Holding

The levy of the fee under Rule 21 of the Textile Committee Rules, 1965 is valid and constitutional, and rayon and nylon yarn fall within the definition of 'textiles' under s.2(g) of the Textile Committee Act, 1963.

Summary

The Supreme Court examined challenges by several textile mills manufacturing rayon and nylon yarn to the fee imposed by the Textiles Committee under Rule 21 of the Textile Committee Rules, 1965 (made under s.22 of the Textile Committee Act, 1963). The mills argued that the fee was unconstitutional because the Committee rendered no inspection service and that rayon/nylon yarn were not "textiles" under s.2(g) as they were filaments, not fibres. The Court held that the definition of "textiles" must be given a broad, popular‑sense construction, encompassing man‑made fibres such as rayon and nylon, and that the fee was a valid fee, not a tax, because there is a reasonable relationship between the levy and the services rendered to the industry as a whole. Consequently, the fee was upheld and the appeals of the mills dismissed, while the Textiles Committee’s appeal was allowed.

Issues considered

The meaning of 'textiles' under s.2(g) of the Textile Committee Act, 1963 with respect to rayon and nylon yarn
Whether the levy of a fee under Rule 21 of the Textile Committee Rules, 1965 is constitutionally valid
Whether the fee constitutes a tax or a fee, i.e., the presence of quid pro quo
The proper method of statutory construction – popular/industry sense versus scientific definition
The relevance of the Industries (Development and Regulation) Act, 1951 for interpreting the later Act

Legislation cited

Constitution of Indias. Article 139, s. Article 226
Industries (Development and Regulation) Act, 1951
Textile Committee Act, 1963s. 11, s. 12, s. 22, s. 2(g), s. 3, s. 4, s. 7
Textile Committee Rules, 1965s. Rule 21

Subjects

fee levyTextiles Committeerayon yarnnylon yarndefinition of textilesstatutory constructionpopular sense interpretationquid pro quofee vs taxconstitutional validityIndustries Development and Regulation Actpari materia

Judgment

SIRSILK LTD. AND ANOTHER
A
v.
TEXTILES COMMITTEE & ORS.

SEPTEMBER 12, 1988

B [A.P. SEN AND K.N. SINGH, JJ.]

Textile Committee Act, 1963/Textile Committee Rules 1965: Sec-
tions 2(g), 12(1) and 22/Rule 21'--Fe~lmposition of-On production of
rayon yarn and staple fibre yarn-Constitutional validity of-Words
used in statute to be interpreted in popular sense.
c Statutory Construction: Provision of earlier statute can be made
use of for purpose of construing a subsequent statute in case of
ambiquity.

A number of textile mills which were engaged in the business of
D manufacture and sale of rayon yarn and staple fibre, i.e. man-made
fibre, moved the High Courts under article 226 of the Constitution
challenging the constitutional validity of the fee imposed upon them by
the Textile Committee under rule 21 of the Textile Committee Rules,
1965 made by the Central Government under s. 22 of the Textiles
Committee Act, 1963. The levy of fee was challenged on the ground that
E the Textile Committee was not rendering any service to them by way of
inspection or examination of rayon yarn and that the element of quid
pro quo was totally absent.

The High Courts of Allahabad, Andhra Pradesh, Gujarat and
Madras upheld the validity of the levy, wbile the Kerala High Court
F took the contrary view. The parties came up in appeal to this Court.
Four similar petitions pending in the High Court of Bombay were also
transferred to this Court.

Before the Court, it was contended on behalf of the textile mills (I)
the rayon yarn and nylon yarn manufactured by them was made wholly
G of filaments and not of fibres and therefore the same are not textiles within
the meaning of the definition of •textiles' as contained of S. 2(g) of the
Textile Committee Act, and hence not liable to payment of any fee in
accordance with rule 21 of the Textile Committee Rules; and (2) the
Textiles Committee rendered no service to the writ petitioners because
neither they needed the services of the Committee nor the Committee
H was in a position to render any service to them.
880
I
SIRSILK LTD. v. 1EXTILES COMMITTEE 881

