MODULE 1

INDIAN FEDERALISM

1.1 Federalism: Definition and Essential Characteristics

Federalism constitutes a complex governmental mechanism for the governance of a country.

Federalism is a system of government in which the power is divided between a central authority
and various constituent units of the country .Federalism has 2 levels of government ,one is the
government for entire country (responsible for few subjects of common national importance) and
the other at the level of provinces or states(looks after day to day administering of their state)

It seeks to draw a balance between the forces working in favour of concentration of power in the
centre and those urging a dispersal of it in a number of units. It thus seeks to reconcile unity with
multiplicity, centralisation with decentralisation and nationalism with localism. There is
centralisation of administration and legislation in certain respects along with decentralisation in
other respects.

A federal constitution establishes a dual polity as it comprises two levels of government. At one
level, there exists a Central Government having jurisdiction over the whole country and reaching
down to the person and property of every individual therein. At the other level, there exist the
regional governments, each of which exercises, jurisdiction in one of the regions or
administrative units into which the country is divided under the constitution. A citizen of a
federal country thus becomes subject to the decrees of two governments the Central and the
regional.

The whole federal system revolves around this basic core of distribution of powers. A federal
constitution thus envisages a demarcation or division of governmental functions and powers
between the Centre and the regions by the sanction of the Constitution itself which is usually a
written document and also a rigid one, i.e., which is not capable of amendment easily.

From this follow two necessary consequences

(1) that any invasion by one level of government on the area assigned to the other level of
government is a breach of the constitution; and

(2) that such a breach of the constitution is a justiciable issue to be determined by the courts.
Each level of government thus functions within the area assigned to it by the constitution.

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 1.2 Nature of the Indian Constitution: Federal or Quasi-federal

The constitution of India has features of both Federal constitution and a unitary constitution.

The Constitution of India establishes a dual polity in the country, consisting of the Union
Government and the State Governments.The States are the regional administrative units into
which the country has been divided and, thus, India has been characterised as the Union of States
[Art. 1(1)].

The fabric of the Indian federal system stands on three pillars, viz., a strong Central
Government, flexible federal system and co-operative federalism.The flexibility of the Indian
Federalism lies in the expedients adopted in the Constitution to mitigate the rigidity of a federal
system and to increase temporarily the powers of the Central Government if the contemporary
situation so demands.

The formal method to amend the federal portion of the Constitution is also not so rigid as is to be
found in other federations. The concept of cooperative federalism has been worked out in a
number of constitutional provisions as well as strengthened through legislation and
administrative practices. The framers of the Indian Constitution learnt a great deal from the
experiences the problems faced and the solutions attempted the Federations of the U.S.A.,
Canada and Australia.

The approach of the framers of the Indian Constitution was conditioned in good measure by the
knowledge of the workings of these Federations. They have tried to incorporate in the Indian
Federal Structure the main developments in those Federations, and have also sought to avoid the
difficulties faced therein from time to time. But, still, the Indian Federal System breaks some
new ground and the Indian Constitution contains some novel provisions which are not to be
found in other Federations.

The Unitary features of the Indian constitution includes:

1. Emergency -In case of an emergency as contained in the Part XVIII of the constitution,
when an emergency is proclaimed, the centre becomes all-powerful, and the states go in
total control of the centre.
2. Single Citizenship-There is only one citizenship for the entire nation. The Indian
constitution deals with the subject of citizenship in Articles 5 and 11 under part 2.
3. Governor Appointment-The Governor is appointed by the President, and he is expected
to function as the agent of the centre. It is through the Governor that the centre exercises
its power in the states.

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 4. One Election Commission-The election commission conducts elections both at the
centre and the states. However, the commission is constituted by the President. States
have no role in the constitution of the Election Commission.
5. Integrated Judiciary-Integrated Judiciary means that any ruling made by a higher court
is binding on the lower courts. Hence, it is obvious that the supreme court incorporates all
the courts in the country from Gram Panchayats to State High Courts.

And so on, keeping in mind both the unitary and federal features of the Indian constitution it can
be concluded that the Constitution of India is a quasi-federal constitution.

1.3 Division of Powers between the Centre and States

According to Article 1 of the Constitution, India is a "Union" of States, which means a

Federation of States.' There is in a federation, a division of functions between the Centre and the
regions, known as the State Governments in India. This division of functions is two-fold from
the point of

View of:

(i) Territory-Article 245

(ii) The subject matter-Article 246

A. TERRITORIAL JURISDICTION TO LEGISLATE

Article 245. (1) 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. (2) No law made by Parliament shall be deemed to be invalid on
the ground that it would have extra-territorial operation

From the territorial point of view, Parliament may make laws for the whole of India, or a part
thereof [Art. 245(1)]. A law made by Parliament is not invalid merely because it has an
extraterritorial operation [Art. 245(2)].

As explained by KANIA, C.J., in A. H. Wadia v. Income-tax Commissioner:"In the case of

sovereign legislature, questions of extra-territoriality of any enactment can never be raised in the
municipal Courts as a ground for challenging its validity. The legislation may offend the rules of
international law, may not be recognised by foreign Courts or there may be practical difficulties
in enforcing them but these are questions of policy with which the domestic tribunals are not
con-cerned."

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Accordingly, the government can proceed under the Hindu Marriage Act against a Hindu who
returns to India after marrying a second wife in a foreign country, for the Act applies to all
Hindus who are domiciled in India but who may be outside India for the time being.

A State Legislature, on the other hand, may make laws only for the State concerned
[Art.245(1)]. A State Legislature has no legislative competence to make laws having extra-
territorial operation. A State can legislate effectively only for its own territory. A State law can
affect per-sons, properties or things within the State and not outside the State. A State law is not
immune from challenge in a Court on the ground of extra-territorial operation. A State law
having operation outside the State is not valid.

