SOUIBERN PETROCHEMICAL INDUSTRIES CO. LTD. v. ELECTRICITY INSPECTOR AND E.T.1.0. AND ORS.

The Judgment of the Court was delivered by G S.B. SINHA, J. 1. Leave granted.

y INTRODUCTION

2. Validity and/or application of Tamil Nadu Tax on Consumption or Sale H

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A of Electricity Act, 2003 (for short "the 2003 Act") is in question in these appeals which arise out of a common judgment dated 13 .07 .2006 passed by a Division Bench of the High Court of Madras.

LEGISLATIVE BACKGROUND

B 3. Legislative competence in Central and Provincial Legislature in India was for the first time provided for by reason of the Government of India Act, 1935 (for short "the 1935 Act"). Item 48-8 of List II of the Seventh Schedule of the I935 Act provided for taxes on consumption or sale of electricity subject, however, to the provisions of Section I 54-A of the 1935 Act which reads as under: c "I 54-A. Save in so far as any Federal may otherwise provide, no Provincial Jaw or law of a Federated State shall impose, or authorize the imposition of, a tax on the consumption or sale of electricity (whether produced by a Government or other persons ) which is -

D (a) consumed by the Federal Government, or sold to the Federal Government for consumption by that Government ; or

(b) consumed in the construction, maintenance or operation of a Federal Railway by the Federal Railway Authority or a railway company operating that railway, or sold to that authority or any such railway company for consumption in the construction, maintenance or operation of a Federal Railway ;

and any such law imposing, or authorising the imposition of a tax on the sale of electricity shall secure that the price of electricity sold to the Federal Government for consumption by that Government, or to the Federal Railway Authority or any such railway company as aforesaid for consumption in the construction, maintenance or operation ofa Federal Railway, shall be less by the amount of the tax than the price charged to other consumers of a substantial quantity of electricity."

G 4. The 1935 Act did not contain any provision similar to Item No. 48- B of the Seventh Schedule of the 1935 Act. After coming into force of the Constitution of India, 'Electricity' was placed in List III of the Seventh Schedule of the Constitution oflndia. However, the matter relating to imposition of taxes on the consumption or sale of electricity was provided for under H Entry 53 of List II of the Seventh Schedule of the Constitution of India.

. SOUTHERN PETROCHEMICAL INDUSTRIES CO.LTD.,., ELECTRICITY INSPECTOR (S.B. SINHA, J J 969 ·-' STATUTORY PROVISIONS A

5. The then State of Madras in tenns of Entry 48-B of the Seventh Schedule of the 1935 Act, enacted Tamil Nadu Electricity Duty Act, 1939 (for short "the 1939 Act") levying a duty on certain sales and consumption of electrical energy by the licensees in the State of Tamil Nadu. At the relevant time, licences used to be granted in tenns of the Indian Electricity Act, 1910 B (for short "the 1910 Act"). Section 3 of the 1910 Act reads as under:

"3. Grant of licenses.( I) The State Government may, on application .( ' made in the prescribed fonn and on payment of the prescribed fee (if any), grant after consulting the State Electricity Board, a licence to any person to supply energy in any specified area, and also to lay c down or place electric supply lines for the conveyance and • transmission of energy,

(a) where the energy to be supplied is to be generated outside such area, from a generating station situated outside such area to the boundary of such area, or D

(b) where energy is to be conveyed or transmitted from any place in r such area to any other place therein, across an intervening area not included therein, across such area.

(2) In respect of every such licence and the grant thereof the following E provisions shall have effect, namely

(a) any person applying for a license under this Part shall publish a notice of his application in the prescribed manner and with the prescribed particulars, and the license shall not be granted - F y (i) until all objections received by the State Government with reference 'r thereto have been considered by it:

Provided that no objection shall be so considered unless it is received ·1 before the expiration of three months from the date of the first publication of such notice as aforesaid; and G (ii) until, in the case of an application for a license for an area including the whole or any part of any cantonment aerodrome, fortress, arsenal, dockyard or camp or of any building or place in the occupation of the Government for defence purposes, the State Government has ascertained that there is no objection to the grant of th~ license on H

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_,__,.. A the part of the Central Government;

(b) where an objection is received from any local authority concerned, the State Government shall, if in its opinion the objection is insufficient, record in writing and communicate to such local authority its reasons for such opinion; B (c) no application for a license under this Part shall be made by any local authority except in pursuance of a resolution passed at a meeting of such authority held after one month's previous notice of the same .'

and of the purpose thereof has been given in che manner in which < notices of meetings of such local authority are usually given; c (d) a license under this part -

(i) may prescribe such terms as to the limits within which, and the .. conditions under which, the supply of energy is to be compulsory or permissive, and generally as to such matters as the State Government D may think fit; and

(ii) save in cases in which under section I0, clause (b ), the provisions of sections 5 and 6, or either of them, have been declared not to apply, ..,. every such licensee shall declare whether any generating station to I be used in connection with the undertaking shall or shall not form part E of the undertaking for the purpose of purchase under section 5 or section 6;

(e) the grant of a licence under this Part for any purpose shall not in any way hinder or restrict the grant of a licence to another person within the same area of supply for a like purpose; F (f) the provisions contained in the Schedule shall be deemed to be incorporated with, and to form part of, every licence granted under r f this Part, save insofar as they are expressly added to, varied or excepted by the licence, and shall, subject to any such additions, variations or exceptions which the State Government is hereby empowered to make, apply to the undertaking authorised by the licence:

Provided that where a licence is granted in accordance with the y provisions of clause IX of the Schedule for the supply of energy to other licensees for distribution by them, then, insofar as such licence relates to such supply, the provisions of clauses IV, V, VI, VII, VIII and

SOUTHERN PETROCHEMICAL INDUSTRIES CO LTD" ELECTRICITY INSPECTOR [S.B. SINHA. J.) 97) ~__( XII of the Schedule shall not be deemed to be incorporated with the licence."

6. It did not contain any provision for exemption. However, after coming into force of the Constitution of India, the Act was to have effect, subject to the provisions of Article 288 of the Constitution of India. B

7. Article 288 of tlie Constitution of India reads as under:

"( l) Save insofar as the President may by order otherwise provide, no -f law of a State in force immediately before the commencement of this Constitution shall impose, or authorise the imposition of, a tax in respect of any water or electricity stored, generated, consumed, c distributed or sold by any authority established by any existing law or any law made by Parliament for regulating or developing any inter- State river or river-valley.

Explanation - The expression "law of a State in force" in this clause shall include a law of a State passed or made before the commencement of this Constitution and not previously repealed, notwithstanding that it or parts of it may not be then in operation either at all or in particular y I areas.

