Relations between Union and the States in India
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Transcript of Relations between Union and the States in India
LEGISLATIVE RELATIONS BETWEEN THE
UNION AND THE STATES
[Articles 245 to 293]
INTRODUCTION
The Indian Constitution provides for a new kind of federalism to meet
India's peculiar needs. In the matter of distribution of powers, the Framers
followed the pattern of the Government of India Act, 1935, which had laid the
foundation for a federal set-up for the Nation. The scheme as envisaged in the
Act of 1935, has not been adopted in the Constitution in every respect, but the
basic framework is the same. India is said to have adopted a loose federal
structure.
The Seventh Schedule to the Constitution divides the subjects of
legislation under three lists, viz. Union, State and Concurrent List.
The Union List (List 1) contains as many as 97 items and comprises of the
subjects which affect the entire country and are of general interest and admit of
uniform laws for the whole of the country. These matters lie within the exclusive
legislative competence of the Union Parliament. The State List (List II)
enumerates 66 items and comprises of subjects of local or State interest and as
such lie within the legislative competence of the State Legislatures. The
Concurrent List (List III) enumerates 47 items, with respect to which, both Union
Parliament and the State Legislatures have concurrent power of legislation.3
The Constitution also confers power on the Union Parliament to make laws with
respect to the matters enumerated in the State List under special
circumstances. Besides, the Constitution vests power in the Union Government
to control the exercise of legislative power by the State Legislatures in certain
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matters.5 The residuary powers of legislation are vested in the Union
Parliament.
This Chapter has been classified as under—
1. Legislative Relations
2. Administrative Relations
3. Financial Relations
LEGISLATIVE RELATIONS
The Constitution of India makes a two-fold distribution of legislative
powers:
(a) With respect to territorial jurisdiction and
(b) With respect to subject-matter of legislation
TERRITORIAL JURISDICTION (Article 245)
'As regards the territorial jurisdiction, Article 245 (1) provides : "Subject to
the provisions of this Constitution, Parliament may make laws for the whole or
any part of the territory of India, and the Legislature of a State may make laws
for the whole or any part of the State."
Doctrine of Territorial Nexus:
Article 245 (1) implies that the State law would be void if it is given extra-
territorial operation, i.e., it is applied to subjects or objects located outside the
territory of that State. However, many times the State laws having extra-
territorial operation have been held valid. It is done by the application of the
"Doctrine of Territorial Nexus".
The doctrine was evolved by the Privy Council in Wallace Bros, and Co.
Ltd. v. Income Tax Commissioner, Bombay. In this case, a company which
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was registered in England appointed an agent in Bombay. Through that agent
the company carried on its business within the territory of India. In a year, the
company out of its total profit of Rs. 2.4 million, earned Rs. 1.7 million by
carrying its business within the territory of India. The Indian Income Tax
Authorities sought to tax the entire income of the company. The company
contended that the Indian Income Tax Act, 1939 could not be applied to it as it
was subject of the English laws. The Privy Council however upheld the levy of
tax by applying the "doctrine of territorial nexus". The doctrine explains : it is not
essential that the object to which the law is applied should be physically located
within the boundaries of the State making the law. It is enough if there is a
sufficient territorial nexus between the object and the State making the law;
"The Supreme Court of India applied the doctrine in State of Bombay v.
R.M.D.C. In this case, the State of Bombay enacted the Bombay Lotteries and
Prize Competitions (Control and Tax) Act, 1948. The Act levied a tax on
lotteries and prize competitions. The Act amended in 1952 sought to tax prize
competitions contained in newspapers. Tax was imposed under this Act on the
income of the respondent company, conducting a prize competition (Crossword
Puzzle) through a paper named "Sporting Star" printed and published in
Bangalore. The paper had wide circulation in the territory of Bombay. A large
number of people from the territory of Bombay subscribed to the Crossword
Puzzle. Keeping in view the number of subscribers, the respondent company
opened its collecting booths within the territory of Bombay, from where the
forms for appearing in the crossword puzzle were to be issued, fees collected
and the results declared. The whole of the activity relating to the Crossword
Puzzle was thus completed within the territory of Bombay. Taking into
consideration these facts, the Supreme Court upheld the. tax imposed on the
company. The Court held that there existed a sufficient territorial nexus to
enable the Bombay State to tax the respondent. For the application of the
doctrine there must be —
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(a) A sufficient nexus between the State making the law and the object of law.
