TaxTMI 
TaxTMI 
TaxTMI 
1957 (4) TMI 56
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....ning the validity of some of the provisions of the Act and the rules framed thereunder. It will be convenient first to refer to the provisions of the Act and of the rules, so far as they are material for the purpose of the present petitions. The object of the legislation is, as stated in the short title and in the preamble, " to provide for the control and regulation of prize competitions ". Section 2(d) of the Act defines "prize competition" as meaning "any competition (whether called a cross-word prize competition, a missing-word prize competition, a picture prize competition or by any other name), in which prizes are offered for the solution of any puzzle based upon the building up, arrangement, combination or permutation of letters, words or figures ". Sections 4 and 5 of the Act are-. the provisions which are impugned as unconstitutional, and they are as follows: 4. "No person shall promote or conduct any prize competition or competitions in which the total value of the prize or prizes (whether in cash or otherwise) to be offered in any month exceeds one thousand rupees; and in every prize competition, ....
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....r in Form C as and when the entries are received and in any case not later than the close of business on each day; and (d) accept for scrutiny only the first two thousand. entries as they appear in the register in Form C and ignore the remaining entries, if any, in cases where no entry fee is charged and refund the entry fee received in respect of the entries in excess of the first two thousand to the respective senders thereof in cases where an entry fee has been charged after deducting the, cost (if any) of refund." Now, the contention of Mr. Palkhiwala, who addressed the main argument in support of the petitions, is that prize competition as defined in s. 2(d) would include not only competitions in which success depends on chance but also those in which it would depend to a substantial degree on skill; that the conditions laid down in ss. 4 and 5 and rr. II and 12 are wholly unworkable and would render it impossible to run the competition, and that they seriously encroached on the fundamental right of the petitioners to carry on business; that they could not be supported under Art. 19(6) of the Constitution as they were unreasonable -and amounted, in effect, to a prohibi....
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.... involve substantial skill, however, different considerations arise. They are business activities, the protection of which is guaranteed by Art. 19(1)(g), and the question would have to be determined with reference to those competitions whether ss. 4 and 5 and rr. 1 1 and 12 are reasonable restrictions enacted in public interest. But Mr. Seervai has fairly conceded before us that on the materials on record in these proceedings, he could not maintain that the restrictions contained in those provisions are saved by Art. 19(6) as being reasonable and in the public interest. The ground being thus cleared, the only questions that survive for our decision are (1) whether, on the definition of 'prize competition' in s.2(d), the Act applies to competitions which involve substantial skill and are not in the nature of gambling; and (2) if it does, whether the provisions of ss. 4 and 5 and rr. II and 12 which are, ex concessi void, as regards such competitions, can on the principle of severability be enforced against competitions which are in the nature of gambling. 1. If the question whether the Act applies also to prize competitions in which success depends to a sub stantial degree on skil....
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.... competitions within the Province of Bombay, and as originally enacted, it applied only to competitions conducted within the Province of Bombay. Section 7 of the Act provided that "a prize competition shall be deemed to be an unlawful prize competition unless a licence in respect of such competition has been obtained by the promoter thereof." Section 12 imposed a tax on the amounts received in respect of competitions which had been licensed under the Act. With a view to avoid the operation of the taxing provisions of this enactment, persons who had there to before been conducting prize competitions within the Province of Bombay shifted the venue of their activities to neighbouring States like Mysore, and from there continued to receive entries and remittances of money therefor from the residents of Bombay State. In order to prevent evasion of the Act and for effectually carrying out its object, the legislature of Bombay passed Act XXX of 1952 extending the provisions of the Act of 1948 to competitions conducted outside the State of Bombay but operating inside it, the tax however being limited to the amounts remitted or due on the entries sent from the State of Bombay. The validity ....
