Delegated Legislation: Kerala Samsthana Chethu Thozhilali Union v. State of Kerala & Ors

This article has been written by Prachi Gupta, pursuing B.A. LL.B (Hons) from Institute of Law Nirma University, Ahmedabad.

Introduction

It has been rightly pointed out that bulk of the legislation in the county as vast and diverse as India emanated from the executive body (also known as “Delegated Legislation”) rather from the legislature itself. It not only ensures that the legislature made law is being supplemented but also ensures that it lays down the nuances of the law which the central body of legislature might overlook. An excellent example of this can be seen in the case of Kerala Samsthana Chethu Thozhilali Union v. State of Kerala & Ors where the State of Kerala had promulgated the rules under the Abkari Act, 1902 for the social welfare of the dispossessed Arrack and Toddy workers. Before dwelling further into the facts and analysis of the case, it is necessary to first understand the concept of delegated legislation which is central to the case.


Salmond has defined Delegated Legislation as:

that which proceeds from any authority other than the sovereign power and is therefore dependent for its continued existence and validity on some superior or supreme authority

Delegate here means more than an agent exerting authority from the principle. Where the agent has no power to build its own rules and laws, the delegatee body retains all the power to act concurrently on matters on the area of the delegated authority. However, there are limits to the power of enactment of the legislation. Various judgements of Indian courts have been posed with the question of the validity of subordinate legislation and have come with a test. Since delegate derives its power from the plenary legislation, it should be intra vires of the legislation itself.


To simplify, the delegated legislation should not be against the scheme and scope of the provisions of the parent legislation. Also, while doing so, it should conform to the main object and legislative policy while enacting the delegated legislation. To see whether the delegated legislation follows the purpose or the legislative policy formulated by the parliament, the court has to determine the object and purpose of the act.


Kerala Samsthana Chethu Thozhilali Union v. State of Kerala & Ors.


Facts of the Case:

The facts of the case are very straightforward. Sale of Arrack was banned by the Kerala State Government on 1st April 1996. To rehabilitate people who lost their jobs due to the ban were given a compensation of Rs. 30,000, among other things under the Akbari Workers Welfare Fund Board Act. After a lapse of six years from the date of ban on the sale of arrack, the government framed rule 4(2) of the Kerala Abkari Shops Disposal Rules 2002 (hereafter the “Abkari Rules”) of Kerala Abkari Act, 1902, (hereafter the “Abkari Act”) Under this rule it was made mandatory for each licensed toddy shop to absorb one arrack worker.


This benefit given to the arrack workers was also extended to the toddy workers, of the toddy shops that were closed having no limit in number for absorption. The benefit was given only to those workers who were registered with the Toddy Workers Welfare Fund Board as on 31st March 2000.


Aggrieved by the Rule 4(2), the Kerala SamsthanaChethuThozhilali (Toddy Tappers) Union and the Toddy Shop Owners (license holders) filed a case before the learned single Judge of the Kerala High Court. The learned single Judge upheld the validity of rule 4(2) on the ground that the action of State as a Welfare State banning the sale of liquor is valid. The State is entitled to make such rule for the protection of workers who were unemployed.


Further, it held that the State is empowered to frame such rule on the basis of entries 23 and 24 of List III of the Seventh Schedule of the Constitution of India. Dissatisfied with the decision of the learned single Judge, the parties of a dispute filed an appeal to the Division Bench of the High Court. The Division Bench upheld the judgment of the learned single Judge. Aggrieved by the decision of the division bench, the toddy workers union appealed to the Supreme Court of India.


Contention Raised by the Toddy Workers

The major contention of the Toddy workers before the Supreme Court was that the State in making the Abkari Rules has transgressed its power of delegated legislation as the Act does not contain any provision as regards the adoption of welfare measures to be taken by the State. This was backed by the concept that:

  • First, rules which are made in conformity of the provisions of any act has to be within the scope of the parent legislation and cannot in violative of the legislation;

  • Second, that the delegates legislation has to conform to the legislative policy which is laid down by the plenary legislation and

  • Third, the social welfare aspect of the workers is governed by the Industrial Dispute Act, under which the State has no competency to make the impugned rules.


Although S. 29(1) of the Abkari Act gives the state the power to make delegated legislation, it is nowhere for the rehabilitation of workers and therefore, the state cannot divulge outside the scope of the same. The main objection of the Abkari Act was to ensure that there is the prohibition on sale and possession of toddy and arrack and the same was imposed 6 years before the impugned rules were enacted.