The nexus must be real and not illusory; and
(b) The liability sought to be imposed must be pertinent to that connection.
Parliamentary Law Having Extra-Territorial Operation [Article 245 (2)]:
Clause (2) of Article 245 declares that Union Parliament may make a law
having extra-territorial operation and such a law would not be void on the
ground of having extra-territorial operation.
In A.H. Wadia v. Income Tax Commissioner, the Gwalior Government
had loaned at Gwalior large sums of money to a company in British India on the
mortgage of debentures over property in British India. The interest on loan was
payable at Gwalior. It was taxed under the Indian Income Tax Act. Upholding
the levy the Federal Court held that in case of a sovereign Legislature, the
question of extra-territoriality of any enactment could never be raised in the
Municipal Courts as a ground for challenging its validity. The legislation might
offend the rules of International law, it might not be recognised by foreign courts
or there might be practical difficulties in enforcing them. These have been held
to be questions of policy with which the domestic tribunals are not concerned.
DISTRIBUTION OF SUBJECT- MATTER OF LEGISLATION (Article 246):
Article 246 provides that the Union Parliament may make laws with
respect to the matters contained in Union List and a State Legislature may
make laws with respect to the matters contained in the State List. As regards
the matters contained in the Concurrent List, both Union Parliament and the
State Legislatures are vested with concurrent powers of legislation. The
Constitution gives autonomy to the Centre and the States within their respective
fields.
Principles of Interpretation:
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The distribution of subject-matter cannot be claimed to be scientifically
perfect and there happens to be overlappings between the subjects
enumerated in the three lists. In such cases, question arises with regard to the
constitutionality of the enactment, which lies within the domain of judiciary. For
that, the Courts apply various principles of interpretation. Some of these are
discussed below)
(1) Presumption of Constitutionality
The Apex Court in Public Service Tribunal Bar Association v. State of
U.P., wherein, upholding the U.P. Public Services (Tribunal) Act, 1976, as
amended from time to time, challenged as violative of Articles 14 and 16 of the
Constitution, ruled that, while examining the challenge to the constitutionality of
an enactment, it was imperative upon the Courts to be conscious to start with
the presumption regarding the constitutional validity of the legislation. The Court
should try to sustain its validity to the extent possible. It should strike down the
enactment only when it is not possible to sustain it. Further, that the burden of
proof is upon the shoulders of the incumbent who challenges it.
(2) Each Entry to be interpreted Broadly
The express words employed in an "Entry" would ne incidental and
ancillary matters so as to make the legislation fundamental principle of
Constitutional Law is that everything exercise of power is included in the grant of
power. The judicial opin; -giving a large and liberal interpretation to the scope of
the Entries. Eacz. should thus be given widest possible and most liberal
interpretation.
(3) Doctrine of Pith and Substance
Many times, a law passed by a Legislature with respect to a matter, within its
legislative competence, encroaches upon another matter, outside its
competence. In such a case, the question with regard to the constitutionality of
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the law is to be determined by applying the doctrine of pith and substance. The
doctrine flows from the words "with respect to" in Article 246.
The doctrine was applied by the Privy Council in Profulla Kumar Mukerjee
v. Bank of Commerce, Khulna.13 In this case, the Bengal Money Lender Act,
1946 fixed the maximum rate of interest and the maximum amount of interest,
which could be recovered by a money-lender from his debtor. The Privy Council
held that the Act was, in pith and substance, a law in respect of "money lending"
and "money-lenders"—a State subject, and was valid, even though it incidentally
trenched on "promissory notes", a Central subject.
