Consti Issue Petitioner.docx

ISSUE-III WHETHER § 3-C AND § 3-D OF THE FOSTERS PRADESH SUGAR UNDERTAKING (ACQUISITION) AMENDMENT ACT, 2009 WAS REPUGNANT TO THE PROVISIONS OF INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951 AND HENCE CONSTITUTIONALLY INVALID? It is submitted before the Hon’ble Court that the State Legislature has legislative competence to enact the Fosters Pradesh (Acquisition) Amendment Act, 2009 (Hereinafter, Amendment Act). It is further stated that Amendment Act, 2009 does not entrench on the legislative field of Parliament under Entry 52 List I and that Amendment Act, 2009 does not violate any of the provisions of The Industries (Development and Regulation) Act, 1951 (hereinafter, IDR Act). Article 246(1) of the Constitution of India states that- “(1) Notwithstanding anything in clauses (2) and (3), Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule (in this Constitution referred to as the Union List).” [III.1] THAT THE ENTRIES IN THE LISTS OF THE SEVENTH SCHEDULE SHOULD BE GIVEN A BROAD INTERPRETATION AND WIDEST SCOPE TO ASCERTAIN THE MEANING OF THE LISTS That the legislative power of Parliament in certain areas is paramount under the Constitution is not in dispute. What is in dispute is the limits of those areas as judicially defined. Broadly speaking, Parliamentary paramountcy is provided for under Articles 246 and 254 of the Constitution. The first three clauses of Article 246 of the Constitution relate to the demarcation of legislative powers between the Parliament and the State Legislatures. Under Clause (1), notwithstanding anything contained in Clauses (2) and (3), Parliament has been given the exclusive power to make laws with respect to any of the matters enumerated in List I or the Union List in the Seventh Schedule. Clause (2) empowers the Parliament, and State Legislatures ‘subject’ to the power of Parliament under Sub-clause (1), to make laws with respect to any of the matters enumerated in List III in the Seventh Schedule described in the Constitution as the 'Concurrent List' notwithstanding anything contained in sub clause (3). Entries in the Lists of the Seventh Schedule have been liberally interpreted, nevertheless Courts have been wary of upsetting this balance by a process of interpretation so as to deprive any entry of its content and reduce it to 'useless lumber'. The entries mentioned under these lists are not powers of legislation but fields of legislation. They are mere legislative heads demarcating the area over which the appropriate legislatures are empowered to enact law.1 Also, the use of the word 'exclusive' in Clause (3) denotes that within the legislative fields contained in List II, the State Legislatures exercise authority as plenary and ample as Parliament. The fact that under the scheme of our Constitution, greater power is conferred upon the center vis-a-vis the States does not mean that States are mere appendages of the center. Within the sphere allotted to them, States are supreme. The center cannot tamper with their powers. More

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T.M.A Pai Foundation v. State of Karnataka, (2002) 8 SCC 481

particularly, the courts should not adopt an approach, an interpretation, which has the effect of or tends to have the effect of whittling down the powers reserved to the States".2 Taking into consideration the broader meaning of the lists as prescribed by this Hon’ble Court in ITC Limited, it can be effectively deduced that State Legislature has not completely encroached upon the powers of the Union by enacting the Amendment Act and in no way contravenes with the supremacy of the Union conferred upon by the Constitution of India. It is further submitted that State Legislature has exercised its power under the ambit of Entry 33 of List III which gives the State Government the power of acquisition and requisitioning of properties. The entrenchment in this case was ‘incidental’ and striking down the entire provision for a mere incidental encroachment would be unjust and unfair. Although Parliament cannot legislate on any of the entries in the State List, it may do so incidentally while essentially legislating within the entries under the Union List. Conversely, the State Legislatures may encroach on the Union List, when such an encroachment is merely ancillary to an exercise of power intrinsically under the State List. The fact of encroachment does not affect the vires of the law even as regards the area of encroachment. This principle is commonly known as the doctrine of ‘pith and substance.’ In the case of India Cement Ltd., this Hon’ble Court held that the courts will have to examine the true nature, character and object of the enactment to determine its true field of legislation.3 A similar principle was reiterated again in the case of Bharat Hydro Power Corp Ltd., where it was held that while examining the legislative competence when a legislation impinges upon legislative field of another legislature, application of doctrine of ‘pith and substance’ has to be done and the main object behind the act is to be paid attention to.4 It is submitted that the decision to enact such an amendment came after continuous efforts of the State Government to revive sick sugar mills and it is only after these mills started incurring huge losses, that the State Government thought it to be expedient in public interest to divest them. Hence, in pith and substance the object of the Act was rational enough and did not conflict or overlap with any of the powers of the Union.

