1966 (12) TMI 67 - SC - Indian Laws

State of West Bengal Must Obtain License Under Calcutta Municipal Act - Supreme Court Affirms Review Power

The Supreme Court held that the State of West Bengal was not exempt from the provisions of Section 218 of the Calcutta Municipal Act, 1951, and was ... Rule that the Crown/State is not bound by a statute unless expressly named or bound by necessary implication - canon of construction versus substantive law - Article 372 - 'law in force' and incorporation of pre Constitution rules - application of presumption of Crown exemption post Republic - implied exclusion by necessary implication in taxing and penal statutes - construction of municipal licensing provisions as binding on the StateRule that the Crown/State is not bound by a statute unless expressly named or bound by necessary implication - canon of construction versus substantive law - Article 372 - 'law in force' and incorporation of pre Constitution rules - application of presumption of Crown exemption post Republic - Validity and applicability of the English canon that the Crown/State is not bound by a statute unless expressly named or by necessary implication, and whether that canon is a 'law in force' under Article 372 and should be applied in India after the Constitution. - HELD THAT: - The Court examined historical English authorities, the Privy Council's decision in Province of Bombay v. Municipal Corporation of the City of Bombay and subsequent Indian decisions, and distinguished between a substantive rule and a canon of construction. It held that the rule in question is a canon of interpretation and not a substantive law automatically incorporated as 'law in force' under Article 372. Even assuming that the canon had been accepted in parts of India, the Court found it unsuitable and incongruous with the republican and constitutional scheme: it produces discriminatory and anomalous results across a federal polity and conflicts with the constitutional principle of equality. Having regard to constitutional structure, legislative practice and the evolution of Indian public law, the Court declined to apply the archaic presumption of Crown immunity as a general rule of statutory construction in India and rejected its continued mandatory application for construing Indian statutes.The English canon that the Crown/State is not bound by a statute unless expressly named or by necessary implication is not to be applied as a controlling rule of construction in India under Article 372 and should not be followed as a general rule for construing Indian statutes.Construction of municipal licensing provisions as binding on the State - implied exclusion by necessary implication in taxing and penal statutes - Whether the State of West Bengal was exempt from the operation of s. 218 of the Calcutta Municipal Act, 1951 (and the enforcement mechanism in s. 541) by necessary implication in respect of carrying on the market at 1, Orphanganj Road for 1960-61. - HELD THAT: - Applying the normal principle of statutory construction-that general enactments prima facie apply to all persons including the State unless an exemption appears expressly or arises by necessary implication-the Court analysed the scheme and purpose of ss. 218 and 541, and related provisions (including s. 115 and s. 547A). The Court rejected the contention that penal/enforcement provisions necessarily exclude the State because it could not be imprisoned or would be both payer and receiver of fines. It construed s. 541(2) as a mode of realising the licence fee payable under s. 218 and held that the fine is credited to the municipal demand and municipal fund; s. 547A is a discretionary enabling provision and does not imply exemption. The Court therefore upheld the High Court's finding that the State carried on the trade without taking a licence for 1960-61 and that no necessary implication excludes the State from the operation of s. 218 or the recovery mechanism in s. 541.The State of West Bengal was not excluded by necessary implication from the operation of s. 218 (and the recovery provision of s. 541) of the Calcutta Municipal Act, 1951; the High Court's conviction of the State for 1960-61 is correct.Final Conclusion: The appeal is dismissed. The Court overruled the mandatory application of the old English canon of Crown exemption as a general rule of construction in India and affirmed the High Court's conviction of the State of West Bengal for carrying on the market trade without a licence for 1960-61, holding that the municipal licensing and recovery provisions bind the State unless excluded expressly or by necessary implication (which was not established). Issues Involved:1. Whether the State is bound by the provisions of a statute unless expressly named or included by necessary implication.2. Whether the rule of construction favoring the State applies equally to sovereign and non-sovereign activities.3. Whether the Supreme Court has the power to review its earlier judgment.Issue-Wise Detailed Analysis:1. State Bound by Statute:The primary issue was whether the State of West Bengal was bound by the Calcutta Municipal Act, 1951, specifically Section 218, which required a license to carry on trade. The State did not obtain a license for the year 1960-61 and argued that it was not bound by the Act. The High Court of Calcutta convicted the State, holding it was as much bound as a private citizen. The Supreme Court examined the historical context and the rule of construction that the Crown is not bound by a statute unless expressly named or by necessary implication. The Court noted the common law of England and its application in India, as established by previous decisions, including the Privy Council's ruling in *Province of Bombay v. Municipal Corporation of the City of Bombay*. However, the Court found that this rule of construction was not universally accepted in India and was inconsistent with the legal philosophy of the Indian Constitution. The Court concluded that the State is not exempt from the operation of Section 218 of the Act.2. Sovereign and Non-Sovereign Activities:The Court addressed whether the rule of construction in favor of the State applied to both sovereign and non-sovereign activities. The Court noted that in modern times, the State engages in various activities, including trading, which are essential for public welfare. It was argued that the distinction between sovereign and non-sovereign activities is blurred, and the State should not be exempt from statutory obligations in its trading activities. The Court held that the rule of construction should not be applied to exempt the State from statutes in either capacity, as it would lead to anomalies and inconsistencies.3. Power to Review Earlier Judgment:The third contention was whether the Supreme Court has the power to review its earlier judgment. The Court referred to its previous decision in *The Bengal Immunity Company Limited v. The State of Bihar*, where it was held that the Supreme Court could depart from its previous decisions if it was satisfied of its error and its adverse effect on public interests. The Court emphasized the need to correct mistakes in constitutional matters to ensure the smooth evolution of the rule of law. The Court reaffirmed its power to review and correct its earlier judgments.Conclusion:The Supreme Court held that the State of West Bengal was not exempt from the provisions of Section 218 of the Calcutta Municipal Act, 1951, and was required to obtain a license to carry on trade. The rule of construction favoring the State was not accepted as a binding rule of law in India and was inconsistent with the republican polity and the principle of equality enshrined in the Constitution. The Court also reaffirmed its power to review and correct its earlier judgments. The appeal was dismissed, upholding the conviction of the State of West Bengal.