(4) Doctrine of Colorable Legislation
Many times, a Legislature makes a law with respect to a matter outside its
legislative competence by giving to the legislation a different colour so as to
bring it within its competence. In such cases, the courts apply the doctrine of
"pith and substance" in order to determine the true nature, character or the real
pith and substance of the law. If after such investigation, it is found that the pith
and substance of the law pertains to a matter outside the legislative
competence of the Legislature enacting the law, then the law would be held
invalid and the different colour given to that law, would not protect it.
ln S.S. Bola v. B.D. Sardana, the constitutionality of the Haryana Service
Engineers Class I, Public Works Department (B & R Branch), (PWD) and
(Irrigation Branch) Act, 1 995, regulating the inter se seniority of direct recruits
and promotees in each of the services, given retrospective effect from 1st day
of November, 1966, the date on which the State of Haryana was formed was
upheld as intra vires the Legislature, and that it was not a colourable piece of
legislation. The Supreme Court said that colourable legislation had reference
only to the legislative competence and not to the power as such. Explaining the
rule, the Court observed that colourable legislation would emerge only when a
Legislature had no power to legislate on an item either because it was not
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included in the List assigned to it or on account of limitations imposed either
under Part III of the Constitution or any other power under the Constitution.
(5) Doctrine of Incidental and Ancillary Powers
The doctrine explains that when a Legislature is given plenary power to
legislate on a particular subject there must also be an implied power to make
laws incidental to the exercise of such power. Expressions 'incidental' and
'ancillary' powers mean the powers which are required to be exercised for the
proper and effective exercise of legislative powers expressly conferred.
The Gujarat Gas (Regulation of Transmission, Supply and Distribution) Act,
2001 was passed by the State w.r.t. Entry 25 of List II, which reads as "Gas and
Gas Works". Natural Gas including Ldquified Natural Gas" is a Union subject
covered by Entry 53 of List I. Answering the reference made by the President of
India under Article 143(1) a five-Judge Constitution Bench of the Supreme
Court in Association of Natural Gas v. Union of India,20 said that the provision of
the Gujarat Act relating to natural gas and CNG were ultra vires the State
Legislature.
(6) Rule of Harmonious Construction
It has been held to, be the duty of the Courts to harmoniously construe
different provisions of any Statute, Rule or Regulation, if possible, and to
sustain the same rather than striking down the provision outright.
The rule of harmonious construction is invoked in cases there is found to
be some ambiguity in provisions of a Statute. Or, where the provisions of a
Statute seem to be inconsistent or repugnant with each other. In such a case,
the rule requires the Court, interpreting the provisions of the Statute, to so
interpret these provisions that all the provisions survive in harmony with each
other.
Repugnancy Between a Union Law and a State Law (Article 254):
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Article 254 (I) provides : "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 repugnancy, be void".
Article 254 (1) enumerates the rule that in the event of a conflict between a
Union and State law the former prevails. The Union law may have been
enacted prior to the State law or subsequent to the State Law.
Test of Repugnancy
The Supreme Court in Deep Chand v. State of Uttar Pradesh, laid down
the following tests for determining the repugnancy between the Union Law and
a State Law—
(a) There may be inconsistency in the actual terms of the two Statutes, i.e.,
when one says "do" and the other says "do not".
(b) When both the State and the Union Laws seek to exercise their powers over
the same subject-matter.
(c) Though, there may be no direct conflict, a State Law will be inoperative
because the Union Law is intended to be a complete, exhaustive code.
In Baijnath v. State of Bihar, Parliament passed the Mines and Minerals
(Regulation & Development) Act, 1957 under Entry 54 of the Union List,
declaring to take under Union's control, the regulation of mines and the
development of minerals to the extent provided in the Act. In 1964, the Bihai
Legislature enacted the Bihar Land Reforms (Amendment) Act, 1964 amending
the Bihar Land Reforms Act, 1950.
Exception [Article 254 (2)]:
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Clause (2) of Article 254 contains an exception to the rule of repugnancy
contained in Article 254 (1). The Clause (2) provides : "Where a law made by
the Legislature of a State 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".
Clause (2) of Article 254 provides for curing of repugnancy which would
otherwise invalidate a State law, which is inconsistent with a Union law or an
existing law. A law so enacted, cannot be challenged on the plea that it lacks
legislative competence.26 In order that the State law should prevail in that State,
the following conditions must be satisfied —
(i) there must be in existence a Union law;
(ii) subsequent to the Union law, the State Legislature enacts a law with respect
to a matter in the Concurrent List; and
(iii) the State law having been reserved for the consideration of the President,
has received his assent thereto.
Subsequent Union Law [Proviso to Article 254 (2)]
Proviso to Article 254 (2). provides 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".
Predominance of the Union Power- NON- OBSTANTE CLAUSE
(Article 246):
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Article 246 provides :
(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").
