PETITIONER: <NAME> Vs. RESPONDENT: ELECTION TRIBUNAL, <NAME>,<NAME>. DATE OF JUDGMENT: 22/03/1955 BENCH: <NAME>, VIVIAN BENCH: <NAME>, VIVIAN JAGANNADHADAS, B. SINHA, BHUVNESHWAR P. CITATION: 1955 AIR 425 1955 SCR (2) 1 ACT: Representation of the People Act (XLIII) of 1951, section 105 Effect of-Finality and conclusiveness of orders of Election Tribunals - Article 136 of Constitution--Jurisdiction of Supreme <ORG>-Jurisdiction and powers of High <ORG>s under Article 226 of the Constitut- tion-Whether in any way affected-Writ of Certiorari- Principles governing grant of-Laws of procedure-Grounded on natural justice-Designed to promote justice- Representation of the People Act of 1951, subsection (2) of section 90- Procedure for trial of Election petitions- Code of Civil Procedure, 1908, sections 27 , 30 and 32-Distinction between 'Penalty" for non-appearance of parties to suit and con- sequences flowing from non-appearance in response to summons-Code of Civil Procedure, 1908, Order 5, rules I and 5 and Order 8, rules I and 14, Order 9, rules 6(1)(a)- 2,7,12 and 13-Order 15, rule 3Order 17, rules 1(1) and 2- Trial of suits-First hearing and adjourned hearing- Distinction-Consequences of non-appearance-Ex parte hearing and ex parte order-Principles governing discretion of <ORG>s-Adjournment of hearing-Convenience of witnesses. HEADNOTE: Notwithstanding the provision in section 105 of the Representation of the People Act (Act XLIII) of 1951 that every order of an Election Tribunal made under the Act shall be final and conclusive, <ORG> and <ORG> have unfettered jurisdiction to examine whether the tribunal, in the exercise of its undoubted jurisdiction, has acted legally or otherwise, This jurisdiction cannot be taken away by a legislative device that purports to confer power on a tribunal to act illegally. The legality of an act or conclusion is something that exists outside and apart from the decision of an inferior tribunal. It is a part of the law of the land which cannot be finally determined or altered by any tribunal of limited jurisdiction. <ORG> and <ORG> alone can determine what the law of the land is vis-a-vis all other <ORG>s and tribunals and they alone can pronounce with authority and finality on what is legal and what is not. All that an inferior tribunal can do is to reach a tentative conclusion which is subject to review under Articles 226 and 136 of the Constitution. The jurisdiction of <ORG>s under Article 226 , with that of <ORG> above them, re- main it-, fullest extent despite section 105 of the Representation 2 of the People Act . Limitations on the exercise of, such jurisdiction can only be imposed by the Constitution. The powers of <ORG>s under Article 226 of the Constitution are discretionary and, though no limits can be placed upon that discretion, it must be exercised along recognised lines and not arbitrarily. In the exercise of their jurisdiction under Article 226 , <ORG>s should not act as <ORG>s of Appeal or revision to correct mere errors of law which do not occasion injustice in a broad and general sense. It is a sound exercise of discretion to bear in mind the policy of the legislature to have disputes about special rights, as in election cases, decided as speedily as may be. <ORG> should not therefore entertain petitions for prerogative writs lightly in this class of case. The appellant filed an election petition under section 100 of the Representation of the People -Act. He appeared on the first and 'Subsequent hearing at Kotah. The proceedings were then adjourned for certain hearings at Udaipur. The appellant did not appear on the first three hearings at that place so the tribunal proceeded ex parte. His counsel appeared on the fourth hearing but was not allowed to take any further part in the proceedings because no good cause was shown for the earlier non-appearance and so the tribunal refused to set aside its "ex parte order". Held, (1) Under section 90(2) of the Representation of the People Act the procedure for the trial of election petitions is to be, as near as may be, the same as in the trial of suits under the Civil Procedure Code; (2) under the Civil Procedure Code there is no such thing as an ex parte order for non-appearance" which precludes further appearance at an adjourned hearing until the Order is set aside. If a party appears at an adjourned hearing the court has a discretion (which must be exercised judicially) either to allow him to appear oil such terms as it thinks fit, or to disallow further appearance; but (3) if he is allowed to appear then, unless good cause is shown under Order 9, rule 7 for the earlier non-appearance the proceedings must continue from the stage at which the later appearance is entered and the party so appearing cannot be relegated to the position he would have occupied if he had appeared at the earlier hearing or hearings; also, (4) in exercising its discretion the court must see that justice is done to all concerned, including the witnesses Rule 6 (1) (a) of Order 9 of the Civil Procedure Code is confined to the first hearing of the suit and does not apply, per se to subsequent hearings. 0. 9, r. 7 gives a party a right to be relegated to the position he would have occupied if he had appeared at the earlier hearing or hearings if he shows good cause. It does not per se prevent further appearance when no good cause is shown. O. 17, r. 2 applies at the adjourned hearing and there, the <ORG> is given a wide discretion to make such order as it thinks fit. 3 A code of procedure is a body of law designed to facilitate justice and further its ends, and should not be treated as an enactment providing for punishments and penalties. The laws of procedure are grounded on the principle of natural justice which requires that men should not be condemned unheard, that decisions should not be reached behind their backs, that proceedings that affect their lives and property should not continue in their absence and that they should not be precluded from participating in them. Subject to clearly defined exceptions the laws of procedure should be construed wherever reasonably possible, in the light of that principle. The court is invested with the widest possible discretion to see that justice is done to all concerned. No hard and fast rule can be laid down; and the court in the exercise of its judicial discretion will have, in a given case, to determine what consequences are to follow from non- appearance. An order awarding costs, or an adjournment, or the consideration of the written statement and the framing of the issues on the spot, can in some cases meet the ends of justice. In other cases, more drastic action may be called for. By "ends of justice" is meant not only justice to the parties but also to witnesses and others who may be inconvenienced. The convenience of the witnesses, which deserves the greatest consideration, is ordinarily lost sight of in this class of case. Justice strongly. demands that this unfortunate section of the general public com- pelled to discharge public duties, usually at loss and inconvenience to themselves should not be ignored in the over-all picture of what will best serve the ends of justice; and it may well be a sound exercise of discretion in a particular case to refuse an adjournment and permit the plaintiff to examine the witnesses present and not allow the defendant to cross-examine them. But broadly speaking, after all the various factors have been taken into consideration and carefully weighed, the endeavour should be to avoid snap decisions and to afford the parties a real opportunity of fighting out their cases fairly squarely. The <ORG> must in every case exercise the discretion given to it. Its hands are not tied by a so-called "ex parts order", and, if it thinks they are tied by rule 7 of Order 9 of the Code , then it is not exercising the discretion which the law says it should, and in a given case interference may be called for. Held, that <ORG> did not exercise the discretion given to it by law because of a misapprehension that it had none. It was directed to do so now and to proceed with the further hearing of the case in accordance with law. <CITATION> ( 1 S.C.R. 1104), <CITATION> ( 1 S.C.R. 267), and <CITATION> ( S.C.R. 913, 918), applied. <NAME> v. <NAME> (A.I.R. 1945 Sind 98, 102), distinguished. <NAME> v. <NAME> (A.I.R. 1952 Raj. 12, 14), overruled. <CITATION> (A.I.R. 1925 Mad. 1274), approved <NAME> v. <NAME> (I.L.R. 40 Mad, 793), 4 <NAME> v. <ORG> (A.I.R. 1928 P.C. 261, 262) and <NAME> v. <NAME> (5 I.A. 233, 236), applied. Case remitted to, <ORG>: JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 214 of 1954. Appeal under Article 133 (1) (c) of the Constitution of India from the Judgment and Order dated the 17th July 1953 of the, <ORG> of Rajasthan (<NAME> and <NAME>.) in Civil Writ Application No. 128 of 1953.

<NAME> and <NAME>, for the appellant. <NAME>, for <NAME>, for respondent No. 2. 1955. March 22. The Judgment of the Court was delivered by <NAME> second respondent <NAME> filed an election petition under section 100 of the Representation of the People Act against the appellant <NAME> and two others for setting aside <NAME>'s election. The proceedings commenced at Kotah and after some hearings the <ORG> made an order on 11-12-1952 that the further sittings would be at Udaipur from the 16th to the 21st March, 1953. It was discovered later that the 16th was a public holiday, so on 5-1-1953 the dates were changed to "from the 17th March onwards" and the parties were duly notified.

On the 17th the appellant did not appear nor did any of the three counsel whom he had engaged, so the <ORG> proceeded ex parte after waiting till 1-15 P.m.

The <ORG> examined <NAME> and two witnesses on the 17th, five more witnesses on the 18th and on the 19th the case was adjourned till the 20th.

On the 20th one of the appellant's three counsel, Mr, <NAME>, appeared but was not allowed to take any part in the proceedings because the <ORG> said that it was proceeding ex parte at that stage. Three more witnesses were then examined.

On the following day, the 21st, the appellant made an application asking that the ex parte proceedings be set aside and asking that he be allowed to cross-examine those of <NAME> witnesses whose evidence had already been recorded.

The <ORG> heard arguments and passed an order the same day rejecting the application on the ground that the appellant had "failed to satisfy ourselves that there was -any just or unavoidable reason preventing the appearance of respondent No. 1 himself or of any of his three learned advocates between the 17th and the 19th of March, 1953", and it added-

"at all events, when para 10 of the affidavit makes it clear that <NAME> had already received instructions to appear on 17-3-1953 there was nothing to justify his non- appearance on the 18th and 19th of March, 1953, if not, on the 17th as well".

The appellant thereupon filed a writ petition under article 226 of the Constitution in <ORG> and further proceedings before the <ORG> were stayed. <ORG> rejected the petition on 17-7-1953 on two grounds-

(1) "In the first -place, the <ORG> was the authority to decide whether the reasons were sufficient or otherwise and the fact that the <ORG> came to the conclusion that the reasons set forth by counsel for the petitioner were insufficient cannot be challenged in a petition of this nature" and (2) "On the merits also, we feel no hesitation in holding that counsel for the petitioner were grossly negligent in not appearing on the date which had been fixed for hearing, more than two months previously".

