(..21..)

RELATIONS BETWEEN THE UNION AND THE STATE[1]

Table of Contents

(Arts. 245 to 293)

QUESTION BANK

Q.1. Examine critically the legislative relations between the Centre and the State.

Q.2 Discuss fully the provisions regarding the administrative relations between the Union and the State.

SHORT NOTES.

Doctrine of pith and substance.
Borrowing by States.
State list.
Concurrent list.
Union list.
Administrative Relations.

SYNOPSIS.

Legislative Relation [Art. 245-255].

1.Territorial Jurisdiction [Art. 245].

Subject wise Jurisdiction [Art. 246].

– List –I-, The Union List.

– List –II-, The State List.

– List-III-, The concurrent List.

The Residuary powers [Art. 248].

Principles of interpretation of Lists-

Pre-dominance of the Union List
Each-entry to be interpreted broadly.
The Doctrine of pith and substance.
The Doctrine of Colourable Legislation.
Administrative Relation [Art. 256-263].

– Control of Union over State.

Direction by Centre to State [Art.256].
Delegation of Union function to the State.[Art. 258].
All India services [Art. 312].
Grant in aid.
Dispute relating to water [Art. 262].
Financial Relations [Art. 264 to 293].

NOTES.

Finance Commission.
Planning commission.
Borrowing by Centre and State.

The basic principle of federalism is that the Constitution divides the legislative, executive, and financial powers between the Centre and the States. The power is concentrated in one body in the Unitary form of Government. There may or may not be a State Government. However, in federalism, it is very important to lay down an accurate scheme of distribution of powers between the Central and the State Governments to avoid conflicts. Therefore, it is important to study Centre-State Relations in the federal Constitution. The relations envisaged in the Constitution are of Cooperative federalism.

A. Legislative Relations[2] (Art. 245-255):-

The division of legislative functions between Centre and State is two-fold, i.e., territory-wise and subject-wise.

1. Territorial Jurisdiction of Legislature[3] (Art. 245):-

The Parliament[4] is empowered to make laws for the whole or any part of the territory of India. Similarly, the State legislatures[5] are empowered to make laws for the whole or any part of the State (Art. 245 (1)). The law made by Parliament is not invalid merely because it has extra-territorial operation (Art. 245 (2)). However, state law, which has operations outside the state, is not valid. To determine whether the law passed by the state legislature has extra-territorial operation or not. the principle of ‘territorial nexus’ is to be invoked. It provides that the State law having the extra-territorial[6] operation is valid if there is a sufficient connection between the State and the object of passing the law.

In State of Bombay vs. R.M.D.C[7].

Facts: Bombay State levied a tax on lotteries and prize competitions in Newspapers. The tax was extended to a newspaper printed and published in Banglore (Karnataka State) but with wide circulation in Bombay.

S.C. Held:-that a sufficient territorial nexus exists to enable Bombay State to tax the newspaper.

2. Subject-matter-wise jurisdiction[8]:-

Art. 246 lists the subject-matter-wise distribution of powers between the Union and the States. Art. 247 provides for Schedule VII in the Constitution; there are three Lists, viz.- the Union List, the State List, and the Concurrent List.

List-I- The Union List[9]: –

List-I- The Union List comprises 97 subjects, matters, or items. The subjects mentioned in the Union List are of national importance[10] and require the Union Parliament to pass laws on them. It contains subject matters: defence, foreign affairs, banking, currency and coins, railway, postage, Union taxation, etc. The Parliament has exclusive power to make laws on any of these 97 subjects mentioned in the Union list.

List-II- The State List[11]:-

The State list consists of 66 subjects. These subjects are of local importance and, therefore, require the State to make laws on them. These subjects are public health and sanitation, agriculture, forest, fisheries, education, State Taxation, maintaining law and order, etc. The State has the exclusive power to make laws on any subject mentioned in the State List.

List III- Concurrent List[12]: –

It consists of 47 subjects. Both the Centre and the State can make laws on the subjects mentioned in the concurrent list. But in case of a conflict between laws passed by the Center and State on the concurrent list subject, the law passed by the Center shall prevail[13]. (Art. 254 (1)).

The Residuary power[14] (Art. 248): –

The Parliament has exclusive power to pass laws with respect to any new matter not mentioned in either of these lists (Art. 248 and Entry 97 of the Union list). So a subject like cybercrime (i.e. computer), a new one ((i.e. not mentioned in either of these lists) empowers Parliament to make law on it.

