National Law Institute University

A project on Constitutional law III

RESIDUARY POWERS OF LEGISLATION & THE INDIAN CONSTITUTION

Submitted to -:
Miss Kuldeep Kaur Barrister-at-law

Submitted by -:
Mr. Dheeresh Kumar Dwivedi 2012B.A.LL.B.65 A-1214

5th trimester
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Table of content 1. 2. 3. 4. Introduction-the conceptual understanding Historical background Nature of The Residuary Power of Legislation In The Indian Constitution Scope of The Residuary Power of Legislation In The Indian Constitution 4.1 Validation of Invalid State Laws 4.2 Power of Regulating and Control of Taxation 5. conclusion

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Acknowledgement: I take immense pleasure in thanking Miss Kuldeep Kaur, our respected teacher of Constitutional Law, for having permitted me to carry out this project work. I express my gratitude to her for giving me an opportunity to explore the world of information concerning my project topic. Words are inadequate in thanking my seniors and batch mates for their support and cooperation in carrying out the project work. Finally, I would like to thank my family members for their blessings and wishes for the successful completion of the project.

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Introduction- The Conceptual Understanding

Complex modern governmental administration in a federal setup like that of India provides for distribution of legislative legislation which may not squarely fall in any specific entry in the three Lists. Something unforeseen may happen and some new matter may arise calling for governmental action and a question may bound to be answered as to which government, Central or State, is entitled to legislate with respect to that matter . Though the three lists under the Art. 246 of the Indian Constitution have been drawn very elaborative and presumably all subject-matters identifiable at the time when constitution was at its framing stage, and regarding which a government could conceivably be called upon to make laws in modern times, have been assigned to one of the three lists. But it is humanly not possible to foresee every possible activity and assign it to one List or the other. In such a situation to meet such difficulty, the Indian Constitution has made such provisions by the virtue of Art. 248 that the Parliament (Centre) would have power to legislate on the subject in the exercise of residuary powers. This power of Parliament cannot be denied or curtailed on the ground that the subject matter of legislation was known to the constitution-makers, so long as that subject is not mentioned in any of the entries in the three Lists in the Seventh Schedule to the Constitution.1

Historical Background of the Residuary Powers of Legislation Under the Government of India Act, 1935, the residuary power of legislation was given neither to the Federal Legislature nor to the provincial legislatures. It was left to the discretion of the Governor-General to assign these powers to either Legislature. It was only when all categories in the three Lists were absolutely exhausted that one could think of falling back upon the residuary powers.2 But the Lists under the Act were so exhaustive that
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2

Governor- General v. Province of Madras, AIR 1945 PC 98: 1945 FCR 179.

Sat Pal & Co. v. Lt. Governor of Delhi, (1979) 4 SCC 232: AIR 1979 SC 1550.

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they left little or nothing in the residuary field. It is to be noted that the only reported occasion for the application of the residuary power of the legislation under the Government of India Act, 1935 was as regards the power to provide for acquisition of a commercial or industrial undertaking.3 Our Constitution has bodily adopted the concept of Residuary Powers of the Legislation from the scheme of Government of India Act, 1935.In India the residuary powers of the legislation have been vested in the Centre so as to incline towards the fabric of the Indian federal system which thus makes the Centre stronger. As was stated in the Constituent Assembly by Pt. Jawahar Lal Nehru, Chairman of the Union Powers Committee:

We think that Residuary Powers should remain with the Centre. In view of the exhaustive nature of the three lists drawn upon by us, the residuary subjects could only relate to matters which, while they may claim recognition in future are not identifiable and cannot be included now in the Lists.4

Although under the present Constitution, the scheme of the Three Lists has been taken over with the difference that although the three lists has been greatly enlarged and is made exhaustive in nature, but the residue power has been conferred on the centre. In adopting the scheme of the Government of India Act, 1935 our Constitution had the benefit of the innovations which the Act had introduced in the distribution of legislative power as the lists contained very little overlapping of issues. Unlike India, in the U.S.A. and in Australia, residuary powers are vested in the competent States, while in Canada they belong to the Centre as the framers of the Canadian Constitution supposed that the American system of vesting residuary powers in the state resulted in weakness of the Federal Government and so they reversed the process, by leaving the residue to the Dominion Parliament and conferring only those powers on the Provincial Legislatures which are required for local purposes.

Rajahmundry Electric Supply Co. v. State of Andhra, (1954) S.C.A. 272.

