Supreme Court of India
CHEVITI VENKANNA YADAVversusSTATE OF TELANGANA AND ORS.
- Citation
- 2016 INSC 1206
- Decided
- 24 October 2016
- Disposal
- Dismissed
- Bench
- DIPAK MISRA
Holding
The Telangana legislature validly exercised its competence to amend the Agricultural Produce and Livestock Markets Act retrospectively, and the amendment does not contravene Article 14 or affect vested rights, thereby upholding its constitutional validity.
Summary
The petitioners were appointed as Chairmen, Vice‑Chairmen and members of Agricultural Market Committees under the Andhra Pradesh (Agricultural Produce and Livestock) Markets Act, 1966. After the creation of Telangana in 2014, the State promulgated Ordinance No.1 of 2014 reducing the size of the committees, shortening the term of office and ordering that existing members vacate their posts. The High Court struck down the ordinance as violative of Art. 14. The State then enacted Ordinance No.1 of 2015 (later the Telangana (Agricultural Produce & Livestock) Markets (Amendment) Act, 2015) with retrospective effect from 1 January 2012, substituting "appointed" with "nominated", reducing the term to one year and adding a validation clause. The High Court upheld the amendment. On appeal, the Supreme Court held that the Telangana legislature was competent to legislate retrospectively, even for periods before its existence, and that the amendment merely altered the terminology and term of office without infringing Art. 14 or vested rights. The amendment validly removed the basis of the earlier judgment and was not colourable legislation. The appeal was dismissed.
Issues considered
- Whether the Telangana Legislature could enact a law with retrospective effect covering a period before the State’s formation
- Whether the amendment removed the foundation of the earlier High Court judgment and thereby nullified it
- Whether the amendment infringed the vested rights of the existing market‑committee members
- Whether the amendment violated the equality clause under Article 14 of the Constitution
Legislation cited
- Andhra Pradesh Reorganisation Act, 2014
- Constitution of Indias. Article 14
- Telangana (Agricultural Produce and Livestock) Markets Act, 1966s. 11, s. 33, s. 5, s. 6
Subjects
retrospective legislationlegislative competenceArticle 14equality clausevested rightsagricultural market committeestate reorganisationstatutory overrulingcolourable legislationvalidation clauseappointment vs nomination
Judgment
[2016) 7 S.C.R. 689
CHEVITI VENKANNA YADAV A
v.
STATE OF TELANGANA AND ORS.
(Civil Appeal No. 13604 of2015)
OCTOBER 24, 2016 B
[DIPAK MISRA AND SHIVA KIRTI SINGH, JJ.]
Telangana (Agricultural Produce and Livestock) Markets Act,
1966 - s. 5 [As amended by Telangana (Agricultural Produce and
Livestock) Markets (Amendment) Act, 2015} - Validity of -
Constitution of Agricultural Market Committee by erstwhile State
c
of Andhra Pradesh l!nder Andhra Pradesh (Agricultural Produce
and Livestock) Markets Act, 1966 -After formation of new State of
Telangana on 2.6.2014 (on bifurcation of the State of Andhra
Pradesh), the State promulgated Ordinance No. 1 of 2014 to amend
the principal Act - Thereby in s. 5, number of Members of Committee D
was reduced from 18 to 14 and the term of the Market Committee
was reduced from 3 years to 2 years - The Ordinance also provided
that the existing Members shall cease to hold office and the
Government would be competent to appQint persons to exercise the
powers and perform the functions of the Market Committee -
E
Ordinance challenged - High Court held the amendment as
discriminatory and violative of Art. 14 of the Constitution as the
existing Chairman/Vice Chairman/Members of the Market Committee
were sought to be removed prematurely taking away the procedural
safeguards which would otherwise be available to the future
Chairman/Vice Chairman/Members -After the judgment, State issued F
Ordinance No. 1 of 2015 to amends. 5 of the Act [Jn due course the
Ordinance I of 2015 came into force as AmendmentAct 5 of 2015
called Telangana (Agricultural Produce & Livestock) Markets
(Amendment) Act, 2015] - The Amendment was made retrospective
w.e.f 1./.2012 and also added a validating provision - The
G
Ordinance was challenged by the appellants by filing writ petition
- High Court dismissed the petition upholding the amendment - On
appeal, held: The State legislature had competence to amend the
law with retrospective effect - The legislature by the impugned~
amendment substituting the word 'appointed' by the word
H
689
690 SUPREME COURT REPORTS [2016] 7 S.C.R.
A 'nominated'with retrospective effect, removed the distinction between
the existing members and the members who were to come in fature -
Thus an appointment initially made by nomination can be terminated
by the State at its pleasure - Such provision neither offends any
Article of the Constitution nor any public policy or democratic norms
enshrined in the Constitution - The amended provision also does
B
not suffer from the vice of equality clause enshrined u!Art. 14 of
the Constitution, so far as Market Committee and Special Market
Committee are concerned, as both function in different areas -
Constitution of India - Art. 14.
Legislation:
c
Statutory overruling - Held: When a law is enacted with
retrospective effect, it is not an encroachment upon judicial power
when the legislature does not directly overrule or reverse a judicial
dictum - Legislature cannot, by way of an enactment, declare a
decision of a court as erroneous or nullity - However, it has the
D power to rectify a defect in law noticed in the decision of the court
- When such an amendment is made, the purpose thereof is not to
overrule the decision of the Court, but to enact a fresh law with
retrospective effect to alter the foundation and meaning of the
legislation and to remove the base on which the judgment was
E founded - This does not amount to statutory overruling by the
legislature.
Co/ourable legislation - Doctrine of co/ourable legislation
does not involve any question of bona fide or malafide on the part of
the legislature - The whole doctrine revolves itself into question of
F competence of a particular legislature to enact a particular law -
Once it is held that the legislature has the power to enact the law as
per its wisdom, and that too with retrospective effect, it cannot be
said that the enactment is a co/ourable exercise.
Competence of legislature - To enact a law w.ej. the period
G when the legislature itself was not existent - Held: After legislature
comes into existence, it has the competence to enact any law
retrospectively or prospectively within the constitutional parameters.
