| Headnote |
Madhya Pradesh Foreign Liquor Rules, 1996 – r.19 – Penalties – Permissible limits of loss of liquor in transit due to leakage, evaporation, wastage etc. – During the relevant license period of 2009-2010 when the violation occurred, r.19 provided that if permissible limits of loss of liquor exceeded, imposition of penalty was to be about four times the maximum duty payable on foreign liquor – However, no action was initiated against the appellant during the relevant license period– r.19 was substituted by an amendment in 2011 reducing penalty to an amount not exceeding the duty payable on foreign liquor – Demand notice issued in 2011 – Payment of penalty, if to be as per the repealed r.19 or the substituted r.19: Held: Penalty to be imposed on the appellants will be on the basis of r.19 as substituted on 29.03.2011 – A repealed provision will cease to operate from the date of repeal and the substituted provision will commence to operate from the date of its substitution, subject to specific statutory prescription – The operation of a subordinate legislation is determined by the empowerment of the parent act – The legislative authorization enabling the executive to make rules prospectively or retrospectively is crucial – Without a statutory empowerment, subordinate legislation will always commence to operate only from the date of its issuance and at the same time, cease to exist from the date of its deletion or withdrawal – Even s.63 of the M.P. Excise Act, 1915 does not provide continuation of a repealed provision to rights and liabilities accrued during its subsistence – Further, r.19 which was substituted on 29.03.2011 was not notified to operate from any other date by the Government – If the amendment by way of a substitution in 2011 was intended to reduce the quantum of penalty for better administration and regulation of foreign liquor, there is no justification to ignore the subject and context of the amendment and permit the State to recover the penalty as per the unamended Rule – Purpose of the amendment was to achieve a proper balance between crime and punishment or the offence and penalty – Classifying offenders into before or after the amendment for imposing higher and lower penalties does not serve any public interest – The substituted Rule alone will apply to pending proceedings – Impugned order of the Division Bench of the High Court set aside. [Paras 2.1, 13, 14, 17, 32, 35] Administrative Law – Subordinate legislation – Operation of – Prospective/retrospective – Principles governing - Discussed. Madhya Pradesh General Clauses Act, 1957 – s.10 – Effect of Repeal – M.P. Excise Act, 1915 – Madhya Pradesh Foreign Liquor Rules, 1996 – r.19 – General Clauses Act, 1897 – s.6 – Violation occurred during the license period of 2009-10 – r.19 substituted in 2011 imposed lesser penalty than the repealed r.19 if permissible limits of loss of liquor exceeded – Demand notice issued in 2011 – Payment of penalty, if to be as per the repealed r.19 or the substituted r.19 – Plea of the respondent that as s.10 states that where any Madhya Pradesh Act repeals any enactment then, unless a different intention appears, the repeal shall not affect any right, privilege, obligation or liability, acquired, accrued or incurred under any enactment so repealed; State of M.P. can continue to apply the repealed Rule for the transaction of 2009-2010 by virtue of specific provisions under the 1957 Act:Held: s.10 of the MP General Clauses Act by itself would not make any difference as the Section is applicable only to enactments, i.e. when any M.P. Act repeals any enactment and not a subordinate legislation – Interpreting s.6, an identical provision of the General Clauses Act, 1897, this Court has consistently held that s.6 of the 1897 Act, has no application to subordinate legislation – Further, the subject of administration of liquor requires close monitoring and the amendment must be seen in this context of bringing about good governance and effective management – Seen in this context, the principle of s.10 of 1957 Act, relating continuation of a repealed provision to rights and liabilities that accrued during the subsistence of the Rule does not subserve the purpose and object of the amendment. [Paras 31, 32] Administrative law – Subordinate legislation – Rule making and its enforcement – Madhya Pradesh Foreign Liquor Rules, 1996 – r.19:Held: The process of identifying a crime and prescribing an appropriate punishment is a complex and delicate subject that the State has to handle while making rules and enforcing them – The gravity of the offence, its impact on society and human vulnerability are taken into account to provide the required measure of deterrence and reform – Day to day working of the Rules, reposing their effectiveness, ineffectiveness, deficiency of