Five months later, on 16-12-1953, <ORG> granted a certificate under article 133(1) (C) of the Constitution for leave to appeal to this <ORG>, The only question before <ORG> was whether the <ORG> was right in refusing to allow the appellant's counsel to appear and take part in the proceedings on and after the 20th of March, 1953, and the first question that we have to decide is whether that is sufficient ground to give <ORG> jurisdiction to entertain a writ petition under article 226 of the Constitution. That, in our opinion, is no longer res integra. The question was settled by a Bench of seven Judges of this <ORG> in <CITATION> (1) in these terms: "Certiorari will also be issued when the <ORG> or <ORG> acts illegally in the exercise of its undoubted jurisdiction, as when it decides without giving an op- portunity to the parties to be heard, or violates the principles of natural justice".

That is exactly the position here.

It was urged that that cannot be so in election matters because of section 105 of the Representation of the People Act of 1951 (Act XLIII of 1951), a section which was not considered in the earlier case. It runs thus: "Every order of the <ORG> made under this Act shall be final and conclusive".

It was argued that neither the <ORG> nor <ORG> can itself transgress the law in trying to set right what it considers is an error of law on the part of the <ORG> or <ORG> whose records are under consideration. It was submitted that the legislature intended the decisions of these tribunals to be final on all matters, whether of fact or of law, accordingly, they cannot be said to commit an error of law when, acting within the ambit of their jurisdiction, they decide and lay down what the law is, for in that sphere their decisions are absolute, as absolute as the decisions of <ORG> in its own sphere. Therefore,'it was said, the only question that is left open for examination under article 226 in the case of an Election <ORG> is whether it acted within the scope of its jurisdiction.

(1) [1955] 1 S.C.R. 1104,1121, But this, also, is no longer open to question. The point has been decided by three Constitution Benches of this <ORG>. <CITATION> (1) the effect of section 105 of the Representation of the People Act was not considered, but the <ORG> laid down in general terms that the jurisdiction under article 226 having been conferred by the Constitution, limitations cannot be placed on it except by the Constitution itself: see pages 238 and 242. Section 105 was, however, considered in <CITATION> (1) and it was held that that section cannot cut down or affect the overriding powers of this <ORG> under article 136. The same rule was applied to article 226 in <CITATION> (1) and it was decided that section 105 cannot take away or whittle down the powers of the High <ORG> under article 226. Following those decisions we hold that the jurisdiction of the High <ORG> under article 226 is not taken away or curtailed by section 105 .

The jurisdiction which articles 226 and 136 confer entitles <ORG> and this <ORG> to examine the decisions of all Tribunals to see whether they have acted illegally. That jurisdiction cannot be taken away by a legislative device that purports to confer power on a tribunal to act illegally by enacting a statute that its illegal acts shall become legal the moment the tribunal chooses to say they are legal. The legality of an act or conclusion is something that exists outside and apart. from the decision of an in- ferior tribunal. It is a part of the law of the land which cannot be finally deter-mined or altered by any tribunal of limited jurisdiction. The High <ORG>s and the Supreme <ORG> alone can determine what the law of the land is vis-a-vis all other courts and tribunals and they alone can pronounce with authority and finality on what is legal and what is not. All that an inferior tribunal can do is to reach a tentative conclusion which is subject to review under articles 226 and 136. Therefore, the jurisdiction of the High (1) [1955] 1 S.C.R. 1104, 1121. (2) [1955] 1 S.C.R. 267. (3) 1954 S.C.R. 913, 918.

Courts under article 226 with that of <ORG> above them remains to its fullest extent despite section

105. That, however, is not to say that the jurisdiction will be exercised whenever there is an error of law. <ORG> do not, and should not, act as <ORG> of appeal under article 226. Their powers are purely discretionary and though no limits can be placed upon that discretion it must be exercised along recognised lines and not arbitrarily; and one of the limitations imposed by the <ORG> on, themselves is that they will not exercise jurisdiction in this class of case unless substantial injustice has ensued, or is likely to ensue. They will not allow themselves to be turned into <ORG> of appeal or revision to set right mere errors of law which do not occasion injustice in a broad and general sense, for, though no legislature can impose limitations on these constitutional powers it is a sound exercise of discretion to bear in mind the policy of the legislature to have disputes about these special rights decided as speedily as may be. Therefore, writ petitions should not be lightly entertained in this class of case.

We now turn to the decision of the <ORG>. The procedure of these tribunals is governed by section 90 of the Act. The portion of the section that is relevant here is sub- section (2) which is in these terms:

"Subject to the provisions of this Act and of any rules made thereunder, every election petition shall be tried by the <ORG>, as nearly as may be, in accordance with the procedure applicable under the Code of Civil Procedure, 1908 (Act V of 1908) to the trial of suits".

We must therefore direct our attention to that portion of the Civil Procedure Code that deals with the trial of suits. Now a code of procedure must be regarded as such. It is procedure, something designed to facilitate justice and further its ends: not a penal enactment for punishment and penalties; not a thing designed to trip people up. Too technical a construction of sections that leaves no room for reasonable elasticity of inter-

pretation should therefore be guarded against (provided always that justice is done to both sides) lest the very means designed for the furtherance of justice be used to frustrate it.

Next, there must be ever present to the mind the fact that our laws of procedure are grounded on a principle of natural justice which requires that men should not be condemned unheard, that decisions should not be reached behind their backs, that proceedings that affect their lives and property should not continue in their absence and that they should not be precluded from participating in them. Of course, there must be exceptions and where they are clearly defined they must be given effect to. But taken by and large, and subject to that proviso, our laws of procedure should be construed, wherever that is reasonably possible, in the light of that principle.

The existence of such a principle has been doubted, and in any event was condemned as unworkable and impractical by <NAME>, J. in <NAME> v. <NAME>). He regarded it as an indeterminate term "liable to cause misconception" and his views were shared by <NAME>, C. J. and <NAME>, J. in Rajasthan: <CITATION> (1). But that a law of natural justice exists in the sense that a party must be heard in <ORG>, or at any rate be afforded an opportunity to appear and defend himself, unless there is express provision to the contrary, is, we think, beyond dispute. See the observations of <ORG> in <NAME> v. <NAME>), and especially in <NAME> v. <ORG>) where Lord <NAME> said "Do forms or procedure should ever be permitted to exclude the presentation of a litigant's defence". Also <NAME> case which we have just quoted.

In our opinion, <ORG> was right in <NAME> v. <NAME>) in holding that "One cardinal principle to be observed in trials by a <ORG> obviously is that a party has a right to (1) A.I.R 1945 Sind 98,102 (2) A.I.R. 1952 Raj. 12,14.

(3) A.I.R. 40 Mad. 793, 800 (4) A.I.R. 1928 P.C. 261, 262.

(5) A.I.R. 1925 Mad. 1274.

appear and plead his cause on all occasions when that cause comes on for hearing", and that "It follows that a party should not be deprived of that right and in fact the Court has no option to refuse that right, unless the Code of Civil Procedure deprives him of it".

Let us now examine that Code; and first, we will turn to the body of the Code . Section 27 provides that "Where a suit has been duly instituted, a summons may be issued to the defendant to appear and answer the claim". Section 30 gives the <ORG> power to "(b) issue summonses to persons whose attendance is required either to give evidence or to produce documents or such other objects as aforesaid".

Then come the penalties for default. They are set out in section 32 but they are confined to cases in which a summons has been issued under section 30 . There is no penalty for a refusal or an omission to appear in response to a summons under section 27 . It is true certain consequences will follow if a defendant does not appear and, popularly speaking, those consequences may be regarded as the penalty for nonappearance, but they are not penalties in the true sense of the term. They are not punishments which the <ORG> is authorised to administer for disregard of its orders. The antithesis that section 32 draws between section 27 and section 30 is that an omission to appear in response to a summons under section 27 carries no penalty in the strict sense, while disregard of a summons under section 30 may entail punishment. The spirit of this distinction must be carried over to the First Schedule. We deprecate the tendency of some Judges to think in terms of punishment and penalties properly so called when they should instead be thinking of compensation and the avoidance of injustice to both sides.

We turn next to the Rules in the First Schedule. It is relevant to note that the Rules draw a distinction between the first hearing and subsequent hearings, and that the first hearing can be either (a) for settlement of issues only., or (b) for final disposal of the suit. First, there is Order V. rule 1:

"................................ a summons may be issued to the defendant to appear and answer the claim on a. day to be therein specified".

This summons must state whether the hearing is to be for settlement of issues only or for final hearing (rule 5). If it is for final hearing, then (rule 8):

"it shall also direct the defendant to produce, on the day fixed for his appearance, all witnesses upon whose evidence he intends to rely in support of his case". Then comes Order VIII, rule 1 which expressly speaks of "the first hearing". Order IX follows and is headed "Appearance of parties and consequence of non-appearance". Now the word "consequence" as opposed to the word "penalty" used in section 32 is significant. It emphasises the antithesis to which we have already drawn attention. So also in rule 12 the marginal note is "Consequence of non- attendance" and the body of the rule states that the party who does not appear and cannot show sufficient cause "shall be subject to all the provisions of the foregoing rules applicable to plaintiffs and defendants, respectively, who do not appear".

