UNIT –II: - DISTRIBUTION OF POWER BETWEEN UNION AND STATES

TOPICS OF THE UNIT-II

1. DESTRIBUTION OF LEGISLATIVE POWER

2. PARLIAMENT’S POWER TO LEGISLATE ON STATE LIST

3. ADMINISTRATIVE RELATION BETWEEN UNION AND STATES.

4. FINANCIAL RELATIONS BETWEEN UNION AND STATES.

5. DOCTRINE OF TERRITORIAL NEXUS, DOCTRINE OF HARMONIOUS

CONSTRUCTION, DOCTRINE OF PITH AND SUBSTANCE

6. DOCTRINE OF REPUGNANCY, DOCTRINE OF COLORABLE LEGISLATION,

DOCTRINE OF PITH AND SUBSTANCE

TOPIC-1 DESTRIBUTION OF LEGISLATIVE POWER
TOPICS COVERED:-

1. Territorial jurisdiction to legislate

2. Distribution of legislative powers
3. Extension over subject matter
4. Residuary powers
5. Repugnancy between the laws made by the parliament and the state legislatures
a) Repugnancy in the laws made by the parliament and the state legislature under article 249 and
250
b) Repugnancy between the law of parliament and state legislature on the subject of the
concurrent list: article 254

TERRITORIAL JURISDICTION TO LEGISLATE:-

From the territorial point of view, Parliament may make laws for the whole of India, or a part thereof Art.
245(1) says that a law made by Parliament is not invalid merely because it has an extra-territorial operation.
Article 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 concerned.”
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. Article 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 persons, 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 its borders. To decide whether or not a State law has an extra-territorial
operation, the doctrine of territorial nexus is invoked.
The doctrine of territorial nexus is applied to find out whether a particular State law has 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-matter of the Act and the State
making the law, then the statute in question is not regarded as having extra territorial operation.
Thus, a State may levy a tax on a person, property, object or transaction not only when it is situated within
its territorial limits, but also when it has a sufficient and real territorial connection with it.

The principle of territorial nexus can be illustrated with reference to an old case. A company was
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.
In State of Bombay v. RMDC, the respondent, the organizer 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.
In its landmark judgment of State of Andhra Pradesh v. National Thermal Power Corporation Lt., (2002) 5
SCC 203 recently the Supreme Court has stated the principle of territorial nexus as follows-
“It is by reference to the ambit or limits of territory by which the legislative powers vested in Parliament
and the State Legislatures are divided in Art. 245. Generally speaking, a legislation having extraterritorial
operation can be enacted only by Parliament and not by any State Legislature; possibly the only exception
being one where extra-territorial operation of a State legislation is sustainable on the ground of territorial
nexus. Such territorial nexus, when pleaded must be sufficient and real and not illusory.”
DISTRIBUTION OF LEGISLATIVE POWERS-
The crux, the pivotal point, of a federal constitution is the division of powers and functions between the
Centre and the regions. The distribution of legislative powers between the Centre and the regions is the most
important characteristic of a federal constitution. The whole structure of the federal system continues to
revolve around this central point.
A study of the federations now extant in the world shows that there is no fixed formula, or a set pattern for
division of powers between the Centre and the regional governments. Usually certain powers are allotted
exclusively to the Centre certain powers are allotted exclusively to the regions, and there may be a common
or concurrent area for both to operate simultaneously.
The foundation for a federal set up was laid in the Government of India Act,1935. Though in every respect
the distribution of legislative power between the Union and the States as envisaged in the 1935 Act has not
been adopted in the Constitution, but the basic framework is the same.
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 circumstances and considerations governing the scheme of division of powers in a federation vary from
place to place and time to time. The pattern of division of functions in any federal country is largely
conditioned by the interaction of two contending and conflicting forces- forces favouring centralization
resulting in a federal union and promoting a strong centre, and the forces supporting decentralisation, local
or particularistic tendencies born of such factors as ethnic, religious, cultural, linguistic and economic, which
manifest in powers being given to regional governments. The scheme which finally emerges in a federation
is the resultant of the balance of these conflicting forces at the time of the constitution making.
Extension over subject matter: (Article 246):- In Indian Constitution the legislative power has been
divided into 3 categories-

1) Union List - It contains 97 subjects of National Interest. Only parliament can legislate on these subjects.
2) State List - It contains 66 subject matter of Local interest. Only state legislature can legislate on these
subjects.
2) Concurrent List- It contains 52 subjects of social interest. Both parliament and state legislature can
legislate on these subjects.
Residuary Powers: (Article 248) Art. 248 confer the residuary powers, i.e. power to legislate over the
subjects which are not enumerated in all the three lists, on the parliament. Entry number 97 of the Union list
provides the same, that any other matter not enumerated in state list or concurrent list including any tax not
mentioned in either of those lists, shall be legislated by Parliament. In this context, Indian Pattern is different
from the pattern followed in constitution of America, Australia and Switzerland under the provisions of
constitution of these countries the residuary powers are conferred upon the parliament. It makes it ample
clear that the constitution farmers were sought to create a powerful center in India.

REPUGNANCY BETWEEN THE LAWS MADE BY THE PARLIAMENT AND THE STATE
LEGISLATURES

There are certain circumstances in which Parliament and the state legislature both can make laws over the
same subject matter. These are-

1. In case where Rajya Sabha declares a subject of a state list of national importance under article 249.
2. In case off failure of constitutional machinery in the state, the parliament is empowered to make laws
on a subject of state list under article 250.
3. In case where law is related to the subject mentioned the concurrent list.

