POWER MACHINES INDIA LIMITED v. STATE OF MADHYA PRADESH

Section 30 enables the State Government to make rules to carry out the provisions of the Act. The power is general and pervasive in nature. It encompasses any other matter which is to be and may be prescribed under the Act, and the Rule is required to be laid in the House of the State Legislature.

10. The Act of 2006 has been enacted for the benefit of micro, small and medium enterprises. The object of the Act is to provide for facilitating the promotion and development, enhancing the competitiveness of micro, small and medium enterprises and the matters connected therewith or incidental thereto. Section 18 of the Act of 2006 is extracted hereunder:

Section 18(1) of the Act of 2006 provides that the dispute with respect to any amount due under section 17 may be referred to the Facilitation Council. On reference being made, the Council can itself conduct reconciliation with the assistance of any institution or ADR Centre. In that case provisions of sections 65 to 81 of the Act of 1996 shall apply and in case conciliation under section 18(2) is not successful, Council shall either itself take up the dispute for arbitration or refer it to some other Centre or institution for arbitration and thereupon the provisions of the Act of 1996 shall apply.

11. Section 36 of the Act of 1996 provides that once the time for filing application to set aside an arbitral award under section 34 has expired, the same shall be enforced in accordance with the provisions of the CPC as if it were a decree of the court. Section 36(1) is extracted hereunder:

No doubt about it that by virtue of the provisions contained in section 18(3) of the Act of 2006, the provisions contained in section 36 of the Act of 1996 are clearly applicable and it is permissible to execute the arbitral award in accordance with the procedure prescribed for execution of a decree under the CPC.

12. However, the question in the instant case is whether it was permissible to the State Government to enact Rule 5 of the Rules for recovery of the amount as arrears of land revenue and whether speedy remedy could have been provided under the Rules framed under the Act of 2006, notwithstanding the remedy as provided in section 36 of the Act of 1996 for executing the arbitral award as a decree in accordance with the provisions of the CPC, while providing remedy the State has exceeded its ken of powers.

13. Section 30 of the Act of 2006 extracted above clearly authorizes the State Government to frame the rules to carry out the provisions of the Act and the power is general, as is apparent from reading of section 30(1), 30(2) and 30(2)(b). The objective of the Act is to provide protection to the micro, small and medium enterprises and to facilitate their development. In order to carry out the objective of the Act speedy recovery mechanism has been provided under Rule 5 of the Rule by providing that amount awarded in an arbitral award can be recovered as arrears of land revenue. No doubt that Rule 5 is inconsistent with the provisions contained in section 36(1) of the Act of 1996 which provides recovery mechanism under Order 21 of CPC as a decree, but, in the matter of providing such remedies, it is open to legislate different remedies which may be inconsistent. It is a question of electing a remedy. Election of a remedy for recovery of the amount would depend upon the choice of the award-holder. Both the provisions i.e. section 36 of the Act of 1996 as well as Rule 5 of the Rules of 2006 intend to recover the amount though by different procedures. Intendment of provisions is same. There is no question of any prejudice being caused to the judgment debtor.

14. In Bihar State Co-operative Marketing Union Ltd. v. Uma Shankar Sharan & Anr. (1992) 4 SCC 196 question arose of plurality of the remedies provided under sections 40 and 48 of the Bihar and Orissa Cooperative Societies Act, 1935. Both the provisions may be attracted to a case. It was held that application of section 40 will not exclude operation of section 48. It is only a question where one of the provisions has to be opted. This Court has further held that when two remedies are provided under a statute even if inconsistent, would continue to be in operation until one of them is elected for application. Even if the two remedies happen to be inconsistent, they continue for the person concerned to choose from, until he elects one of them, for commencing an action. As no action under section 40 was taken, this Court held that section 48 was available to the appellant for recovery of the loss. This Court in Bihar State Cooperative Marketing Union Ltd. (supra) has laid down thus:

It is apparent from the aforesaid dictum of this Court that providing of plural remedies is valid when two or more remedies are available to a person even if inconsistent, they are valid. It is for the person to elect one of them and there is no question of repugnancy in providing such remedy.