Dismissing the appeals, the Court
HELD: 1. After the legislature comes into existence, it has
H
CHEVITI VENKANNA YADAV v. STATE OF TELANGANA 691
AND ORS.
the competence to enact any law retrospectively or prospectively A
within the constitutional parameters. [Para 23) [706-B]
Mis. Rattan Lal and Co. and Anr. etc v. The Assessing
Authority, Patiala and Anr. AIR 1970 SC 1742:1969
SCR 544 - relied on.
B
2.1 There is a demarcation between legislative and judicial
functions predicated on the theory of separation of powers. The
legislature has the power to enact laws including the power to
retrospectively amend laws and thereby remove .causes of
ineffectiveness or invalidity. When a law is enacted with
retrospective effect," it is not considered as an encroachment upon c
judicial power when the legislature does not directly overrule or
reverse a judicial dictum. The legislature cannot, by way of an
enactment, declare a decision of the court as erroneous or a nullity,
but can amend the statute or the provision so as to make it
applicable to the past. The legislature has the power to rectify,
through an amendment, a defect in law noticed in the enactment D
and even highlighted in the decision of the court. This plenary
power to bring the statute in conformity with the legislative intent
and correct the flaw pointed out by the court, can have a curative
and neutralizing effect. When such a correction is made, the
purpose behind the same is not to overrule the decision of the E
court or encroach upon the judicial turf, but simply enact a fresh
law with retrospective effect to alter the foundation and meaning
of the legislation and to remove the base on which the judgment
is founded. This does not amount to statutory overruling by the
legislature. In this manner, the earlier decision of the court
becomes non-~xistent and unenforceable for interpretation of the F
new legislation. No doubt, the new legislation can be tested and
challenged on its own merits and on the question whether the
legislature possesses the competence to legislate on the subject
matter in question, but not on the ground of over-reach or
colourable legislation. [Para 29) [709-E-H; 710-A-B] G
2.2 Once it is held that the legislature has the power to
enact the law as per its wisdom, and that too with retrospective
effect, it cannot be said that the enactment is a colourable
. exercise. The doctrine of colourable legislation does not involve
any question of bona fide or ma/a fides on the part of the H
692 SUPREME COURT REPORTS [2016] 7 S.C.R.
A legislature. The whole doctrine revolves itself into the question
of the 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 inconsequential, unless
they, in the amended incarnation invite the frown of any Article of
the Constitution. [Para 30) [710-C-D]
B
Shri Prithvi Cotton Mills Ltd. and another v. Broach
Borough Municipality and Ors. (1969) 2 SCC 283:1970
(1) SCR 388; Tara Prasad Singh and Ors. v. Union of
India and Ors. (1980) 4 SCC 179:1980 (3) SCR 1042;
State of T.N. v. Arooran Sugars Ltd (1997) 1 SCC
c 326:1996 (8) Suppl. SCR 193 - followed.
Bhubaneshwar Singh and Anr. v. Union of India and
Ors. (1994) 6 SCC 77:1994 (1) Suppl. SCR 639; Central
Coal Fields Ltd. v. Bhubaneswar Singh and Ors. (1984)
4 SCC 429:1985 (1) SCR 618; State of Himachal
D Pradesh v. Narain Singh (2009) 13 SCC 165:2009 (10)
SCR 821; Dharan1 Dutt and Ors. v. Union of India &
Ors. (2004) 1 SCC 712:2003 (6) Suppl. SCR 151 -
relied on.
3.1 The High Court in its earlier judgment had struck down'
E the amended provision on the foundation that there was
discrimination between the existing appointees and future
appointees to the office of members, Vice-Chairmen and
Chairmen. The High Court had opined that the classification
between the two categories was not reasonable and it caused
F discomfort to Article 14 of the Constitution. It had given emphasis
on the statutory safeguards meant for removal. The legislature
after the decision of the High Court has amended the provision
and thereby removed the distinction between the existing
members and the members who are to come in future. It has
substituted the word "appointed" by "nominated". The members
G were not elected. They were not appointed by any kind of
selection. They were chosen by the State Government from
certain categories. The status of the members have been changed
by amending the word "appointed" by substituting it with the
word "nominated". Thus, the legislature has retrospectively
H changed the meaning. Therefore, by virtue of the amendment,
CHEVITI VENKANNA YADAV v. STATE OF TELANGANA 693
AND ORS.
the term which has been reduced for a nominated member stands A
on a different footing. If an appointment has been made initially
by nomination, there can be no violation of any provision of the
Constitution in case the legislature authorised the State
Government to terminate such appointment at its pleasure and
to nominate new members in their place. Such provision neither
B
offends any Article of the Constitution nor the same is against
any public policy or democratic norms enshrined in the
Constitution. [Para 31] (710-E-H; 711-E-H]
Om Narain Agarwal and Ors. v. Nagar Palika,
Shahjahanpur and Ors. (1993) 2 SCC 242:1993 (2)
SCR 34 - relied on. c
3.2 The legislature, in its wisdom, has substituted the word
"appointment" and made it "nomination with retrospective
effect". To enable it to curtail or reduce the term, the procedure
for removal remains intact. A nominee can go from office by efflux
of time when the period is over. That is different than when he is D
removed. A nominated member, in praesenti, can also be
removed by adopting the procedure during the period. Otherwise,
he shall continue till his term is over; and the term is one year. It
cannot be said that by virtue of amendment vested rights of the
appellants have been affected. [Para 32) [712-A-C) E
4. The composition, function and purpose of the Market
Committee and Special Market Committee arc different. They
basically fall into different categories. It is difficult to weigh them
in the scale of Article 14. The equality clause, is not affected.
The characteristics of the committees being different, Article 14 F
is not attracted. [Para 33] [712-D]
D.S. Reddy v. Chancellor, Osmania University and Ors.
(1967) 2 SCR 214; P. Venugopal v. Union of India
(2008) 5 SCC 1:2008 (8) SCR l - referred to.