Therefore, in the above three cases there may be repugnancy between the law made by the Parliament and
the law made by the state legislature. This repugnancy can be classified under two classes:-

1. Repugnancy in laws made by the Parliament and the state legislature under article 249 and 250.
2. Repugnancy in the laws made by the Parliament and the state legislature on the subject mentioned in
the concurrent list.

REPUGNANCY IN THE LAWS MADE BY THE PARLIAMENT AND THE STATE

LEGISLATURE UNDER ARTICLE 249 AND 250:

Article 251 provide that, notwithstanding anything contained in article 249 and 250, the Legislature of the
state can also make laws which under this constitution it has power to make, but if any provision of the law
made by state legislature is repugnant to any provision of law made by the Parliament under either of the
said articles, the law made by the Parliament shall prevail and the law made by the state legislature shall, to
the extent of the repugnancy, be inoperative so long as the law made by the Parliament continues to have
effect.

REPUGNANCY BETWEEN THE LAW OF PARLIAMENT AND STATE LEGISLATURE ON THE

SUBJECT OF THE CONCURRENT LIST: ARTICLE 254:
If both the Parliament and state legislature make law over the same subject mentioned in the concurrent list
and if there is any inconsistency between both laws, the law made by the Parliament shall prevail and the
law made by the state legislature shall be void to the extent of the inconsistency.

according to clause (2) of this article, if state law, with respect to any of the matter enumerated in the
concurrent list, contains any matter repugnant to the provision contained in the law made by the Parliament
or an existing law with respect to that matter, then the State Law, if it has been reserved for the assent of the
President and has received his assent, shall prevail, notwithstanding such repugnancy.

But it would still be possible for the Parliament under the provision of clause (2) to override such a law by
subsequently making a law on the same matter. If it makes such a law, the State Law would be void to the
extent of repugnancy with the law made by the parliament. (Zaver Bhai v. State of Bombay, 1954, SC)

PREVIOUS YEARS QUESTIONS OF UNIVERSITY OF LUCKNOW:-

a) State the legislative relation between union and the state under the constitution of India? (2014)
b) How does constitution of Indian distribute the legislative power between union and the states? (2016)

PROBABLE QUESTIONS:-

a) Mention the demarcation of legislative powers between union and the states under the constitution of
India?
b) What is the effect of repugnancy between the laws made by the parliament and the state legislature?
How does constitution deals with the matter? Explain in detail.
TOPIC 2- PARLIAMENT’S POWER TO LEGISLATE ON STATE LIST
TOPICS COVERED:-

1. Parliamentary legislation in the state field

2. Article 246(4), 249, 250, 252, 253, 353, 357, 312 states such conditions under which parliament can
legislate on subject matters enumerated in state list-
 Legislation for union territories
 Parliament to legislate in national interest
 During proclamation of emergency
 Parliaments power to legislate with consent of the states
 Parliament’s power to legislate for giving effect to treaties and international agreements
 In case of failure of constitutional machinery of state
 Constitution of all India services
3. Central control over state legislation
PARLIAMENTARY LEGISLATION IN THE STATE FIELD
Proverbially, federalism has been characterised as a rigid form of government. Constituted as it is of a dual
polity, there is a rigid distribution of the functions between the Centre and the States supported by no less a
sanction than that of the Constitution. The balance thus drawn between the Centre and the States cannot be
disturbed by one of them unilaterally. Neither the Centre nor the States can trench upon the jurisdiction
assigned to the other.
A change in the scheme of distribution of powers can be effected only by an amendment of the Constitution
which is not always easy to effectuate, as the process of constitutional amendment in a federation is always
more rigid than the ordinary legislative process.
There are disadvantages in having a rigid scheme of distribution of functions. A scheme which may be
appropriate in the context of the times when the Constitution was adopted, may need re-adjustment when
circumstances may have changed. There may arise an emergency in the country when a Central law on a
matter in the State List may be a desideratum; and if this cannot be done without amending the Constitution,
difficulties may be felt in taking effective steps to meet the situation.

Gradual adjustments may be effected in the balance of power by the process of judicial interpretation, but
there may be times when this technique fails to rise to the occasion and make the needed adjustments to meet
situations at hand. To some extent, rigidity of federalism has been mitigated by the newly arising concept of
co-operative federalism but even this concept has its own limitations in practice, and it is a product of non
availability of better and more effective methods of effecting the needed adjustments in the Central-State
relationship. There have been occasions in other federations when lack of necessary powers in the Centre has
been keenly felt as pressing problems have demanded urgent solutions.
The Constitution of India, however, breaks new ground in this respect. It contains several provisions to
create a mechanism for effecting temporary adjustments in the frame of the distribution of powers and thus
introduce an element of flexibility in an otherwise inherently rigid federal structure, and some of these
methods are original insofar as these expedients are not to be found elsewhere. Learning by the difficulties
faced in other federations by a too rigid distribution of powers, which often denied power to the Centre to
take effective measures to meet a given situation, the framers of the Indian Constitution took adequate care
to create a federal structure which could be easily moulded to respond to the needs of the situation, without
resorting to the tedious and elaborate procedure of amending the Constitution.
First, the sizeable Concurrent List represents an attempt to break down, to some extent, the unpassable
barriers between the Centre and the States which arise when there are two exclusive areas allotted to them.
The Concurrent List makes it possible for either the Centre or the States or both to operate on a matter
according to the demands of the situation at a given time.
Secondly, a number of constitutional provisions enable Parliament to legislate in the State sphere from time
to time. These constitutional provisions are discussed below.

Article 246(4), 249, 250, 252, 253, 353, 357, 312 states such conditions under which Parliament can
legislate on subject matters enumerated in state list-

Article 246(3) empowers the state legislature to enact upon the subject matters mentioned in state list.
Whereas Parliament cannot legislate over state list. Such a division of Subject matters is a fundamental
ground of Federal System in India. The object of division of Subject matters is to develop and make the
nation a welfare and Democratic State. But there are many provisions under Constitution which empowers
the Parliament to legislate over the subject matter of state list.

