Case: M/S. R. M. D. C. (Mysore) Private Ltd Vs. The State Of Mysore

1. This is an appeal against the judgment and order of the High Court of Mysore dismissing the petition of the appellants made under Art. 226 of the Constitution. The appellants were conducting, since the month of August 1948, what were called "prize competitions" in the State of Mysore with the permission of the Government of the erstwhile State of Mysore. An Act called the Mysore Lotteries and Prize Competitions Control and Tax Act 1951 (Act 27 of 1951) hereinafter called the "Mysore Act" was passed by the Mysore Legislature and came into force as from June 21, 1951. The Rules made thereunder came into force on February, 1, 1952. Previous to that the Bombay Legislature had passed a similar Act called the Bombay Lotteries and Prize Competitions Control and Tax Act 1948 which was amended in November 1952 by the Bombay Act 30 of 1952. In December 1952 and January 1953 petitions under Art. 226 were filed in the High Court of Bombay challenging the Bombay Act. On January 12, 1955 the Bombay High Court held that the provisions of the Bombay Amendment Act above referred to were unconstitutional and that the taxes imposed under the provisions of that Act were hit by Art. 301 of the Constitution. The result of that judgment was that though prize competitions could be controlled by the States within their respective borders, their ramifications beyond those borders could only be dealt with by action under Art. 252(1) of the Constitution. It was for that reason that the States of Andhra, Bombay, Madras, U. P., Hyderabad, Madhya Bharat, Pepsu and Saurashtra passed resolutions under Art. 252(1) of the Constitution authorising Parliament to legislate for the control and regulation of prize competitions and in pursuance thereof Parliament passed the Prize Competitions Act (Act 42 of 1955) hereinafter called the "Central Act" which received the assent of the President on October 22, 1955 and came into force on April 1, 1956. On February 24, 1956 the Mysore Legislature passed a resolution adopting the said Act. The resolutions passed by the various States and the resolution passed by the Mysore Legislature will be quoted in a later part of this judgment.2. On April 7, 1956 the appellants filed a petition under Art. 32 of the Constitution in the Supreme Court challenging the validity of the Central Act but that petition was dismissed and is reported as R. M. D. Chamarbaugwala v. Union of India, 1957 SCR 930     at p. 939 : ((S) AIR 1957 SC 628   at P. 632). The appeal against the Bombay judgment declaring the Bombay Act to be unconstitutional was brought in this court and was allowed and that case is reported as State of Bombay v. R. M. D. Chamarbaugwala, 1957 SCR 874     at p. 929 :((S) AIR 1957 SC 699   at p. 722). During the pendency of their petition under Art. 32, the appellants applied for and were granted a stay of the operation of the Central Act pending the disposal of the said writ petition. This was on April 16, 1956. The judgment of the Supreme Court in that petition was given on April 9, 1957. On August 31, 1957 the Mysore Lotteries and Prize Competitions Control and Tax (Amendment) Ordinance 1957 (Ord. 6 of 1957) was issued by the Governor of Mysore and thus for the period of about 16 months the appellants carried on prize competitions as before.3. The Ordinance was enacted into an Act on September 28, 1957 which is Mysore Act 26 of 1957. Certain amendments were made by this in the Mysore Act as originally passed, in 1951. As a result of this amendment the definition of prize competition was amended; the definition as given in the Central Act was adopted and Ss. 8 and 9 of the Mysore Act were omitted with retrospective effect from April 1, 1956; cl. (b) of sub-sec. (1) of S. 12 was amended and certain words referring to licences under S. 8 were retrospectively, omitted and retrospective effect was given to the Mysore Act as amended. By adding a proviso to S. 15 of the Mysore Act all prize competitions conducted between March 31, 1956 and August 31, 1957 were brought within the purview of the amended Act. Thus the prize competitions which as a result of the stay of the operation of the Central Act were conducted by the appellants became subject to the operation of the Mysore Act as amended. The appellants on September 10, 1957, were called upon to file their returns, but, at their request for extension of time, they were given another 15 days in which to file their return. They filed their return but under protest. The gross collections were of a sum of Rs. 26,47,147-5-9 and on that the appellants were "called upon to pay up provisionally" a sum of Rs. 3,30,893-7-0. As the money was not paid within the time specified proceedings were taken under S. 6 (1) ofthe Revenue Recovery Act, 1890 (Central Act 1 of 1890) and certain properties movable and immovable were attached and one of the properties was sold and the price so realised was deposited in the Government treasury.4. The Mysore amending Act was challenge in the High Court of Mysore by a petition under Art. 226 which was dismissed on November 20, 1958 and against that judgment and order this appeal has been brought pursuant to a certificate of the High Court under Art. 132 (1) of the Constitution. The certificate was confined to the interpretation of Art. 252 of the Constitution. The respondent in the present appeal is the State of Mysore.

