1. The petitioners have been running a factory from 1947 onwards for the manufacture of wire-betting rolls, wire netting, wire gauge, wire cloth and jaali made from G. I. Wires of different sizes largely imparted from abroad. Respondent No. 1 is the Regional Provident Funds Commission (hereinafter called the Commissioner) who is to implement the provisions of the Employees' Provident Funds Act, 1952 (hereinafter called the Act) and of the Employees' Provident Funds Scheme, 1952 framed by the Government under the Act (hereinafter called the Scheme). Section 1(3)(a) of the Act makes it applicable to every establishment which is a factory engaged in any industr specified in Schedule I to the Act in which twenty or more persons are employed. Section 4 of the Act empowered the Central Government to add other industries to Schedule I. The importance of Schedule I lies in the fact that the application of the Act depends entirely on the particular industry being covered by an entry in the Schedule.
2. The petitioners' case is that the industry carried on by them is in the nature of a metal textile industry which is not covered by any entry in Schedule I. The only relevant entries are 'industry engaged in the manufacuture of electrical, mechanical or general engineering products' and 'industry engaged in the manufacture of textiles (made wholly or in part of cotton or wool or jute or silk, whether natural or artificial).' The petitioners' industry is not covered by the former entry because the indutrial activity carried on by the petitioners is not in the nature of an engineering industry. It is also not covered by the second entry inasmuch as it is confined only to certain kinds of textiles which do not include the metal textiles woven by the petitioners.
Nevertheless, the Commissioner was of the view that the industry carried on by the petitioners was covered by the former entry relating to 'electrical, mechanical or general engineering products.' In the course of a long correspondence with the petitioners, Respondent No. 1 tried to persuade the petitioners to supply the relevant information to him so that after hearing the petitioners he may decide the question of the coverage of the factory of the petitioners by the Act and the Scheme. The petitioners, however, refused to supply the information on the ground that their factory was not covered by the Act and the Scheme. Ultimately, Respondent No. 1 advised the petitioners to apply to the Central government under Section 19-A of the Act if the petitioners had any doubt as to their factory being covered by the Act and the Scheme. The petitioners, thereforee, represented to the Central Government under Section 19-A that their factory was not covered by the Act and the Scheme.
Pending the decision of the Central Government, however, Respondent No. 1 called upon the petitioners to deposit provident fund contributions for the period from January 1965 to January 1967 amounting to Rs. 5,700 and Rs. 171 as administrative charges and penal damages at the rate of 25 per cent on these amounts by his order dated 10th August 1967 at Annexure A-18 of the writ petition. Subsequently, the Central Government passed the order under Section 19-A butwithout giving a personal hearing to the petitioners though they had made such a request. By this order, the Central Government expressed the opinion that the products manufactured by the petitioners were 'general engineering products' and as such the petitioners' industry was covered by Schedule I of the Act and conveyed this to the petitioners by letter dated 16th January 1968 being Annexure A to the Civil Writ Petition No. 121 of 1968.
The petitioners have challenged the validity of both the demand by the Commissioner and the opinion of the Central Government on the following grounds, namely:-
(1) That the petitioners' industry is not covered by the entry in Schedule I relating to 'electrical, mechanical or general engineering products';
(2) That the provisions of Section 7-A of the Act empowering the Commissioner to determine the amount of provident fund contributions due from any employer are ultra virus inasmuch as no opportunity is given there under to the employers to show to the Commissioner that the particular industry is not covered by any entry in Schedule I. The invalidity of Section 7-A is not affected by the fact that the Commissioner in a particular case may give such opportunity to a particular employer;
(3) That the provisions of Section 19-A of the Act are also void on the ground of excessive and uncanalized delegation of powers by the legislature to the Central Government; and
(3-A) the order dated 16th January 1968 passed by the Central Government is also vitiated inasmuch as no personal hearing was given to the petitioners and no reasons for the order are given therein before it was passed.
3. Learned counsel for the petitioner Shri B.C. Misra did not press the other grounds such as the actual denial of opportunity by the Commissioner to show that the petitioners' industry is not covered by the Act and that the Commissioner was not entitled to recover the provident fund contributions from the petitioner prior to the impugned order.
4. The Commissioner who defended the writ petitions maintained that the industry carried on by the petitioners was covered by the entry in Schedule I of the Act as being an industry engaged in the manufacture of 'electrical, mechanical or general engineering products' and that Sections 7-A and 19-A of the Act were perfectly valid.