1. Legislation for Union Territories: - Under Article 246(4) Parliament is empowered to legislate for
Union Territories over the subject matters enlisted in State List. Even Parliament is empowered to make laws
for the Union Territories in which state assemblies have been constituted like Delhi & Puducherry and In
Case of any repugnancy the law made by the legislature shall prevail.
2. Parliament to legislate in National Interest: - According to Article 249, if the Rajya Sabha passes a
resolution supported by 2/3 of the members present and voting that it is necessary or expedient in the
national interest that parliament should make law with respect to any matter enumerated in state list, then it
shall be lawful for the Parliament to make law for the whole or any part of territory of India with respect to
that matter so long as the resolution remains in force. Such a resolution normally last for a year, It may be
renewed as many time necessary but not exceeding a year at a time. These laws of Parliament, however,
ceases to have effect on the expiration of the period of Six months after resolution have ceases to operate.
3. During Proclamation of Emergency: - According Art. 250 while the proclamation of Emergency is in
operation. The Parliament shall have power to make laws for the whole or any part of the territory of India
with respect to all matters in a state list. Such laws however, ceases to have effect on the expiration of 6
months after the proclamation of emergency has ceased to operate.
4. Parliaments power to legislate with consent of the states:- According to Art. 252 if the legislature of
two or more states pass resolution to the effect that it is desirable to have law passed by the parliament on
any matter in a state list, it shall be lawful for the parliament to make laws regulating that matter. Any other
state may adopt such a law by passing a resolution to that effect. Such law can only be amend and repealed
by the act of parliament.
5. Parliament’s power to Legislate for giving effect to treaties and international agreements: - Art 253
empowers the parliament to make laws for the whole or any part of the territory of India for implementing
treaties and international agreements and convention related with any subject matter whether or not such
subject matter is enumerated in state list. But the Laws enacted for the enforcement of International treaties
will be subject to the constitutional limits, that is, such law cannot infringe fundamental rights. (In Re Indo-
Pakistan Agreement, AIR 1960)
6. In Case of failure of Constitutional machinery of State: - Under Article 356 parliament is empowered
to make laws with respect to all matters in a state list when parliament declares that the Government of state
cannot be carried on in Accordance with the provisions of the Constitution.
7. Constitution of All India Services - Article 312 empowers parliaments to create new All India Services
Common to the Union and the states. Parliament can create such services if the Rajya Sabha by a resolution
supported by not less than 2/3 of the members present and nothing declares that it is necessary & expectant
in the national interest to create such services.
CENTRAL CONTROL OVER STATE LEGISLATION There are a few provisions in the Constitution
as stated below which prescribe assent of the President, i.e., the Central Executive before a Bill passed by a
State Legislature can become legally effective. This mechanism is part of the scheme of checks and balances
insofar as the Centre is able to keep under its control certain types of State legislation.
(a) Article 31A(1) provides that a law regarding acquisition of estates will not be invalid even if it is
inconsistent with Article 14 or 19.93 However, under the first proviso to Art. 31 A(1), the exemptions
granted to some categories of acquisitorial law from Arts. 14 and 19 cannot be available unless the relevant
State law has been reserved for the consideration of the President and has received his assent.
(b) Article 31C gives overriding effect to the Directive Principles over Fundamental Rights granted by Art.
14 or Art. 19, but a State law can claim this effect only if the President gives his assent to it. This is also a
safeguard against undue abridgment of Fundamental Rights in the name of implementation of Directive
Principles.
(c) Under the Second Proviso to Art. 200, a State Governor has been ordained not to assent to, but to
reserve for the consideration of the President, any Bill passed by a State Legislature which, in his opinion,
would, if it became law, so derogate from the powers of the High Court as to endanger the position which
that Court is by the Constitution designed to fill.
(d) Under Art. 288(2), a State law imposing, or authorizing imposition of, a tax in respect of any water or
electricity stored, generated, consumed, distributed or sold by any authority established by law made by
Parliament for regulating or developing any inter-State river or river-valley, has no effect unless it has
received the assent of the President.

(e) Article 301 declares that trade, commerce and intercourse shall be free throughout India. However, under
Article 304(b), a State Legislature may impose reasonable restriction in public interest on the freedom of
trade, commerce or intercourse with or within the State, but no such Bill is to be moved in the State
Legislature without the previous sanction of the President.
(f) Then, there is Article 254(2) under which repugnancy between a State law and a Central law with respect
to a matter in the Concurrent List may be cured by the assent of the President to the State legislation.
(g) When a proclamation of financial emergency is in operation under Article 360(1), the President, i.e., the
Central Executive can direct the States to reserve all Money Bills or Financial Bills for the President‟s
consideration after they are passed by the State Legislature. [Art. 360(4) (a) (ii)]
(h) Besides the above specific situations where State legislation compulsorily needs Central assent for its
validity, there is Article 200 which makes a general provision enabling the State Governor to reserve a Bill
passed by the State Legislature for Presidential consideration and assent.

