Content Provider | Supreme Court of India |
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e-ISSN | 30484839 |
Language | English |
Access Restriction | NDLI |
Subject Keyword | Validity of Forward contracts Bye-laws empowering closing out of hedge contract Regulation of |
Content Type | Text |
Resource Type | Law Judgement |
Jurisdiction | India |
Case Type | Appeal |
Court | Supreme Court of India |
Disposal Nature | Appeal Dismissed |
Headnote | Forward Contracts—Regulation of—Bye-laws empowering closing out of hedge contract--Validity of—If can operate retrospectively—Hast India Cotton Association Bye-laws cl. 52A—Forward Contracts (Regulation) Act, 1982 (LXXIV of 1952), Ss. 4, 11 and 12.The appellants were members of the East India Cotton Association which was an association recognised by the Central Government under the Forward Markets Regulation Act, 1952. Prior to December 1955, they had entered into “hedge contracts” in respect of cotton for settlements in February and May 1956 in accordance with the bye-laws of the Association. Towards the end of 1955 it was apprehended that the forward market in cotton was heading for a crisis and the Central Government issued notifications directing the Association to suspend business in hedge contracts for February and May 1956 deliveries for short periods this did not improve the situation. On January 21, 1956, the Central Government, acting under s. 12 of the Act, made a new bye-law in substitution of bye-law 524A of the Association which empowered the Forward Markets Commission, constituted under, the Act, to issue a notification closing out all hedge contracts at rates fixed by the Commission. On January 24, 1956, the ‘Commission issued a notification closing out all hedge contracts including those subsisting on that date, and fixed the rates for the settlement of such contracts. The appellants contended that the amended bye law 52AA was invalid as the power to close out hedge contracts could not be conferred upon the Commission and as the Association was in law incapable of conferring such a power on the Commission or on any other body and that in any cases the bye-law could not operate retrospectively so as to affect existing contracts. Held, (per Sinha, C.J., Ayyangar, Mudholkar and Aiyar, JJ. Subba Rao, J. contra), that the amended bye-law 52AA was not ultra vires the Central Government and validly empowered the Commission to close all hedge contracts in cotton including existing contracts. Clause (f) of s. 4 of the Act provided that one of the functions of the Commission shall be to perform such other duties and exercise such other powers as may be assigned to the Commission “‘by or under the Act, as may be prescribed”. There was no limitation upon the nature of the power that may be conferred under cl. (f) except that it must be in relation to the regulation of forward trading in goods. It was not possible to place any limitation on this power by invoking the rule of ejusdem generis as there was no common positive thread running through cls. (a) to (e) of s.4. To judge whether legally a power could be rested in a statutory body the proper rule of interpretation was that unless the nature of the power was such as to be inconsistent with the purpose for which the body was created or unless the particular power was contra-indicated by any specific provisions of the Act, any power which furthered the provisions of the Act could be legally conferred. Judge by this test the power conferred by the bye-law could be validly vested in the Commission. The power was one conferred ‘under the Act”. The words ‘‘under the Act” signified a power conferred by laws made bye subordinate law-making authority which was empowered to do so by the Act. The impugned bye-law was clearly well within the bye-law making power under ss. 11 and 12, The bye-law did not contravene articles 64 of the Articles of Association of the Association as articles 64 applied only to the Board and placed no restrictions on the power of the Association. Further, upon a proper construction of the amended bye-law it applied not only to contracts to be entered into in future but also to subsisting contracts, A statute which could validly enact a law with retrospective effect could in express terms validly confer upon a rule making authority a power to make a rule or frame a bye-law having retrospective operation. In the present case the power to make bye-laws so as to operate on subsisting contracts followed as a necessary implication from the terms of s. 11. There was no contra indication in the other provisions of the Act. Per Subba Rao, J—Under s.12 (1) of the Act the Central Government had no power to make a bye-law with retrospective effect. The provision conferring rule making power must be strictly construed and unless it expressly conferred a power to make a bye-law with retrospective effect, it must be held that it was not conferred any such power. Even if it was permissible to inter such a power by necessary implication, it could not be inferred in the present case.‘ It could not be said that unless retrospective operation was given te the provisions of s. 12, the object of the legislature would be defeated or the purposes for which the power was conferred could not be fulfilled. Further, the powers conferred on the Commission under the impugned bye-law could not be performed by the Commission under cl. (f) of s. 4. Clauses (a) to (e) of s. 4 showed that the functions of the Commission were wholly supervisory and advisory in nature; the functions described in cl. (f) were analogous to these and could only be supervisory or advisory. The Commission had no administrative. functions or powers of management or powers of interference in the internal management of registered association which were vested in the Association. The power conferred upon the Commission was not conferred “under the Act”. The words did not include a rule or a bye-law, and applied only to an assignment made in the exercise of an express power conferred under the Act. The Central Government had no power under s. 12 to make a bye-law assigning any function to the Commission. |
Judge | Honble Mr. Justice K. Subba Rao Hon'ble Mr. Justice N. Rajagopala Ayyangar |
Neutral Citation | 1962 INSC 137 |
Petitioner | Dr. Indramani Pyarelal Gupta |
Respondent | W.r. Nathu And Others |
SCR | [1963] 1 S.C.R. 721 |
Judgement Date | 1962-04-11 |
Case Number | 109 |
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