Notwithstanding anything in clause (3), Parliament, and, subject to clause
(1), the Legislature of any State also, have power to make laws with respect to
any of the matters enumerated in List III in the Seventh Schedule {in this
Constitution referred to as the , "Concurrent List").
Subject to clauses (1) and (2), the Legislature of any State has exclusive
power to make laws for such State or any part thereof with respect to any of the
matters enumerated in List II in the Seventh Schedule (in this Constitution
referred to as the "State List.") 'Parliament has power to make laws with respect
to any matter for any part of the territory of India not included in a State,
notwithstanding that such matter is a matter enumerated in the State List.
. Article 246 contains the non-obstante clause. Article 246, not only talks
about distribution of powers, but also explains the supremacy of powers.
It must thus be noted that if the legislative powers of the Union and State
Legislatures, which are enumerated in Lists I and II of the Seventh Schedule,
cannot fairly be reconciled, the former will prevail. Though, every attempt would
be made to reconcile the conflict but if it is irreconcilable, the Central legislation
shall prevail. Thus, if a subject happens to be included both in List I and List II, it
would be the Parliament alone which will be competent to legislate on that
subject.
Again, if there is a conflict between List II and List III, it is Union power with
respect to List III, which shall prevail.
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The opening words of Clause (3) of Article 246, i.e., "subject to clauses (1)
and (2)" expressly secure the predominance of the Union List and Concurrent
List over the State List.
Thus, Parliament's power to legislate with respect to any matter contained
whether in List I or List III would have predominance over State Legislature's
power to legislate with respect to any matter in the State List. Again, while
Parliament's power to legislate on matters in List III has predominance over
State -Legislature's power to legislate on matters in the State List, but State
Legislature's power to legislate on matters in List III is subjected to Parliament's
power to legislate on matters in List I.
In State of Karnataka v. Vishwabarathi House Building Co-operative Society
the Consumer Protection Act, 1986, for the creation of quasi-judicial authorities
at the District, State and Central levels, to provide momentum to the consumer
movement.
Upholding the constitutional validity of the impugned Act, a Bench of three
learned Judges of the Supreme Court held that Parliament had legislative
competence to provide for creation of special courts and tribunals, by virtue of
Clause (2) of Article 246 of the Constitution read with Entry 11-A of List III which
read as "Administration of justice; constitution and organisation of all courts
except the Supreme Court and the High Courts".
RESIDUARY POWERS OF LEGISLATION (Article 248):
Article 248 provides :
'Parliament has exclusive power to make any law with respect to any
matter not enumerated in the Concurrent List or State List.
Such power shall include the power of making any law imposing a tax not
mentioned in either of these Lists. Article 248, thus, confers residuary powers of
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legislation exclusively on the Union Parliament. Articles 248 is to be read with
Entry 97 of Union List which reads as : "Any other matter not enumerated in List
II or List III including any tax not mentioned in either of those Lists".
The Goa, Daman and Diu (Opinion Poll) Act, 1966 was enacted by
Parliament in the exercise of its residuary powers.
LEGISLATION FOR UNION TERRITORIES (ARTICLE 246(4)):
Clause (4) of Article 246 confers unqualified power of legislation on the Union
Parliament. With regard to Union Territories, there is no distribution of
legislative power, since specified in the resolution, it shall be lawful for
Parliament to make laws for the whole or any part of the territory of India.
CIRCUMSTANCES WHEN THE UNION PARLIAMENT CAN MAKE
LAWS ON THE SUBJECTS CONTAINED IN THE STATE LIST:
1. Power of Parliament to legislate in National interest (Article 249)
Parliament may make laws under Article 249 (1) only with respect to suitable
State matters as are specified in the resolution passed by the Council of States.
Such a resolution passed under Clause (1) normally lasts for one year but it
may be renewed as many times as deemed necessary. Every time resolution is
passed, it shall remain in force for one year only.
Laws passed by Parliament under a resolution passed under Clause (I)
Article 249, would cease to have effect on the expiration of a period of six mont
after the resolution has ceased to operate.38
Article 249 has been used a few times. The Supply and Prices of
Goods Act, 1952 and the Evacuee Interest (Separation) Act, 1951 are the
instance
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2. Power of Parliament to legislate during operation of
Proclamation of Emergency (Article 250)
Article 250 (1) provides that "Parliament shall, while a proclamation
Emergency is in operation, have power to make laws for the whole or any pi of
the territory of India with respect to any of the matters enumerated in t State
List".