5. Question No. 1:-
On the question of coverage of the petitioners' industry by the Act, Shri B.C. Misra argued that the products manufactured by the petitioners are textiles inasmuch as they are made only by weaving wire into various kinds of nets and jaali etc. The essence of the industrial activity carried on by the petitioners was weaving and, thereforee, the petitioners' industry could not be covered by any entry other than the entry relating to 'textiles' in Schedule I. But the entry relating to 'textiles' was restricted to textiles made wholly or in part of cotton or wool or jute or silk, whether natural or artificial. Shri Misra's suggestion was that the legislature wanted to exclude from the operation of the Act all other textiles. These other kinds of textiles cannot, thereforee, be included in the general entry relating to 'electrical, mechanial or general engineering products.'
6. As the decision of this case mainly depends on the correct construction of the relevant entries in Schedule I, the legislative history of the Schedule may first be examined. The original and the unamended Act of 1952 contained Schedule I with only the following six entries namely:-
'Any industry engaged in the manufacture or production of any of the following, namely:- Cement, Cigarettes, Electrical, mechanical or general engineering products, Iron and Steel, Paper, Textiles (made wholly or in part of cotton or wool or jute or silk, whether natural or artifical)'.
The words 'or production' were omitted by Act 37 of 1953 and the Government has by notifications issued from time to time added numerous other entries to the Schedule. Some of the additions relate to industries other than the original six kinds of industries while some additions are made by way of inclusion in the original six industries Act 37 of 1953 added an Explanationn, the relevant part of which is as follows:-
'In this Schedule, without prejudice to the ordinary meaning of the expressions used therein:- (a) the expression 'Electrical, mechanical or general engineering products' includes' - (25 listed items).
The use of the word 'includes' shows that the 25 items listed in the Explanationn do not exhaust the scope of the expression 'Electrical, mechanical or general engineering products', but either illustrate the scope or extend it. Further, the words 'without prejudice to the ordinary meaning of the expressions used therein' bring out two more important features which help the proper construction of the meaning of the entry 'Electrical, mechanical or general engineering products'. Firstly, the expression 'Electrical, mechanical or general engineering products' has to be given its 'ordinary meaning', that is to say, it is to be understood in its ordinary, popular, general everyday meaning as known to ordinary persons. thereforee, the expresion is not to be construed in a technical manner, Secondly, the expression 'Electrical, mechanical or general engineering products' is a general one. Its generality is not prejudiced by the 25 particular items listed in the Explanationn. This may be explained by analogy.
It is usual for the legislature while enacting a statute to confer powers on administrative authorities to make rules to carry out the purposes of the statute. After giving such a power in geneal words, specific powers to carry out specified provisions of the statute are also given. But the conferment of the specific power is without prejudice to the generality of the general power to carry out the purposes of the statute. thereforee, a rule which is covered by the general power would be valid even if it is not covered by any of the specific powers. Further, as observed by the Supreme Court in Regional Provident Funds Commissioner v. Shibu Metal Works, : (1965)ILLJ473SC , while construing the entry 'Electrical, mechanical or general engineering products' it is necessary to bear in mind that this entry occurs in the Act which is intended to serve a beneficent purpose. thereforee, if two views are reasonably possible as to the meaning of the words used in the entry, then the broader meaning which is capable of including a certain industry should be adopted rather than the narrower view which would exclude such industry from the scope of the entry.
Their Lordships have also pointed out that it is the nature of the industrial activity which is the test to determine if the particular industry is covered by Schedule I or not. Their Lordships also observed that the words 'general engineering' would exclude the other specific kinds of engineering such as electrical or mechanical. The essence of 'engineering ' is to design or to construct. Engineering brings out a finished product out of raw-material or gives a particular shape to the raw-materials. A certain length of wire is only a raw-material. It has no particular shape. By weaving the wire into a warp and woof, the petitioners make wire nets etc. What is the essence of this activity? It mustbe said that it is a constructive activity and as such a general engineering activity. I do not see how this activity can escape from being covered by the expression 'general engineering' activity particularly because we have to construe the words 'general engineering' industrybroadly and in their ordinary meaning and not in a technical or a narrow sense.
7. Shri. B. C. Misra argues that the entry 'textiles' being a particular one prevails over the entry 'Electrical, mechanical or general engineering products' which is a general one. This may be so. But what is excluded by this particular entry from the general entry? The answer must be that only those textiles which are included in the particular entry are excluded from the general entry. The metal textiles manufactured by the petitioners are not included in the particualr entry 'textiles'. It follows, thereforee, that they are not excluded from the general entry 'general engineering products'.