Case Law Reference G
(1?67) 2 SCR 214 relied on Para8
2008 (8) SCR 1 referred to Para8
1969 SCR 544 relied on l'ara 23
H
694 SUPREME COURT REPORTS [2016] 7 S.C.R.
A 1970 (1) SCR 388 followed Para24
1994 (1) Suppl. SCR 639 relied on Para25
.1?80 (3) SCR 1042 followed Para 25
1985 (1) SCR 618 relied on Para26
B ~099 (10) SCR 821 relied on Para 27
1996 (8) Suppl. SCR 193 followed Para28
2003 (6) Suppl. SCR 151 relied on Para30
1993 (2) SCR 34 relied on Para 31
c CIVIL APPELLATE JURISDICTION: Civil Appeal No. 13604
of2015.
From the Judgment and Order dated 18.06.2015 of the High Court
of Judicature at Hyderabad for the State ofTelangana and the State of
Andhra Pradesh in WP No. 11512 of2015
D WITH
C.A. Nos. 13613 of2015.
V. V. S. Rao, Sr. Advocate, K. Parameshwar and Ms. Vijayasri
Patnaik, Advocates for the appellant.
E V. Giri, Sr. Advocate, K. Ramkrishna Reddi, Advocate General,
Mohan Rao, S. Udaya Kumar Sagar and T. V. Ratnam, Advocates for
the respondents.
The Judgment of the Court was delivered by
DIPAK MISRA, J. I. In these appeals, by special leave, the
F appellants have called in question the legal acceptability of the judgment
and order passed by the High Court of Judicature at Hyderabad for the
State of Telangana and for the State of Andhra Pradesh in a batch of
writ petitions wherein the Division Bench has upheld the constitutional
validity of sub-section (3) of Section 5 of theAndhra Pradesh (Agricultural
G Produce and Livestock) Markets (Amendment) Act, 2015 (for brevity,
"the Act").
2. The High Court, for the sake of convenience, has stated the
facts as adumbrated in W.P. No. 11512 of2015 and, therefore, we shall
advert to the facts of the said writ petition. Needless to say, the averments
in all the writ petitions are fundamentally the same.
H
CHEVITI VENKANNA YADAV v. STATE OF TELANGANA 695
AND ORS. [DIPAK MISRA, J.]
3. The petitioners in the said writ petition were appointed as A
Chairmen ofAgricultural Market Committees by the State for a term of
3 years. It is worthy to note thatvide GO. Rt. No. 435 dated 04.03.2013
the Government of Andhra Pradesh in exercise of powers conferred
under Section 6(1) read with sub-sections (I) and (2) of the Section 5 of
the Act constituted the Agricultural Market Committee, Kubeer, Adilabad
B
District with one B. Chandra Shekar as Chairman and others as
members. It was mentioned that the said B. Chandra Shekar was
nominated as Chairman and one D. Dattaram as Vice-Chairman and
16 others as members. Similar notifications were issued in ·respect of
other Agricultural Market Committees vide notifications dated 04.03.2013,
3 J.08.2013, 18.11.2013,27.11.2013 and after such nomination the persons C
who were nominated as Chairman, Vice-Chairman and members
continued in their respective assignments.
4. On 02.06.2014 the State of Telangana was carved out of
erstwhile State of Andhra Pradesh and the statehood came into effect
from the said date by virtue of Andhra Pradesh Reorganization Act, D
2014 [Act 6 of2014] (hereinafter referred to as "The Reorganization
Act"). After formation of the new State the Governor of Telangana
promulgated Ordinance No. 1 of2014 to amend the Act and by virtue of
the said Ordinance Section 5 of the Act underwent two major changes.
The total number of members in the market committee was reduced
from 18 to 14 and the term of the market committee was reduced from E
3 to 2 years. It was also provided in the Ordinance that notwithstanding
anything contained in the principal Act, the existing members shall cease
to hold office and the Government would be competent to appoint person
or persons, to exercise the powers and perfonn the functions of the
market committee.
5. To appreciate the controversy in proper perspective, the relevant
part of the Ordinance is reproduced below:-
"2. In the Telangana (Agricultural Produce and Livestock)
Markets Act, 1966 (hereinafter refen-ed to as the principal
Act) in section 5. G
(amendment of section 5, (act No. 16of1966))
(I) in sub-section (I)
(a) in the opening paragraph, for the words "eighteen
H
696 SUPREME COURT REPORTS [20 I6) 7 S.C.R.
A members", the word "fourteen members" shall be
substituted;
(b) in clause (i) :- for the words "eleven members", the
words "eight members" shall be substituted;
(c) in the second proviso, for the words "five members",
B the words "three members" shall be substituted;
(d) in clause (ii) forthe words "three members", the words
"two members" shall be substituted;
(2) In sub-section (3) for the words "three years", the words
c "two years" shall be substituted.
3. Existing Members, Vice-Chairman and Chairman of the
Market Committee to cease hold Office: (l)
Notwithstanding anything contained in the principal Act, all
the members, Vice-Chairman and Chairman of every
Market Committee holding office at the commencement of
D the Telangana (Agricultural Produce and Livestock)
Markets (Amendment) Ordinance, 2014 shall cease to hold
office as such and thereupon it shall be competent for the
Government to appointment a person or persons to exercise
the powers and perform the functions of the Market
E Committee until the Market Committee is re-constituted in
accordance with the provisions of section 5 of the principal
Act as amended by this Ordinance."
remphasis added]
6. After the Ordinance was issued, the Agriculture and Cooperation
·F (MKT.I) Department vide G.0.MS. No. 11 dated I 8.08.2014 passed
the following order:-
" In pursuance of an Ordinance issued in the reference 3rd
read above and in accordance with clause (3) of the Andhra
Pradesh (Agricultural Produce and Livestock) Markets
G (Amendment) Ordinance, 2014, all the members, Vice-
Chairmen and Chairmen of the existing Market Committees
shal I cease to hold office. The Commissioner and Director
ofAgricultural Marketing, Telangana, Hyderabad is directed
to appoint a person or persons with immediate effect to
exercise the powers and perform the functions of each
H
CHEVITI VENKA.NNA YADAV v. STATE OF TELANGANA 697
AND ORS. [DIPAK MISRA, J.]