deterrence, disproportionate penalty having a chilling effect on genuine businesses, are some routine factors which require the executive to make necessary amendments to the rules – In this context, depending on the nature of offence, the proportionate penalty is required to be modulated from time to time – In the present case, the regulatory process required the Government to deal with the problem of diversion and unlawful sale of foreign liquor and also provide an appropriate penalty and punishment – In light of this, the felt need of the State to amend and substitute r.19 which provided a higher penalty at four times the duty, with a simple penalty not exceeding the duty payable can be appreciated. [Para 31] Madhya Pradesh General Clauses Act, 1957 – s.31 – Application of Act to Ordinances and Regulations - “unless there is anything repugnant in the subject and context” – Madhya Pradesh Foreign Liquor Rules, 1996 – r.19 – By virtue of s.31, the provisions of the 1957 Act were made applicable to the construction of rules – By such application, the principle of a repeal of a provision not affecting any liability incurred thereunder was also extended to the operation of the subordinate legislations under the Act – Therefore, the respondent-State submitted that having incurred the liability of exceeding the prescribed limits of losses of liquor for the license period 2009-10, the liability is not affected by the subsequent substitution of r.19:Held: Conscious of the big leap to extend the 1957 Act, for construction of subordinate legislations, s.31 took care to provide that it may be done only when it is not repugnant to the subject and context – If the amendment of r.19 by way of a substitution in 2011 intended to reduce the quantum of penalty for better administration and regulation of foreign liquor, there is no justification to ignore the subject and context of the amendment and permit the State to recover the penalty as per the unamended Rule. [Paras 23, 32] Interpretation of Statutes – Interpretation statutes like the General Clauses Act, 1897 - Purpose:Held: Are enactments intended to set standards in construction of statutes – The expression construction is of seminal importance as it is oriented towards enabling a seeker of the text of a statute to understand the true meaning of the words and their intendment – Apart from setting coherent and consistent methods of understanding enactments, the interpretation statutes also subserve the purpose of reducing prolixity of legislations – Therefore, the standard principles formulated in the interpretation statutes must be read into any and every enactment falling for consideration – Interpretation statutes or definitions in interpretation clauses are only internal aids of construction of a statute – Subordinate legislation, by its very nature, rests upon the executive’s understanding of the primary legislation – When a Court is of the opinion that such an understanding is not in consonance with the statute, it sets it aside for being ultra-vires to the primary statute. [Paras 24, 27, 28] Madhya Pradesh Foreign Liquor Rules, 1996 – r.19 – Retroactive operation – Substituted Rule imposed lesser penalty than the repealed rule if permissible limits of loss of liquor exceeded – Plea of the respondent-State that the substituted Rule cannot be given retrospective effect:Held: Submission rejected – It is wrong to assume that the substituted Rule is given retrospective effect if its benefits are made available to pending proceedings or to those that have commenced after the substitution – r.19 which was substituted on 29.03.2011 was made applicable to proceedings that commenced with the issuance of the demand notice in November, 2011 – The Rule operates retroactively and thus saves it from arbitrarily classifying the offenders into two categories with no purpose to subserve. [Para 33] Madhya Pradesh Foreign Liquor Rules, 1996 – r.19 – Constitution of India – Article 20(1) – Substituted Rule imposed lesser penalty than the repealed rule if permissible limits of loss of liquor exceeded – Bar of Article 20(1) imposing a penalty greater than the one in force at the time of the commission of the offence, if applicable:Held: No – The substituted penalty only mollifies the rigour of the law by reducing the penalty from four times the duty to value of the duty – Therefore, the bar of Article 20(1) of imposing a penalty greater than the one in force at the time of the commission of the offence has no application – Single Judge was of the view that the amendment by way of substitution had the effect of repealing the law which existed as on the date of repeal – Division Bench on the other hand, held that levy of penalty was substantive law, and as such, it cannot operate retrospectively – Reasoning of both, rejected. [Para 35] |
