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Synopsis

The Supreme Court has declared that when a competent legislature retrospectively removes the substratum or foundation of a judgement to make the decision ineffective, such a move is a valid legislative exercise provided it does not transgress on any other constitutional limitation. 

The court said such a legislative device which removes the vice in the previous legislation which has been declared unconstitutional is not considered to be an encroachment on judicial power but an instance of abrogation recognised under the Constitution of India. 

A bench of Justices B V Nagarathna and Ujjal Bhuyan pointed out that it is open to the legislature to alter the law retrospectively, provided the alteration is made in such a manner that it would no more be possible for the Court to arrive at the same verdict.

"The power of a legislature to legislate within its field, both prospectively and to a permissible extent, retrospectively, cannot be interfered with by Courts provided it is in accordance with the Constitution. It would be permissible for the legislature to remove a defect in an earlier legislation, as pointed out by a constitutional court in exercise of its powers by way of judicial review. This defect can be removed both prospectively and retrospectively by a legislative process and previous actions can also be validated," the bench said.

However, where a legislature merely seeks to validate the acts carried out under a previous legislation which has been struck down or rendered inoperative by a Court, by a subsequent legislation without curing the defects in such legislation, the subsequent legislation would also be ultra-vires, it declared. 

"Such instances would amount to an attempt to ‘legislatively overrule’ a Court’s judgment by a legislative fiat, and would therefore be illegal and a colourable legislation," it said.

Highlighting the concept of separation of powers and the principle of checks and balances, the bench said, "Simply setting at naught a decision of a court without removing the defects pointed out in the said decision, would sound the death knell for the rule of law. The rule of law would cease to have any meaning if the legislature is at liberty to defy a judgment of a court by simply passing a validating legislation, without removing the defects forming the substratum of the judgment by use of a non-obstante clause as a technique to do so".

The court explained the legal position of abrogation while upholding validity of the Amendment and Validation Act of 1997 to Himachal Pradesh Passengers and Goods Taxation Act, 1955.

It pointed out by enacting the Amendment and Validation Act of 1997, the Himachal Pradesh State Legislature has validly removed the basis of the judgment of the Division Bench of the High Court of March 27, 1997, inter-alia, by amending the definition of the term ‘business’; defining the terms ‘fare’, ‘freight’ and ‘road’ and bringing non-fare paying passengers at par with fare-paying passengers for the purpose of levying tax.

In its plea, the NHPC Ltd contended they were public sector organisations (and not private operators) who are engaged in transporting their employees and their children to the work sites and to the school and back gratis as a facility being provided to them having regard to the location of the work sites in remote hilly terrain and to ensure the safety of the children of the employees of the appellant organisations.

Since 26 years have passed after the passage of law and vehicles would have been replaced by now, the bench, while exercising its power under Article 142 of the Constitution, ordered that the appellants should be made liable to pay the tax w.e.f. April 01, 2023, the current financial year onwards and not for the period prior thereto. 

"One of reasons for directing so is by bearing in mind that the affected appellants herein are not private bus operators or stage carriage operators but are public sector units engaged in hydro-power projects and irrigation projects and as a convenience or facility, owning buses for transporting their employees and children of the employees to the work sites and to schools and return to their homes as a facility being provided to them," the bench said. 

Case Title: NHPC Vs State of HP

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