15. In “Principles of Statutory Interpretation” by Justice G.P. Singh, 14th Edn. while dealing with the question of inconsistency and repugnancy, it has been observed that harmonious construction has to be adopted and the principle that special provision excludes the application of general provision has not been applied when two provisions deal with the remedies for the reason that the validity of plural remedies cannot be doubted, even if the two remedies are inconsistent, court has to harmonize the provisions. Following discussion has been made: “(b) Inconsistency and repugnancy to be avoided; harmonious construction It has already been seen that a statute must be read as a whole and one provision of the Act should be construed with reference to other provisions in the same Act so as to make consistent enactment of the whole statute. Such a construction has the merit of avoiding any inconsistency or repugnancy either within a section or between a section and other parts of the statute. It is the duty of the courts to avoid “a head on clash” between two sections of the same Act and, “whenever it is possible to do so, to construe provisions which appear to conflict so that they harmonise”. Accordingly, the provisions of the Maharashtra Regional and Town Planning Act, 1966, were read together by the Supreme Court and after noting the purpose of the Act. The Act was held not to envisage a situation of conflict, and therefore, the edges were required to be ironed out to read those provisions of the Act which were slightly incongruous, so that all of them are read in consonance with the object of the Act, which is to bring about orderly and planned development. It should not be lightly assumed that “Parliament had given with one hand what it took away with the other”. The provisions of one section of a statute cannot be used to defeat those of another “unless it is impossible to effect reconciliation between them”. The same rule applies in regard to sub-sections of a section. In the words of Gajendragadkar,

16. Thus, the submission raised by learned senior counsel on behalf of the appellant that Rule 5 is inconsistent and repugnant to the provisions of section 36 of the Act of 1996 cannot withstand judicial scrutiny and is liable to be rejected on the anvil of the aforesaid reasoning.

17. This Court while considering the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) in Mardia Chemicals Ltd. & Ors. v. Union of India (2004) 4 SCC 311 has held that secured interest can be enforced without intervention of the court. This Court has also laid down that there is a presumption of constitutionality in favour of the legislation. While considering presumption in favour of such legislation it would be necessary to see that the person aggrieved gets a fair deal at the hands of those vested with power under such legislation. This Court also considered the question whether the SARFAESI Act was uncalled for and a superimposition of an undesired law in the light of operation of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 in the field. This Court has laid down that given the level of indebtedness and NPAs on the balance-sheets of banks and financial institutions, the time taken for recovery of debts via the civil courts, the importance of liquid and solvent banks and financial institutions to economic progress, especially in the present day global economy with a need to give up old and conventional methods of financing and recovery of debts, and the failure of the 1993 Act to bring about the desired results, it could not be said that a step taken towards securitization of debts and to evolve means for faster recovery of NPAs was not called for. This Court has also laid down that primacy is to be given to public interest over private interest. Thus, the provision of recovery outrightly, without recourse to the Civil Court, was upheld. In the instant case, the recovery of arrears of land revenue has been resorted to after adjudication process when arbitral award had been passed and when it is not objected to within the time prescribed under section 34 of the Act of 1996. Thus, the procedure cannot be said to be illegal or arbitrary in any manner and cannot be said to be violative of Article 14 of the Constitution, as contended by the appellant. On the basis of aforesaid reasoning it is clear that Code of Civil Procedure cannot be the only remedy. It is open to legislate recovery mechanism without interference of Civil Court.

18. The submission was raised on behalf of the appellant that Order 21 of the CPC provides more safeguards under different rules, which are referred to above, to a judgment debtor to raise various kinds of objections to file suits and has a right to object also at various stages. No doubt that a detailed procedure is provided under the CPC. But by now it is well known that after a decree is obtained, it has become more difficult to ensure its speedy execution due to misuse of the provisions by unscrupulous judgment debtors of a detailed procedure prescribed for execution of a decree in CPC which was never envisaged. Thus, providing a speedy recovery by way of arrears of land revenue, in fact, was the need of the day and Rule 5 has been rightly enacted to ensure speedy recovery and to ensure that small, micro and medium industries do not suffer.