Market Committee until the Market Committee is re- A
constituted in accordance with the provisions of section 5
of the Telangana (Agricultural Produce and Livestock)
Markets Act, 1966 as amended by an Ordinance in the 3rd
read· above.
2. The Commissioner and Director of Agricultural. B
Marketing, Telangana, Hyderabad shall take further
necessary action in the matter accordingly."
7. The Ordinance and the consequent order passed on that basis
were challenged in a batch of Writ Petitions being Writ Petition No.
24877of2014 and connected matters before the High Court. The High c
Court came to hold that the removal of all of the petitioners vi de clause-
3 by way oflegislative action was discriminatory as future appointees in
the office of the members, Vice-Chairmen and Chairmen were liable to
be removed or denuded of their power under the existing provisions as
provided under Sections 5, 6, 6(A) & 6(B) of the said Act whereas the
writ petitioners were sought to be removed prematurely taking away the D
procedural safeguard established by law. The High Court further ruled
that the writ petitioners had been picked up as a class and were being
treated discriminately compared to the same class of future members,
Vice-Chairmen and Chairmen without any intelligible differentia inasmuch
as similar provision of removal had not been made applicable to the E
future members, Vice-Chairmen and Chairmen who are entitled to have
the procedural safeguard. On that ground it opined that the amended
provision invited the frown of Article 14 of the Constitution, for it was
incomprehensible as 1egards the difference between the existing
members, Vice-Chairmen and Chairmen of the market committee and
future members of the same committee for which different provision is F
envisaged with regard to their removal. Eventually the High Court held:-
" We hold that by making the above provision by insertion
of clause-3 of the Ordinance the petitioners. and each of
them have been treated with naked discrimination. In other
words equal protection of laws has not been given as G
guaranteed in Article 14 of the Constitution oflndia. The
petitioners are entitled to be protected as regards their term
of office and their functioning as Chairmen qua members
against arbitrary, whimsical removal like present one by
Sections 5(3) (5) (7), 6(A) & 6(R) of the said Act at par H
698 SUPREME COURT REPORTS [2016] 7 S.C.R.
A with future counterpart. This right of equality has been
taken away by above clause."
8. Thereafter, the High Court referred to decisions in D.S. Reddy
v. Chancellor, Osmania University and otl1ers 1 and P. Venugopal v.
Union of India 2 and further opined thus:-
B "[n the case on hand, of course, it is a not a singular
candidate but a group of candidates who were equally
aggrieved and equally placed and those were clubbed in
one class and treated differently from other groups in the
same office viz., future members and office bearers of the
c market committee.
x x x x x
We, therefore, accepting the contention of the learned
counsel for the writ petitioners while overruling that of the
learned Advocate General hold Clause-3 of the said
D Ordinance is not constitutionally valid. Accordingly, the same
is struck down. In view of this declaration and striking
down, consequential Government Order issued pursuant
thereto is also void and illegal, the same is also struck down
and that the petitioners and each of them shall be restored
E to their respective positions. We accordingly direct the
Government to do so forthwith."
9. After the judgment of the High Court in Writ Petition No. 24877
of 2014 and connected matters, the Government of Telangana issued
Ordinance No. I of2015 dated 13.02.2015 to amend Section 5 of the
Act. The Ordinance was challenged before the High Court which issued
F
notice and directed status quo to be maintained with regard to functioning
of the market committee. [n due course, the Amendment Act No. 5 of
2015 came into force. The said Amendment Act is called the Telangana
(Agricultural Produce & Livestock) Markets (Amendment) Act,.2015.
The said Amendment Act has been made retrospective with effect from
G 01.01.2012. The Amendment Act amends Sections 5, SA, 6, 11, 22 and
33. lt also adds a validating provision. The High Court in a tabular form
has referred to the statutory scheme under the principal Act of 1966 and
the Amendment Act. We think it appropriate to refer to the relevant
1
(1967)2SCR214:AIR 1967SC 1305
'(2008) s sec 1
H
CHEVITI VENKANNA YADAV v. STATE OF TELANGANA 699
AND ORS. [DIPAK MISRA, J.]
provisions of the principal Act and the Amendment Act. Section 5( 1) A
of the principal Act provided that every market committee shall consist
of eighteen members and shall be constituted by the Government by
notification in the manner prescribed therein. Section 5( 1)(i) stipulated
that eleven members to be appointed by the Government in consultation
with the Director of Marketing from among certain categories mentioned
B
thereafter, namely, growers of agricultural produce who are small farmers,
growers of agricultural produce other than small farmers, owners of
livestock and products of livestock in the notified areas. The principal
Act provided certain members in respect of certain categories which
has been changed by the Amendment Act. We need not advert to the
same in detail. Section 5(2) of the principal Act provided composition of c
the market committee and it was couched in a different language. Section
5(2) of the principal Act is reproduced below:-
"(2) Every market committee shall have a Chairman
appointed from among its members specified in Clause (i)
of sub-section ( 1) and Vice-Chairman be appointed from D
among its members specified in Clause (i) or Clause (ii) of
sub-section (I), by the Government in consultation with the
Director of Marketing;"
10. Section 5(3) of the principal Act stipulated about the term of
office of the members appointed under sub-section ( 1). Sub-sections E
(3), (5), (6) and (7) of Section 5 which are relevant for adjudication of
the !is, are reproduced below:-
"(3) Save as otherwise provided in this Act, the tenn of
office of the members appointed under sub-section (I) shall
be three years from the date of appointment: F
Provided that a member appointed under clause (ii) of
sub-section (I) shall cease to hold office, ifhe ceases to be
a trader:
Provided further that a non-official member of the market
committee shall cease to hold his office ifhe absents himself G
from three consecutive meeting3 of the committee, including
meeti1;gs which for want of quorum could not be held.