The use of the word "penalty" is scrupulously avoided. Our attention was drawn to rule 6(2) and it was argued that Order IX does contemplate the imposition of penalties. But we do not read this portion of the rule in that light. All that the plaintiff has to do here is to pay the costs occasioned by the postponement which in practice usually means the cost of a fresh summons and the diet money and so forth for such of the witnesses as are present; and these costs the plaintiff must pay irrespective of the result. Rule I of Order IX starts by saying-

"On the day fixed in the summons for the defendant to appear and answer................................................."

and the rest of the rules in that Order are consequential on that. This is emphasised by the use of the word "postponement" in rule 6 (1)(c), of "adjournment" in rule 7 and of "adjournment" in rule 1. Therefore, we reach the position that Order IX, rule 6 (1) (a), which is the rule relied on, is confined to the first hearing of the suit and does not per se apply to subsequent hearings: see <NAME> v. <NAME>). Now to analyse rule 6 and examine its bearing on the first hearing. When the plaintiff appears and the defendant does not appear when the suit is called on for hearing, if it is proved that the summons was duly served-

"(a).................................................... the Court may proceed ex parte".

The whole question is, what do these words mean? Judicial opinion is sharply divided about this. On the one side is the view propounded by <NAME>, J. in <CITATION> (2) that ex parte merely means in the absence of the other party, and on the other side is the view of <NAME>, J., in <NAME> v. <NAME>) that it means that the <ORG> is at liberty to proceed without the defendant till the termination of the proceedings unless the defendant shows good cause for his non-appearance. The re- maining decisions, and there are many of them, take one or the other of those two views.

In our opinion, <NAME>, <NAME> and the other Judges who adopt the same line of thought, are right. As we have already observed, our laws of procedure are based on the principle that, as far as possible, no proceeding in a <ORG> of law should be conducted to the detriment of a person in his absence. There are of course exceptions, and this is one of them. When the defendant has been served and has been afforded an opportunity of appearing, then, if he does not appear, the <ORG> may proceed in his absence. But, be it noted, the <ORG> is not directed to make an ex (1) 5 I.A. 233, 236.

(2) A,I.R. 1925 Mad. 1274.

(3) A.I.R. 1945 Sind 98, 102.

parte order. Of course the fact that it is proceeding ex parte will be recorded in the minutes of its proceedings but that is merely a statement of the fact and is not an order made against the defendant in the sense of an ex parte decree or other ex parte order which the <ORG> is authorised to make. All that rule 6 (1) (a) does is to remove a bar and no more. It merely authorises the <ORG> to do that which it could not have done without this authority, namely to proceed in the absence of one of the parties. The contrast in language between rules 7 and 13 emphasises this. Now, as we have seen, the first hearing is either for the settlement of issues or for final hearing. If it is only for the settlement of issues, then the <ORG> cannot pass an ex parte decree on that date because of the proviso to Order XV, rule 3(1) which provides that that can only. be done when "the parties or their pleaders are present and none of them objects".

On the other hand, if it is for final hearing, an ex parte decree can be passed, and if it is passed, then Order IX, rule 13 comes into play and before the decree is set aside the <ORG> is required to make an order to set it aside. Contrast this with rule 7 which does not require the setting aside of what is commonly, though erroneously, known as "the ex parte order". No order is contemplated by the Code and therefore no order to set aside the order is contemplated either. But a decree is a command or order of the <ORG> and so can only be set aside by another order made and recorded with due formality.

Then comes rule 7 which provides that if at an adjourned hearing the defendant appears and shows good cause for his "previous non-appearance", he can be heard in answer to the suit "as if he had appeared on the day fixed for his appearance". This cannot be read to mean, as it has been by some learned Judges, that he cannot be allowed to appear at all if he does not show good cause. All it means is that he cannot be relegated to the position he would have occupied if he had appeared, We turn next to the adjourned hearing. That is dealt with in Order XVII. Rule I (1) empowers the <ORG> to adjourn the hearing and whenever it does so it must fix a day "for the further hearing of the suit", except that once the hearing of the evidence has begun it must go on from day to day till all the witnesses in attendance have been examined unless the <ORG> considers, for reasons to be recorded in writing, that a further adjournment is necessary. Then follows rule 2-

"Where., on any day to which the hearing of the suit is adjourned, the parties or any of them fail to appear, the Court may proceed to dispose of the suit in one of the modes directed in that behalf by Order IX or make such other order as it thinks- fit".

Now rule 2 only applies when one or both of the parties do not appear on the day fixed far the adjourned hearing. In that event, the <ORG> is thrown back to Order IX with the additional power to make "such order as it thinks fit". When it goes back to Order IX it finds that it is again empowered to proceed ex parte on the adjourned hearing in the same way as it did, or could have done, if one or other of the parties had not appeared at the first hearing, that is to say, the right to proceed ex parte is a right which accrues from day to day because at each adjourned hearing the <ORG> is thrown back to Order IX, rule 6. It is not a mortgaging of the future but only applies to the particular hearing at which a party was afforded the chance to appear and did not avail himself of it. Therefore, if a party does appear on "the day to which the hearing of the suit is adjourned", he cannot be stopped from participating in the proceedings simply because he did not appear on the first or some other hearing.

But though he has the right to appear at an adjourned hearing, he has no right to set back the hands of the clock. Order IX, rule 7 makes that clear. Therefore, unless he can show good cause, he must accept all that has gone before and be content to proceed from the stage at which he comes in. But what exactly does that import? To determine that it will be neces-

<NAME> to hark back to the first hearing.

We have already seen that when a summons is issued to the defendant it must state whether the hearing is for the settlement of issues only or for the final disposal of the suit (Order V, rule 5). In either event, Order VIII, rule I comes into play and if the defendant does not present a written statement of his defence, the <ORG> can insist that he shall; and if, on being required to do so, he fails to comply-

"the <ORG> may pronounce judgment against him, or make such order in relation to the suit as it thinks fit". (Order VIII, rule 10).

This invests the <ORG> with the widest possible discretion and enables it to see that justice is done to both sides; and also to witnesses if they are present: a matter on which we shall dwell later.

We have seen that if the defendant does not appearat the first hearing, the <ORG> can proceed exparte, which means that it can proceed without a written statement; and Order IX, rule 7 makes it clear that unless good cause is shown the defendant cannot be relegated to the position that he would have occupied if he had appeared. That means that he cannot put in a written statement unless he is allowed to do so, and if the case is one in which the <ORG> considers a written statement should have been put in, the consequences entailed by Order VIII, rule 10 must be suffered. What those consequences should be in a given case is for the <ORG>, in the exercise of its judicial discretion, to determine. No hard and fast rule can be laid down. ID some cases an order awarding costs to the plaintiff would meet the ends of justice: an adjournment can be granted or a written statement can be considered oil the spot and issues framed. In other cases, the ends of justice may call for more drastic action.

Now when we speak of the ends of justice, we mean justice not only to the defendant and to the other side but also to witnesses and others who may be inconvenienced. It is an unfortunate fact that the convenience of the witness is ordinarily lost sight of in this class of case and yet be is the one that deserves the greatest consideration. As a rule, he is not parti- cularly interested in the dispute but he is vitally interested in his own affairs which he is compelled to abandon because a <ORG> orders him to come to the assistance of one or other of the parties to a dispute. His own business has to suffer. He may have to leave his family and his affairs for days on end. He is usually out of pocket. Often he is a poor man living in an out of the way village and may have to trudge many weary miles on foot. And when he gets there, there are no arrangements for him. He is not given accommodation; and when he reaches the <ORG>, in most places there is no room in which he can wait. He has to loiter about in the verandahs or under -the trees, shivering in the cold of winter and exposed to the heat of summer , wet and miserable in the rains: and then, after wasting hours and sometimes days for his turn, he is brusquely told that he must go back and come again another day. Justice strongly demands that this unfortunate section of the general public compelled to discharge public duties, usually at loss and inconvenience to themselves, should not be ignored in the over all picture of what will best serve the ends of justice and it may well be a sound exercise of discretion in a given case to refuse an adjournment and permit the plaintiff to examine the witnesses present and not allow the defendant to cross-examine them, still less to adduce his own evidence. It all depends on the particular case. But broadly speaking, after all the various factors have been taken into consideration and carefully weighed, the endeavour should be to avoid snap decisions and to afford litigants a real opportunity of fighting out their cases fairly and squarely. Costs will be adequate compen- sation in many cases and in others the <ORG> has almost unlimited discretion about the terms it can impose provided always the discretion is judicially exercised and is not arbitrary.

In the Code of 1859 there was a provision ( section 119 ) which said that-

"No appeal shall lie from a judgment passed exparte against a defendant who has not appeared".

<ORG> held in <NAME> v. <NAME>(' ) that this only applied to a defendant who had not appeared at all at any stage, therefore, if once an appearance was entered, the right of appeal was not taken away. One. of the grounds of their decision was that-

"The general rule is that an appeal lies to <ORG> from a decision of a civil or subordinate Judge, and a defendant ought not to be deprived of the right of appeal, except by express words or necessary implication". The general rule, founded on principles of natural justice, that proceedings in <ORG> should not be conducted behind the back of a party in the absence of an express provision to that effect is no less compelling. But that apart. It would be anomalous to hold that the efficacy of the so-called ex parte order expends itself in the first Court and that thereafter a defendant can be allowed to appear in the appellate Court and can be beard and can be permitted to urge in that Court the very matters he is shut out from urging in <ORG>; and in the event that the appellate Court considers a remand necessary he can be permitted to do the very things he was precluded from doing in the first instance without wetting the exparte order set aside under Order IX, rule 7.

Now this is not a case in which the defendant with whom we are concerned did not appear at the first hearing. He did. The first hearing was on 11-12-1952 at Kotah. The appellant (the first defendant) appeared through counsel and filed a written statement. Issues were framed and the case was adjourned till the 16th March at Udaipur for the petitioners evidence alone from the 16th to the 21st March. Therefore, Order IX, rules 6 and 7 do not apply in terms. But we have been obliged to examine this order at length because of the differing views taken in the various <ORG> and because the contention is that Order XVII, rule 2 throws one back to the position under Order IX, rules 6 and 7, and there, according to one set of (1) 5 I.A. 233.

views, the position is that once an ex parte "order" is "Passed" against a defendant he cannot take further part in the proceedings unless he gets that 'corder" set aside by showing good cause under rule

7. But that is by no means the case.

If the defendant does not appear at the adjourned hearing (irrespective of whether or not he appeared at the first hearing) Order XVII, rule 2 applies and the <ORG> is given the widest possible discretion either "to dispose of the suit in one of the modes directed in that behalf by Order IX or make such other order as it thinks fit". The point is this. The <ORG> has a discretion which it must exercise. Its hands are not tied by the so called ex parte order; and if it thinks they are tied by Order IX, rule 7 then it is not exercising the discretion which the law says it should and, in a given case, interference may be called for.