Moreover, Shri Misra's argument emphasises the word 'products' rather than the nature of the industrial activity and this is what we are warned against by the Supreme Court in construing Schedule I. Further, though one need not quarrel with the use of the expression 'metal textiles' adopted by the petitioners to decribe their products, we must construe the word 'textiles' in its ordinary sense. So construed, the word 'textiles' refers to certain well-known kinds of textiles which are used for well-established purposes, such as textiles made of natural fibre or synthetic textiles used as garments, furnishings and coverings. Even synthetic textiles are excluded from the entry 'textiles' in Schedule I. Can it be then said that the word 'textiles' in its ordinary sense would apply to metal textiles? In 21 Exncyclopaedia Britannica 909, the article on 'Textiles' begins by saying that textiles are woven fabrics. This does not mean, however, that everything which is woven must be regarded as textiles. This article on 'Textiles' begins by saying that textiles are woven fabrics. This does not mean, however, that everything which is woven must be regarded as textiles. This article on 'textiles'deals with only the conventional 'textiles' of wool, linen, cotton and silk and it is in this context that the word 'textile' is used by laymen.
in 23 Encylopaeida Britannica 342, the article on 'Weaving' says 'woven materials include, besides familiar household and apparel textiles (See 'TEXTILES'), wire screening, fencing, wicker (See 'BASKET'), asbestos cloth, conveyor belting, tire cord, and many other products. It is further said that 'cloth is of course the most important class of woven product'. The statistics of the production of woven cloth are then given. It is then stated that 'the table excludes wire cloth and other miscellaneous fibres'. From this statement, it would appear that weaving and woven fabrics are a wider category than 'textiles' and there are many woven materials which may be made, for instance, of wire screening etc., which are not regarded as 'textiles'.
There is no pleading and there was no argument that these metal textiles can serve any of the purposes for which textiles are ordinarily used such as garments, furnishings, coverings, etc. On the contrary, the metal textiles seemed more suited to be used as window panes etc. They are, thereforee, more used for housing and industrial purposes rather than for the purposes of garments. If metal textiles are to be covered by the ordinary meaning of textiles, one may ask why the cane textiles should also not be so included? But no one has suggested that the baskets, chairs and tables which are made of cane or asbestos cloth or wire screening can be called textiles.
8. In Bourne v. Norwich Crematorium Ltd., (1967) 1 wLR 691, the expession 'industrial building or structure' meant a building or structure in use for the purposes of a trade which consists in the manufacture of goods or materials or 'the subjection of goods ormaterials to any process'. The technical meaning of 'materials' could include almost everything. Similarly, the words 'subjection of goods or materials to any process' would also apply to doing anything with the materials. But the burningof the human corpses in an electric crematorium could not be held to be 'the subjection of goods or materials to any process' within the ordinary meaning of these words. Stamp J., protested against what he called 'subjecting the English language and more particularly a simple English phrase to this kind of process of philology and semasiology'. In Hardwick Game Farm v. Suffolk Agricultural Poultry Producers Association, (1966) 1 Wlr 287, the ordinary meanign of the word 'poultry' was held to exclude pheasants by the Court of Appeal. The decision of the Court of Appeal was affirmed by the House of Lords in Hardwick Game Farm v. Suffolk Agricultural Poultry Producers Association, (1968) 3 Wlr 110, when Lord Guest at page 162 of the Report observed as follows:-
'The essential difference between the pheasants involved in this case and poultry is that poultry are normally reared for table use, while these pheasants are reared not for table use but for sporting purposes.'
The fact that the metal textiles manufactured by the petitioners are not used for any purposes for which the ordinary textiles are used becomes significant in the light of the above remark.
9. Question No. 2:-
We may now read Section 7-A of the Act which is as follows:
'Determination of moneys due from employers.-
(1) The Central Provident Fund Commissioner, any Deputy Provident Fund Commissioner or any Regional Provident Fund Commissioner may, by order, determine the amount due from any employer under any provision of this Act or of the Scheme and for this purpose may conduct such inquiry as he may deem necessary.
(2) The Officer conducting the inquiry under sub-section (1) shall, for the purposes of such inquiry, have the same powers as are vested in a court under the Code of Civil Procedure, 1908, for trying a suit in respect of the following matters, namely:-
x x x x x x
and any such inquiry shall be deemed to be a judicial proceedings within the meaning of Sections 193 and 228, and for the purpose of Section 196, of the Indian Penal Code.
(3) No order determining the amount due from any employer shall be made under sub-section (1), unless the employer is given a reasonable opportunity of representing his case.
(4) An order madeunder this section shall be final and shall not be questioned in any court of law.'