On behalf of the Revenue, the Additional Solicitor General con-
A
tended (1) the levy under r. 21 of the Rules was not correlated to the
power. of inspection which the Textiles Committee had und·er s. 11 of the
Act, but was relatable to its power to levy fees under s. 12 for the
performance of its functions, powers and duties under s. 4 (2) the
avowed object and purpose of the Act, as was clear from s. 3, was
'quality control' of all textile and it would be idle to contend that rayon B
yarn and nylon yarn which were but species of what was known as
man-made fibres, otherwise called artificial silk, and had a world
market, should be outside the purview of the Act, (3) the Act and the
words used therein had to be interpreted not on a technological or
specialised scientific plane, but in a popular sense as understood by
experts in the sphere of the textile industry and the commercial world
dealing with it; and (4) the definition of 'textiles' must be given a broad C
and liberal construction in furtherance of the object and purpose of the
Act.

Dismissing the appeals filed by the textile mills and allowing the
appeal filed by the Textile Committee, it was D

HELD: (1) In view of the fact that in the writ petitions filed in the
High Courts the textile mills had stated that they were actually engaged
in the manufacture of rayon. yarn and nylon yarn both of which, they
a\'erred, were 'species of what was known as man-made fibres', their
contention that rayon yarn and nylon yarn manufactured by them E
were not 'yarn' and therefore did not fall within the definition of textiles
under s. 2(g) of the Act could be countenanced. [899E-F)

(2)- T!tere was no explicable reason for the Legislature to have
excluded rayon yarn and nylon yarn frof!l the purview of the definition
of textiles in s.(2)(g) of the Act. In the premise, the expression 'textiles' F
as defined in s.2(g) of the Act has to be given a broad and liberal
construction, in furtherance of the purpose and object of the Act. [901A-B)

(3) The Act and the words used therein have to be interpreted not
\ on a technological or specialised scientific plane but in the popular sense
as understood by experts in the 5phere of the textile industry and the G
commercial world dealing with it. ·[90ID-E)

(4) The Industries (Development and Regulation) Act, 1951 treats
rayon as well as nylon as textiles made of artificial (man-made) fibres.
The Industries (Development and Regulation) Act, 1951 and the.Tex-
tiles Committee Act may properly be considered to be statutes in pari H
materia. [9058]
882 SUPREME COURT REPORTS [1988] Supp. 2 S.C.R.

(5) The Industries (Development and Regulation) Act is an Act
A earlier in point of time, and there is no reason why if a subsequent
statute by the same Legislature can be pressed in aid for the pur-
pose <>f interpreting, in the event of any doubt, the provisions of
an earlier statute, the earlier statute cannot be made use of for
the purpose of construing, in the event of ambiguity, the provisions
S of a later statute. [905E]

(6) Rayon and nylon yarn are not only made of 'other fibre'
but are also yarn of 'artificial silk' within the meaning of s. 2(g) of
the Act. [904D]

(7) The contention that rayon yarn and nylon yarn manufactured
by the mills are made wholly of filaments and not of fibres and therefore
did not come within the purview of textiles as defined in s. 2(g) of the
Act prior to .its amendment and therefore were not liable for payment of
the fee levied under r. 21 of the Rules, cannot prevail. [90SF]

D (8) The grievance of the textile mills that there is no inspection of
the rayon yarn and nylon yarn manufactured by them at the stage of
production is belied by the fact that there is pre-shipment inspection of
the fabrics manufactured from such fibres for export. [910B-C]

(9) When the entire proceeds of the fee are utilised in financing
E the various projects undertaken by the Textiles C-Ommittee, as also the
inspection of all textiles including man-made fibres and textile machi-
nery, the appellants cannot be heard to say that there is no reasonable
and sufficient correlation between the levy of the fee and the services
rendered. [907C]

p (10) When the levy of the fee is for the benefit of the entire textile
industry, there is sufficient quid pro quo between the levy recovered
and.the services rendered to the industry as a whole. [910D]

(II) The conclusion is inevitable that the levy of the ·fee under r. 21
of the Textiles Committee Rules, 1965 by the Textiles Committee under
G sub-s. (I) of s. 12 of the Textiles Committee Act, 1963 is valid and
constitutionally permissible. [912B-C]

