That
the title of this post is a part of Indian constitutional
law is explained by the fact that the validity of tax and commercial legislation
is often challenged on the ground that it conflicts with a similar legislation
enacted by another legislature. Often the challenge is on the basis of
legislative competence, and this requires a careful analysis of not only the
words of Schedule VII, but of the principles
upon which legislative power is distributed in India.
the title of this post is a part of Indian constitutional
law is explained by the fact that the validity of tax and commercial legislation
is often challenged on the ground that it conflicts with a similar legislation
enacted by another legislature. Often the challenge is on the basis of
legislative competence, and this requires a careful analysis of not only the
words of Schedule VII, but of the principles
upon which legislative power is distributed in India.
Until
7 May, 2012, it was taken for granted that the doctrines of occupied field and
repugnance are as different as chalk and cheese. The easiest way of explaining
the difference is to say that occupied field is concerned with the existence of legislative power, while
repugnance is concerned with the exercise
of legislative power that is shown or assumed to exist. In more precise
terms, the doctrine of repugnance, found in article 254 of the Constitution, is
that a State legislation which is repugnant to a law enacted by Parliament is
void to the extent of repugnance. Some
doubts about the scope of art 254 arose on account of the words “with respect to one of the matters
enumerated in the Concurrent List”. A close analysis of these words demonstrates
that the “comma” is placed after the words “competent
to enact” rather than “an existing law”, suggesting that article
254 is confined to Central legislation in the Concurrent List only in respect
of pre-1950 legislation. But the Supreme Court rejected this interpretation in many
cases, notably VK Sharma v State of
Karnataka AIR 1990 SC 2072, and held that article 254 is applicable only to
a conflict between a State and a Central legislation enacted under the same entry in the Concurrent List.
7 May, 2012, it was taken for granted that the doctrines of occupied field and
repugnance are as different as chalk and cheese. The easiest way of explaining
the difference is to say that occupied field is concerned with the existence of legislative power, while
repugnance is concerned with the exercise
of legislative power that is shown or assumed to exist. In more precise
terms, the doctrine of repugnance, found in article 254 of the Constitution, is
that a State legislation which is repugnant to a law enacted by Parliament is
void to the extent of repugnance. Some
doubts about the scope of art 254 arose on account of the words “with respect to one of the matters
enumerated in the Concurrent List”. A close analysis of these words demonstrates
that the “comma” is placed after the words “competent
to enact” rather than “an existing law”, suggesting that article
254 is confined to Central legislation in the Concurrent List only in respect
of pre-1950 legislation. But the Supreme Court rejected this interpretation in many
cases, notably VK Sharma v State of
Karnataka AIR 1990 SC 2072, and held that article 254 is applicable only to
a conflict between a State and a Central legislation enacted under the same entry in the Concurrent List.
While
there are, of course, two views about whether this is correct or not, two basic
propositions about repugnance were never questioned even in this line of case
law: (i) repugnance arises only if
there is an actual conflict between two legislations, one enacted by the
State Legislature and the other by Parliament, both of which were competent
to do so; and (ii) the State law
is void only to the extent of repugnance, subject to art 254(2).
there are, of course, two views about whether this is correct or not, two basic
propositions about repugnance were never questioned even in this line of case
law: (i) repugnance arises only if
there is an actual conflict between two legislations, one enacted by the
State Legislature and the other by Parliament, both of which were competent
to do so; and (ii) the State law
is void only to the extent of repugnance, subject to art 254(2).