Rao, B. Shiva, The Framing of Indias Constitution, II, 777

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Nature of The Residuary Power of Legislation In The Indian Constitution: It can be easily pointed out that the aim of the Indian Constitution, like that of the Government of India Act, 1935, is to make the Legislative Lists as exhaustive as possible. The three lists which were exhaustive as to leave little or nothing for the residual field was said for the Government of India Act, 1935 is even more pertinent to the present Constitution as it contains 97 as against 59 entries in the List I, 66 entries as against 54 in list II and even List III is larger in the present Constitution. Hence, the resort to the residual power should be the last refuge was held for Government of India Act, 1935 still prevails with the present Constitution. In a case where two constructions are possible, one of which will avoid resort to the residuary power and the other which will necessitate such resort, the former must be preferred.5 This does not mean, however, that in order to avoid falling back upon the residual power, the Court would be justified in straining the language of any of the Entries or to render the residuary entry altogether meaningless.6 This article, i.e., Art. 248(1) applies to the Union vis a vis the States. So far as the Union Territories are concerned, Parliament has unlimited power under the article 246 (4).7Nonetheless great care with which the various Entries in the three lists given under the seventh schedule of our Constitution have been framed, there may be some legislative or taxing power which does not come under any of these Entries. In such a case, it is the Union Parliament which shall have the power to legislate with regard to such matter of taxation, by virtue of Art. 248(2). Art 248(2) has reference to the distribution of legislative powers between the centre and the states as it provides that in respect of matters not enumerated in the Lists including taxation. It is the Parliament that has power to enact laws for which provision is given under Art. 248(2) read with Art. 246(4) of the Indian Constitution. This Residuary Power of legislation has also been explained in Entry 97 of the Union List (List I).

Manikkasundaram v. Nayadu, (1946) F.C.R. 67. Sesharatnam v. Gift Tax Officer, A. 1960 A.P. 115 (118) 7 Mithan Lal v. State of Delhi, A. 1958 S.C. 682 (658)
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Scope of The Residuary Power of Legislation In The Indian Constitution: The scope of Residuary Powers of Legislature in the Indian Constitution is very wide. Since the commencement of the Constitution the Residuary Powers of Parliament have been exercised several times. The expression any matter not enumerated the Concurrent List of State List in Article 248 must mean, in the context of Clause (1) of Article 246 which gives Parliament exclusive power in respect of matters in List I, any matter other than those enumerated in any of the three Lists. Obviously, the residuary power given to Parliament in Article 248 cannot include power which is exclusively given to Parliament on matters in List I already conferred under Clause (1) of Article 246, and which is a clear attempt to distinguish the words any matter in Article 248 and any other matter in Entry 97 in List I which is a distinction without difference. The fact that the residuary power has been vested in the Central Legislature under Article 248 and its consequence translated in Entry 97 in List I, there can be no gainsaying that the idea was to assign such residuary power over matters which at the time of framing the three Lists could not be thought of or contemplated. This is clear from the fact that the Lists contain as many as 209 matters which are couched in careful and elaborate words with inclusive and excluding language in the case of some, which has made the Constitution, to use words of Gwayer, C.J.8, Unique among Federal Constitutions in the length and detail of the legislative Lists. In the layout of such elaborately worded matters in the context of Article 246(1), the residuary power contained in Article 248 read with Entry 97, List I must be interpreted as power in respect of matters not enumerated in any of three Lists. If no entry in any of the three Lists covers a particular matter then it must be regarded as a matter not enumerated in any of the three Lists then it belongs exclusively, to Parliament under Entry 97 of the Union List as a scope of legislation. Such a residuary power cannot therefore, be ordinarily claimed in respect of a matter already dealt with under an Article or an entry in any one of the three List as the Art 248 declares that the Parliament has the exclusive power to legislate on matters not enumerated in List III or List II and to impose a tax not mentioned in either of those Lists. To avoid any doubts, Entry 97 is inserted in List I, which sets out the field of legislation there under as follows:
8

Union of India v. H.S.Dhillon, AIR 1972 SC 1061: (1972) 2 SCR 33: (1971) 2SCC 779: (1972) 83 ITR 582.

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Any other matter not enumerated in List II or List III including any tax not mentioned in either of those Lists. Thus, Art.246 lays down the powers of the respective legislatures in respect of the matters enumerated in three Lists and where those Lists come into conflict, the non obstante clause in Clauses (1), (2) shows that List I has priority over Lists III and II, and List III has priority over List II. Despite the dominant part given to Parliament in this Article, the State Legislatures, however have the exclusive jurisdiction over matters set out in List II and the principle underlying the non obstante clause can be resorted3. This has been observed in In Re C.P. and Berar Sales of Motor Sprit and Lubricants Taxation Act 9. When dealing with a Central Act, we should enquire whether it was legislation in respect of any matter in List II for this is the only field regarding which there is a prohibition against Parliament. If a Central Act does not enter or invade these prohibited fields there is no point in trying to decide as to under which entry or entries of List I or List III a Central Act would rightly fit in.