The learned Judges who constituted <ORG> of <ORG> (<NAME> v. <NAME>) ) thought that if the original ex parte order did not enure throughout all future hearings it would be necessary to make a fresh ex parte order at each succeeding hearing. But this proceeds on the mistaken assumption that an ex parte order is required. The order sheet, or minutes of the proceedings, has to show which of the parties were present and if a party is absent the <ORG> records that fact and then records whether it will proceed ex parte against him, that is to say, proceed in his absence, or whether it will adjourn the hearing; and it must necessarily record this fact at every subsequent bearing because it has to record the presence and absence of the parties at each hearing. With all due deference to the learned Judges who hold this view, we do not think this is a grave or a sound objection. A much weightier consideration is that the plaintiff may be gravely prejudiced in a given case because, as ,the learned Rajasthan Judges point out, and as <NAME>, J. thought, when a case proceeds ex parte, (1) A.I.R. 1949 Oudh 59.

the plaintiff does not adduce as much evidence as he would have if it had been contested. He contents himself with leading just enough to establish a prima facie case. Therefore, if he is suddenly confronted with a contest after he has closed his case and the defendant then comes forward with an army of witnesses he would be taken by surprise and gravely prejudiced. That objection is, however, easily met by the wide discretion that is vested in the <ORG>. If it has reason to believe that the defendant has by his conduct misled the plaintiff into doing what these learned Judges apprehend, then it might be a sound exercise of discretion to shut out cross-examination and the abduction of evidence on the defendant's part and to allow him only to argue at the stage when arguments are heard. On the other hand, cases may occur when the plaintiff is not and ought not to be, misled. If these considerations are to weigh, then surely the sounder rule is to leave the <ORG> with an unfettered discretion so that it can take every circumstance into consideration and do what seems best suited to meet the ends of justice in the case before it.

In the present case, we are satisfied that the <ORG> did not exercise its discretion because it considered that it had none and thought that until the ex parte order was set aside the defendant could not appear either personally or through counsel. We agree with the <ORG>, and with <ORG>, that no good cause was shown and so the defendant had no right to be relegated to the position that he would have occupied if he had appeared on 17-3-1953, but that he had a right to appear through counsel on 20-3-1953 and take part in the proceedings -from the stage at which they had then reached, subject to such terms and conditions as the <ORG> might think fit to impose, is we think, undoubted. Whether he should have been allowed to cross- examine the three witnesses who were examined after the appearance of his counsel, or whether he should have been allowed to adduce evidence, is a matter on which we express no opinion, for that has to depend on whatever view the <ORG> in a sound exercise of judicial discretion will choose to take of the circumstances of this particular case, but we can find no justification for not at least allowing counsel to argue.

Now the <ORG> said on 23-3-1953-

"The exact stage at which the case had reached before us on the 21st of March 1953 was that under the clear impression that respondent No. 1 had failed to appear from the very first date of the final hearing when the ex parte order was passed, the petitioner must have closed his case after offering as little evidence as he thought was just necessary to get his petition disposed of exparte. Therefore, to all the respondent No. 1 to step in now would certainly handicap the petitioner and would amount to a bit of injustice which we can neither contemplate nor con done". But this assumes that the petitioner was misled and closed his case "after offering as little evidence as he thought was just necessary to get his petition disposed of ex parte". It does not decide that that was in fact the case. If the defendant's conduct really gave rise to that impression and the plaintiff would have adduced more evidence than he did, the order would be unexceptional but until that is found to be the fact a mere assumption would not be a sound basis for the kind of discretion which the <ORG> must exercise in this class of case after carefully weighing all the relevant circumstances. We, therefore, disagreeing with the High <ORG> which has upheld the <ORG>'s order, quash the order of the <ORG> and direct it to exercise the discretion vested in it by law along the lines we have indicated. In doing so the <ORG> will consider whether the plaintiff was in fact misled or could have been misled if he had acted with due diligence and caution. It will take in-to consideration the fact that the defendant did enter an appearance and did file a written statement and that issues were framed in his presence; also that the case was fixed for the "Petitioner's" evidence only and not for that of the appellant; and that the petitioner examined all the witnesses he had present on the 17th and the 18th and did not give up any of them; that he was given an adjournment on 19-3-1953 for the examination witnesses who did not come on that date and that the examined three more on 20-3-1953 after the defendant had entered an appearance through counsel an( claimed the right to plead; also whether, when the appellant's only protest was against the bearings a Udaipur on dates fixed for the petitioner's evidence alone, it would be legitimate for a party acting with due caution and diligence to assume that the other side had abandoned his right to adduce his own evidence should the hearing for that be fixed at some other place or at some other date in the same place.

The <ORG> will also consider and determine whether it will be proper in the circumstances of this case to allow the appellant to adduce his own evidence. The <ORG> will now reconsider its orders of the 20th, the 21st and the 23rd of March 1953 in the light of our observations and will proceed accordingly. The records will be sent to <ORG> with directions to that authority to reconstitute the <ORG>, if necessary, and to direct it to proceed with this matter along the lines indicated above.

There will be no order about costs.


PETITIONER: <NAME> & <ORG> Vs. RESPONDENT: STATE OF KERALA DATE OF JUDGMENT12/11/1975 BENCH: <NAME>, HANS RAJ BENCH: <NAME>, HANS RAJ BHAGWATI, P.N. FAZALALI, SYED MURTAZA CITATION: 1976 AIR 182 1976 SCR (2) 690 1976 SCC (3) 219 CITATOR INFO : R 1977 SC1459 (7) R 1980 SC 614 (40) D 1985 SC1211 (41) RF 1986 SC 649 (29) F 1989 SC1949 (7,8A) R 1990 SC1637 (33) ACT: Kerala Luxury Tax on Tobacco (Validation) Act, 1964 (9 of 1964) <ORG>-if competent to enact-if could enact a taxation law retrospectivly. Constitution of India- Art. 304(b)- reasonable restriction-public interest-colourable legislation tests to decide. Entry 84 of List I and Entry 62 of List II Luxury- meaning of HEADNOTE: The Finance Act 1950 extended the Central Excise and Salt Act , 1944 to the Part <ORG> of' Travancore Cochin and repealed the Cochin Tobacco Act, 1909 and the Tobacco Act (Travancore Act I of 1087). Thereafter a system of licensing was introduced by which the licensees were required to pay a specified fee in respect of tobacco imported into the <ORG>. The appellants challenged unsuccessfully in <ORG> the collection of the licence fee for the period between August 1950 and December 1957. The Act and rules having been declared by this Court as invalid ab initio, the <ORG> refunded a portion of the licence fee collected. but the appellants filed writ petitions claiming refund of the remainder of the licence fee paid by them. During the pendency of the writ petitions the Kerala Luxury Tax on Tobacco (Validation) Act of 1964 (Act 9 of 1964) was passed by the <ORG> legislature to provide for the levy of a luxury tax on tobacco and validate the levy and collection of fees for licences for the vend and stocking of tobacco for the period between August 17, 1950 and December 31, 1957 and it received the assent of the President. The appellants then challenged the validity of the 1964 Act, but the <ORG> on the other hand demanded payment of the part of the fee earlier refunded to the parties The validity of the demand notice was questioned by the appellants on the question of validity of the 1964 Act, <ORG> held that (1) the levy being in respect of goods produced outside the <ORG>, was not an excise duty falling within Entry 84 of the Union List; (2) the tax clearly answers the description of luxury tax falling within entry 62 of <ORG>, List; (3) however, the payment of the tax being a condition precedent to the bringing of the goods into the taxing territory, it was a direct impediment on the free flow of goods, and (4) even so, it is saved by Article 304(b) being n reason able tax levied in public interest. Dismissing the appeals, ^ HELD. (1) The judgment of this Court in <CITATION> .  Supp. 2 S.C.R. 741 does not operate as res. judicata regarding the points in controversy in these appeals. What was held in that case was that the Cochin Tobacco Act and the similar Travancore Act taken along with the rules framed under those Acts were in substance law corresponding to the Central Excise and Salt Act . The Cochin Tobacco Act and the similar Travancore Act stood repealed on April 1, 1950 and there would be no power in the <ORG> Government thereafter to frame new rules in August 1950 and January 1951 for there would be no law to support the new rules. In the instant case what is questioned is the constitutional validity of Act 9 of 1964 which was enacted subsequent to the above decision of this Court. [698 C-G] (2)(a) The argument that the provisions of the Act fell under Entry 84 of List I of the Seventh Schedule is bereft of force. The liability to pay the tax is on stocking and vending of tobacco. There is no provision in the Act which is concerned with production or manufacture of tobacco or which links the tax under its provisions with the manufacture or production of tobacco. [699-D-E] 691 (b) Excise duty is a tax on articles produced or manufactured in the taxing country. Generally speaking, the tax is on the manufacturer or producer, yet laws are to be found which impose a duty of excise at stages subsequent to the manufacture or production. [698H, 699A] <CITATION> .  Supp. 2 S.C.R. 741 referred to. (c) Where, however, the levy imposed or tax has no nexus with the manufacture or production of an article, the impost or tax cannot be regarded to be B one in the nature of excise duty. [699-B-C] (3) The word `luxury' has not been used in the sense of something pertaining to the exclusive preserve of' the rich. The connotation of the word `luxury' is something which conduces enjoyment over and above the necessaries of life. There is nothing static about what constitutes an article of luxury. The luxuries of yesterday could well become the necessities of today. Likewise, what constitutes necessity for citizens of one country or for those living in a particular climate may well be looked upon as an items of luxury for the nationals of another country or for those living in a different climate. A number of factors may have to be taken into account in adjudging the commodity as an article of luxury. [699 G, 701B] (4) (a) <ORG> was right in its view that the levy of tax was violative of Article 301 of the Constitution. But while the <ORG> can impose restrictions on the freedom of trade, commerce or intercourse between one <ORG> and another or within any part of the territory of India as may be required in the public interest, so far as the <ORG> legislatures are concerned, restrictions must satisfy two requirements, firstly they must be in public interest, and secondly, the restrictions should be reasonable. [701, F, 702DE] <CITATION>  3 S.C.R. 829 referred to, (b) To some extent every tax imposes an economic impediment to the activity taxed as compared with others not taxed. But that fact by itself would, not make it unreasonable. The law of taxation in the ultimate analysis is the result of' the balancing of several complex considerations. The legislatures have a wide discretion in the matter. [702G, 703-AB] (c) In considering the question whether the restriction is reasonable in public interest the Court will have to balance the importance of freedom of trade as against the requirement of public interest. [703- <CITATION>  S S.C.R. 975 referred to. (d) The onus of showing that the restrictions on the freedom of trade, commerce or intercourse in the public interest are reasonable is upon the <ORG>. [703D] In the present case the levy of luxury tax relates to tobacco the consumption of which is a health hazard. Regulation of the sale and stocking of such an article and treating it as an article of luxury by imposing a licence fee is a permissible restriction in public interest within Art. 304(b) of the Constition. [703-F] (e) The fact that the operation of the Act was confined to a particular area, and did not extend to the entire <ORG> was due to historical reasons. The object of the Act was to validate the recoveries already made. [704-B] <ORG> etc. v. <ORG> of Andhra Pradesh JUDGMENT:

(f) The levy of tax is protected by Article 304(b) of the Constitution as the requirement of the proviso regarding the sanction of the President has been satisfied. Though the assent of the President was given subsequent to the passing or the Bill by <ORG>, that fact would not affect the validity of the impugned Act in view of the provisions of Article 255 of the Constitution. [702 AB] (5)(a) Where a topic is not included within the relevant List dealing with the legislative competence of <ORG>, <ORG>, by making a law cannot attempt to confer such legislative competence on the State legislatures This principle would, however, have no application where what is sought to be done is to validate the recovery of licence fee for stocking and vending of tobacco. The impugned provisions have nothing to do with the production and manufacture of tobacco. The levy is sought to be made as luxury to which is within the competence of State legislature and not as excise duty which is beyond the legislative competence of the State legislature. If the levy in question could be justified under a provision which is within the legislative competent of the State legislature, the levy shall be held to be validly imposed and cannot be considered to be impermissible. [705-B-D]

(b) The impugned Act cannot be said to be a colourable piece of legislation. Where a challenge to the validity of a legal enactment is made on the ground that it is a colourable piece of legislation what is to be proved is that though the Act ostensibly is within the legislative competence of the legislature in substance and reality it covers a field which is outside its legislative competence. In the present case, in enacting the impugned provisions the <ORG> legislature has exercised power of levying luxury tax in the shape of licence fee on the vend and stocking of tobacco. The enactment of a law for levying luxury tax is unquestionably within the legislative competence of the State legislature in view of Entry 62 in List II of the Seventh Schedule to the Constitution. [705- <CITATION> .  1 S.C.R. 523 and <CITATION> .  3 S.C.R. 242 distinguished.

(c) The State legislature has sought to validate the recovery of the amounts already made by treating those amounts as luxury tax. The fact that the validation of the levy entailed converting the character of the collection from an impermissible excise duty into permissible luxury tax would not make it an Inconstitutional. The only conditions are that the levy should be of a nature which can answer to the description of luxury tax and that the State legislature should be competent to enact a law for recovery of luxury tax. Both these conditions are satisfied. [706-FG] (6)(a) Where the State legislature can make valid law it can provide not only for the prospective operation of the material provisions of the law but can also provide for the retrospective operation of the provisions. [706-G]

(b) In judging the reasonableness of the retrospective operation of law for the purpose of Article 304(b ), the test of length of time covered by the retrospective operation could not by itself be treated as decisive. [706H, 707A]

(c) It is not correct to say that the legislation should be held to be invalid because its retrospective operation might operate harshly in some cases. [707A] <CITATION>  1 S.C.R. 897 and <NAME>, Proprietor, Epari Chinna Moorthy & Sons. <CITATION>  7 S.C.R. 185 applied.

(d) If a provision regarding the levy of luxury tax is within the competence of the State legislature, the said legislature would be well within its competence to enact a law for recovery of an amount which though already refunded to a party, partakes of the nature of a luxury tax in the light of that law. [707-C] & CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 1689- 1690 and 1692-1705 of 1972.

From the Judgment and order dated the 15th October, 1970 of <ORG> at Ernakulam in O.P. Nos. 934 and 944 and W.A.

Nos. 15, 17, 18, 20, 22, 24, 27, 31, 32, 51-55 of 1965 and W.A. No. 170 of 1965 respectively.

<NAME>, <NAME> and <NAME> for the Appellants in C.As. Nos. 1689, 1962 and in C.As. 1694 to 1705 of 1972 <NAME> and <NAME> for the appellants in C.As. Nos. 1690 and 1693.

<NAME> and <NAME> for Respondents in all the appeals.

The Judgment of the Court was delivered by <NAME>, J. Whether the provisions of the Luxury Tax on Tobacco (Validation) Act, 1964 (Act 9 of 1964) (hereinafter referred to as the Act) enacted by <ORG> are void on the grounds that (1) <ORG> lacked the legislative competence to enac that Act, and (2) the provisions of the Act contravened article 301 of the Constitution and were not protected by article 304 is the main question which arises for determination in these 16 civil appeals Nos. 1689, 1690 and 1692 to 1705 filed on certificate against the judgment of <ORG>. A Division Bench of <ORG> has up held the validity of the Act.

We may set out the chequered history giving rise to civil appeals 1689 and 1692. Learned counsel for the parties are agreed that it is not necessary to set out the facts of the other cases and that the decision in the above two appeals would also govern those other cases. The appellants were dealers in tobacco and tobacco preparations in Mattancherry in erstwhile Cochin State. In 1909 Cochin Tobacco Act (Act 7 of 1084 M.E.) was enacted by the Maharaja of Cochin. Section 4 p of that Act prohibited the transport, import or export, sale and cultivation of tobacco, except as permitted by the Act and the rules framed thereunder. In pursuance of the power given by that Act the Diwan of Cochin made rules relating to matters specified in the Act. Under the rules it became necessary to obtain a licence for cultivation of tobacco plant. Drying, curing, manufacturing and the storing of tobacco cultivated in the State was to be done under the supervision of an <ORG> officer in licenced manufacturing yards and store houses. The system which was in force for the collection of tobacco revenue up to August 1950 was to auction what were called A class and class shops. In addition, there were class shops, the licence for which was granted either on the recommendation of or in consultation with class licensees. A somewhat similar law was in operation in the erstwhile Travancore State. On April 1, 1950 after the Constitution had come in force and Travancore-Cochin had become a Part State Finance Act (No. 25 of 1950) extended the Central <ORG>s and Salt Act (No. 1 of 1944) to Part State of Travancore-Cochin by section 11 thereof. Section p 13 (2) of the Finance Act provided that "if immediately before the 1st lay of April 1950, there is in force in any State other than Jammu and Kashmir a law corresponding to, but other than, an Act referred to in r sub-sections (1) or (2) of section 11 , such law is hereby repealed with effect from the said date. . . ". In consequence of this provision in 3-L 159SCI/176  Finance Act , 1950, the rules which were in force on April 1, 1950 were changed in the Cochin area by notification dated August 3, 1950 and the system of auction sales of A class and class shops was done away with and instead graded licence fees were introduced for various classes of licensees, including class licensees. Similar change was made for the Travancore area. Notification dated January 25, 1951 was issued in this context. A class licensees under the new rules were called stockists, class licensees were wholesale sellers and class licensees were retailers. A class licensees were to pay a specified minimum fee for a fixed maximum quantity of tobacco and tobacco goods possessed by them and an additional fee for an additional quantity. The fee was to be levied only in respect of the tobacco imported into the State <ORG> collected licence fee from the appellants for the period from August 17, 1950 to December 31, 1957. In 1956 the appellants, who were A class licensees, filed writ petitions in <ORG> for refund of the licence fee collected from them on the ground that the Cochin and Travancore Tobacco Acts stood repealed by the Finance Act of 1950 because of the extension of the Central <ORG>s and Salt Act to Part State of Travancore-Cochin. The petitions were opposed on behalf of the State and it was contended that the Cochin Act or the similar Travancore Act did not stand repealed from April 1, 1950. It was urged that the State was competent to frame new rules under the Cochin Tobacco Act and the corresponding Travancore Act. It was further stated that the tax in question could be validly levied under entry 60 or 62 of List II of the Seventh Schedule to the Constitution. <ORG> dismissed the petitions holding that the laws under which the new rules were framed were in force and were valid under entry 62 of List II of the Seventh Schedule. The 13: appellants then came up in appeal to this Court. It was held by this Court in its judgment dated January 24, 1962 reported in (1962) Supp. 2 SCR 741 that the Cochin Tobacco Act of 1084 and the rules framed thereunder as also similar provisions in Travancore, requiring licences to be taken out for storage and sale of tobacco and for payment of licence fee in respect thereof were law corresponding to the provisions of the Central <ORG>s and Salt Act , 1944 and hence stood repealed on April 1, 1950 by virtue of section 13(2) of the Finance Act, 1950. It was further held that as the parent Acts, namely, the Cochin Tobacco Act and corresponding Travancore Act had stood repealed, the new rules framed in August 1950 and January 1951 under those Acts for the respective areas of Cochin and Travancore for the issue of licences and payment of fee therefore for storage of tobacco were invalid ab initio.