Occupied
field, on the other hand, has nothing at all to do with a conflict between two
laws. It is perhaps an unfortunate expression because it is used in precisely
this sense in the jurisprudence of other countries. But in India it simply a
compendious way of referring to a few legislative entries in List II of
Schedule VII, which are expressly made “subject”
to a corresponding Entry in List I or List III. The two most important
instances of such entries are Entry 24, List II (“Industries”, made subject to Entry 52, List I, which provides that
Parliament may declare, by law, that
the control of a certain industry by the Union is in the public interest) and
Entry 23, List II (Mines and mineral development, made subject to Entry 54 List
I, which provides that Parliament may by law declare that the control of mines
and mineral development by the Union is in the public interest). By making such
a declaration in a legislation (for example the Essential Commodities Act or
the MMRDA), Parliament acquires legislative competence over what would
otherwise be a field of State legislation, and the State is entirely denuded of
legislative competence. It is apparent that no question of repugnance arises:
if a field is validly occupied, that field ceases to form part of the State
List. As one judge put it, that field is “subtracted”
from the State List and “added” to
the Union List.
field, on the other hand, has nothing at all to do with a conflict between two
laws. It is perhaps an unfortunate expression because it is used in precisely
this sense in the jurisprudence of other countries. But in India it simply a
compendious way of referring to a few legislative entries in List II of
Schedule VII, which are expressly made “subject”
to a corresponding Entry in List I or List III. The two most important
instances of such entries are Entry 24, List II (“Industries”, made subject to Entry 52, List I, which provides that
Parliament may declare, by law, that
the control of a certain industry by the Union is in the public interest) and
Entry 23, List II (Mines and mineral development, made subject to Entry 54 List
I, which provides that Parliament may by law declare that the control of mines
and mineral development by the Union is in the public interest). By making such
a declaration in a legislation (for example the Essential Commodities Act or
the MMRDA), Parliament acquires legislative competence over what would
otherwise be a field of State legislation, and the State is entirely denuded of
legislative competence. It is apparent that no question of repugnance arises:
if a field is validly occupied, that field ceases to form part of the State
List. As one judge put it, that field is “subtracted”
from the State List and “added” to
the Union List.
One
controversy that arose in occupied field litigation was whether Parliament
could occupy a field by simply making a declaration. For example, suppose
Parliament declares in the MMRDA that mines and mineral development under the control
of the Union is expedient in the public interest, but merely provides in the
operative part that “the mining sector
shall comply with such rules as may be notified by the Competent Authority”,
and the competent authority notifies no such rules. A concern was expressed
that if occupied field is invoked in this way, neither the State (because it cannot),
nor the Union (because it does not) legislates for that sector, leading to a “legislative
vacuum”. In the leading Entry 54 cases (Hingir Rampur Coal Co, MA Tulloch and Baijnath Kedia), the Supreme Court held that this is
irrelevant, because Entry 54 denudes the States of competence the moment the
declaration is made by Parliament. But some leading Entry 52 cases,
particularly Belsund Sugar and Ishwari Khetan,
suggested otherwise. This apparent conflict was not really a conflict – without
going into more detail than is necessary, the difference is explained by the
fact that the Supreme Court had previously construed the substance of Entry 52
more narrowly (and correctly) than it did Entry 54 (see Tika Ramji affirmed
in a judgment rich in scholarship by Ruma Pal, J., in ITC v AMPC,
over Pattnaik, J’s dissent).
controversy that arose in occupied field litigation was whether Parliament
could occupy a field by simply making a declaration. For example, suppose
Parliament declares in the MMRDA that mines and mineral development under the control
of the Union is expedient in the public interest, but merely provides in the
operative part that “the mining sector
shall comply with such rules as may be notified by the Competent Authority”,
and the competent authority notifies no such rules. A concern was expressed
that if occupied field is invoked in this way, neither the State (because it cannot),
nor the Union (because it does not) legislates for that sector, leading to a “legislative
vacuum”. In the leading Entry 54 cases (Hingir Rampur Coal Co, MA Tulloch and Baijnath Kedia), the Supreme Court held that this is
irrelevant, because Entry 54 denudes the States of competence the moment the
declaration is made by Parliament. But some leading Entry 52 cases,
particularly Belsund Sugar and Ishwari Khetan,
suggested otherwise. This apparent conflict was not really a conflict – without
going into more detail than is necessary, the difference is explained by the
fact that the Supreme Court had previously construed the substance of Entry 52
more narrowly (and correctly) than it did Entry 54 (see Tika Ramji affirmed
in a judgment rich in scholarship by Ruma Pal, J., in ITC v AMPC,
over Pattnaik, J’s dissent).