A State law is not valid if it purports to affect men and property outside the State. A State law
may apply to persons within its territory, to property moveable and immovable situated within
the state or to acts and events which occur within the border, to decide whether or not a state law
has an extra territorial jurisdiction, the doctrine of territorial nexus is applied

The doctrine of territorial nexus is applied to find our whether a particular State law has an
extra-territorial operation. It signifies that the object to which the law applies need not be
physically located within the territorial boundaries of the State, but what is necessary is that it
should have a sufficient territorial connection with the State. If there is a territorial nexus
between the subject of the act and the state making the law, then the statute in question is not
regarded as having extra-territorial operation

Eg. The principle of territorial nexus can be illustrated with reference to an old case A company s
incorporated in the United Kingdom and had its control and management exclusively situated
there. A member of it carried on business in India. The company made an overall profit of which
a major part accrued from India. It was held that India could levy an income-tax on the entire
income of the company, and not only on the portion accruing from India, for there was a
sufficient territorial nexus between the company and India for this purpose.

Eg. The Bihar legislature enacted the Bihar Hindu Religious Trusts Act, 1950, for the protection
and preservation of properties appertaining to the Hindu religious trusts. The Act applied to all
trusts any part of which was situated in the State of Bihar. A question was raised whether the Act
would apply to trust properties situated outside the State of Bihar. Applying the doctrine of
territorial nexus, the Supreme Court held that the Act could affect the trust property situated
outside Bihar, but appertaining to a trust situated in Bihar where the trustees functioned. The Act
aims to provide for the better administration of Hindu religious trusts in the State of Bihar. This
aim is sought to be achieved by exercising control over the trustees in personam. The trust being
situated in Bihar, the State has legislative power over it and also over its trustees, The Act thus
has no extra-territorial operation. The fact that the trust is situated in Bihar gives enough
territorial connection to enable the Bihar legislature to make a law with regard to such a
trust.What is necessary is that the connection between the trust and the property appertaining

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thereto is real and not illusory and that the religious institution and the property appertaining
thereto form one integrated whole.4 "It cannot be disputed that if the religious endowment is
itself situated in Bihar and the trustees function there, the connection between the religious
institution and the property appertaining thereto form one integrated whole and one cannot be
dissociated from the other. If, therefore, any liability is imposed on the trustees, such liability
must affect the trust property."

In State of Bombay v. RMDC, the respondent, the organiser of a prize competition, was outside
the State of Bombay. The paper through which the prize competition was conducted was printed
and published outside the State of Bombay but it had a wide circulation within the State of
Bombay. Most of the activities which the gambler was expected to undertake took place within
the State. A tax levied by the State of Bombay on lotteries and prize competitions was extended
to the newspapers published outside the State "in a lump sum having regard to the circulation or
distribution of the newspaper" in the State. The provision was questioned on the ground that it
purported to affect men residing and carrying on business outside the State. Nevertheless, it was
held valid because the newspapers although printed and published outside Bombay had a wide
circulation there; they had collectors in Bombay to collect the entry fee for the competition.

The State sought to collect the tax only on the amount received by the newspapers from the State
and, therefore, there was sufficient territorial nexus entitling the State of Bombay to impose a tax
on the gambling that took place within its boundaries. Therefore, the law could not be struck
down on the ground of extra-territoriality.

There is no general formula defining what territorial connection or nexus is sufficient or

necessary for application of the law to a particular object. Sufficiency of the territorial
connection involves consideration of two elements, viz.:

(a) the connection must be real and not illusory; and

(b) the liability sought to be imposed under the Act must be pertinent or relevant to that
connection.

Whether in a given case there is sufficient territorial nexus or not is a question of fact, and it is
for the Courts to decide in each case whether "the territorial nexus" being put forward as the
basis of the application of the law is "sufficient" or not.

In Narasu Appa Mali V Sate of Bombay,the Bombay State Legislature enacted a law prohibiting
a bigamous marriage and made it a criminal offence to enter into such a marriage. Marriages
contracted outside the State by people domiciled within the State were also prohibited. The High
Court declared the Act ultra vires as there was no territorial nexus between the State and the
marriage performed or crime committed outside the State, even when it was done by a person
domiciled in the State.

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 B. SUBJECT MATTER

A basic test applied to decide what subjects should be allotted to the one or the other level of
government is that functions of national importance should go to the Centre, and those of local
interest should go to the regions. This test is very general, a sort of ad hoc formula, and does not
lead to any uniform pattern of allocation of powers and functions between the two tiers of
government in all federal countries. The reason for this lack of uniformity is that what is of
general or national importance, and what is of local importance, cannot be decided on any a
priori basis. Certain subjects like defence, foreign affairs and currency, are regarded as being of
national importance everywhere and are thus given to the Centre. But, beyond this, what other
subjects should be allotted to the Centre depends on the exigencies of the situation existing in the
country, the attitudes of the people and the philosophy prevailing, at the time of constitution-
making, and the future role which the Centre is envisaged to play.

The Indian Constitution seeks to create three functional areas:

(i) an exclusive area for the Centre;

(ii) an exclusive area for the States; and

(iii) a common or concurrent area in which both the Centre and the States may operate
simultaneously, subject to the overall supremacy of the Centre.

ARTICLE 246. (1) 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”).

(2) Notwithstanding anything in clause (3), Parliament, and, subject to clause (1), the
Legislature of any State 1 *** 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”).

(3) Subject to clauses (1) and (2), the Legislature of any State 1 *** 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”).

(4) Parliament has power to make laws with respect to any matter for any part of the territory of
India not included 2 [in a State] notwithstanding that such matter is a matter enumerated in the
State List

The scheme of Art. 246 is as follows:

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(i) Article 246(1) confers on Parliament an exclusive power to make laws with respect to any of
the matters in the Union List (List I in the Seventh Schedule). The entries in this List are such as
need a uniform law for the whole country. The States are not entitled to make any law in this
area.

If any matter is within the exclusive competence of the Centre i.e. List I, it becomes a prohibited
field for the States.

(ii) Article 246(3) confers an exclusive power on the States to make laws with respect to the
matters enumerated in the State List (List II in the Seventh Schedule). These are matters which
admit of local variations and, from an administrative point of view, are best handled at the State
level and, therefore, the Centre is debarred from legislating with respect to these matters.

If a particular matter falls within the exclusive competence of the States, i.e. List II, that
represents the prohibited field for the Centre.