Expla11atio11 :- For the purposes of the second proviso,
no meeting of the market committee from which a member
H
700 SUPREME COURT REPORTS [2016) 7 S.C.R.
A absents himself shall be counted against him if due notice
of that meeting was not given to him.
x x x x x
(5) The Government may, by notification, remove the
Chairman or Vice-Chairman, who in their opinion willfully
B omits or refuses to carry out or disobeys the provisions of
this Act or any rules or bye-laws of lawful orders issued
hereunder or abuses his position or the power vested in
him, after giving him an opportunity for explanation, and
the said notification shall contain a statement of the reasons
c of the Government for the action taken.
(6) Any person removed under sub-section (5) from the
office of Chairman or Vice-Chairman shall be ineligible for
appointment to either of the said offices, until the date of
next reconstitution of the market committee under sub-
D section (I) of section 6.
(7) Any other member of a market committee may, at any
time, be removed from office by the Government for such
reasons and after such inquiry, as may be prescribed."
11. Section 6 of the principal Act provided thus:-
E
"Section 6. Reconstitution of the Market Committee:- (1)
The Government shall reconstitute the market committee
on the expiration of the term of office of the members of
the market committee or of the term as extended under
sub-section(2).
F
(2) The Government may extend the term of office of the
members of a market committee for a period not exceeding
one year:
Provided that no such extension shall be given for a period
exceeding six months at a time.
G
(3)(a) Where, for any reason, there is delay in. the
constitution or reconstitution of the market committee in
accordance with the provisions of this Act, the Government
or the Director of Marketing may appoint a person or
persons to manage the affairs of the market committee until
H
CHEVITI VENKANNA YADAV v. STATE OF TELANGANA 701
AND ORS. lDIPAK MISR..<\, J.]
the market committee is re-constituted. A
(b) The person or persons so appointed shall, subject to
the control of the Government and to such instructions or
directions as they may issue from time to time, exercise the
powers, discharge the duties and perform the functions of
the market committee and take all such action as may be B
required in the interests of the market committee.
( c) The Government may fix the remuneration payable to
the person or persons so appointed. The amount of such
remuneration and other costs, if any, incurred in the
nanagement of the market committee shall be payable out c
Jf the Market Committee Fund.
(d) The Government may at any time, and shall at the
expiration of the period of appointment of person or persons
so appointed, arrange for the constitution or reconstitution
of the market committee in accordance with the provisions D
of this Act. The person or persons so appointed shall cease
to manage the affairs of the market committee on such
constitution or reconstitution."
12. There were other provisions empowering the State Government
and the Director of Marketing to suspend the Chairman of the market E
committee, withdraw the power of Chairman and make certain other
arrangements which are not relevant for the present purpose.
13. The Amendment Act No. 5 of2015 received the assent of the
Governor on lJlh April, 2015. Sub-section (2) of Section 1 provides that
it shall be deemed to have come into force with effect from 01.01.2012.
F
The amendment to Section 5 of the principal Act is as follows:-
"( l) In sub-section ( l )-
(a) in the opening paragraph, for the word "eighteen" the
word "fourteen" shall be substituted;
G
(b) in clause (i), for the word "eleven", the word "eight"
and for the word "appointed", the word "nominated" shall
be substifuied respectively;
(c) in the second proviso tO'clause (i) for the word "five",
the word "three" shall be substituted;
H
702 SUPREME COURT REPORTS [2016) 7 S.C.R.
A (d) in clause (ii) for the word "three'', the word "two" and
for the word "appointed'', the word "nominated" shall be
substituted respectively.
(e) in clause (iii), for the word "appointed'', the word
"nominated" shall be substituted.
B (2) In sub-section (2), for the word "appointed", occurring
at two places, the word "nominated" shall be substituted;
(3) for sub-section (3) along with the first proviso thereunder,
the following shall be substituted, namely-
c "(3) Save as otherwise provided in this Act, the term of
office of the members nominated under sub-section (I)
shall be one year from the date ofnomination;
Provided that a member nominated under clause
(ii) of sub-section (I) shall cease to hold office, if he/
D she ceases to be a trader".
(4) in sub-section ( 6), for the word "appointment'', the word
"nomination" shall be substituted.
(5) in sub-section (9), for the word "appointed" the word
"nominated" shall be substituted;
E
(6) in sub-section (I 0), for the word "appointment", the word
"nominated" shall be substituted;
(7) after sub-section (I 0), the following sub-section shall
be inserted, namely-
F "( 11) Notwithstanding anything contained in any
provisions of this Act, members of the Committee
including the Chairman and Vice-Chairman shall hold
the office during the pleasure of the Government".
14. Certain amendments have been made in Section 6 of the
G principal Act which are extracted below:-
"(i) in clause (a), for the words "may appoint" the
words "may nominate" shall be substituted;
{ii) in clause (b ), for the word "appointed" the word
"nominated" shall be substituted;
H
CHEVITI VENKANNA YADAV v. STATE OF TELANGANA 703
AND ORS. [DIPAK MISRA, J.]
(iii) in clause (c), for the word "appointed" the word A
"nominated" shall be substituted;
(iv) in clause (d),-
(a) for the words "appointment" the word "nomination"
shall be substituted;
B
(b) for the word "appointed" occurring at two places
the word "nominated" shall be substituted."
15. In a similar manner, in sub-section (I) of Section 11 of the
principal Act, the word "appointed" has been substituted with the word
"nominated". In Section 33 in sub-section (2) in clause (a) of the principal c
Act, the word "appoint" has been substituted with the word "nominate".
Be it stated, wherever the words "appointment", "appointed" and
"appoint" are used in the principal Act, they have been substituted with
the words "nomination", "nominated" and "nominate" respectively. The
provision relating to validation, which is a part of Section 33, reads as
T)
follows:-
"Notwithstanding anything contained in any provisions of
this Act, the members of the Committee, including Chairman
and Vice-Chairman, whose term expiring under the
provisions of this Act, their continuation in the office from
the date of expiring of their term, are validated in all respects, E
as if they deemed to have been validly nominated for the
said period."
