JUDGEMENT
Bhagwati, J. -
(1.)These writ petitions raise a common question of law relating to the constitutional validity of the Special Bearer Bonds (Immunities and Exemptions) Ordinance, 1981 (herein- after referred to as the Ordinance) and Special Bearer Bonds (Immunities and Exemptions) Act, 1981 (hereinafter referred to as the Act). The principal ground on which the constitutional validity of the Ordinance and the Act is challenged is that they are violative of the equality clause contained in Art. 14 of the Constitution. There is also one other ground on which the Ordinance is assailed as constitutionally invalid and it is that the President had no power under Article 123 of the Constitution to issue the Ordinance and the Ordinance is therefore ultra vires and void. We shall first deal with the latter ground since it can be disposed of briefly, but before we do so, it would be convenient to refer to the relevant provisions of the Act. It is not necessary to make any specific reference to the provisions of the Ordinance since the provisions of the Act are substantially a reproduction of the provisions of the Ordinance.
(2.)On 12th Jan., 1981, both Houses of Parliament not being in session, the President issued the Ordinance in exercise of the power conferred upon him under Article 123 of the Constitution. The Ordinance was later replaced by the Act which received the assent of the President on 27th March, 1981, but which was brought into force with retrospective effect from l2th Jan., 1981 being the date of promulgation of the Ordinance. The Act is a brief piece of legislation with only a few sections but the ascertainment of their true meaning and legal effect has given rise to considerable controversy between the parties and hence it is necessary to examine the provisions of the Act in some detail. The long title of the Act describes it as an Act "to provide for certain immunities to holders of Special Bearer Bonds 1991 and for certain exemptions from direct taxes in relation to such Bonds and for matters connected therewith" and the provisions enacted in the Act are preceded by a Preamble which indicates the object and purpose of the Act in the following words:
Whereas for effective economic and social planning it is necessary to canalise for productive purposes black money which has become a serious threat to the national economy;
And whereas with a view to such canalisalion the Central Government has decided to issue at par certain bearer bonds to be known as the Special Bearer Bonds, 1991, of the face value of ten thousand rupees and redemption value, after ten years, of twelve thousand rupees;
And whereas it is expedient to provide for certain immunities and exemptions to render it possible for persons in possession of black money to invest the same in the said Bonds:Sections 3 and 4 are extremely material since on their true interpretation depends to a large extent the determination of the question relating to the constitutional validity of the Act and they may be reproduced as follows:
3. (1) Notwithstanding anything contained in any other law for the time being in force:-
(a) no person who has subscribed to or has otherwise acquired Special Bearer Bonds shall be required to disclose, for any purpose whatsoever, the nature and source of acquisition of such Bonds;
(b) no inquiry or investigation shall be commenced against any person under any such law on the ground that such person has subscribed to or has otherwise acquired Special Bearer Bonds; and
(c) the fact that a person has subscribed to or has otherwise acquired Special Bearer Bonds shall not be taken into account and shall be inadmissible as evidence in any proceeding's relating to any offence or the imposition of any penalty under any such law.
(2) Nothing in sub-section (1) shall apply in relation to prosecution for any offence punishable under Chap. IX or Chap. XVII of the Indian Penal Code, the Prevention of Corruption Act, 1947 or any offence which is punishable under any other law and which is similar to an offence punishable under either of those Chapters or under that Act or for the purpose of enforcement of any civil liability.
Explanation:For the purposes of this subsection "civil liability" does not include liability by way of tax under any law for the time being in force.
