Appeal No 109 of 1957
Appeal by special leave from the judgment and order dated March 1 1956 of the Bombay High Court in Appeal No 20 of 1956
G section Pathak K H Bhabha H M Vakeel and I N Shroff for the appellants
C K Daphtary Solicitor General of India B K Khanna and P D Menon for the respondents
724 C K Daphtary Solicitor General of India section N Andley Rameshwar Nath and P L Vohra for the Interveners
April 11
The Judgment of Sinha C J Ayyangar Madholkar and Aiyar JJ was delivered by Ayyangar J Subha Rao J delivered a separate judgment
AYYANGAR J This is an appeal by special leave from the judgment of a Division Bench of the Bombay High Court affirming the judgment of a learned Single Judge whereby a petition filed under Article 226 of the constitution by the appellants was dismissed
By their petition the appellants challenged the validity of a notification issued by Forward Markets Commission a statutory body created by the Forward Markets Regulation Act 1952 LXXIV of 1952 hereinafter referred to as the Act to the authorities of the East India Cotton Association Bombay which will be referred to as the Association intimating to them that the continuation of trading in certain types of forward contracts in cotton including that known as hedge contracts was detrimental to the interest of the trade and the public interest and to the larger interests of the economy of India and directed these contracts to be closed out to be settled at prices fixed in the notification
It is necessary to set out briefly certain facts in order to appreciate the points raised by the appeal
The fast India Cotton Association is an association which has been recognised by the Central Government under a 6 of the Act
The three appellants are members of the Association carrying on business in partnership
The appellants had prior to December 1955 entered into hedges contracts in respect with other members of the Association for settlements in February and May 1956
There was no dispute that these 725 contracts were in accordance with the bye laws of the Association as they stood at the date when the contracts were entered into
The terms and conditions of forward contracts in cotton including hedge contracts and the manner of their implementation were governed by the provisions contained in certain bye laws of the Association and of these that relevant to the consideration of the matters in this appeal was bye law 52AA which on the date when the appellants entered into their contracts ran as follows 52 AA 1 whether or not the prices at which the cotton may be bought or sold are at any time controlled under the provisions of the Essential Commodities Act 1055 if the Textile Commissioner with the concurrence of the Forward Markets Commission and after consultation with the Chairman of the Board be of opinion that the continuation of hedge trading is likely to result in a situation detrimental to the larger interests of the economy of India and so informs the Board the Board shall forthwith cause a notice to be posted on the Notice Board to that effect and on the posting of such notice and notwithstanding anything to be contrary contained in these bye laws or in any hedge or on call contract made subject to these Bye laws the following provisions shall take effect
2Every hedge contract and every on call contract in so far as the cotton is uncalled thereunder or in so far as the price has not been fixed thereunder entered into between a member and a member or between a member and a non member then outstanding shall be deemed closed out at such rate appropriate to such contract as shall be fixed by the Textile Commissioner and the provisions 726 of Clauses 3 4 and 6 of Bye laws 52A in so far as they apply to hedge and on call contracts shall apply as if they formed part of this Bye law
After the affixation of the said Notice on the Notice Board trading in hedge and on call contracts shall be prohibit ed until the Textile Commissioner with the concurrence of the Forward Markets Commission and after consultation with the Chairman permits resumption
Towards the end of 1955 the Chairman of the Association appears to have apprehended that the forward Market in cotton was heading for a crisis which was in part due to the transacting of unbridled option business which though prohibited by the Act and also by the bye laws of the Association was ever the less indulged in on a large scale
The hairman brought this situation to the notice of the members of the Board of the Association at a meeting held on December 16 1955 and suggested that they should give serious thought to this vital problem
It may be mentioned that the government also were anxiously considering the steps to the taken to solve or avert the crisis
The action which the government took in this matter is reflected in a notification issued by them on December 23 1955 by which in exercise of the powers conferred in them by section 14 of the Act they directed the Association to suspend its business in Indian cotton edge contracts for delivery in February 1956 and May 1956 for a period of 7 days with effect from the date of the notification
The situation did not apparently improve as a result of this temporary suspension so that before the expiry of the work fortnight action under the same provision was gain taken under a notification dated December 10 1955 by which the period of 7 days was exten ded by a further period of 7 days i e till 6 1
56A meeting of the Board of Association was held on 727 January 6 1956 i e the day on which the suspension of forward business expired when the following  resolution was unanimously passed  In view of the suspension of forward trading by government the Board hereby resolves under bye law 52 that an emergency has arisen or exists and prohibits until further notice subject to the concurrence of the Forward Markets Commission as from Saturday the 7th January 1956 trading in hedge contracts for February and May 1956 deliveries above a maximum rate of Rs 700 per candy Thereupon a suit numbered as suit 21956 was filed by a member of the Association as representing himself and all other members on the original side of the High Court Bombay against the Association and its Board challenging the validity of the notification of Government suspending forward trading as also of the resolution of the Board just now extracted
An application for the grant of interim stay was made for restraining the Board from giving effect to its resolution but this was refused by the learned trial Judge and an appeal was filed against the refusal
While things were in this state the Central Government in exercise of the powers conferred on them by section 12 of the Act made anew bye law which was published in a Gazette of India Extra
ordinary dated January 21 1956 in substitution of bye law 52 AA set out earlier
The new bye law ran
152 AA 1 Whether or not prices at which cotton may be bought or sold are at any time controlled under the provisions of the  if the Forward Markets Commission is of the opinion 728 that continuation of trading in hedge contrac ts for any delivery or deliveries is detrimental to the
interest of the trading or the public interest or to the larger interests of the economy of India and so notifies the Chairman then notwithstanding anything to the contrary contained in these bye laws or in any hedge or on call contract made subject to these bylaws the following provisions shall take effect
2Every hedge contract and every on call contract in so far as the cotton is uncalle d thereunder or in so far as the price has not been fixed thereunder and relating to the delivery or deliveries notified under clause 1 entered into between a member and a member or between a member and a non member then outstanding shall be deemed closed out at such rate appropriate to such contract and with effect from such date as shall be fixed by the Forward Markets Commission and the provisions of clauses 3 4 and 0 of Byelaws 52 A in so far as they apply to hedge and on call contracts shall apply as if they formed part of this Bye law
This bye law was communicated to the Board of the Association on January 23 1956
We might here state that the validity of this new bye law has been impugned on various grounds and the alleged invalidity of this We law serves as the main foundation for challenging the validity of the notification of the Forward Markets Commission issued under the powers conferred by it
On January 24 1956 the appeal from the order refusing the interim injunction in Suit No 2 of 1956 was settled between the parties on  theme terms  1 The impugned resolution dated January 6 1956 declared to be valid 729 2The Board of Directors to meet on January 25 1958 and consider under bye laws 52 2 whether the rate of Rs 700 fixed under the said resolution should continue or whether it should be waived In considering the same the Board will apply its own mind and exercise its own judgment
On the same day ie January 24 1956 the Forward Markets Commission took action under the powers vested in them under the new bye law 52 AA which had been made by government three days earlier
By a communication addressed to the Chairman of the Association the Commission stated   In pursuance of cl
1 of the bye law 52AA of the Bye laws of the EICA Ltd Bombay I hereby notify to you that the For
ward Markets Commission is of the opinion that continuation of trading in the hedge contracts for February and May 1956 delivery is detrimental to the interests of the trade and the public interest and the larger interest of the economy of India and fixed under cl
2 of the said bye law that the rates prevailing at the time at which the trading in the said contracts closed On January 24 1956 viz Rs 700 for February and Rs 6868 for May delivery as the rates at which and January 25 1956 as the date with effect from which the hedge contracts and on call contracts in so far as the cotton is uncalled thereunder or in so far as the price has not been fixed thereunder relating to the said delivery shal l be deemed to be closed out
Thereupon the three appellants who are partners carrying on business in cotton under the name and style of Indramani Pyarelal Co moved the High Court of Bombay by a petition under article 226 of the Constitution on January 27 1956 for a writ of mandamus or a direction in the nature of 730 mandamus against the members of the Forward Markets Commission who were individually impleaded as respondents to the petition ordering them to cancel or withdraw the notification dated January 24 1956 whose validity was impugned on various grounds
The petition was heard by a learned single Judge who dismissed it by his order dated February 23 1956
An appeal was filed therefrom to a Bench of the High Court and when this was also dismissed the petitioners moved for a certificate of fitness to appeal to this Court but the same having been rejected they applied for
and obtained special leave from this Court and that is bow the matter is now before us
The submissions of Mr Pathak learned Counsel for the appellant in support of the appeal may be classified under three main heads  1 The notification dated 24th January 1956 served on the Board of the Association by the Forward Markets Commission was ultra vires for the reason that bye law 52AA as amended by the Central Government on January 21 1956 was invalid
2 Assuming the byelaw to be valid it could not operate retrospectively or be availed of retrospectively so as to affect rights under existing contracts subsisting on the day the amended bye law was notified in the Gazette but that it could if at all be validly applied only to Forward hedge contracts entered into thereafter
3 The notification by the Forward Markets Commission was improper and malafide and was therefore invalid
It would be convenient to deal with these points in that order  1 The first of the points raised raises the question of the validity of bye law 52 AA as amended by the Central Government on January 21 1956