PREVIOUS YEARS QUESTIONS OF UNIVERSITY OF LUCKNOW:-

a) State the circumstances when Parliament is empowered to enact upon the Subject matters enlisted
under state list? (2014)

PROBABLE QUESTIONS:-

a) Mention the situations in which normal distribution of legislative power does not exist and the union
is authorized to override the legislative power of the States?
TOPIC 3- ADMINISTRATIVE RELATION BETWEEN UNION AND STATES.
TOPICS COVERED:-

A) Direction by Union to state Government

a) Obligation of States and the Union
b) State to exercise executive powers so as not to impede executive power of Union
c) State to construct means of communication
d) Protection of railways
e) Executive power of State in emergency
f) Union’s power to issue direction in Financial emergency
g) Union executive directs the state to construct or maintain the means of communications of
national or military interest
h) Effect of failure to comply with, or to give effect to, directions given by the Union
B) Delegation of Union’s function to the States
a) Delegation by Union to State: CENTRE TO DEFRAY COST
b) Delegation by State to the Union: Power of the States to entrust functions to the Union
c) Full Faith and Credit Clause
d) Inter-state Council
e) Dispute relating to water

The Constitution places certain restrictions and obligations on the States in order to ensure that the Centre
can exercise its powers unimpeded by them. It is necessary to ensure that no State by its action or inaction
interferes with the legislative and administrative policies of the Centre.

Article 256 imposes a general obligation on the States to so exercise their executive power as to ensure
compliance with the laws made by Parliament. This lays down the general constitutional duty of every State.

Article 256 further enacts that the executive power of the Centre extends to the giving of such directions to a
State as may appear to the Centre to be necessary for the purpose.

It is clear from the phraseology of Article 256 that the existence of a law made by Parliament is a condition
precedent which must be satisfied for the issuance of a direction under it. No direction can be issued under
Art. 256 where no enforcement of a law made by Parliament is involved
Administrative Relation between Union and state can be studied under the following heads:-

(A) Direction by Union to state Government :-The Union executive may direct the state executive-
1. Obligation of States and the Union- That state should use its executive powers in such a manner so as
to ensure the compliance of Laws made by Parliament and any existing laws which apply in that State, and
the executive power of the Union shall extend to the giving of such directions to a State as may appear to the
Government of India to be necessary for that purpose. (Art. 256)
2. State to exercise executive powers so as not to impede executive power of Union: - That states must
exercise their executive powers in such a ways so as not to impede or prejudice the exercise of the executive
power of the Union and the executive power of the Union shall extend to the giving of such directions to a
State as may appear to the Government of India to be necessary for that purpose. (Art. 257)
3. State to construct means of communication: That state should construct and maintain the means of
communication which declared to be of National & Military importance. Article 257(2)
Provided that nothing in this clause shall be taken as restricting the power of Parliament to declare highways
or waterways to be national highways or national waterways or the power of the Union with respect to the
highways or waterways so declared or the power of the Union to construct and maintain means of
communication as part of its functions with respect to naval, military and air force works.
4. Protection of railways: That state must adopt measures for the protection of railways within the state.
Article 257(3)
5. Executive power of State in emergency: That in case of emergency state executive shall exercise its
powers under the direction of Union. (Art. 353)
6. Union’s power to issue direction in Financial emergency: That in case of financial emergency, the
executive authority of the Union shall extend to the giving of directions to any State to observe such canons
of financial propriety as may be specified in the directions, and to the giving of such other directions as the
President may deem necessary and adequate for the purpose. Art. 360 (3)
7. Union executive directs the state to construct or maintain the means of communications of national
or military interest: Where Union executive directs the state to construct or maintain the means of
communications of national or military interest or for protection of Railway in the state and in complying
with such direction, the state has to incur the expenses exceeding the General Expenditures. In such a case
state is entitled to get such exceeding expenses from the Union. Such exceeding expenses must be decided
by the Chief Justice of India Article 257(4).
8. Effect of failure to comply with, or to give effect to, directions given by the Union- Where any State
has failed to comply with, or to give effect to, any directions given in the exercise of the executive power of
the Union under any of the provisions of this Constitution, it shall be lawful for the President to hold that a
situation has arisen in which the Government of the State cannot be carried on in accordance with the
provisions of this Constitution. (Article 365)
(B) Delegation of Union’s function to the States: - Under Art. 258 the President may, with the consent of
the Government of a State, entrust either conditionally or unconditionally to that Government or to its
officers functions in relation to any matter to which the executive power of the Union extend delegation of
functions have been laid down to make the Union of India, a co-operative Union.
(a) Delegation by Union to State:- Under Art. 258(1) the President may, with the consent of the
Government of a State, entrust either conditionally or unconditionally to that Government or to its officers
functions in relation to any matter to which the executive power of the Union extends.
Under clause (2) Parliament is also empowered to use state machinery for the enforcement of Union laws
and for this purpose may confer powers or impose duties upon the states or its officers or authorities there of
in respect of these matters to see that the laws are made applicable to the state. It is to be noted that while
under clause (1) the delegation of powers is made with the consent of state, the consent of state is not
necessary under clause (2) & and delegation can be made by parliament by Law.
CENTRE TO DEFRAY COST- Where by virtue of this article powers and duties have been conferred or
imposed upon a State or officers or authorities thereof, there shall be paid by the Government of India to the
State such sum as may be agreed, or, in default of agreement, as may be determined by an arbitrator
appointed by the Chief Justice of India, in respect of any extra costs of administration incurred by the State
in connection with the exercise of those powers and duties.
(b) Delegation by State to the Union:-
Power of the States to entrust functions to the Union- (Article 258-A)
Like the Central Government, the State Government can also delegate its power to the Union and its officers.
Art. 258-A lays down that the Governor of the state way with the consent of Government of India, entrust to
the Government or its officers, functions relating to any matter to which the executive powers of the
Government extends. It is this clear that where it is not convenient for the either government to directly carry
out its administrative functions, it may get those functions executed through the other Government.
(c) Full Faith and Credit Clause: - Art. 261 declare that full faith and credit shall be given throughout the
territory of India to public acts, records and judicial proceeding of the Union and every state. According to
clause (3) final Judgment or orders delivered or passed by civil courts in any part of the territory of India can
be executed anywhere in the country according to law.
(d) Inter-state Council: - Article 263 provides establishment for an inter-state council to effect co-
ordination between states. The Inter-state council would be appointed by the President if it appears to him
that the public interest would be served by its establishment. The Inter-State council is generally charged
with the duty of-
(1) Inquiring into & advising upon disputes which may arise between states.
(2) Investigating and discussing subjects in which some or all of the states of the Union or one or more states
have common interest.
(3) Making recommendation or any subject and for the better co-ordination of the policy and action with
respect to that subject matter.
(e) Dispute relating to water: - Art. 262 authorize Parliament to provide by law for adjudication of any
dispute or complaint with respect to the uses, distribution or control of water of any interstate river or river
valleys.
Under clause (2) of the article, Parliament may by law provide that neither the Supreme Court nor any other
court shall have any jurisdiction in respect such disputes and complaints relating to water of inter-state river
or river valleys. Under Article 262 Parliament has passed the River Board Act, 1956 and the Inter-States
Water Disputes Act, 1956.

