LEGISLATIVE RELATIONS BETWEEN THE

UNION AND THE STATES

[Articles 245 to 293]

INTRODUCTION

The Indian Constitution provides for a new kind of federalism to meet

India's peculiar needs. In the matter of distribution of powers, the Framers

followed the pattern of the Government of India Act, 1935, which had laid the

foundation for a federal set-up for the Nation. The scheme as envisaged in the

Act of 1935, has not been adopted in the Constitution in every respect, but the

basic framework is the same. India is said to have adopted a loose federal

structure.

The Seventh Schedule to the Constitution divides the subjects of

legislation under three lists, viz. Union, State and Concurrent List.

The Union List (List 1) contains as many as 97 items and comprises of the

subjects which affect the entire country and are of general interest and admit of

uniform laws for the whole of the country. These matters lie within the exclusive

legislative competence of the Union Parliament. The State List (List II)

enumerates 66 items and comprises of subjects of local or State interest and as

such lie within the legislative competence of the State Legislatures. The

Concurrent List (List III) enumerates 47 items, with respect to which, both Union

Parliament and the State Legislatures have concurrent power of legislation.3

The Constitution also confers power on the Union Parliament to make laws with

respect to the matters enumerated in the State List under special

circumstances. Besides, the Constitution vests power in the Union Government

to control the exercise of legislative power by the State Legislatures in certain

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matters.5 The residuary powers of legislation are vested in the Union

Parliament.

This Chapter has been classified as under—

1. Legislative Relations

2. Administrative Relations

3. Financial Relations

LEGISLATIVE RELATIONS

The Constitution of India makes a two-fold distribution of legislative

powers:

(a) With respect to territorial jurisdiction and

(b) With respect to subject-matter of legislation

TERRITORIAL JURISDICTION (Article 245)

'As regards the territorial jurisdiction, Article 245 (1) provides : "Subject to

the provisions of this Constitution, Parliament may make laws for the whole or

any part of the territory of India, and the Legislature of a State may make laws

for the whole or any part of the State."

Doctrine of Territorial Nexus:

Article 245 (1) implies that the State law would be void if it is given extra-

territorial operation, i.e., it is applied to subjects or objects located outside the

territory of that State. However, many times the State laws having extra-

territorial operation have been held valid. It is done by the application of the

"Doctrine of Territorial Nexus".

The doctrine was evolved by the Privy Council in Wallace Bros, and Co.

Ltd. v. Income Tax Commissioner, Bombay. In this case, a company which

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was registered in England appointed an agent in Bombay. Through that agent

the company carried on its business within the territory of India. In a year, the

company out of its total profit of Rs. 2.4 million, earned Rs. 1.7 million by

carrying its business within the territory of India. The Indian Income Tax

Authorities sought to tax the entire income of the company. The company

contended that the Indian Income Tax Act, 1939 could not be applied to it as it

was subject of the English laws. The Privy Council however upheld the levy of

tax by applying the "doctrine of territorial nexus". The doctrine explains : it is not

essential that the object to which the law is applied should be physically located

within the boundaries of the State making the law. It is enough if there is a

sufficient territorial nexus between the object and the State making the law;

"The Supreme Court of India applied the doctrine in State of Bombay v.

R.M.D.C. In this case, the State of Bombay enacted the Bombay Lotteries and

Prize Competitions (Control and Tax) Act, 1948. The Act levied a tax on

lotteries and prize competitions. The Act amended in 1952 sought to tax prize

competitions contained in newspapers. Tax was imposed under this Act on the

income of the respondent company, conducting a prize competition (Crossword

Puzzle) through a paper named "Sporting Star" printed and published in

Bangalore. The paper had wide circulation in the territory of Bombay. A large

number of people from the territory of Bombay subscribed to the Crossword

Puzzle. Keeping in view the number of subscribers, the respondent company

opened its collecting booths within the territory of Bombay, from where the

forms for appearing in the crossword puzzle were to be issued, fees collected

and the results declared. The whole of the activity relating to the Crossword

Puzzle was thus completed within the territory of Bombay. Taking into

consideration these facts, the Supreme Court upheld the. tax imposed on the

company. The Court held that there existed a sufficient territorial nexus to

enable the Bombay State to tax the respondent. For the application of the

doctrine there must be —

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(a) A sufficient nexus between the State making the law and the object of law.

The nexus must be real and not illusory; and

(b) The liability sought to be imposed must be pertinent to that connection.