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....ed substantially on skill could not have been in the minds of the legislatures which passed those resolutions. Those competitions had not been the subject of any controversy in court. They had done no harm to the public and bad presented no problems to the States, and at no time had there been any legislation directed to regulating them. And if the State legislatures felt that there was any need to regulate even those competitions, they could have themselves effectively done so without resort to the special jurisdiction under Art. 252(1). It should further be observed that the language of the resolutions is that it is desirable to control competitions. If it was intended that Parliament should legislate also on competitions involving skill, the word, ,control' would seem to be not appropriate. While control and regulation would be requisite in the case of gambling, mere regulation would have been sufficient as regards competitions involving skill. The use of the word control' which is to be found not only in the resolution but also in the short title and the preamble to the Act appears to us to clearly indicate that it was only competitions of the character dealt with in the Bombay....
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....e which can arise only with reference to laws enacted by bodies which do not possess unlimited powers of legislation, as, for example, the legislatures in a Federal Union. The limitation on their powers may be of two kinds: It may be with reference to the subject-matter on which they could legislate, as, for example, the topics enumerated in the Lists in the Seventh Schedule in the Indian Constitution, ss. 91 and 92 of the Canadian Constitution, and s. 51 of the Australian Constitution; or it may be with reference to the character of the legislation which they could enact in respect of subjects assigned to them, as for example, in relation to the fundamental rights guaranteed in Part III of the Constitution and similar constitutionally protected rights in the American and other Constitutions. When a legislature whose authority is subject to limitations aforesaid enacts a law which is wholly in excess of its powers, it is entirely void and must be completely ignored. But where the legislation falls in part within the area allotted to it and in part outside it, it is undoubtedly void as to the latter; but does it on that account become necessarily void in its entirety? The answer to....
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....e must, on the principle laid down in Macleod v. Attorney-General for New, South Wales, be presumed to have known its own limitations and must be held to have intended to enact only laws within its competence, that accordingly the word I property' in Act No. XVIII of 1937 must be construed as property other than agricultural land, and that, in that view, the legislation was wholly intra vires. It is contended by Mr. Palkhiwala that this decision does not proceed on the basis that the Act is in part ultra vires and that the remainder however could be separated therefrom, but on the footing that the Act is in its entirety intra vires, and that thus, no question of severability was decided. That is true; but that the principle of severability had the approval of that Court clearly appears from the following observations of Sir Maurice Gwyer C. J.: "It should not however be thought that the Court has overlooked cases cited to it in which the same words have been applied in an Act to a number of purposes, some within and some without the power of the Legislature, and the whole Act hag been held to be bad. If....
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.... so -far as it may be applied within the constitutional limits, as it is not severable ". In rejecting this contention, the Court observed (at pp. 717-718): " These items being thus treated separately by the legislature itself and being severable, and it not being contended, in view of the directive principles of State policy regarding prohibition, that the restrictions imposed upon the right to possess or sell or buy or consume or use those categories of properties are unreasonable, the impugned sections must be held valid so far as these categories are concerned." This decision is clear authority that the principle of severability is applicable even when the partial invalidity of the Act arises by reason of its contravention of constitutional limitations. It is argued for the petitioners that in that case the legislature had through the rules framed under the statute classified medicinal and toilet preparations as a separate category, and had thus evinced an intention to treat them as severable, that no similar classification had been made in the present Act, and that therefore the decision in questi....
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....sp; "It is a sound rule to extend severability to include separability in enforcement in such cases, and we are of opinion that the principle should be applied in dealing with taxing statutes in this country. " The petitioners contend that the rule of severability in enforcement laid down in the above passage following the decision in Bowman v. Continental Co.(2) is confined in American law to taxing statutes, that it is really in the nature of an exception to the rule against severability of laws which are partially unconstitutional, and that it has no application to the present statute. We are unable to find any basis for this argument in the American authorities. That the decision in Bowman's case ([1921] 256 U.S. 642 ; 65 L. Ed. II37) related to a taxing statute is no ground for limiting the principle enunciated therein to taxing statutes. On the other hand, the discussion of the law as to severability in the authoritative text-books shows that no distinction is made in American Jurisprudence between taxing statutes and other statutes. Corpus Juris Secundum, Vol. 82, dealing with the subject of severability, states first the principles applicable ....