(iii) A unique feature of the Indian scheme of division of powers is the existence of a large
concurrent field for the Centre and the States. Article 246(2) confers a concurrent power of
legislation on both the Centre and the States with respect to the matters enumerated in the
Concurrent List (List III in the Seventh Schedule).

The general idea underlying the Concurrent List is that there may be subjects on which
Parliament may not feel it necessary or expedient to initiate legislation in the first instance
because these matters may not have assumed much national importance. A State may, therefore,
make necessary legislation with respect to any matter in the Concurrent List. But, if at any time,
any of these matters assumes a national importance, and requires to be dealt with on a uniform
all-India basis, then the Centre can step in and enact necessary legislation.

I. Union List Subjects:

Some of the important subjects are:

1. Defence
2. Preventive Detention
3. Foreign Affairs
4. Transportation
5. Army
6. International Relations
7. Communication
8. Property of the Union
9. Union Services
10. Elections

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 11. Parliamentary Affairs
● It originally had 97 subjects. Now, it has 100 subjects
● Centre has exclusive powers to makes laws on the subjects mentioned under the Union
List of Indian Constitution
● Law made by the Parliament on a subject of the Union List can confer powers and
impose duties on a state, or authorise the conferring of powers and imposition of duties
by the Centre upon a state
● There are 15 subjects in the Union List on which Parliament has an exclusive power to
levy taxes

II. State List Subjects:

Some of the important subjects are:

1. Law and order, justice

2. Health, local government
3. Communications
4. Trade, commerce, industry
5. Intoxicants
6. State public services
7. Land and agriculture
● It has 61 subjects.
● The laws can be made on the subjects enumerated under the state list of the Indian
Constitution exclusively by the State legislatures. However, all these can be done only
under ‘Normal Circumstances.’
● Article 249 gives Parliament the power to legislate concerning a subject enumerated in
the State List in the national interest
● Parliament can legislate on subjects that are enumerated under the State List on three
conditions:
➢ When Rajya Sabha passes resolution
➢ During a national emergency (Article 250)
➢ When two or more states pass a resolution requesting Parliament to legislate on subjects
under State List

III. Concurrent List Subjects:

Some of the important subjects are:

1. Basic laws
2. Education
3. Forest
4. Labour

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 5. Public welfare
6. Economic power and planning
● While both Central and State Government can legislate on subjects mentioned under
Concurrent List, however, in case of any conflict, the law made by the Central
Government prevails
● The matters on which uniformity of legislation throughout the country is desirable but not
essential are enumerated in the concurrent list

Principles of interpretation of the lists

1. Each entry to be interpreted broadly;

The entries in the three Lists are not always set out with scientific precision or logical definition.
It is practically impossible to define each item in a List in such a way as to make it exclusive of
every other item in that List. The framers of the Constitution wished to take a number of
comprehensive categories and describe each of them by a word of broad and general import.
An important principle to interpret the entries is that none of them should be read in a narrow,
pedantic sense; that the widest possible and most liberal construction be put on each entry, and
that each general word in an entry should be held to extend to all ancillary or subsidiary matters
which can fairly and reasonably be said to be comprehended in it.
2. Harmonious Interpretation of entries
The three Lists are very detailed and the constitution-makers have made an attempt to make the
entries in one List exclusive of those in other Lists. But, at times, some conflict or overlapping
between an entry in one List and an entry in the other List comes to surface. This gives rise to the
question of determining inter-relationship between such entries.
3. Inter-relation of entries
In State of Bombay v. Balsara, a conflict was sought to be made out between entry 41, List I and
entry 8, List II. Arguing for a broader view of the Central entry, it was suggested that import of
intoxicating liquors would not end with mere landing of goods on the shore but would also imply
that the imported goods reach the hands of the importer who should be able to possess them.
Therefore, it was said that the State could not prohibit the possession and sale of intoxicating
liquors as that would amount to a power to prohibit their import into the country, as one is a
necessary consequence of the other.
M.Karunanidhi V Union of India - The Supreme Court held that where the provision of a
central act and a state act in the concurrent list are fully inconsistent and absolutely
irreconcilable. The central act will prevail and the state act will become void in the view of
repugnancy.

To reconcile the two entries, the Supreme Court gave a limited meaning to the word import in
the Central entry in order to give effect to the State entry. The Court held that import standing by
itself, could not include sale or possession of the article imported into the country by a person
residing in the territory in which it was imported. The State entry has no reference to import and

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export but merely deals with production, manufacture, possession, transport, purchase and sale of
intoxicating liquors. The State Legislature could, therefore, prohibit the possession, use and sale
of intoxicating liquors. Thus, entry 8 (List II) has been given effect by narrowing down the scope
of the Central entry which could otherwise nullify the State power if it were to be broadly
interpreted.

Matters which come under inter-realtion are sugar,liquor ,law and order,education etc.
4. Rule of Pith and substance
Parliament or a State Legislature should keep within the domain assigned to it, and not trespass
into the domain reserved to the other. A law made by one which trespasses or encroaches upon
the field assigned to the other is invalid. If a subject falls exclusively in List II, and in no other
List, then the power to legislate exclusively vests in the State Legislature. But if it also falls in
List I as well, then the power belongs to the Centre.
But before the legislation with respect to a subject in one List, and touching also on a subject in
an other List, is declared to be bad, the Courts apply the rule of pith and substance.24 To adjudge
whether any particular enactment is within the purview of one legislature or the other, it is the
pith and substance of the legislation in question that has to be looked into. This rule envisages
that the legislation as a whole be examined to ascertain its true nature and character in order to
determine to what entry in which List it relates. In determining whether the impugned Act is a
law with respect to a given power, the Court has to consider whether the Act, in its pith and
substance, is a law on the subject in question. To examine whether a legislation has impinged on
the field of other legislatures, in fact or in substance, or is incidental, keeping in view the true
nature of the enactment, the Courts have evolved the doctrine of "pith and substance" for the
purpose of determining whether it is legislation with respect to matters in one list or the other.
For applying the principle of "pith and substance" regard is to be had
(i) to the enactment as a whole,
(ii) to its main objects, and
(iii) to the scope and effect of its provisions. Where the question for determination is whether a
particular law relates to a particular subject mentioned in one list or the other, the Courts look
into the substance of the enactment. Thus, if the substance of enactment falls within the Union
List then the incidental encroachment by the enactment on the State List would not make it
invalid.
To ascertain the true character of the legislation in question, one must have regard to it as a
whole, to its objects and to the scope and effect of its provisions. If according to its true nature
and character, the legislation substantially relates to a topic assigned to the Legislature which has
enacted it, then it is not invalid merely because it incidentally trenches or encroaches on matters
assigned to another Legislature. The fact of incidental encroachment does not affect the vires of
the law even as regards the area of encroachment.
The Privy Council applied this doctrine in Profulla Kumar Mukherjee v Bank of Khulna.,n this
case, the Bengal Money Lenders Act of 1946 enacted by the State Legislature was challenged
with the contention that parts of the legislation dealt with promissory notes; a central subject.
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The Privy Council while upholding the validity of the impugned legislation stated that the
Bengal Money Lenders Act was in pith and substance a law relating to money lenders and
money lending - a state subject even though it incidentally trenches upon
Promissory note - a central subject.