As for the validity of Section 7-A is concerned, the petitioners would be the least qualified to challenge it. For, the correspondence beginning from 23-2-1965 at Annexure A-1 to the writ petition and ending with Annexure A-17 dated 10th August 1967 would show that the Commissioner repeatedly called upon the petitioners to furnish information and returns to enable him to decide, after hearing the petitioners, the question whether the petitioners factory is covered by the Act and the Scheme. The petitioners, on the other hand, have adopted delaying tactics and succeeded in no supplying the desired information to the Commissioner for a period of more than 2 1/2 years. The Commissioner repeatedly asked the petitioner to come to him with their records so that he may decide the question of the coverage of the petitioner's factory. But the petitioners evaded doing so. As the petitioners did not suffer any prejudice inasmuch as they refused to avail themselves o the opportunity repeatedly given to them by the Commissioner, Shri B. C. Misra contended that the fact that actual opportunity wsa given by the Commissioner to the pettioners is irrelevant to the construction of Section 7-A which alone should decide whether Section 7-A imposes an unreasonable restriction on the fundamental right of the petitioners to hold property and to carry on business guaranteed by Article 19(1) (f) and (g) of the Constitution.
10. The following features are relevant to determine the reasonableness or otherwise of Section 7-A, namely:-
(1) The provisions of the Act such as Section 1(3), Section 4, Schedule I and the Scheme framed under the Act clearly lay down the framework within which the Commissioner must act. The Commissioner has repeatedly told the petitioners in the numerous communications which he sent to them that he was implementing the provisions of the Act and the Scheme. The power given to the Commissioner was, thereforee, merely to implement these provisions. There was no unguided or unfettered discretion given to him at all.
(2) Sub-section (3) of Section 7-A expressly lays down that no order determining the amount due from any employer shall be made under sub-section (1) unless the employer is given a reasonable opportunity of representing his case.
(3) As stated by Lord Esher M.R. in Queen v. Special Commissioner of Income-tax, (1888) 21 Qbd 313 , quasi-judicial powers may be exercised by two kinds of adminsitrative authorities or tribunals, namely, (1) by those whose jurisdiction depends on facts and preconditions, the existence of which is to be decided by the Civil Courts and (2) those who are given the power to decide even the jurisdictional facts on the proof of which their jurisdiction depends . the possibility of arbitrary exercise of powers can exist with the latter but not with the former. The Commissioner acting under Section 7-A belongs to the former category. The question whether a particular factoy or establishment is covered by the act and the Scheme is not to be decided finally by the Commissioner but is open to decision by the civil courts as well as by the High Courts and the Supreme Court.
This was also the view expressed in Wadi Stone Marketing Co. Pvt. Ltd., v. Regional Provident Fund Commr. Bangalore, (1964) 27 Fjr 43 by a Division Bench of the Mysore High Court speaking through Hegde J., (as he then was). It is true that the Commissioner will not be powerless to act under Section 7-A merely because some employer raises an objection that his factory is not covered by the Act. The Commissioner would have to formulate a preliminary view of his own after hearing the employer whether the factory is covered by the Act or not. It is only then that the Commissioner can determine the amount due from the employer under Section 7-A But such preliminary assessment of the coverage made by the Commissioner is not final at all. Sub-section (4) of Section 7-A gives finality only to the determination of the amount due from the employer made by the Commissioner butnot to the preliminary assessment of the coverage by the Commissioner.
(4) It is true that Section 7-A does not expressly gives this power of tentatively examining whether a particular factory is covered by the Act to the Commissioner and, thereforee, does not require the Commissioner expressly to give a hearing to the employer before making even this tentative assessment. The reason is that the power to make such tentative assessment is necessarily implied in the power of the Commissioner to determine the amount due from the particular employe. Such a power is always implied and has never been expressly given in any statutes. It follows, thereforee, that the hearing to be given to the employer before such preliminary assessment is also implied. The fact that the requirement of such a hearing is not expressed in the statute does not , thereforee, in any way mean that the Commissioner is not to give a hearing to the employer before making such a preliminary assessment. The absence of such an express requirement does not, thereforee, invalidate Section 7-A.
(5) The power of the Commissioner to make an adverse preliminary assessment against an employer that his factory is covered by the Act can be implied in Section 7-A only if it is also implied that the Commissioner must give the employer an opportunity to show that this factory is not covered by the Act. The latter implication results from a rule of statutory construction by which this requirement of natural justice is read into a statute so that the restriction imposed by the statute on the fundamental rights guaranteed under Article 19(1)(f) and 19(1)(g) is capable of being regarded as reasonable. A statute should, if possible, be so construed as to be constitutional by making such natural justice a part of it.
11. The decision of the Supreme Court in State of Madhya Pradesh v. Baldev Prasad, : 1961CriLJ442 is distinguishable. In paragraph (8) of the report, the Court observed that there was no provisions in the C.P. and Berar Goondas Act enabling the District Magistrate to decide whetehr a person was a goonda or not. In paragraph (9) the Court observed that the definition of the word 'goonda' was an inclusive one and did not afford any guidance to the District Magistrate. This was why the provision of the Act enabling the District Magistrate to take action against the goonda was held to be unconstitutional. In the present case, on the other hand, exhaustive guidelines are laid down in Schedule I of the Act to be followed by the Commissioner in determing whether a particular industry is covered by the Act or not. It cannot be said, thereforee, that the Commissioner was authorise to act arbitrarily in deciding whether an industry was covered by the Act and the Scheme or not. Further the deision of the Commissioner was liable to be reviewed by the Central Government under Section 19-A and also by the civil Court as pointed out above.