(2) The Legislature of a State may by law impose, or authorise the imposition of, any such tax as is mentioned in Clause (I), but no such law shall have any effect unless it has, after having been reserved for the consideration of the President received his assent; and if any such law provides for the fixation of the rates and other incidents of such tax by means of rules or orders to be made under the law by any authority, the law shall provide for the previous consent of the President F ..,. being obtained to the making of any such rule or order." 'r

8. A bare perusal of Section 3 of the I 939 Act would show that taxes were levied on sale of electrical energy by the licensee. There was, thus, no provision under the 193 9 Act for levy of tax on consumption of electrical energy. G

9. In exercise of its power conferred upon it under Entry 38 of List III . of the Seventh Schedule of the Constitution of India, the Parliament enacted the Electricity (Supply) Act, 1948 (for short "the 1948 Act"). In terms of Section 5 thereof, each State was enjoined with a duty to constitute State Electricity Board. Section 12 of the 1948 Act provides for incorporation of H

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A such Boards constituted thereunder. IO. In the year 1962, the State of Tamil Nadu enacted Tamil Nadu Electricity (Taxation on Consumption) Act, 1962 (Act No. IV of 1962) (for short "the 1962 Act") to provide for the levy of tax on the consumption of electrical energy in the State of Madras. B

11. "Consumer" and "energy intensive industries" have been defined in Sections 2(1) and 2(3) respectively of the 1962 Act in the following terms:

"(!) "consumer" with its grammatical variations and cognate expressions includes any person who consumes energy whether c generated by himself or supplied to him.

(3) "energy intensive industries" means industries in which the price of energy used in the process of manufacturing or producing the principal product of the industry concerned exceeds 15 per centum of the total cost of the manufacture or production of that product and D includes the industries manufacturing or producing the following namely:- (i) aluminium; '< I (it) bleaching powder ; E (iii) calcium carbide ;

(iv) caustic soda ; (v) synthetic gem ;"

12. Section 3 of the 1962 Act provides for levy of tax on consumption of energy, referred to therein as electricity tax computed as percentage of the "price of energy consumed" by the consumer. Section 3-A provided for levy of additional tax on consumption of energy calculated at the rate of four per centum of the "price of energy consumed" by the consumer. The proviso appended thereto, however, inter alia provides for exemption from levy of some additional tax on the energy consumed by any person (ot~er than a licensee) who consumes energy generated by himself.

13. Section 12 of the 1962 also provided for exemption of tax in the following terms:

"12. Exemption from tax. - (I) Where energy under High Tension H

SOUTHERN PETROCHEMICAL INDUSTRIES CO. LTD "· ELECTRICITY INSPECTOR [S.B SINHA, l. ] 973

Supply is consumed in the process of manufacturing or producing the A principal product in any industrial undertaking licensed under the Industries (Development and Regulation) Act, 1951 (Central Act LXV of 1951 ), no electricity tax shall be payable on the energy so consumed for a period of three years from the date of the commencement of the manufacture or production of the principal product in such undertaking. B

(2) For the purposes of sub-section (I), if any question arises in regard to the date of the commencement of the manufacture or production of the principal product, the question shall be decided by the prescribed officer in accordance with such procedure as may be prescribed and his decision thereon shall be final." c

14. Section 13 of the 1962 Act, however, enabled the Government to make exemptions and impose restrictions by notification in the following terms:

13. Power of Government to notify exemptions and reductions. - (!) The Government may, by notification, make an exemption or reduction D in rate, in respect of the electricity tax payable under this Act by any specified class of persons, having regard to all or any of the following r matters, namely:- (a) the nature of the business or industry carried on by such class of persons ; E (b) the price of energy consumed in relation to the total cost of the manufacture or production of the principal product in any industrial undertaking owned or controlled by such class of persons ; (c) such other matters as may be prescribed. · F (2) Any exemption from electricity tax or reduction in the rate of electricity tax notified under sub-section (I) may be subject to such restrictions and conditions as may be specified in the notification.

(3) The Government may, by notification, cancel or vary any G notification issued under sub-section (1).

15. Section 14 of the 1962 Act provided that the said Act was in addition to and not in derogation of the 1939 Act. Section 18 of the 1962 Act also contained a provision that the same shall be subject to Article 288 of the Constitution of India.

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A 16. The 1939 Act and the 1962 Act were repealed by the 2003 Act. \___,. Incidentally, the 2003 Act was not to consolidate and amend the levy of tax on consumption or sale of electricity but to consolidate and rationalize the same.

17. "Captive generating plant", "consumer'', "generating company" and B "tariff' were defined in Section 2 of the 2003 Act as under:

"(2) "captive generating plant" means power plant set up by any person or association of persons or any Co-operative society to generate electricity primarily for his own use or for the use of members, and includes the power plants that are permitted to sell the surplus c power so generated;

(5) "consumer" with its grammatical variations and cognate expression means any person who is supplied with electricity on payment of charges, or free of cost or otherwise by a licensee or by the Government or by any other person engaged in the business of supplying electricity D to the public under the Indian Electricity Act, 1910 or any other law for thr. time being in force and includes-

(i) a licensee who consumes electricity whether generated by himself or supplied to him by any other licensee; and

E (ii) actual use of power or any other person who consumes electricity generated by himself;

Explanation 1.- Where a licensee consumes electricity, whether generated by himself or supplied to him, such licensee shall be deemed to be a consumer only in respect of the electricity so consumed, F Explanation II - Where a licensee or other person consumes energy for purposes connected with the construction, maintenance and )

operation of the generating, transmitting and distributing system, such licensee or person shall not be deemed to be a consumer in respect of the energy so consumed; G (9) "generating company" means any company or body corporate or association or body of individuals, whether incorporated or not or artificial juridical person, which owns or operates or maintains a generating station;

H (14) "tariff' means a rate of tariff leviable upon the consumption of

SOCTHERN PETROCHEMICAL INDUSTRIES CO LTD ,. ELECTRICITY INSPECTOR [SB Sl~HA. I.) 975

electricity b the State supplied by the licensee and as fixed by the A Tamil Nadu Electricity Regulatory Commission;"

18. Section 3 of the 2003 Act is the charging provision in terms whereof every licensee and every person other than a licensee is required to pay every month to the Government in the prescribed manner, a tax on the electricity sold or consumed during the previous month at the rate specified thereunder. B Section 4, however, contains a non-obstante clause stating that no electricity tax shall be payable under Section 3 on the sale of electricity by a licensee to the persons nominated thereunder. It contains almost an identical provision of the 1939 Act. The 2003 Act provides for a complete machinery for assessment of the electricity duty payable. It also provides for an appeal from an order of assessment of electricity tax.

19. Section 14 of the 2003 Act provides for general exemption which is in the following terms:

"Exemption and reduction of tax.-The Government may, by notification, make an exemption or reduction in rate in respect of the electricity tax payable under this Act on electricity sold for consumption by or in respect of any- r \ (i) institution or class of person;

(ii) place of public worship, public burial or burning ground or other place for the disposal of the dead;

(iii) premises declared by the State Government to be used exclusively for purposes of public charity;

(iv) vessel whether seagoing or inland." F

20. The repeal and saving clause is contained in Section 20 thereof.

21. Section 20 and 21 of the 2003 Act read as under:

"20(1) :-The Tamil Nadu Electricity Duty Act, 1939 and the Tamil Nadu G Electricity (Taxation and Consumption) Act, 1962 is hereby repealed.