Learned Counsel divided his submission on this matter into two sub heads a that the Forward Markets Commission could not on a proper construction of the Act be validly vested 731 with the power with which it was clothed by the amended bye law and b that it was beyond the power of the Association to have conferred the power which it purported to do under the amended bye law 52AA
Put in other words the objections were that the Forward Markets Commission could not having regard to the terms of the statute under which it was created be a proper recipient of the power with which it was vested by the bye law and secondly that the Association was in law incapable of conferring that power on the Forward Markets Commission or on any other body
We shall first take up for consideration the argument that the Forward Markets Commission was in law incapable of being the recipient of the power conferred by the bye law under which it was empowered to issue the impugned notification
For this purpose it is necessary to examine in detail the relevant provisions of the Act
Section 2 b defines Commission  as meaning The Forward Markets Commission established under section 3
Section 3 1 enacts  3
The Central Government may by notification in the Official Gazette establish a Commission to be called the Forward Markets Commission for the purpose of exercising such functions and discharging such duties as may be assigned to the Commission by or under this Act
 The point urged by learned Counsel was that the function or the duty cast upon it by the amended bye law 52 AA was not such as could be assigned to the Commission by or under this Act The meaning of the words by or under  and the extent and nature of the duties assigned to the Commission by the Act will therefore require careful examination
Section 4 relates to the functions of the Commission and it is the proper construction of this 732 section that has loomed large in the arguments on this point
It is therefore necessary to set this out in full  4
The functions of the Commission shall be ato advise the Central Government in respect of the recognition of or the withdrawal of recognition from any association or in resPect of any other matter arising out of the administration of this Act  bto keep forward markets under observation and to draw the attention of the Central Government or of any other prescribed autho rity to any development taking place in or in relation to such markets which in the opinion of the commission is of sufficient importance to deserve the attention of the Central Government and to make recommendations thereon  eto collect and whenever the Commission thinks it necessary publish information regar ding the trading conditions in respect of goods to which any of the provisions of this Act is made applicable including information regarding supply demand and prices and to submit to the Central Government periodical reports on the operation of this Act and on the working of forward markets relating to such goods  dto make recommendations generally with a view to improving the Organisation and working of forward markets  eto undertake the inspection of the accounts and other documents of any recognished association whenever it considers it necessary  and 733 fto perform such other duties and exercise such other powers as may be assigned to the Commission by or under this Act or as may be prescribed
Pausing here it is necessary to add that the expression prescribed found at the end of cl
f has been defined by section 2h of the Act to mean Prescribed by rules made under the Act
Before considering the points urged as regards the construction of this section taken in conduction with the terms of s31 we shall refer to a few other provisions which are of some relevance in the present context
Section 32 which confers power on the Central Government to call for periodical returns from Recognised Associations and to direct such enquiries as they consider necessary to be made empowers the government to direct the Commission to inspect the accounts and other documents of any recognised Association or of any of its members and submit its report thereon to the Central Government vide section 32 c
Sub section 4 of this section enacts  84
Every recognised association and every member thereof shall maintain such books of account and other documents as the Commission may specify and the books of account and other documents so specified shall be preserved for such period not exceeding three years as the Commission may specify and shall be subject to inspection at all reasonable times by the Commission
Section 28 reads  28
1 The Central Government may by Notification in the Official Gazette make rules for the purpose of carrying into effect the objects of this Act
734 2 In particular and without prejudice to the generality of the foregoing power such rules may provide for a the terms and conditions of service of members of the Commission b the manner in which applications for recognition may be made under section 5 and th e levy of fees in respect thereof  c the manner in which any inquiry for the purpose of recognising any association may be made and the form in which recognition shall be granted  d the particulars to be contained in the annual reports of recognised associations  e the manner in which the bye laws to be made amended or revised under this Act shall before being so made amended or revised be published for criticism  f the constitution of the advisory commit
tees established under section 26 the terms of office of and the manner of filling vacancies among members of the committee  the interval within which meetings of the advisory committee may be held and the procedure to be followed at such meetings  and the matters which may be referred by the Central Govern ment to the advisory committee for advice  g any other matter which is to be or may be prescribed
 The argument on this part of the case was briefly this  The Forward Markets Commission is a statutory body specially created for the purposes of the Act
The powers which mat be conferred upon the Commission and the duties which it may be called on to discharge are therefore subject to the provisions of the Act
No more power can be conferred upon this body than what the Act allows 735 and the power under the amended bye law 52AA is not one which is contemplated by the Act as conferable on it
Section 4 defines the functions of the Commission under five general heads a to e with a residuary clause contained in cl
The powers or duties dealt with in cls
a to e are in their essence either recommendatory or advisory
In the context therefore the other duties or  other powers which may be assigned to the Commission under cl
f must be either ejuesdem generis with advisory or recommendatory powers or of a nature similar to those enumerated in the previous subclauses
In support of these submissions learned Counsel invited our attention to several decisions in which ancillary powers which might be implied from the grant of certain express powers were referred to
In particular it was submitted that the Court would not imply a power which it was not absolu tely necessary to effectuate on express grant or was need to prevent the nullification of an express power that was granted
In our opinion these decisions afford no assistance for resolving the controversy before us
There is no question here of deducing an implied power from the grant of an express one
What we are concerned with is the scope of an express power or rather whether the grant of the power conferred upon the Commission by the bye law could be held to be a power which could be assigned to the Commission under cl
So far as the terms of el f are concerned there is no limitation upon the nature of the power that might be conferred except of course that which might flow from its having to be one in relation to the regulation of forward trading in goods which the Act is designed to effectuate
Any limitation therefore would have to be deduced from outside clf of section 4
Taking each of the clauses a to e it is not possible to put them positively under one genus in order 736 that there might be scope for the application of the ejusdem generis rule of construction
Negatively no doubt it might be said that none of these five clauses confer an executive power such as has been vested in them by the amended bye law 52AA but this cannot be the foundation for attracting the rule of construction on which learned Counsel relies
On the other hand if there is no common positive thread running through clsa to e such as would bring them under one genus and negatively they do not expressly include any administrative or executive functions that itself might be a reason why the expression other occurring in cl
f should receive the construction that it is intended to com prehend such a function
Learned Counsel further suggested that even if the rule of ejusdem generis did not apply the allied rule referred to at page 76 of the report of Western India Theatres Ltd vs Municipal Corporation of Poona that the matters expressly referred to might afford some indication of the kind and nature of the power might be invoked but we consider that in the context there is no scope for the application of this variant either
What we are here concerned with is whether it is legally competent to vest a particular power in a statutory body and in regard to this the proper rule of interpretation would be that unless the nature of the power is such as to be incompatible with the purpose for which the body is created or unless the particular power is contra indicated by any specific provision of the enactment bringing the body into existence any power which would further the provisions of the Act could be legally conferred on it
Judged by this test it would be obvious that the power conferred by the bye law is one which could be validly vested in the Commission
A more serious argument was advanced by learned Counsel based upon the submission that a 737 power conferred by a bye law framed under section 11 or 12 was not one that was conferred by or under the Act or as may be prescribed
Learned Counsel is undoubtedly right in his submission that a power conferred by a bye law is not one conferred by the Act for in the context the expression conferrod by the Act would mean conferred expressly or by necessary implication by the Act itself
It is also common ground that a bye law framed under section II or 12 would not fall within the phraseology as may be prescribed for the expression Prescribed  has been defined to mean  by rules under the Act those framed under section 28 and a bye law is certainly not within that description
The question therefore is whether a power conferred by a bye law could be held to be a power conferred under the Act
The meaning of the word under the Act is well known
By an Act would mean by a provision directly enacted in the statute in question and which is gatherable from its express language or by necessary implication therefrom
The words under the Act  would in that context signify what is not directly to be found in the statute itself but is conferred or imposed by virtue of powers enabling this to be done in other words by laws made by a subordinate law making authority which is empowered to do so by the parent Act
This distinction is thus between what is directly done by the enactment and what is done indirectly by rule making authorities which are vested with powers in that behalf by the Act
vide Hubli Electricity Company Ltd vs Province of Bombay and Narayanaswami Naidu vs Krishna Murthi
That in such a sense bye laws would be subordinate legislation  under the Act is clear from terms of sections 11 and 12 themselves
Section 11 1 enacts 11
1 Any recognised association may subject to the previous approval of the Central 1 76 IA 57 66
2 ILR  547
738 Government
make bye laws for the regulation and control of forward contracts and sub section
