PRINCIPLE OF OCCUPIED FIELD

Doctrine of Occupied Field comes into picture even before the Union Law or the
State Law has commenced. Under Article 254, as soon as a Union law receives
assent of the President, it is said to be 'a law made by the Parliament'.

Introduction

There is a very thin of line of difference between doctrine of Repugnancy and

Doctrine of Occupied Field. As we know that repugnance arises only if there is an
actual conflict between two legislations, one enacted by the State Legislature and
the other by Parliament, both of which were competent to do so.

Doctrine of Occupied Field simply refers to those legislative entries of State List,
which are expressly made ‘subject’ to a corresponding Entry in either the Union
List or the Concurrent List.

Doctrine of Occupied Field has nothing to do with the conflict of laws between the
state and the centre. It is merely concerned with the ‘existence of legislative
power’.

Doctrine of Occupied Field comes into picture even before the Union Law or the
State Law has commenced. Under Article 254, as soon as a Union law receives
assent of the President, it is said to be ‘a law made by the Parliament’. Actual
commencement of the law is not important for the purpose of attracting doctrine of
Occupied Field.

The Curious Case of State of Kerala v. Mar Appraem Kuri

Let us understand this doctrine with the help of a famous case. In the case of State
of Kerala & Ors v. M/S. Mar Appraem Kuri Co.Ltd. & Anr. , the Centre enacted
the Chit Funds Act (Central Act). For the Law to become operative in any state, the
Central Government would have to issue a notification under Section 3 of the
Central Act. In the meantime, the State of Kerala enacted a separate act on ‘Chit
Funds’ called as Kerala Chitties Act. However, the Central Act did not get notified
in Kerala resulting into a situation wherein there was only one Act in force in the
State of Kerala i.e. the Kerala Chitties Act. It was contended that the Kerala
Chitties Act was repugnant to the un-Notified Central Act. The Supreme Court
held that even an un-notified Central law attracts art 254.

The reasoning given by the Supreme Court was that the Central Enactment covered
the entire ‘field’ of ‘Chit Funds’ under the Concurrent List. Even though the
Central Chit Funds Act was not brought in force in the State of Kerala, it is still a
law ‘made’, which is alive as an existing law.

The Court emphasized that Article 254 uses the verb ‘made’ and the ‘making’.
Thus, the ‘making’ of a law is complete, even before that law is notified. The
court also said that:

“The verb ‘make’ or the verb ‘made’ is equivalent to the expression ‘to legislate’.
The importance of this discussion is to show that the Constitution framers have
deliberately used the word ‘made’ or ‘make’ in the above Articles.

Our Constitution gives supremacy to the Parliament in the matter of making of the
laws or legislating with respect to matters delineated in the three Lists. The
principle of supremacy of the Parliament, the distribution of legislative powers, the
principle of exhaustive enumeration of matters in the three Lists are all to be seen
in the context of making of laws and not in the context of commencement of the
laws.”

Thus, the State Legislature is denuded of Legislative Competence as soon as the

Parliament, by enacting the Central Act, intended to occupy the entire field of
‘Chit Funds’ under the Concurrent List.
Last Word

1. Where Occupied Fields ends, repugnancy starts. Parliament is indeed the

supreme Law-Making body under our Constitutional Scheme. Normally, the
Courts try to construe a Central Law and a State Law harmoniously. However,
when the Parliament tries to occupy the field of the State Law, it is the Central Law
that is to prevail.

2. The question of repugnance is separate one. Whether the whole State law or
only a particular provision is repugnant to the Central Law is a question that is to
be decided after deciding whether the Parliament has really occupied the field of
the State Law.

3. Once it is made sure that the Parliament intends to legislate over a particular
field on which the State has already legislated, the repugnancy kicks in. To what
extent is the repugnancy is a subjective question.

4. The intention of the Parliament can be either express or implied. Express

intention can be shown explicitly by enacting a Central Law to repeal a State Law.
Implied Intention is slightly more convoluted. Implied Intention can be shown by
enacting a Central Law on a subject on which the State has already legislated. By
enacting such a Central Legislation, it will be implied that the Parliament intends
to occupy a particular field and strip the State Legislature of its power to legislate
in this respect.
Legal doctrine of Occupied Field

Doctrine of Occupied Field is attracted in a variety of ways. For example if a

special law covers a subject, general law stands automatically excluded because
that field of law is already occupied.

Claim of Gratuity made under Section 33-C(2) Industrial Disputes Act instead
of Payment of Gratuity Act — Validity.

It was urged that the Payment of Gratuity Act is a self-contained code

incorporating all the essential provisions relating to payment of gratuity which can
be claimed under that Act, and its provisions impliedly exclude recourse to any
other statute for that purpose.