19. We find no force in the submission that the recovery procedure as arrears of land revenue is harsh. It is quite reasonable and is provided in various enactments for recovery of the sums due. The procedure cannot be said to be illegal, arbitrary, onerous or harsh in any manner.

20. Learned counsel appearing on behalf of the appellant has placed reliance on the decision in Agricultural Market Committee v. Shalimar Chemical Works Ltd. (1997) 5 SCC 516 which has been laid down thus: “24. The power of delegation is a constituent element of the legislative power as a whole under Article 245 of the Constitution and other relative Articles and when the Legislatures enact laws to meet the challenge of the complex socio-economic problems, they often find it convenient and necessary to delegate subsidiary or ancillary powers to delegates of their choice for carrying out the policy laid down by the Acts as part of the Administrative Law. The Legislature has to lay down the legislative policy and prin-ciple to afford guidance for carrying out the said policy before it delegates its subsidiary powers in that behalf (See: Vasantlal Maganbhai Sanjanwala v. The State of Bombay and Others, [1961] 1 SCR

341. This Court in another case, namely, The Municipal Corporation of Delhi v. Birla Cotton, Spinning and Weaving Mills, Delhi and Another, AIR (1968) SC 1232 as also in an earlier decision in In Re: The Delhi Laws Act, 1912, The Ajmer-Merwara (Extension of Laws) Act, 1947, and The Part C States (Laws) Act, 1950, [1951] SCR 747 has laid down the principle that the Legislature must retain in its own hands the essential legislative functions and what can be delegated is the task of subordinate legislation necessary for implementing the purposes and objects of the Act concerned.

25. In Avinder Singh v. State of Punjab, [1979] 1 SCC 137, Krishna Iyer, J. laid down the following tests for valid delegation of legislative power. These are: "(1) the legislature cannot efface itself: (2) it cannot delegate the plenary or the essential legislative function; (3) even if there be delegation, Parliamentary control over delegated legislation should be a living continuity as a constitution-al necessity." It was further observed as under: "While what constitutes an essential feature cannot be delineated in detail it certainly cannot include a change of policy. The legislature is the master of legislative policy and if the delegate is free to switch policy it may be usurpation of legislative power itself."

26. The principle which, therefore, emerges out is that the essential legislative function consists of the determination of the legislative policy and the Legislature cannot abdicate essential legislative function in favour of another. Power to make subsidiary legislation may be entrusted by the Legislature to another body of its choice but the Legislature should, before delegating, enunciate either expressly or by implication, the policy and the principles for the guidance of the delegates. These principles also apply to Taxing Statutes. The effect of these principles is that the delegate which has been authorised to make subsidiary Rules and Regulations has to work within the scope of its authority and cannot widen or constrict the scope of the Act or the policy laid down thereunder. It cannot, in the garb of making Rules, legislate on the field covered by the Act and has to restrict itself to the mode of implementation of the policy and purpose of the Act.” This Court has laid down that the legislature has to lay down the legislative policy to delegate for carrying out the said policy. What can be delegated is the task of the subordinate legislation necessary for implementing the purposes and objects of the Act. In the instant case by exercising the rule making power conferred under Section 30, the purpose of the Act of 2006 is being protected. The rule intends to implement the object. It cannot be said that authority has been exceeded nor it can be said that the scope of the Act has been widened or constricted under the garb of rule making power. Object of both provisions is to ensure recovery.

21. Reliance has also been placed on a decision of this Court in Dr. Mahachandra Prasad Singh v. Chairman, Bihar Legislative Council & Ors. (2004) 8 SCC 747 in which this Court has observed that delegated legislations are subject to certain fundamental factors. The delegatee is not intended to travel wider than the object of the legislature. A delegatee cannot extend the scope or general operation of the enactment but power is strictly ancillary. This Court has laid down thus:

In our opinion Rule 5 of the Rules being a remedial provision is ancillary. It is open to provide for an additional speedier remedy so as to carry out the objective of the Act.

