The story so far: A Bench led by Chief Justice of India (CJI) D.Y. Chandrachud will hear on October 12 four long-standing nine-judge Constitution Bench matters for issuing procedural directions like the appointment of a nodal counsel and allocation of time for the compilation of written submissions before the onset of final hearings.
Some of these cases have been pending for more than two decades now and involve crucial questions of law — whether equitable sharing of community resources under Article 39(b) of the Constitution includes privately owned resources; whether ‘royalty’ can be considered a tax, interpretation of the term ‘industry’ under the Industrial Disputes Act, 1947 and the extent of separation of powers between the Union government and the State legislatures over the regulation of industries.
A Constitution Bench is constituted whenever a case requires the interpretation of key constitutional provisions or if there is a significant legal question to be decided. Article 145(3) of the Constitution, which deals with the rules of the Court, provides for the setting up of Constitution Benches and stipulates that a minimum of five judges need to sit to decide a case involving a “substantial question of law as to the interpretation of the Constitution,” or for hearing any reference under Article 143, which deals with the power of the President to consult the Supreme Court.
Constitution Benches wield great power in shaping India’s rule of law framework. There is also a great deal of finality attached to the verdicts — since the only way to get such a verdict overruled is to first convince a subsequent five-judge bench that the view previously taken was wrong, have the matter referred to a larger bench of seven or nine judges, and then convince the larger bench to overrule the previous judgment of the Constitution Bench.
1. Property Owners Association v. State of Maharashtra [C.A. No.1012/2002]
Issue
Whether the phrase ‘material resources of the community’ under Article 39(b) of the Constitution includes privately owned resources?
Background
Taking note of the crumbling residential structures in the city of Bombay, the State government in 1986 amended the Maharashtra Housing and Area Development Act, 1976, to include Chapter VIII-A, which empowered the Mumbai Building Repair and Reconstruction Board (MBRRB) to acquire cessed properties with the consent of 70% of the residents for restoration purposes. Section 1A of the Act stipulated that the legislation aimed to give effect to the policy of the State towards securing the Directive Principle of State Policy specified in Article 39(b) of the Constitution — distribution of material resources of the community in such a way as to serve the common good. Aggrieved by the power conferred upon the MBRRB to forcibly take possession of such residential complexes, the Property Owners’ Association, a body representing over 20,000 landowners in Mumbai, filed this lawsuit.
Timeline of case
December 13, 1991: The Bombay High Court dismissed the challenge while observing that it was the duty of the government to provide shelter to the common people since landowners had failed to ensure that occupiers enjoyed reasonable living conditions. It also upheld the contention of the petitioners that Article 31C of the Constitution bars any challenge on the grounds of Articles 14 or 19 if the statute has been enacted in furtherance of Article 39(b).
May 1, 1996: A three-judge Bench of the Supreme Court referred the case to a five-judge Bench.
March 21, 2001: The five-judge Bench subsequently referred the matter to a larger Bench of seven judges after taking into account conflicting rulings about the interpretation of Article 39(b) in the State of Karnataka and Anr. v. Shri Ranganatha Reddy (1978) and Sanjeev Coke Manufacturing Company v. Bharat Coking Coal Ltd. and Anr (1983). In Ranganatha Reddy, the majority of the judges did not subscribe to the view taken by Justice Krishna Iyer that both public as well as privately owned resources fell within the ambit of ‘material resources of the community.’ However, Justice Iyer’s minority view was subsequently affirmed in Sanjeev Coke Manufacturing Company.
February 19, 2002: The seven-judge bench referred the matter to a larger Bench of nine judges, since an earlier nine-judge Bench decision in Mafatlal Industries Ltd. v. Union of India (1997) had reiterated that the material resources of the community are not confined to public resources only but also include privately owned resources. Expressing doubts over the view taken, the Bench recorded in the reference order that after due consideration “we are of the opinion that this interpretation of Article 39(b) requires to be reconsidered by a Bench of nine learned Judges: we have some difficulty in sharing the broad view that material resources of the community under Article 39(b) covers what is privately owned.”
2. Mineral Area Development v. M/S Steel Authority Of India & Ors [C.A. N0. 4056/1999]
Issue
Whether ‘royalty’ under the Mines and Minerals (Development and Regulation) Act, 1957 is in the nature of a ‘tax’?
Background
The case pertains to a challenge to the Bihar Coal Mining Area Development Authority (Amendment) Act, 1992 and the rules framed thereunder which imposed additional taxes on land revenue incurred from mineral-bearing lands leased out to mining industries. The mining industries argued that the State legislature was not competent to impose such taxes exercising their powers under Article 246 of the Constitution.