Parliamentary Law Having Extra-Territorial Operation [Article 245 (2)]:

Clause (2) of Article 245 declares that Union Parliament may make a law

having extra-territorial operation and such a law would not be void on the

ground of having extra-territorial operation.

In A.H. Wadia v. Income Tax Commissioner, the Gwalior Government

had loaned at Gwalior large sums of money to a company in British India on the

mortgage of debentures over property in British India. The interest on loan was

payable at Gwalior. It was taxed under the Indian Income Tax Act. Upholding

the levy the Federal Court held that in case of a sovereign Legislature, the

question of extra-territoriality of any enactment could never be raised in the

Municipal Courts as a ground for challenging its validity. The legislation might

offend the rules of International law, it might not be recognised by foreign courts

or there might be practical difficulties in enforcing them. These have been held

to be questions of policy with which the domestic tribunals are not concerned.

DISTRIBUTION OF SUBJECT- MATTER OF LEGISLATION (Article 246):

Article 246 provides that the Union Parliament may make laws with

respect to the matters contained in Union List and a State Legislature may

make laws with respect to the matters contained in the State List. As regards

the matters contained in the Concurrent List, both Union Parliament and the

State Legislatures are vested with concurrent powers of legislation. The

Constitution gives autonomy to the Centre and the States within their respective

fields.

Principles of Interpretation:

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The distribution of subject-matter cannot be claimed to be scientifically

perfect and there happens to be overlappings between the subjects

enumerated in the three lists. In such cases, question arises with regard to the

constitutionality of the enactment, which lies within the domain of judiciary. For

that, the Courts apply various principles of interpretation. Some of these are

discussed below)

(1) Presumption of Constitutionality

The Apex Court in Public Service Tribunal Bar Association v. State of

U.P., wherein, upholding the U.P. Public Services (Tribunal) Act, 1976, as

amended from time to time, challenged as violative of Articles 14 and 16 of the

Constitution, ruled that, while examining the challenge to the constitutionality of

an enactment, it was imperative upon the Courts to be conscious to start with

the presumption regarding the constitutional validity of the legislation. The Court

should try to sustain its validity to the extent possible. It should strike down the

enactment only when it is not possible to sustain it. Further, that the burden of

proof is upon the shoulders of the incumbent who challenges it.

(2) Each Entry to be interpreted Broadly

The express words employed in an "Entry" would ne incidental and

ancillary matters so as to make the legislation fundamental principle of

Constitutional Law is that everything exercise of power is included in the grant of

power. The judicial opin; -giving a large and liberal interpretation to the scope of

the Entries. Eacz. should thus be given widest possible and most liberal

interpretation.

(3) Doctrine of Pith and Substance

Many times, a law passed by a Legislature with respect to a matter, within its

legislative competence, encroaches upon another matter, outside its

competence. In such a case, the question with regard to the constitutionality of

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the law is to be determined by applying the doctrine of pith and substance. The

doctrine flows from the words "with respect to" in Article 246.

The doctrine was applied by the Privy Council in Profulla Kumar Mukerjee

v. Bank of Commerce, Khulna.13 In this case, the Bengal Money Lender Act,

1946 fixed the maximum rate of interest and the maximum amount of interest,

which could be recovered by a money-lender from his debtor. The Privy Council

held that the Act was, in pith and substance, a law in respect of "money lending"

and "money-lenders"—a State subject, and was valid, even though it incidentally

trenched on "promissory notes", a Central subject.

(4) Doctrine of Colorable Legislation

Many times, a Legislature makes a law with respect to a matter outside its

legislative competence by giving to the legislation a different colour so as to

bring it within its competence. In such cases, the courts apply the doctrine of

"pith and substance" in order to determine the true nature, character or the real

pith and substance of the law. If after such investigation, it is found that the pith

and substance of the law pertains to a matter outside the legislative

competence of the Legislature enacting the law, then the law would be held

invalid and the different colour given to that law, would not protect it.

ln S.S. Bola v. B.D. Sardana, the constitutionality of the Haryana Service

Engineers Class I, Public Works Department (B & R Branch), (PWD) and

(Irrigation Branch) Act, 1 995, regulating the inter se seniority of direct recruits

and promotees in each of the services, given retrospective effect from 1st day

of November, 1966, the date on which the State of Haryana was formed was

upheld as intra vires the Legislature, and that it was not a colourable piece of

legislation. The Supreme Court said that colourable legislation had reference

only to the legislative competence and not to the power as such. Explaining the

rule, the Court observed that colourable legislation would emerge only when a

Legislature had no power to legislate on an item either because it was not

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included in the List assigned to it or on account of limitations imposed either

under Part III of the Constitution or any other power under the Constitution.