2 enumerates the matters in respect of which bye laws might make provision
Sub section
3 refers to the bye laws as the se made under this section and the provisions of sub section
4 puts this matter beyond doubt by enacting 11 4 Any bye laws made under this section shall be subject to such conditions in regard to previous publication as may be prescribed and when approved by the Central Government shall be published in the Gazette of India and also in the Official Gazette of State in which the principal office of the recognised association is situate  Section 12 under which the impugned bye law was made states in sub section
2  12 2 where in pursuance of this section any bye laws have been made or amended the bye laws so made or amended shall be published in the Gazette of India and also in the Official Gazette of the State in which the principal office of the recognized association is situate and on the publication thereof in the Gazette of India the bye laws so made or amended shall have effect as if they had been made or amended by the recognised associations and in sub section
4 12
The making or the amendment or revision of any bye laws under this section shall in all cases be subject to the condition of previous publication Having regard to these provisions it would not be 739 possible to contend that notwithstanding that the bye laws are rules made by an Association under section 11 or compulsorily made by the Central Government for the Association as its bye laws under section 18 they are not in either case Subordinate legislation under section 11 or 12 as the case may be of the Act and they would therefore squarely fall within the words  under the Act in s 4f
Indeed we did not understand Mr Pathak to dispute this proposition
His contention however was that when cl
f specifically made provision for powers conferred by rules by the employment of the pbrase or as may be prescribed and so to speak took the rules out of the reach of the words  under the Act it must necessarily follow that every power confered by Subordinate law making body must be deemed to have been excepted from the content of that expression and that consequently in the Content the word  by the Act should be held to mean directly by the Act ie by virtue of positive enactment of the words under the Act should be held to be a reference to powers gatherable by necessary implication from the provisions of the Act
As an instance learned Counsel referred us to the power of the Central Government to direct the Commission to inspect the accounts and other documents of any recognised association or of any of its members and submit its report thereon to the Central Government under section 8 2c and suggested that this would be a case of a power or duty which would be covered by the words under the Act
We find ourselves wholly unable co accept this
If without the reference to the phrase as may be prescribed the words  under the Act would comprehend powers which might be conferred under bye laws as well as those under rules we are unable to appreciate the line of reasoning by which powers conferred by bye laws have to be excluded because of the specific reference to powers conferred by rules
740 Undoubtedly there is some little tautology in the use of the expression as may be prescribed after the comprehensive reference to the powers conferred under the Act but in order merely to avoid redundancy you cannot adopt a rule of construction which cuts down the amplitude of the words used except of course to avoid the redundancy
Thus the utmost that could be that though normally and in their ordinary signification the words under the Act would include both rules framed under s28 as well as bye laws under section 11 or 12 the reference to rules might be eliminated as tautlogous since they have been specifically provided by the words that follow
But beyond that to claim that for the reason that it is redundant as to a part the whole content of the words under the Act should be discarded and the words by the Act should be read in a very restricted and if one may add in an unnatural sense as excluding a power confered by necessary implication when such a power would squarely fall within the reach of these words would not in our opinion be any reasonable con struction of the provision We need only add that the construction we have reached of s4 f is reinforood by the language of section 3 1 which is free from the ambiguity created by the occurrence of the expression  as may be prescribed in the former
We have therefore no hesitation in holding that there was no incompetency in the Forward Markets Commission being the recipient of the power which was conferred upon them by bye law 52AA as amended
The next part of the submission in relation to this matter was that it was not competent for the Association to have framed this bye law and that the powers of the Central Government under section 12 and of the Association under section 11 in regard to the framing of bye law being co extensive the bye law framed was not competent to confer any power on the commission
741 This contention was urged with reference to two considerations a that a bye law of the type now in controversy was not within section II of the Act and b that having regard to the provision contained in the Articles of Association of the Association the bye law was beyond the powers of the Association to frame
These we should deal in that order
The first objection naturally turns upon whe ther the bye law is one which could be comprehended with section 11 of the Act
Its first sub section enacts  11 1 any recognised association may subject to the previous approval of the Central Government make bye laws for the regulation and control of forward contract
 That the impugned bye law is one for the regulation and control of forward contracts cannot be disputed and the terms being very general would include a bye law of the type now impugned
In this connection reference may be made to byelaw 52AA which the impugned bye law amended under which power was vested in the Textile Commissioner with the concurrence of the Forward Markets Commission though after consultation with the Chairman of the Board to direct the enclosure of hedge contracts and fix the rates at which such contracts might be closed out a provision whose validity was not impugned in the present proceedings
Mr Pathak no doubt submitted that he was not precluded from challenging before us even the earlier bye law for the purpose of sus taining his argument that the amended bye law was ultra vires
Nevertheless it must be apparent that it was always assumed that bye laws which vest in authorities external to the Association the 742 power to interfere with forward dealing was within the scope of the bye law making powers under This general provision apart sub section
2 of section 11 enact 112
In particular and without prejudice to the generality of the foregoing power such bye laws may provide for a      b      c      dfixing altering or postponing days for settlement edetermining and declaring market rates including opening closing highest and lowest rates for goods f     g       h       i        j       k        1        m        n the regulation of fluctuations in rates and prices o the emergencies in trade which may arise and the exercise of powers in such eme regencies including the power to fix maximum prices 743 As the power of the Central Government to make bye laws under section 12 is admittedly co extensive with the power of the Associations to frame byelaws it is not necessary to refer to the terms of the latter sections Before considering in detail the argument on this part of the case we consider it useful to set out a few of the bye laws of the Association whose validity has not been challenged and which would show the manner in which the Association has been functioning in emergencies such as that for which the impugned bye law provides Bye law 52 which still exists 521 If in the opinion of the Board an emergency has arised or exists the Board may by a resolution i passed by a majority of not less than and ii confirmed prohibit as from the date of such confirmation or from such later date as maybe fixed by the Board in the resolution referred to in sub clause 1 atrading in the Hedge Contract for any delivery or deliveries or b all trading in such contracts as are referred to in clause a for a specified period 52A
If the Board at a meeting specially convened in this behalf resolve that a state of emergency exists or is likely to occur such as shall in the opinion of the Board make free trading in forward contracts extremely difficult the Board shall so inform the Forward Markets Commission and upon the 744 Forward Markets Commission intimating to the Board its agreement with such resolution then notwithstanding anything to the contrary contained in these bye laws or in any forward contract made subject to these Byelaws the following provisions shall take effect 1The Board shall at a meeting specially convened in this behalf afix a date for the purpose hereinafter contained bfix settlement process for forward con tracts cfix a special Settlement Day
2   Every hedge contract entered into between a member and a member or between a member and a non member outstanding on the date fixed under clause 1a hereof shall be demand closed out at the rate appropriate to such contracts fixed under clause 1b hereof
 3 6 and then follows Bye law 52AAA
Apart for the amended bye law occurring in the group of existing bye laws making provision for emergencies to which sub clause oof s112 refers there is no dispute that there was an emergency in the forward market and that the impugned bye law was framed to meet such a contingency
It was not contended before us that the method by which the emergency was resolved by the impugned bye law viz by closing out subsisting contract was not the usual method employed for the purpose
If therefore the bye law was provision for an emergency within s11 2o then it would seem to follow that for the resolution of that emergency 745 every one of the matters which could be included in such bye laws would be attracted to it and so we find it impossible to accept Mr Pathaks submission regarding the invalidity of the bye Law
An analysis of the impugned bye law 52AA and comparison of it with that which it replaced would show that the main point of difference is that whereas formerly action to stop forward trading and for closing out contracts and to fix the rate at which contracts were to be closed out was vested in the Textile Commissioner acting with the concurrence of the Forward Markets Commission under the amended bye law the power is directly vested in the Forward Markets Commission itself
The arguments addressed to us on this point are concerned not so much with the propriety as with the vires of a provisions by which the power to close out contracts by the issue of a notification is vested in the Commission
Apart from an argument immediately to be noticed we do not see how if such a power could validly be conferred upon a Textile Commissioner or even exercised by the Board of the Association under a bye law framed under section 11 the same would be beyond the power to make bye laws under section 11 by the mere fact that the authority vested with the power is the Forward Markets Commission
We are clearly of the opinion that bye law 52AA is well within the bye law making power under section 11 of the Act and therefore within 12
It was then said that the amended bye law 52AA wag invalid as in violation of the Articles of Association of the Association being an impermissible delegation of the powers vested in the board of the Association by its Memorandum of Articles
In this context Mr Pathak placed reliance on cl 64 of the Articles as laying down the limits within which 746 the Board might delegate their powers
