DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY

VISAKHAPATNAM, A.P., INDIA

PROJECT TITLE

PRINCIPLES OF INTERPRETATION OF CONSTITUTION

SUBJECT

CONSTITUTIONAL LAW-II

NAME OF THE FACULTY

MR.NAGESWARA RAO SIR

NAME OF THE STUDENT

Neeleash Ganta
2017119

R0ll N0: - 2017119

SEM: 4thsem

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 ACKNOWLEDGEMENT

I am highly indebted t0 my H0n’ble CONSTITUTIONAL LAW pr0fess0r, MR.

NAGESWARA RAO, f0r giving -me a w0nderful 0pp0rtunity t0 w0rk 0n the t0pic:
PRINCIPLES OF INTERPRETATION OF CONSTITUTION and it is because
0f his excellent kn0wledge, experience and guidance, this pr0ject is made with great
interest and eff0rt . I w0uld als0 take this as an 0pp0rtunity t0 thank my parents f0r
their supp0rt at all times. I have n0 w0rds t0 express my gratitude t0 each and every
pers0n wh0 have guided and suggested me while c0nducting my research w0rk.

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Chapterization

Abstract……………………………………………………………….5

Introduction……………………………………………………………8

General rules of interpretation of the Constitution……………………10

Principles of Constitutional Interpretation…………………………….10

Principle of Colourable Legislation…………………………………...10

Principle of pith and substance…………………………………………12

Principle of eclipse……………………………………………………..15

Principle of Severeability………………………………………………16

Principle of territorial nexus ………………………………………….19

Principle of Implied powers…………………………………………….21

Principle of incidental or ancillary powers………………………………22

Conclusion………………………………………………………………23

Bibliography…………………………………………………………….25

List of cases……………………………………………………………..25

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Abstract:

Doctrine of colourable legislation:

The doctrine of colourability is the idea that when the legislature wants to do
something that it cannot do within the constraints of the constitution, it colours the
law with a substitute purpose which will still allow it to accomplish its original
goal.“Quando aliquid prohibetur ex directo, prohibetur et per obliqum” which means
what cannot be done directly cannot also be done indirectly.

Doctrine of pith and substance:

Pith means ‘true nature’ or essence of something’ and substance means ‘the most
important or essential part of something’. The basic purpose of this doctrine is to
determine under which head of power or field i.e. under which list (given in the
seventh schedule) a given piece of legislation falls.

Union & State Legislatures are supreme within their respective fields. They should
not encroach/ trespass into the field reserved to the other. If a law passed by one
trespass upon the field assigned to the other—the Court by applying Pith & Substance
doctrine, resolve the difficulty &declare whether the legislature concerned was
competent to make the law.

Doctrine of eclipse:

All laws in force in India before the commencement of the Constitution shall be void
in so far they are inconsistent with the provisions of the Constitution. Any law
existing before the commencement of the Constitution and inconsistent with the
provision of Constitution becomes inoperative on commencement of Constitution. But
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the law does not become dead. The law remains a valid law in order to determine any
question of law incurred before the commencement of the Constitution. An existing
law only becomes eclipsed to the extent it comes under the shadow of the
Fundamental Rights

Doctrine of Severability

Doctrine of severability provides that if an enactment cannot be saved by construing it

consistent with its constitutionality, it may be seen whether it can be partly saved. The
State shall not make any law which takes away/ shortens the rights conferred in Part
III of the Constitution ie. Fundamental Rights. Any law made in contravention of the
provisions of the Constitution shall be void and invalid. The invalid part shall be
severed and declared invalid if it is really severable. (That is, if the part which is not
severed can meaningfully exist without the severed part.) Sometimes the valid and
invalid parts of the Act are so mixed up that they cannot be separated from each other.
In such cases, the entire Act will be invalid.

Doctrine of territorial nexus

Article 245 (2) of the Constitution of India makes it amply clear that ‘No law made by
Parliament shall be deemed to be invalid on the ground that it would have extra-
territorial operation’. Thus a legislation cannot be questioned on the ground that it has
extra-territorial operation. It is well-established that the Courts of our country must
enforce the law with the machinery available to them; and they are not entitled to
question the authority of the Legislature in making a law which is extra-territorial.
Extra-territorial operation does not invalidate a law.

Principle of implied powers

Laws which are necessary and proper for the execution of the power or incidental to
such power are called implied powers and these laws are presumed to be
constitutional. In other words, constitutional powers are granted in general terms out
of which implied powers must necessarily arise. Likewise constitutional restraints are
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put in general terms out of which implied restraints must also necessarily establish.
This is a Legal principle which states that, in general, the rights and duties of a
legislative body or organization are determined from its functions and purposes as
specified in its constitution or charter and developed in practice.