4. Without prejudice to the generality of the provisions of Sec. 3 the subscription to, or acquisition of Special Bearer Bonds by any person shall not be taken into account for the purpose of any proceedings under the Income Tax Act, 1961 (hereinafter referred to as the Income Tax Act), the Wealth-tax Act, 1957 (hereinafter referred to as the Wealthtax Act). or the Gift-tax Act, 1958 (hereinafter referred to as the Gift-tax. Act) and, in particular no person who has subscribed to or otherwise acquired, the said Bonds shall be entitled
(a) to claim any set-off or relief in any assessment, reassessment, appeal, reference or other proceeding under the Income Tax Act or to reopen any assessment or re-assessment made under that Act on the ground that he has subscribed to or has otherwise acquired the said Bonds;
(b) to claim, in relation to any period before the date of maturity of the said Bonds, that any asset which is incredible in his net wealth for any assessment year under the Wealth-tax Act has been converted into the said Bonds, or
(c) to claim, in relation to any period before the date of maturity of the said Bonds, that any asset held by him or any sum credited in his books of account or otherwise held by him represents the consideration received by him for the transfer of the said Bonds.
We shall analyse the provisions of these two sections when we deal with the arguments advanced on behalf of the parties and that will largely decide the fate of the challenge against the constitutional validity of the Act, but in the meanwhile we may proceed to summarise the remaining provisions of the Act. Section 5 amends the Income Tax Act, 1961 by providing that the definition of "capital asset" in Section 2, Clause (14) shall not include the Special Bearer Bonds issued under the Act so that any profit arising on sale of the Special Bearer Bonds would not be liable to capital gains tax and it also eludes from the computation of the total income of the assessee premium on redemption of the Special Bearer Bonds by introducing a new sub-clause in Section 10, Clause (15). Section 5, sub-section (1) of the Wealth-tax Act, 1957 is also amended by Section 6 so as to exclude the Special Bearer Bonds from the net wealth of the assessee liable to wealth-tax. Section 7, by amending Section 5, sub-section (1) of the Gift-tax Act, 1958 exempts gifts of Special Bearer Bonds from the incidence of gift-tax. Section 8 confers powers on the Central Government to make order removing any difficulty which may arise in giving effect to the provisions of the Act and Section 9. sub-sec. (1) repeals the Ordinance, but since the Act is brought into force with effect from the date of promulgation of the Ordinance, sub-section (2) of Section 9 provides that notwithstanding the repeal of the Ordinance, anything done or any action taken under the Ordinance shall be deemed to have been done or taken under the corresponding provisions of the Act,
(3.)Having set out the provisions of the Act - and be it noted again that the provisions of the Ordinance were substantially in the same terms as the provisions of the Act - we may now proceed to consider the challenge against the constitutional validity of the Ordinance on the ground that the President had no power to issue the Ordinance under Art. 123 of the Constitution. There were two limbs of the argument under this head of challenge; one was that since the Ordinance had the effect of amending the tax laws, it was outside the competence of the President under Article 123 and the other was that the subject-matter of the Ordinance was in the nature of a Money Bill which could be introduced only in the House of the People and passed according to the procedure provided in Articles 109 and 110 and the President had therefore no power under Article 123 to issue the Ordinance by-passing the special procedure provided in Arts. 109 and 110 for the passing of a Money Bill. There is, as we shall presently point out, no force in either of these two contentions, but we may point out straightway that both these contentions are academic, since the Act has been brought into force with effect from the date of promulgation of the Ordinance and sub-section (2) of Section 9 provides that anything done or any action taken under the Ordinance shall be deemed to have been done or taken under the corresponding provisions of the Act and the validity of anything done or any action taken under the Ordinance is therefore required to be judged not with reference to the Ordinance under which it was done or taken, but with reference to the Act which was, by reason of its retrospective enactment, in force right from the date of promulgation of the Ordinance and under which the thing or action was deemed to have been done or taken. It is in the circumstances wholly unnecessary to consider the constitutional validity of the Ordinance, because even if the Ordinance be unconstitutional, the validity of anything done or any action taken under the Ordinance could still be justified with reference to the provisions of the Act. This would seem to be clear on first principles as a matter of pure construction and no authority