He contended that the conferment of the power to take action on the Forward Markets Commission was thus contrary to and inconsistent with the powers of the Association under this Article
It would be seen that if learned Counsel is right this would render invalid not merely bye law 52AA as now amended but even the bye law as it originally stood but as already stated learned Counsel urged that he was not precluded from raising this contention
This point was not raised in the Court below but having beard arguments on it we shall pronounce upon it
We consider that there is no substance in this objection
Article 64 on which reliance was placed runs in these terms The Board may delegate any of their powers authorities and duties to committees consisting of such members or member of their body or consisting of such other members or members Associate Members Special Associate Members or Temporary Special Associate Members of the Association not being Directors or partly of Directors and partly of such other members andor Associate Members Special Associate Members or Temporary Special Asso ciate Members as the Directors may think fit
Any Committee so formed shall in the exercise of the powers so delegated conforms to any regulation that may from time to time be imposed on it by the Directors
In so far as the Memorandum is concerned its paragraph III states the objects for which the Association was established as being inter alia   e To make from time to time bye laws for opening and closing of markets in cotton and the 747 times during which they shall open or closed the making performance and determination the prohibition of specified classes of dealings and the time during which such prohibition shall operate the provision of an dealing with Croners  or Bear Raids  in any and every kind of cotton and cotton transactions so as to prevent or stop or mitigate undue speculation inimical to the trade as a whole the course of business between Original Members inter be or between any of them on the one hand and their constituents on the other hand the forms of contracts between them and their rights and liabilities to each other in respect of dealings in The Articles dealing with bye laws the manner in which they are to be made as well as the subject to which they might relate is to be found in Articles 73 and 74
The relevant portion of Article 73 runs Under and in conformity with any Statutory provisions for the time being in force the Board may pass and bring into effect such bye laws as may be considered in the interest of or conducive to the objects of the and Article 74 runs Without prejudice to the generality of the powers to make bye laws conferred by the Memorandum of Association and by these Articles and under or in the absence or any statute or statutes in force in that behalf it is hereby expressly declared that the said powers to make alter add to or rescined Bye laws including power to do so in regard to all or any of the following matters  Sub para 7 repeats inter alia the contents of 748 Paragraph III e of the Memorandum of Association which we have extracted The entire argument of Mr Pathak on Article 64 was based on the footing that the power to make a bye law was vested solely in the Board because it is only the powers of the Board that are subject to the limitation imposed by Article 64
If however the power to make a bye law was not confined to the Board but bye laws might be framed by the Association itself the argument based on Article 64 would be seen to have no validity
That the later is the true position is clear from Article 73 which reads The Board s powers as aforesaid in relation to bye laws shall not derogate from the powers hereby conferred upon the Association who may also in the same way and for the same purpose from time to time pass and bring into effect new bye laws and rescind or alter or add to any existing bye law by resolution passed by a majority of two thirds at the least of the Members present and voting at the General Meeting previous to which at least fourteen day s notice has been given that a Member intends at such meeting to propose the making of such bye law or the decision alteration of or addition to a bye law or bye laws
If therefore a bye law could be made by the Association it is manifest that there is no limitation upon its powers such as is to be found in Article 64 which applies only to the Board
The validity of the bye law therefore cannot be challenge by reference merely to the powers of the Board because what is contemplated by section I I is the power of the recognised Association to frame the bye law
We have therefore no hesitation in rejecting the contention that the bye law as framed contravenes the rules of the Association
749 Mr Pathak next contended that the impugned bye law was invalid because it operated retrospectively
This argument he presented under two heads His first submission was that consistently with the rule that an enactment would not be construed as
retrospective unless the same were to have that effect by express language or by necessary intendment the impugned bye law should be held to affect and close out only those contracts which were entered into after the date on which the byelaw came into operation and that if he was right in this construction the impugned notification had gone beyond the powers conferred on the Commission by the new bye law
We are wholly unable to accept this submission as to the construction of the bye law
The first paragraph of the ye law by its list words points out the consequence of a notification by the Forward Markets Commision
It provides that if the Chairman were notiified that the continuation of trading in hedge contracts for any delivery etc
was detrimental to the interests of the general public or the larger interests of the economy of rndia then notwithstanding anything to the contrary contained the bye laws of the Association or in any hedge etc
contract the provisions contained in the second paragraph should have effect
 If one had regard only to paragraph and nothing more there might be  some room for a plausible argument that subsisting contracts were not to be affected though the expression notwithstanding anything to the contrary contained in any bedge etc
contract would undoubtedly militate against any such contention
But such ambiguity if any is cleared by the provision in paragraph 2 which has effect on the notification under paragraph 1 for by express terms it refers to every hedde contract and every on call contract in so far as cotton is uncalled thereunder or in so far as the pride has not been fixed thereunder
This therefore places it beyond doubt that executory contracts 750 which were subsisting on the date of the notification were within its scope and were intended to be affected by it
And this if anything more needed is made more certain by the I reference in parts 2 to the provisions of old
3 4 and 6 of bye law 52A
Bye law 62A deals with cases where the Board of the Association resolves repeat its terms that a state of emergency exists or is likely to occur which makes free trading in forward con
tracts difficult and on obtaining the concurrence of the Forward Markets Commission then notwithstanding anything to the contrary contained in these Bye laws subject to these Bye laws
The following provision hall have effect 1 The Board shall at a meeting specially convened in this behalf afixa date for the purposes herein
after contained bfix settlement prices for forward contracts c fix a special Settlement Day
 Clause 3 of bye law 52A runs  52A 3 All differences arising out of every such contract between members shall be paid through the Clearing House on the Settlement Day fixed under clause 1 c her Clause 4 52A 4 All differences arising out of every such contract between a member and a non member shall become immediately due and payable and Clause 6 52A 6 In hedge and on call contracts entered into between a member and a non
member and in contracts to which clause 5 751 applies any margin received shall be adjusted and the whole or the balance thereof as the case may be shall be immediately refundable
It is thus clear that the entire machinery for resolving emergencies such as is contemplated by byelaw 52A includes the suspension of forward businow together with the closing out of forward contracts of hedge and on call types whose volume or nature had led to the emergency
It proceeds on the basis that the crisis could not be met unless subsisting contracts were closed out and so to speak a new chapter begun
That is the ratio underlying the combined effect of bye laws 52AA and 52 A and in view of this circumstance the argument that on a reasonable construction of the amended bye law it would apply to contracts to be entered into in future and not to subsisting contracts must be rejected
If he was wrong in his argument that the byelaw on its proper construction did not affect subsisting contracts such as these of the Appellants Mr Pathak s further submission was that the impugned bye law was invalid and ultra vires of the Act because it purported to operate retrospectively affecting vested rights under contracts which were subsisting on the day on which the bye law came into force
Mr Pathak invited our attention to a passage in Craies  Statute Law 5th Ed
p 366 reading Sometimes a statute although not intended to he retrospective will in fact have a retrospective operation
For instance if two persons enter into a contract and afterwards a statute is passed which as Cockburn C J said in Duke of Devonshire vs Barrow etc
 Co  289 engrafts an enactment upon existing contracts  and 752 thus operates so as to produce a result which is something quite different from the original intention of the contracting parties such a statute has in effect a retrospective operation
 The bye law in so far as it affects executors contracts requiring such contracts to be closed out on a lay not originally contracted for and at a price fixed by law is in the above sense undoubtedly retrospective
The submission of learned Counsel was that though a legislature which bad plenary power in this regard could enact a havind a retrospective operation Subordinate legislation be it a rule a bye law or a notification could not be made so as to have retrospective operation and that to that extent the rule bye law or notification would be ultra vires and would have to be struck down relying for this position on the decision of the Mysore High Court reported in AIR 1960 Mys 326 We do not however consider it necessary to canvass the correctness of this decision or the broad propositions laid down in it
It is clear law that a Statute which could validly enact a law with retrospective effect could in express terms validly confer upon a rule making authority a power to make a rule or frame a bye law having retrospective operation and we would add that we did not understand Mr Pathak to dispute this position
If this were so the same result would follow where the power to enact a rule ora byelaw with retrospective effect so as to Affect PendinG transactions is conferred not by express words but where the necessary intendment of I the Act confers such A power
If in the present case the power to make a byelaw so as to operate on contracts subsisting on the day the same was framed would follow as a necessary implication from the term of section 1 1 it would not be necessary to discuss the larger question as to whether and the 753 circumstances in which Subordinate legislation with retrospective effect could be validly made
Before proceeding further it is necessary to notice a submission that under the Act far from there being a conferment of power to make a bye law so as to affect rights under subsisting contracts there was a contra indication of such a power being conferred
In this connection Mr Pathak invited our attention to the terms of sections 16 and 17 and 19 of the Act under which the Act has itself made special provision for affecting rights such as those if the appellants in the present case