After the above decision of this Court the appellants made a demand to the respondent-State that the amounts of Rs. 1,14,750 collected by the State from them by way of licence fee under the invalid rules might be refunded to them. The respondent-State refunded. 73,500 to the appellants on April 29, 1963. On July 10, 1963 the appellants filed original petition No. 1268 of 1963 in <ORG> for issue of a writ to the respondent State to pay the balance amount of Rs 41.250 which along with interest came to Rs. 52,800 to the appellants. During the pendency of the above petition on December 16, 1963 the Governor of Kerala promulgated ordinance No. 1 of 1963 which was later replaced by Kerala Luxury Tax on Tobacco (Validation) Act of 1964 (Act of 1964). This Act received the assent of the President on March 3, 1964. Original petition No. 1268 of 1963 was thereupon amended with a view to challenge the validity of the above mentioned Act. In the meanwhile, on January 21, 1964 demand was made in view of the ordinance by <ORG> calling upon the appellants to pay the amount of Rs. 73,500 which had been refunded to them by <ORG>. Original petition No. 934 of 1964 was filed by the appellants in <ORG> to challenge the validity of demand notice dated January 21, 1964 as also the vires of the Act.

At this stage it may be appropriate to refer to the relevant provisions of the Act. The preamble of the Act reads as under:

"PREAMBLE: WHEREAS it is expedient to provide for the levy of a luxury tax on tobacco for the period beginning with the 17th day of August, 1950 and ending on the 31st day of December 1957, and the validation of the levy and collection of fees for licences for the vend and stocking of tobacco for the aforesaid period: BE it enacted in the Fifteenth Year of the Republic of India as follows:-"

Section 2(ii) of the Act defines tobacco to include leaf of the tobacco plant, snuff, cigars, cigarettes, beedies, beedi tobacco, tobacco powder and other preparations or admixtures of tobacco. Section 3 is the charging section and provides that "for the period beginning with the 17th day of August 1950 and ending on the 31st day of December, 1957, every person vending or stocking tobacco within any area to which this Act extends shall be liable and shall be deemed always to have been liable to pay a luxury tax on such tobacco in the form of a fee for licence for the vend and stocking of the tobacco, at such rates as may be prescribed, not exceeding the rates specified in the Schedule". Section 4(1) of the Act gives power to <ORG> to make rules by publication in the gazette to carry out the purposes of the Act. According to sub-section (3) of section 4 of the Act, 'the rules and notifications specified below purported to have been issued under the Tobacco Act of 1087 (Travancor Act 1 of 1087) or the Cochin Tobacco Act, VII of 1084, as the case may be, in so far as they relate or purport to relate to the levy and collection of fees for licences for the vend and stocking of tobacco, shall be deemed to be rules issued under this section and shall be deemed to have been in force at all material times." Along the rules and notifications specified in subsection (3) of section 4 are rules published on August 3, 1950 and January 25, 1951. Sections 5 and 6 read as under:

"5. Validation-Notwithstanding any judgment, decree or order of any court, all fees for licences for the vend or stocking of tobacco levied or collected or purported to have been levied or collected under any of the rules or notifications specified in sub-section (3) or s. 4 for the period beginning with the 17th day of August, 1950 and ending on the 31st day of December, 1957, shall be deemed to have been validly levied or collected in accordance with law as if this Act were in force on and from the 17th day of August, 1950 and the fees for licences were a luxury tax on tobacco levied under the provisions of this Act, and accordingly,-

(a) no suit or other proceeding shall be maintained or continued in any court for the refund of any fees paid or purported to have been paid under any of the said rules or notifications; and

(b) no court small enforce a decree or order directing the refund of any fees paid or purported to have been paid under any of the said rules or notifications.

6. Recovery of licence fees refunded- Where any amount paid or purported to have been paid as a fee for licence under any of the rules or notifications specified in sub-section (3) of s. 4 has been refunded after the 24th day of January, 1962, and such amount would not have been liable to be refunded if this Act had been in force on date of the refund, the person to whom the refund was made shall pay the amount so refunded to the credit of the <ORG> in any <ORG> treasury on or before the 16th day of April, 1964, and, where such amount is not so paid, the amount may be recovered from him as an arrear of land revenue under the Revenue Recovery Act for the time being in force."

According to the appellants, the label given to the tax imposed by the charging section was only a cloak to disguise its real nature of being an excise duty. <ORG>, as such, was stated to be in competent to levey excise duty on tobacco. It was also stated that the provisions of the Act were violative of the provisions of article 301 of the Constitution. In the meanwhile, a single Judge of <ORG> dismissed on July 20, 1964 original petition No. 1268 of 1963 which had been filed by the appellants. The appellants thereupon filed appeal before <ORG> of <ORG> against the judgment of the learned single Judge. The learned Judges of <ORG> allowed original petition No. 963 of 1964 and quashed demand notice dated January 21 1964 issued by the <ORG> asking for refund of Rs.73,500. <ORG> relied upon a decision of this Court in the case of <ORG> v. state of Orissa(1) and held that in the absence of any production or manufacture of tobacco inside the appellant- <ORG> it was not competent for the <ORG> Legislature to impose a take on tobacco imported from outside the <ORG>. The provisions of Act 9 of 1964 were held to violate article 301 of the Constitution and not protected by article 304. The learned Judges also set aside the judgment (1)  1 S.C.R. 865.

Of the single Judge and allowed the appeals against that judgment in original petition No. 1268 of 1963.

The State of Kerala thereafter came up in appeal to this <ORG>. As per judgment dated July 30, 1969 reported in (1970)1 SCR 700 this <ORG> held that <ORG> had not correctly appreciated the import of the decision in Kalyani Stores (supra). It was held that only such restrictions or impediments which directly and immediately impeded the free flow of trade, commerce and intercourse fell within the prohibition imposed by article 301. This <ORG> further observed that unless <ORG> first came to the finding whether or not there was the infringement of the guarantee under article 301 of the Constitution, the further question as to whether the statute was saved under article 304 (b) did not arise. The case was accordingly sent back to <ORG> with the direction to take further affidavits in the matter. The <ORG> left it open to the parties to argue as to whether the levy in question was in substance a duty of excise and as such whether it was not competent for <ORG> to enact the provisions in question.

After remand affidavits were filed on behalf of the appellants and the respondent-State. The learned Judges of <ORG> as per judgment under appeal gave the following findings:

"(1) The levy being in respect of goods produced out side the State, it cannot be, and is not, an excise duty falling within entry 84 of the Union List. (2) The tax is on tobacco, an article of luxury, consumed within the taxing territory, levied on the occasion of its stocking and vending by the importers into the taxing territory. It clearly answers the description of luxury tax falling within entry 62 of the State List.

(3) There being no competing internal goods, the mere fact that the levy is only on imported goods can only have, like any other tax, the economic effect of reducing the demand by reason of increasing the price. The consequent diminution in the quantity of goods imported into the taxing territory is too remote an effect to be a direct impediment to the free flow of trade offending article 301 of the constitution. (4) However, the payment of the tax in the shape of a licence fee being a condition precedent to bringing the goods into the taxing territory, there would appear to be a direct impediment on the free flow of goods and therefore of trade into that territory notwithstanding that the taxable event is not the movement of the goods but the stocking after completing their journey and reaching their destination, the levy in advance being only for convenience of collection. (5) Even assuming that the levy offends article 301 , it is saved by article 304(b) being a reasonable tax levied in the public interest, the condition in the proviso thereto being satisfied by the assent of the President in view of article 255.

(6) The guarantee in article 301 and the saving in article 304(b) being in respect of both inter-<ORG> and inter <ORG> trade, the fact that the taxing territory is only a part of the <ORG> is of no consequence."

On behalf of the appellants, their learned counsel Mr. <NAME> has at the outset contended that the question as to whether the levy of the licence fee upon the appellants constitutes excise duty is concluded by the decision of this Court of January 24, 1962 and the same operates as res judicata. As against that, Mr. <NAME> on behalf of the respondent-State submits that the question decided by this Court on January 24, 1962 was different from that which arises in these appeals and that the said decision does not operate as res judicata. The above submission of Mr. <NAME>, in our opinion, is wellfounded. What was decided by this Court in its judgment dated January 24, 1962 was that the Cochin Tobacco Act r and the similar Travancore Act taken along with the rules framed under those Acts by the respective <ORG> were in substance law corresponding to the Central Excises and Salt Act . The Cochin Tobacco Act and the similar Travancore Act, it was further held, stood repealed on April 1, 1950 by virtue of section 13(2) of the Finance Act, 1950. So far as the rules are concerned which were issued on August 3, 1950 and January 25, 1951, this Court held that as the parent Acts under which those rules were issued stood repealed on April 1, 1950, there would be no power in the State Government thereafter to frame new rules in August 1950 and January 1951 for there would be no law to support the new rules. The above question does not arise for determination in these appeals before us. What we are concerned with is the constitutional validity of the Kerala Act 9 of 1964. This Act was enacted subsequent to the above decision of this Court rendered on January 24, 1962. No question relating to the validity of the above mentioned Act in the very nature of things could arise at the time of the earlier decision in 1962. We, therefore, are of the view that the judgment dated January 24, 1962 of this Court does not operate as res judicate regarding the points of controversy with which we are concerned in these appeals.