(5) Doctrine of Incidental and Ancillary Powers

The doctrine explains that when a Legislature is given plenary power to

legislate on a particular subject there must also be an implied power to make

laws incidental to the exercise of such power. Expressions 'incidental' and

'ancillary' powers mean the powers which are required to be exercised for the

proper and effective exercise of legislative powers expressly conferred.

The Gujarat Gas (Regulation of Transmission, Supply and Distribution) Act,

2001 was passed by the State w.r.t. Entry 25 of List II, which reads as "Gas and

Gas Works". Natural Gas including Ldquified Natural Gas" is a Union subject

covered by Entry 53 of List I. Answering the reference made by the President of

India under Article 143(1) a five-Judge Constitution Bench of the Supreme

Court in Association of Natural Gas v. Union of India,20 said that the provision of

the Gujarat Act relating to natural gas and CNG were ultra vires the State

Legislature.

(6) Rule of Harmonious Construction

It has been held to, be the duty of the Courts to harmoniously construe

different provisions of any Statute, Rule or Regulation, if possible, and to

sustain the same rather than striking down the provision outright.

The rule of harmonious construction is invoked in cases there is found to

be some ambiguity in provisions of a Statute. Or, where the provisions of a

Statute seem to be inconsistent or repugnant with each other. In such a case,

the rule requires the Court, interpreting the provisions of the Statute, to so

interpret these provisions that all the provisions survive in harmony with each

other.

Repugnancy Between a Union Law and a State Law (Article 254):

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Article 254 (I) provides : "If any provision of a Law made by the Legislature of

a State is repugnant to any provision of a law made by Parliament which

Parliament is competent to enact, or to any provision of an existing law with

respect to one of the matters enumerated in the Concurrent List, then, subject

to the provisions of Clause (2), the law made by Parliament, whether passed

before or after the law made by the Legislature of such State, or, as the case

may be, the existing law, shall prevail and the law made by the Legislature of

the State shall, to the extent of repugnancy, be void".

Article 254 (1) enumerates the rule that in the event of a conflict between a

Union and State law the former prevails. The Union law may have been

enacted prior to the State law or subsequent to the State Law.

Test of Repugnancy

The Supreme Court in Deep Chand v. State of Uttar Pradesh, laid down

the following tests for determining the repugnancy between the Union Law and

a State Law—

(a) There may be inconsistency in the actual terms of the two Statutes, i.e.,

when one says "do" and the other says "do not".

(b) When both the State and the Union Laws seek to exercise their powers over

the same subject-matter.

(c) Though, there may be no direct conflict, a State Law will be inoperative

because the Union Law is intended to be a complete, exhaustive code.

In Baijnath v. State of Bihar, Parliament passed the Mines and Minerals

(Regulation & Development) Act, 1957 under Entry 54 of the Union List,

declaring to take under Union's control, the regulation of mines and the

development of minerals to the extent provided in the Act. In 1964, the Bihai

Legislature enacted the Bihar Land Reforms (Amendment) Act, 1964 amending

the Bihar Land Reforms Act, 1950.

Exception [Article 254 (2)]:

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Clause (2) of Article 254 contains an exception to the rule of repugnancy

contained in Article 254 (1). The Clause (2) provides : "Where a law made by

the Legislature of a State with respect to one of the matters enumerated in the

Concurrent List contains any provision repugnant to the provisions of an earlier

law made by Parliament or an existing law with respect to that matter, then, the

law so made by the Legislature of such State shall, if it has been reserved for

the consideration of the President and has received his assent, prevail in that

State".

Clause (2) of Article 254 provides for curing of repugnancy which would

otherwise invalidate a State law, which is inconsistent with a Union law or an

existing law. A law so enacted, cannot be challenged on the plea that it lacks

legislative competence.26 In order that the State law should prevail in that State,

the following conditions must be satisfied —

(i) there must be in existence a Union law;

(ii) subsequent to the Union law, the State Legislature enacts a law with respect

to a matter in the Concurrent List; and

(iii) the State law having been reserved for the consideration of the President,

has received his assent thereto.

Subsequent Union Law [Proviso to Article 254 (2)]

Proviso to Article 254 (2). provides that "nothing in this clause shall prevent

Parliament from enacting at any time any law with respect to the same matter

including a law adding to, amending, varying or repealing the law so made by

the Legislature of the State".