Detailing the conseqences of a notification under section 15 s16 a enacts 16 a Every forward contract for the sale or purchase of any goods specified in the notification entered into before the date of the notification and remaining to be performed after the said date and which is not in conformity with the provision of section 15 shall be deemed to be closed out at such rate as the Central Government may fix in this behalf
S17 3 enacts 17
3 Where a notification has been issued under sub section 1 the provisions of section 16 shall in the absence of anything to the contrary in the notification apple to all forward contracts for the sale or purchase of any goods specified in the notification entered into before the date of the notification and remaining to be performed after the said date as they apply to all forward contracts for the sale or purchase of any goods specified in the notification under section 15 and f 19 2 runs 19 2
Any option in good which has been entered into  before the date on which 754 this section comes into force and which re mains to be performed whether wholly or in part after the said date shall to that extent becomes void
 Based on these provisions the submission was that Act had made special provisions for retrospective operation of certain notifications so as to affect rights under subsisting contracts and that in cases where there was no such specific provision it was not intended that a bye law or a notification could have that effect
We see no force in this argument
The fact that the Act itself makes provision for subsisting contracts being affected would in our opinion far from supporting the appellants indicate that in the context of a crisis in forward trading the closing out of contracts was a necessary method of exercising control and was the mechanism by which the enactment contemplated that normalcy could be restored and healthy trading resumed
If therefore we eliminate the provisions in as 16 17 and 19 as not containing any indication that a power to frame a bye law with retrospective effect was withheld from the Association the question whether such bye law making power was conferred has to be gathered from the terms of section II itself
Thus considered we are clearly of the opinion that a power to frame a bye law for emergencies such as those for which a bye law like 52 AA is intended includes a power to frame one so as to affect subsisting contracts for resolving crisis in Forward Markets
We have already referred to the terms of bye law 52A which shows that when an emergency of the type referred to a It 2 a arises it is not practicable to rescue a forward market from a crisis without 1 putting an end to forward trading and 2 closing out subsisting contracts so as to start with a clean slate for the 755 future
When therefore under section 11 2 power is conferred to frame a bye law to provide for  O the emergencies in trade which may rise and the exercise of power in such emergencies including the power to fix maximum and minimum prices  ad this is read in conunction with clause g reading regulating the entering into making per formance rescission and termination of contra eta  
If It is manifest that the section contemplates the making of a bye law regulating the performance of contracts the rescission and termination of contracts and this could obviously refer only to the bye law affeding rights under contracts which are subsisting on the day the action is taken
It is therefore manifest that section 11 authorises the framing of a byelaw which would operate retrospectively in the sense that it affects rights of parties under subsisting contracts
Finally it should be borne in mind is that ultimately what we are concerned in a 1 1 of the Act is the power of the Association to frame the bye law  for if the Association could validly frame such a bye law the Central Government could under section 12 have a similar power
We did not hear any argument to establish that the Association had no such power
There is one other aspect in which the same problem might be viewed and it is this  The contract entered into by the respondents purported to be one under the bye laws for the time being in force and any change in the bye laws therefore would in to be contemplated and provided for by the contract itself so that it might not be correct to speak of the new bye law as affecting any accrued 756 rights under a contract
For when those by laws were altered the changes would get incorporated into the contracts themselves so as to afford no scope for the argument that there has been an infringement of a vested right
In the view however which we have taken about the validity of the bye law on the ground that it was well within the terms of as  II and 12 we do not consider it necessary to pursue this aspect further or to rest our decision on it
What remains to consider is the challenge to the notification based on the ground that it was vitiated by having been issued malafide
The ground of malafides alleged was that the impugned notification was issued in order to prevent the Board of Directors of the Association
from applying their minds and exercising their judgment which they were directed to do by the terms of the Consent Memo filed on which the appeal from the judgment in CS 2 of 1956 was disposed of on January 24 195 
To the allegation made in this form in the petition the first respondent the Chairman of the Forward Markets Commission filed an affidavit in the course of which he pointed out that the continuance of trading in futures was in the circumstances then prevailing in the market detrimental to the interests of the trade and that a conclusion on this matter hadbeen reached by the Commission even before by law 52 AA was amended that the question of closing out existing contracts was engaging the attention of even the Board of the Association from as early as the beginning of January 1956 and it was for the purpose of enabling the Commission to take action to set right matters that bye law 52AA was amended and that immediately the amended bye law came into force the Commission took action and issued the notification now manugned
He also pointed out that the liberty given to the Association to consider the matter 757 under  the terms of the Compromise Memo was a factor which had also boon taken into account before the notification had been issued
The learned Judges of the High Court accepted this explanation of the circumstances in which the notification came to be issued and considered that on the allegation in the petition no mala fides could be inferred
We are in entire agreement with the learned Judges of the High Court on this point
No personal motive or mala fided in that sense has been attributed to the members of the Commission and in these circumstances we consider that there is no basis for impugning the notification on the ground that it was not issued bonafide
This completes all the points urged by the learned Counsel for the appellants
We consider that there is no merit in the appeal which fails and is dismissed with costs
SUBBA RAO J
I regret my inability to agree with the judgment prepared by my learned brother Rajagopala Ayyangar J
As the fact  have been fully stated in the judgment of my learned brother I need not repeat them except to the extent necessary to appreciate the two points on which I propose to express my opinion
The appellants carry on business in cotton under the name and style of Indramani Pyarelal Gupta  Co The said firm is a member of the East India Cotton Association Limited which is a recognized Association within the meaning of the Forward Contracts Regulation Act 1952 hereinafter called the Act
The Association has been formed for the purpose of inter alia promoting and regulating trade in cotton and providing a cotton Exchange and a Clearing House
Under the Act a formed by the Central Government and respondent is its man and respondents 2 and 3 are its Members
758 Prior to January 21 1956 on behalf of themselves and their constituents the appellants entered into hedge contracts in cotton for February 1956 and May 1956 Settlements with other members of the Association in accordance with its bye laws
When the said contracts were effected bye law 52 AA ran as follows  I Whether or not the prices at which cotton may be bought or sold are at any time controlled under the provisions of the  if the Textile Commissioner with the concurrence of the Forward Markets Commission and after consultation with the Chairman be of opinion that the continuation of hedge trading is likely to result in a situation detrimental to the larger interests of the economy of India and so informs the Board the Board shall forthwith cause a notice to be posted on the Notice Board to that effect and on the posting of such notice and notwithstanding anything to the contrary contained in these Bye laws or in any hedge or on call contract made subject to these Bye law the following provision shall take effect
2Every hedge contract and every on call contract in so far as the cotton is uncalled thereunder or in so far as the price has not been fixed thereunder entered into between a member and a member or between a member and a non member then outstanding shall be deemed closed out at such rate appropriate to such contract as shall be fixed by the Textile Commissioner and the provisions of clauses 3 4 and 6 of Bye law 52 A in so far as they apply to hedge and on call contracts shallapply as if the formed part of this Bye law
After the affixation of the said notice onthe Notice Board trading in hedge 759 and on call contracts shall be prohibited until the Textile Commissioner with the concurrence of the Forward Markets Commission and after consultation with the Chairman permits resumption
On January 21 1956 the Central Government in exercise of power conferred upon it by sub section
1 of section 12 of the Act notified a new bye law 52 AA to be substituted in place of the earlier bye law 52 AA
The new bye law reads as follows  1 Whether or not prices at which cotton may be bought or sold are at any time controlled under the provisions of the  if the Forward Markets Commission is of the opinion that continuation of trading in hedge contract for any delivery or deliveries is detrimental to the interest of the trading or the public interest or the larger interests of the economy of India and so notified the Chairman then notwithstanding anything to the contrary contained in these Bye laws or in any hedge or on call contract made subject to these Bye laws the following provisions shall take effect
2 Every hedge contract and every on call contract in so far as cotton is uncalled thereunder and relating to the delivery or deliveries notified under clause 1 entered into between a member and a member or between a member and non member then outstanding shall be deemed closed out at such rate appropriate to such contract and with effect from such date as shall be fixed by the Forward Markets Commission and the provisions of Clauses 3 4 and 6 of Bye law 52A in so far as they apply to hedge and on call contract shall apply as if they formed part of this Bye law 760 On January 24 1956 the Forward Markets Commission in exercise of the power conferred on it under the new bye law issued a notification closing out all contracts of February 1956 and May 1956 Settlements at the rates mentioned in the said notification
The petition for a writ of mandamus filed by the appellants in the High Court of Judi cature at Bombay for ordering the respondents to cancel or withdraw the said notification dated January 24 1956 was dismissed in the first instance by Coyajee J and the appeal preferred against the judgment of Coyajee J was also dismissed by a division Bench consisting of Chagla CJ and Tendolkar T Hence the appeal