Validation of Invalid State Laws : Whenever States lack legislative competence with respect to a subject-matter, Parliament will have such competence. At times, when a State law is declared invalid because of the States legislative incompetence, Parliament may come to the rescue of the State by way of validating the law in question. Here, the principle is that the Parliament cannot merely pass an Act stating that such and such State Act is declared as valid. This amounts to delegation of legislative power on the State Legislature on a do. As the Supreme Court has explained: Where a topic is not included within the relevant list dealing with the legislative competence of the State Legislatures, Parliament by making a law cannot attempt to confer such legislative competence on the State Legislatures. It is for the Constitution and not Parliament to confer competence on State Legislatures, Parliament cannot arrogate to itself any omnipotence to redraw Legislative Lists so as to confer competence on the State to legislate on a topic within its power, it can re-enact the
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AIR 1939 FC 1: 1939 FCR 18(38)

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invalid State law. As a convenient legislative device, Parliament can, instead of repeating the whole of the State Act, can legislate referentially. In Baijnath Kedia v. State of Bihar10,the Supreme Court held a statutory legislation made by a State Legislature unconstitutional on the ground that the State Legislature had no power to enact it and that only Parliament was competent to legislate in that behalf. Thereafter, Parliament enacted a Validation Act. The act was upheld as valid by the Supreme Court.11The court ruled that Parliament could validate retrospectively what a State Legislature had no power to enact. Most of these validating Acts have been enacted by Parliament under its Residuary Power. A number of validating Acts have been passed by Parliament to validate judicially invalidated State taxing measures. In Shree Vinod Kumar v. State of Himachal Pradesh,12the Supreme Court invalidated an Act passed by the Himachal Pradesh Assembly on the ground that the Assembly was not validly constituted and, as such, it was incompetent to pass the law in question. Parliament then passed a validating Act validating the proceedings of the Legislative Assembly of Himachal Pradesh. The courts were prohibited from questioning the validity of any Act or proceeding of the Assembly on the ground of defect in its constitution. The Supreme Court upheld the competence of Parliament to enact the validating Act under its Residuary Powers.13

Power of Regulating and Control of Taxation : Entry 97 of List I confer on Parliament the power to legislate on Any other matter not enumerated in List III including any tax not mentioned in either of those lists. This entry is in the nature of a residuary entry given under Art.248(2) . Parliament has exclusive power to make any law with respect to any matter not enumerated in the concurrent or State List. Such power includes the power of making any law imposing a tax not mentioned in either of those lists. If no entry in any of the lists covers it, then it must be regarded as matter not enumerated in any of three lists. Then it belongs exclusively to Parliament under Entry 97 of the Union List as a topic of Legislation.

(1969) 3 SCC 838 : AIR 1970 SC 1436 Krishna Chandra Gangopadhyaya v. Union of India, AIR 1975 SC 1389 : (1975) 2 SCC 302. 12 AIR 1959 SC 223 : (1959) Supp 1 SCR 160 13 Jadab Singh v. Himachal Pradesh Administration, (1960) 3 SCR 75: AIR 1960 SC 1008
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But, before exclusive legislative competence can be claimed for Parliament by resorting to the residuary power, the legislative incompetence of the State legislative must be established. Entry 97 itself is specific that a matter can be brought under that entry only if it is not enumerated in List II or List III and in the case of a tax if it is not mentioned in either or those lists. In a Federal Constitution like ours where there is a division of legislative subjects but the residuary power is vested in Parliament, such residuary power cannot be so expansively interpreted as to whittle down the power of the State legislature. That might affect and jeopardize the very federal principle. The federal nature of the Constitution demands that an interpretation which would allow the exercise of legislative power by Parliament pursuant to the residuary powers vested in it to trench upon State legislation and which would thereby destroy or be little State autonomy must be rejected 14. In Attorney General for Ontario v. Attorney General for the Dominion15, it was observed by the House of Lords: .............the exercise of legislative power by the Parliament of Canada, in regard to all matters not enumerated in Section 92, ought to be strictly confined to such matters as are unquestionably of Canadian interest and importance, and ought not to trench upon provincial legislation with respect to any of the classes of subjects enumerated in Section 92. To attach any other construction to the general power which, in supplement of its enumerated powers, is conferred upon the Parliament of Canada by Section 91,would, in their Lordships opinion, not only be contrary to the intendment of the Act, but would practically destroy the autonomy of the Provinces. In Manikkasundara Bhatter v. R.S.Nayudu16, the Federal Court observed: In the Indian Constitution Act, Section 104 has been inserted for the very purpose of enabling legislation to be enacted in respect of subjects omitted from the three lists in the Seventh Schedule. There is not therefore the same necessity for Courts in India to find that a subject must be comprised within the entries in the Lists. But when there is a choice between two possible constructions of an entry or entries, one of which will result in legislative power being conferred by some entry or entries in the Lists and the other in a finding of no existing power, but if legislation is required that recourse