It is the state discretion to have a monopoly over the liquor business, rules made by the state should conform the legislative policy of prohibition of alcohol and should be for the pursuance of the provisions of the act. The Abkari Rules enacted neither conforms to the legislative policy of abolition of alcohol nor are in pursuance of the carrying out the purpose of the Act.

Contentions raised by the State

Assailing the arguments raised by the Toddy Workers Association, the State argued that the state government has the power to enact the rules in as much as the state has the power to grant a licence to the toddy workers under the Abkari Act. The State merely parts with a privilege which is exclusively vested in it and in that view of the matter if, in terms of the policy decision of the State, arrack workers were to be rehabilitated, it could direct employment of unemployed arrack workers.


Moreover, the State is entitled to control both arrack and toddy workers as both of them come under the control of the Abkari Act. The sub-severing purpose of the Act also has to be seen while determining the purpose and object of the act.


Judgment

The court recognised that the state government has the general power to enact delegated legislation under S. 29(1) of the Abkari Act. However, none of the sections in act delegate the state government to encroach upon the jurisdiction of another department of the state or legislate upon something which is not within the purview of control of the parent act. It was ultimately held by the Supreme Court that the impugned rules neither promote the legislative policy nor secures the objective of the Act. Rehabilitation of the dispossessed worker is not within the object or legislative policy of the Act.


Critical Analysis

Since the judgement is one of the most riveted judgements which strengthens the position of the scope and limitation of delegated legislation, the author will analyse the judgement from a critical lens. The court correctly has pointed out that delegated legislation is a product of executive exercising legislative function who derive their authority directly from the legislative body. Any legislature has to intra vires of the Constitution of India and the Delegated Legislation of the Parent Legislation. To validate the subordinate legislation, the court has to ensure that the legislation is intra vires to, first, the Constitution and second, the parent legislation itself. The question then arises in the case that whether the Abkari Rules are ultra vires of the Parent Act, Abkari Act?


Is it beyond the scope of the delegation?

It is a well-recognised principle that while making the rules under the supreme act, the executive has to act within the limited scope of the legislation and its objective. Although the primary objective of the act was to ensure that there is a prohibition of alcohol and giving licence to toddy workers, it could have been argued by the state that rehabilitation of the workers was done in pursuance of the abolition of the toddy shops.


However, this argument of the state would have hold water only when the legislation in question gave prima facie dealt with rehabilitation of workers impacted from the prohibition and restriction of the trade. Having said that, it is also to be noted that it was only after 6 years were the workers purported to rehabilitated after restricting the trade. Not only the title, object and purpose of the plenary enactment were for restriction of trade but also the sections which dealt with delegating legislation does not deal with even a smidgen of rehabilitation of workers.


Is it against public policy and unreasonable?

Another aspect of the issue was imposing employment upon the employers against the public policy of India and therefore, against the principles of Constitution. When an employer gives employment to a person, a contract of employment is entered into. The right of the citizens to enter into any contract, unless it is expressly prohibited by law or is opposed to public policy, cannot be restricted. Such a power to enter into a contract is within the realm of the Indian Contract Act.


It has not been and could not be contended that a contract of employment in the toddy shops would be hit by Section 23 of the Indian Contract Act. So long as the contract of employment in a particular trade is not prohibited either in terms of the statutory or constitutional scheme, the State's intervention would be unwarranted unless there exists a statutory prohibition. This argument would have succeeded had the State successfully proved that legislation was Intra vires of the plenary legislation. Since the occasion did not arise, it gave a different aspect of the judgement and ensure that the impugned rules were invalid otherwise.


Therefore, the state cannot under the garb of the privilege of having power over the restriction of trade of alcoholic substance under the constitution can't Act beyond the legislative mandate of the plenary act itself. The court was correct in finding that the main objective and legislative purpose of the Abkari act was to restriction of trade of toddy and arrack and not rehabilitation of workers.


If the said rules have been enacted under the Industrial Dispute Act, the rules might have survived the fate of being ultra vires. However, as compensation has been already ordered for the workers which were previously dispossessed of their employment, the state cannot force employment further upon the citizen of India. This is not only dehors the objective and policy of the legislation but also unreasonable and beyond the policy under the Indian Contract Act.