Premchand Jain v. R-K. chhabra (1984) - the Supreme Court held that in a case and enactment
substantially falls within the powers conferred by the constitution upon the enacting legislature,
it cannot be held to be invalid, merely because it incidentally encroaches on matters assigned to
another legislature from the Doctrine of pith and substance, if the encroachment is merely
incidental, the act would not as a rule be invalid.

5. Doctrine of colourable legislation

The doctrine of colourable legislation is based on the maxim that what cannot be done directly
cannot also be done indirectly. The doctrine becomes applicable when a legislature seeks to do
something in an indirect manner what it cannot do directly. The doctrine thus refers to the
question of competency of the legislature to enact a particular law. If the impugned legislation
falls within the competence of the legislature, the question of doing something indirectly which
cannot be done directly does not arise.
The doctrine of colourable legislation does not involve any question of bona fides or mala fides
on the part of the legislature. If the legislature is competent to pass a particular law, the motives
which impelled it to act are irrelevant. On the other hand, if the legislature lacks the competency,
the question of motive does not arise at all; the legislation will be invalid even if enacted with the
best of motives. Whether a statute is constitutional or not is thus a question of power. "Malice or
motive is beside the point, and it is not permissible to suggest parliamentary incompetence on the
score of mala fides.
The Constitution distributes legislative powers between the State Legislatures and Parliament,
and each has to act within its sphere. In respect of a particular legislation, the question may arise
whether the legislature has transgressed the limits imposed on it by the Constitution. Such
transgression may be patent, manifest or direct, or may be disguised, covert or indirect. It is to
the latter class of cases that the expression colourable legislation is applied. The underlying idea
is that although, apparently, a legislature in passing a statute purports to act within the limits of
its powers, yet, in substance and reality, it has transgressed these limits on its powers by taking
resort to a mere pretence or disguise. If that is so, the legislation in question is invalid.

Doctrine of repugnancy:The doctrine of repugnancy is basically when two pieces of legislation

have a conflict between them and when are applied to the same facts but they produce different
outcomes or results. When provisions of 2 laws are so contrary and disconfirmed that it becomes
difficult to do one without opposing the other, this is a situation where repugnancy arises. Article
254 of the Indian Constitution establishes successfully the Doctrine of Repugnancy in India.

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Article 254 deals with inconsistency between laws made by Parliament and laws made by the
Legislatures of States. It talks about the doctrine of repugnancy. It involves solving questions of
repugnancy between the Central and the State law.

Article 254(1): If any legislation enacted by the state legislature is repugnant to the legislation
enacted by the Parliament, then the state legislation will be declared void, and the legislation
enacted by the Parliament will prevail over the former.

Article 254(2):In case of repugnant legislation passed by the state against the Parliament, the
state can enforce the legislation if they receive assent from the President.

K.C.Gajapathi Narayana Deo V State of Orissa - the Supreme Court held that colourable
legislation is a situation where the legislature avows on the face of the act that it intends, thereby
to legislate in reference to a subject over which it does not have jurisdiction. however, if the
enacting clauses of the act bring the legislation within its power, then such act cannot be
considered ultra-vires. Therefore, the doctrine of colourable legislation does not involve any
bona fides or malafide in the question on the part of legislature.
Deep chand v State of UP (1959)- The court held that if a law made after 25th Jan, 1950, then
the statute is void ab initio, and conventions made under such unconstitutional law will have to
be set aside by resort to exercise of powers given by COI.

➢ Administrative Relations Between Centre And State

Administrative Relations are a critical component in controlling Centre-State relations. Articles

256 and 257, as well as Articles 356 and 365, deal with the components of Centre-State
interactions. The Centre has been given authority to issue guidelines and directions to the State
under Articles 256 and 257. The entire purpose of Article 356 is to provide for the governance
of a state when no political party can establish a stable government by itself or by forming a
coalition with another party.

Taste of President' s Rule in different states on more than 126 occasions. Article 365, on the
other hand, authorises the President to hold that a situation has arisen in which the Government
of a state cannot be carried on in accordance with the provisions of the Constitution, that is , if
the state fails to comply with or give effect to any directions given in exercise of the executive
power of the Union.3 The meaning of expression "any direction" must be understood to mean
that any direction issued under any of the provisions of this Constitution in the exercise of the
executive powers of the Union.

Division of Administrative powers between the center and the states as per Centre-State
Administrative constitutional provisions:

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 ● Directives from the union to state governments: Under Article 256, the union's executive
power extends to issuing direction to the states in order for them to comply. The Union's
power goes to the limit of controlling a state in a way that feels necessary for the purpose.
● Delegation of union functions to the states:According to Article 254, the President may
delegate to the state government, either conditionally or unconditionally, functions
relating to any matter falling within the purview of union executive power. Under clause
(2), Parliament is also entitled to use the state machinery for the enforcement of the union
laws, and confer powers and entrust duties to the state. A state can also, with the consent
of union government confer administrative functions on the union.
● Deployment of Military and Para-military Forces:Military and paramilitary forces can be
deployed in a state by the union if the circumstances demand, even against the intentions
of the state administration
● Judicial System: A distinctive feature of our federal system is the presence of integrated
judicial system. Though we have federal form of government with two sets of
government and dual powers, there is no dual system of administration of justice. This is
clear by the presence of single integrated chain of courts to administer both union and
state laws with the Supreme Court at the apex of hierarchy of courts.