The Proclamation of Emergency referred to in this Article must be
proclamation which may be made under Article 352.
When a proclamation of Emergency is in operation, Parliament can en;
laws with respect to all the three Legislative Lists in Schedule VII. It can ma
laws conferring powers and imposing duties on the Union and its Officers
respect of all the Lists.
Laws made under Article 250 (I), however, would cease to have effect the
expiration of a period of six months after the Proclamation has ceased
operate.
Article 251 clarifies that Articles 249 and 250 do not restrict the
Legislature of a State to make laws with respect to matters with respect to
which Parliament is empowered to legislate under these Articles. However in
case the two laws, i.e., Parliamentary law and State law, are repugnant each
other, it is the law made by Parliament which will prevail and the Sti law shall
be void to the extent of the repugnancy, that to for the period specific therein.
3. Parliament's Power to legislate with the Consent of the States
(Article 252)
Article 252 (1) provides that when all the Houses of Legislatures of two more
States have passed resolutions to the effect that it shall be desirable tl any of
the matters in the State List should be regulated in such States Parliament by
law, it shall be lawful for Parliament to pass an Act for regulat that matter.
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The resolution must be passed by the Houses of at least two St
Legislatures before Parliament gets empowered to legislate under Article 2 (1).
The resolution may be passed by the simple majority. An Act so pass by
Parliament shall have operation within the territories of only such States.
However, the Act so enacted may be adopted by other States by passing
resolution in the Houses of their Legislatures for that purpose.
Clause (2) of Article 252 provides that such Act as passed by Parliament
under Clause (1), may be amended or repealed by an Act of Parliament passed or
adopted in the like manner, i.e., the procedure provided in Clause (1) for its
enactment.
In case an Act passed by the Parliament in exercise of its legislative powers
under Article 252 pursuant to the resolutions passed by the Houses of
Legislatures of various States, is repealed by the Parliament, the Repealing Act
would not be applicable to the State, unless said State passes another
resolution, approving and adopting the Repealing Act.
The Estate Duty Act, 1952, the Prize Competitions Act, 1955, the Urban Land
(Ceiling & Regulation) Act, 1976, and the Transplantation of Human Organs Act,
1994, are some laws passed by Parliament under Article 252 (I).
4. Legislation for giving effect to International Agreements (Article 253)
Article 253 provides : "Parliament has power to make any law for the whole or
any part of the territory of India for implementing any treaty, agreement or
convention with any other country or countries or any decision made at any '
International Conference, Association or other body".
Article 253 exhibits that in implementing a treaty, agreement or convention
with another country, the limitations imposed by Articles 245 and 246 are lifted
and the entire field of legislation, in that respect, is open to the Union
Parliament.41
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5. Parliament's Power to Legislate Under (Article 356)
Article 356 provides that after the President has declared that the
Government in a State cannot be carried on in accordance with the provisions of
the Constitution, he may by Proclamation further declare that the powers of the
Legislature of that State shall be exercisable by or under the authority of
Parliament.
Having been so authorised Parliament may make laws with respect to any or
all the matters contained in the State List. Laws so made by Parliament would
be operative in that State only. Such laws would continue in force until amended
or repealed by appropriate Legislature, i.e., either by Parliament during the
operation of Proclamation made under Article 356 or by the State Legislature
after such Proclamation ceases to operate.
Requirements as to Recommendations and Previous Sanctions
of the President or the Governor (Article 255):
There are certain Bills, such as Money Bills or Financial Bills which can be
introduced in the Legislature with the prior recommendations of the President or
the Governor, as the case may be. Article 255 provides that if such
recommendations or sanctions have not been taken, the Acts so enacted or any
provision in such Act, shall not be invalid by reason of non-compliance of this
procedural requirement. But, such an Act would be unenforceable until the
infirmity is cured. It stands cured if the Act is assented to by the President in
cases where the recommendations required were that of the President. Where
the recommendations required were that of the Governor, the infirmity may be
cured if the Act is assented to by the Governor or the President.
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