It is crucial to note that
none of this had anything to do with
repugnance. The controversy over “mere declaration” versus “actual
legislation” was at all times confined to the few entries in the Constitution
that expressly permit Parliament to occupy a State field. Indeed, when
the point was argued in relation to repugnance, the Supreme Court
authoritatively held in Tika Ramji (para 18) that “repugnancy
must exist in fact, and not depend merely on a possibility”. Conceptually, it is submitted that this is correct –
the Constitution has two mechanisms to deal with legislative conflicts: one deals
with who has the power to enact a law
in a certain field of legislation in List II (ordinarily the State, unless the
Centre occupies the field in the manner specified in the corresponding entry in
List I) and the other with what happens
when two legislatures, both of which have the power to enact laws, enact
conflicting laws (repugnance). Indeed, repugnance presupposes that both
laws have been enacted by competent legislatures – thus, if the State of Tamil
Nadu imposes income tax, and this is in conflict with the Income Tax Act, 1961,
it is unnecessary to resort to art 254, because the Tamil Nadu Act is void ab initio for the legislature lacks
competence. On the other hand, if the State of Tamil Nadu enacts the Sales Tax
Act, and Parliament enacts the Central Excise Act, and it is argued that the
two legislations somehow conflict, the solution is article 254 (conceptually –
in practice, article 254 would be unavailable because of VK Sharma and one would have to resort to the non-obstante clause in article 246). But if the Centre has not enacted the Central Excise Act, and
it is sought to be shown that the Tamil Nadu legislature still lacks the power
to enact it, there can be no question
of repugnance. That contention can succeed only
if it is shown that: (i) “tax on
sale of goods” is not in the State List or (ii)
the Centre has validly occupied the field of “tax on sale of goods” (which it
can never do, it is not expressly subject to a List I entry) or (iii) the Tamil Nadu Act is, in pith
and substance, not within “tax on sale of goods”. Repugnance, it is submitted,
can never arise when there is only one law in operation.
none of this had anything to do with
repugnance. The controversy over “mere declaration” versus “actual
legislation” was at all times confined to the few entries in the Constitution
that expressly permit Parliament to occupy a State field. Indeed, when
the point was argued in relation to repugnance, the Supreme Court
authoritatively held in Tika Ramji (para 18) that “repugnancy
must exist in fact, and not depend merely on a possibility”. Conceptually, it is submitted that this is correct –
the Constitution has two mechanisms to deal with legislative conflicts: one deals
with who has the power to enact a law
in a certain field of legislation in List II (ordinarily the State, unless the
Centre occupies the field in the manner specified in the corresponding entry in
List I) and the other with what happens
when two legislatures, both of which have the power to enact laws, enact
conflicting laws (repugnance). Indeed, repugnance presupposes that both
laws have been enacted by competent legislatures – thus, if the State of Tamil
Nadu imposes income tax, and this is in conflict with the Income Tax Act, 1961,
it is unnecessary to resort to art 254, because the Tamil Nadu Act is void ab initio for the legislature lacks
competence. On the other hand, if the State of Tamil Nadu enacts the Sales Tax
Act, and Parliament enacts the Central Excise Act, and it is argued that the
two legislations somehow conflict, the solution is article 254 (conceptually –
in practice, article 254 would be unavailable because of VK Sharma and one would have to resort to the non-obstante clause in article 246). But if the Centre has not enacted the Central Excise Act, and
it is sought to be shown that the Tamil Nadu legislature still lacks the power
to enact it, there can be no question
of repugnance. That contention can succeed only
if it is shown that: (i) “tax on
sale of goods” is not in the State List or (ii)
the Centre has validly occupied the field of “tax on sale of goods” (which it
can never do, it is not expressly subject to a List I entry) or (iii) the Tamil Nadu Act is, in pith
and substance, not within “tax on sale of goods”. Repugnance, it is submitted,
can never arise when there is only one law in operation.