Supreme Court accepted this contention in following words:

“A careful perusal of the relevant provisions of the Payment of Gratuity Act shows
that Parliament has enacted a closely knit scheme providing for payment of
gratuity. A controlling authority is appointed by the appropriate Government under
section 3 and Parliament has made him responsible for the administration of the
entire Act. In what event gratuity will become payable and how it will be
quantified are detailed in section 4. Section 7(1) entitled a person eligible for
payment of gratuity to apply in that behalf to the employer. Under section 72, the
employer is obliged,as soon as gratuity becomes payable and whether an
application has or has not been made for payment gratuity, to determine the
amount of gratuity and inform the person to whom the gratuity is payable
specifying the amount of gratuity so determined. He is obliged, by virtue of the
same provision, to inform the controlling authority also, thus ensuring that the
controlling authority is seized at all times of information in regard to gratuity as it
becomes payable. If a dispute is raised in regard to the amount of gratuity payable
or as to the admissibility of any claim to gratuity, or as to the person entitled to
receive the gratuity, section 7(4) a requires the employer to deposit with the
controlling authority such amount as he admits to be payable by him as gratuity.
The controlling authority is empowered. under section 7(4)(b), to enter upon
adjudication of the dispute, and after due inquiry, and after giving the parties to the
dispute a reasonable opportunity of being heard, he is required to determine the
amount of gratuity payable.
In this regard, the controlling authority has all the powers as are vested in a court
while trying a suit under the Code of Civil Procedure, 1908 in respect of obtaining
evidentiary material and the recording of evidence. The amount deposited by the
employer with the controlling authority as the admitted amount of gratuity will be
paid over by the controlling authority to the employee or his nominee or heir.
Section 77 provides an appeal against the order of the controlling authority under
section 74 to the appropriate Government or such other authority as may be
specified by the appropriate Government in that behalf. The appropriate
Government or the appellate authority is empowered under section 78, after giving
the parties to the appeal a reasonable opportunity of being heard, to confirm,
modify or reverse the decision of the controlling authority. Where the amount of
gratuity payable is not paid by the employer with in the prescribed time,the
controlling authority is required by section 8, on application made to it by the
aggrieved person, to issue a certificate for that amount to the Collector. The
Collector,thereupon, is empowered to recover the amount of gratuity,together with
compound interest thereon at the rate of nine per cent per annum from the date of
expiry of the prescribed time, as arrears of land revenue, and pay the same to the
person entitled thereto.It is apparent that the Payment of Gratuity Act enact a
complete code containing detailed provisions covering all the essential features of
a scheme for payment of gratuity.It creates the right to payment of gratuity,
indicates when the right will accrue, and lays down the principles for quantification
of the gratuity. It provides further for recovery of the amount, and contains an
especial provision that compound interest at nine per cent per annum will be
payable on delayed payment. For the enforcement of its provisions, the Act
provides for the appointment of a controlling authority, who is entrusted with the
task of administering the Act. The fulfilment of the rights and obligations of the
parties are made his responsibility, and he has been invested with an amplitude of
power for the full discharge of that responsibility. Any error committed by him can
be corrected in appeal by the appropriate Government or an appellate authority
particularly constituted under the Act.Upon all these considerations, the conclusion
is in escapable that Parliament intended that proceedings for payment of gratuity
due under the Payment of Gratuity Act must be taken under that Act and not under
any other.
There is anther example of doctrine of occupied field. In another case regarding
prohibition on manufacture and sale on Gutka (Pan Masala with chewing tobacco),
under Prevention of Food Adulteration Act, it was contended that Cigarettes and
Other Tobacco Products (Prohibition of Advertisement and Regulation of Trade
and Commerce, Production, Supply and Distribution) Act, 2003, (Act 34 of 2003),
referable to entry 52, List I and entry 18, List III to the Seventh Schedule of the
Constitution of India, occupies the entire field in relation to tobacco. Therefore the
State Government could not do indirectly what it can not do directly. Supreme
Court of India accepted the proposition and quashed the notification under PFA
Act. It observed:

The provisions of the Cigarettes and Other Tobacco Products (Prohibition of

Advertisement and Regulation of Trade and Commerce, Production, Supply and
Distribution) Act, 2003 are directly in conflict with the provisions of Section 7(iv)
of the Prevention of Food Adulteration Act, 1954. The former Act is a special Act
intended to deal with tobacco and tobacco products particularly, while the latter
enactment is a general enactment. Thus, the Act 34 of 2003 being a special Act,
and of later origin, overrides the provisions of Section 7(iv) of the Prevention of
Food Adulteration Act, 1954 with regard to the power to prohibit the sale or
manufacture of tobacco products which are listed in the Schedule to the Act 34 of
2003.
Though it was not relevant in this judgement, Article 254 of Constitution of India
also deals with the aspect of occupied field and any Union/Central legislation
would have effect of repealing the State Legislation on the same subject if it is in
conflict with Central legislation.
The Constitution Bench elides repugnance and occupied field

That the title of this post is a part of Indian constitutional law is explained by the
fact that the validity of tax and commercial legislation is often challenged on the
ground that it conflicts with a similar legislation enacted by another legislature.
Often the challenge is on the basis of legislative competence, and this requires a
careful analysis of not only the words of Schedule VII, but of the principles upon
which legislative power is distributed in India.

