dire consequences of the pre-existing appointment process for judges not reviving. He wrote:
“413. … it would have to be kept in mind that if the construction suggested by the learned Solicitor General was to be adopted, it would result in the creation of a void. We say so, because if neither the impugned constitutional provision nor the amended provisions of the Constitution would survive, it would lead to a breakdown of the constitutional machinery inasmuch as there would be a lacuna or a hiatus insofar as the manner of selection and appointment of Judges to the higher judiciary is concerned. Such a position, in our view, cannot be the result of any sound process of interpretation..,”
The above extract highlights a key issue originally expounded by Justice Hidayatullah in Laxmibai and reiterated by Central Provinces Manganese Ore and DK Trivedi & Sons; namely, that giving effect to the repeal while simultaneously invalidating the enactment could lead to a lacuna in the law, rendering a provision unworkable, or as in the case of the NJAC Decision, lead to a “constitutional crisis”.
The opinion of Justice MB Lokur in the NJAC Decision also highlights another aspect of this issue that must be kept in mind. Justice Lokur assessed the outcome of non-revival of the unamended text vis-a-vis the principles expressed in the judgement. The learned Judge wrote:
“961. … If the contention of the learned Solicitor General is accepted, then on the facts of the case, the result would be calamitous. The simple reason is that if the 99th Constitutional Amendment Act is struck down as altering the basic structure of the Constitution and if Article 124(2) in its original form is not revived then Article 124(2) of the Constitution minus the words deleted (by the 99th Constitution Amendment Act) and minus the words struck down (those inserted by the 99th Constitution Amendment Act) would read as follows:
“(2) Every Judge of the Supreme Court shall be appointed by the President by warrant under his hand and seal and shall hold office until he attains the age of sixty-five years:”
962. This would give absolute power to the President to appoint a Judge to the Supreme Court without consulting the Chief Justice of India (and also to appoint a Judge to a High Court ). The result of accepting his submission would be to create a tyrant […]
963. This was put to the learned Solicitor General and it was also put to him that if his submissions are correct, then it would be better for the Union of India to have the 99th Constitution Amendment Act struck down so that absolute power resides in the President making him/her an imperium in imperio so far as the appointment of Judges is concerned. The learned Solicitor General smiled but obviously had no answer to give. It must, therefore, be held that the constitutional provisions amended by the 99th Constitution Amendment Act spring back to life on the declaration that the 99th Constitution Amendment Act is unconstitutional.”
The above extract highlights how following a two-step approach advanced by the appellants may result in a situation where the ultimate consequence of invalidating an amendment is a graver perpetuation of the harms sought to be prevented by the striking down of the amendment. The Constitution Bench in the NJAC Decision invalidated the Ninety-Ninth Amendment on the ground that it interfered with judicial independence which is part of the basic structure of the Constitution. But as Justice Lokur’s opinion points out, disaggregating the substitution and giving effect to the repealing portion of the amendment while also invalidating the new enactment would lead to a situation where judicial independence was further compromised. Such an approach would be neither legally tenable nor normatively desirable.
Reference
Property Owners’ Association v. State of Maharashtra (2024)