AN EXCLUSIVE AREA FOR THE STATE : ART.246(3)

Article 246(3) confers an exclusive power on the States to make laws with respect to the matters enumerated in the State List (List II in the Seventh Schedule). These are matters which admit of local variations and, from an administrative point of view, are best handled at the State level and, therefore, the Centre is debarred from legislating with respect to these matters. Art. 246(3) opens with the words: “subject to clauses (1) and (2)”.

Thus, if a particular matter falls within the exclusive competence of the States, i.e. List II, that represents the prohibited field for the Centre.

In the Indian federation, a division of  legislative functions between Centre and States is two-fold :-

(i) Territory =  For a particular place a unit can legislate.

(ii) The subject-matter = For a Particular thing (say Income Tax – Only centre can make law)  a unit can legislate.

• TERRITORIAL JURISDICTION TO LEGISLATE :

      PARLIAMENT :  Parliament can make law for a) whole of the India b) Part of it c) on extra-territorial basis.

• Extra-territorial law is not invalid i.e., valid.[Art. 245(2)]. KANIA, C.J., in A.H. Wadia v. Income-tax Commissioner : Although it may offend rules of International law or may not be recognized by foreign courts or may have practical difficulties = but this is not concern of municipal courts.

STATE LEGISLATURE : A state legislature can make laws for the state concerned (for its own territory). [Art. 245(1)]. It cannot make a law having extra-territorial operation. :

DOCTRINE OF TERRITORIAL NEXUS : With the help of this doctrine, we can find whether a particular object, for which the law applies, has any connection(nexus) with the state concerned. A State may levy a tax on a person, property, object or transaction not only when it is situated within its territorial limits, but also when it has a sufficient and real territorial connection with it.  

Wallace v. Income-tax Commissioner, AIR 1948 P.C. 118 :

Although a company is incorporated in U.K., Indian state can levy tax on its whole income as the substantial part of profits is from India.  Therefore there was a sufficient territorial nexus between the company and India for this purpose.

State of Bihar v. Charusila Das :

Bihar Hindu Religious Trusts Act, 1950 : for the protection and preservation of properties appertaining to the Hindu religious trusts.  This act cannot be extended outside the territory of Bihar as it doesn’t have real connection.

State of Bombay v. RMDC

Prize competition conducted through newspaper, published outside the State.  HELD: It was held valid because the newspapers although printed and published outside Bombay had a wide circulation there; they had collectors in Bombay to collect the entry fee for the competition. There is a sufficient territorial nexus. 

DISTRIBUTION OF LEGISLATIVE POWERS :  WHAT IS THE MAIN FEATURE OF FEDERAL CONSTITUTION ?   The most important characteristic of a federal constitution is the distribution of legislative powers between the Centre and the regions.  The foundation for a federal set up was laid in the Government of India Act, 1935

What other subjects should be allotted to the Centre depends on the

• Centralisation V. De-centralisation debate.
• Exigencies of the situation existing in the country,
• The attitudes of the people and
• The philosophy prevailing, at the time of constitution-making, and
• The future role which the Centre is envisaged to play.

1.THE THREE LISTS : INDIAN CONSTITUTION :  UPSC 2005The scheme of the Constitution is to secure a constitutionally strong Centre having adequate powers both in extent and nature so that it can maintain and protect the unity and integrity of the country.

UNDER ARTICLE 246 : The Indian Constitution seeks to create three functional areas:

1.an exclusive area for the Centre;

2.an exclusive area for the States; and

3.a common or concurrent area in which both the Centre and the States may operate simultaneously, subject to the overall supremacy of the Centre.

AN EXCLUSIVE AREA FOR THE CENTRE : ART.246(1) :

Article 246(1) confers on Parliament an ‘exclusive power’ to make laws with respect to any of the matters in the Union List (List I in the Seventh Schedule).

• EFFECT OF ABOVE-MENTIONED PROVISION : This means that if any matter is within the exclusive competence of the Centre i.e. List I, it becomes a prohibited field for the States.
• WHY EXCLUSIVE : Art. 246(1) opens with the words: “Notwithstanding anything in clauses (2) and (3).”

RESULT : Uniform law for the whole country.

The Union List has 99 entries in VII SCHEDULE. Entries 1 to 81, 93 to 95 and 97 deal with general legislative powers, and entries 82 to 92, 96 and 97 deal with power to levy taxes and fees.