It has next been argued on behalf of the appellants that the levy for the licence fee for stocking and vending of tobacco, even though described as luxury tax in charging section 3 of the Act, is in reality and substance an excise duty on tobacco. Excise duty on tobacco under entry 84 of List I of the Seventh Schedule to the Constitution can only be levied by <ORG> and, as such, according to the learned counsel for the appellants, <ORG> was not competent to enact the impugned Act 9 of 1964. This; contention. in our opinion, is equally devoid of force. Excise duty, it is now well-settled, is a tax on articles produced or manufactured in the taxing country. Generally speaking, the tax is on the manufacturer or the producer, yet laws are to be found which impose a duty of excise at stages subsequent to the manufacture or production [see p. 750-51 of the judgment of this Court delivered on January 24, 1962 in the case between these very parties, reported in (1962) Supp. 2 SCR 741].

The fact that the levy of excise duty is in the form of licence fee would not detract from the fact that the levy relates to excise duty. It is, however, essential that such levy should be linked with production or manufacture of the excisable article. The recovery of licence fee in such an event would be one of the modes of levy of the excise duty. Where, however, the levy imposed or tax has no nexus with the manufacture or production of an article, the impost or tax cannot be regarded to be one in the nature of excise duty.

In the light of what has been stated above, we may now turn to the provisions of the impugned Act 9 of 1964. The charging section 3 of this Act creates a liability for payment of luxury tax on the stocking and vending of tobacco. There is no provision of this Act which is concerned with production or manufacture of tobacco or which links the tax under its provisions with the manufacture or production of tobacco. The same is the position of the rules issued on August 3, 1950 and January 25, 1951 and Mr. <NAME> on behalf of the appellants has frankly conceded that those rules are in no way concerned with the production or manufacture of tobacco. It would, therefore follow that the levy of tax contemplated by the provisions of section 3 of the Act has nothing to do with the manufacture or production of tobacco and, as such, cannot be deemed to be in the nature of excise duty. Argument that the provisions of the Act fall under entry 84 of List I of the Seventh Schedule to the Constitution must, therefore, be held to be bereft of force.

The next argument which has been advanced on behalf of the appellants is that the tax on the vending and stocking of tobacco cannot be considered to be luxury tax, as contemplated by entry 62 of List II of the Seventh Schedule to the Constitution. According to that entry, <ORG> can make laws in respect of "taxes on luxuries, including taxes on entertainments, amusements, betting and gambling". Question, therefore, arises as to whether tobacco can be considered to be an article of luxury. The word "luxury" in the above context has not been used in the sense of something pertaining to the exclusive preserve of the rich. The fact that the use of an article is popular among the poor sections of the population would not detract from its description or nature of being an article of luxury. The connotation of the word "luxury" is something which conduces enjoyment over and above the necessaries of life. It denotes something which is superfluous and not indispensable and to which we take with a view to enjoy, amuse or entertain ourselves. An expenditure on something which is in excess of what is required for economic and personal well-being would be expenditure on Luxury although the expenditure may be of a nature which is incurred by a large number of people, including those not economically well off. According to <ORG>, luxury tax is "a tax on commodities or services that are considered to be luxuries rather than necessities. Modern examples are taxes levied on the purchase of jewellery, perfume and tobacco". It has further been n said:

"In the 19th and 20th centuries increased taxes have been placed on private expenditure upon alcohol, tobacco, entertainment and automobiles. Such expenditure is superfluous in the sense that a large part of it may be said to be in excess of what is required for economic efficiency and personal well- being, although the expenditure affects large numbers of people."

In Re The Central Provinces and Berar Sales of Motor Spirit and Lubricants Taxation Act, 1938(1) <ORG> while dealing with excise duty described spirits, beer and tobacco as articles of luxuries.

It is no doubt true that for those who have been lured by the charms and blandishments of Lady Nicotine there are few things which are so soothing to the distraught nerves and so entertaining as tobacco and its manifold preparations. One of them has gone to the extent of saying that he who doth not smoke hath either known no great griefs, or refuseth himself the softest consolation, next to that which comes from heaven (<ORG> He do with It ?). <NAME> in "A Farewell to Tobacco" observes: "For thy sake, tobacco, I would do anything but die". The fact all the same remains that the use of tobacco has been found to have deleterious effect upon health and a tax on tobacco has been recognized as a tax in the nature of a luxury tax. One of the earliest indictments of tobacco is in <NAME> Anatomy of Melancholy wherein he says:

"It's a plague, a mischief, a violent purger of goods, lands, health, hellish, devilish, and damned tobacco, the ruin and overthrow of body and soul."

Another indictment is from <NAME> of England (Counterblaste to Tobacco) when it is said:

"A custom (smoking) loathsome to the eye, harmful to the brain, dangerous to the lungs, and in the black stinking fume thereof, nearest resembling the horrible Stygian smoke of the pit that is bottomless."

The taxation of the objects or procedures of luxurious consumption has aimed at two purposes, on the surface contradictory: the suppressing or limiting of this consumption and the deriving of a public (1) [1939] F. C. R. 18.

income from it. On closer inspection a good deal of this contradiction vanishes when it is seen that prohibition and taxation of luxury tend equally to fix certain levels and standards of living, as against economic and social progress, which is tending to "level" such differences (see page 634 of the Encyclopaedia of the Social Sciences Volumes IX-X, 14th Printing).

It may be added that there is nothing static about what constitutes an article of luxury. The Luxuries of yesterday can well become the necessities of today. Likewise, what constitutes necessity for citizens of one country or for those living in a particular climate may well be looked upon as an item of luxury for the nationals of another country or for those living in a different climate. A number of factors may have to be taken into account in adjudging a commodity as an article of luxury. Any difficulty which may arise-in borderline case would not be faced when we are dealing with an article like tobacco, which has been recognised to be an article of luxury and is harmful to health.

The learned Judges of <ORG> were of the opinion that the levy of tax in question was violative of article 301 of the constitution, according to which subject to the provisions of Part XIII, trade, commerce and intercourse throughout the territory of India shall be free. The learned Judges in this connection took the view that the levy of tax as a condition preceding to the entry of goods into a place directly impeded the flow of trade to that place. The conclusion arrived at by <ORG> in this respect, in our opinion, was correct and sound. The appellants were A class licensees. According to rule 16 of the rules issued on January 25, 1951, A class licensees shall be entitled to purchase tobacco from any dealer within or without the <ORG> without any quantitative restriction. This class of licensees could sell only to other A class licensees or class licensees. It was also mentioned in that rule that the licence fee would be realised only for the quantities brought in from outside. Perusal of the rules shows that it was imperative for the A class licensees to pay the licence fee in advance before they could bring tobacco within the taxable territory. We agree with the learned Judges of <ORG> that such levy directly impedes the free flow of trade and as such is violative of article 301 of the Constitution.

The next question which arises for consideration is whether the levy of tax is protected by article 304(b) of the Constitution. Article 3041b ) reads as under `"304. Notwithstanding anything in article 301 or article 303 , the Legislature of a State may by law-

(a) .... .... ....

(b) impose such reasonable restrictions on the freedom of trade. commerce or intercourse with or within that State as may be required in the public interest;

Provided that no Bill or amendment for the purposes of clause (b) shall be introduced or moved in the <ORG> of a State without the previous sanction of the President."

We may observe that the requirement of the proviso regarding the sanction of the President has been satisfied. It is no doubt true that the assent of the President was given subsequent to the passing of the Bill by the legislature but that fact would not affect the validity of the impugned Act in view of the provisions of article 255 of the Constitution.

Clause (b) of article 304 empowers the <ORG> of a State notwithstanding anything in article 301 or article 303 but subject to the sanction of the President to impose reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest. Article 302 confers power upon <ORG> to impose by law such restrictions on the freedom of trade, commerce or intercourse between one State and another or within any part of the territory of India as may be required in the public interest. Perusal of article 302 and article 304 shows that while <ORG> can impose restrictions on the freedom of trade, commerce or intercourse between one State and another or within any part of the territory of India as may be required in the public interest, so far as the State <ORG>s are concerned, restrictions must satisfy two requirements, firstly, they must be in the public interest and, secondly the restrictions should be reasonable. Shall <NAME> speaking for the majority of <ORG> in the case of <CITATION> (1) observed that the exercise of the power to tax may normally be presumed to be in the public interest. The above observations though made in the context of article 302 have equal relevance under article 304. Not much argument is needed to show that the power to tax is essential for the maintenance of any governmental system. Taxes are levied usually for the obvious purpose of raising revenue. Taxation is also resorted to as a form of regulation. In the words of Justice <NAME>, "every tax is in some measure regulatory" <NAME> v. <ORG>. According to <NAME>, the taxing power "becomes an instrument available to government for accomplishing objectives other than raising revenues" [The Federal Taxing Process, page 410 (Quoted on page 263 of American Constitutional Law by <NAME> and <NAME>, 3rd Ed.]. To some extent every tax imposes an economic impediment to the activity taxed as compared with others not taxed, but that fact by itself would not make it unreasonable. It is well-settled that when power is conferred upon the legislature to levy tax, that power must be widely construed; it must include the power to impose a tax and select the articles or commodities for the exercise of such power; it must likewise include the power to fix the rate and prescribe the machinery for the recovery of tax. This power also gives jurisdiction to the legislature to make such provisions as, in its (1)  3 S.C.R. 829. (2) 300 US 506 (1937) Opinion, would be necessary to prevent the evasion of the tax. As observed by Chief Justice <NAME> in <NAME> v. Maryland (1), "the power of taxing the people and their property is essential to the very existence of Government, and may be legitimately exercised on the objects to which it is applicable to the utmost extent to which the Government may choose to carry it". There can also be no doubt that the law of taxation in the ultimate analysis is the result of the balancing of several complex considerations. The legislatures have a wide discretion in the matter.

In considering the question as to whether the restriction is reasonable in public interest, the court will have to balance the importance of freedom of trade as against the requirement of public interest. Article 304(b) necessarily postulates that considerations of public interest may require and justify the imposition of restrictions C` on the freedom of trade provided they are reasonable. In determining the reasonableness of the restriction, we shall have to bear in mind the importance of freedom of trade and the requirement of public interest. It is a question of weighing one relevant consideration against another in the context of the larger public interest [see <CITATION> (2)].