16. Before the High Court, as the impugned order depicts, the
principal challenge was to Section 5 of the Act whereby the term of the
market committee was reduced from three years to one year by giving F
retrospective effect in the Amendment Act. It was contended before
the High Court that the Amendment Act had no rationale or nexus to the
objects sought to be achieved through the retrospective operation of the
Amendment Act and Section 5(3) which has reduced the term is ex
facie illegal, discriminatory and suffers from vice of absolute
G
unreasonableness. A contention was advanced that the Amendment
Act so far as market committees are concerned is violative of Article 14
of the Constitution as special market committees have been left out
from such reduction of term.
17. It may be noted here that during the final disposal of the matter,
H
704 SUPREME COURT REPORTS [2016) 7 S.C.R.
A the High Court took note of the question framed at the initial stage which
is as follows:-
" Whether the Legislature while making an enactment can
flout the constitutional provisions and that the retrospective
operation of Amendment Act from the date even before
B the State of Telangana was formed stands to scrutiny of
constitution provisions."
18. It was also urged that reducing the term ofthe market committee
was not only an unreasonable act but also against the judgment rendered
by the High Court on the previous occasion inasmuch as the provision
c relating to validation has not removed the base of the judgment.
l 9. On behalf of the State, it was argued before the High Court
that in the absence of challenge to the competence of the State
Legislature, the petitioners' submissions were not acceptable. As regards
competence of the legislature, it was also urged that Telangana State
D Legislature is competent to make law on the subject in question and is
entitled to make amendments to all the Acts in vogue in the composite
State. It was canvassed on behalf of the State that an amendment to
the existing law with retrospective effect would not be unconstitutional.
As regards comparison drawn between the market committee and special
market committee, it was contended that the two function in different
E areas and as a matter of fact, only a few special market committees
were constituted.
20. The High Court, appreciating submissions advanced at the Bar,
came to hold that the legislature of State ofTelangana has authority to
legislate with retrospective effect before coming into force of the
F Reorganization Act; that the petitioners therein did not have any vested
right to continue; that the amended provisions does not usurp the judicial
power and that the provisions are neither arbitrary nor discriminatory
itnd do not offend any limb ofArticle l 4 of the Constitution. Being of this
view, the High Court by the impugned judgment and order declined to
G interfere and resultantly dismissed the writ petitions.
21. We have heard Mr. V.V.S. Rao, learned senior counsel with
Mr. K. Parameshwar, learned counsel for the appellants and Mr. V. Giri,
learned senior counsel with Mr. S. Udaya Kumar Sagar, learned counsel
for the respondents.
H
CHEVITI VENKANNA YADAV v. STATE OF TELANGANA 705
AND ORS. [DIPAK MISRA, J.]
22. Having heard learned counsel for the parties, we are disposed A
to think, the following issues arise for delineation:-
a) Whether the State Legislature could have legislated for the period
prior to coming into existence of the State?
b) Whether the base of earlier judgment has been removed to
erase the effect of the judgment? B
c) Whether by virtue of the amendment the vested rights have
been affected?
d) Whether the amended provisions suffer from the vice of the
equality clause as enshrined under Article 14 of the Constitution? c
23. We shall deal first point first. The Reorganization Act came
into force on 02.06.2014. Submission is, prior to the said date, the legislature
that was not in existence as an entity could not have legislated relating to
-some aspect that covers the prior period. The aforesaid submission
should not detain us long. In Mis. Rattan Lal and Co. and another etc
D
v. The Assessing Authority, Patiala and anotl1er3 the Court was dealing
with competence of State ofHaryana pertaining to a legislation enacted
by State ofHaryana by way of an amendment prior to the reorganisation
of the State. In that context the Court held:-
"It is argued that the reorganisation of the State took place
E
on November 1, 1966 and the amendment in some of its
parts seeks to amend the original Act from a date anterior
to this date. In other words, the legislature of one of the
States seeks to amend a law passed by the composite State.
This argument entirely misunderstands the position of the
original Act after the reorganisation. That Act applied now F
as an independent Act to each of the areas and is subject to
the legislative competence of the legislature in that area.
The Act has been amended in the new States in relation to
the area of that State and it is inconceivable that this could
not be within the competence. If the argument were
G
accepted .then the Act would remain unamendable unless
the_ composite State came into existence once more. The
scheme of the States Reorganization Acts makes the Jaws
applicable to the new areas lmtil superseded, amended or
'AIR 1970 SC 1742
H
706 SUPREME COURT REPORTS [2016] 7 S.C.R.
A altered by the appropriate legislature in the new States.
This is what the legislature has done and there is nothing
that can be said against such amendment."
The aforesaid passage makes it clear as crystal that after the
legislature came into existence, it has the competence to enact any law
B retrospectively or prospectively within the constitutional parameters.
24. The second issue that emanates for consideration is whether
the base of the earlier judgment has really been removed. Before stating
the factual score it is necessary to state how this Court has viewed the
said principle. In Shri Prit/1vi Cotton Mills Ltd. mu/ anot/ler v. Broach
c Borough Municipality and oilier~. the Constitution Bench while dealing
with the legislation which intended to validate the tax declared by law to
be illegal, opined that when a Legislature sets out to validate a tax declared
by a court to be illegally collected under an ineffective or an invalid law,
the cause for ineffectiveness or invalidity must be removed before
validation can be said to take place effectively. The most important
D condition, of course, is that the Legislature must possess the power to
impose the tax, for if it does not, the action must ever remain ineffective
and illegal. Granted legislative competence, it is not sufficient to declare
merely that-the decision of the Court shall not bind, for that tantamount
to reversing the decision in exercise of judicial power which the
E Legislature does not possess or exercise. A court's decision must always
bind unless the conditions on which it is based are so fundamentally
altered that the decision could not have been given in the altered
circumstances. Thereafter, the Court proceeded to state that validation
ofa tax so declared illegal may be done only ifthe grounds of illegality or
invalidity are capable of being removed and are in fact removed and the
F tax thus made legal. The legislature does it many a way. One of the
methods it may adopt is to give its own meaning and interpretation of the
law under which tax was collected and by legislative fiat makes the new
meaning binding upon courts. On such legislation being brought, it
neutralizes the effect of the earlier decision as a consequence of which
G it becomes ineffective. The test of validity of a validating law depends
upon whether the Legislature possesses the competence which it claims
over the subject-matter and whether in making the validation it removes
the defect which the courts had found in the existing law and makes
adequate provisions in the validating law for a valid imposition of the tax.
