The division of time for penning articles on taxation laws and its’ principles and the issues of constitutional impact has been for sometimes recognized the necessity coupled with occasion for publication in the AIFTP Journal for the larger benefit of the professional fraternity. Accordingly, in terms of the time left with me, ordinarily not intervening with the fixed schedules of my professional work in courts across the country, the articles are penned for publication.
This time I thought it essential to devote a kind of attention to the doctrine of the common law principles as well as its’ scope for application in India. Accordingly, the undernoted inking on the subject of the article is as under:
Let me authoritatively state that the common law principle had found its’ origin and stripes of pace for the existence, development and growth of the society in England. The significance behind the principle is that once upon a time the Britishers ruled almost all parts of the universe. Therefore, in their rule, the common law rule has given birth. The meaning that can be ascribed is that the law made never binds the crown unless the crown is specifically or expressly or by necessary implication is named therein. The reason of the rule as stated to be that a statute is presumed to be enacted only for the subjects (people) and not for the king. I am reminded of the words of PLOWDEN saying that it is to be intended that when the king gives his assent for a statute, he does not mean to prejudice himself or to bar himself of his liberty and privileges, but assents that it is a law among his subjects. A reference is being made to a decision in Willion v. Berkley (1562) 1 and also in AG v. Donaldson (1874) 10M & W117, in Madras Electric Supply Corporation v. Borland (1955) 1All ER 753. A statement of recent times of the rule is found in a passage from the judgment of LORD DUPARCQ to the effect that the maxim of law in early times was that no statute bound the crown unless the crown was expressly named therein, “Roy n’est lie par ascun statute, si il ne soit experiment nosme’. However, the longtime established rule, of course, subject to one exception, to say that the crown may be bound, as has often been said by necessary implication. Therefore, it is to say that from the very terms of the statute, it would be manifest from the term of the statute that the legislature intended to bind the crown too, then the result is the same, as if, the crown had been expressly named. Let me make a reference to a decision in Bombay Province v. Bombay Municipal Corporation in AIR -1947 PC 34 as further referred to in Premchand Nathu & Company v. Land Officer (1963) 1 All England Reports 216 & in Lord Advocate v. DUMBARTON DISRICT COUNCIL (1990) 1 All England reports Page 1.
Whatever might have been the historical Origin of the rule whether based on immunity by royal prerogative or otherwise, there is a consensus of judicial opinion that the rule as at present known is merely a rule of construction “LORD MAC DERMOTT in Madras Electric Corporation case observed that the appropriate rule is that in an Act of Parliament general words shall not bind the crown to its’ prejudice unless by express provision or necessary implication. After making a review of the earlier cases, LORD KEITH spoke for the house of Lords that the rule of construction is to the effect that the crown is not bound by any statutory provision unless there can somehow be gathered from the terms of the relevant Act an intention to that effect.
The common law rule has been applied in the colonies and the Common Wealth in the sense that “the executive government of the state is not bound by the statute unless the intention is apparent”. In the case of ROBERTS v. AHERN (1904) 1 CLR 406, the common law rule was also applied in America as a rule of construction in a decision in USA v. United Mine Workers of America (1946) 330 US 358 and further followed in the case of USA v. Reginald P.WITTEK (1948) 337 US 346. The categorical follow up is that the laws are prima-facie made for the people and not for the king. But the said rule of law is no-a-days regarded even in England as an overstatement. Reference is made to a decision in AG v. HANCOCK (1940) 1 All England Report, Page 32. Attempts, however, were made to lay down certain categories as to when a crown is bound although not specifically named. LORD COKE in Cambridge case (1616) 11 COREP66 indicated three kinds of statues that bound the kind without expressly naming him namely statutes for maintenance of religion, learning and the poor, secondly statutes or suppression of wrong and thirdly statutes that tend to perform the will of a founder or donor. Similarly, in BACON’S abridgement it was quoted where an Act of Parliament is made for the public good, the advancement of religion and justice and to prevent injury and wrong, the king shall be bound by such Act. The only safe rule that may be valid in all cases, to decide whether a given statute binds the crown by necessary implication, it is to read the statute in entirety and to see whether it is manifest from the very terms of the statute that it was the intention of the legislature that the crown shall be bound.