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....qualifications of the alienee. (Vide Punjab Province v. Daulat Singh ([1942] F.C. R. 67). Before the Privy Council, Mr. Privy, counsel for the appellant, " conceded that membership of a tribe was generally a question of descent ", and the Board accordingly held that s. 13A wag repugnant to a. 298(1) and was void. Dealing next with the enquiry which was directed by the Federal Court as to the qualifications of the alienee, the Privy Council observed as follows (at p. 20): " The majority of the Federal Court appear have contemplated another form of severability namely, by a classification of the particular cases or which the impugned Act may happen to operate, involving an inquiry into the circumstances of each individual case. There are no words in the Act capable of being so construed, and such a course would in effect involve an amendment of the Act by the court, course which is beyond the competency of the court, as has long been well established." It will be noticed that, in the above case, there was no question of the application of the Act to different categories which were distinct and severable....
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....d under s. 4 was single and indivisible, and therefore it was not severable. Agreeing with this opinion, we are of opinion that the decision in Punjab Province v. Daulat Singh([1946] F.C.R. 1) cannot, in view of the decision of this Court in The State of Bombay v. P. N. Balsara ([1951] S.C.R. 682), be accepted as authority for the position that there could be no severability, even if the subjectmatters are, in fact, distinct and severable. In Romesh Thappar v. State of Madras ([1950] S.C.R. 594), the question was as to the validity of s. 9 (1-A) of the Madras Maintenance of Public Order Act XXIII of 1949. That section authorised the Provincial Government to prohibit the entry and circulation within the State of a newspaper "for the purpose of securing the public safety or the maintenance of public order". Subsequent to the enactment of this statute, the Constitution came into force, and the validity of the impugned provision depended on whether it was protected by Art. 19(2) which saved " existing law in so far as it relates to any matter which undermines the security of or tends to overthrow the State." It was held by this Court that as the purposes mentioned in s. 9(1-A) of the ....
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....), is by its very nature inseverable, and it could not be enforced without re-writing it. The observation aforesaid must be read in the context of the particular provision which was under consideration. This really is nothing more than a decision on the severability of the particular provision which was impugned therein, and it is open to the same comment as the decision in Romesh Thappar v. State of Madras ([1950] S.C.R. 594). That was also one of the decisions distinguished in The, State, of Bombay v. F. N. Balsara ([1951] S.C.R. 682). The resulting position may thus be stated: When a statute is in part void, it will be enforced as regards the rest, if that is severable from what is invalid. It is immaterial for the purpose of this rule whether the invalidity of the statute arises by reason of its subject-matter being outside the competence of the legislature or by reason of its provisions contravening constitutional prohibitions. That being the position in law, it is now necessary to consider whether the impugned provisions are severable in their application to competitions of a gambling character, assuming of course that the definition of 1 prize competition' in s. 2(d) is wide....
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....nvalid portion is expunged from the statute what remains cannot be enforced without making alterations and modifications therein, then the whole of it must be struck down as void, as otherwise it will amount to judicial legislation. Vide Sutherland on Statutory Construction, Vol. 2, p. 194. 7. In determining the legislative intent on the question of separability, it will be legitimate to take into account the history of the legislation, its object, the title and the preamble to it. Vide. Sutherland on Statutory Construction, Vol. 2, pp. 177-178. Applying these principles to the present Act, it will not be questioned that competitions in which success depends to a substantial extent on skill and competitions in which it does not so depend, form two distinct and separate categories. The difference between the two classes of competitions is as clear-cut as that between commercial and wagering contracts. On the facts, there might be difficulty in deciding whether a given competition falls within one category or not ; but when its true character is determined, it must fall either under the one or the other. The distinction between the two classes of competitions has long been recognis....