Financial Relation -

Part XII of the Constitution, Articles 264 to 293, deal with financial relation between the Centre
and the state. Because India is a federal country, it adheres to the division of powers when it
comes to taxation, and it is the responsibility of the Centre to allocate funds to the states.

All such connected provisions have been addressed in this document. Schedule VII describes the
ability of the Centre and states to levy taxes. Furthermore, it contains numerous regulations
concerning the levy and allocation of taxes by the center and states, grants to states, surcharges,
and so on. The Goods and Services Tax, a dual structure tax, is a recent example of a financial
center-state relationship.

1.4 Emergency Provisions:-

Emergency it refers to the unexpected turn of events that causes the public authorities to take
instant actions within their boundary. Human civil rights, except Articles 20 and 21 of the Indian
Constitution, are removed from the state or Nation during an emergency.

Emergency in the Indian Constitution can be differentiated as National Emergencies, State

Emergencies, and Financial Emergencies. Part XVIII of the Constitution contains the emergency
provisions in India.

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A state of emergency in India refers to a period of governance that can be proclaimed by the
President of India during certain crisis situations. Under the advice of the cabinet of ministers,
the President can overrule many provisions of the Constitution, which guarantees Fundamental
Rights to the citizens of India.

● The emergency provisions are contained in Part XVIII of the Constitution of India, from
Article 352 to 360. These provisions enable the Central government to meet any
abnormal situation effectively.
● The rationality behind the incorporation is to safeguard the sovereignty, unity, integrity
and security of the country, the democratic political system and the Constitution.
● The Constitution stipulates three types of emergencies;
1. National Emergency
2. State Emergency
3. Financial Emergency

a) National Emergency under Article 352

ARTICLE 352. (1) If the President is satisfied that a grave emergency exists whereby the
security of India or of any part of the territory thereof is threatened, whether by war or external
aggression or 1 [armed rebellion], he may, by Proclamation, make a declaration to that effect 2
[in respect of the whole of India or of such part of the territory thereof as may be specified in the
Proclamation]. 3

[Explanation.—A Proclamation of Emergency declaring that the security of India or any part of
the territory thereof is threatened by war or by external aggression or by armed rebellion may
be made before the actual occurrence of war or of any such aggression or rebellion, if the
President is satisfied that there is imminent danger thereof.]

(2) A Proclamation issued under clause (1) may be varied or revoked by a subsequent
Proclamation.

(3) The President shall not issue a Proclamation under clause (1) or a Proclamation varying
such Proclamation unless the decision of the Union Cabinet (that is to say, the Council
consisting of the Prime Minister and other Ministers of Cabinet rank appointed under article 75)
that such a Proclamation may be issued has been communicated to him in writing.

{Added by 44th Amnendment}

(4) Every Proclamation issued under this article shall be laid before each House of Parliament
and shall, except where it is a Proclamation revoking a previous Proclamation, cease to operate
at the expiration of one month unless before the expiration of that period it has been approved
by resolutions of both Houses of Parliament:

14
{Added by 44th Amnendment}(2 months was provided earlier)

(5) A Proclamation so approved shall, unless revoked, cease to operate on the expiration of a
period of six months from the date of the passing of the second of the resolutions approving the
Proclamation under clause

{Added by 44th Amnendment}

(6) For the purposes of clauses (4) and (5), a resolution may be passed by either House of
Parliament only by a majority of the total membership of that House and by a majority of not
less than two-thirds of the Members of that House present and voting.

{Added by 44th Amnendment}

(7) Notwithstanding anything contained in the foregoing clauses, the President shall revoke a
Proclamation issued under clause (1) or a Proclamation varying such Proclamation if the
House of the People passes a resolution disapproving, or, as the case may be, disapproving the
continuance in force of, such Proclamation.

(8) Where a notice in writing signed by not less than one-tenth of the total number of members
of the House of the People has been given, of their intention to move a resolution for
disapproving, or, as the case may be, for disapproving the continuance in force of, a
Proclamation issued under clause (1) or a Proclamation varying such Proclamation,—

(a) to the Speaker, if the House is in session; or

(b) to the President, if the House is not in session, a special sitting of the House shall be held
within fourteen days from the date on which such notice is received by the Speaker, or, as the
case may be, by the President, for the purpose of considering such resolution.]

(9)] The power conferred on the President by this article shall include the power to issue
different Proclamations on different grounds, being war or external aggression or 3 [armed
rebellion] or imminent danger of war or external aggression or 3 [armed rebellion], whether or
not there is a Proclamation already issued by the President under clause (1) and such
Proclamation is in operation.

{Added by 38th Amnendment}

* * * * *

Article 352(1)is the National Emergency where an emergency is announced by the President of
India due to any armed rebellion, war or any other external attack or aggression to whole of India

15
or any part of the Indian territory.44th Amendment of Indian constitution included or
substituted the term 'armed rebellion' by replacing internal disturbance' phrase.

Naga People’s Movement of Human Rights v UOI

In this case it was held that the expression “ internal disturbance “ has a wider connotation than
“Armed rebellion “ in the sense that Armed rebellion is likely to pose threat to the security of the
country , or a part while internal disturbance though serious in nature , would not pose a threat to
the security of country , or a part thereof .

In India, the emergency state was declared 3 times in which the first one was during the war of
India and China from October 26,1962 till January 10, 1968 when the Indian security and safety
was endangered due to the external attacks or aggression while the second one was when the
emergency was announced during the war of India and Pakistan from December 3 to December
17, 1971 and the third and the last one was from June 25, 1975 to March 21, 1977 which was
declared by Fakhruddin Ali Ahmed due to internal disturbances or the instability of political
circumstances under leadership of Indra Gandhi so that she can overrule the order of High Court
of Allahabad against her and was the emergency under Article 352 in 1975 .