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International Tourist Corp. V. State of Haryana, AIR 1981 SC 774(777): (1981) 2 SCR 364: (1981) 2 SCC 318. 15 (1896) AC 348 (360-61) : 65 LJPC 26. 16 AIR 1947 FC 1:1946 FCR 67 (88).

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must be had to Section 104, the first construction should on principles analogous to those applied to the Canadian Constitution be preferred. In Hari Krishna Bhargava v. Union of India17, the provisions of the Income tax act 1961, relating to annuity deposits were incorporate challenged in the Supreme Court on the ground that Parliament had no authority to incorporate in the Income Tax Act what is substance was borrowing by the Government from a class tax-payers. Upholding the validity of the impugned provisions the Court held that under Article 246 read with Entry 82 of List I Parliament had the power to levy tax on income other than agricultural income. But granting that the scheme relating to annuity deposits was borrowing money from income tax payers, power to legislate in that behalf was still with parliament by virtue of Entry 97 of List I. According to it, Parliament was not prohibited from enacting in a single statue matters which call for the exercise of power under two or more entries in List I. Hidayatullah, J., in his separate opinion, thought that the scheme could validly be made under Entry 82 of List I without invoking the aid of Entry 97. He clarified that before recourse could be had to Entry 97 of List I, it must be established that there was no entry in any of the three Lists under which impugned provisions could fall. Later, in Second Gift Tax Officer v. D.H.Nazareth18, Hidayatullah, C.J., maintained that if no entry in any of the three Lists covers a piece of legislation, it must be belong exclusively to Parliament under Entry 97 of List I. That case involved the validity of the Gift Tax Act of 1958, which provided for the imposition of tax on the gift of property including land and buildings. The Supreme Court held that the Act was within the competence of Parliament. It was admitted that no entry in List II or List III mentioned such a tax, and, therefore, the conclusion was that Parliament with Article 248; Entry 49 of List II, it was observed, could not include purported to use its powers derived from Entry 97 of List I read gift tax as levied by Parliament. The Chief Justice made a reference to Article 248 and explained that Parliament had exclusive power to make any law with respect to any mater not enumerated in List II or List III, and for this purpose, and to avoid any doubts, Entry 97 was also included in List I.It is therefore, but proper those were the competing entries are an entry in List II and Entry 97 of List I, the entry in the State List must be given a broad and plentiful interpretation.

AIR 1966 SC 619:(1966) 2 SCR 22 (1970) 1 SCC 749: AIR 1970 SC 999:(1971) 1 SCR 195. As to the scope of Entry 49 of List II, see Sudhir Chandra Nawn v. WTO, AIR 1969 SC 59: (1969) 1 SCR 108
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Thus, Article 246 (1) of the Constitution specifies that the Parliament has exclusive powers to make laws with respect to any of the matters enumerated in List I in the seventh schedule to the constitution. As per article 246 (3), the State Government has exclusive powers to make laws with respect to matters enumerated in List II (State List). In respect of matters enumerated in List 3 (Concurrent List) both Parliament and State Government have powers to make laws and Service Tax is made by Parliament under the above residuary powers19.

CONCLUSION Federalism leads to the setting up of a composite institution where there is a separate and distinct union government, and state governments. The pattern of relationship is never rigidly defined in the Indian Constitution. The fact that the relationship is based on an elastic set of norms has always gone to the advantage of successive powerful union governments. The concept of federalism in India is built upon the substructure of power sharing in a set up of parliamentary democracy. In speaking about the concept of federalism-in-practice, we should be sharply aware of the fact that from the moment the Constitution started to be drafted, the concept of unity rather than diversity had a marked influence on the process of federalism. The drive to create an indestructible union was also accompanied by the urge to foster and foist on the nation, a driving supremacy of the Union over the State, in matters that concerned the nations interests. Residuary Power of the Legislation is one such concept introduced in the Indian Constitution by the framers of the Constitution who were able to perceive the future legislative needs which would arise in future through there far sightedness has proved to be a boon in keeping the federal character of our Constitution intact with a stronger Centre.

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Tamilnadu Kalyana Mandapam Association v. Union of India, AIR 2004 SC 3757 (3770): (200)5(2004) 93

ECC 353: (2004) 4 SLT 773.

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