PREVIOUS YEARS QUESTIONS OF UNIVERSITY OF LUCKNOW:-

a) State the administrative relation between union and the state under the constitution of India? (2014)
b) How does constitution of Indian distribute the administrative power between union and the states?
(2016)

PROBABLE QUESTIONS:-

a) Mention the demarcation of administrative powers between union and the states under the
constitution of India?
b) Mention the situations in which the union government can give directions to the state governments
for the better administration?
TOPIC 4- FINANCIAL RELATIONS BETWEEN UNION AND STATES.

TOPICS COVERED:-

1. FINANCIAL RELATION
2. ALLOCATION OF TAXING POWERS
3. CENTRAL TAXES
4. STATE TAXES
5. NO TAX OUTSIDE THE TAX ENTRIES
6. Financial Relation between Union and state can be studies under the following heads
A. Distribution of Revenue between Union and States:
a) Duties levied by the Union but collected and appropriated by the States
b) Taxes levied and Collected by the Union& Assigned to states (Art. 269)
c) Taxes levied and collected by the Union but distributed between the Union& states (Art.
270)
B. Grant-in-aid (Art. 275 ineffective)
C. Finance Commission (Art. 280)
D. Inter Government tax Immunities (Article-285, 286, 287, 288, 289)

Explain the financial relations between the union and the state?

FINANCIAL RELATION:- Financial relation between Union and State mentioned in Part XII of the
Constitution of India under Article 264 to 290-A.

Intergovernmental financial relationship in a federation is a vital, or one may say, even a critical matter. It
touches the very heart of modern federalism, as the way in which this relationship functions, affects the
whole content and working of a federal polity. It is, however, an arduous exercise to create a viable scheme
of intergovernmental financial relationship in a federal polity as federalism has its own special and peculiar
problems. Finance is an essential pre-requisite of good government.

There being in a federation two sets of governments having functions to discharge, it is essential for the
effective working of each government that it be endowed with powers to raise financial resources of its own.
This necessitates an apportionment of taxing powers between the Centre and the States. In a federation,
therefore, along with division of functions there is also a division of taxing powers between the Central and
the State Governments.

But the problems of ordering an inter-governmental financial relationship in a federation does not end with
allocating taxing powers between the two levels of government. To enable a government to function
effectively, it is not enough that it raises some money to carry on its functions, but what is necessary is that
its financial resources match its needs, demands and responsibilities. A balance ought to exist between the
financial resources of the government and its allotted responsibilities and functions. If a government is
starved of resources necessary to carry out its assigned functions, then its powers and autonomy would be no
more than a myth.

ALLOCATION OF TAXING POWERS- Taxing powers are divided between the Centre and the States.
The Constitution allots separate legislative heads of taxation to the Centre and the States. The taxes
enumerated in the Union List [List I] are leviable by the Centre exclusively while those mentioned in the
State List [List II] are leviable by the States exclusively. Not many tax entries are contained in the
Concurrent List. This has been done to avoid problems of overlapping and multiple taxation between the
Centre and the States.

CENTRAL TAXES: Entries 1 to 81 in this List confer general legislative powers on Parliament, while
entries 82 to 92B enumerate the taxes which, Parliament is entitled to levy exclusively.

STATE TAXES: Entries 1 to 44 in this List confer general legislative powers on the State Legislatures
while entries 45 to 63 confer taxing powers on them. The following taxes are mentioned in the State List and
are therefore leviable exclusively by the States.

NO TAX OUTSIDE THE TAX ENTRIES: Entries 1 to 81 in List I mention the several matters on which
Parliament could legislate and entries 82 to 92A, List I enumerate the taxes which Parliament could impose.
While the main subject of legislation is included in the first group (1-81), a tax in relation thereto is
separately mentioned in the second group (81-92A). Thus, entry 22 in List I deals with Railways, while entry
89 deals with terminal taxes on goods or passengers carried by Railways; entry 41 deals with import and
export, and entry 83 with duties of customs; entries 43 and 44 deal with the incorporation and regulation of
companies while entry 85 deals separately with corporation tax.

Similarly in List II, entries 1 to 44, form a group comprising the subjects on which States can legislate;
entries 45 to 63 deal with taxes. For example, entry 18 is „land‟ while entry 45 is „land revenue‟.