Principle of incidental or ancillary powers

This principle is an addition to the doctrine of Pith and Substance. What it means is
that the power to legislate on a subject also includes power to legislate on ancillary
matters that are reasonably connected to that subject. It is not always sufficient to
determine the constitutionality of an act by just looking at the pith and substance of
the act. In such cases, it has to be seen whether the matter referred in the act is
essential to give affect to the main subject of the act.

Important cases:

. KC Gajapati v. State of Orissa

. State of Bombay vs. FN Balsara

. Keshavan Madhava Menon v. The State of Bombay

. AK Gopalan v. State of Madras

. State of Bombay v. RMDC

. Navinchandra Mafatlal v. The Commissioner of Income Tax, Bombay

City

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Introduction

The constitution is an organic instrument. It is the fundamental law. The general rule
adopted for construing a written constitution is the same as for construing any other
statute. The constitution should be interpreted so as to give effect to all its parts.

In democratic countries the judiciary is given a place of great significance. The courts
perform the key role of expounding the provisions of the Constitution. The courts act
as the supreme interpreter, protector and guardian of the supremacy of the
Constitution. The judiciary has to perform an important role in the interpretation and
enforcement of human rights inscribed in the fundamental law of the country.
Therefore, it is necessary to consider what should be the approach of the judiciary in
the matter of Constitutional Interpretation. The judiciary has to devise a pragmatic
wisdom to adopt a creative and purposive approach in the interpretation of various
rights embodied in the Constitution. The task of interpreting the constitution is a
highly creative judicial function which must be in tune with the constitutional
philosophy. A democratic society lives and swears by certain values such as
individual liberty, human dignity; rule of law, constitutionalism etc. and it is the duty
of the judiciary to so interpret the constitution and the law as to constantly inculcate
these values on which democracy thrives. The predominant positivist approach of
interpretation followed by the Indian Judiciary emanates from the basic traditional
theory that a judge does not create law but merely declares the law.

There are basically three types of interpretation of the constitution.

Historical interpretation

Ambiguities and uncertainties while interpreting the constitutional provisions can be

clarified by referring to earlier interpretative decisions.

Contemporary interpretation

The Constitution must be interpreted in the light of the present scenario. The situation
and circumstances prevalent today must be considered.

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Harmonious Construction

It is a cardinal rule of construction that when there are in a statute two provisions
which are in such conflict with each other, that both of them cannot stand together,
they should possibly be so interpreted that effect can be given to both. And that a
construction which renders either of them in operative and useless should not be
adopted except in the last resort.

Re Kerala Education Bill1

This reference was made by the President under Art. 143(1) of the Constitution of
India for the opinion of this Court on certain questions of law of considerable public
importance that have arisen out of or touching certain provisions of the Kerala
Education Bill, 1957, hereinafter referred to as "the said Bill", which was passed by
the Legislative Assembly of the State of Kerala on September 2, 1957, and was, under
Art. 200, reserved by the Governor of Kerala for the consideration of the President.
After reciting the fact of the passing of the said Bill by the Legislative Assembly of
Kerala and of the reservation thereof by its Governor for the consideration of the
President and after setting out some of the clauses of the said Bill and specifying the
doubts that may be said to have arisen out of or touching the said clauses, the
President has referred to this Court certain questions hereinafter mentioned for
consideration and report.question of the validity of Clause (20) or Cls. (14) and (15)
where for which Supreme court held that in deciding the fundamental rights, the court
must consider the directive principles and adopt the principle of harmonious
construction so two possibilities are given effect as much as possible by striking a
balance.

Qureshi v State of Bihar2,

The Bihar Preservation and Improvement of Animals Act ,955,put a total ban on the
slaughter of all categories ofanimal,, of the species of bovine cattle. The U. P.

1
1959 1 SCR 995
2
1958 AIR 731
8
Prevention of Cow Slaughter Act, 1955, put a total ban onthe slaughter of cows and
her progeny which included bulls,bullocks, heifers and calves. The C. P. and Berar
Animal Preservation Act, 1949, placed a total ban on the slaughter of cows, male or
female calves of cow, bulls, bullocks, and heifers and the slaughter of buffaloes
(male or female,adults or calves) was permitted only under a certificate granted by
the proper authorities. No exception was made in any of these Acts permitting
slaughter of cattle even for bona fide religious purposes. These three Acts were
enacted in pursuance of the directive principles of State policy contained in Art. 48
Of the Constitution. The petitioners, who were engaged in the butcher's trade and its
subsidiary undertakings, challenged the constitutional validity of the three Acts on
the grounds that they infringed their fundamental rights guaranteed under Arts. 14,
19(1)(g) and 25 of the Constitution. The respondents contended that the impunged
acts were constitutional and valid as they were made in consonance with the directive
principles of Art- 48 which were superior to the fundamental rights and that the
impugned Acts did not offend Art. 14, 19(1)(g) or 25 Held,

(i) that a total ban on the slaughter of cows of all ages and calves of cows and of
she-buffaloes, male and female, was quite reasonable and valid;

The Supreme Court held that while the state should implement the directive
principles, it should be done in such a way so as not to violate the fundamental rights.

