Decided on June 29,1954


Referred Judgements :-



Chagla, C.J. - (1.)This is an appeal from a judgment of the Principal Judge of the City Civil Court, setting aside an award on a petition made for that purpose by the opponents. On 7-11-1951, ,the appellant was employed by the respondent as a 'pueca adatia' to effect certain transactions in groundnuts, linseed, castor seeds and gold. On 26-21952, two transactions of purchase were outstanding. One was of 300 tons of groundnuts and the other was of 25 tons of linseed. Both these were forward transactions for April-May delivery. The case of the respondent was that he gave instructions to the appellant to close the transaction on 26-2-1952. In fact the appellant closed it on 5-3-1952, and his allegation was that he was asked to close the transaction on that date. As a result of the closing of the transaction on 5-3-1952, certain " amount became due by the respondent to the appellant. In respect of this a dispute arose and dispute was referred to arbitration under the provisions of the Bombay Oil Seeds Exchange, Ltd. The arbitrator made his award on 7-10-1952, awarding to the appellant about Rs. 22,000. This award was filed in the City Civil Court, and the respondent filed a petition to set aside the award. As already pointed out, the petition succeeded and the award was set aside.
(2.)Now, the award has been set aside only en one ground and that ground is that forward transaction is groundnuts and linseed are illegal and therefore the whole contract including the term with regard to submission for arbitration cannot be enforced and therefore the arbitration was bad and the award resulting from that arbitration was equally bad. Under Rule 81 (2) of the Defence of India Rules an order was issued on 29-5-1943, and by Clause 3 of this order it was provided that no person shall, after the specified date, for any class of oil seeds, enter into any forward contract in any of those oil seeds, and in the schedule groundnut and linseed were mentioned as oil seeds in respect of which no forward contract could be entered into from 31-5-1943. The Defence of India Act expired on 31-9-1946. The British Parliament then enacted 9 and 10 Geo. VI, 1939, and by this statute it was provided that the Central Legislature would have the power to legislate with regard to certain subjects which were in the Provincial List until the date mentioned in that statute, and pursuant to this power conferred upon the Central Legislature the Temporary Powers Emergency Act of 1946 was passed, and under this Act the order of 29-51943, was continued. In 1947 the Bombay Legislature passed the Bombay Forward Contracts Control Act, 1947 (Act 64 of 1947), and by Section 8 of that Act it declared forward contracts of any goods specified in a notification to be issued under Section 1 (3) to be illegal if these were not entered into, made or performed in the manner laid down in that section, and a notification was issued under Section 1 (3) on 19-121950, by the Government of Bombay by which it recognised the Bombay Oil Seeds Exchange, Ltd., as an authorised body which had the power to put through forward transactions under certain circumstances, and on that very day it applied the Act to all varieties of oil seeds. The Essential Supplies (Temporary Powers) Act would have expired on 1-4-1951, by reason of the provisions of 9 and 10, Geo. VI, 1939, but in the meanwhile our Constitution had been enacted and Article 369 of the Constitution gave to Parliament, during a period of five years from the commencement of the Constitution, the power to make laws with respect to certain matters enumerated in the Concurrent List, and among the matters enumerated were: "(a) trade and commerce within a State in, and the production, supply and distribution of, cotton and woollen textiles, raw cotton (including ginned cotton and unginned cotton or Kapas), cotton seed, paper (including newsprint), foodstuffs (including edible oilseeds and oil), cattle fodder (including oil cakes and other concentrates) coal (including coke and derivatives of coal, iron, steel and mica)." In exercise of the power conferred by this article Parliament passed Act 52 of 1950 on 14-8-1950. This Act continued the original Essential Supplies Act with certain Important amendments up to 31-12-1952, and when the transactions in dispute were entered into, the two laws which were on the statute book arid which were in operation were the Bombay Act-64 of 1947 and the Essential Supplies Act as amended by Act 52 of 1950.
(3.)Now, it is not disputed by Mr. Shah on behalf of the appellant that if effect is to be given to the Parliamentary statute, Act 52 of 1950, then undoubtedly the contracts in respect of which the award is made are illegal, because the prohibition to which attention has been drawn contained in the order of 29-5-1943, was continued by Act 52 of 1950. ""But what is urged is that the Bombay Legislature has removed the illegality with regard to the contracts in respect of oil seeds, and as the Provincial Act is subsequent to the Central Act and as the subject was in the Concurrent List, the Provincial Legislature had the power to do so. For this purpose reliance is placed on Section 107 of the Government of India Act and Article 254 of the Constitution. In our opinion both these provisions are substantially the same. Therefore, turning to Article 254 of the Constitution, it provides:
"(1) If any provision of a law made by the Legislature of a State is repugnant to any provision of a law made by Parliament which Parliament is competent to enact, or to any provision of an existing law with respect to one of the matters enumerated in the Concurrent List, then, subject to the provisions of clause (2), the law made by Parliament, whether passed before or after the law made by the Legislature of such State, or, as the case may be, the existing law, shall prevail and the law made by the Legislature of the State shall, to the extent of the repugnancy, be void."
Therefore, in the hierarchy of legislation in India a higher place was naturally accorded to laws passed by Parliament, and the Constitution enacts that' if a law is passed both by the Legislature of a State and by Parliament with regard to the same subject matter, then if there is any repugnancy between the provisions of the two laws, the law of Parliament shall prevail. This is subject to Clause (2) which is the important provision and that provides:
"Where a law made by the Legislature of a State specified in Part A or Part B of the First Schedule with respect to one of the matters enumerated in the Concurrent List contains any provision repugnant to the provisions of an earlier law made by Parliament or an existing law with respect to that matter, then, the law so made by the Legislature of such State shall, if it has been reserved for the consideration of the President and has received his assent, prevail in that State."
Therefore, if the State Legislature passes a ]aw subsequent to the law passed by Parliament and the State Legislature wants in any way to depart from the provisions of the law as laid down by Parliament, it could do so provided it satisfies the condition, viz., that it reserves the bill for the consideration of the President and the President gives his assent. The principle underlying this clause is clear, viz., that the President should apply his mind- to what Parliament has enacted and also consider the local conditions prevailing in a particular State, and it he is satisfied that Judging by the local conditions a particular State should be permitted to make a provision of law different from the provision made by Parliament, he should give his assent and thereupon the State legislation would prevail. There is a proviso to this Clause (2) and that is: "Provided that nothing in this clause shall prevent Parliament from enacting at any time any law with respect to the same matter" including a law adding to, amending, varying or repealing the law, so made by the Legislature of the State." This again emphasises the omnipotence of Parlia-ment. Even though the State law may contain a provision assented to by the President and may have contained a provision of law different from the provision contained in the Parliamentary statute, it is open to Parliament to legislate again with regard to the same matter. This proviso contains certain, words which do not find a place in the corresponding section of the Government of India Act, and the words are, "including a law adding to, amending, varying or repealing the law so made by the Legislature of the State." In our opinion it is clear that these words do not in any way restrict the competence or jurisdiction of Parliament, They are illustrative words, elabo-rating and making clear the power and compe-tence of Parliament to pass a law with regard to the same subject-matter with regard to which the State Legislature has passed a law, and what the proviso emphasises is that this law passed by Parliament can in terms amend, vary or repeal a law passed by the Legislature of the State. The only possible difference that can be suggested between this provision and the provision in the Government of India Act is that whereas under the Government of India Act it may be said that the Central Legislature could pass a law on any particular subject and that law would prevail provided there was a repugnancy between that law and the law passed by the Provincial Legislature, the Central Legislature could not deal directly with any State legislation. The departure made under the Constitution is that wider power is conferred upon Parliament directly to tackle State legislation and to amend, vary or repeal Stats legislation. But it is impossible to contend that the additional words contained in the proviso in any way restrict the competence of Parliament. Whether under the Constitution or under the Government of India Act, the Central Legislature or Parliament had always the power to override any legislation passed by a Provincial or state Legislature provided the subject it dealt with found a place in the Concurrent List, and that important principle is reiterated in Article 254 and the proviso to Clause (2) merely emphasises that important principle.

Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.