From the above, it is clear that taxation is not included in the main subject in which it might, on an extended
construction, be regarded as included, but is treated as a distinct matter for purposes of legislative
competence. A tax cannot, therefore, be levied outside the specific tax entries enumerated in the three Lists.
A tax can be levied only under a „tax‟ entry and not under a „non-tax‟ entry as an ancillary or incidental
matter. Therefore, Parliament‟s power in respect of inter- State trade and commerce under entry 42, List I,
could not be read as including tax on inter-State sales. Similarly, though entry 18, List II, mentions the
subject of transfer and alienation of land, it does not include taxation on transfers and alienation of land.
Financial Relation between Union and state can be studies under the following heads:-

A. Distribution of Revenue between Union and States:

1. Duties levied by the Union but collected and appropriated by the States:- It includes two types of
taxes under Art. 268.
(a) Stamp duties
(b) Duties of excise on medicinal and toilet preparations.
2. Taxes levied and Collected by the Union& Assigned to states (Art. 269):- It includes two types of
taxes-
(a) Taxes on sale or purchase of goods
(b) Taxes on assignment of goods
But such sale or purchase must take place in course of inter-state trade or commerce. But it excludes the sale
and purchase of Newspapers. Such taxes shall be distributed as per the norms made by parliament.
3. Taxes levied and collected by the Union but distributed between the Union& states (Art. 270):- All
taxes and duties referred to in Union list, except the duties above mentioned and taxes referred to in Art. 271
and any cess levied for specific purpose under any law made by Parliament shall be levied and collected by
Government of India and shall be distributed between the Union and states (80th Amendment Act, 2000) But
prior to this only income other than income from agriculture and taxes on production were distributed among
Union and states.
B. Grant-in-aid (Art. 275 ineffective):- Article 275 empowers parliament to make such grants, as it may
deem essential, to the state which are in need of financial assistance. The Constitution also provides for
special grants given to states which undertake scheme of development for the purpose of promoting welfare
of the scheduled tribes or raising the level of administration of Scheduled areas.

Under Article 282 both the Union and a state make grant for any public purpose even if it relates to a subject
ever if it relates to a subject over which it cannot make laws.
C. Finance Commission (Art. 280):- Constitution- Article 280 of the Constitution of “Finance
Commission”. It is constituted after period of every 5 years. A chairperson and 4 other members of finance
commission are appointed by the President of India. The qualification required for the chairperson and the
members of finance commission are determined by the Law made by Parliament.

The member of the commission shall hold office for such period as may be specified in Presidential order
and shall be eligible for re-appointment.
Under Article 200(2) Parliament has passed the Finance (Miscellaneous Provisions) Act, 1951. It provides
that the chairman of the commission shall be selected from among the person who has had experience in
public affairs. The other four members shall be selected from among the persons who-

(a) Are, or have been, or are qualified to have been appointed as a judge of High Court, or
(b) Have special knowledge of finance and accounts of Governments or,
(c)Have had wide experience in financial matters and in administration, or
(d) Have special knowledge of economics.
D. Inter Government tax Immunities (Article-285, 286, 287, 288, 289):-
The Provision related to Inter- Government tax immunities are borrowed from U.S.A. According to it,
Union and State-
(a) Shall have no power to levy tax on other‟s property (Art. 285 & 289)
(b) No state taxes apply on inter-state trade or commerce. (Art. 286)
(c)No tax on electricity used by the Union Government. In this way the electricity used by the Railways for
construction and production shall be tax free but the actual coast shall be charged (Art. 287).

No taxes on the use of water or electricity used for the development of inter-state river or river vallies.

PROBABLE QUESTIONS:-

Explain the financial relations between the union and the state?
TOPIC 5- DOCTRINE OF TERRITORIAL NEXUS, DOCTRINE OF HARMONIOUS
CONSTRUCTION, DOCTRINE OF PITH AND SUBSTANCE
TOPICS COVERED:-

1. Doctrine of territorial nexus. (2016)

2. Doctrine of harmonious construction. (2013)

A. Doctrine of territorial Nexus

Extent of laws made by Parliament and by the Legislatures of States
Under Article 245(1) the legislature of state may make laws for the whole or any part thereof. This means
state laws would be void if it has Extra- territorial operations i.e. take effect outside the state. However there
is one exception to this general rule. A state law of Extra- territorial jurisdiction will be valid if there is
sufficient nexus between the state and the subject matter of Law.

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 extra-territorial operation [Art. 245(2)]

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 persons, 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 its borders. To decide whether or not a State law has an extra-territorial operation,
the doctrine of territorial nexus is invoked.
Territorial Nexus- The doctrine of territorial nexus is applied to find out whether a particular State law has
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-matter of the Act and
the State making the law, then the statute in question is not regarded as having extra-territorial operation.
Thus, a State may levy a tax on a person, property, object or transaction not only when it is situated within
its territorial limits, but also when it has a sufficient and real territorial connection with it.
In Wallance v. Income tax commissioner Bombay 1948 PC, The principle of territorial nexus can be
illustrated with reference to an old case. A company was 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.
In the land mark judgment of State of Bihar v. Charusila Dasi, AIR 1959 SC 1002 : 1959 and state of
Bihar v. Bhabapritananda, AIR 1959 SC 1073 the Hon‟ble. Supreme Court held that 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 thereto is real and
not illusory and that the religious institution and the property appertaining thereto form one integrated
whole. “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.”

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.

In State of Bombay v. RMDC, the respondent, the organizer 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.
In Shri kant Vs. Karulkar v. state of Gujarat,1957 Supreme Court decided on the ground of theory of
territorial nexus that state legislature is empowered to make such laws which includes the land situated
outside the state for the purpose of computing the maxim limit of land of a person because such hands have
intimate relation with the state.