12. The decisions in Satish Chander v. Delhi Improvement Trust, , Jagu Singh v. Shaukat Alil, 58 Cal Wn 1066 and Brigade Commander, Meerut Sub-Area v. Ganga Prasad, : AIR1956All507 are also distinguishable. They invalidated the provisions of the Government Premises (Eviction) Act, 1950, because the Act empowered the Competent Authority to summarily evict persons alleged to be in unauthorised occupation of Government premises without giving them any opportunity to show cause against such eviction. This unfettered and arbitrary power was ubject only to an appeal to the Government. But section 7-A on the other hand expressly requires the Commissioner to give a hearing to the employer. Further the decision of the Commissioner is subject to review by the Central Government under Section 19-A and also by the Civil courts, by the High Courts under Article 226 and 227 of the Constitution and by the Supreme Court under Article 136 of the Constitution.
13. Shri Misra also relied on the recent decision of the Supreme Court in State of Bihar v. Kamla Kant Mishra, Civil Appeal NO. 21 of 1966, D/- 21-10-1969 (SC) wherein the majority held Section 144(6) of the Criminal Procedure Code unconstitutional. The reason was that the power of the Central Government to extend the time during which the restriction on personal liberties was imposed by the Magistrate First Class was completely unfettered. In the present case, the Act and the Scheme completely confine the power of the Commissioner. IT is not unfettered at all. This decision, thereforee, does not help the petitioners.
14. Finally, the power given to the Commissioner is for a beneficient purpose to enforce the social securitygiven to the employees by the Act. It does not interfere with the liberties of the employer in any other way for any other purpose. It has, thereforee, to be viewed symathetically and not suspiciously. For the above reasons. I am not convinced that Section 7-A imposes any unreasonable restrictions on the rights of the employer guaranteed by Article 19(1)(f) and (g) of the Constitution. Article 14 of the Constitution is not attracted at all inasmuch as the Commissioner has no discrtion to pick and choose any employers but is bound to act according to the provisions of the Act and the Scheme.
15. Question Nos. 3 and 3-A:-
Sections 19-A of the Act is as follows:-
'Power to remove difficulties - If any difficulty arises in giving effect to the provisions of this Act, and in particular, if any doubt arises as to-
(i) whether an establishment which is a factory is engaged in any indsutry specified in Schedule I;
(ii) whether any particular establishment is an establishment falling within the class of establshments to which this Act applies by virtue of a notification under clause (b) of sub-section (3) of Section 1; or
(iii) the number of persons employed in an estblishment; or
(iv) the number of years which have elapsed from the date on which an establishment has been set up; or
(v) whether the total quantum of benefits to which an employee is entitled has been reduced by the employer,
the Central Government may, by order, make such provision or give such direction, not inconsistent with the provisions of this Act, as appear to it to be necessary or expedient for the removal of the doubt or difficulty and the order of the Central Government, in such cases, shall be final.'
16. What is the nature of the power given to the Central Government by Section 19-A? In Wadi Stone Marketing Company's case, (1964) 27 Fjr 43 referred to above, it was inferred from the words 'if any difficulty arises in giving effect to the proviions of this Act' that the power under Section 19-A was to be exercised to remove the difficullties and doubts of those who are giving effect to the provisions of the Act. The Central Government 'may' but was not bound to make provisions or give directions and it could not, thereforee, be moved to do so at the instance of a private party. The order or the direction by the Central Government would only be an administrative or a ministerial order and not a judicial or quasi-judicial order. Such an order could not bind persons who were not parties before the Central Government and, thereforee, parties affected were not required to be heard nor any decision was required to be rendered by the Central Government.
17. On the other hand, in Dhanalakshmi Weaving Works v. The Regional Provident Fund Commissioner, : (1964)ILLJ528Ker , Vaidialingam, J., (as he then was) held that the decision by the Central Government under Section 19-A may be solicited even by a private person who is affected by the implementation of the provisions of the Act. For, it could not be the intention of the legislature that the decision of the Provident Fund Commissioner alone was sufficient to apply the Act to the factories and the establishments which in his opinion are covered by the Act. There is no provisions in the statute except Section 19-A whereby an adjudication of the essential facts has to be made and an investigation conducted by any other authority. In this background Section 19-A should be construed as an enabling section available not only to the department but also to the employers.