I purpose as I have already indicated to consider the following two questions as in the view I will be taking on those questions the appeal will have to be allowed and no other question therefore will arise for consideration
The said questions are  1 Whether under section 12 i of the Act the Central Government
has power to make a bye law with retropective effect and 21 whether under section 4 f of the Act the Forward Markets Commission can exercise a power assigned to it under a bye law made by the Government under section 12 of the Act
Before considering the scope of the power of the Central Government under section 12 1 of the Act it is necessary to consider whether the new byelaw notified on January 21 1956 has retrospective There are material differences between the old bye law 52 AA and the new one substituted in its place Under the now bye law the important provision is that all hedge Contracts outstainding at the time it came into force shall be deemed to be closed out at such rates as shall be fixed by the Textile Commissioner
Whereas under the old by law the Textile Commissioner had to form his opinion with the concurrence of the Forward Markets Commission and after consultation with 761 the Chairman under the new bye law the said power of forming an opinion is conferred solely on the For ward Markets Commission where as under the old bye law the opinion and was in regard to the question whether hedge trading was likely to result in a situation detrimental to the larger interests of the economy of India under the new bye law the opinion is in respect of the question whether the continuation of trading in hedge contracts will be detrimental to the interests of trading or the public interest or the larger interests of the economy of India
While under the old byelaw the question to he considered was in regard to hedge trading as such under the new bye law it is in respect of the continuation of trading in hedge contracts for any delivery or deliveries
While under the old bye law the said opinion was Communicated to the Board for action under the new bye law it is notified to the Chairman
While under the old bye law trading in hedge and on call contracts could be resumed if the Textile Commissioner with the concurrence of the Forward Markets Commission and after consultation with the Chairman permitted the resumption under the now bye law the said provision for resumption is omitted
It is therefore manifest that the power of closing out a contract under the new bye law differs from that Under the old bye law in respect of the purpose of closing out the authority empowered to order the close out and the consequences of such closing out
It is idle to contend that the new bye law makes only inconsequential changes in the old bye law
The new bye law operates upon an important term of a contract entered into before it came into force namely the mode of performance it carries oil its face the vice of retroactivity
In Craies on Statutes 5th Edn 
p 366 the following passage appropriate to the question now raised is found
762 renders the performance of a contract impo ssible the rule of law is that the contract to frustrated by supervening impossibility consequently in this case also the statute operates retrospectively
 The learned author proceeds to state at p 367 The principle of this case has been applied in later cases to contracts the performance of which in manner contemplated by the parties has been rendered impossible by reason of some change in the law
 It is therefore clear that the said bye law in so far as it purports to effect the mode of performance of the preexisting contracts is certainly retrospective in operation
I am assuming for the purpose of the present question that the bye law cannot be construed in such a way as to confine its operation only to contracts that are entered into after it came into force
If so the question arises whether the Central Government had power to make a bye law under section 12 1 of the Act with retrospective effect Section 12 1 of the Act reads The Central Government may either on a request in writing received by it in this behalf from the governing body of a recognized association or if in its opinion it is expedient so to do make bye laws for all or any of the matters specified in section II or amend any bye laws made by such association under that section  Section 11 enumerates the matters in respect of which the recognized associations can make bye laws for the regulation and control of forward contracts
Neither section 12 nor a 11 expressly states that a bye law with retrospective operation can be made under either of those two sections
Full effect 763 can be given to both the sections by recognizing a power only to make bye laws prospective in operation that is bye laws that would not affect any vested rights
In the circumstances can it be held that the Central Government to which the power to make bye laws is delegated by the Legislature without expressly conferring on it a power to give them retrospective operation can exercise a power thereunder to make such bye laws
Learned counsel for the respondents contends that as the Legislature can make a law with retrospective operation so too a delegated authority can make a bye law with the same effect
This argument ignores the essential distinction between a Legislature functioning in exercise of the powers conferred on it under the Constitution and a body entrusted by the said Legislature with power to make subordinate Legislation
In the case of the Legislature article 246 of the Constitution confers a plenary power of Legislation subject to the limitations mentioned therein and in other provisions of the Constitution in respect of appropriate entries in the Seventh Schedule
This Court in Union of India vs Madan Gopal Kabra 1 held that the Legislature can always Legislate retrospectively unless there is any prohibition under the Constitution which has created it
But the same rule cannot obviously be applied to the Central Government exercising delegated Legislative power for the scope of their power is not co extensive with that of Parliament
This distinction is clearly brought out by the learned Judges of the Allahabad High Court in Modi Food Products Ltd vs Commission of sales Tax U P 2 wherein the learned Judges observed A Legislature can certainly give retrosp ective effect to pieces of Legislation passed by it but an executive Government exercising subordinate and delegated legislative 1  2 A T R 1956 All
764 powers cannot make legislation retrospective in effect unless that power is expressly conferred In Strawboard Manufacturing Co Ltd vs Gutta Mill Workers Union 1 a question arose whether the Governor of U P who referred an industrial dispute to a person nominated by him with a direction that he should submit the award not later than a particular date could extend the date for a making of the award so as to validate the award made after the prescribed date
Reliance was placed upon section 21 of the U P General Clauses Act 1904 in support of the contention that the power of amendment and modification conferred on the State Government under that section might be so exercised as to have retrospective operation
In rejecting that contention Das J as he then was observed  It is true that the order of April 26 1950 does not ex facie purport to modify the order of February 18 1950 but in view of the absence of any distinct provision in section 21 that the power of amendment and modification conferred on the State Government may be so exercised as to have retrospective operation the order of April 26 1950 viewed merely as an order of amendment or modification cannot by virtue of section 21 have that effect This decision is therefore an authority for the position that unless a statute confers on the Government an express power to make an order with retrospective effect it cannot exercise such a power
The Mysore High Court in a considered judgment in India Sugar  Refineries Ltd vs State of Mysore 2 dealt with the question that now arises for consideration
There the Government issued 1  447 448
2 A 1
R 1960 Mys
3 765 there notifications dated 9 4 1956 15 10 1957 and 13 2 1958 purporting to act under section 14 1 of the Madras Sugar Factories Control Act 1949 whereby cess was imposed on sugarcane brought and crushed in Petitioner s factory for the crushing season 1955
56 1956 57 and 1957 58 respectively
One of the question raised was whether under the said section the Government had power to issue the notifications imposing a cess on sugarcane brought and crushed in petitioner s factory for a period prior to the date of the said notifications
Das Gupta C J deliver ing the judgment of the division Bench held that it could not
The learned Advocate General who appeared for the State argued as it is now argued before us that in a case where power to make rules is conferred on the Government and if the provision conferring such a power does not expressly prohibit the making of rules with retrospective operation the Government in exercise of that power can make rules with retrospective operation
In rejecting that argument the learned Chief Justice delivering the judgement of the division Bench observed at p 332 In my opinion a different principle would apply to the case of an executive Government exercising subordinate and delegated legislative powers
In such oases unless the power to act retrospectively is expressly conferred by the Legislature on the Government the Government cannot act retrospectively
 With respect I entirely agree with the said observations
The same question was again raised and the same view was expressed by the Kerala High Court in C W Motor Service P Ltd vs State of Kerala 1
There the Regional Transport Authority Kozhikode granted a stage carriage permit to the third respondent therein in respect of a proposed 1 A 1
R 195 Ker
347 348
766 Ghat route
The grant of the permit was challenged on the ground that when that order was passed there was no constituted Regional Transport Authority for the district
It was contended on behalf of the contesting respondent that the said defect was cured by a subsequent notification issued by the Government whereby Government ordered the continuance of the Road Transport Authority from the date of the expiry of the term of the said Authority till its successor was appointed
The High Court held that the notification with retrospective operation was bad
In that context Varadaraja lyengar J observed  The rule is well settled that even in a case where the executive Government acts as a delegate of a legislative authority it has no plenary power to provide for retrospective operation unless and until that power is expressly conferred by the parent enactment The House of Lords in Howell vs Folmouth Boat Construction Co Ltd 1 expressed the same opinion and also pointed cut the danger of conceding such a power to a delegated authority
There a licence was issued to operate retrospectively and to cover works already done under the oral sanction of the authority
Their Lordships observed It would be a dangerous power to place in the hands of Ministers and their subordinate officials to allow them when
ever they had power to license to grant the licence ex post facto and a statutory power to license should not be construed as a power to authorise or ratify what has been done unless the special terms of the statutory provisions clearly warrant the construction
 It is true that this is a case of a licence issued by an 1 767 authority in exercise of a statutory power conferred on it but the same principle must apply to a byelaw made by an authority in exercise of a power conferred under a statute
Our Constitution promises to usher in a welfare State
It involves conferment of powers of subordinate legislation on government and governmental agencies affecting every aspect of human activity
The regulatory process is fast becoming an ubiquitouselement in our life
In a welfare State perhapsit is inevitable for the simple reason that Parliament or Legislature cannot be expected to provide for all possible contingencies