Predominance of the Union Power- NON- OBSTANTE CLAUSE

(Article 246):

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Article 246 provides :

(Notwithstanding anything in clauses (2) and (3), Parliament has

exclusive power to make laws with respect to any of the matters enumerated in

List I in the Seventh Schedule (in this Constitution referred to as the "Union

List").

Notwithstanding anything in clause (3), Parliament, and, subject to clause

(1), the Legislature of any State also, have power to make laws with respect to

any of the matters enumerated in List III in the Seventh Schedule {in this

Constitution referred to as the , "Concurrent List").

Subject to clauses (1) and (2), the Legislature of any State has exclusive

power to make laws for such State or any part thereof with respect to any of the

matters enumerated in List II in the Seventh Schedule (in this Constitution

referred to as the "State List.") 'Parliament has power to make laws with respect

to any matter for any part of the territory of India not included in a State,

notwithstanding that such matter is a matter enumerated in the State List.

. Article 246 contains the non-obstante clause. Article 246, not only talks

about distribution of powers, but also explains the supremacy of powers.

It must thus be noted that if the legislative powers of the Union and State

Legislatures, which are enumerated in Lists I and II of the Seventh Schedule,

cannot fairly be reconciled, the former will prevail. Though, every attempt would

be made to reconcile the conflict but if it is irreconcilable, the Central legislation

shall prevail. Thus, if a subject happens to be included both in List I and List II, it

would be the Parliament alone which will be competent to legislate on that

subject.

Again, if there is a conflict between List II and List III, it is Union power with

respect to List III, which shall prevail.

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The opening words of Clause (3) of Article 246, i.e., "subject to clauses (1)

and (2)" expressly secure the predominance of the Union List and Concurrent

List over the State List.

Thus, Parliament's power to legislate with respect to any matter contained

whether in List I or List III would have predominance over State Legislature's

power to legislate with respect to any matter in the State List. Again, while

Parliament's power to legislate on matters in List III has predominance over

State -Legislature's power to legislate on matters in the State List, but State

Legislature's power to legislate on matters in List III is subjected to Parliament's

power to legislate on matters in List I.

In State of Karnataka v. Vishwabarathi House Building Co-operative Society

the Consumer Protection Act, 1986, for the creation of quasi-judicial authorities

at the District, State and Central levels, to provide momentum to the consumer

movement.

Upholding the constitutional validity of the impugned Act, a Bench of three

learned Judges of the Supreme Court held that Parliament had legislative

competence to provide for creation of special courts and tribunals, by virtue of

Clause (2) of Article 246 of the Constitution read with Entry 11-A of List III which

read as "Administration of justice; constitution and organisation of all courts

except the Supreme Court and the High Courts".

RESIDUARY POWERS OF LEGISLATION (Article 248):

Article 248 provides :

'Parliament has exclusive power to make any law with respect to any

matter not enumerated in the Concurrent List or State List.

Such power shall include the power of making any law imposing a tax not

mentioned in either of these Lists. Article 248, thus, confers residuary powers of

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legislation exclusively on the Union Parliament. Articles 248 is to be read with

Entry 97 of Union List which reads as : "Any other matter not enumerated in List

II or List III including any tax not mentioned in either of those Lists".

The Goa, Daman and Diu (Opinion Poll) Act, 1966 was enacted by

Parliament in the exercise of its residuary powers.

LEGISLATION FOR UNION TERRITORIES (ARTICLE 246(4)):

Clause (4) of Article 246 confers unqualified power of legislation on the Union

Parliament. With regard to Union Territories, there is no distribution of

legislative power, since specified in the resolution, it shall be lawful for

Parliament to make laws for the whole or any part of the territory of India.

CIRCUMSTANCES WHEN THE UNION PARLIAMENT CAN MAKE

LAWS ON THE SUBJECTS CONTAINED IN THE STATE LIST:

1. Power of Parliament to legislate in National interest (Article 249)

Parliament may make laws under Article 249 (1) only with respect to suitable

State matters as are specified in the resolution passed by the Council of States.

Such a resolution passed under Clause (1) normally lasts for one year but it

may be renewed as many times as deemed necessary. Every time resolution is

passed, it shall remain in force for one year only.