Provided that such repeal shall not affect: (a) the previous operation of the said Acts or anything duly done or suffered ther"(:under; H

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A (b) any right, privilege, obligation or liability acquired, accrued or incurred under the said Acts; (c) any penalty, forfeiture or punishment incurred in respect of any offence committed against the said Acts; (d) any investigation, legal proceeding (including assessment B proceeding) or remedy in respect of any such right, privilege, obligation, liability, forfeiture or punishment as aforesaid and any such investigation, legal proceeding or remedy may be instituted, continued or enforced and any such penalty, fprfeiture or punishment may be imposed as if this Act has not been passed; c (2) Notwithstanding such repeal;

(a) anything done or any action taken or purported to have been done or taken including any rule, notification, inspection order or notice made or issued or any direction given under the repealed laws, shall so far as it is not inconsistent with the provisions of this Act be deemed to have been done or taken under the corresponding provisions of this Act. (b) Any duty levied under the repealed Tamil Nadu Electricity Duty Act, 1939 and the rules made thereunder during the period prior to the commencement of this Act, but not collected, may be recovered in the manner provided under the repealed Act and rules made thereunder. (c) Any tax levied under the repealed Tamil Nadu Electricity (Taxation on Consumption) Act, 1962 and the rules made thereunder during the period prior to the commencement of this Act, but not collected, may be recovered in the manner provided under the repealed Act and the rules made thereunder. ) i

21. This Act shall have effect subject to the provisions of Article 288 of the Constitution"

G WRIT PETITIONS

22. Validity of the provisions of the 2003 Act and/ or application thereof in respect of the generating companies as also the consumers of electrical energy being purchasers from the Tamil Nadu Electricity Board came to be questioned before the Madras High Court in a large number of writ petitions. H The matter was heard by a Division Bench of the said High Court. By reason

SOUTHERN PETROCHEMICAL INDUSTRIES CO. LTD. v. ELECTRICITY INSPECTOR (S.B. SINHA, l. ] 977 ~· of a judgment and order dated 13.07.2006, the Division Bench dismissed the A writ petition.

HIGH COURT JUDGMENT

23. The High Court noticed seven arguments raised before it. It decided all the issues against the writ petitioners. Before us, only argument Nos. 1, B 3, 4, 5 and 7 have been pressed.

24. We may notice the same at the outset:

"(I) The Tamil Nadu Act 12 of2003 levying tax on consumption or sale of electricity is invalid for want of assent of the President of c _. . India, in view of Article 288(2) of the Constitution of India.

(2) *** (3) The impugned Act is repugnant to Section 29 of the Electricity Regulatory Commissions Act, 1998. The Central Act, 1996 provided for the fixation of tariff for electricity to vest with the Commission. The tariff so fixed should be held to include the entire price payable for the energy. Thus, the impugned State Act which imposes a tax on the '/" sale or consumption of electricity is repugnant to the Central Law. • Since the State Act had not received the assent of the President, it is not saved by Article 254(2) of the Constitution. Hence, it is invalid in law.

(4) Under the Tamil Nadu Electricity Taxation on Consumption Act, 1962, some of the appellants were exempted from payment of tax on consumption of self-generated energy. Even though this Act 1962 has been repealed by the present Act, in view of Section 20(2)(a) of the F .y impugned Act, their rights are protected. Therefore, they are entitled )- to continue the exemption from payment of tax.

(6) ••• G (7) The tax on consumption should be actual consumption. It cannot include the maximum/sanctioned demand charges. As such, the tax on consumption cannot be levied on such electricity which is lost in transmission. The tax on consumption of electricity should be based on the electricity consumed and not on the electricity lost in H

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A transmission."

25. In regard to argument No. I, the High Court opined that Article 288 of the Constitution of India being applicable in respect of those which are the authorities within the meaning of the provisions thereof, assent of the President was necessary only in their case and not in case of consumers like the B appellants.

26. It was furthermore held that in terms of Section 4 of the 2003 Act, the State of Tamil Nadu covered all persons except the Government, Railways and authorities dealing with the development of inter-state river and, thus, the constitutional obligation laid down under Article 288 of the Constitution of C India stands satisfied. It was held:

"22. Thus, it is clear that this Article imposes a total ban against a ... State from imposing any tax on the purchase outside a State. This prohibition is absolute. Whereas under Article 288 of the Constitution, the State is not prevented from enacting a law, but it is made clear that the law shall not have any effect against the authority mentioned in Article 288 of the Constitution of India unless it receives the assent of the President. Thus, the purpose of the article is to give protection only in respect of the authorities generated, consumed, etc. of the electricity as referred to under Article 288. Therefore, as correctly held by the learned single Judge, the appellants, who are not such authorities described in the article, cannot take umbrage under the said article and consequently, they cannot resist the enforcement of Act 12 of 2003. Hence, the first submission would fail."

27. As regards argument No. 3, the High Court opined that as the tax is levied on the tariff, the same being not a part of tariff, the provisions of the Electricity Regulatory Commissions Act, 1998 (for short "the 1998 Act") cannot be said to have any application whatsoever holding:

"30. Similarly, the contention of repugnancy is also baseless. The question of repugnancy would arise only when both the laws are enacted on the same entry. The question of repugnancy between one law and another would arise only if both the laws of the Parliament and the State Legislature are referable to an Entry in List Ill. As , . indicated above, the Central Law is referable to Entry 38 List III while the State Law falls under Entry 53 List II. In these circumstances, no question of repugnancy would arise."

SOUTHERN PETROCHEMICAL INDUSTRJES CO LTD "· ELECTRICITY INSPECTOR [S B. SINHA. l ] 979 -..j 28. On argument No. 4, the High Court opined that as the exemption provision contained in Section 14 of the 2003 Act is inconsistent with the provisions of Sections 12 and 13 of the 1962 Act, Section 20(2)(a) of the 2003 Act will have no application stating:

"37. However, in this case, as indicated above, there is an exemption as provided in Section 14 only with reference to the tax on the sale of electricity and not on the tax on consumption of electricity. Thus, it is clear that there is clear inconsistency between the Acts that have been repealed and the repealing Act of 2003. In these circumstances, -1 in view of Section 20(2)(a) of the impugned Act, the exemption orders would cease to be valid on the coming into force of the new Act. Hence, the appellants cannot take advantage of Section 20( I) of the c Act."

29. In relation to argument No. 7, the High Court held that there being two types of consumers, viz., Low Tension consumers and High Tension consumers, tax being payable only on High Tension consumers and as tariff is collected on the permitted demand, levy thereof on maximum demand is permissible in law stating: )· \ "52. With regard to the High Tension connections, a twin tariff system is adopted, one rate as per KV A for each unit consumed, the other rate is on permitted demand as per KV A. It is pointed out that as per the definition of maximum demand, the same is determined on the energy delivered ,at a point of supply. Even though the tariff is collected on the permitted demand, the tax is levied only on the maximum demand, that is, on the energy consumed."