18. With great respect, it seems to me that the Mysore and the Kerala decisions referred to abvoe bring out the two features characterising the power delegated to the Central Government under Section 19-A, namely, on the one hand, an administrative power exercised by the central Government to make prospective provisions and orders of general application to future cases and on the other hand the power to make a quasi-judicial adjudication by an order passed on the existing facts of a particular case which would also serve as a precedent for the future. The orders and directions of general application to future cases are in the nature of, to use an American term, 'rule making' which process has been defined in Section 2(c) of the U.S.A. Federal Administrative Procedure Act, 1946, to mean
'the whole or any part of any agency statement of general or particular applicability or future effect to implement, interpret or prescribe law or policy or to describe the organisation procedure or practice requirements of any agency'. The word 'agency' generally applies under the said Act to an authority of the Government of the United States which is other than the Congress and the Courts.
Administrative action in the nature of rule-making is not directed against a specific person and is not made to decide the existing dispute to which a particular person is a party. The question of giving any hearing to any particular person before making such provisions or directions of future application does not, thereforee, arise. On the other hand, a difficulty or doubt in giving effect to the provisions of the Act may arise out of some objection raised by a particular employer in respect of a matter specified in clauses (i) to (v) of Section19-A. An order made by the Central Government to decide such an objection would be in the nature of adjudication of an existing dispute. Such adjudication is final and binds the person at the instance of whom it is made. It is but just and proper, thereforee, that such a person should be heard before his objection is decided upon.
19. The nature of the power conferred on the Central Government by Section 19-A is, thereforee, two-fold; in some cases, it is administrative power analogous to rule-making or the power to make subordinate legislation. The directions and the provisions made in exercise of this power are, therefoe, sometimes called administrative legislation. In other cases, it is a quasi-judicial power to decide an existing controversy or dispute. The audialteram partem rule of natural justice has to be observed before any such decision is given. The common characteristic of both these powers is that the orders made there under are declaratory only. Such declaratory orders by the administration are a counterpart of the declaratory judgments and orders made by the civil Courts and also by the High Courts and the Supreme Court as a discretionary and extraordinary remedy. Section 5(d) of the Amercian Federal Administrative Procedure Act, 1946, succinctly defines these 'declaratory orders' in the following words:-
'The agency is authorised in its sound discretion, with like effect as in the case of other orders, to issue a declaratory order to terminate a controversy or remove uncertainty.'
An order terminating a controversy is adjudication while an order removing an uncertainty is in the nature of general rule-making for the future. Both these kinds of orders are passed in exercise of statutory authority. They are, thereforee, to be distinguished from administrative advice given by authorities in reply to queries made by private parties.
20. Is the power, of either kind, delegated to the Central Government under Section 19-A excessive or uncanalized? So far as the quasi-judicial power of the Central Government to give an opinion by way of a decision on an existing controversy is concerned, as observed by the Supreme court in Assistant Commr. Of Urban Land Tax, Madras v. Buckingham and Carnatic Co. Ltd., : 75ITR603(SC) , paragraph (10) the doctrine of excessive delegation of authoirty has no application. The only objections urged by Shri Misra against his power are that no personal hearing was given to the petitioners before the Central Government passed the impugned order under Section 19-A and that the order did not give reasons for the decision. As already stated above, Section 7-A expressly requires the employer to be heard by the Commissioner. One of the grounds on which the employer can object to the determination of the amount due from him is that the Act does not apply to his factory at all. A similar right to be heard would be implied by Courts in construing Section 19-A on the principle laid down in Ridge v. Baldwin, 1964 Ac 40; Associated Cement Co. Ltd., v. P. N. Sharma, : (1965)ILLJ433SC and Bhagwan v. Ramchand, : 3SCR218 . The right of hearing being thus secured by a mere rule of construction. It cannot be urged that Section 19-A is invalid because it does not expressly provide for a hearing. The detailed representation made by the petitioners to the Central Government was in pursuance of the right to be heard. The question is whether the petitioners were entiled to be heard orally by the Central Government. The result of the English case-law and the statutes passed after the Frank's committee Report 1959 on this point has been recently summed up by an eminent author as follows:-
'In the absence of clear statutory guidance in the matter, one who is entitled to the protection of audi alteram partem rule is now prima facie entitled to put his case orally; but in a number of contexts the Courts have held natural justice to have been satisfied by an opportunity to make written representations to the deciding body, and there are still many situations where a person will be able to present his case adequately in this way.' (S.A. de Smith Judicial Review of Administrative Actions, p. 189, Second Edition).
