Holding

The proviso to Rule 3 and the circular restricting transfer of land subservient to tea estates are ultra vires the Himachal Pradesh Ceiling on Land Holdings Act, 1972 and therefore invalid.

Summary

The Himachal Pradesh Ceiling on Land Holdings Act, 1972 exempts tea estates from its provisions. Under Section 26 the State Government framed rules in 1973, and in 1986 added a proviso to Rule 3 prohibiting transfer of land subservient to tea plantations without government permission. A 1990 circular further directed registrars not to register sale deeds of such land. The appellants challenged the validity of the proviso and the circular, arguing they were beyond the delegated rule‑making power and arbitrary. The Supreme Court held that Section 26’s delegation is limited to "for carrying out the purposes of this Act" and cannot cover subjects expressly excluded, such as tea estates, nor impose restrictions that do not further the Act’s purpose. Consequently, the proviso and the circular were declared ultra vires and struck down. The appeal was allowed and the High Court’s order set aside.

Issues considered

Whether the amendment to Rule 3 (the proviso) and the 1990 circular are within the scope of the rule‑making power delegated under Section 26 of the Himachal Pradesh Ceiling on Land Holdings Act, 1972.
Whether a prohibition on transfer of land subservient to tea plantations, which are exempted by the Act, is ultra vires, arbitrary or unreasonable.
Whether the legislature may delegate essential legislative functions concerning matters expressly excluded by the parent Act.

Legislation cited

Himachal Pradesh Ceiling on Land Holdings Act, 1972s. 26, s. 5
Urban Land (Ceiling and Regulation) Act, 1976s. 27

Subjects

delegated legislationultra viresessential legislative functionland ceilingtea estatesrule‑making poweradministrative lawarbitrarinessunreasonableness

Judgment

A KUNJ BEHAR! LAL BUTAIL A."'ID ORS.
v.
STATE OF HIMACHAL PRADESH AND ORS.

FEBRUARY 18, 2000

B [S. SAGHIR AHMAD, R.C. LAHOTI AND Y.K. SABHARWAL, JJ.)

Admi11istrative Law :

Delegated legislation-Essential legislative function-Held, cannot be
C delegated by the legislature-Only a11cillary or subordinate legislative fu11ctions
may be delegated--Act delegating rule maki11g power to the State Government ...,_
;for canyillg out the purposes of tliis Act"-He/d, is a general delegation
without guidelines-Such delegated powers cannot be used to bring within its
11et a subject excluded by the Act itself or to bring into existence substantive
D rights or obligations or disabilities 11ot contemplated by the provisions of the
Act-Delegated legislation must advance the purposes of the statute if is
framed under and unless it does so, it can11ot be sustai11ed.

Himachal Pradesh Ceiling on Land Holding Act, 1972 :
E
Section 26--Delegating rule making power to the State Government
circumscribed by the Act itself, ''for canying out the purposes of this
Act''-State Government framing Rules making complete prohibiti011 of trans-
! er of land subservient to tea plantation-Held, such Rules cannot be sus-
tained because no purpose sought to be achieved by the Act is advanced by
F such a prohibition--Himachal Pradesh Ceiling on Land Holdings Rules,
1973---Administrative Law-Doctrine of ultra vires.

Sections 26 and S(g) - Power delegated to State to make rules to cany
out pwposes of the Act - Tea pla11tations and areas necessary for purposes
G subservient to a tea plantation were expressly exempted from the provisions
of the AcrState framing rule 3( lj, proviso by a Gazette Notification •vherein
complete prohibition was pllt 011 trans/er of land subservient to a tea planta-
tion-Held, Proviso to Rule 3( I) was ultra vires the Act - Himachal Pradesh
Ceiling on Land Holdings Rules, 1973 Rule 3( 1) proviso - Administrative
H Law - Doctrine of ultra vires.
1054
K.B.L. BUTAIL v. STATE 1055

To consolidate and amend the laws relating to ceiling on land holding A
in the State, the Legislative Assembly of the Respondent State enacted
Himachal Pradesh Ceiling 011 Land Holdings Act, 1972. Jn exercise ofpov.er
cocferred under Section 26 of the Act, the State Government framed the
Himachal Prudesb Ceiling on Land Holdings Rules, 1973. Rule 3 of the said
Rules provided for areas to be treated as subservient to tea plantation.
Proviso appended to sub-rule (l) just below clause (d) was inserted by B
amendment through Notification published in Gazette Extraordinary
dated 26.4.1986. 01.1 21.8.1990, the Registrar issued a general Circular to all
Tehsildars-cum-Sub-!legistrar directing them not to register the sale deed
in n:sp:!ct of lands being sold by land owners exempted from the provisions
of the Act. The constitutional validity of amendment made in the Rules and c
the Circular was challenged by the appellants in a writ petition before the
High Court, as the effort at alienating a piece of land subservient to tea
plantation was sought to be put into jeopardy. High Court dismissed the
writ petition. Hence this appeal.