Principles of Interpretation of the Lists[15]: –

Though legislative powers are divided between the Centre and the States, it is not a scientific division. Questions usually arise as to whether a particular subject falls in the sphere of the Union or the State Government. It is the duty of the Supreme Court to solve this problem. Therefore, to solve the above problem, the Supreme Court has evolved[16] the following rules. –

1. Predominance of the Union list[17]: –

This rule states that the Union list predominates the State and concurrent list. The concurrent list predominates over the State list. Thus it establishes the predominance of the Union list.

2. Each entry is to be interpreted broadly[18]:-

Subject to the overriding predominance of the Union list, an entry in the Concurrent List should be interpreted broadly. The ‘widest possible’[19] and “most liberal”[20] interpretation should be given to the language of each entry.

In Indian Hotel and Restaurants Association v. the State of Maharashtra[21].

Bombay High Court has held that the entries[22] given in lists of Sch-VII are legislative heads. Therefore, these entries should be liberally and widely interpreted. Not only main matters but any incidental[23] or ancillary matters[24] are also to be included in the entry field.

3. The Doctrine of pith and substance[25]:-

If the law passed by one Legislature encroaches[26] upon the field assigned to the other, the court will apply the doctrine of pith and substance to determine whether the legislature concerned is competent to make that particular law. If the pith and substance (i.e., the true object of the legislation) relate to the matter within the competence of the legislature which enacted the controversial law, such law is to be treated as valid and within the competence of the legislature that made it, even though it might incidentally encroach upon other legislature’s competence[27].

In order to ascertain the true character of the legislature, the court should regard the enacted law as a whole, its object, scope, and effect[28].

In State of Bombay Vs. F. N. Balsara[29].

Facts- The Bombay Prohibition Act, which prohibited[30] the sale[31] and possession of liquor in the State was challenged on the ground that it incidentally encroached upon “the import and export of liquor across the customs frontier,” – which is the Central subject. It was contended that the prohibition on the purchase, use, possession[32] , and the sale of liquor would affect the import of liquor, which is a Central subject.

Held:- The Act[33] is valid because the pith and substance of the Act fall under the State List and not under the Union List, even though the Act incidentally has encroached upon the Union List.

4. The Doctrine of Colourable Legislation[34]: –

The doctrine of ‘colourable legislation’ is based on the maxim ‘what cannot be done directly, cannot also be done indirectly’. The doctrine becomes applicable when a legislature seeks to do something indirectly that it cannot do directly. The doctrine thus refers to the question of the legislature’s competence to enact a particular law. In other words, although, apparently, a legislature in passing a statute purports to act within the limits of its power yet, in substance and in reality, it has transgressed these powers by taking resort to a mere pretense or disguise.

In The State of Bihar Vs. Kameshwar Singh[35].

It is the only case where a law has been declared invalid based on colourable legislation. In this case, the Bihar Land Reforms Act of 1950 was held void on the ground that, though apparently, it purported to lay down a principle for determining compensation yet, in reality, it did not lay down any such principle and thus indirectly sought to deprive the petitioner of any compensation.

B. Administrative Relations[36] (Art’s. 256 to 263):-

In the federal government, the problem often comes to the distribution of administrative powers between the centre and the states. The Union Government is responsible for maintaining peace and order in the country. Therefore, cooperation and coordination between the Centre and the State administrative authority[37] become important. In an emergency, the central Government exercises complete control over the State and its functions as if it were a unitary system.

Control of the Union over the State[38]: –

Art 256 to 263 provides for the Union’s control over the State even in normal times through the following ways:-

1. Direction by the Centre to the State[39] (Art. 256):-

The Parliament and the executive power of the Union extend to giving such directions to a State as it deems essential for the purpose (Art. 256).

If such directions are not abided by the State, the President can adopt coercive sanctions[40] against the State, including sanctions mentioned under Art. 356 (i.e., declaring an emergency on the failure of Constitution machinery)

2. Delegation of Union’s functions to the State[41] (Art. 258):-

Parliament can delegate its functions to the State or use State machinery, even without the State Government’s permission, to enforce the Union law in the State.

3. All-India Services[42] (Art. 312):-

Besides the separate services for the Union and the States, the Constitution creates an additional “All India Service” common to both the Union and the State. It is to ensure greater inter-State coordination. Two main All-India services are the ‘Indian Administrative Services’[43] and the ‘Indian Police Services’[44].

4. Grant in aid:-

The Constitution provides limited financial resources[45] to the State. The State depends upon the Centre for grant-in-aid to carry out its welfare activities. These grants are allotted upon certain conditions. If these conditions are not fulfilled, the Centre may withdraw grants. In this way, the Centre exercises strict control over the States.

5. Dispute Relating to water[46] (Art. 262): –

Parliament is empowered to adjudicate upon any dispute relating to the distribution or control of water of inter-state rivers and river valleys[47].

