Case Analysis: Atlas Cycle Industries Ltd. v. State of Haryana

This article has been written by Shreyansh Bhansali, pursuing B.A. LL.B (Hons) from Institute of Law Nirma University, Ahmedabad. The present article is a case analysis of Atlas Cycle Industries Ltd. v. State of Haryana.


“Legislation is either supreme or subordinate, the former proceeds from sovereign and the later from any other authority –Salmond”


What is Delegated Legislation?

Delegated legislation (also referred to as secondary legislation or subordinate legislation or subsidiary legislation) is law made by an authority under forces given to them by primary legislation so as to actualize and direct the necessities of that primary legislation.


It is law made by an individual or body other than the legislature however with the assembly's legislative authority. Regularly, a legislature passes resolutions that set out wide blueprints and standards, and representatives power to a delegates authority to issue appointed enactment that tissue out the subtleties (meaningful guidelines and substantive regulations) and give methods to executing the considerable arrangements of the rule and considerable guidelines (procedural guidelines).


Delegated legislation can likewise be changed quicker than primary legislation so governing bodies can assign and delegate issues that may be tweaked through understanding and experience. The Indian Constitution recognises subordinate legislation by delegation. Article 13(3) gives that "law" incorporates any mandate, request, bye-law, rule, guideline, notice, customs, or uses having in the domain and territory of India the power of law.


It is the Legislature's essential obligation to control and screen the activity of appointed authority by the executive authorities. A parliamentary review of the approved legislation happens in three stages. This is otherwise called the Laying Procedure or 'Laying on the Table'.


This serves to advise the assembly regarding what all principles were defined by the authorities during the time process of legislation. Moreover, this gives a stage for legislators to address or challenge the principles that have been made or proposed. A provision as to "laying" might be "directory or mandatory".


It will rely on the plan of the Act, the language utilized, results counted in the pertinent law and different contemplations. In Atlas Cycle Industries Ltd. v. State of Haryana, the Supreme Court thought about this viewpoint in subtleties and saw that the utilization of "shall" isn't convincing or conclusive of the issue and the court needs to find out in the purpose of the legislature which is the assurance factor.


Facts of the case

The Development Officer of the Directorate-General, Technical Development, New Delhi, carried out a spot review of the balance sheet of the appellant on 29th December 1964, it was discovered that from the date 1st January 1964 till 12th January 1965, the company had purchased around 60.03 tons of black plain iron sheets from multiple suppliers at a higher rate than the maximum permissible rate which is set by the Iron and Steel Controller which is an authority conferred by Iron and Steel Control Order, 1956.


The special magistrate charged the appellants under Section 120B of Indian Penal Code read with Section 7 of the Essential Goods Act and Section 7 read with Section 15(3) on the Iron and Steel Control Order. The appellant applied under Section 251 of the Code of Criminal Procedure pleading that the notification from the government which had set the maximum price was not put before the parliament and therefore was not valid, the Iron and Steel Control Order, 1956 was also vied to be a nullity, this application was rejected by the Trial Court.


The appeal in the High court was rejected under the grounds that the said order was valid because the legislature never intended that the order will be invalid if the order is not in accordance with Section 3(6) of Essential Commodities Act which said that non-laying of the notification before the Houses of Parliament will not be the motive for nullification of the notice. Moreover, it was even expressed that Section 3(6) of the Essential Commodities act say that any order issued will be presented in both the houses, here it is critical to comprehend whether the arrangement being referred to is "directory or mandatory" in nature, additionally the utilization of "Shall" isn't indisputable and the legislature interpretation must be deciphered by the court.


The High Court alluded to two grounds on which the provision is a directory in nature:

  • Firstly if the proviso isn't followed, the nonattendance of any statement indicating the possibility.

  • Secondly, the inconvenience and discrimination will affect the overall population if the act or any instrumentality was discovered invalid because of inability to conform to a specific provision.

Hence, it is directory in nature and not obligatory as the order was not precluded without the endorsement of both the houses as indicated by Section 3(6) of the Essential Commodities Act.


Disappointed with the decision given by Punjab and Haryana High Court, the appellants engaged the Supreme Court under its Criminal Appellate Jurisdiction.


Issues before the Supreme Court

  1. Whether the notification attempting to set the maximum price is void as it was not laid before both parliamentary house?

  2. Whether it is mandatory for the laying provision incorporated in Section 3(6) of the Essential Commodities Act, 1955?

Arguments

The respondent argued that the provision section 3(6) of Essential Commodity act is not mandatory but only directory which means that failure to comply with that provision will not overthrow the notification given. The respondent also argued that the mens reas of the appellants was palpable from various manipulations recorded in the balance sheet which clearly showed that they acquired the black steel sheets more to increase their profits by increasing their production.


The appellants majorly argued that the Iron and Steel Control Order did not have any legal support as it became void when the said order was not presented to both the houses under stipulated time period under the Essential Commodities Act.


In the case of Atlas Cycle laying procedure were also observed by the Supreme Court, those three laying provisions are as under:

  1. “Laying without further procedure,

  2. Laying subject to negative resolution,

  3. Laying subject to affirmative resolution.”

The first can also be given a different name like simple laying because in this concept which came prior to the concept of laying was introduced. This provision of laying stated that the provision of laying down rules for that duration of which the regulation was not in effect and that legislation could be discarded without it ever seeing the light of the day.


The second one states that the legislation or the order will be in operation if it is not disapproved within 40 days from both the houses which are subject to annulment in lieu of the houses. The third laying provision is in two parts, the first states that the resolution unless approved from both the houses will have no effect and the second part says that all such rules will have no consequence until sanctioned by an affirmative resolution.


Judgment

The Supreme Court decided in favour of the respondent. The court acknowledged that section 3(6) of the Essential Element Act required that any order made under section 3 of the Act by any office or authority of the Central government it shall be brought before the House but the court interpreted by saying that even though it shall be done but that section doesn’t provide whether it would be subject to affirmative or negative resolution by the Houses.


The court also observed that there is no time specified during which the order that has to be laid down in front of the Houses nor does it ever specify any penalty for not following the same. The order was passed and it was clearly submitted that the legislature had no intention to make it void by failure to follow with section 3(6) of Essential Commodities Act. Court also observed that no laying down the order will not nullify the order hence dismissed the appeal.


Conclusion

The judiciary has laid down multiple judgments which decided upon orders and laying provisions, however, the effect of non-compliance with the laying provision does not directly attract punishments, it has to be interpreted depending on the provision in the enabling act if they are directory or mandatory in nature.


It fills two needs: right off the bat, it helps in educating the governing body concerning what the sum total of what directions have been made by the decision-making authority in the implementation of delegated legislation, furthermore, it gives a discussion to the officials to address or defy the guidelines made or recommended to be made.