In Messrs. Travancore Rayon Ltd., v. Union of India (Civil Appeal No. 2252 of 1966, D/- 28-10-1969 (SC)) after a review of the previous decisions the Supreme Court observed as follows:-
'It is true that the rules do not require that personal hearing shall be given, but in appropriate cases where complex and difficult questions requiring familiarity with technical problems are raised, if personal hearing is given, it would conduce to better administration and more satisfactory disposal of the grievance of the citizens....... In this case, we are of the view, having regard to the complicated and technical questions involved, that the Central Government may be well advised to give an oral hearing to the appellant company.'
In the case before the Supreme Court the question was whether a certain substance manufactured by the appellant company was nitro-cellulose lacquer falling under tariff Item NO. 22(Iii) (i) No. 14(Iii) (i) of the First Schedule to the Central Excises & Salt Act 1944, read with the Finance Act, 1955. Conflicting technical opinions were held on this point. A personal hearing was, thereforee, considered desirable or even necessary. In the case before me, there is no dispute at all regarding the physical or technical nature of the industrial activity of tpetitioners and the products manufactured by them. The question is purely one of construction of the relevant entries in Schedule I of the Act. The Commissioner under Section 7-A and after him the Central Government under Section 19-A were entitled to construe the entries. Each of them had done so. I am not inclied to view this case as requiring a personal hearing. Firstly, the petitioners were repeatedly offered a personal hearing by the Commissioner but they refused to avail themselves of the offers made by the Commissioner showing thereby that they did not require a personal hearing. Secondly, the representation submitted by the petitioners to the Central Government was not much different from the representation made by them to the Commissioner. It cannot be said, thereforee, that the petitioners really required a personal hearing before the Central Government. Lastly, the same question has been argued before me and has been decided by me in the present case. It would, thereforee, be unnecessary now to quash the order of the Central Government on this ground and to send back the case to them for the decision of the same question.
21. It is true that Section 19-A unlike Section 7-A does not expressly require the Central Government to give a hearing before deciding a representation made to it by a private party. The reason for this omission seems to lie in the dual nature of the functions of the Central Government under Section 19-A. The same words have been used to give two different kinds of powers to the Central Government, namely, adjudicatory and rule-making. As no hearing was required to be given before the Cntral Government exercises the latter power, no express requirement of a hearing was introduced in Section 19-A. But the Courts have always read the requirement of a hearing in construing a statute giving either quasi-judicial or administrative power to the Government, the exercise of which would adversely affect a particular person. Such construction is applicable to Section 19-A also insofar as the Central Government there under acts to the prejudice of a particualr person on existing facts. Since no such hearing is necessary when the Central Government makes directions or orders under Section 19-A for future general application, one cannot insist that a requirement of hearing should have been embodied in Section 19-A.
22. The second objection is that the Central Government's order does nto give reasons. I had recently occasion to survey, the law on this question in an article on 'Speaking Orders' in Air 1969 Journal 147 and to point out that a quasijudicial order must state its reasons. The order of the Central Government at Annexure A of the Writ Petition No. 121 of 1968 says that the Government 'is of the opinion that the wire-cloth, wire-guages and wire-nettings manufactured in your factory are 'general engineering products' and, thereforee, 'your factory falls within the scope of the industry', 'Electrical, mechanical or general engineering products' included in Schedule I of the Act'. The reasons why the Central Government thinks that the factory of the petitioners is covered by the Act are, thereforee, clear from the order. An executive authority like the Government cannot be expected to give more detailed reasons such as, for instance, may be given by Courts of law. It cannot be said, thereforee, that the order of the Central Government is not a speaking order or that it is bad for want of reasons.
23. In so far as the power given to the Central Government by Section 19-A to make general orders and provisions for future application is concerned, can it be said that Section 19-A is unconstitutional on the ground of excessive and uncanalized delegation of power by the legislature to the Central Government? Section 19-A itself lays down in great detail the precise nature of the power, when and the conditions subject to which the power is to be exercised and the matters regarding which alone it should be exercised. The power cannot be exercised in respect of any other matter. It cannot, thereforee, be said to be legislative power comparable and parallel to the plenary legislative power of the legislatue. On the other hand, it is not the ordinary power to make subordinate legislation to make rules and regulations to carry out the purposes of a particular statute. The power to remove difficulties and doubts by making general orders and provisions for future application is neither as extensive as ordinary legislative power nor is it as restricted as the power to make subordinate legislation. It seems to stand somewhere between these two extremes. It is similar to the power given to the Central Government under Section 1(3)(b) to notify establishments or class of establishments to which the Act is to be made applicable. The power given by Section 1(3)(b) read with Section 17 of the Act was challenged as uncontrolled or uncanalized, but this contention was repelled by the Supreme Court in Mohmedalli v union of India, (1963) 1 Lab Lj 536, with the observations summarised below:
'The whole Act is directed to institute provident funds in factories and other establishments as the preamble indicates. The institution of provident funds for the employees is a measure of social justice. The Act has given sufficient indication of the policy underlying its provisions, namely, that it shall apply to all factories engaged in the specified kinds of industries and to specified establishments employing twenty or more persons. The Supreme Court has repeatedly laid down that where the discretion to apply the provisions of a particular statute is left with the Government, it would be presumed that the discretion vested in such a high authority would not be abused.'