We agree with Mr. <NAME> that the onus of showing that the restrictions on the freedom of trade, commerce or intercourse in the public interest are reasonable, is upon the <ORG>. It is also true that no effort was made in the affidavit filed on behalf of the <ORG> in this case to show as to how the restrictions were reasonable, but that fact would not necessarily lead the court to hold that the restrictions are unreasonable. If the court on consideration of the totality of facts finds that the restrictions are reasonable, the court would uphold the same in spite of lack of details in the affidavit filed on behalf of the <ORG>. In judging the question of reasonableness of restriction in the present case, we must bear in mind that the levy of luxury tax relates to tobacco, the consumption of which involves health hazard. Regulation of the sale and stocking of an article like tobacco which has a health hazard and is considered to be an article of luxury by imposing a licence fee for the same, in our opinion, is a permissible restriction in public interest within article 304(b) of the Constitution. The material on record shows that except for cultivation of tobacco on experimental basis, no tobacco is grown in the area with which we are concerned. The levy of luxury tax is bound to result in raising the price of tobacco in the area of erstwhile <ORG>s of Travancore and Cochin. Once of the likely effects of the enhancement of the price of a commodity entailing health hazards is to lower its consumption.

The fact that there is no commercial production of tobacco in the area with which we are concerned would show that there is no discrimination between tobacco brought from outside that area and the locally grown tobacco because in fact there is no tobacco of the latter category, except that grown on experimental basis.

4 Ed.579, 607. (2) [1964] 5 S.C.R.9 75.

Argument has been advanced on behalf of the appellants that the provisions of the Act do not apply to the entire State of Kerala but apply only to those areas which were parts of erstwhile States of Travancore and Cochin. The restriction of the operation of the Act to only a part of the area of the State would show, it is urged, that the restriction is unreasonable. This contention, in our opinion, is not well founded. The fact that the operation of the Act is confined to a particular area and does not extend to the entire State is due to historical reasons. The object of the Act was to validate the recoveries already made. In the case of <ORG> etc. v. <ORG> & Anr.(1), the appellants, who were motor transport operators, challenged the increase in surcharge of the fares and freights imposed by the Andhra Pradesh Motor Vehicles (Taxation of Passengers and Goods) Amendment and Validation S Act, 1961. It was urged that the Act fell within the mischief of article 301 of the Constitution and was not protected by article 304(b) and article 19(1)(f) of the Constitution. Contention was also advanced that the provisions of the said Act were violative of article 14 of the Constitution. In support of the above contentions, reference was made to the fact that the Act had been made applicable to the Andhra area and had not been made applicable to the Telengana area. Some other grounds were also relied upon to challenge the validity of the Act. This Court upheld the validity of the Act and repelled the contentions. No doubt this Court referred to the circumstance that the levy of tax was confined only to the Andhra area and was not operative in the Telengana area in the context of the argument that the Act was violative of article 14 of the Constitution, the fact all the same remains that one of the grounds advanced with a view to assail the validity of the Act was that its provisions were not applicable to the Telengana area. We are unable to accede to the submission that this Court lost sight of the fact that the Act was not applicable to the Telengana area in holding that its provisions were protected by article 304(b) of the Constitution.

It is also true that the levy of tax relates only to the period from August 17, 1950 to December 31, 1957, but that too was due to the historical reason that the licence fee had been realised only during that period and the object of the impugned Act was to validate the recovery already made.

Argument has also been advanced by Mr. <NAME> that the impugned Act is a colourable piece of legislation because what is sought to be done is to validate the levy made under provisions of law which were found to have been repealed. It is further pointed out that those provisions of law were found by this Court to be similar to the provisions of the Central Execises and Salt Act and as such, those provisions were beyond the competence of <ORG>. Any levy made under those provisions cannot, according to the learned counsel, be validated by <ORG>. The above argument has a seeming plausibility, but, on deeper examination, we find it to be not tenable. It is no doubt true, as stated by (1)  2 S.C.R. 52 this Court in the case of <CITATION> ..(1) that when an Act passed by <ORG> is invalid on the ground that <ORG> did not have legislative competence to deal with the topics covered by it, in that event even <ORG> cannot validate such an Act, because the effect of such attempted validation, in substance, would be to confer legislative competence on <ORG> in regard to a field or topic which, by the relevant provisions of the schedules to the Constitution, is outside its jurisdiction. Where a topic is not included within the relevant List dealing with the legislative competence of <ORG>, <ORG>, by making a law cannot attempt to confer such legislative competence on <ORG>s. The above principle would, however, have no application where, as in the present case, what is sought to be done is to validate the recovery of licence fee for stocking and vending of tobacco. The impugned provisions under which that levy is sought to be made with a retrospective effect have nothing to do, as already pointed out above, with production and manufacture of tobacco. The levy is sought to be made as luxury tax which is within the competence of <ORG> and not as excise duty which is beyond the legislative competence of <ORG>. If the levy in question can be justified under a provision which is within the legislative competence of <ORG>, the levy shall be held to be validly imposed and cannot be considered to be impermissible.

Where a challenge to the validity of a legal enactment is made on the ground that it is a colourable piece of legislation, what has to be proved to the satisfaction of the court is that though the Act ostensibly is within the legislative competence of the legislature in question, in substance and reality it covers field which is outside its legislative competence. In the present case we find that in enacting the impugned provisions, <ORG>, as already pointed out above, has exercised a power of levying luxury tax in the shape of licence fee on the vend and stocking of tobacco. The enactment of a law for levying luxury tax is unquestionably within the legislative competence of <ORG> in view of entry 62 in List II of the Seventh Schedule to the Constitution. As such, it cannot be said that the impugned Act is a colourable piece of legislation. In the case of <ORG> access was levied under the Madhya Pradesh Sugarcane (Regulation of Supply and Purchase) Act , 1958 on sugarcane. This Court in the earlier case of <ORG>) had held that such a levy was not valid. Following the above decision <ORG> struck down section 23 which was the charging section of the Madhya Pradesh Sugarcane (Regulation of Supply and Purchase) Act , 1958. There were similar Acts in- several other States which suffered from the same infirmity and to meet that situation, <ORG> passed the Sugarcane Cess (Validation) Act , 1961. The Act made valid by section 3 all the assessments and collections made before its commencement under the various State Act s and laid down that all the provisions of the (1)  1 S.C.R 523. (2)  3 S.C.R 242.

State Act s as well as the relevant notifications, rules, etc., made under the State Act s would be treated as part of section 3 . It was further provided that the said section shall be deemed to have existed at all material times when the cess was imposed, assessed and collected under the State Act s. The appellant, a sugar factory, was asked to pay the cess for the years 1959-60 and 1960-61. The appellant challenged the levy. <ORG> having dismissed the petition, the appellant came to this Court. Among the various contentions which were advanced on behalf of the appellant in the case were: (1) What the validation of the Act had done was to attempt to cure the legislative incompetence of <ORG>s by validating State Act s which were invalid on the ground of absence of legislative competence in the respective State Legislatures; (2) <ORG> lrad passed the Act in question not for the purpose of levying a cess of its own, but for the purpose of enabling the respective States to retain the amounts which they had illegally collected. The Act was, therefore, a colourable piece of legislation; and (3) The Act had not been passed for the purposes of the Union of India and the recoveries of cesses which were retrospectively authorised by it were not likely to go into <ORG>. The <ORG> of this Court speaking through <NAME> CJ. repelled all the above contentions. It was held by this Court that if collections are made under statutory provision which are invalid because they deal with a topic outside the legislative competence of <ORG>, the <ORG> can in exercise of its undoubted legislative competence, pass a law retrospectively validating the said collections by converting their character into collections made under its own statute operating retrospectively. So far as the present case is concerned, we have already pointed out above that it was within the competence of <ORG> to make a law in respect of luxury tax and to recover that tax in the shape of licence fee for vend and stocking of tobacco. <ORG> has sought to validate the recovery of the amounts already made by treating those amounts as luxury tax. The fact that the validation of the levy entailed converting the character of the collection from an impermissible excise duty into permissible luxury tax would not render it unconstitutional. The only conditions are that the levy should be of a nature which can answer to the description of luxury tax and that <ORG> should be competent to enact a law for recovery of luxury tax. Both these conditions as stated above are satisfied.

As regards the power of the legislature to give retrospective operation to a tax legislation, we may also refer to the case of <CITATION> (1) wherein it was held that where the legislature can make a valid law, it can provide not only for the prospective operation of the material provisions of the said law but can also provide for the retrospective operation of the said provisions. The legislative power was held to include the subsidiary or the auxiliary power to validate law which had been found to be `H invalid. It was also observed that in judging the reasonableness of the retrospective operation of law for the purpose of article 304(b ), (1) [1964] 1 S.C.R 897.

The test of length of time covered by the retrospective operation could nob by itself be treated as decisive. Again, in the case of <CITATION> (1) <ORG> of this Court repelled the argument that a legislation should be held to be invalid because its retrospective operation might operate harshly in some cases.

As a result of the above, we would hold that the impugned provisions are protected by article 304(b) of the Constitution.

Lastly, it has been argued that section 6 of the impugned Act is invalid because it provides for payment of an amount which had been refunded in pursuance of the order of this Court. Section 6 is thus stated to be an encroachment by the legislature upon a judicial field. This contention, in our opinion, is bereft of force. If a provision regarding the levy of luxury tax is within the competence of <ORG>, the said <ORG> would be well within its competence to enact a law for recovery of an amount which, though already refunded to a party, partakes of the nature of luxury tax in the light of that law. If an amount can answer to the description of luxury tax, there would be no legal impediment to recovering the same as luxury tax, even though initially it was recovered or sought to be recovered as something different from luxury tax.

As a result of the above, we dismiss these appeals, but, in the circumstances, leave the parties to bear their own costs.

P.B.R Appeals dismissed. (1) [1964] 7 S.C.R. 185.