Effects of Article 352

Article 352 will bring various changes in the setup of the running of the country. For uniformity
purposes of the administration the country's federal framework will turn to an unitary one. The
extraordinary or special powers are given to the President of India in order to figure out the
instructions and directions to the state. The effects of the Article 352 can be done in following
three manners;

● It will affect the life of the legislature.

● It will have the effect on the Fundamental Rights of an individual.
● It will also affect the relations of Centre and State

● The centre federal system will change, centre will be supreme and parliament will make
laws foe whole of India.

● Parliament will be the head of sate and will decide on matters under state list too.

● No distribution of power-state will have no individualism.

Grounds for the National Emergency under Article 352

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 1. When the safety and security of the country is in danger due to armed rebellion, external
aggression or war. The emergency of war and external aggression is regarded as the
external emergency while the emergency of armed rebellion will be regarded as the
internal emergency.
2. The 44th Amendment introduced the term armed rebellion by replacing the term internal
disturbances and this was done because it was believed that the term internal disturbances
would be misinterpreted which may lead to states political persecution.
3. The Indian President can also declare the national emergency even before the armed
rebellion, external aggression or war if he or she is convinced that there might be some
serious danger.

In Minerva Mills vs Union of India, it has been held that there can be no bar to judicial review
of determining the validity of the proclamation of emergency issued by the President under
Article 352(1). The courts powers are limited only to examining whether the limitations
conferred by the Constitution have been observed or not. It can check if the satisfaction of
President is on valid grounds or not. If the President is satisfied that grounds for national
emergency exist but the same is based on absurd, malafide or irrelevant grounds then it won’t be
considered that the President is satisfied.

In Makhan Singh v. State Of Punjab, the validity of the suspension of the right to move any
court for the enforcement of Articles 14, 21 and 22 under the proclamation of emergency
declared during the Indo-China war was challenged. The Supreme Court held that the rights were
suspended only for legally detained persons and not applicable to persons illegally detained
under preventive detention law. The Supreme Court pointing out that a citizen would not be
deprived of his right to move the appropriate court for a writ of habeas corpus if his detention has
been mala fide.

In 1975 during emergency an important question came up. The question was whether in the wake
of suspension of Article 21 do people still claim right to life under any of the provisions of
provisions. In A.D.M. Jabalpur v. Shiv Kant Shukla (Habeas Corpus Case), the court held that
political detainees could be denied all access to the courts during emergency. The court further
held that: in effect, if not in intent, that as to life and personal liberty, all laws were abrogated
during the emergency.The Court declared article 21 to be the sole repository of liberty and when
that has been suspended in its totality, there cannot be any question of enjoyment of right to life
and liberty and no writ of Habeas Corpus is maintainable. The judgement is criticised and may
believe that the Court did not uphold the legitimacy and supremacy of the Constitution.

In Mohd. Yaqub v. State of Jammu Kashmir, the Supreme Court held that an order issued by the
President under article 359(1) was not law within the meaning of article 13(2) and therefore its
validity cannot be challenged with refernce to the Provisions of Part III. Thus, if the order
suspends the enforcement of article 14, if cannot be challenged on the ground that it is

17
discriminatory under article 14. The validity of the order cannot be tested under the very
fundamental rights, i.e. article 14, which may be suspended.

In Bhootnath v State of West Bengal the Supreme Court refused to hold the continuence of
emergency as void and stated that it is a political issue and not justicable or a legal
issue.Thus,beyond the powers of the court as by 38th amendment. Article 352(5) made
president’s satisfaction, final and conclusive. However, 44th amendment, repealed it and power
of the courts have been restored to check the validity of president satisfaction.

b) State Emergency under Article 356

If the President on received from the governor of a state or otherwise, is satisfied that a situation
is a rise in which the government of the state cannot be carried on in accordance to the provisions
of the Constitution. Then the President may by proclamation;

1. Assume to himself all the powers.

2. Transfer all the powers of the legislative assembly to the Parliament.

State emergency comes under Article 356 of the Indian Constitution which allows the Indian
President to impose his rule in a particular state and rule out the state's government. Article 356
is used around 115 times till 2016. The highest number of times it has been imposed in Manipur
is 10 followed by Uttar Pradesh which 9, third is Punjab where it was imposed 8 times.

The State emergency or Article 356 provides the President to rule out the government of the
particular state or Union Territory and enforce his own rule in that particular state or Union
Territory. The President must be satisfied that the situation has occurred where the state
government cannot work in consonance with the provisions of the Indian Constitution.

Article 356 of the Indian Constitution has some provisions which are:

● The Legislative Assembly is either dismissed completely or suspended. There is no

Council of ministers when it is imposed.
● Union Government directly rules over the state or the union territory.
● The President's rule can only be imposed after it has been approved by both the houses
which are Lok Sabha and Rajya Sabha.

Revocation procedure

Article 356 and we revoked by the President of India at any time by proclamation, the
proclamation does not require any type of approval from any of the houses.

18
 1. In the S.R. Bommai case (1994), the Supreme Court of India put forth strict guidelines
for the imposition of Article 356.
● The proclamation (of President’s Rule) is subject to judicial review on grounds of
mala fide intention.
● The imposition of Article 356 should be justified by the centre.
● The court has the power to revive the suspended or dissolved state government if
the grounds for the imposition is found to be invalid and unconstitutional.
● The state assembly cannot be dissolved before parliamentary approval for the
imposition of Article 356 and the President can only suspend the assembly.
● Serious allegations of corruption against the state ministry and financial instability
are not grounds for the imposition of Article 356.
● Any action by the state government that leads to the security of secularism (which
is a basic feature of the Constitution) cannot be grounds for the use of Article 356.
● Article 356 cannot be used to sort out any intraparty issues in the ruling party.
● If the Ministry of the state resigns or is dismissed or loses the majority, then the
governor cannot advise the President to impose this article until enough steps are
taken by the governor for the formation of an alternative government.
● The power under Article 356 is to be used only in case of exigencies. It is an
exceptional power.
2. State of Rajasthan vs UOI

In 1977 elections, after the lifting of the emergency of 1975, the Congress party lost elections in
6 states including Rajasthan .The union Home Minister of Janata Party, Mr. Charan Singh, wrote
letter to each of the chief ministers of these states suggesting that they should seek dissolution of
State legislature from the governor and obtain fresh mandate from the electorate.The State of
Rajasthan along with other states filed an original suit in the Supreme Court against the Union of
India under Article 131 holding that the directive is illegal and inherently unconstitutional.