22. Reliance has also been placed on a decision of this Court in B.K. Srinivasan & Ors. v. State of Karnataka & Ors. (1987) 1 SCC 618 in which this Court considered the question that subordinate legislation, in order to take effect, must be published or promulgated in some suitable manner. Where the parent statute prescribes the mode of publication or promulgation that mode must be followed. Mode of publication of subordinate legislation should be reasonable, which is necessary, only then it will take effect. The question was entirely different. Even otherwise procedure for recovery of land revenue is quite reasonable.

23. Reliance has been placed on Academy of Nutrition Improvement & Ors. v. Union of India etc. (2011) 8 SCC 274 in which this Court has laid down thus:

In said case, there was substantial difference in the normal procedure of the income-tax Act for catching escaped income and in the procedure prescribed by Act 30 of Taxation on Income (Investigation Commission) Act, 1947. The classification made was held to be impermissible without any rationale. Such is not the situation in the instant case. The procedural provision of recovery of arrears of land revenue cannot be said to be prejudicial to the appellants. Once adjudication of dues has been made it was expected of the appellant to honour it after lapse of time under Section 34 of Act of 1996.

28. The decision in Maganlal Chhaganlal (P) Ltd. v. Municipal Corporation of Greater Bombay & Ors. (1974) 2 SCC 402 has also been referred to in which this Court has laid down thus:

In Maganlal Chhaganlal (supra), this Court considered the alternative procedure for eviction of unauthorized occupants on Government premises; one by suit and the other by summary procedure alleged to be more drastic and onerous under Chapter V-A of the Bombay Municipal Corporation Act, 1888 or the Bombay Government Premises Act, 1955. The procedure for recovery of land revenue envisaged under Rule 5 of the Rules could not be said to be discriminatory, it being quite reasonable procedure. It cannot be said to be harsh or drastic but is quite a reasonable procedure and it furthers the mandate of the Act. The difference between the procedure of execution of Rule 5 and that of CPC cannot be said to be unconscionable so as to attract the vice of discrimination.

29. Resultantly, the appeal is found to be without any merit and the same is hereby dismissed. IA No. 6 of 2017 has been filed for de-freezing the bank account of the appellant. In case, the appellant has deposited the amount of Rs.5,29,58,937/- as per the fresh recovery citation No.484002 and the interest as well, till the date when the amount was deposited, it would be open to the concerned Tehsildar to de-freeze the account on being satisfied that the amount has been so deposited. The cost is quantified at Rs.50,000/- to be deposited in Supreme Court Advocates on Record Welfare Trust within six weeks. ……………………….J. (ARUN MISHRA) ............................ J. (S. ABDUL NAZEER)

NEW DELHI APRIL 17, 2017 ITEM NO.1A COURT NO.12

SECTION IVA (For Judgment) S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS Civil Appeal No.5317/2017 @ Petition(s) for Special Leave to Appeal (C) No(s).29266/2016 (Arising out of impugned final judgment and order dated 18/07/2016 in WP No. 11824/2016 passed by the High Court Of M.P. at Jabalpur)

VERSUS

STATE OF MAHDYA PRADESH & ORS. Respondent(s) (With appln. (s) for directions and exemption from filing c/c of the impugned judgment and exemption from filing O.T. and permission to file additional documents and office report) Date: 17/04/2017 This petition was called on for pronouncement of judgment today. For Petitioner(s) Mr. Mayank Pandey,Adv. For Respondent(s) Mr. Purushaindra Kaurav, AAG. Mr. Arjun Garg, Adv. Ms. Anuradha Mishra, Adv. Mr. Manish Yadav, Adv. Mr. Pulkit Tare, Adv. Hon'ble Mr. Justice Arun Mishra pronounced the judgment of the Bench comprising His Lordship and Hon'ble Mr. Justice S. Abdul Nazeer. Appeal is dismissed with cost quantified at Rs.50,000/- to be deposited in Supreme Court Advocates on Record Welfare Trust in terms of the Signed Reportable Judgment. (B.Parvathi) (Tapan Kr. Chakraborty) (Signed Reportable Judgment is placed on the file)