Until 7 May, 2012, it was taken for granted that the doctrines of occupied field and
repugnance are as different as chalk and cheese. The easiest way of explaining
the difference is to say that occupied field is concerned with the existence of
legislative power, while repugnance is concerned with the exercise
of legislative power that is shown or assumed to exist. In more precise
terms, the doctrine of repugnance, found in article 254 of the Constitution, is
that a State legislation which is repugnant to a law enacted by Parliament is
void to the extent of repugnance. Some doubts about the scope of art 254 arose on
account of the words “with respect to one of the matters enumerated in the
Concurrent List”. A close analysis of these words demonstrates that the “comma”
is placed after the words “competent to enact” rather than “an existing law”,
suggesting that article 254 is confined to Central legislation in the Concurrent List
only in respect of pre-1950 legislation. But the Supreme Court rejected this
interpretation in many cases, notably VK Sharma v State of Karnataka AIR 1990
SC 2072, and held that article 254 is applicable only to a conflict between a State
and a Central legislation enacted under the same entry in the Concurrent List.

While there are, of course, two views about whether this is correct or not, two
basic propositions about repugnance were never questioned even in this line of
case law:
(i) repugnance arises only if there is an actual conflict between two legislations,
one enacted by the State Legislature and the other by Parliament, both of which
were competent to do so; and (ii) the State law is void only to the extent of
repugnance, subject to art 254(2).
Occupied field, on the other hand, has nothing at all to do with a conflict between
two laws. It is perhaps an unfortunate expression because it is used in precisely
this sense in the jurisprudence of other countries. But in India it simply a
compendious way of referring to a few legislative entries in List II of
Schedule VII, which are expressly made “subject” to a corresponding Entry in List
I or List III. The two most important instances of such entries are Entry 24, List II
(“Industries”, made subject to Entry 52, List I, which provides that Parliament
may declare, by law, that the control of a certain industry by the Union is in the
public interest) and Entry 23, List II (Mines and mineral development, made
subject to Entry 54 List I, which provides that Parliament may by law declare that
the control of mines and mineral development by the Union is in the public
interest). By making such a declaration in a legislation (for example the Essential
Commodities Act or the MMRDA), Parliament acquires legislative competence
over what would otherwise be a field of State legislation, and the State is entirely
denuded of legislative competence. It is apparent that no question of repugnance
arises: if a field is validly occupied, that field ceases to form part of the State List.
As one judge put it, that field is “subtracted” from the State List and “added” to
the Union List.

One controversy that arose in occupied field litigation was whether Parliament
could occupy a field by simply making a declaration. For example, suppose
Parliament declares in the MMRDA that mines and mineral development under the
control of the Union is expedient in the public interest, but merely provides in the
operative part that “the mining sector shall comply with such rules as may be
notified by the Competent Authority”, and the competent authority notifies no such
rules. A concern was expressed that if occupied field is invoked in this way,
neither the State (because it cannot), nor the Union (because it does not) legislates
for that sector, leading to a “legislative vacuum”. In the leading Entry 54 cases
(Hingir Rampur Coal Co, MA Tulloch and Baijnath Kedia), the Supreme Court
held that this is irrelevant, because Entry 54 denudes the States of competence the
moment the declaration is made by Parliament. But some leading Entry 52 cases,
particularly Belsund Sugar and Ishwari Khetan, suggested otherwise. This apparent
conflict was not really a conflict – without going into more detail than is necessary,
the difference is explained by the fact that the Supreme Court had previously
construed the substance of Entry 52 more narrowly (and correctly) than it did Entry
54 (see Tika Ramji affirmed in a judgment rich in scholarship by Ruma Pal, J.,
in ITC v AMPC, over Pattnaik, J’s dissent).