Laws passed by Parliament under a resolution passed under Clause (I)

Article 249, would cease to have effect on the expiration of a period of six mont

after the resolution has ceased to operate.38

Article 249 has been used a few times. The Supply and Prices of

Goods Act, 1952 and the Evacuee Interest (Separation) Act, 1951 are the

instance

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2. Power of Parliament to legislate during operation of

Proclamation of Emergency (Article 250)

Article 250 (1) provides that "Parliament shall, while a proclamation

Emergency is in operation, have power to make laws for the whole or any pi of

the territory of India with respect to any of the matters enumerated in t State

List".

The Proclamation of Emergency referred to in this Article must be

proclamation which may be made under Article 352.

When a proclamation of Emergency is in operation, Parliament can en;

laws with respect to all the three Legislative Lists in Schedule VII. It can ma

laws conferring powers and imposing duties on the Union and its Officers

respect of all the Lists.

Laws made under Article 250 (I), however, would cease to have effect the

expiration of a period of six months after the Proclamation has ceased

operate.

Article 251 clarifies that Articles 249 and 250 do not restrict the

Legislature of a State to make laws with respect to matters with respect to

which Parliament is empowered to legislate under these Articles. However in

case the two laws, i.e., Parliamentary law and State law, are repugnant each

other, it is the law made by Parliament which will prevail and the Sti law shall

be void to the extent of the repugnancy, that to for the period specific therein.

3. Parliament's Power to legislate with the Consent of the States

(Article 252)

Article 252 (1) provides that when all the Houses of Legislatures of two more

States have passed resolutions to the effect that it shall be desirable tl any of

the matters in the State List should be regulated in such States Parliament by

law, it shall be lawful for Parliament to pass an Act for regulat that matter.

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The resolution must be passed by the Houses of at least two St

Legislatures before Parliament gets empowered to legislate under Article 2 (1).

The resolution may be passed by the simple majority. An Act so pass by

Parliament shall have operation within the territories of only such States.

However, the Act so enacted may be adopted by other States by passing

resolution in the Houses of their Legislatures for that purpose.

Clause (2) of Article 252 provides that such Act as passed by Parliament

under Clause (1), may be amended or repealed by an Act of Parliament passed or

adopted in the like manner, i.e., the procedure provided in Clause (1) for its

enactment.

In case an Act passed by the Parliament in exercise of its legislative powers

under Article 252 pursuant to the resolutions passed by the Houses of

Legislatures of various States, is repealed by the Parliament, the Repealing Act

would not be applicable to the State, unless said State passes another

resolution, approving and adopting the Repealing Act.

The Estate Duty Act, 1952, the Prize Competitions Act, 1955, the Urban Land

(Ceiling & Regulation) Act, 1976, and the Transplantation of Human Organs Act,

1994, are some laws passed by Parliament under Article 252 (I).

4. Legislation for giving effect to International Agreements (Article 253)

Article 253 provides : "Parliament has power to make any law for the whole or

any part of the territory of India for implementing any treaty, agreement or

convention with any other country or countries or any decision made at any '

International Conference, Association or other body".

Article 253 exhibits that in implementing a treaty, agreement or convention

with another country, the limitations imposed by Articles 245 and 246 are lifted

and the entire field of legislation, in that respect, is open to the Union

Parliament.41

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5. Parliament's Power to Legislate Under (Article 356)

Article 356 provides that after the President has declared that the

Government in a State cannot be carried on in accordance with the provisions of

the Constitution, he may by Proclamation further declare that the powers of the

Legislature of that State shall be exercisable by or under the authority of

Parliament.

Having been so authorised Parliament may make laws with respect to any or

all the matters contained in the State List. Laws so made by Parliament would

be operative in that State only. Such laws would continue in force until amended

or repealed by appropriate Legislature, i.e., either by Parliament during the

operation of Proclamation made under Article 356 or by the State Legislature

after such Proclamation ceases to operate.

Requirements as to Recommendations and Previous Sanctions

of the President or the Governor (Article 255):

There are certain Bills, such as Money Bills or Financial Bills which can be

introduced in the Legislature with the prior recommendations of the President or

the Governor, as the case may be. Article 255 provides that if such

recommendations or sanctions have not been taken, the Acts so enacted or any

provision in such Act, shall not be invalid by reason of non-compliance of this

procedural requirement. But, such an Act would be unenforceable until the

infirmity is cured. It stands cured if the Act is assented to by the President in

cases where the recommendations required were that of the President. Where

the recommendations required were that of the Governor, the infirmity may be

cured if the Act is assented to by the Governor or the President.

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