In Bhatia International v Bulk trading SA3, it was held that if more than one
interpretation is possible for a statute, then the court has to choose the interpretation
which depicts the intention of the legislature.

General rules of interpretation of the Constitution

 If the words are clear and unambiguous, they must be given full effect.

 The constitution must be read as a whole.

 Principles of Harmonious construction must be applied.

 The constitution must be interpreted in a broad and liberalsense.

3
(2003) 5 SCC (Jour) 22
9
 The court has to infer the spirit of the constitution from the language.

 Internal and External aids may be used while interpreting.

 The Constitution prevails over other statutes.

Principles of Constitutional Interpretation

The following principles have frequently been discussed by the courts while
interpreting the Constitution:

Principle of colourable legislation

The doctrine of colourability is the idea that when the legislature wants to do
something that it cannot do within the constraints of the constitution, it colours the
law with a substitute purpose which will still allow it to accomplish its original goal.

Maxim: “Quando aliquid prohibetur ex directo, prohibetur et per obliqum” which

means what cannot be done directly cannot also be done indirectly.

The rule relates to the question of legislative competency to enact a law. Colourable
Legislation does not involve the question of bonafides or malfides. A legislative
transgression may be patent, manifest or direct or may be disguised, covert or indirect.
It is also applied to the fraud of Constitution.

In India ‘the doctrine of colorable legislation’ signifies only a limitation of the law
making power of the legislature. It comes into picture while the legislature purporting
to act within its power but in reality it has transgressed those powers. So the doctrine
becomes applicable whenever legislation seeks to do in an indirect manner what it
cannot do directly. If the impugned legislation falls within the competence of
legislature, the question of doing something indirectly which cannot be done directly
does not arise.

In our Constitution, this doctrine is usually applied to Article 246 which has
demarcated the Legislative competence of the Parliament and the State Legislative
Assemblies by outlining the different subjects under list I for the Union, List II for the
States and List III for the both as mentioned in the seventh schedule.

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This doctrine comes into play when a legislature does not possess the power to make
law upon a particular subject but nonetheless indirectly makes one. By applying this
principle the fate of the Impugned Legislation is decided.

KC Gajapati v. State of Orissa4

Facts: The petitioners were the owners of estates. The Orissa state Legislature enacted
the “Orissa State Estates Abolition Act, 1952” whose primarily purpose of the Act is
to abolish all zamindary and other proprietary estates and interests in the State of
Orissa and after eliminating all the intermediaries, to bring riots or the actual
occupants of the lands in direct contact with the State Government the compensation
would be calculated at a certain number of years purchase of the net annual income of
the estate during the previous agricultural year, that is to say, the year immediately
preceding that in which the date of vesting falls. The other sum payable as income-tax
in respect of any other kind of income derived from the estate would also be included
in the deductions. The amount of compensation thus determined is payable in 30
annual equated installments commencing from the date of vesting and an opinion is
given to the State Government to make full payment at any time.

Whether “Orissa State Estates Abolition Act”, 1952 is a piece of colourable

legislation?

That the doctrine of colourable legislation does not involve any question of bonafides
or malafides on the part of the legislature. The whole doctrine resolves itself into the
question of competency of a particular legislature to enact a particular law. If the
legislature is competent to pass a particular law, the motives which impelled it to act
are really irrelevant5. On the other hand, if the legislature lacks competency, the
question of motive does not arise at all. Whether a statute is constitutional or not is
thus always a question of power “Malice or motive is beside the point, and it is not
permissible to suggest parliamentary incompetence on the score of malafides. A
distinction, however, exists between a legislature which is legally important like the
British Parliament and the laws promulgated by which could not be challenged on the

4
AIR 1953 SC 375
5
MP Jain, Indian Constitutional Law, Wadwa Nagpur, 5 th Ed., 537
11
ground of incompetency, and a legislature which enjoys only a limited or a qualified
jurisdiction.