But there is no effective machinery to control the rule making powers or to prevent its diversion through authoritarian channels
If the conferment of power to make delegated Legislation proportion vigor carried with it to make a rule or bye law with retrospective operation it may become an instrument of oppression
In these circumstances it has been rightly held that the provision conferring such a power must be strictly construed and unless a statute expressly confers a powers to make a rule or bye law retrospectively it must be held that it has not conferred any such power
It is said that such a strict construction may prevent a rule making authority from making a rule in an emergency though the occasion demands or justifies a rule with retrospective effect
The simple answer to this alleged difficulty is that if the Legislature contemplates or visualizes such emergencies calling for the making of such rules or bylaws with retrospective effect it should expressly confer such power
It is also said that the Government can be relied upon to make such rules only on appropriate occasions
This Court cannot recognize implied powers pregnant with potentialities for mischief on such assumptions
That apart the scope or ambit of a rule cannot be made to depend upon the status of a functionary entrusted with a 768 rule making power
In public interest the least the court can do is to construe provisions conferring such a power strictly and to confine its scope to that clearly expressed therein
Applying that rule of strict construction I would hold that section 12 1 does not confer a power on the Central Government to make a bye law with retrospective effect and therefore the new bye law made on January 21 1956 in so far as it purports to operate retrospectively is invalid
Assuming that it is permissible to infer such a power by necessary implication can it be said that it is possible to so imply under section 12 of the Act  The phrase necessary implication as applied in the law of statutory construction means an implication that is absolutely necessary and unavoidable that is to say a court must come to the conclusion that unless such an implication is made the provisions of the section could not be given full effect on the wording as expressed therein
Under section 12 of the Act the Central Government may either on a request in writing received by it from the governing body of a recognized association or if in its opinion it is expedient so to do make byelaws for all or any of the matters specified in section 11 or amend any bye law made by such association under that section
Now section 11 says that any recognized association may subject to the previous approval of the Central Government make bye laws for the regulation and control of forward contracts under sub a 2 thereof the association is authorized to make laws providing for any of the matters mentioned therein
A glance at those matters shows that all the bye laws providing for those matters could be framed without giving section 12 any retrospective effect
It is said that section II o gives an indication that a bye law contemplated by that sub clause must necessarily provide for its retrospective operation
It reads 769 the emergencies in trade which may arise and the exercise of powers in such emergencies including the power to fix maximum and minimum prices The learned Solicitor General contends that an occasion may arise when by a determined action of a bear or a bull the rates may about up beyond a reasonable level or fall down steeply below a particular point creating an emergency in the market and in that emergency it would be necessary for the authorities concerned to step in and close out the contracts and unless the bye law is made retrospective such an emergency cannot be met and therefore the power to make a by law to meet an emergency contemplated in section 11o of the Act must necessarily imply a power to make a bye law retrospectively
There is an underlying fallacy in this argument
The conferment of a power on the Government to make a bye law with retrospective operation must be abso lutely necessary and unavoidable to provide for the matter mentioned in sub cl
o of section 11 or any other clause of sub section
2 of section 11
A bye law could certainly be made to provide for an emergency visualized by the learned Solicitor General or for any other emergency contemplated by that clause with only prospective operation
It cannot there fore be said that unless retrospective operation was given to the provisions of section 12 the objects of the legislation would be defeated or the purposes for which the power was conferred could not be fulfilled
therefore hold that section 121 of the Act does not confer any such power on the Central Government by necessary implication
The second question turns upon the interpretation of a 4 of the Act
It reads The function of the Commission shall be a to advise the Central Government in
770 respect of the recognition of or the with drawal of recognition from any association or in respect of any other matter arising out of the administration of this Act b to keep forward markets under observa tion and to take such action in relation to them as it may consider necessary in exercise of the powers assigned to it by or under this Act c to collect and whenever the Commission thinks it necessary publish information regarding the trading conditions in respect of goods to which any of the provisions of this Act is made applicable including information regarding supply demand and prices and to submit to the Central Government periodical reports on the operation of this Act and on the working of forward markets relating to such goods d to make recommendation generally with a view to improving the Organisation and working of forward markets e to undertake the inspection of the acco unts and other documents of any recognized association or registered association or any member of such association when
ever it considers it necessary and f to perform such other duties and exercise such other powers as may be assigned to the Commission by or under this Act or as may be prescribed
 Two questions arise under this section namely i whether the duties imposed and the powers conferred on the Commission under cl
f of section 4 shall 771 be read ejusdem generis with those imposed or conferred under cls
a to e and ii whether the powers assigned to the Commission by or under a bye law can be performed by the Commission under cl
To appreciate the first question it would be necessary to know the constitution of the Commission and its rule in the scheme of control pro vided by the Act
Under a 2b Commission  means the Forward Markets Commission established under section 3
Section 3 empowers the Central Government to establish a Commission to be called the Forward Markets Commission for the purpose of exercising such functions and discharging such duties as may be assigned to the Commission by or under this Act
Clauses a to e of section 4 show that the function of the Commission are wholly supervisory and advisory in nature
It keeps the forward markets under observation collects and publishes information undertakes the inspection of the accounts and other documents and makes recommendations to the Central Government in respect of matters mentioned in that section
Under section 82c the Central Government may also direct the Commission to inspect the accounts and other documents of any recognized association or any of its member and submit its report thereon to the Central Government
It is therefore manifest that the Commission has no administrative functions or powers of management or powers of interference in the internal management of the registered associations on the other hand section 11 and the bye laws framed thereunder it is not necessary to go into them in detail show that the regulation and control of the business of forward contracts and other businesses is entirely in the hands of the Association
The doctrine of ejusdem generis is very well settled
The expression of ejusdem generis means of the same kind  and it is only an illustration of specific application of the broader maxim noscuntur a sociia i e general and specific 772 words which are capable of an analogous meaning being associated together take colour from each other so that the general words are restricted to a sense analogous to the less general
While to invoke the application of the doctrine of ejusdem generis there must be a distinct genus or category
 that is to say the specific words preceding the general word must belong to the same class the maxim noscuntur a sociis is of wider application
This Court in The Western India The acres Ltd vs Municipal Corporation of the City of Poona though did not expressly say so in my view was dealing with the said two doctrines and it observed therein    although the rule of construction based on the principle of ejusdem generis cannot be invoked in this case for items i to x do not strictly speaking belong to the same genus but they do indicate to our mind the kind and nature of tax which the municipalties are authorized to impose So in the present case it way be said that cls
a to f may not belong to the same class but they indicate that the functions described in the said clauses being supervisory and advisory in character are so analogous to each other that they take colour from each other and therefore the general words following must be restricted to a sense ana logous to the said functions
It is said that clf provides for duties and powers whereas cls
a to e only deal with functions and therefore cl
f must be deemed to provide for altogether a different subject matter
I cannot agree with this contention for the heading of s4 is Function of the Commission and the action opens out with the words The functions of the Commission shall be and the functions are mentioned in cls
 to 773 f
It is therefore manifest that the duties and powers mentioned in clf are also functions
To put it differently all the clauses deal with functions of the Commission
That apart a power and a duty are the two facts of the same concept
Clauses a to e also though ex facto they read as if they impose only duties on a closer scrutiny indicate that the duties cannot be exercised without the corresponding powers for the discharge of those duties
I would therefore hold that the duties and powers that may be assigned to the Commission under cl
f can be only supervisory or advisory functions other than those mentioned in clsa to e
The power conferred on the Commission under the bye law made by the Government to close out contracts and thus terminate the contracts is neither an advisory nor a supervisory power and therefore the Commission cannot legally exercise the same
The second question turns upon the interpretation of the provisions of cl
f of s4
The said clause reads to perform such duties and exercise such other powers as may be assigned to the Commission by or under this Act or as may be prescribed
 The crucial words are by or under this Act or as may be prescribed
Under section 2h of the Act Prescribed means prescribed by rules made under this Act  an a 2 k defines rules thus  rules with reference to the rules relating in general to the constitution and managemen t of an association includes in the case of an incorporated association its memorandum and articles of association
 If read with the definition of the word Prescribed 774 cl
f indicates that the commission can perform the functions assigned to it by or under the Act or as may be prescribed by the rules made under the Act
The specific mention of the rules made under the Act in the clause makes it abundantly clear that the phrase  under the Act excludes a rule made in exercise of the power conferred under the Act for if the said phrase takes in a rule the word Prescribed becomes redundant