'(1969) 2 sec 2s3
H
CHEVITI VENKANNA YADAV v. STATE OF TELANGANA 707
AND ORS. [DIPAK MISRA, J.]
25. In Blwbanesltwar Singh and anotlter v. Union of India A
and otlters5 in view of Section 3 of the Coking Coal Mines (Emergency
Provisions) Act, 1971 which has promulgated in the year 1971 the
custodian being appointed by the Central Government took over the
management of Coking Coal Mines and the said mines remained under
the management of the Central Government through the custodian during
B
the period from 17.10.1971 to 30.04.1972. The Coking Coal Mines
(Nationalisation)Act, 1972 came into force w.e.f. 1.5.1972, and the right,
title and interest of the owners in relation to Coking Coal Mines stood
transferred to and vested absolutely in the Central Government free
from all encumbrances. The provisions of the said Act were challenged
before this Court in the case of Tar" Pras"d SingIt "nd otlters v. Union c
ofIndia and otlters6 and the Constitution Bench upheld the validity of
the said Act. The writ petitioner before the High Court making a grievance
that the Custodian had debited the expenses for raising the coal while
the Coking Coal Mine was under the Management of the Custodian but
had not credited the price for the quantity of the coal raised, which was
D
lying in stock on the date prior to the date the said Coal Mine vested
under the Central Government. The High Court allowed the writ petition
and a direction was issued that account be recast and payment be made
to the petitioner. The appeal before this Court by special leave was
dismissed, as this Court was of the view that sale price of stock of
extracted coal lying at the commencement of the appointed date had to E
be taken into account for determining the profit and loss during the period
of management of the mine by the Custodian. After the appeal preferred
by the Coal Fields was dismissed, Coal Mines Nationalisation Laws
(Amendment) Ordinance, 1986 was promulgated and later on replaced
by Coal Mines Nationalisation Laws (Amendment)Act, 1986 came into
F
force. By Section 4 of the Amendment Act, sub-section (2) was
introduced in Section 10 of the Coking Coal Mines (Nationalisation)Act,
1972. The said provision declared that the amounts specified in the fifth
column of the First Schedule against any coking coal mines or group of
coking coal mine specified in the second column of the said schedule are
required to be given by the Central Government to its owner under sub- G
section (I) shall be deemed to be included, and deemed always to have
included, the amount required to be paid to such owner in respect of coal
in stock or other assets referl'cd to in clause U) of Section 3 on the date
'(1994) 6 sec 77
'(1980) 4 sec 179
H
708 SUPREME COURT REPORTS [20 I 6) 7 S.C.R.
A immediately before the appointed day and no other amount shall be paid
to the owner in respect of such coal or other assets. Section I 9 was the
validating provision.
· 26. The writ petition was filed questioning the validity of the said
ordinance primarily on the ground that it purported to nullify the judgment
B rendered in the case of Central Coal Fields Ltd. v. B/1ubaneswar
Singh and ot/1ers1 • The Court referred to the provisions and opined
that:-
" ... if sub-section (2) as introduced by the Coal Mines
Nationalisation Laws (Amendment) Act, I 986 in Section
c I 0 had existed since the very inception, there was no
occasion for the High Court or this Court to issue a direction
for taking into account the price which was payable for the
stock of coke lying on the date before the appointed day.
The authority to introduce sub-section (2) in Section I 0 of
the aforesaid Act with retrospective effect cannot be
D questioned. Once the amendment has been introduced
retrospectively, courts have to act on the basis that such
provision was there since the beginning. The role of the
deeming provision need not be emphasised in view of series
of judgments of this Court. Hence reading sub-section (2)
E of Section I 0 along with Section I 9, it has to be held that
respondents are nQt required to take into account the stock
of coke lying on the date prior to the appointed day, for the
··purpose of accounting during the period when the mine in
question was under the management of the Central
Government, because it shall be deemed that the
F compensation awarded to the petitioner included the price
for such coal lying in stock on the date prior to the appointed
day. Neither any compensation is to be paid for such stock
of coal nor the price thereof is to be taken into account for
the purpose of sub-section (I) of Section 22 of the Coking
G Coal Mines (Nationalisation) Act, 1972."
Being of this view, the Court dismissed the writ petition.
27. In State ofHimacl1a/ Pradesh v. Narain Singh 8 while dealing
with the validation of statute the Court ruled that:- ·
7 (1984)4SCC429
H '(2009) 13 sec 165
CHEVITI VENKANNA YADAV v. STATE OF TELANGANA 709
AND ORS. [DIPAK MISRA, J.]
"It is therefore clear where there is a competent legislative A
provision which retrospectively removes the substratum of
foundation of a judgment, the said exercise is a valid
legislative exercise provided it does not transgress any other
constitutional limitation."
28. To arrive at the said conclusion, the two-Judge Bench B
reproduced from the decision in Constitution Bench in State of T.N. v.
Arooran Sugars Lt<f which is to the following effect:-
"It is open to the legislature to remove the defect pointed
out by the court or to amend the definition or any other
provision of the Act in question retrospectively. In this c
process it cannot be said that there has been an
encroachment by the legislature over the power of the
judiciary. A court's directive must always bind unless the
conditions on which it is based are so fundamentally altered
that under altered circumstances such decisions could not
have been given. This will include removal of the defect in D
a statute pointed out in the judgment in question, as well as
alteration or substitution of provisions of the enactment on
. which such judgment is based, with retrospective effect."