It was contended by the appellants that the Act was not applicable to D
land subservient to tea estates and therefore, a provision made in the Rules
framed in exercise of power delegated by the Act but proposing to make
provision as regards a subject excluded within the purview of the Act itself
was ultra vires the provisions of the Act; that the prohibition imposed by the
amended rule suffered from the vice of arbitrariness and unreasonableness
E
inasmuch as though an alineation of land forming part of tea plantation
iti..;lf was not proltibited either by the Act or the Rult.'S but alienation of
land subservient to tea plantation was sought to be restrained; that lands
covered by seven categories as defined in clauses (a) to (g) of Section S have
been excluded from the applicability of the provisions of the Act; and that
Section 26 delegates to the State Government the legislative power of F
malting rules which delegation was circumscribed by the expression "for
carrying out the purposes of this Act".

Allowing the appeal, this Court

HIELD : 1. Section 26 of the H.P. Ceiling on Land Holdings Act, 1972 G
delegates to the State Government the legislative power of making rules
wliich delegation is circumscribed by the expression • "for carrying out the
purposes of this Act". In exercise of such delegated power to legislate, the
State Government cannot bring within the net of the Rules what has been
excluded by the Act itself. Tea estates are excluded from the provisions of H
1056 SUPREME COURT REPORTS (2000] l S.C.R.
A the Act by Section 5. "Tea estate" is defined in the interpretation clause of.
the Act to mean an area under tea plantation and includes within the
definition "such other area necessary for purposes subservient to a tea
plantation'. The amendment made vide notification dated 4.4.1986 places
an embrago on the right to transfer such subservient land though exempted
from the operation of the Act. Clearly the impugned proviso is beyond the
B rule-making power of the State Government as conferred by the Act. The
legislature cannot delegate its essential legislative functions which consist
in the determination or choosing of the legislative policy and of formally
enacting that policy into a binding rule of conduct. What is permitted is the
delegation ancillary or subordinate legislative functions, or, what is fiction-
C ally called, a power to fill up the details. [1061-D-G]
Supreme Court Employees' We/fare Association v. Union of India, AIR
(1990) SC 334 and General Officer Commanding-in-Chief v. Dr. Subhash
Chandra Yadav, AIR (1988) SC 876, relied on.

D Principles of Statutory Interpretation-By Justice G.P. Singh, 7th Edn.,
1999 (pages 689-90), referred to.

2.1. It is common for the legislature to provide for a general rule
making power to carry out the purpose of the Act. When such a power is
E given, it may be permissible to find out the object of the enactment and
then see if the rules framed satisfy the test of having been so framed as to
fall within the scope of such general power confirmed. If the rule-ma!dng
power is not expressed in such usual general form then it shall have to be
seen if the rules made are protected by the limits prescribed by the parent
Act. [1061-G-Hl
F
Sant Saran Lal v. Parsuram Sahu, AIR (1966) SC 1852, relied on.

2.2. From the provisions of the Act, no legislative intent delegating
expressly or by necessary implication, the power to enact any prohibition
G on transfer of land can be spelt out. £1062-A]

2.3. By placing complete prohibition on transfer of land subservient
to tea estate no purpose sought to be achieved by the Act is advanced and
so also such prohibition cannot be sustained. Land forming part of a tea
estate including land subservient to a tea plantation have been placed
H beyond the ken of the Act. Such land is not to be taken in account either
K.B.L. BUTAIL v. STATE [R.C. LAifOTI,J.J 1057

for calculating the area of surplus land or for calculating the area of land A
which a person may retain as falling within the ceiling limit. (1062-B-C]

Bhim Singhji v. Union of India, (19811 SCC 166, relied on •

2.4. A delegated power to legislate by making rules "for carrying out
the purposes of the Act" is a general delegation without laying down any B
guidelines; it cannot be so exercised as to bring into existence substantive
rights or obligations or disabilities not contemplated by the provisions of
the Act itself. [1063-B]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1424 of
2000. c
From the Judgment and Order dated 13.9.98 of the Himachal
Pradesh High Court in C.W.P. No. 1009 of 1992.