30. A statement made by the learned Advocate General as to actually F 'f on what basis tax is collected was recorded in the following terms: t "53. Now, it is submitted by the learned Advocate General that the maximum demand is what is really consumed by them as against the permitted demand and therefore, the taxes are imposed only on the demand charges and it is based on actual consumption." G ADDITIONAL GROUND

3 I. One of the appellants before us in Civil Appeal arising out of SLP (C) No. 21689 of 2006 filed an application for raising additional grounds. Permission to raise additional grounds was granted by an order dated 12.02.2007. H

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A Pursuant thereto or in furtherance of such leave granted, the constitutionality ,..._,. of Section 14 of the 2003 Act was questioned.

SUBMISSIONS ON BEHALF OF THE APPELLANTS

32. Mr. K.K. Venugopal, learned senior counsel appearing on behalf of B the appellants, in support of the appellants pressing the aforementioned additional grounds, would contend that the consumers of electrical energy form a homogenous class and, thus, could not have been discriminated in the matter of grant of exemption. The learned counsel would contend that the equality clause contained in Article 14 of the Constitution of India being a t basic structure of the Constitution must in a situation of this nature be c enforced and in that view of the matter, it was obligatory on the part of the State to treat all the consumers on equal footing. In view of the fact that Section 14 of the 2003 Act per se is arbitrary, it was urged, the burden of proof was on the State to show that the classification is a valid classification. It was contended that in such an event, the validity of the 2003 Act can be read down for the purpose of upholding its constitutionality and according to the learned counsel the following words should be declared to be ultra vires "on electricity sold for consumption by". -{

33. Relying on the decision of a Constitution Bench of this Court in D.S. I Nakara and Ors v. Union of India, [1983] 1 SCC 305, the learned counsel would contend that for the aforementioned purpose, the court may take into consideration the historical facts that the exemption which had all along been granted could not have been taken away all of a sudden particularly when the appellants altered their position relying on or on the basis of the representations made by the State that in the event, such captive generating plant or cogenerating units are set up, they would be granted perennial exemption from payment of electricity tax. 'r

34. It was submitted that in view of the decision of this Court in j

Manekagandhi v. Union of India, [1978] l SCC 248, the Act can be struck down not only on the ground of being discriminatory in nature but also on the ground of being arbitrary.

35. Mr. R.F. Nariman, learned counsel appearing on behalf of the appellants in Civil Appeals arising out ofSLP (C) Nos. 2100, 2844, 2099, 2097, 3108, 3109, 3111 and 3112 of2007 would submit that the High Court committed a manifest error in interpreting Sub-sections (I) and (2) of Section 20 of the H 2003 Act together. They are independent of each other and operate in different

SOUTHERN PETROCHEMICAL INDUSTRIES CO LTD.•« ELECTRICITY INSPECTOR (S.B. SINHA, I.] 98}

-_/ fields. Whereas the proviso appended to Section 20(1) of the 2003 Act A provides for savings that follow from the repeal of the 1962 Act and the 1939 Act; Section 20(2) thereof provides for a legal fiction for continuation of certain things as if the Acts of 1962 and 1939 had not been repealed. It was pointed out that Sub-section ( 1) of Section 20 does not contain any statement which occurs in Section 6 of the General Clauses Act being "unless a different intention appears". In that view of the matter, all rights and privileges obtained B by a consumer in terms of the provisions of the 1939 Act or the 1962 Act are safeguarded. y

) 36. It was urged that whereas Sub-section (1) of Section 20 of the 2003 Act contains a similar provision as Section 6 of the General Clauses Act, Clauses (a) and (b) of Sub-section (1) of Section 20 of the 2003 Act are clearly c attracted. Reliance in this behalf has been placed on Mis. Universal Imports Agency and Anr. v. The Chief Controller of Imports and Exports and Ors., .(1961] I SCR 305, Shri Ran Prasad (Deceased) By His Legal Representative v. The State ofPunjab, [ 1966] 3 SCR 486 and State ofPunjab v. Harnek Singh, (200213 sec 481. D 3i. It was urged that the words "sold for consumption" would amount ,... to 'tautology' as electrical energy can never be stored. Reliance in this behalf ) has been placed on State of A.P. v. National Thermal Power Corpn. Ltd. and Ors., (2002] 5 SCC 203 and BSES Ltd. v. Tata Power Co. Ltd. and Ors., (2004] 1 SCC 195. In that view of the matter, this is a fit case for applying purposive construction to provide meaningful context to the semantic interplay between the words "by" and the phrase "sold for consumption". If the aforementioned part of the provision, viz., "sold for consumption by" is to be treated as superfluous, the same may as well be read down for the purpose of upholding the exemption granted in favour of the appellants, pursuant to the notifications issued under the 1939 Act and the 1962 Act, particularly when such exemptions -r were to be granted 'permanently'. \

38Copy pinpoint38. Such a construction is permissible having regard to the fact that the 2003 Act is not a consolidating and amending statute but one for consolidation and rationalization. Having regard to the new economic policy, the statute encourages more private participation in the private sector and thereby a literal or narrow interpretation will defeat the same. In any event, Section 14 should be construed in such a manner so as to make it consistent with Article 14 of the Constitution of India.

39Copy pinpoint39. It was submitted that the 'privilege' is superior to the right and in H

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A that view of the matter even if the appellants have not acquired any right, \. - they having enjoyed privilege, the same is saved under Clause (b) of Sub- section (I) of Section 20 of the 2003 Act.

40Copy pinpoint40. The parties have set up their industries relying on the promises made by the State. In particular sugar industries have spent about Rs. 745.64 B crores in that behalf. Taking accou11t of this substantial spin-off, doctrine of promissory estoppel should be attracted in this case and in that view of the matter, the State is estopped from demanding the electricity duty from the captive power plants including the appellants. Reliance in this behalf has • \-. been placed on MRF Ltd., Kottayam v. Assistant Commissioner (Assessment) ...

c Sales Tax and Ors., [2006] 8 SCC 702 and State of Punjab v. Nestle India Ltd. and Anr., [2004] 6 SCC 465.

41Copy pinpoint41. Our attention in this behalf has also been drawn to the observations of Beg, J. in his concurrent judgment in Madan Mohan Pathak and Anr. v. Union ofIndia and Ors., [1978] 2 SCC 50 wherein the Life Insurance Corporation D (Modification of Settlement) Act, 1976 was struck down inter alia on the premise that the statute resiled from the earlier promise made by the Government. ~

42Copy pinpoint42. Mr. A.K. Ganguli, learned senior counsel appearing on behalf of the • appellants, had supplemented the submissions of Mr. K.K. Venugopal and Mr. E R.F. Nariman, urging that no previous sanction having been obtained from the President oflndia as is required under Article 288 of the Constitution oflndia, the 2003 Act is ultra vires particularly when Section 2 I of the 2003 Act as also Section 18 of the 1962 Act specifically refer thereto.