Issue: whether imposition of President rule in states is reviewable by the judiciary

Judgment: The Supreme Court dismissed the suit and held that the apprehended proclamation
would be valid. The position adopted by the Court was that it could not interfere with the
Centre’s exercise of power under Article 356 merely on the ground that it embraced political and
executive policy and expediency unless some constitutional provision was being infringed .It
was noted that Article 356(5) makes it impossible for the court to question the Presidents
satisfaction on any ground unless and until the usage of the Article is found to be “grossly
perverse and unreasonable” to constitute patent abuse of the provision.It was held by the court
that the proclamation is intended to function as a safeguard against the failure of constitutional
machinery in a state or to repair the effects of a breakdown.It was stated the power under Article
356 allowed the government to make a curative or preventive action and therefore in the case in

19
question, the possibility of State Government having lost the confidence of people could not be
ruled out.

3. Rameshwar Prasad V UOI

In February 2005, after the state elections, as no party or alliance could muster the required
majority of 122 seats in the 243-member House, Bihar saw a hung assembly.Following several
meetings with political parties, the Governor came to the conclusion that no party or coalition
could attain a majority in the Assembly. On March 6, 2005: Governor wrote to the President of
India, recommending a President’s rule in the state under Article 356, keeping the assembly in
‘suspended animation’ .The day after, two notifications were issued which declared President’s
Rule in Bihar and transferred the President’s powers to the Governor, subject to his final control
and superintendence. At the same time, a group of 17 independent MLAs and three smaller
parties extended their support to the NDA group to form the government. Governor sent two
reports to the President:

● The first one was on April 27, 2005, which warned of attempts to manipulate the election
process by offering incentives such as posts and money. The report recommended fresh
elections to prevent distortion of democracy.
● The second report was sent less than a month later on May 21, 2005, in which the
Governor recommended the dissolution of the existing Assembly and reiterated the need
for fresh elections, noting that LJP had sided with the JD(U).
The Union Cabinet promptly forwarded the reports to the President for his assent, which is
required for the dissolution of an Assembly and the conducting of fresh elections.
Rameshwar Prasad and three other MLAs from the dissolved House filed a petition before the
Supreme Court challenging the constitutionality of the Presidential Proclamation of May 23,
2005. They requested that the dissolution of the Assembly be deemed “unconstitutional.”Despite
the pending petitions before the SC, the Election Commission of India (ECI) announced fresh
elections and declared the dates of new elections in the state of Bihar. This decision created a
challenging situation as the Supreme Court had not yet made a ruling, and the election outcome
could potentially complicate matters.
Judegement:The court declared the President’s Proclamation of dissolving the state Assembly
unconstitutional. However, the court decided not to reinstate the Assembly due to the upcoming
elections.The Supreme Court ruled that the Governor must be kept away from controversies such
as disqualifying members of the Legislative Assembly. Therefore, the Constitution has
provisions such as Article 192(2), which mandates the Governor to seek the opinion of the
Election Commission and act accordingly. Similarly, Article 103(2) of the Constitution contains
a similar provision for Members of Parliament.The court deemed the Governor’s actions as
insincere and claimed that the underlying motive was to prevent a political party from attempting
to form the Government.

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 ❖ FINANCIAL EMERGENCY is mentioned in Article 360

Financial Emergency is when the President of India is convinced that there is financial instability
or debt of India/any part of India is jeopardized. The President of India can call for a Financial
Emergency with the cooperation and support of the Council Ministers. Till now Financial
Emergency has never been declared in India.

1.5 Inter-governmental Conflicts

Intergovernmental conflicts in India refer to disputes or disagreements between different levels

of government in the country. India has a federal system of government with multiple layers,
including the central government, state governments, and local governments. Intergovernmental
conflicts can arise due to various reasons, such as differences in jurisdiction, allocation of
resources, policy implementation, or political disagreements between these levels of government.
These conflicts can impact governance and often require negotiation and resolution mechanisms
to maintain the balance of power and cooperative federalism.
Intra-governmental conflicts in India refer to disputes or conflicts that arise within a particular
level of government, such as within the central government or between different departments and
agencies at the same level. These conflicts typically do not involve disagreements between
different tiers of government (central, state, or local) but rather conflicts within a single level of
government.
 Article 263 of the Indian constitution gives provision for the establishment of an Inter-
State Council. This is to enhance the coordination between the Center and States. It is the
most dynamic platform to discuss policies, strengthen the Centre-State relations and act
as a bridge to the trust deficit between the Center and the States
 The nation can progress only if the Union and State Governments work hand in hand.
There are many challenges to maintain the federation. For a soothing functioning of the
system, it is necessary to conduct periodic debates and discussions.
 Inter-State Council is not a permanent constitutional body, which can be created at any
time if it seems to the President that the public interest would be served by the
establishment of such council. It was set up in 1990 through a presidential ordinance for
the first time as per the recommendations of the Sarkaria Commission under the Ministry
of Home affairs.
 Inter-State Council works as an instrument for cooperation, coordination and the
evolution of common policies. The interstate council is proposed to meet thrice a year.

1.6 Special Status of Jammu and Kashmir

Jammu & Kashmir was a former Indian state (now a Union Territory) located at the northern tip.
In 1947, at the time of independence, the State of Jammu and Kashmir decided not to join either
Pakistan or India. India welcomed this decision, but Pakistan attempted to annex the State

21
militarily. The Maharaja sought Indian help to save his territory and people who were being
killed and looted by the Pakistani militants. The then Prime Minister Jawaharlal Nehru accepted
Jammu & Kashmir’s accession to India. The Maharaja signed the “instrument of Accession”
with certain concessions for the autonomy of the State. This special status of the State was
enshrined in Article 370 of the Indian Constitution.