Anil B. Diwan, V.C. Mahajan, Mrs. Indra Sawhney, Virender Sood,
S. Mohanty and B.B. Sawhney for the Appellants. D
Naresh K. Sharma for the Respondents.

The Judgment of the Court was delivered by

R.C. LAHOTI, J. Leave granted. E
To consolidate and amend the laws relating to ceiling on land hold-
ings in the State of Himachal Pradesh, the Legislative Assembly of
Himachal Pradesh enacted Himachal Pradesh Ceiling on Land Holdings
Act, 1972 (hereinafter 'the Act', for short). Sub-section (1) of Section 26
of the Act provides that the State Government may, by notification, make F
rules for carrying out the purposes of this Act, Sub-sections (2) and {3)
thereof provide for previous publication of the rules and the rule being laid
on the floor of the State Legislature as soon as may be after it is made. In
exercise of the power so conferred the State Government has framed the
Himachal Pradesh Ceiling on Land Holdings Rules, 1973 (hereinafter 'the G
Rules', for short), Rule 3 thereof reads as under :

''3. Areas to be treated as subservient to tea plantation. - {l) The
following areas shall be treated as subservient to tea plantation :

(a) areas on which there is programme for expansion of tea H
1058 SUPREME COURT REPORTS (2000) 1 S.C.R.

A plantation during next ten years which will be determined by
the State Government;

(b) areas c.overed by forests and forest growth of which the fuel
wood, timber is required for the manufacture of the tea and
maintenance of tea estatt:;
B
(c) low-lying lands which generally serve as water reservoirs for
the use of tea plantation; and

( d) land on wh~ch tea factories, labour quarters, playgrounds and
other ancillary buildings are situated.
c
Provided that no land, treated as subservient to tea plantation
under this sub-rule and exempted from the operation of the Act
under Section 5l(g) thereof, shall be transferred by the landowner
in any manner, without the permission of the State Government.
D
(2) The owner of the tea estate will submit return in Form C-1
to the Collector showing the areas he intends to include for the
purpose of c:lause (a) of sub-rule (1) within one month from the
date on which these rules will come into force. The Collt:ctor on
receipt of this return shall make such inquiry as he deems fit and
E thereafter send his recommendations to the State Government for
orders which will be final."

The pro\'iso appended to sub-rule (1) and placed just bdow clause
(d) of sub-rule (1) was not there in the text of the Rules as originally
F framed. It has been inserted by amendment through Notification No.
10-5n3-II Rev.B dated 4.4.86. This amendment was published in Gazette
Extraordinary dated 26.4.86.

On 21.8.90 the Registrar Kangra District at Dharmshala issued a
G general circular to all Te.!isildars-cum-Sub-Registrar (of deeds) in Kangra
District containing the following direction :

"It has been brought to the notice of the Government that the
land owners are selling land exempted from the provisions of the
H.P. Ceiling on Land Holdings Act, 1972. Therefore you are
H directed not to register the sale deeds in respect of such lands,
K.B.L BUTAIL v. STATE [R.C. LAHOTI, J.) 1059

and take action in such cases under the provisions of the Land A
Ceiling Act, 1972 and intima.te of the same to the Deputy Com-
missioner also so that proper guidance is given by him."

It is the constitutional validity of amendment made in the Rules by
notification dated 4.4.86 (published on 26.4.86) and the circular order
dated 21.8.90 which has been put in issue by a writ petition filed by the B
appellants. The cause of action arose to the appellants because their effort
at alienating a piece of land subservient to tea plantation was sought to be
put into jeopardy.

Shri Anil Divan, the learned senior counsel for the appellants has
raised two pleas; (i) that the Act is not applicable to land subservient to
c
tea estates and therefore a provision made in the Rules framed in exercise
of powers delegated by the Act but proposing to make provision as regards
a subject excluded from within the purview of the Act is ultra vires the
provisions of the Act; (ii) that the prohibition imposed by the amended
rule suffers form the vice of arbitrariness and unreasonableness inasmuch D
as though an alienation of land forming part of tea plantation itself is not
prohibited either by the Act or the rules but alienation of land subservient
to tea plantation is sought to be restrained.