Court's reasoning:
In the Indian Constitution as it was in the Government of India Act the power of legislation is distributed between the Union and the States and the subjects on which the respective Legislatures can legislate are enumerated in the three Lists and in the Articles of the Constitution, provision is made as to what is to happen if there is a conflict between the Statutes passed by Parliament and the Legislatures of the States.The scheme if the Indian Constitution and distribution of powers under it are entirely different from what it is in America and therefore the construction of the entries in the manner contended for by the appellants would bemay be remarked that the Court in construing and interpreting the Constitution or provisions of an enactment has to ascertain the meaning and intention of Parliament from the language-used in the statute itself and it is not concerned with the motives ofif the Mysore Legislature had the power which in our opinion, it had and it had not surrendered its power to Parliament which, in our opinion, it had not then it cannot be said that the imposition of the tax is a piece of colourable legislation and is on that grounduse the language of Gwyer C. J., in 1939 FCR 18 ; (AIR 1939 FC 1)is not for the Court to express, or indeed to entertain, any opinion on the expediency of a particular piece of legislation, if it is satisfied that it was within the competence of the Legislature which enacted it; nor will it allow itself to be influenced by any considerations of policy, for these lie wholly outside itsthe Central Act is with respect to betting and gambling under Entry 34 of List II and the taxing sections of the Mysore Act are with respect to tax on betting and gambling under Entry 62. It is also instructive to note that Venkatarama Ayyar J., in 1957 SCR 930   : (S) AIR 1957 SC 628  ), in construing the language of the resolution was of the opinion that the use of the word "control and regulation" was requisite in the case of gambling and as regards regulation of competitions involving skill mere regulation would have been sufficient.15. In view of our finding that by passing the resolution the States did not surrender their power of taxation it cannot be said that Cl. (2) of Art. 252 of the Constitution was violated by the amendment of the Mysore Act; nor can it be said that in reality it was a piece of colourable legislation by an indirect attempt to amend the Central Act and a new method of control was devised by imposing a penalty under the name of tax. We have already held that the tax imposed under the Mysore Act was not by way of penalty but was the exercise of the power which the legislature possessed of imposing tax under Entryby the omission of words "for which a licence had been obtained," under S. 8, the rest of the clause would be valid. The effect of the amending Act is that the abovementioned words were deemed to have been omitted as from April 1, 1956 and the rest of cl,. (b) is not repugnant to any of the provisions of the Central Act. Article 254 (1) therefore did not make S. 12 (1) (b) wholly void. All that it did was that portion which refers to licensing became repugnant but it did not affect the rest of the section At the time when the Mysore Act was passed it was within the legislative power of the Mysore Legislature and it may be that it was rendered unconstitutional by reason of Ss. 4 and 5 in the Central Act but that portion which deals with taxation cannot be held to be void because as a result of the Amending Act the words which were repugnant to the provisions of the Central Act were subsequently declared by the Mysore Legislature to be deemed to have been omitted as from April 1, 1956, the day when the Central Act came into force. This is in accord with the view taken in 1959 Supp (2) SCR 8; (AIR 1959 SC 648  ) i.e. the doctrine of eclipse could be invoked in the case of a Law which was valid when made but was rendered invalid by a supervening constitutional inconsistency. This disposes of the challenge to the constitutionality of the Mysore Act on the five points set outthe law may be summed up as follows :(1) By passing the resolutions as to control and regulation the power to tax had not been surrendered to Parliament.(2) The amending Act was not a new method of controlling prize competitions nor was it a piece of colourable legislation.(3) There was no amendment of an Act which stood repealed nor was the retroactive operation of the Amending Act affected by Art. 254 (1) of thelegality depends upon the constitutionality of amended S. 12 (1)(b) and if that is valid, as we have held it to be, the notification is equally valid. The notification was only in regard to the rate of taxation and had no reference to the obtaining or not obtaining of thewe have pointed out the notice of demand called upon the appellants to pay the sum therein specified and to produce the challan in token of payment within a week. It is not the case of the appellants that they had paid or were in a position to produce the challan within a week. It was not an order making the tax payable within a week. These objections, in our opinion, are without substance and are therefore overruled.