The validity of this provision has been challenged on the ground that it is a piece of
colourable legislation which comes within the principle enunciated by the majority of
this court in the Bihar case6. It is difficult to appreciate this argument of the learned
counsel. It is not a legislation on somethimg which is non-existent or unrelated to
facts. It cannot also be seriously contended that what section 37 provides for, is not
giving of compensation but of negativing the right to compensation as the learned
counsel seems to suggest. There is no substance in this contention and we have no
hesitation in overruling it. The result is that all the points raised by the learned counsel
for the appellants fail and the appeals are dismissed. Having regard to some important
constitutional questions involved in these cases which needed clearing up, we direct

K. C. G. Narayan Dev v. State of Orissa7,

The Supreme Court explained the meaning and scope of the doctrine of Colourable
Legislation in the following terms :

"If the Constitution distributes the legislative power amongst different Legislative
bodies, which have to act within their respective spheres marked out by specific
legislative Entries, or if there are limitations on the legislative authority in the shape
of fundamental rights, question arises as to whether the Legislature in a particular case
has or has not, in respect to the subject-matter of the statute or in the method of
enacting it, transgressed the limits of its constitutional powers. Such transgression
may be patent, manifest or direct, but it may also be disguised, covert or indirect, or
and it is to this latter class of cases that the expression colourable legislation has been
applied in judicial pronouncements. The idea conveyed by the expression is that
although apparently a legislature in passing a statute purported to act within the limits
of its powers, yet in substance and in reality it transgressed these powers, the
transgression being veiled by what appears, on proper examination, to be a mere
pretence or disguise. In other words, it is the substance of the Act that is material and
not merely the form or outward appearance, and if the subject-matter in substance is

6
State of Bihar vs. Maharaja Kameshwar Singh & ors, 1955 SCR 889
7
AIR 1953 SC 375
12
something which is beyond the powers of that Legislature to legislate upon the form
in which the law is clothed cannot save it from condemnation. The Legislature cannot
violate the constitutional prohibitions by employing indirect methods.”

"Colourability" is thus bound up with incompetency and not tainted with bad faith or
evil motive. A thing is colourable which in appearance only and not in reality, what it
purports to be.

hat each party should bear his own costs in these appeals. Appeal dismissed.

Principle of pith and substance

Pith means ‘true nature’ or essence of something’ and substance means ‘the most
important or essential part of something’. The basic purpose of this doctrine is to
determine under which head of power or field i.e. under which list (given in the
seventh schedule) a given piece of legislation falls.

Union & State Legislatures are supreme within their respective fields. They should
not encroach/ trespass into the field reserved to the other. If a law passed by one
trespasses upon the field assigned to the other—the Court by applying Pith &
Substance doctrine, resolve the difficulty &declare whether the legislature concerned
was competent to make the law.

If the pith & substance of law (i.e. the true object of the legislation) relates to a matter
within the competence of the legislature which enacted it ,it should be held intra
vires—though the legislature might incidentally trespass into matters not within its
competence. The true character of the legislation can be ascertained by having
regard—to the enactment as a whole -- to its object – to the scope and effect of its
provisions.

Profulla Kumar vs. Bank of Khulna8

dispute is as to the validity of the Bengal Money-lenders Act, 1940. By way of

introduction it is enough to say that that Act limits the amount recoverable by a

8
AIR 1947 PC 60
13
moneylender on his loans for principal and interest and prohibits the payment of sums
larger than those permitted by the Act.

The respondents are an incorporated body to which by an order of May 12, 1941,
passed by the High Court of Calcutta under Section 153A of the Indian Companies
Act, the assets of the Khulna Loan Bank, Ltd. (earlier known as the Khulna Loan
Coy., Ltd.) were transferred.

Some of the cases now under appeal to their Lordships' Board were brought by the
respondents who claimed to recover loans and interest alleged to be due upon
promissory notes, executed by appellant borrowers and in other instances by appellant
debtors claiming a declaration that their indebtedness was at least diminished by the
provisions of the Act and even in some instances that they were entitled to repayment
of sums overpaid.

The Act, the validity of which their Lordships have to determine, by Section 30
provides that "Notwithstanding anything contained in any law for the time being in
force, or in any agreement

(1) No borrower shall be liable to pay after the commencement of this Act-" more
than a limited sum in respect of principal and interest or more than a certain
percentage of the sum advanced by way of interest. Moreover it is retrospective in its
effect, and its limitations can be relied upon by a borrower by way of defence to an
action by the moneylender or the borrower can himself institute a suit in respect of a
loan to which the provisions of the Act apply.

In this case, the Privy Council applied pith & substance doctrine. S. 100 GI Act 1935
is similar to Art .246 of the Constitution. The Bengal Money Lenders Act 1940
provided for limiting the amount and the rate of interest recoverable by any money
lender on any loan. Challenged that the Bengal Legislature has no legislative
competence. The High Court held the Act intra vires .But the Federal Court held it
ultra vires. On appeal the Privy Council reversed and held that Bengal Act in pith &
substance is within the provincial legislative field. Money lending in Entry 27 List
two. Promissory Notes in Entry 28 List one. The interference was incidental.