43Copy pinpoint43. The High Court, Mr. Ganguli would contend, has mis-interpreted the provisions of Article 288 of the Constitution of India insofar as it failed to take into consideration that it is in two parts. Reference to inter-State river I i authority has nothing to do with the first part of the said provision. Also, as Tamil Nadu Electricity Board which was constituted by reason of the provisions of the 1948 Act, does not pay any tax, it cannot realize any tax from the consumers to whom electricity is supplied.

44Copy pinpoint44. It was further submitted that the maximum demand charges cannot be made a basis for demanding electricity tax as maximum demand charges have been levied for a different purpose whicli is penal in nature. Reliance in this behalf has been placed on Orissa State Electricity Board and Anr. v. H /Pl Steel Ltd. and Ors:, [1995] 4 SCC 320.

SOUTHERN PETROCHEMICAL INDUSTRIES CO.LTD '· ELECTRICITY INSPECTOR [SB. SINHA, l.] 983 - _( _

45Copy pinpoint45. The learned counsel would argue that as tax can be levied in terms A of Article 265 of the Constitution of India, no taxable event occurred for levy of electricity duty on the quantum of electrical energy which has not been consumed or sold. Our attention in this behalf has been drawn to a decision of this Court in State of Mysore v. West Coast Papers Mills Ltd. and Anr., [1975] 3 sec 448 for the proposition that no electricity duty was payable at transmission loss. B

46Copy pinpoint46. Mr. A.R.L. Sundrasan, learned senior counsel appearing on behalf of the appellants in Civil Appeal arising out of SLP (C) No. 18220 of 2006 -{ would submit that having regard to the Entry 38, List III of the Seventh Schedule of the Constitution of India, in terms whereof the Parliament had enacted the 1998 Act, the State could not have made any law in terms of Entry c 58, List II of the Seventh Schedule of the Constitution of India as the entire filed of electricity is covered thereby and, thus, the impugned Act should he held to be repugnant to the 1998 Act.

47Copy pinpoint47. The learned counsel appearing on behalf of the appellants in Civil D Appeal arising out of SLP (C) No. 3600 of 2007, would submit that in terms of Article 288 of the Constitution of India, the focus is on the law which ,. ~ enables the State to impose tax and not the individual event of levy thereof and, thus, even if such actual levy might not have been levied, the Act authorizing imposition of such tax on river valley authorities, is bad in law. E

48Copy pinpoint48. The impugned Act suffers from callous exercise of power inasmuch as the State, by imposing tax, intended to give the State Electricity Board such amount which it could not get from the hands of the Electricity Regulatory Commission. A provision of the Act cannot be exercised in such a way to defeat the provisions of another Act. Burden of collection of tax from the F ..,,.. consumer where it does not have any captive generation plant is on the licensee and, thus, it should be held to be the part of the tariff and in that \ view of the matter, the impugned legislation is ultra vires Article 246 of the Constitution of India.

49Copy pinpoint49. Mr. K. V. Viswanathan, learned counsel would submit that tariff is not G only a price but also all which is taken for sale or consumption of electrical energy.

50Copy pinpoint50. In certain m~tters, including Civil Appeals arising out of SLP(C) Nos. 1746 to 1762 of2007, the validity of provisions of the 1962 Act, as amended H

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A by Act 32 of 1991, have also been challenged on the ground that in view of ~- - insertion of Section 3-A, the Government of Tamil Nadu issued a notification bearing No. GOMs No. 787 dated 30.04.1979 so as to simplify the process of tariff and all taxes, thus, having been merged, fresh levy of additional tax would be prohibited.

51Copy pinpoint51. In respect of certain factories involving products like cement, involving inter alia Grasim Industries Ltd. [Civil Appeal arising out of SLP (C) No. 2064 of2007], we may notice that the Government of Tamil Nadu issued GOMs No. 2072 dated 19.11.1969 under Section 13(1) of the 1962 granting exemption for consumption of energy under High Tension Supply for a period of two years in addition to the exemption specified in Sub-section {I) of Section 12, i.e., five years. By GOMs. No. 1201dated18.06.1970, the Government of Tamil Nadu again, in exercise of its power under Section 13( 1) of the 1962 Act, granted exemption to those 'who consume energy generated by t.hemselves' for a period of two years in addition to the exemption. specified in the notification issued through GOMs. No. 2404, i.e., for a period of five years. Some of the appellants established their cement plants and applied for High Tension Energy connection in the year 1998 and set up captive power plants in 2000 and started drawing energy from its captive power plant only from the year 2000 and, thus, the exemption notifications would remain valid despite enactment of the 2003 Act. E SUBMISSIONS ON BEHALF OF THE STATE

52Copy pinpoint52. Mr. T.R. Andhyarujina, learned senior counsel appearing on behalf of the State of Tamil Nadu, on the other hand, would submit:

(i) The exclusive right of the State Legislature to legislate matters under entries enumerated in List II being exclusive, Entry 53 thereof would not be subservient to Entry 38 of List III of the Seventh Schedule of the Constitution of India. (ii) No material has been placed on record to show that the State Legislature has transgressed its legislative power in covert or indirect manner or otherwise over-stepped its limits. (iii) The functions of the State Electricity Regulatory Commission constituted under the 1998 Act refer to a non-taxing entry dealing with general aspects of electricity excluding taxation and, thus, the 1998 Act cannot prevail over Entry 53 of List II of the H Seventh Schedule of the Constitution of India and,_ thus, in that

SOUTHERN PETROCHEMICAL INDUSTRIES CO. LTD v. ELECTRICITY INSPECTOR [S.B SINHA. J. J 985 -_( view of the matter Article 254 of the Constitution of India cannot A have any application.

(iv) Article 288 of the Constitution of India would be attracted only when the following things are established:

(a) Existence of an authority established by any law made by the Parliament; B (b) The Authority must be established for regulating or developing any inter-state river or river valley and only in -I such case no State would make a law imposing or authorizing the imposition of tax in respect of any water or electricity stored, generated, consumed, distributed or sold by such c authority;

and in that view of the matter, only when a State makes a law on such an authority, the assent of the President would be required in terms of Clause (2) of Article 288 of the Constitution oflndia and not otherwise. D (v) Whereas the 1939 Act having contained no provmon for )' exemption and the 1962 Act providing for exemption only from ; consumption of electrical energy, the 2003 Act granted exemption only for sale; the provisions of the latter being inconsistent with the provisions of the earlier acts, the exemption notifications do E not survive having regard to the fact that Section 20 of the 2003 Act repeals both the 1962 Act as well as the I 939 Act.

(vi) Sub-sections ( 1) and (2) of Section 20 of the 2003 Act must be .read together and having regard to the fact that the notifications are referred to under Sub-section (2) of Section 20 only, in view F r of the inconsistencies between the 2003 Act, on the one hand, \ and the 1939 Act and the 1962 Act, on the other, they do not survive.