is needed in support of it, but if any were needed, it may be found in the decision of this Court in Gujarat Pottery Works v. B. P. Sood, AIR 1967 SC 964). There the question was whether the Mining Leases (Modification of Terms) Rules, 1956 (hereinafter referred to as the 1956 Rules) made under Mines and Minerals (Regulation and Development) Act, 1948 (referred to shortly as 1948 Act) were void as being inconsistent with the provisions of the 1948 Act and if they were void, they could be said to be continued by reason of Section 29 of the Mines and Minerals (Regulation and Development) Act, 1957 (hereinafter called the 1957 Act). This Court sitting in a Constitution Bench held that the 1956 Rules were not inconsistent with the provisions of the 1948 Act and were therefore valid, but proceeded to observe that even if the 1956 Rules were void as being inconsistent with the provisions of the 1948 Act, they must by reason of Section 29 of the 1957 Act be deemed to have been made under that Act and their validity and continuity must therefore be determined with reference to the provisions of the 1957 Act and not the provisions of the 1948 Act and since there was no inconsistency between the 1956 Rules and the provisions of the 1957 Act, the 1956 Rules could not be faulted as being outside the power of the Central Government. Raghubar Dayal, J. speaking on behalf of the Court articulated the reason for taking this view in the following words :
"Even if the rules were not consistent with the provisions of the 1948 Act and were, therefore, void, we do not agree that they could not have continued after the enforcement of the 1957 Act. Section 29 reads:
'All rules made or purporting to have been made under the Mines and Minerals (Regulation and Development) Act, 1948, shall, in so far as they relate to matters for which provision is made in this Act and are not inconsistent therewith, be deemed to have been made under this Act as if this Act had been in force on the date on which such rules were made and shall continue in force unless and until they are superseded by any rules made under this Act'.
The effect of this section is that the rules which were made or purported to have been made under the 1948 Act in respect of matters for which rules could be made under the 1957 Act would be deemed to have been made under the 1957 Act as if that Act bad been in force on the date on which such rules were made and would continue in force. The Act of 1957 in a way is deemed to have been inforce when the Modification Rules were framed in 1956. The 1956 Rules would be deemed to be framed under the 1957 Act and, therefore, their validity and continuity depends on the provisions of the 1957 Act and not of the 1948 Act.
In this connection we may refer to the case reported as Abdul Majid v. P. R. Nayak, AIR 1951 Bom 440. In that case Sec. 58 of Act XXXI of 1950 repealed Ordinance No. XXVII of 1949 and provided as follows:'The repeal by this Act of the Administration of Evacuee Property Ordinance, 1949 (XXVII of 1949) shall not affect the previous operation thereof, and subject thereto, anything done or any action taken in the exercise of any power conferred by or under that Ordinance shall be deemed to have been done or taken in the exercise of the powers conferred by or under this Act, as it this Act were in force on the day on which such thing was done or action was taken.'
Section 58 was construed thus:
'The language used in Section 58 is both striking and significant. It does not merely provide that the orders passed under the Ordinance shall be deemed to be orders passed under the Act but it provides that the orders passed under the Ordinance shall be deemed to be orders under this Act as if this Act were in force on the day on which certain things were done or action was taken. Therefore, the object of this section is, as it were, to antedate this Act so as to bring it into force on the day on which a particular order was passed which is being challenged. In other words, the validity of an order is to be judged not with reference to the Ordinance under which it was passed, but with reference to the Act subsequently passed by parliament.
The rules have not been challenged to be ultra vires the 1957 Act in the instant case." The same process of reasoning which appealed to this Court in upholding the validity of the 1956 Rules must apply equally in the present case and the validity of anything done or any action taken under the Ordinance must be judged with reference to the provisions of the Act and not of the Ordinance. It would therefore be academic for us to consider whether the Ordinance was within the ordinance-making power of the President under Article 123 and ordinarily we would have resisted the temptation of pronouncing on this issue because it is a self-restraining rule of prudence adopted by this Court that "the Court will not formulate a rule of constitutional law broader than is required by the precise facts to which it is to be applied." But since considerable argument was advanced before us in regard to this issue we do not think it would be right on our part to refuse to express our view upon it.