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State of Bombay vs. FN Balsara9

The petitioner, claiming to be an Indian citizen, prayed to the High Court inter alia for
the writ of mandamus against the State of Bombay and the Prohibition Commissioner
ordering them to forbear from enforcing against him the provisions of the Prohibition
Act and for the issue of a writ of mandamus ordering them (1) to allow him to
exercise his right to possess, consume and use certain articles, namely, whisky,
brandy, wine, beer, medicated wine, eau-de-cologne, etc, and to import and export
across the Customs frontier and to purchase, possess consume and use any stock of
foreign liquor, eau-de-cologne, lavender water, medicated wines and medicinal
preparations containing alcohol, and (2) to forbear from interfering with his right to
possess these articles and to take no steps or proceedings against him, penal or
otherwise, under the Act. The petitioner also prayed for a similar order under section
45 of the Specific Relief Act against the respondents.

Bombay Prohibition Act, 1949 which prohibited sale & possession of liquors in the
State, was challenged on the ground that it incidentally encroached upon Imports &
Exports of liquors across custom frontier - a Central subject. It was contended that the
prohibition, purchase, use, possession and sale of liquor will affect its import. The
court held that act valid because the pith & substance fell under Entry 8 of State List
and not under Entry 41 of Union List.

A general word used in an Entry must be construed to the extent to all ancillary or
subsidiary matters which can fairly and reasonably be held to be included in it.‘ The
Court should try. as far as possible. to reconcile entries and to bring harmony between
them. When this is not possible only then the overriding power of the Union
legislature –non-obstante clause applies and the federal power prevails.

Principle of eclipse

9
AIR 1951 SC 318
15
The Doctrine of Eclipse says that any law inconsistent with Fundamental Rights is not
invalid. It is not dead totally but overshadowed by the fundamental right. The
inconsistency (conflict) can be removed by constitutional amendment to the relevant
fundamental right so that eclipse vanishes and the entire law becomes valid.

All laws in force in India before the commencement of the Constitution shall be void
in so far they are inconsistent with the provisions of the Constitution. Any law
existing before the commencement of the Constitution and inconsistent with the
provision of Constitution becomes inoperative on commencement of Constitution. But
the law does not become dead. The law remains a valid law in order to determine any
question of law incurred before commencement of the Constitution. An existing law
only becomes eclipsed to the extend it comes under the shadow of the FR.

Bhikhaji v. State of M.P10

In this case the provisions of Civil Procedure and Berar Motor Vehicles
(Amendment) Act 1948 authorized the State Government to take up the entire motor
transport business in the Province to the exclusion of motor transport operators. This
provision though valid when enacted, but became void on the commencement of the
Constitution in 1950 as they violated Article 19(1) (g) of the Constitution. However,
in 1951 Clause (6) of Article 19 was amended by the Constitution (1st Amendment
Act) so as to authorize. The Government to monopolize any business. The Supreme
Court held that the effect of the amendment was to remove the shadow and to make
the impugned Act free from blemish or infirmity. It became enforceable against
citizens as well as non-citizens after the constitutional impediment was removed. This
law was eclipsed for the time being by the fundamental rights. As soon as the eclipse
is removed, the law begins to operate from the date of such removal.

Keshavan Madhava Menon v. The State of Bombay11

In this case the law in question was an existing law at the time when the Constitution
came into force. That existing law imposed on the exercise of the right guaranteed to
the citizens of India by article 19(1)(g) restrictions which could not be justified as

10
AIR 1955 S.C. 781
11
[1961] S.C.R. 288
16
reasonable under clause (6) as it then stood and consequently under article
13(1)12 that existing law became void “to the extent of such inconsistency”.

The court said that the law became void not in to or for all purposes or for all times or
for all persons but only “to the extent of such inconsistency”, that is to say, to the
extent it became inconsistent with the provisions of Part III which conferred the
fundamental rights on the citizens.

Thus the Doctrine of Eclipse provides for the validation of Pre-Constitution Laws that
violate fundamental rights upon the premise that such laws are not null and void ab
initio but become unenforceable only to the extent of such inconsistency with the
fundamental rights. If any subsequent amendment to the Constitution removes the
inconsistency or the conflict of the existing law with the fundamental rights, then the
Eclipse vanishes and that particular law again becomes active again.

Principle of Severeability

Doctrine of severability provides that if an enactment cannot be saved by construing it

consistent with its constitutionality, it may be seen whether it can be partly saved.
Article 13 of the Constitution of India provides for Doctrine of severability which
states that-

All laws in force in India before the commencement of Constitution shall be void in
so far they are inconsistent with the provisions of the Constitution.

The State shall not make any law which takes away/ shortens the rights conferred in
Part III of the Constitution ie. Fundamental Rights. Any law made in contravention of
the provisions of the Constitution shall be void and invalid. The invalid part shall be
severed and declared invalid if it is really severable. (That is, if the part which is not
severed can meaningfully exist without the severed part.) Sometimes the valid and
invalid parts of the Act are so mixed up that they cannot be separated from each other.
In such cases, the entire Act will be invalid.