Having
said that, there is no doubt that this apparent conflict in the occupied
field cases on the need for actual legislation as opposed to a mere
declaration is an important one, and ought to have been decided by the Supreme
Court. Unfortunately, the Supreme Court, with respect, picked the wrong case,
when it decided State of Kerala v Mar Appraem
Kuri on 7 May, 2012. Simplifying the facts, the Centre enacted the Chit
Funds Act, 1982 [“the Central Act”] which would become operative in the State
of Kerala upon the issue of a notification under s 1(3) of the Central Act, and
the State of Kerala enacted the Kerala Chitties Act, 1975. The Centre did not
notify the Central Act in the State of Kerala. The result was that there was
only one law in force in the State of Kerala – the Kerala Act. Chit funds filed
a writ petition in the Kerala High Court and managed to persuade a Division
Bench that the Kerala Act was repugnant to
the un-notified Central Act. The State of Kerala appealed. The Supreme Court
referred the matter to a Constitution Bench.
said that, there is no doubt that this apparent conflict in the occupied
field cases on the need for actual legislation as opposed to a mere
declaration is an important one, and ought to have been decided by the Supreme
Court. Unfortunately, the Supreme Court, with respect, picked the wrong case,
when it decided State of Kerala v Mar Appraem
Kuri on 7 May, 2012. Simplifying the facts, the Centre enacted the Chit
Funds Act, 1982 [“the Central Act”] which would become operative in the State
of Kerala upon the issue of a notification under s 1(3) of the Central Act, and
the State of Kerala enacted the Kerala Chitties Act, 1975. The Centre did not
notify the Central Act in the State of Kerala. The result was that there was
only one law in force in the State of Kerala – the Kerala Act. Chit funds filed
a writ petition in the Kerala High Court and managed to persuade a Division
Bench that the Kerala Act was repugnant to
the un-notified Central Act. The State of Kerala appealed. The Supreme Court
referred the matter to a Constitution Bench.
Surprisingly,
the Constitution Bench accepted the contention of the chit funds that even an
un-notified Central law attracts art 254. The Chief Justice gives two reasons
for this conclusion: (i) article 254
uses the verb “made” and the form “making” – the “making” of a law is
complete on enactment, even before the law is notified and (ii) Parliament, by enacting the Central Act, intended “to occupy
the entire field falling in Entry 7 of List III” and therefore the
State Legislature is denuded of legislative competence unless article 254(2) is
applicable.
the Constitution Bench accepted the contention of the chit funds that even an
un-notified Central law attracts art 254. The Chief Justice gives two reasons
for this conclusion: (i) article 254
uses the verb “made” and the form “making” – the “making” of a law is
complete on enactment, even before the law is notified and (ii) Parliament, by enacting the Central Act, intended “to occupy
the entire field falling in Entry 7 of List III” and therefore the
State Legislature is denuded of legislative competence unless article 254(2) is
applicable.