29. From the aforesaid authorities, it is settled that there is a . E
demarcation between legislative and judicial functions predicated on the
theory of separation of powers. The legislature has the power to enact
laws including the power to retrospectively amend laws and thereby
remove causes of ineffectiveness or invalidity. When a law is enacted
with retrospective effect, it is not considered as an encroachment upon
judicial power when the legislature does not directly overrule or reverse F
a judicial dictum. The legislature cannot, by way of an enactment, declare
a decision of the court as erroneous or a nullity, but can amend the
statute or the provision so as to make it applicable to the past. The
legislature has the power to rectify, through an amendment, a defect in
law noticed in the enactment and even highlighted in the decision of the
court. This plenary power to bring the statute in conformity with the G
legislative intent and correct the flaw pointed out by the court, can have
a curative and neutralizing effect. When such ·a correction is made, the
purpose behind the same is not to overrule the decision of the court or
encroach upon the judicial turf, but simply enact a fresh law with
9
(1997) 1 sec 326
H
710 SUPREME COURT REPORTS (2016] 7 S.C.R.
retrospective effect to alter the foundation and meaning of the legislation
and to remove the base on which the judgment is founded. This does
not amount to statutory overruling by the legislature. In this manner, the
earlier decision of the court becomes non-existent and unenforceable
for interpretation of the new legislation. No doubt, the new legislation
can be tested and challenged on its own merits and on the question
8
whether the legislature possesses the competence to legislate on the
subject matter in question, but not on the ground of over-reach or
colourable legislation.
30. Once we hold that the legislature has the power to enact the
c law as per its wisdom, and that too with retrospective effect, the
contention that the enactment is a colourable exercise, must fail and
should be rejected. In Dlumrm Dutt <tnd others v. Union of lntlia
and ot'1ers' 0 , the Court has highlighted that the doctrine of colourable
legislation does not involve any question of bona fide or mala tides on
the part of the legislature. The whole doctrine revolves itself into the
D question of the competency ofa 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 inconsequential, unless they in the
amended incarnation invite the frown ofany Article of the Constitution.
3 I. Having so stated, it is to be scrutinized whether the base of
E earlier judgment has been removed. The High Court in its earlier judgment
had struck down the amended provision on the foundation that there
was discrimination between the existing appointees and future appointees
to the office of members, Vice-Chairmen and Chairmen. The High Court
had opined that the classification between the two categories was not
F reasonable and it caused discomfort to Article 14 of the Constitution. It
had given emphasis on the statutory safeguards meant for removal. The
legislature after the decision of the High Court has amended the provision.
By such amendment, it has removed the distinction between the existing
members and the members who are to come in future. It has substituted
the word "appointed" by "nominated". It is worth noting that as per the
G earlier provision members were to be appointed by the Government in
consultation with the Director of Marketing from among certain categories
of growers of agricultural produce, owners of Iivestock and products of
livestock in the notified area. The Chairmen and the Vice-Chairmen
'"(2004) 1sec112
H
CHEVITI VENKANNA YADAV v. STATE OF TELANGANA 711
AND ORS. [DIPAK MISRA, J.]
were appointed from amongst its members by the Government in A
consultation with the Director of Marketing. As has been stated earlier,
the word "appointed" has been substituted as "nominated". Submission
of Mr. Rao, learned senior counsel appearing for the appellants is that
by such an amendment the vested right of the appellants has been
affected. It is noticeable that under the scheme of the Act, the word
B
"appointed" as was used in the earlier provision was really not an
appointment which can be equated to a post under the service
jurisprudence. The members were meant to be members for the purpose
of composition of market committee. What is urged is that the members,
the Chairmen and the Vice-Chairmen had a fixed term, who could be
removed after inquiry or under certain conditions. Our attention has been c
drawn to sub-section (5) of Section 6 but after the amendment the
members had ceased to become members prior to expiry of their tenure,
that is, three years. We may make it clear that the competent authority
of the State Government still can remove member or Vice-Chairman or
Chairman taking recourse to other provisions prior to expiry of the period.
D
The grievance of the appellants is that the period is curtailed and the
vested right is affected. The argument is that it could not have been
dor.e by retrospective amendment of the provision. The aforesaid
argument suffers from a fallacy. The members were not elected. They
were not appointed by any kind of selection. They were chosen by the
State Government from certain categories. The status of the members E
have been changed by amending the word "appointed" by substituting it
with the word "nominated". Thus, the legislature has retrospectively
changed the meaning. In our considered opinion, by virtue of the
amendment, the term which has been reduced for a nominated member
stands on a different footing. In Om Nllrllin Agllrwal lint/ otllers v.
Nllgllr Plllikll, Slmlljllllllnpur anti otllers 11 it has been held that if an
F
appointment has been made initially by nomination, there can be no
violation of any provision of the Constitution in case the legislature
authorised the State Government to terminate such appointment at its
pleasure and to nominate new members in their place. It is because the
nominated members do not have the will or authority of any residents of G
the Municipal Board behind them as may be present in the case of an
elected member. The Court further observed that such provision neither
offends any Article of the Constitution nor the same is against any public
policy or democratic norms enshrined in the Constitution.
11
(1993)2 sec 242 H
712 SUPREME COURT REPORTS [2016] 7 S.C.R.
32. The word "appointment" has been substituted by "nomination".
It is an appointment by nomination. It is from certain categories for the
purpose ofrepresentation. It is not appointment as the word ordinarily
connotes. The legislature, in its wisdom, has substituted the word
"appointment" and made it "nomination with retrospective effect". To
enable it to curtail or reduce the term, the procedure for removal remains
B
intact. A nominee can go from office by efflux of time when the period
is over. That is different than when he is removed. A nominated member,
in praesenti, can also be removed by adopting the procedure during the
period. Otherwise, he shall continue till his term is over; and the term is
one year. The plea of vested right is like building a castle in Spain. It
c has no legs to stand upon and, therefore, we unhesitatingly repel the said
submission.
33. The last issue that has arisen pertains to different kinds of
delineation with regard to market committee and the special market
committees. Their composition, function and purpose are different. They
D basically fall into different categories. It is difficult to weigh them in the
scale of Article 14. The equality clause, in our considered view, is not
affected. The characteristics of the committees being different, Article
14 is not attracted. Thus, the said submission is sans substratum.
34. In view of the aforesaid analysis, we do not perceive any merit
E in these appeals and, accordingly, they are dismissed. There shall be no
order as to costs.
Kalpana K. Tripathy Appeals dismissed.
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