AK Gopalan v. State of Madras13

12
Article 13 (1) – All laws in force in the territory of India immediately before the commencement of
this Constitution, in so far as they are inconsistent with the provisions of this Part, shall, to the extent of
such inconsistency, be void.
17
The petitioner who was detained under the Preventive Detention Act (Act IV of
1950) applied under Art. 32 of the Constitution for a writ of habeas corpus and for his
release from detention, on the ground that the said Act contravened the provisions of
Arts. 13, 19, 21 and 22 of the Constitution and was consequently ultra rites and that
his detention was therefore illegal the same was contended by the petitioner where as
Supreme court stated that repugnancy to the Constitution, only the repugnant
provision of the impugned Act will be void and not the whole of it, and every attempt
should be made to save as much as possible of the Act. If the omission of the invalid
part will not change the nature or the structure of the object of the legislature, it is
severable. It was held that except Section 14 all other sections of the Preventive
Detention Act, 1950 were valid, and since Section 14 could be severed from the rest
of the Act, the detention of the petitioner was not illegal.

HR Banthia v. Union of India14

Even though import of the gold into India had been made banned, considerable
quantities of contraband gold were finding their way into the country through illegal
channels, affecting the national economy and hampering the country's economic
stability and progress. The Customs Department was not in a position to effectively
combat the smuggling over the long borders and coast lines.

For which supreme court held that Section 27 6(a) states that in the matter of issue or
renewal of licences ,he Administrator shall have regard to the number of dealers
existing in the region in which the applicant intends to carry on business as a
dealer. But the word 'region' is nowhere defined in the Act. Similarly s. 27(6)(b)
requires the Administrator to have due regard to the anticipated demand as estimated
by him for ornaments in that region but the expression anticipated demand' is vague
and incapable of objective assessment. and is bound to lead to a reat deal of
uncertainty.

Therefore, anti-smuggling measures had to be supplemented by a detailed system of

control over the gold control Act 1968 was passed for this purpose. The petitioners,

13
AIR 1950 SC 27
14
AIR 1970 SC 1453
18
who were goldsmiths, contended that the restrictions imposed by ss. 4(4), 4(5), 5(1),
5(2), 27(2)(d), 27(6), 32, 46, 88 and 100 of the Gold (Control) Act were
unreasonable and not in public interest and so are violative of Art. 19(1)(f) and (g) of
the Constitution,and that s. 27 and s. 39 are discriminatory and violative ofArt. 14.
so the act has to be invalidated

In the same way the expression 'suitability of the applicant' in s. 27(6)(e) and
'public interest' in s. 27(6)(g) do not provide any objective standard or norm.
Further. the requirement in the section imposing the same consditions for the renewal
of the licence as for the initial grant is unreasonable, as it renders the entire
future of the business of the dealer uncertain and subject to the caprice and
arbitrary will of the administrative authorities. Therefore. clauses (t). (h). (e) and
(g) of s. 27(6) arc constitutionally invalid. Since these clauses are inextricably woven
up with other clauses of s. '7(6) the entire s. 17(6) must be held to be invalid. F-501
D-H; 502 A-B]

The manufacture of gold ornaments by the goldsmiths in India is a process of

systematic production for trade or manufacture and so falls within the connotation of
the word 'industry' in the appropriate legislative Entries. Therefore,in enacting the
impugned act Parliament was validly exercising its legislative power in respect of
matters covered by Entry 52 of List I and Entry 33 of ListIII.

Entry 27 of List 11 dealing with 'Production, supply and distribution of

goods,subject to the provisions 480 of Entry 33 of List III', is a general Entry and the
general power should not be interpreted so or as to or as like as to nullify the
particular power conferred by Entry 52 of List 1 and Entry 33 of List There is no
reason for imposing on the word 'industry' a restriction that to constitute industry, a
process of machinery or mechanical contrivance is essential. The mere use of skill or
art by the goldsmith is not a decisive factor and will not take the manufacture or gold
ornaments out of the ambit of the relevant legislative Entries

In this case, the Supreme Court struck down certain provisions of the Gold Control
Act, 1968 and since these were not inextricably bound up with the rest of the
provisions of the Act, the rest were held to be valid. The decision is an illustration of
severability in application.

19
Principle of territorial nexus

Article 245 (2) of the Constitution of India makes it amply clear that ‘No law made by
Parliament shall be deemed to be invalid on the ground that it would have extra-
territorial operation’. Thus a legislation cannot be questioned on the ground that it has
extra-territorial operation. It is well-established that the Courts of our country must
enforce the law with the machinery available to them; and they are not entitled to
question the authority of the Legislature in making a law which is extra-territorial.
Extra-territorial operation does not invalidate a law. But some nexus with India may
still be necessary in some of the cases such as those involving taxation statutes.