C. Financial Relations[48] (Arts. 264 to 293):-

A finical autonomy should exist for the smooth and successful conduct of legislative and executive relations. Revenue is distributed between the Union and the States. The State possesses exclusive jurisdiction over taxes enumerated in the State list, and the Union is entitled to the proceeds of the taxes mentioned in the Union list. The concurrent list includes no taxation entries. However, some of the taxes in the Union list may be allotted wholly or partially to the States.

NOTES.

1. Finance Commission[49] (Art. 280): –

(a) Its Composition:-

Art. 280 provides that the President shall, within two years from the commencement of the Constitution and thereafter at the expiration of every fifth year or at such earlier time as he considers necessary, constitute a Finance Commission. The Finance Commission shall consist of a chairman and four other members appointed by the President.

(b) Qualification: –

The Chairman of the Commission shall be selected from amongst persons who have had experience in public affairs[50]. The other four members shall be selected from amongst persons who: –

are or have been qualified to be appointed as a Judge of the High Court or
have special knowledge of the finance and accounts of the Government or
have had wide experience in financial matters and in administration or
have special knowledge of economics.

(c) Duties of the Finance Commission[51]: –

It shall be the duty of the Commission to make recommendations to the President as to-

the distribution between the Union and States of certain taxes (which are provided to be distributed between the Centre and the States as enumerated in the Union List).
The principles which should govern the grant-in-aid of the revenue to the State out of the consolidated fund of India.
Measures are needed to augment the consolidated fund[52] of the State to supplement the resources of the Panchayats in the State[53].
Measures are needed to augment the state’s consolidated fund to supplement the resources of the state’s municipalities.
Any other matter referred to the Commission by the President in the interest of sound finance.

The Commission shall have all the powers of the civil court in respect of summoning and enforcing the attendance of witnesses, requiring the production of any document, and requiring any person to furnish information that the Commission thinks to be useful and relevant.

***

2) Planning Commission[54]:-

India is an economically underdeveloped country[55]. It has limited resources, whereas the demands for development are greater; hence, it becomes necessary that planned efforts be made to use the available resources to achieve maximum effect. This, therefore, leads to the planning and formulation of five-year plans. The Constitution has not made any provision for establishing a planning commission; however, the “Directive Principals” obligate the central and the State Governments to play a creative role in promoting the socioeconomic welfare of the people.

(a) Its Composition[56]:-

Though the Constitution did not establish planning machinery, in 1950, the Government of India established the Commission with the Prime Minister as its Chairman. The Commission has a few central ministers and some non-official experts as members. There is no State representative on the Commission.

(b) Functions/ Role of commission[57]: –

The Role of the Commission is advisory[58]It makes recommendations to the Central Government and the National Development Council. These bodies are responsible for making final decisions, and the Central and State Governments are responsible for implementing the plan.

Close cooperation exists between the Commission and the Central Government to supervise the planning results and suggest measures from time to time. The Prime Minister heads both these organs. In addition, other Central Ministers are invited to the Commission’s meeting from time to time when matters concerning their department are being discussed. Likewise, the Commission members may attend Central Cabinet meetings when economic matters are being discussed.

***

3) National Development Council[59]:-

Planning in India is unified[60] and comprehensive[61] because it deals with both central and State subjects, it, therefore, becomes necessary to give participation to the States in the planning process. Therefore, in 1952, the National Development Council was established, consisting of the Prime Minister, Chief Ministers of all States and the representatives of the Union Territories[62] and members of the planning commission.

Its Functions: –

The functions of the council are as follows-

To strengthen and mobilise the nation’s efforts and resources to support the plans.
To promote common economic policies in all vital spheres.
To ensure the balanced and rapid development of all parts of India.
Review the plan’s workings from time to time.
To consider the important questions of social and economic policy affecting national development and to recommend measures to achieve these objectives[63].

Difference Between the Planning Commission And Finance Commission:-

1. A Finance commission is a body Constituted under the Constitution[64].

Whereas the Planning Commission is a non-constitutional body[65]. The administrative discretion of the Central Government creates it.

2. A planning Commission greatly influences economic decisions made by various Governments. The State Government gets a central grant on the Commission’s advice.

The Finance Commission, through a Constitutional body, is not as important as the Planning Commission.

****

4) Borrowing power of Centre and State[66] (Art.292 and 293):-

Art. 292 deals with the power of the Union and States of borrowing.

1. Power of the Union to Borrow (Art. 292):-

The Union has unlimited powers to borrow money from within or outside the country to secure India’s consolidated fund. Furthermore, the Union Government can borrow within such limits as may be fixed by the Parliament from time to time.