Timeline of case
May 26, 1999: A civil appeal was instituted in the Supreme Court.
April 6, 2004: A three-judge Bench of the Supreme Court comprising Justices S.H. Kapadia, K.S. Panicker Radhakrishnan and Swatanter Kumar began hearing the matter.
March 30, 2011: The three-judge Bench referred the matter to a nine-judge Bench instead of a five-judge Bench after noting that there was a conflict between the decisions in State of West Bengal v. Kesoram Industries (2004) and India Cements v. State of Tamil Nadu (1990) — rulings by a five-judge and a seven-judge Bench respectively. The Bench framed eleven questions of law to be decided by the larger Bench, such as whether ‘royalty’ can be considered to be in the nature of a tax and whether the State legislature, while levying a tax on land under Entry 49, List II of the Seventh Schedule of the Constitution, can adopt a measure of tax based on the value of the produce of land, among others.
3. State of Uttar Pradesh v. Jai Bir Singh [C.A. No. 897/2002]
Issue
What is the definition of the term ‘industry’ under Section 2(j) of the Industrial Disputes Act, 1947?
Background
In this case, the question under consideration was whether the ‘social forestry’ department of a State, which was a welfare scheme undertaken for the improvement of the environment, would be covered by the definition of ‘Industry’ under Section 2(j) of the Industrial Disputes Act, 1947.
The definition of the term ‘industry’ holds great significance, since any person who works in such an establishment is entitled to various protections under the Act such as a mandatory notice period before dismissal from service, maximum hours of work, provisions for leave, and fixed compensation. In 1978, a seven-judge Bench in Bangalore Water Supply v. R. Rajappa accorded a very broad definition to the term ‘industry,’ including even establishments functioning without a profit motive such as universities and charitable organizations within its ambit. Such an expansive definition and the stringent labour standards that this entailed were subsequently opposed by various industry bodies. In 1982, the Parliament passed an amendment to the Act creating several exceptions to the definition; however, the amendment never came into force.
Timeline of case
May 5, 2005: A five-judge Bench of the Supreme Court referred the decision in Bangalore Water Supply to a larger bench of seven judges for reconsideration, expressing the opinion that the majority judgment was not unanimous, which resulted in varying interpretations by courts. The reference order also alluded to the helplessness of the executive and the legislature in bringing out suitable amendments to address the grievances of the stakeholders
January 2, 2017: The seven-judge Bench referred the matter to a larger Bench of nine judges after taking into account the ‘serious and wide-ranging implications of the issue that fall for determination’ and the ‘serious doubts’ that were expressed in the reference order about the accuracy of the view taken in Bangalore Water Supply.
4. State of UP & Ors. v. M/S Lalta Prasad Vaish [C.A. No.151/2007]
Issue
Interpretation of Section 18-G of the Industries (Development and Regulation) Act, 1951.
Background
In 1999, through a notification issued under the U.P. Licences for the Possession of Denatured Spirit and Specially Denatured Spirit Rules, 1976, a licence fee at 15% ad valorem on the sale made by any wholesale vendor to holders of licence under the U.P. Excise Act, 1910, was imposed. Subsequently, the petitioner challenged the imposed license fee alleging that the State had no power to regulate the manufacture and sale of denatured spirits in view of Section 18-G of the Industries (Development and Regulation) Act, 1951.
Section 18-G permits the Union government to regulate certain products related to scheduled industries to ensure that they are distributed fairly and are available at reasonable prices. At the same time, Entry 33 of List III of the Seventh Schedule of the Constitution confers concurrent powers on both the State and the Union governments to legislate with regard to the product of any industry, where the Parliament declares that control of such industry by the Union is expedient in the public interest.
Timeline of case
December 16, 2004: The Allahabad High Court declared the imposition of the license fee wholly illegal and ordered the State government to refund the fee collected from the petitioners along with interest at the rate of 10% per annum.
October 25, 2007: A three-judge Bench of the Supreme Court referred the matter to a five-judge Bench. The Bench passed the reference order after observing that the appellant’s submissions had a good deal of force and that if the Supreme Court’s prior decision in Synthetics and Chemical Ltd. v. State of U.P (1990) is allowed to persist then it would render obtuse Entry 33 (a) of List III. For context, a seven-judge Bench in Synthetics and Chemicals had ruled that the State government is not empowered to regulate industrial alcohol as a product of the industry under Entry 33 of List III, since the Union government had evinced a clear intention to occupy the whole field under Section 18-G of the Act.
December 8, 2010: The five-judge Bench referred the matter to a larger Bench of nine judges for consideration after noting that the views expressed by the seven-judge Bench in Synthetics and Chemicals had been distinguished in several subsequent decisions of the Court.
