Atlas Cycle Industries Ltd v State of Haryana (1979)

It is the leading Indian authority on the laying requirement, and it produces the most important negative result in this module: where Parliament has used the bare laying formula, failure to lay does not invalidate the rule. It also carries the classification of the three kinds of laying, which a question on legislative control almost always asks for.

Officers found that the appellant company had acquired iron sheets above the maximum price fixed by the Iron and Steel Controller under clause 15(1) of the Iron and Steel (Control) Order 1956, made under section 3 of the Essential Commodities Act 1955. Clause 15(3) provides that "No producer or stockholder or other person shall sell or offer to sell, and no person shall acquire, any iron or steel at a price exceeding the maximum prices fixed under sub-clause (1) or (2)."

The defence was that the price notification had not been laid before Parliament as section 3(6) requires, and was therefore ineffective.

Section 3(6) "ordains that every order made under this section by the Central Government or by any officer or authority of the Central Government shall be laid before both Houses of Parliament as soon as may be, after it is made." Is that requirement mandatory or directory?

The problem is sharpened by the absence in India of any equivalent of the Statutory Instruments Act 1946 or the Laying of Documents Before Parliament (Interpretation) Act 1948 "prescribing the conditions, the period and the legal effect of the laying of order before the Parliament".

Section 3(6) "falls within the first category, i.e. "simple laying" and is directory not mandatory." The conviction stood.

The interpretive rule. "the use of the word 'shall' is not conclusive and decisive of the matter and the Court has to ascertain the true intention of the Legislature, which is the determining factor, and that must be done by looking carefully to the whole scope, nature and design of the statute."

Subba Rao J.'s summary in State of Uttar Pradesh v Babu Ram Upadhya is quoted: "When a statute uses the word "shall", prima facie, it is mandatory, but the Court may ascertain the real intention of the Legislature by carefully attending to the whole scope of the statute", considering "the nature and the design of the statute, and the consequences which would follow from construing it one way or the other", whether the statute provides for the contingency of non-compliance, whether non-compliance is visited with a penalty, and "above all, whether the object of the legislation will be defeated or furthered."

The two considerations for treating a provision as directory. "(1) absence of any provision for the contingency of a particular provision not being complied with or followed, and (2) serious general inconvenience and prejudice that would result to the general public if the act of the Government or an instrumentality is declared invalid for non-compliance with the particular provision."

The three kinds of laying, taken from Craies and approved in Hukam Chand v Union of India:

1. Simple laying — "Laying without further procedure".
2. Laying subject to negative resolution. "Instruments so laid have immediate operative effect but are subject to annulment within forty days without prejudice to a new instrument being made." The usual phrase is "subject to annulment in pursuance of a resolution of either House of Parliament". "This is by far the commonest form of laying. It acts mostly as a deterrent", and may force a Minister, in Sir Cecil Carr's phrase, to "buy off opposition" by promising a modification.
3. Laying subject to affirmative resolution. The phrase is "no order shall be made unless a draft has been laid before Parliament and has been approved by a resolution of each House of Parliament." Because it "necessitates a debate in every case", the object of "saving the time of Parliament" "is to some extent defeated", so the procedure "is sparingly used" — reserved for orders that almost amount to an Act, orders replacing local Acts, and above all cases "where the spending, etc. of public money is affected."

A fourth pattern exists for speed or secrecy: the order operates at once but must be confirmed within a period. The Emergency Powers Act 1920 is the example, where regulations laid before Parliament "do not continue in force after the expiration of seven days from the time when they are so laid unless a resolution is passed by both Houses providing for their continuance."

Applying it. Craies answers the mandatory question by saying "each case must depend on its own circumstances or the wording of the statute under which the rules are made". Section 3(6) merely requires laying as soon as may be. "It does not provide that it shall be subject to the negative or the affirmative resolution by either House of Parliament", nor that Parliament may approve or disapprove, nor that the order shall be subject to modification, nor does it specify a period or "provide any penalty for non-observance". And the requirement "is not a condition precedent but subsequent to the making of the order. In other words, there is no prohibition to the making of the orders without the approval of both Houses of Parliament."

Where a parent Act requires only that an order be laid before Parliament as soon as may be after it is made, without a negative or affirmative resolution procedure, without a period, and without a penalty, and where the requirement is subsequent and not precedent to the making of the order, the laying requirement is directory and non-compliance does not invalidate the order.

• On legislative control of delegated legislation: give the three kinds of laying, then say plainly that the effectiveness of parliamentary control depends entirely on which laying formula the parent Act chose.
• On mandatory or directory: read it with Govindlal Patel, where a particular mode of publication prescribed in compulsive language was held mandatory, and with Sonik Industries, where the Act was silent as to mode and substantial compliance sufficed.