2. Powers of the State to Borrow (Art. 293):-

Subject to any limitation fixed by the state legislature, the state government can borrow money within India’s territory. Moreover, the Government of India may extend a loan to the State under the law passed by the Parliament. However, if a loan or any part thereof remains outstanding, no fresh loan can be raised by the State without the consent of the Central Government.

*****

[1] केंद्र व राज्याचे एकमेकांषी संबंध

[2] सहकारातून संघराज्य/कायदेविशयक संबंध

[3] प्रादेशिक कायदा करण्याचे कार्यक्षेत्र

[4] लोकसभा

[5] राज्य विधी मंडळ

[6] प्रादेशिक संबंध

[7] AIR. 1957 SC 699.

[8] विषयवार कार्यक्षेत्र

[9] केंद्र सूची

[10] राश्ट्रीयदृश्टया महत्वाचे

[11] राज्य सूची

[12] समावर्ती सूची

[13] प्रचलित

[14] शेष अधिकार

[15] सूची चा अर्थ लावण्याची तत्व

[16] विकसित करणे

[17] केंद्र सूचीचे प्राबल्य

[18] प्रत्येक सूचीचा विस्तृतपणे अर्थ लावणे

[19] षक्य तेवढे विस्तृत

[20] जास्तीत जास्त मुक्तपणे

[21] (AIR 2006 (NOC) 901 (Bom)).

[22] नोंदी

[23] अनुषंगिक

[24] सहाय्यक बाबी

[25] कायदा बनविणेचा मुळ उद्देष

[26] अतिक्रमण

[27] सक्षम

[28] Sharat Hydro Power Corpn. Ltd. v. State of Assam. (2004 AIR SCW 2308 (A)).

Supreme Court Observed- that, in a federal Constitution, in which there is a division of legislative powers between the Central and the Provincial Legislatures controversies often arise as to whether one or the other legislature is not exceeding its legislative power and encroaching on the other’s constitutional legislative power. To examine whether a legislation has encroached in the field of’ other legislatures, in fact or in substance, or is incidental, keeping in view of the true nature of the enactment, the Courts have evolved the doctrine of “pith and substance” for the purpose of determining whether it is legislation with respect to matters in one list or the other. Where the question for determination is whether a particular law relates to a particular subject mentioned in one list or the other, the Courts look into the substance of the enactment. Thus, if the substance of enactment falls within Union List then the Incidental encroachment by the enactment on the State List would not make it invalid. This principle came to be established by the Privy Council, for applying the principle of “pith and substance’ regard is to be had (1) to the enactment as a whole, (ii) to its main objects and (iii) to the scope and effect of its provisions.

[29] AIR. 1951 SC 318.

[30] निर्बंध

[31] विक्री

[32] जवळ बाळगणे

[33] राज्य सरकारचे कृत्य

[34] अधिकार असल्याचा रंग/मुलामा चढविलेला कायदा

[35] AIR. 1952 SC 252.

[36] प्रशासकीय संबंध

[37] प्रशासकीय यंत्रणा

[38] केंद्र सरकारचे राज्य सरकारवर नियंत्रण

[39] केंद्र सरकारची राज्य सरकारला सूचना

[40] जुलमी निर्बंध

[41] केंद्राची कार्ये राज्यांना देण

[42] अखिल भारतीय सेवा

[43] भारतीय प्रषासकीय सेवा

[44] भारतीय पोलीस सेवा

[45] मर्यादीत आर्थिक उत्पन्नाची साधने

[46] पाण्याविशयी वाद/तंटे

[47] नदयांची खोरी

[48] आर्थिक संबंध

[49] वित्त आयोग

[50] सार्वजनिक बाबी

[51] वित्त आयोगाची कर्तव्ये/कार्ये

[52] संचित निधी

[53] पंचायतराज व्यवस्थेला आवष्यक निधी/साधने मिळण्यासाठी राज्याच्या संचित निधीत वाढ करण्यासाठी उपाय सूचविणे

[54] योजना आयोग

[55] अविकसित देष/गरीब देष

[56] योजना आयोगाची रचना

[57] योजना आयोगाची कार्ये

[58] सल्ला देणे

[59] राष्ट्रीय विकास परिशद

[60] एकात्म

[61] विस्तृत/सर्वांगिण

[62] केंद्रशासीत प्रदेष

[63] देशाचा विकास साधण्यासाठी देषातील आर्थिक व सामाजिक प्रष्नांचा विचार करुन आवष्यक उपाय सूचविणे

[64] संविधानात्मक संस्था

[65] असंविधानात्मक संस्था

[66] कर्ज घेण्याचा केंद्र सरकार व राज्य सरकारचा अधिकार