(vii) The words "corresponding provisions" contained in Section 20 of the 2003 Act need not mean exactly similar but "to be in G harmony with or to be similar, analogous to or to be identical with" and in that view of the matter, Section 14 of the 2003 Act containing an exemption provision must be held to have covered the subject. (viii) As the notifications for exemption from payment of electricity H

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A duty under the 1962 Act are held to be saved under Sub-section \_- ( 1) of Section 20 of the 2003 Act, the same would lead to anomalous situation. (IX) (a) The words "unless a different intention appears" must necessarily be read in the context of Sub-section (I) of Section B 20 of the 2003 Act ,and the proviso appended thereto being practically the incorporation of Section 6 of the General Clauses Act, the words "unless a different intention appears" must be read thereinto although not expressly contained therein. (b) The words "anything duly done" contained in proviso (a) to c Sub-section (I) of Section 20 of the 2003 Act cannot have the meaning of keeping alive a notification for exemption of electricity tax on consumption which is prohibited by Section 14 and negatived by Section 20(2)(a) and, thus, it must receive a restricted and contextual construction.

D (c) An exemption, by its very nature, does not create a right and it is always defeasible and susceptible to be withdrawn. (x) In absence of necessary pleadings, a challenge to the constitutionality of the Act on the purported ground of "( discrimination must fail. In matters of taxation including exemption, !

the State is given wide discretion and is allowed to pick and E choose objects for taxation and exemption and in that view of the matter the notifications cannot be held to be ultra vires. (xi) The doctrine of promissory estoppel will have no application in the instant case as the State cannot be prevented from extending the exemption of electricity tax on consumption under the 2003 F Act on the basis thereof or otherwise, inasmuch as there cannot be any estoppel against the exercise of legislative power to repeal 'r any Act and to re-enact it. The exemption granted under Section ~

13(1) of the 1962 Act was otherwise subject to cancellation or variation under Section 13(2) thereof. G (xii) Electricity tax is levied on a licensee under the 2003 Act in terms of Clauses (a) and (b) of Sub-section (I) of Section 3 thereof. In view of the definition of"net charge" contained in Section 2 (12) read with Explanation II of Section 2(7), the tax must be held to Y" be levied on actual consumption and not on demand charges. H

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-_,( CONSTITUTIONAL SCHEME AND THE VIRES ISSUE A

53Copy pinpoint53. Article 245 of the Constitution of India vests the Parliament with power of legislation on all matters enumerated in List I and also the matters enumerated in List III of the Seventh Schedule of the Constitution of India. The State Legislature, however, has the exclusive right to legislate matters specified in the Entries contained in List JI. B

54Copy pinpoint54. Federal supremacy no doubt recognizes that the State's power to legislate with regard to any matters in List III would be subject to any Act i of the Parliament; however, Clause (3) of Article 246 of the Constitution of India gives the legislature of the State an exclusive power with respect to any matters in List II, subject to restriction imposed in the entry itself, as for c example, Entries I, 2, 12, 13, 17, 22, 23, 24, 32 and 33. Entry 53 of List II does not contain any such restriction and has not been made subject to any of the entry made in List I or List III.

55Copy pinpoint55. Various entries in the three Lists provide for the fields of legislation. D They are, therefore, required to be given a liberal construction inspired by a broad and generalize spirit and not in a pedantic manner. A clear distinction is provided for in the scheme of the Lists of the Seventh Schedule between ..,,.. ~ the general subjects of legislation and heads of taxation. They are separately enumerated. Taxation is treated as a distinct matter for purposes of legislative competence vis-a-vis the general entries. Clauses (I) and (2) of Article 248 of E the Constitution of India also manifests the aforementioned nature of the entries of the List, and, thus, the matter relating to taxation has been separately set out. The power to impose tax ordinarily would not be deduced from a general entry as an ancillary power. In List II, entries I to 44 form one group providing for the legislative competence of the State on subjects specified therein, whereas entries 45 to 63 form another group dealing with taxation. F f We, however, do not mean to suggest that in regard to the validity of a taxation statute, the same, by itself, would be a determinative factor as in a case where the Parliament may legislate an enactment under several entries, one of them being a tax entry. G

56Copy pinpoint56. A bare perusal of Entry 53 of List II and Entry 38 of List III, however, clearly suggests that they are meant to operate in different fields.

57Copy pinpoint57. In National Thermal Power Corpn. Ltd. (supra}, this Court has clearly held that "the power of the State Legislature to enact law to levy tax by reference to List II of the Seventh Schedule has two limitations: one, H

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A arising out of the entry itself, and the other, flowing from the restriction embodied in the Constitution."

58Copy pinpoint58. Entry 53 does not contain any such restriction and, thus, Clause (3) of Article 254 of the Constitution of India will have no application in the instant case. B

59Copy pinpoint59. Legislative competence of the State of Tamil Nadu to legislate the impugned Act is beyond any dispute. It cannot therefore, be said that the State's action in enacting the Act suffers from colourable exercise of any power. Thus, it can be safely concluded that the State has not over-stepped its limits of power. [See K.C. Gajapati Narayan Deo and Ors. v. The State C of Orissa, [1954] SCR I and R.S. Joshi, Sales Tax Officer, Gujarat and Ors. v. Ajit Mills Limited and Anr., [1977) 4 SCC 98).

60Copy pinpoint60. In the decision of this Court in Raja Jagannath Baksh Singh v. State of Uttar Pradesh, AIR (1962) SC 1563, it has been held:

D "21... Though the validity of a taxing statute cannot be challenged merely on the ground that it imposes an unreasonably high burden, it does not follow that a taxing statute cannot be challenged on the ground that it is a colourable piece of legistation and as such, is a fraud on the legislative power conferred on the legislature in question. E If, in fact, it is shown that the Act which purports to be a taxing Act is a colourable exercise of the legislative power of the legislature, then that would be an independent ground on which the Act can be struck down. Colourable exercise of legislative power is not a legitimate exercise of the said power and as such, it may be open to challenge. But such a challenge can succeed not merely by showing that the tax F levied is unreasonably high or excessive, but by proving other relevant circumstances which justify the conclusion that the statute is colourable and as such, amounts to a fraud."

61Copy pinpoint61. Entry 53 of List II provides for a taxation entry; whereas Entry 38 G of List III provides for a non-taxation entry dealing with general aspects of electricity excluding taxation. The 1998 Act empowers the Commission only to fix the electricity tariff or the charges for consumption of electricity. The legislation made by the State is independent of actual tariff of electricity charges. Tariff would mean a cartel of commerce and normally it is a book of rates. [BSES Ltd (supra) at page 208) H

SOUTHERN PETROCHEMICAL INDUSTRIES CO l TD '· ELECTRICITY INSPECTOR [S.B. SINHA. I. ) 989

62Copy pinpoint62. Article 254 deals with methods ofresolving conflict between the law A ---{ made by the Parliament and law made by the State in respect of the matters enumerated in the concurrent list.