With
great respect, it is submitted that this decision is incorrect and unfortunately
conflates occupied field and repugnance. First, the verb “made” is used, as senior
counsel rightly submitted in oral argument, not to indicate when a law becomes repugnant, but to identify the law which must
independently be shown to be repugnant. Secondly,
the conceptual distinction between repugnance and occupied field – or between
the existence of legislative power
and its exercise – is at the heart of
the Constitution’s distribution of legislative powers. To hold that a mechanism
intended to solve conflicts arising out of the latter is in fact applicable
because the field is occupied is, it is respectfully submitted, unfortunate.
great respect, it is submitted that this decision is incorrect and unfortunately
conflates occupied field and repugnance. First, the verb “made” is used, as senior
counsel rightly submitted in oral argument, not to indicate when a law becomes repugnant, but to identify the law which must
independently be shown to be repugnant. Secondly,
the conceptual distinction between repugnance and occupied field – or between
the existence of legislative power
and its exercise – is at the heart of
the Constitution’s distribution of legislative powers. To hold that a mechanism
intended to solve conflicts arising out of the latter is in fact applicable
because the field is occupied is, it is respectfully submitted, unfortunate.
The
second reason the Court gives is an illustration of why it may be dangerous to
use the expression “occupied field” – in the law of other countries, notably
America, it is possible for the Federal legislature to oust the Provincial Legislature’s
legislative competence by “evincing an
intention” to enact a complete code. This is sometimes called “occupied
field”. That conception of occupied field has no place at all in Indian
constitutional law. This is clear not only as a matter of concept, but also
from a number of Supreme Court authorities, particularly Tika Ramji.
second reason the Court gives is an illustration of why it may be dangerous to
use the expression “occupied field” – in the law of other countries, notably
America, it is possible for the Federal legislature to oust the Provincial Legislature’s
legislative competence by “evincing an
intention” to enact a complete code. This is sometimes called “occupied
field”. That conception of occupied field has no place at all in Indian
constitutional law. This is clear not only as a matter of concept, but also
from a number of Supreme Court authorities, particularly Tika Ramji.
The
final point is that the Chief Justice rejected the State of Kerala’s reliance
on paragraph 18 of Tika Ramji by
relying on MA Tulloch, which had held
that a mere declaration can denude the State Legislature of legislative
competence. Once again, it is submitted with respect that the error is to
confuse occupied field with repugnance – MA
Tulloch held that occupied field
under Entry 54 only requires a declaration. It did not hold, and could not have
held, that a mere declaration suffices for repugnance
under art 254.
final point is that the Chief Justice rejected the State of Kerala’s reliance
on paragraph 18 of Tika Ramji by
relying on MA Tulloch, which had held
that a mere declaration can denude the State Legislature of legislative
competence. Once again, it is submitted with respect that the error is to
confuse occupied field with repugnance – MA
Tulloch held that occupied field
under Entry 54 only requires a declaration. It did not hold, and could not have
held, that a mere declaration suffices for repugnance
under art 254.
Since
it is unlikely that the Supreme Court will revisit this issue, this judgment will
fundamentally alter Indian constitutional law on the distribution of
legislative power, with significant consequences for virtually every area of
law in which Parliament or the States have legislated.
it is unlikely that the Supreme Court will revisit this issue, this judgment will
fundamentally alter Indian constitutional law on the distribution of
legislative power, with significant consequences for virtually every area of
law in which Parliament or the States have legislated.
I think you are absolutely right that it may be dangerous to use the word `occupied field’ in India. In the USA, states are competent to pass laws on virtually all subjects (including those enumerated in Art 1, Section 8 of the Constitution on which the US Congress has the power to make laws). So even in case of these enumerated matters, federal and state laws can coexist unless Congress explicitly or through declaration of intention `preempts’ state law on the subject (and therefore occupies the entire field.) A concise analysis of the pre-emption doctrine can be found at http://law2.umkc.edu/faculty/projects/ftrials/conlaw/preemption.htm
In India, Parliament has the exclusive authority to pass laws on List I fields, so there is wholesale, universal pre-emption of state laws w.r.t. all List I entries (Yashpal v State of Chhatisgarh – 2005). So a case by case analysis of pre-emption is not warranted in India.
Mangesh Patwardhan
Very good article.
Very analytical article.
A very good and well written article, crisp and clear. I searched it to know more about occupied field and landed on this page. This provides lot of clarity to law students and those who want to understand the judicial system