B. Doctrine of harmonious construction- If any subject comes under both the lists, it should be interpreted
harmoniously. It is the duty of the courts to read both the entries simultaneously and interpret the language in
reasonable and practical ways to establish harmony between the both lists. In a case where such
interpretation becomes impossible, the Union list shall be given preference (Calcutta Gas co. v. state of
west Bengal 1962 SC). It is called the “Principle of Harmonious interpretation.

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, as no drafting can be perfect, 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.

To meet such a situation, the scheme of Article 246 is to secure the predominance of the Union List over
the other two Lists, and that of the Concurrent List over the State List. Thus, in case of overlapping
between an entry in the Union List and an entry in the State List, the former prevails to the extent of
overlapping; the subject-matter falls exclusively within the Union jurisdiction and the States cannot legislate
on it.

In case of any overlapping between an entry in the Union List and an entry in the Concurrent List, the former
prevails over the latter and the subject-matter again is treated as being exclusively Central, so as to debar the
States from legislating on it, to the extent of overlapping. If there is an overlapping between an entry in the
Concurrent List and one in the State List, the former prevails and the subject would fall within the
Concurrent List, thus, giving both Parliament and the State Legislatures jurisdiction to legislate with respect
to it rather than making it exclusively a State matter.

This result is inherent in the wordings of Article 246. Art. 246(1) confers exclusive power on Parliament to
legislate relating to matters in List I „notwithstanding anything in clauses (2) and (3).‟ This is known as the
non-obstante clause and its effect is to make the Union power prevail in case the Union and State powers
overlap.

Some of the entries in the different Lists may overlap or may appear to be in direct conflict with each other.
In such a situation, the principle of supremacy of the Union List over the State List, as enunciated above, is
not to be applied automatically or mechanically as soon as some conflict of legislative jurisdiction becomes
apparent. The non-obstante clause is the ultimate rule which is to be invoked only as a last resort, in case of
inevitable or irreconcilable conflict between the entries in different Lists.

Before applying the rule, however, the Court should make an attempt to reasonably and practically construe
the entries so as to reconcile the conflict and avoid overlapping. This is the rule of harmonious interpretation
of the various entries.

This principle of interpretation was lucidly explained by LORD SALMOND in Governor-General in

Council v. State of Madras AIR 1945 PC 98, at 100, in relation to the Government of India Act, 1935, but
which remains as valid to-day as it was at that time. LORD SALMOND observed:

“.. it is right first to consider whether a fair reconciliation cannot be effected by giving to the language
of the Federal legislative List a meaning which, if less wide than it might in another context bear, is yet
one that can properly be given to it, and equally giving to the language of the Provincial [now State]
Legislative List a meaning which it can properly bear”.

In the words of the Supreme Court:-

“It is well established that the widest amplitude should be given to the language of the entries. But
some of the entries in the different lists or in the same list may overlap or may appear to be in direct
conflict with each other. It is then the duty of this Court to reconcile the entries and bring about a
harmonious construction.”

In the landmark judgment of Shankari Prasad Singh Deo v. Union of India (1951) the Apex Court, in this
case, made use of the rule of harmonious construction and held that Fundamental Rights are granted
against the State and they may be revoked only under certain circumstances and even modified by the
Parliament to comply with the constitutional provisions. The Supreme Court gave preference to both and
said that the Fundamental Rights and Directive Principles of State Policy are two sides of the same coin, and
it is beneficial that they must work together. The Supreme Court further held that the Fundamental Rights
enforce limitation over both the legislature and executive power. They are not sacrosanct and the Parliament
can amend them to bring them in conformity with the Directive Principles.

PREVIOUS YEARS QUESTIONS OF UNIVERSITY OF LUCKNOW:-

a) Discuss in detail the principle of territorial nexus? (2013)

b) What is the effect of the laws made by the state legislature operating outside the territory of the state?
c) Define the doctrine of the harmonious construction? (2016)

PROBABLE QUESTIONS:-

a) Write a short note on the following:-

1. Doctrine of territorial nexus.
2. Doctrine of harmonious construction.
TOPIC 6- DOCTRINE OF REPUGNANCY, DOCTRINE OF COLORABLE LEGISLATION,
DOCTRINE OF PITH AND SUBSTANCE

TOPICS COVERED:-

A. DOCTRINE OF PITH AND SUBSTANCE-

a) ORIGIN OF THE DOCTRINE

b) MEANING OF THE DOCTRINE

B. PRINCIPLE OF COLOURABLE LEGISLATION

A. DOCTRINE OF PITH AND SUBSTANCE-

ORIGIN OF THE DOCTRINE
The origin of this doctrine lies in Canada through the case named Cushing Vs. Dupuy (Important judgment
because it paved the roots for Ancillary and Incidental encroachment) and slowly made its way to India and
is firmly supported by Article 246 and Seventh Schedule (The Constitution of India has divided the extent
of legislative powers between the Centre and states by way of the Seventh Schedule. This schedule consists
of, Union, State and Concurrent Lists) of Indian Constitution. This doctrine has become the basis of many
Supreme Court Judgments.

MEANING OF THE DOCTRINE

To disintegrate the doctrine to its molecular meanings, Pith denotes true nature or essence of something and
Substance means the most important or essential part of something. The definition of this doctrine state,
within their respective spheres the state and the union legislatures are made supreme, they should not
encroach upon the sphere demarcated for the other.
Doctrine of Pith and Substance is applied when legislation made by of the legislatures is challenged or
trespassed by other legislatures. This doctrine says that when there is a question of determining whether a
particular law relates to a particular subject the court looks to the substance of the matter. If the substance of
the matter lies within one of the 3 lists, then the incidental encroachment by law on another lists, does not
make it invalid because they are said to be intra vires.

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. Similarly if it falls within List III also, then it is deemed to be excluded from List II. The dominant
position of Parliament in List
I and List III is thus established.