63Copy pinpoint63. In MP. Vidyut Karamchari Sangh v. MP. Electricity Board, [2004] 9 sec 755, it was held: B "28. Recourse to the said principles, however, would be resorted to only when there exists direct conflict between two provisions and not otherwise. Once it is held that the law made by Parliament and the State Legislature occupy the same field, the subsequent legislation -f made by the State which had received the assent of the President of India indisputably would prevail over the parliamentary Act when c there exists direct conflict between two enactments. Both the laws would ordinarily be allowed to have their play in their own respective fields. However, in the event there does not exist any conflict, the parliamentary Act or the State Act shall prevail over the other depending upon the fact as to whether the assent of the President has been D obtained therefor or not. (See Bharat Hydro Power Corpn. ltd v. State of Assam)".

64Copy pinpoint64. The 2003 Act is, thus, not repugnant to the 1948 Act. .r ARTICLE 288 ISSUE E

65Copy pinpoint65. It is no doubt true that Section 18 of the 1962 Act as also Section 21 of the 2003 Act provided that they would be subject to the provisions of Article 288 of the Constitution of India. It deals with exemption from taxation by States in respect of water or electricity in certain cases. Clause (2) of the said Article mandates that when a State makes a law for imposition of tax and F if any such law provides for fixation of the rates and other incidents of tax, y the assent of the President would be required. ~

66Copy pinpoint66. A plain reading of Clause (2) of Article 288 of the Constitution of India raises no doubt that the application thereof was meant to be only in respect of the river valley authorities like Damodar Valley Corporation G constituted in the year 1948 by the Damodar Valley Corporation Act, 1948. The question came up for consideration before this Court in Damodar Valley Corporation v. State of Bihar and Ors., [1976] 3 SCC 710 wherein it was y stated: H

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A "9. What is required by clause (2) of Article 288 is that the law made by the State Legislature for imposing, or authorising the imposition of \_- tax mentioned in clause (I) shall have effect only if after having been reserved for the consideration of the President it receives his assent. Another requirement of that clause is that if such law provides for the fixation of the rates and other incidents of such tax by means of Rules B or orders to be made under the law by any authority, the law shall provide for the previous consent of the President being obtained to the making of any such Rule or order. It is, however, not the effect of that clause that even if the abovementioned two requirements are satisfied, the provisions which merely deal with the mode and manner c of the payment of the aforesaid tax should also receive the assent of the President and that in the absence of such assent, the provisions dealing with the incidence of tax, which have received the assent of the President, would remain unenforceable."

67Copy pinpoint67. It may be true that in a case of this nature, it was not necessary to lay down a clear provision of applicability of Article 288 of the Constitution of India, but then it must have been done .ex maori cautela (by way of abundant caution). Only because a provision of the Constitution has been mentioned in the Act, the same, in our opinion, would not necessarily mean that the same is required to be taken into consideration for the purpose of judging the constitutionality thereof. Submission of Mr. Ganguli and other learned counsel appearing on behalf of the appellants, that the same was meant to give effect to the 1948 Act under which the State Electricity Boards are created, does not appeal to us. The provisions, it is trite, are to be read in their entirety. The same have to be read so as to give effect to the provisions contained in Article 287 of the Constitution of India. It is meant to be acted upon in the context of the heading of Part XII of the Constitution of India and not for dealing with a situation of the nature prevalent in the instant case.

68Copy pinpoint68. The State Electricity Board has been given the exemption under the 2003 Act which by itself would not mean that those who purchase electrical energy from them would also be so exempted. Had that been so, the same could have been explicitly provided for. The principle of construction of statute, that the exemption provisions would be attracted only when requisite conditions precedent therefor are satisfied, would apply in a case of constitutional interpretation also. ..,.. H

SOUTHERN PETROCHEMICAL INDUSTRIES CO. LTD v. ELECTRICITY INSPECTOR [S.B. SINHA. I ) 99 J

--1 69. The learned counsel for the appellants would, however, submit that A Article 265 of the Constitution read with Article 288 thereof would mandate compliance of the latter provision.

70Copy pinpoint70. The expression "subject to" stated that the same would imply that the provisions of Article 288 will have to be complied with. It is no doubt true that ordinarily the expression "subject to" conveys the idea of a provision B yielding place to another provision or other provisions subject to which it is made as has been held in Surinder Singh v. Central Government and Ors., AIR (1986) SC 2166, para 6; South India Corporation (P) Ltd v. Secretary, f Board of Revenue. Trivandrum and Anr., AIR (1964) SC 207, Ashok Leyland Ltd v. State of Tamil Nadu & Anr., (2004] 3 SCC I and S.N. Chandrashekar and Anr. v. State of Karnataka and Ors., (2006] 3 SCC 208. But, keeping in c view the nature of exemption granted, the subject matter and nature of the recipient of such exemption, in our opinion, Article 288 has no application in the instant case.

ARTICLE 14 ISSUE D

71Copy pinpoint71. The issue that the 2003 Act in violation of the equality clause contained in Article 14 of the Constitution of India was not raised before the .r High Court. Only in one of the civil appeals, prayer was made for urging additional ground and the same having been directed, additional ground has been taken to urge the said question. A ground taken, however, must be E based on a factual foundation. For attracting Article 14, necessary facts were required to be pleaded. The foundational facts as to how Section 14 of the 2003 Act would be discriminatory in nature have not been stated at all. The Government of Tamil Nadu has also not been given any opportunity to meet the said contention. F y 72. It is now trite that such factual foundation, unless is apparent from • the statute, itself, cannot be pennitted to be raised and that too for the first time before this Court.

73Copy pinpoint73. In Orient Weaving Mills (P) Ltd. v. The Union ofIndia, [1962] Supp G 3 SCR 481, this Court has stated:

" .. .It is one thing to attack the constitutionality of the provisions of the Act authorising the levy of the excise duty on the petitioners; it is quite a different thing to complain of the· exemption granted in respect of the goods produced by the 5th respondent. As the vires H

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A of the Act itself has not been challenged, we need not say anything more on that aspect of a possible controversy which has not been actually raised in the petition."

74Copy pinpoint74. Furthermore, in the matter of taxation, the State is given wide discretion and is allowed to pick and choose objects for taxation and exemption. B

75Copy pinpoint75. We do not think that it is advisable for us to go into the said question.

76Copy pinpoint76. In absence of necessary pleadings and grounds taken before the High Court, we are not in a position to agree with the learned counsel appearing on behalf of the appellants that only because Section 13 of the repealed Act is inconsistent with Section 14 of the 2003 Act, the same would be arbitrary by reason of being discriminatory in nature and ultra vires Article 14 of the Constitution of India on the premise that charging section provides for levy of tax on sale and consumption of electrical energy, while the exemption provision purports to give power to exempt tax on "electricity sold for consumption" and makes no corresponding provision for exemption of tax on electrical energy self-generated and consumed.