AN EXCLUSIVE AREA FOR THE STATE : ART.246(3)

Article 246(3) confers an exclusive power on the States to make laws with respect to the matters enumerated in the State List (List II in the Seventh Schedule). These are matters which admit of local variations and, from an administrative point of view, are best handled at the State level and, therefore, the Centre is debarred from legislating with respect to these matters. Art. 246(3) opens with the words: “subject to clauses (1) and (2)”.

Thus, if a particular matter falls within the exclusive competence of the States, i.e. List II, that represents the prohibited field for the Centre.

CONCURRENT ARENA FOR CENTRE AND STATES, WITH SUPREMACY OF THE CENTRE

WHY CONCURRENT LIST ? There may be certain matters which are neither of exclusively national interest, nor of purely State or local concern.

Art. 246(2) confers a concurrent power of legislation on both the Centre and the States with respect to the matters enumerated in the Concurrent List (List III in the Seventh Schedule).

USE : The Centre can intervene in the area without any need to amend the Constitution. It permits of diversity along with a unity of approach.

The phraseology of the various clauses of Art. 246 is such as to secure the principle of Union supremacy.   Arts. 246(1) [Union List] + 246(2) [Concurrent List]  >  power conferred on the State Legislature under Art. 246(3) [State List].

CONCURRENT LIST : LIST III : The Concurrent List comprises 52 items. The States are competent to legislate with respect to matters in this List, subject to the rule of repugnancy contained in Art. 254.

Then, some subject-matters of legislation may be multi-faceted and so they cannot be assigned exclusively either to the Centre or the States. These matters are such that both the Centre and the States may have common interest therein.

PRINCIPLES OF INTERPRETATION OF THE LISTS : (UPSC 2012,2003)

• EACH ENTRY TO BE INTERPRETED BROADLY :  Entries cannot be set out with scientific precision or logical definition. Each general word in an entry should be held to extend to all ancillary or subsidiary matters/‘widest possible’ / ‘most liberal’ construction . Hans Muller v. Superintendent, Presidency Jail, Calcutta.  However,the legislature to make a law relating to a matter which has no rational connection with the subject-matter of the concerned entry.

WHY ? Legislative power on the Centre and the States is conferred by Art. 246 and not by the entries in the three legislative lists.

B HARMONIOUS INTERPRETATION OF ENTRIES :  Whenever there is overlap or may appear to
be in direct conflict with each other.

• CONDITION 1 : APPLY HARMONIOUS CONSTRUCTION : It is the duty of the court to reconcile the entries and bring about a harmonious construction.
• CONDITION 2 : NON-OBSTANTE CLAUSE : If the entries come in inevitable or irreconcilable conflict ; no such reconciliation can done, then, centre law will prevail over the state law.

C RULE OF PITH AND SUBSTANCE : (UPSC 2015,1993,1996,2001)

GENERAL RULE: Parliament or a State Legislature should keep within the domain assigned to it, and not trespass into the domain reserved to the other. A law made by one which trespasses or encroaches upon the field assigned to the other is invalid.

TEST : This rule envisages that the legislation as a whole be examined to ascertain its ‘true nature and character’ in order to determine to what entry in which List it relates.

WHAT IS NOT THE TEST : The name given by the legislature to the legislation is immaterial. It would be a wrong approach to view the statute as a mere collection of sections, to disintegrate it into parts and then to examine under which entry each part would fall and then to determine which part of it is valid and which invalid.

WORKING OF THE RULE :  Lending = state list ; Negotiable Instruments =Central list. Lending cannot be without negotiable instruments. The Act was held valid even though as an ancillary effect it affected the negotiable instruments—a Central subject.

D DOCTRINE OF COLOURABLE LEGISLATION

The doctrine of colourable legislation is based on the maxim that what cannot be done directly cannot also be done indirectly.

CONCERNED ABOUT COMPETENCY : The doctrine thus refers to the question of competency of the legislature to enact a particular law. the legislature is incompetent to enact a particular law, although the label of competency is stuck on it, and then it is colourable legislation # R.S. Joshi v. Ajit Mills

NOT CONCERNED WITH MOTIVE : If the legislature has competency, question of bona fides or mala fides on the part of the legislature doesn’t arise.

TEST ; disguised,covert or indirect transgression .

WORKING OF THE RULE : State of Bihar v. Kameshwar : Clubbing through a state  law =  abolition of the landlord system + payment of compensation on the basis of income accruing to the landlord by way of rent. The provision was held to be a piece of colourable legislation and hence void under entry 42 List III.

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