Special Status of Jammu and Kashmir

1. The State of Jammu and Kashmir has its own Constitution apart from Indian constitution.
2. This state follows ‘dual citizenship’- Citizenship of Jammu and Kashmir and India.
3. The residuary power of the state lies with the Legislature of the Jammu and Kashmir and
not the Parliament of India.
4. Except for defense, foreign affairs, finance and communications, the Parliament needs the
state government’s concurrence for applying all other laws.
5. The national emergency declared in the ground of war or external aggression shall have
an automatic extension to the State.
6. The national emergency proclaimed on the grounds of armed rebellion, shall not have an
automatic extension to Jammu and Kashmir.
7. The Governor of the State is to be appointed only after consultation with the Chief
Minister of that State.
8. Financial Emergency under Article 360 of Indian constitution cannot be imposed on the
State.
9. Directive Principle of Policy and Fundamental duties enshrined in the Indian constitution
are not applicable to Jammu and Kashmir.
10. Apart from the President‘s rule, the Governor’s rule can also be imposed on the State for
a maximum period of six months.
11. The preventive detention laws as mentioned in Article 22 of Indian constitution do not
have an automatic extension to the State.
12. The name, boundary or territory of the State of Jammu and Kashmir cannot be changed
by the Parliament without the concurrence of the State Legislature.
13. Article 19(i) (f) and 31 (2) of Indian constitution have not been abolished for this State
and ‘Right to property’ still, stands guaranteed to the people of Jammu and Kashmir.

1.7 Federal Structure in Globalized World

I. Canada

The scheme of distribution of powers in Canada between the Centre and the Provinces makes a
threefold enumeration of powers.

22
The Centre is empowered by S. 91 of the British North America Act, 1867, to make laws for the
peace, order, and good government of Canada with respect to subjects not exclusively assigned
to the Provinces; but for greater certainty, and not so as to restrict the generality of the foregoing
provision, 30 specific heads of powers have been mentioned in the section itself; it is further laid
down that whatever falls within this enumeration cannot be regarded as coming within the
subjects falling in the Provincial List. Some of these heads are: defence, postal service, currency
and coinage, taxation, criminal law, regulation of trade and commerce, unemployment insurance.

S. 92 empowers the Provinces to legislate exclusively with respect to sixteen subjects. One of the
heads in the Provincial list is property and civil rights. Education is an exclusive Provincial
matter. Under s. 95, Agriculture and immigration are concurrent subjects with supremacy in
favour of the Centre in case of conflict between a Central and a Provincial law. S. 94A makes
Old age pension a concurrent subject, but, curiously enough, in this area the supremacy lies with
the Provinces and the Central law is subject to the Provincial law.

Comparing the Indian and Canadian schemes of distribution of powers, a number of

resemblances and contrasts are found to exist. The Centre in Canada has an exclusive field
enumerated in S. 91 of the B.N.A. Act. So has the Centre in India although the Union List is
more elaborate and detailed than its Canadian counterpart. The Canadian Provinces have an
exclusive field. So have the States in India though here again the State List is more detailed. In
Canada, there is a small concurrent field consisting of three subjects only; the Concurrent area in
India is, however, much larger. In both countries, the residuary belongs to the Centre, but there is
not much left by way of residuary in Canada because of the judicial interpretation of the
Provincial property and civil rights clause in peace-time.

II. Australia

The Commonwealth of Australia joined the family of federations in 1900 when the British
Parliament enacted the Commonwealth of Australia Constitution Act .

It follows the American model to the extent of giving only specific powers to the Centre but, in
effect, there are some interesting differences between Australia and America in the scheme of
distribution of powers between the Centre and the States. Section 51 of the Commonwealth Act
enumerates 40 heads with respect to which the Central Parliament has power to legislate. S. 51
does not make the power of the Centre exclusive and the States are also authorised to legislate in
this area concurrently. But some heads either by their nature, or by virtue of other constitutional
provisions, are such that only the Central Parliament can make laws with respect to them, as for
example, borrowing money on the public credit of the Commonwealth, defence, external affairs,
etc. Besides, a few exclusive powers have also been assigned to the Centre.37 All the rest of the
functions, lying beyond the concurrent and the Centre exclusive fields, fall within the exclusive
State jurisdiction.

23
The States thus have to look after such functions as education, health, roads, railways and other
various developmental act ivities.38 In case of an inconsistency between a Central law and a
State law, the Central law prevails and the State law is invalid to the extent of inconsistency.

There are several interesting points of comparison and contrast between the Australian and
Indian schemes of distribution of powers. Both in Australia and India, certain powers have been
assigned exclusively to the Centre, though, in India, the enumeration of powers in the Union List
is much more exhaustive and much larger than in Australia. Both countries have Concurrent
Lists with primacy being vested in the Centre, though in India, unlike Australia, it is possible to
keep alive a State law inconsistent with the Central law while there is no such provision in
Australia. In Australia, the powers of the States are unenumerated and undefined. In India

III. USA
The U.S. Constitution adopts a very simple method for Centre-State distribution of powers. It has
only one List specifically enumerating the powers of the Centre. A few enumerated and specified
powers have thus been allocated to the Centre, and the unenumerated residue of powers have
been left to the States.

The powers entrusted to the Federal Government are thus specific and fall under eighteen heads
but Central powers have expanded a great deal over time through judicial creativity and act ivism
so much so that, in the words of U.S. Supreme Court as early as 1920, "it is not lightly to be
assumed that in matters requiring national action, a power which must belong to and somewhere
reside in every civilized government is not to be found".Moreover, "even constitutional power
may be established by usage". The Congress is given power to make all laws which may be
necessary and proper to give effect to its enumerated powers.

Comparing the scheme of distribution of powers in the U.S.A. with that in India, we find that in
America there is only one List while there are three Lists in India. In America only the exclusive
powers of the Centre are defined; there is no concurrent field and the residue vests with the
States. In India, the exclusive powers of the Centre as well as of the States are defined: there is a
large concurrent area and the residue vests in the Centre and not the States. Functions assigned to
the Centre in India are much more numerous and broader in ambit than those assigned to the
Centre in the U.S.A.

24