SHOULD WE READ IT DOWN

77Copy pinpoint77. This leaves to the question as to whether the provisions of Section 14 of the 2003 Act should be read in such a manner so as to make it in consonance with Article 14 of the Constitution of India. The learned counsel would contend that Section 14 is loosely worded. We do not agree. The premise on which the said submission was made is that electricity cannot be stored. It has been held to be so in National Thermal Power Corpn. Ltd F (supra) in the following words:

" .. .In this observation we agree with Grover, J. on all other characteristics of electric energy except that it can be stored and to the extent that electric energy can be stored, the observation must be held to be erroneous or by oversight. Science and technology till this G day have not been able to evolve any methodology by which electric energy can be preserved or stored."

[See also BSES Ltd (supra), para 16 and 18]

78Copy pinpoint78. However, the editorial note in National Thermal Power Corpn. Ltd H (supra) itself suggests that now electricity, at least to some extent is possible

SOUTHERN PETROCHEMICAL INDUSTRIES CO. LTD •·. ELECTRICITY INSPECTOR [S.B. SINHA, J ) 993

to be stored and that aspect of the matter had not been considered therein. A Furthermore, the words "sold for consumption", only because the electricity cannot be stored, cannot be held to be mere tautology as urged or at all.

79Copy pinpoint79. The doctrine of purposive construction can be taken recourse to provided there exists any ambiguity. If we have to agree with the submission of the learned counsel and in particular, Mr. Nariman, we will have to not only B ignore the words "for consumption" occurring immediately after the word "sold" but also ignore the word "by" occurring immediately after the word "consumption". We have to give a new meaning which would amount to f judicial legislation. We do not see any need therefor as thereby the taxation provision would be given a new dimension, by reason whereof not only exemption provisions will have to be understood in the context of sale of c electricity but also consumption thereof.

80Copy pinpoint80. We are not unmindful of the fact that the 2003 Act was enacted not only to consolidate but also to rationalize the Act. Mr. Nariman takes us to various authorities in regard to the construction of a consolidating statute D including IRC v. Hinchy, (1960) I All ER 505, Beswick v. Beswick, (1967) 2 All ER 1197, Dir. Of Public Prosecutions v. Schild/camp, (1969) 3 All ER 1640, Maunsell v. Olins, (1975) I All ER 16 and Farrell v. Alexander, (1976) 2 All ,r ER 721, to suggest that a consolidating statute is not meant to alter law. But, in these decisions, it has also been suggested that a consolidating statute may also be an amending act. E

81Copy pinpoint81. It is one thing to say that where the words or expressions in a statute are plainly taken from an earlier statute in pari materia, which have received judicial interpretation, it must be presumed that the Parliament was aware thereof and intended to be followed in latter enactment. But, it is F another thing to say that it is necessary or proper to resort to or consider ..,-- the earlier legislations on the subject only because the consolidating Act re- ~ enacts in an orderly form the various statutes embodying the Jaw on the subject. [See Williams v. Permanent Trustee Co. of New South Wales, (I 906) AC 249, p. 252 and N.S. Bindra's Interpretation of Statutes, 10th edition, pages !071-1072] G

82Copy pinpoint82. The words "consolidate and amend" furthermore often occur in a statute in repealing provision. Such a statute is not intended to alter the law.

83Copy pinpoint83. In The Union of India v. The Mahindra Supply Co. AIR (1962) SC 256, this Court observed: 11

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A "7 ... The Arbitration Act of 1940 is a consolidating and amending statute and is for all purposes a code relating to arbitration. In dealing with the interpretation of the Indian Succession Act, 1865, the Privy Council in Norendra Nath Sircar v. Kamlabasini Desai observed that a code must be construed according to the natural meaning of the language used and not on the presumption that it was intended to B leave the existing law unaltered. The Judicial Committee approved of the observations of Lord Herschell in Bank of England v. Vagliano Brothers to the following effect:

I think ... the proper course is in the first instance to examine the language of the statute and to ask what is its natural meaning, c uninfluenced by any considerations derived from the previous state of the law, and not to start with enquiring how the law previously stood, and then, assuming that it was probably intended to leave it unaltered, to see if the words of the enactment wm bear an interpretation in conformity with this view. If a statute, intended to embody in a D code a particular branch of the law, is to be treated in this fashion, it appears to me that its utility will be almost entirely destroyed, and the very object with which it was enacted will be frustrated. The purpose of such a statute surely was that on any point specifically dealt with by it, the law should be ascertained by interpreting the language used instead of, as before, by roaming over a vast number of authorities in order to discover what the law was, extracting it by a minute critical examination of the prior decisions ....

The court in interpreting a statute must therefore proceed without seeking to add words which are not to be found in the statute, nor is it permissible in interpreting a statute which codifies a branch of the law to start with the assumption that it was not intended to alter the pre-existing law; nor to add words which are not to be found in the statute, or for which authority is not found in the statute. But we do not propose to dispose of the argument merely on these general considerations. In our view, even the legislative history viewed in the light of the dictum of the Privy Council in Hurrish Chander case, does not afford any adequate justification for departing from the plain and apparent intendment of the statute."

84Copy pinpoint84. Such construction is to be put only when it is a pure consolidating statute but there cannot be any doubt whatsoever that the same has to yield to plain words to the contrary. [See Beswick (supra) and Grey v. !RC, (1959)

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85Copy pinpoint85. However, there is no constitutional or statutory embargo that a consolidating Act must also be an amending Act. When different terms are used in the new Act, it would not be proper for the Court to refer to the provisions of a repealed statute. B

86Copy pinpoint86. We may furthermore notice that the distinction between consolidating statute and other statutes is no longer valid. It is only in certain exceptional situations that the language used in the earlier Act can be resorted to.

87Copy pinpoint87. In G.P. Singh's 'Principles of Statutory Interpretation', Tenth Edition, pages 315-316, it is stated: C "The distinction between consolidating statutes and other statutes for purposes of interpretation is being obliterated. Recent decisions have emphasised. that a consolidation Act should be interpreted according to normal canons of construction and recourse to repealed enactments can be taken only to solve any ambiguity, for the process of consolidation would lose much of its point if, whenever a question as to construction of a consolidating Act arose, reference had to be made to the statutes which it has consolidated and repealed. The primary rule of construction of a consolidation Act is to examine the language used in the Act itself without any reference to the repealed statutes. It is only when the consolidation Act gives no guidance as to its proper interpretation that it is permissible to refer to the repealed enactments for guidance and it is never legitimate to have recourse to repealed enactments to make obscure or ambiguous that which is clear in the consolidation Act. It is only when there is a real or substantial difficulty or ambiguity that the court is to attempt to resolve the difficulty or ambiguity by reference to the legislation which has been repealed and re-enacted in the consolidation Act. This rule applies to all types of consolidation Acts which are now three: (I) Pure consolidation. i.e. re-enactment, (2) Consolidation with correction and minor improvement, and (3) Consolidation with Law G Commission amendments. But when "the provisions of the Act itself invited reference to the earlier law and in some cases were unintelligible without them" recourse to the earlier law for construing the Act becomes inevitable."

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