[III. 2] THAT THE PRINCIPLE OF FEDERAL SUPREMACY IN ARTICLE 246(1) OF THE CONSTITUTION IS APPLICABLE ONLY IN CASES OF ‘IRRECONCILABLE’ CONFLICTS. In the case of Mar Appraem Kuri Co. Ltd., it was held that the principle of federal supremacy in Article 246 (1) cannot be resorted to unless there exists an ‘irreconcilable’ conflict between the entries of Union and State Lists. The non obstante clause in Article 246 (1) stands to operate only if reconciliation is impossible. State Legislatures are thus, fully competent to legislate regarding subjects in the Concurrent List.5

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I.T.C. Limited v The Agricultural Produce Market Committee and Ors. AIR 2002 SC 852. India Cement Ltd. v. State of Tamil Nadu, (1990) 1 SCC 12; PK Mukherjee v. Bank of Commerce Ltd AIR 1947 PC 60. 4 Bharat Hydro Power Corp. Ltd. v. State of Assam (2004) 2 SCC 553. 5 State of Kerela v. Mar Appraem Kuri Co. Ltd., (2012) 7 SCC 106 3

As stated earlier, the entrenchment by the State Legislature in enacting the Amendment Act was purely incidental and not absolutely irreconcilable. Entry 43 of List III gives the State Legislature the power to legislate on the matter of property acquisition. Constitutional validity of the Parent Act i.e. 1971 Act having been upheld in Ishwari Khetan Sugar Mills case6, the amendment Act 2009 is also within the legislative competence of the State Legislature. It is further submitted that the State is not denuded of its power to legislate under Entry 24 List II since the field is not occupied by 1951 Act. All sugar undertakings vest under Section 3 of 1971 Act in the Sugar Corporation Ltd. and the U.P. State Sugar Corporation Ltd. has every right to sell it. The right to acquire the property itself contains the right to transfer. Hence there exists no apparent ‘irreconcilable’ conflict to make way for the application of Article 246 (1). In the case of Rajiv Sarin, similar reasoning as to that of Mar Appraem Kuri was established. It was held that the question of repugnancy under Article 254 of the Constitution arises when the provisions of both the laws are completely inconsistent or absolutely irreconcilable and only in cases of a direct conflict.7 It is further submitted before the honorable court no provision of the Amendment Act is absolutely irreconcilable with the IDR Act. In fact the IDR Act, generally speaking, does not deal with the ownership of industrial undertakings in declared industries. The Act is primarily concerned with development and regulation of the declared industries. Even after the incidental entrenchment took place, the Central Government still has power under § 18A and § 18AA of the IDR Act to assume direct management or control of industrial undertakings in certain cases and even after acquisition of scheduled undertakings under the impugned legislation the power of the Central Government under Sections 18A and 18AA would remain intact. Even § 18FA provides for taking over management or control of a company which is being wound up with the permission of the High Court and in such a situation the authorized person appointed by the Central Government would then look after all the major affairs of the company. All these regulatory provisions clearly prove the supremacy of the Parliament as mentioned under Article 246 (1). It is clearly evident that even after the State Legislature legislates on the impugned subject under Entry 43 List III, the legislation is no way is ‘inconsistent’ to or in absolute ‘irreconciliation’ with the provisions of List I. It is therefore humbly contended before the Hon’ble Court that since there is no way that it can be shown that the enactment done by the State Legislature in furtherance of the provisions of Entry 43 of List III was completely inconsistent or in direct conflict with the powers of the Union, the impugned legislation not be struck down on the ground of legislative incompetence when the pre requisites of it are not met.

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Ishwari Khetan Sugar Mills (P) Ltd. and Ors. v. State of Uttar Pradesh and Ors AIR 1980 SC 1955 Rajiv Sarin v. State of Uttarakhand, (2011) 8 SCC 708