24. Article 392 of the Constitution itself gives such a power to the President. It is inconceivable that the constitutionality of Article 392 could be doubted on the ground of excessive delegation of power to the President. In Shankari Parshad v. Union of India, Air 1951 Sc 458 in paragraph (11), the adaptation of Article 368 made by the President acting under Article 392 was upheld. In the Commr. Of Income-tax v. Dewan bahadur Ramgopal Mills Ltd., : 41ITR280(SC) , paragraph (8) the Removal of Difficulties Order, 1`950 made under Section 12 of the Finance Act, 1950, was upheld by the Supreme Court. In Commr. Of Income-tax Madhya Pradesh v. M/s. Straw Products Ltd., Bhopal, : 60ITR156(SC) and Straw Products Ltd., v. Income-Tax Officer, : 68ITR227(SC) , the power given to the Central Government to remove difficulties in the implementation of legislation was treated as being a legitimate power which could be validly used within the limits laid down by the legislature. It is only when any such limit was exceeded that the order made in exercise of such a power could be invalidated.
It is only in Jalan Trading Co. Pvt. Ltd., v. Mills Mazdoor Sabha, : (1966)IILLJ546SC in paragraph (21) that a three to two majority of the Supreme Court Bench observed as follows
'If in giving effect to the provisions of the Act any doubt or difficulty arises, normally it is for the legislature to remove that doubt or difficulty. Power to remove the doubt or difficulty by altering the provisions of the Act would in subtance amount to exercise of legislative authority and that cannot be delegated to an executive authority.
Section 37 of the Bonus Act, 1965 was held invalid on the above grounds. With the greatest respect, it may be submitted that the delegation of power under Section 19-A is not of legislative power comparable to that of the Parliament. Secondly, Section 19-A gives no power to the Central Government to alter in any way the provisins of the Act. Lastly, by the use of the word 'normally', the Supreme Court has not altogether rules out the legality of the grant of power to the Central Government by the legislature to remove difficulties in the application of a statute. The delegation under Section 19-A being hedged in by strict conditions and being limited in its application to specific matters, it would apepar that the delegation of power under Section 19-A is not to be viewed with the disfavor with which section 37 was viewed by the Supreme Court. Further Section 19-A of the Act is distinguishable from Section 37 of the Bonus Act inasmuch as the detailed restrictions on the exercise of the power by the Central Government were not to be found in section 19-A were not to be found in Section 37 of the Bonus Act. Lastly, the finality of the order of the Central Government under Section 19-A must be construed to be for departmental purposes only. For, in so far as the orders or provisions made by the Central Government are contrary to the Act, they would be invalid by the terms of Section 19-A itself which authorises the Central Government to issue the orders and directions 'not inconsistent with the provisions of the Act'. The civil Courts, the High Courts and the Supreme Courts would always have the jurisdiction to hold such an order of the Central Government as ultra virus the Act.
25. In Bharat Board Mills Ltd., v. Regional Provident Fund Commr. : AIR1957Cal702 , a learned Single Judge held Section 19-A of the Act to be an unreasonable restriction on the fundamental right guaranteed under Article 19(1)(g) of the Constitution, inter alia, because the order of the Central Government was final without any provision for appeal or representation by the party aggrieved by the order and because the Government was not required to disclose its reaosns for making the order and the order was made on the subjective satisfaction of the Government.
With respect, it may be pointed out that the first hearing to an employer is given by the Commissioner and a second hearing by the Central Government. thereforee, no appeal against the decision of the Central Government could be provided in the Act. But the resort to the civil Courts is kept open by the Act and the Constitution also permits resort to the High Courts and the Supreme Court. Section 19-A wouldalso be construed to require grant of hearing by the Central Government when it exercises a quasi-judicial power there under. The statement of reasons for the order of the Central Government is also a requirement which has to be implied on the ground that the order of the Central Government is open to judicial review. It is not necessary to incorporate such a requirement in Section 19-A itself.
26. I am, not, thereforee, persuaded to hold that Section 19-A is unconstitutional.
27. On the above findings, both the writ petitions (Civil Writ 1236 of 1967and Civil Writ 121 of 1968) fail and are dismissed but without any order as to costs.
28. Petition dismissed.