Section 4 of the Act defines the permissible area which a landowner,
a tenant or a mortgagee with possession or a person holding partly one or E
other of the abovesaid status may hold Section 6 pli:CL-s a ceiling on the
entitlement to hold any land beyond witut is permitted by the Act. Section
7 empowers ilic State Government to determine the surplus circa of the
land held by any one ignoring the transfer after the appointed day of a land
held in excess of the permissible except bona fide transfers. Section 5 of F
the Act provides for Exemptions and enacts that the provisions of this Act
shall not apply amongst others to "tea estates". Section 5 reads as under :

"5. Exemptions. - The provisions of this Act shall not apply to -

(a) lands owned by the State Government or the Central Govern- G
ment;

(b) lands belonging to registered Co-operative Farming Societies;

Provided that the share of a member of such society, together
with his other land, if any does not exceed the permissible area; H

\
'
1060 SUPREME COURT REPORTS [2000) 1 S.C.R.
A (c) lands belonging to Land Mortgage Banks, the State and
Central Co-operative Banks and any other Banks as defined
in the Explanation - not reproduced.

(d) lands be.longing to or vested in local authorities;

B (e) lands belonging to Himachal Pradesh Agriculture University;

(f) lands owned by the Bhudan Yagna Board established under
the law in force in the State of Himachal Pradesh and

(g) tea estates."
c
Shri Anil Divan, the learned senior counsel for the appellants sub-
mitted that lands covered by seven catt:gories as defined in clauses (a) to
(g) of Section 5 have been excluded from applicability of the provisions of
the Act. Section 26 dekgates to the Stab: Government the legislative power
D of making rules which delegation is circumscribed by the expn:ssion - 'for
carrying out the purposes of this Act'. In exercise of such delegated power
to legislate, the State Government cannot brine; within the net of the rules
what has been excluded by the Act itself. We find merit in the submission
so mode. Tea estates are excluded from the provisions of the Act by
E Section 5. 'Tea estate' 1s defined in the interpretation clause of the Act to
mean an area under tea plantation and includes within the definition 'such
other area necessary for purposes subservient to a tea plantation as may
be prescribed'. Ruk 3 defines what areas shall be treated as subservient to
tea plantation. The amendment made vide notification dated 4.4.86 places
an embargo on right to transfer such subservient land though exempted
F from the operation of the Act. Clearly the impugned proviso is beyond the
rule making power of the State Government as conferred by the Act. It is
well settled that the Legislature cannot delegate its essential legislative
functions which consist in the determination or choosing of the legislative
policy and of formally enacting that policy into a binding rule of conduct.
G What is permitted is the delegation of ancillary or subordinate legislative
functions, or, what is fic:tionally called, a power to fill up the details, (See
: Principles of Statutory Interpretation, Justice G.P. Singh, Seventh Edition
1999, at pp.689-690).

In Supreme Court Employees Welfare Association v. Union of India,
H AIR (1990) SC 334, this Court has held :
K.B.L. BUTAILv. STATE(R.C. LAHOTI,J.] 1061

"A delegated legislation or a subordinate legislation must confirm A
exactly to the power granted." (para 62)

"Rules whether made under Constitution or a statute, must be intra
vires the parent law under which power has been delegated." (para
98)
B
In General Officer Comma11di11g-i11-Chief & AllT. v. Dr. Subhash
Candra Yadav & Anr., AIR (1988) SC 876, it has been held :

"Before a rule can have the effect of a statutory provision, two
conditions must be fulfilled, namely, (1) it must conform to the
provisions of the statute under which it is framed; and (2) it must C
i also come within the scope and purview of the rule making power
of the authority framing the rule. If either of these two conditions
is not fulfilled, the rule so framed would be void.'

In the abovesaid case, the rule making provision of the Cantonment D
Act conferred power of the Central Government to make rules in the
matter of "the tenure of office, salaries and allowances, provident funds,
pensions, gratuities, leave of absence and other conditions of service of
servant. of boards." In exercise of this power, the Central Government
framed rules to make provision for transfer of the employees of the Boards.
It was held that the rule was in excess of the rule making power given to E
the Central Government.