It is crucial to note that none of this had anything to do with repugnance. The
controversy over “mere declaration” versus “actual legislation” was at all times
confined to the few entries in the Constitution that expressly permit Parliament to
occupy a State field. Indeed, when the point was argued in relation to repugnance,
the Supreme Court authoritatively held in Tika Ramji (para 18) that “repugnancy
must exist in fact, and not depend merely on a possibility”. Conceptually, it is
submitted that this is correct –
the Constitution has two mechanisms to deal with legislative conflicts: one deals
with who has the power to enact a law in a certain field of legislation in List II
(ordinarily the State, unless the Centre occupies the field in the manner specified in
the corresponding entry in List I) and the other with what happens when two
legislatures, both of which have the power to enact laws, enact conflicting
laws (repugnance). Indeed, repugnance presupposes that both laws have been
enacted by competent legislatures – thus, if the State of TamilNadu imposes
income tax, and this is in conflict with the Income Tax Act, 1961, it is unnecessary
to resort to art 254, because the Tamil Nadu Act is void ab initio for the legislature
lacks competence. On the other hand, if the State of Tamil Nadu enacts the Sales
Tax Act, and Parliament enacts the Central Excise Act, and it is argued that the
two legislations somehow conflict, the solution is article 254 (conceptually –
in practice, article 254 would be unavailable because of VK Sharma and one would
have to resort to the non-obstante clause in article 246). But if the Centre
has not enacted the Central Excise Act, and it is sought to be shown that the Tamil
Nadu legislature still lacks the power to enact it, there can be no question
of repugnance. That contention can succeed only if it is shown that: (i) “tax on
sale of goods” is not in the State List or (ii) the Centre has validly occupied the
field of “tax on sale of goods” (which it can never do, it is not expressly subject to
a List I entry) or (iii) the Tamil Nadu Act is, in pith and substance, not within “tax
on sale of goods”. Repugnance, it is submitted, can never arise when there is only
one law in operation.
Having said that, there is no doubt that this apparent conflict in the occupied
field cases on the need for actual legislation as opposed to a mere
declaration is an important one, and ought to have been decided by the Supreme
Court. Unfortunately, the Supreme Court, with respect, picked the wrong case,
when it decided State of Kerala v Mar Appraem Kuri on 7 May, 2012. Simplifying
the facts, the Centre enacted the Chit Funds Act, 1982 [“the Central Act”] which
would become operative in the State of Kerala upon the issue of a notification
under s 1(3) of the Central Act, and the State of Kerala enacted the Kerala Chitties
Act, 1975. The Centre did not notify the Central Act in the State of Kerala. The
result was that there was only one law in force in the State of Kerala – the Kerala
Act. Chit funds filed a writ petition in the Kerala High Court and managed to
persuade a Division Bench that the Kerala Act was repugnant to the un-notified
Central Act. The State of Kerala appealed. The Supreme Court referred the matter
to a Constitution Bench.

Surprisingly, the Constitution Bench accepted the contention of the chit funds that
even an un-notified Central law attracts art 254. The Chief Justice gives two
reasons for this conclusion: (i) article 254 uses the verb “made” and the form
“making” – the “making” of a law is complete on enactment, even before the law
is notified and (ii) Parliament, by enacting the Central Act, intended “to occupy
the entire field falling in Entry 7 of List III” and therefore the State Legislature is
denuded of legislative competence unless article 254(2) is applicable.

With great respect, it is submitted that this decision is incorrect and unfortunately
conflates occupied field and repugnance.
First, the verb “made” is used, as senior counsel rightly submitted in oral
argument, not to indicate when a law becomes repugnant, but to identify the law
which must independently be shown to be repugnant.
 Secondly, the conceptual distinction between repugnance and occupied field – or
between the existence of legislative power and its exercise – is at the heart of
the Constitution’s distribution of legislative powers. To hold that a mechanism
intended to solve conflicts arising out of the latter is in fact applicable
because the field is occupied is, it is respectfully submitted, unfortunate.

The second reason the Court gives is an illustration of why it may be dangerous to
use the expression “occupied field” – in the law of other countries, notably
America, it is possible for the Federal legislature to oust the Provincial
Legislature’s legislative competence by “evincing an intention” to enact a
complete code. This is sometimes called “occupied field”. That conception of
occupied field has no place at all in Indian constitutional law. This is clear not only
as a matter of concept, but also from a number of Supreme Court authorities,
particularly Tika Ramji.

The final point is that the Chief Justice rejected the State of Kerala’s reliance
on paragraph 18 of Tika Ramji by relying on MA Tulloch, which had held
that a mere declaration can denude the State Legislature of legislative
competence. Once again, it is submitted with respect that the error is to
confuse occupied field with repugnance – MA Tulloch held that occupied field
under Entry 54 only requires a declaration. It did not hold, and could not have
held, that a mere declaration suffices for repugnance under art 254.

Since it is unlikely that the Supreme Court will revisit this issue, this judgment will
fundamentally alter Indian constitutional law on the distribution of
legislative power, with significant consequences for virtually every area of
law in which Parliament or the States have legislated.