Such ineptitude and went of precision in drafting shall not be attributed to the Legislature except for compelling reasons
If a rule was not comprehended by the phrase Under the Act it would be illogical to hold that it would take in a bye law
It would mean that the Legislature specially provided for a rule which has certainly a higher status than a bye law in legislative practice while it treated a bye law as a provision of Act that cannot be
The other reason that may be suggested is that the word Prescribed was used in superabundant caution or by mistake
If superabundant caution was required to mention separately the rules greater caution would have been necessary to provide separately for a bye law
A court ordinarily shall attempt to give meaning to every word used by the Legislature unless it is impossible to do so
Here there is not only no such impossibility but there is also a good reason for the Legislature in excluding the bye laws from the operation of clf of section 4 of the Act
Subordinate or delegated legislation takes different forms
Subordinate legislation is divided into two main classes namely i statutory rules and ii bye laws or regulations made a by authorities concerned with local government and b by persons societies or corporations
The Act itself recognizes this distinction and provides both for making of the rules as well as bye laws
A comparative study of sections 11 and 12 whereunder 775 power is conferred on the Central Government and the recognized associations to make bye laws on the one hand and section 28 whereunder the Central Government is empowered to make rules on the other indicate that the former are intended for conducting the business of the association and the letter for the purpose of carrying into effect the objects of the Act
In considering the question raised in this case in this distinction will have to be borne in mind
It would be unreasonable to assume that a private association though registered under the Act could confer powers on a statutory authority under the Act
That is why under section 4f the Legislature did not think fit to provide for the assignment of a function to the commission in exercise of a power under a bye law
The nonmention of bye law in cl
f is not because of any accidental omission but a deliberate one because of the incongruity of an assignment of a function to the Commission under a bye law
I would therefore construe the words by or under this Act or as may be prescribed as follows  by this Act applies to powers assigned proportion vigor by the provisions of the Act  under this Act applies to an assignment made in exercise of an express power conferred under the provisions of the Act and may be prescribed takes in an assignment made in exercise of a power conferred under a rule
This construction gives a natural meaning to the plain words used in the section and avoids stretching the language of a statutory provision to save an illegal bye law
In this context two decisions are cited at the Bar
The first is that of the Judicial Committee in Hubli Electricity Company Ltd vs Province of Bombay 1
There under section 32f of the Indian Electricity Act No TX of 1910 the provisions contained in 11948 26 IA 57 776 the Schedule shall be deemed to be incorporated with and to form part of every licence granted under this Part
Under section 41a of the said Act The Provincial Government may if in its opinion the public interest so requires revoke a licence inter alia if the licensee in the opinion of the Provincial Government makes wailful and unreasonably prolonged default in doing anything required of him by or under this Act
Under sub cl
6 of the Schedule a licensee had to comply with certain conditions
The Government revoked the licence on the ground that the licensee did not comply with the conditions laid down in Schedule VI which were deemed to be incorporated in the licence by virtue of section 32 and therefore he did not do the thing required of him within the meaning of section 4 of that Act
The Privy Council held that the performance by the licensee of the conditions of the Schedule to the Act was clearly required to be made under the Act
This decision does not help us very much in the present case as the question of bye law did not arise therein 
Nor the decision of the Madras High Court in Narayanaswamy vs Krishnamurthi 1 is of any assistance
There the question was whether the regulations framed by the Life Insurance Corporation by virtue of the powers vested in it by Act 31 of 1956 prohibiting the employees from standing for election fell within the meaning of the words under any law in article 191 1 e of the Constitution
The High Court held that the regulations were law made under the Act of Parliament
The conclusion was based on the principle that the rule made in pursuance of the delegated power has the same validity and has the same characteristic as a law made directly by the Parliament
Apart from the fact that the words to be construed there were different and in a sense wider than the words to be construed in the present case the principle accepted in the decision is only 1 ILR 777 of a general application and does not help to construe the specific words of cl
f of section 4  their meaning can be gathered only by interpreting the said words having regard to the setting and the context in which they are used
For the foregoing reasons I would hold that the Government had no power under section 12 of the Act to make a bye law assigning any function to the Commission
It follows that notification dated January 24 1956 by the Forward Markets Commission was illegal and the appellants would be entitled to the issue of a writ of mandamus in the terms prayed for
In the result the appeal is allowed with costs
ORDER In view of the Judgment of the majority the appeal stands dismissed with costs


Summary:
The appellants were members of the East India Cotton Association which was an association recognised by the Cen tral Government under the Forward Markets Regulation Act 1952
Prioi to December 1955 they had entered into hedge contracts in respect of cotton for settlements in February and May 1956 in accordance with the bye laws of the Associa tion
Towards the end of 1955 it was apprehended that the forward market in cotton was heading for a crisis and the Central Government issued notifications directing the Asso ciation to suspend business in hedge contracts for February and May 1955 deliveries for short periods this did not improve the situation
On January 21 1956 the Central Government acting under section 12 of the Act made a new bye law in substitution of bye law 52AA of the Association which empowered the Forward Markets Commission constituted under the Act to issue a notification closing out all hedge contracts at rates fixed by the Commission
On January 24 1956 the Commission issued a notification closing out all hedge contracts including those subsisting on that date and fixed the rates for the settlement of such contracts
The appellants contended that the amended byelaw 52AA was invalid as the power to close out hedge contracts could not be conferred upon the Commission and as the Association was in law incapable of conferring such a power on the Commission or on any other body and that in any cases the bye law could not operate retrospectively so as to affect existing contracts
Held per Sinha C J Ayyangar Mudholkar and Aiyar JJ
Subba Rao J contra that the amended bye law 52AA was not ultra vires the Central Government and validly empowered the Commission to close all hedge contracts in cotton including existing contracts
Clause f of section 4 of the Act provided that one of the functions of the Commission 722 shall be to perform such other duties and exercise such other powers as may be assigned to the Commission by or under the Act as may be prescribed
There was no limitation upon the nature of the power that may be conferred under cl
f except that it must be in relation to the regulation of forward trading in goods
It was not possible to place any limitation on this power by invoking the rule of ejusdem genesis as there was no common positive thread running through cls
a to e of section 4
To judge whether legally a power could be rested in a statutory body the proper rule of interpretation was that unless the nature of the power was such as to be inconsistent with the purpose for which the body was created or unless the particular power was contra indicated by any specific provisions of the Act any power which furthered the provisions of the Act could be legally conferred
judge by this test the power conferred by the bye law could be validly vested in the Commission
The power was one conferred under the Act
The words under the Act signified a power conferred by laws made by a subordinate law making authority which was empowered to do so by the Act
The impugned bye law was clearly well within the bye law making power under sections II and 12
The bye law did not contravene articles 64 of the Articles of Association of the Association as articles 64 applied only to the Board and placed no restrictions on the power of the Association Western India Theaters Ltd vs Municipal Corporation of Poona 1959 Supp 2 SCR 71 Hubli Electricity Co Ltd vs Province of Bombay 76 IA 57 and Narayanaswamy Naidu vs Krishnamurthi ILR  referred to Further upon a proper construction of the amended bye law it applied not only to contracts to be entered into in future but also to subsisting contracts
A statute which could validly enact a law with retrospective effect could in express terms validly confer upon a rule making authority a power to make a rule or frame a bye law having retrospective operation
In the present case the power to make bye laws so as to operate on subsisting contracts followed as a necessary implication from the terms of section 11
There was no contra indication in the other provisions of the Act
Per Subba Rao J Under section 12 1 of the Act the Central Government had no power to make a bye law with retrospective effect
The provision conferring rule making power must be strictly construed and unless it expressly conferred a power to make a bye law with retrospective effect it must be held that it was not conferred any such power
Evey if it was permissible to inter such a power by necessary 723 implication it could not be inferred in the present case
It could not be said that unless retrospective operation was given to the provisions of section 12 the object of the legis lature would be defeated or the purposes for which the power was conferred could not be fulfilled
Further the powers conferred on the Commission under the impugned bye law could not be performed by the Commission under c1
f of section 4
Clauses a to e of section 4 showed that the functions of the Commission were wholly supervisory and advisory in nature the functions described in cl
f were analogous to these and could only be supervisory or advisory
The Commission had no administrative functions or powers of management or powers of interference in the internal management of registered association which were vested in the Association
The power conferred upon the Commission was not conferred under the Act
The words did not include a rule or a bye law and applied only to an assignment made in the exercise of an express power conferred under the Act
The Central Government had no power tinder section 12 to make a byelaw assigning any function to the Commission
Union of India vs Madan Gopal Kabra   Modi Food Products Ltd vs Commissioner of Sale s Tax UP A IR 1956 All 35 Strawboard Manufacturing Co Ltd vs Gupta Hill Workers  Union   India Sugar  Belineries Ltd vs State of Mysore AIR 1960 Mys
326 CW Motor Service P Ltd vs State of Kerala AIR 1959 Kerala 347 Howell vs Falmouth Boat Construction Co Ltd  The Western India Theatres Ltd vs Municipal Crporation of the City of Poona 1959 Supp
2 SCR 71 and Hubli Electricity Co Ltd vs Province of Bombay  1948 76 IA 57 referred to