The Government while framing rules under the Bihar Money
Lenders Act, 1938 fixed the upper limit for the loans which the money
lenders could lend though the Act nowhere provided for the fixing of such F
upper limit. In Sant Saran Lal v. Parsuram Saha, AIR (1966) SC 1852 1t
was held that the rule making power of the Government does not extend
to the fixing of such a limit as it was not empowered by the Act.

It is very common for the legislature to provide for a general rule
making power to carry out the purpose of the Act. When such a power is G
given, it may be permissible to find out the object of the enactment and
then see if the rules framed satisfy the test of having been so framed as to
fall within the scope of such general power confirmed. If the rule making
power is not expressed in such a usual general form then it shall have to
be seen if the rules made are protected by the limits prescribed by the H
1062 SUPREME COURT REPORTS (2Q00] 1 S.C.R.
A parent Act, (See : Sant Saran Lal & Anr. v. Parsuram Sahu & Ors., AIR
· (1966) SC 1852, para 19. From the provisions of the Act we cannot spell
out any legislative:: inte.nt delegating expressly, or by necessary implication,
the power to enact any prohibition on transfer of land. Wt: are also in
agreement with the submission of Shri Anil Divan that by placing complete
B prohibition on transfor of land subscrvic::nt to tea estates no purpose
sought to be achieved by the Act is advanced so also such prohibition
cannot be sustained. Land forming part of tea c::state including land sub-
servient to tea plantation have been placed beyond the:: ken of the Act. Such
land is not to be taken in account either for calculating area of surplus land
C or for calculating area of land which a person may retain as falling within
ceiling limit. We fail to understand how a restriction on transfer of such
land is going to carry out any purpose of the Act. We are fortified in taking
such view by the Constitution Bench decision of this Court in Maharao
Sahib Sltri Bltim Singltji v. Union of India Ors., (198111 SCC 166 whereby
D sub-section (1) of Section 27 of the Urban Land (Ceiling and Regulation)
Act, 1976 was struck down as invalid insofar as it impost:d a restriction on
transfer of any urban or urbanisable land with a building or a portion only
of such building which was within the ceiling area. The provision impugned
therein imposed a restriction on transactions by way of sale, mortgage, gift
E or lease of vacant land or buildings for a period exceeding ten yc::ars, or
otherwise for a period of ten years from the date of the commencement of
the Act even though such vacant land, with or without building thereon,
fell within the ceiling limits. The Constitution Bench held (by majority) that
such property will be transforable without the constraints mentioned in
F - sub-section (1) of Section 27 of the said Act. Thc::ir Lordships opined that
tlie right to carry on a business guaranteed under Article 19(l)(g) of the
Constitution carrit:d with it the right not to carry on business. It logically
followed, as a nc::cessary corollary, that the right to acquire, hold and
dispose of property guaranteed to citizens under Article 19(l)(f) carried
G within it the right not to hold any property. It is difficult to appreciate how
could a citizen be compelled to own property against his will though he
wanted to alienate it and the land being within the ceiling limits was outside
the purview of Sc::ction 3 of the Act and that being so the person owning
the land was not governed by any of the provisions of the Act. Reverting
H back to the case at hand, the learned counsel for the State of Himachal
K.B.L. BUTAIL v. STATE [R.C. LAHOTI, J.) 1063
Pradesh has not been able to satisfy us as to how such a prohibition as is A
imposed by the impugned amendment in the Rules helps in achieving the
object of the Act.

We are also of the opinion that a delegated power to legislate by
making rules 'for carrying out the purposes of the Act' is a general
delegation without laying down any guidelines; it cannot be so e:g:ercised as B
to bring into existence substantive rights or obligations or disabilities not
contemplated by the provisions of the Act itself.

For the foregoing reason, the appeal is allowed. The judgment of the
High Court is set aside. The proviso inserted into sub-rule (1) of Rule 3 C
of the Himachal Pradesh Ceiling on Land Holdings Rules, 1973 by the
notification dated 4.4.1986 {published in the Himachal Pradesh Govern-
ment Gazette dated 26.4.86) and the circular order dated 21.8.90 issued by
the Registrar, District Kangra at Dharmshala are declared invalid and
struck down as ultra vires the powers of the H.P. Ceiling on Land Holdings
Act, 1972. No order as to the costs. D
R.K.S. Appeal allowed.