Atlas Cycle Industries Ltd. v. State of Haryana

Supreme Court of India, 4 October 1978, 3 judges, 1979 AIR 1149, 1979 SCR (1) 1070, 1979 SCC (2) 196

The requirement in Section 3(6) of the Essential Commodities Act, 1955 that orders be laid before Parliament 'as soon as may be' is directory. Failure to lay the price notification did not make it void.

Facts

The appellants were prosecuted under Section 7 of the Essential Commodities Act, 1955 and Section 120-B IPC for buying black plain iron sheets above the maximum price fixed by a notification of the Iron and Steel Controller under clause 15(1) of the Iron and Steel (Control) Order, 1956. The State conceded that the notification had not been laid before both Houses of Parliament. The trial Magistrate refused to drop the case, and the Punjab and Haryana High Court dismissed their writ petition, which argued that the Control Order and notification had no force of law because they were not laid within a reasonable time under Section 3(6). The High Court granted a certificate.

Questions before the Court

Whether the notification fixing maximum selling prices was void for not having been laid before both Houses of Parliament under Section 3(6) of the Essential Commodities Act, 1955.
Whether the laying requirement in Section 3(6) is mandatory or directory.

What the Court held

The word 'shall' is not conclusive. The Court must find the legislature's intention from the scope, nature and design of the statute. A provision is treated as directory where no consequence of non-compliance is provided and invalidity would cause serious general inconvenience to the public.
Laying clauses take three forms: simple laying, laying subject to negative resolution, and laying subject to affirmative resolution. Which applies, and its effect, depends on the wording of the statute.
Section 3(6) provides no negative or affirmative resolution, no power to approve, disapprove or modify, no period and no penalty, and laying follows the making of the order. It is simple laying and is directory, not mandatory.
Non-laying of the notification did not nullify it. The appeal was dismissed.

Why it matters

The judgment classifies laying clauses for delegated legislation into simple laying, negative resolution and affirmative resolution, and holds that a simple laying requirement such as Section 3(6) of the Essential Commodities Act is directory. It applies the test for mandatory and directory provisions drawn from earlier decisions of the Court.

In the Court's words

Copied from the official judgment; each passage links to its page.

“In these circumstances, we are clearly of the view that the requirement as to laying contained in sub-section (6) of section 3 of the Act falls within the first category i.e. "simple laying" and is directory not mandatory.”

Jaswant Singh J.Page 10 of the judgment

“From the foregoing discussion, it inevitably follows that the Legislature never intended that non-compliance with the requirement of laying as envisaged by sub-section (6) of section 3 of the Act should render the order void. Consequently non-laying of the aforesaid notification fixing the maximum selling prices of various categories of iron and steel including the commodity in question before both Houses of Parliament cannot result in nullification of the notification.”

Jaswant Singh J.Page 14 of the judgment

“Thus two considerations for regarding a provision as directory are : (1) absence of any provision for the contingency of a particular provision not being complied with or followed and (2) serious general inconvenience and prejudice that would result to the general public if the act of the Government or an instrumentality is declared invalid for non-compliance with the particular provision.”

Jaswant Singh J.Page 8 of the judgment

“It is well to remember at the outset that the use of the word 'shall' is not conclusive and decisive of the matter and the Court has to ascertain the true intention of the legislature, which is the determining factor, and that must be done by looking carefully to the whole scope, nature and design of the statute.”

Jaswant Singh J.Page 7 of the judgment

Provisions interpreted

Section 3(6), Essential Commodities Act, 1955
Clause 15, Iron and Steel (Control) Order, 1956

Related judgments

Follows State of Uttar Pradesh v. Manbodhan Lal Srivastava (1957)“Reference in this connection may be made to the decision of this Court in State of U.P. v. Manbodhan Lal Srivastava.” (page 7)

Case and bench

Parties: Atlas Cycle Industries Ltd. and Ors. v. State of Haryana
Case: Criminal Appeal No. 24 of 1976
Decided: 4 October 1978
Bench: Singh, Jaswant, Fazalali, Syed Murtaza, Kailasam, P.S.
Opinions: Unanimous. Judgment of the Court delivered by Jaswant Singh J.

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