The immunity of the Crown inspite of the rule was affected by other factors, Section 1 of the Crown Proceedings Act, 1947 enables the Crown to be sued directly in such situations where prior to the Act a claim might have been enforced by petition of right. Section 2 of the above stated Act in general permits actions to be brought against the crown in respect of torts committed by its agents or servants by a breach of its’ duties giving rise to a tortious liability. Although the rule still holds the field in England, it has not escaped its’ criticism. The rule originated in the middle ages, when it had perhaps some justification. Its’ survival, however, is due to little but vis inertia. The chief objection to the rule is its’ difficulty of application.
Now let me examine the extent of the Rule;
According to English law, the protection of the Rule presumption that the Crowned is not bound by statutes extends to three classes of personnel namely, the sovereign personally, secondly, his servants or agents acting, as such, and three persons who though not strictly the servants or agents are considered to be in consimili casu, class (ii) covers not only officers of the state with ministerial status, but all sub-ordinate officials as also servants holding statutory office and class (iii) has not maintained and the performance of the functions also taken into account in deciding, whether a particular person falls under class (ii). The third category, who perform some of the regal functions as also other functions not consequential to that category. Whether a non- profit earning statutory corporation not subject to control by the Crown or a Minister and the revenues claimed immunity from local rates and the question before the House of Lords was whether the corporation could claim Crown privileges as it was performing a public duty. Such privilege claimed was negative in Mersey Docks & Harbour Board v. Cameron. In the case of Greig v. Edin Burgh University, the claim of exemption from local rates was claimed by a university was rejected.
Whether common law rule is applicable in India. The Privy Council in the case of Director of R &D v. Corporation of Calcutta, held that the common law rule to the effect Crown was not bound by the statute unless named expressly applied in India before the constitution in the case of Bombay Province v. Bombay Municipal Corporation, reported in AIRA 1947 PC 34. The said judgment when continued after the constitution was overruled in the case of State of West Bengal v. Corporation of Calcutta, reported in AIR 1967 SC997. As a result of the said decision, the rule that applies in India is that a General Act applies to citizens of as well as to the state unless either expressly or by necessary implication exempts the state from its’ operation. When a penal enactment providing for imprisonment or fine, which goes to the government is made applicable to the government or a government department. However, as per article 285 of the constitution of India property of the Union is exempt from taxation impose a state law, unless the Parliament provides, otherwise in the case of Municipal Corporation, Amritsar v. Senior Superintendent of Post Offices, Amritsar Division in (2004) 3SCC 92. A company registered under Companies Act, 1956 is not a government company, even it its’ share capital is wholly subscribed by the Government. Therefore, even in case, where the Act does not apply to the government, an agency of instrumentality of the government, which is not a department of the government will be bound by the Act. The exemption from payment of taxation in terms of article 285 does not extend to the companies with the same degree of in respect of statutory corporation like Food Corporation of India.
Therefore, simultaneously, article 289 exempting property of a state of Union taxation have no application to indirect taxes, such as, customs duty, central excise duty, sales tax in New Delhi Municipal Council v. State of Punjab (1997) 7SCC 339.
Therefore, the Union is liable to sales Tax under a state Act. Thus, the rule of common law in strict sense has no applicability in India. Of course, it used to have some application in our country before the advent of the constitution of India. So also every company registered under the Companies Act, though wholly funded by the government is not a government company. Therefore, the rule of common law has no applicability. The reason simply being is England is ruled by the Crown, whether a king or queen, whereas from August 15th, 1947, India being a democratic country is ruled by the people. Hence, there will be nothing like England to view that laws made by the House people is not applicable to the government, why because in India, it is a rule of people and every act, action or deed is accountable to the people, while the laws made in England would simply apply to the common people/subjects and will not bind the Crown.
In the possible brief narration the origin and growth of common law rule and its’ applicability to our country has been stated with reference to the relevant decisions of English courts and how common law rule is not applicable in our country is also explained with reference to nuances of law coupled with judicial decisions.
Hope this will throw some light on this topic to the advantage the members of the fraternity.
//JAI HIND //