The Doctrine of Territorial nexus can be invoked under the following circumstances-

Whether a particular state has extra-territorial operation.

If there is a territorial nexus between the subject- matter of the Act and the state
making the law

It signifies that the object to which the law applies need not be physically located
within the territorial boundaries of the state, but must have a sufficient territorial
connection with the state. A state may levy a tax on a person, property, object or
transaction not only when it is situated within its territorial limits, but also when it has
a sufficient and real territorial connection with it. Nexus test was applied to the state
legislation's also

State of Bombay v. RMDC15

The Respondent was not residing in Bombay but he conducted Competitions with
prize money through a newspaper printed and published from Banglore having a wide
circulation in Bombay. All the essential activities like filling up of the forms, entry

15
AIR 1957 SC 699
20
fees etc for the competition took place in Bombay. The state govt. sought to levy tax
the respondent for carrying on business in the state.

The question for decision before the Supreme Court was if the respondent, the
organizer of the competition, who was outside the state of Bombay, could be validly
taxed under the Act.

It was held that there existed a sufficient territorial nexus to enable the Bombay
Legislature to tax the respondent as all the activities which the competitor is
ordinarily expected to undertake took place mostly within Bombay.

Tata Iron & Steel Company vs. Bihar State16

The appellant company, carrying on business as manufacturer of iron and steel, with
its factory and works at Jamshedpur in Bihar, was assessed to sales tax for two
periods prior to the Constitution, under the Bihar Sales Tax Act, 194(No.XIX Of
1947), enacted by the Bihar Legislature in exercise of its exclusive power under the
Government of India Act, 1935.

The company used to send its goods from Jamshedpur to various parts of India.In the
railway receipt the company itself figured as the consignee, it paid the freight and the
receipt was sent either to its branch offices or bankers to be handed over to the
purchaser when he paid the price.

From the amounts shown as gross turn-over in the two returns for the two periods,
the company claimed deduction of certain amounts, being the valuable
consideration for the goods manufactured in Bihar but sold, delivered and consumed
outside, on the ground that in none of the transactions in respect of the said sums did
property in the goods pass to the purchasers in Bihar. The appellant claimed further
deductions on account of the railway freight paid by it.

The Sales Tax Officer disallowed both the claims and added the amounts of sales tax
realised by the appellant from its purchasers to the taxable turnover. The company
appealed against the orders of assessment, but the Commissioner of Sales Tax

16
AIR 1958 SC 482
21
dismissed its appeals. The Board of Revenue, in revision, confirmed the orders of
the Commissioner with certain modifications and remanded the matters to the
Sales Tax Officer. On the appellant's application for reference of certain questions
of law, the Board referred them to the High Court.

One of them related to the legality of adding the Sales Tax to the turn-over and was
answered in favour of the appellant and the respondent did not appeal. The other
questions decided by the High Court against the appellant related to the vires of
the Act and the validity of retrospective levy of sales tax under S. 4(1) of the
Act.

whether the sale was concluded within the state or outside if the goods were
produced, found and manufactured in the state .The court held there was sufficient
territorial nexus and upheld the Act as valid. Whether there is sufficient nexus
between the law and the object sought to be taxed will depend upon the facts and
circumstances of a particular case.

It was pointed out that sufficiency of the territorial connection involved a

consideration of two elements- a) the connection must be real and not illusory b) the
liability sought to be imposed must be pertinent to that connection.

Principle of Implied powers

Laws which are necessary and proper for the execution of the power or incidental to
such power are called implied powers and these laws are presumed to be
constitutional. In other words, constitutional powers are granted in general terms out
of which implied powers must necessarily arise. Likewise constitutional restraints are
put in general terms out of which implied restraints must also necessarily establish.

This is a Legal principle which states that, in general, the rights and duties of a
legislative body or organization are determined from its functions and purposes as
specified in its constitution or charter and developed in practice.

Principle of incidental or ancillary powers

Incidental and ancillary powers are an elementary cardinal rule of interpretation that
the words used in the Constitution which confer legislative power must receive the
22
most liberal construction and if they are words of wide amplitude, they must be
interpreted so as to give effect to that amplitude17. It would not be correct to put a
narrow or restricted construction on the words of wide amplitude in a Constitution.

This principle is an addition to the doctrine of Pith and Substance. What it means is
that the power to legislate on a subject also includes power to legislate on ancillary
matters that are reasonably connected to that subject. It is not always sufficient to
determine the constitutionality of an act by just looking at the pith and substance of
the act. In such cases, it has to be seen whether the matter referred in the act is
essential to give affect to the main subject of the act. For example, power to impose
tax would include the power to search and seizure to prevent the evasion of that tax.
Similarly, the power to legislate on Land reforms includes the power to legislate on
mortgage of the land. However, power relating to banking cannot be extended to
include power relating to non-banking entities. However, if a subject is explicitly
mentioned in a State or Union list, it cannot be said to be an ancillary matter. For
example, power to tax is mentioned in specific entries in the lists and so the power to
tax cannot be claimed as ancillary to the power relating to any other entry of the lists.