But before the legislation with respect to a subject in one List, and touching also on a subject in another List,
is declared to be bad, the Courts apply the rule of pith and substance. 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. To put it differently, incidental encroachment is not altogether forbidden.

The Supreme Court has enunciated the principle in Premchand Jain v. R.K. Chhabra as follows:

“As long as the legislation is within the permissible field in pith and substance, objection would not be
entertained merely on the ground that while enacting legislation, provision has been made for a
matter which though germane for the purpose for which competent legislation is made, it covers an
aspect beyond it. In a series of decisions this Court has opined that if an enactment substantially falls
within the powers expressly conferred by the Constitution upon the Legislature enacting it, it cannot
be held to be invalid merely because it incidentally encroaches on matters assigned to another
legislature.”

To ascertain the true character of a law, it must be looked into as an organic whole. It would be a wrong
approach to view the statute as a mere collection of sections, to disintegrate it into parts and then to examine
under which entry each part would fall and then to determine which part of it is valid and which invalid.
Instead, the Act should be taken in one piece and then its true character determined. The name given by the
legislature to the legislation is immaterial. It is not enough to examine the object of enactment in question.

The Supreme Court has enunciated the rule of pith and substance in State of Bombay v. F.N. Balsara, AIR
1951 SC 318, at 322 as follows:

“It is well settled that the validity of an Act is not affected if it incidentally trenches on matters
outside the authorized field and, therefore, it is necessary to enquire in each case what is the pith and
substance of the Act impugned. If the Act, when so viewed, substantially falls within the powers
expressly conferred upon the legislature which enacted it then it cannot be held to be invalid merely
because it incidentally encroaches on matters which have been assigned to another legislature”.

Applying the rule of pith and substance, it has been held that-
(i) A State law enforcing prohibition is valid because it prohibits purchase, use, possession, transport and
sale of liquor (Entry 8, List II), and it only incidentally encroaches on the Central power on imports (Entry
41, List I).
(ii) A State prohibition law is valid even though it also deals with some aspects of evidence and criminal
procedure which fall in the Concurrent List, for the law deals, in substance, with intoxicating liquors and
only incidentally with evidence and criminal procedure.
(iii) The Industrial Disputes Act enacted by Parliament, even though it applies to employees of
municipalities, is valid as, in substance, it deals with „industrial and labour disputes‟ (Entry 22, List III), and
not with „local government‟ (Entry 5, List II).
(iv) A State law banning use of amplifiers after 10 P.M. is valid as it seeks to control use of amplifiers in the
interests of health (Entry 6, List II), and it only incidentally touches upon entry 31, List I.
(v) A State law dealing with co-operative societies engaged in the banking business falls under entry 32, List
II, and not under Entry 44 or 45, List I.
(vi) A State Law dealing with chit funds falls under Entry 7, List III, and not under Entries 26 or 30 of List
II. It does not fall under Entry 34, List II, as there is no element of gambling in running chits, nor under
Entry 45, List I, as the essence of banking is absent in running chits.
(vii) A State law reducing arrears of rent or debts due from agriculturists falls under entries 18 and 30, List
II.
(viii) The Central Reserve Police Force Act enacted by Parliament falls under Entry 2, List I, and Entries 1
and 2, List III, and not under Entry 2, List II.
(ix) The object of the Advocates Act, 1961, is to constitute one common Bar for the whole country and to
provide machinery for its regulated functioning. Though the Act relates to legal practitioners, in its pith and
substance it concerns itself with the qualifications, enrolment and discipline of the persons entitled to
practice as advocates before the Supreme Court or the High Courts. The Act thus falls under items 77 and
78 of List I. The power to legislate in regard to such persons is excluded from entry 26 of List III.

(x) In Krishna Vs. State of Madras, applying the rule of pith and substance, the Supreme Court upheld the
Madras Prohibition Act, even though it laid down procedure and principles of evidence for trial of offences
under the law in question very different from those contained in the Criminal Procedure Code and the Indian
Evidence Act, both Central Acts in the Concurrent field. In this case, the Court appears to have gone rather
too far in upholding the State law.

B. PRINCIPLE 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.

It is also called “legislative fraud” or “Fraud with Constitution”. When legislature pretends to show that it is
exercising its own limits but actually it encroaches the limit of others.

Such legislation is called colorable legislation. Broadly speaking it is a legislation which is enacted by a
legislature pretending to work in its own limits but such legislation is enacted by using the powers which are
not in it ambit.

In the case of R.S. Joshi V. Ajit Mills, Ahmedabad, Air 1977 Sc 2279: It was held that 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.

The legislation enacted may be regarded on colourable legislation. It is only when a legislature having no
power to legislate frames a legislation so camouflaging the same as to make it appear to fall within its
competence, the legislation enacted may be regarded as colourable legislation. The extent of encroachment
in the field reserved for the other legislature is an element for determining whether the impugned Act is a
colourable piece of legislation.

The real purpose of legislation may be different from what appears on its face, but it would be colourable
legislation only if the real object is not attainable by the Legislature because it lies beyond its ambit.

The doctrine of colourable legislation has reference to the competence and not to the motives, bona fides or
mala fides of the legislature. The motives of a legislature in making a law are irrelevant

PREVIOUS YEARS QUESTIONS OF UNIVERSITY OF LUCKNOW:-

a) Write a short note on the doctrine of pith and substance.(2017)

b) Write a short note on the principle of colourable legislation (2016)
c) What is the effect of the laws made by one legislature by intruding the power of the other legislature?

PROBABLE QUESTIONS:-

Write a short note on the following:-

a) Doctrine of pith and substance.

b) Principle of colourable legislation.