Navinchandra Mafatlal v. The Commissioner of Income Tax, Bombay City18

The appellant was assessed by the Income Tax officer, Bomaby (by an assessment
order dated 31st March, 1948) for the assssessment year 1947-1948 on a total income
of rs.19,66,782 including a sum of Rs.9,38,011 representing capital gains assessed in
the hands of the4 appellant under section 12(B) of the Indian Income tax Act, 1922.
Now, this said amount of capital gains was earned by the appellant in the following
circumstances. The asppellant had a half share in certain immovable properties that
were situated in Bombay, which were sold by the appellant himself along with his co-
owners in the year ending 31st December, 1946 to a private limited

Company known as Mafatlal Gagalbhai & Company limited. The profits on the sale
of the said properties amounted to Rs.18,76,023 and there by the appellants half share
came to a sum of Rs. 9,38,011 which was included in the calculation of tax under
Section 12(B) of the Act.

17
VN Shukla, “Constitutional Law”, 6th Ed., Wadhwa Nagpur: Lexis Nexis Butterworths, 2010, p575
18
AIR 1955 SC 58
23
The main issue of the case is as follows:

Whether the imposition of a tax under the head “capital gains” by the Central
Legislature is ultra vires?

Now, the principle question arising is that Section 12(B) of the Indian Income tax act,
1922; which authorized the imposition of tax on capital gains will fall under Entry 82
or Entry 86 of List 1 of the seventh Schedule of the Constitution of India?

Section 12(B) is intra vires the powers of the Central Legislature, acting under Entry
82 (which says, taxes on income other than agricultural income) of list 1 in seventh
schedule of the constitution of India. In this view of the matter, it is completely
unnecessary to consider or express any opinion as to the meaning, scope and ambit of
Entry 86 in the same list. The appeal is therefore dismissed.

Conclusion

Constitution is the supreme and fundamental law of our country. Since it is

written in the form of a statute, the general principles of statutory interpretation are
applicable to interpretation of the constitution as well. It is important to note that the
constitution itself endorses the general principles of interpretation through Article
367(1), which states that unless the context otherwise requires, the General Clauses
Act, 1897 shall apply for the interpretation of this constitution as it applies for the
interpretation of an act of the legislature.

The letters of the constitution are fairly static and not very easy to change but the
laws enacted by the legislature reflect the current state of people and are very
dynamic. To ensure that the new laws are consistent with the basic structure of the
constitution, the constitution must be interpreted in broad and liberal manner giving
affect to all its parts and the presumption must be that no conflict or repugnancy was
intended by its framers. Applying the same logic, the provisions relating to
fundamental rights have been interpreted broadly and liberally in favor of the subject.
Similarly, various legislative entries mentioned in the Union, State, and Concurrent
list have been construed liberally and widely.
24
Bibliography:

 MP.Jain, Indian Constitutional law, eighth edition, 2016.

 VN Shukla, “Constitutional Law”, 6th Ed., Wadhwa Nagpur:Lexis Nexis
Butterworths, 2010
 JN Pandey, The constitutional law of India,51st edition, 2018.
 Internet sources

List of cases:
1. Re Kerala Education Bill, 1959 1 SCR 995
2. Qureshi v State of Bihar, 1958 AIR 731
3. Bhatia International v Bulk trading SA, (2003) 5 SCC (Jour) 22
4. Re Berubari, AIR 1960 SC 845
5. Keshavananda Bharathi’s case, AIR 1973 SC 1461
6. KC Gajapati v. State of Orissa, AIR 1953 SC 375
7. State of Bihar vs. Maharaja Kameshwar Singh & ors, 1955 SCR 889
8. Profulla Kumar vs. Bank of Khulna, AIR 1947 PC 60
9. State of Bombay vs. FN Balsara, AIR 1951 SC 318
10. Bhikhaji v. State of M.P, AIR 1955 S.C. 781
11. Keshavan Madhava Menon v. The State of Bombay, [1961] S.C.R. 288
12. AK Gopalan v. State of Madras, AIR 1950 SC 27
13. HR Banthia v. Union of India, AIR 1970 SC 1453
14. State of Bombay v. RMDC, AIR 1957 SC 699
15. Tata Iron & Steel Company vs. Bihar State, AIR 1958 SC 482
25
 16. Navinchandra Mafatlal v. The Commissioner of Income Tax, Bombay City,
AIR 1955 SC 58
17. State of Bihar vs. Maharaja Kameshwar Singh & ors, 1955 SCR 889
18. K. C. G. Narayan Dev v. State of Orissa AIR 1953 SC 375

26