Mis Juggilal Kamalapat Cotton Spinning & Weavin,ir Mills Co.
Ltd. v. The Textiles Committee, Bombay, [1972] Tax L.R. 2104; The
Travancore Rayons Ltd. v. The Textiles Committee, !LR (1972) Ker.
H 437; Sreeniwasa General Traders & Ors. v. State of Andhra Pradesh,
SIRSILK LTD. v. TEXTILES COMMITTEE [SEN, J.} 883

[1983)-3 SCR 843 referred to. The Gwalior Rayon Silk Manufacturing
A
(Wvg.) Co. Ltd., Birlagram Ujjain v. The Textiles Committee,
Bombay, AIR 1980 MP 69, overruled.

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 869/
73, 863-64/77, 1460/80, 1281/73, and 1133-34/79.
B
From the Judgments and Orders dated 22.1.1973, 18.11.1976
10.4.1980, 30.10. 72 and 24.10.1978 of the Hyderabad, Ahmedabad,
Allahabad, Kerala, Allahabad High Courts in Writ Appeal No. 154/
72, Special ·civil Application No. 597/69, 598/69 F.A.F.O. No. 235/
1972, S.C.A. No. 13707/1972 & Special AppealNo. 3 and 4/1972.
WITH C
TRANSFERRED CASE NOS. 351-52, 354-55 of 1983.
Transfer Petition Nos. 21, 22, 24 to 26 of 1981 from Bombay High
Court.
V.C.Mahajan, G.L. Sanghi, N.R. Khaitan, Alok Sharma, D
Krishan Kumar, Mrs. P. Shroff, Mrs. A.K. Verma, Joel Peres and
S. K. Jain for the Appellants in all the appeals.

;- V.A. Bobde, B.R. Agarwala, Ms. S. Manchanda, Dr. D.
Chandrachud and P.H. Parekh for the Petitioners in Transferred
Cases. E

G. Ramaswamy, Additional Solicitor General, V.C. Mahajan,
Harish Salve, D.N. Misra, Mrs. A.K. Verma, T.C. Sharma and C.V.
Subba Rao for the Respondents in all the appeals.

G.Ramaswamy, Additional Solicitor General, V.C. Mahajan, F
S.S. Shroff, P. Shroff, R. Sasiprabhu, T.C. Sharma, C.V. Subba Rao,
V.B. Desai, Bharat Sangal and Ms. Madhuri Gupta for the Respon-
dents in all the Transfer Cases.

P.H. Parekh and P. Narasimhan for the Intervener.
,,
• G
The Judgment of the Court was delivered by

SEN, J. In all these appeals except the one by special leave, and

'
the connected transferred cases brought by the. appellants, each of
which is a company incorporated under· the Compa,nies Act, 1956
e9gaged in.the business of manufacture and sale on a very large scale of H
884 SUPREME COURT REPORTS [1988) Supp. 2 S.C.R.

A textiles generally and also of rayon yalJi and staple fibre, both of which
form species of what is known as man-made fibre i.e. artificial silk,
there is a common question as to the constitutional validity of a fee
imposed under r. 21 of the Texti)es .Committee Rules, 1965 made by
the Central Government under (;. 22 of the Textiles Committee Act,
1963, by the Textiles Committee constituted under s. 3 of the Act, on
B the production of rayon yarn and staple fibre i.e. man-made fibres
manufactured by them. These appeals are against the various judg-
ments and orders of the High Courts of Allahabad, Andhra Pradesh,
Gujarat and Madras upholding the validity of the levy. The remaining
appeal i.e. Civil Appeal No. 1281 of 1973 is preferred by the Textiles
Committee against the judgment and order of the Kerala High Court
taking the view to the contrary.
c
The facts in all these cases are more or less similar. It would
suffice for our purposes to notice the salient features thereof. To illus-
trate, the appellant company in Civil Appeal·No. 869 of 1973, Messrs
Sirsilk Ltd., Hyderabad is a manufacturer of rayon yarn and staple
D fibre and has established its factory at Sirpur Kagaznagar in the State of
Andhra Pradesh for the manufacture of the aforesaid man-made
fibres. The Chief Inspecting Officer, Textiles Committee by his letter
dated May 19, 1965 directed all the textile mills in India including the
appellant to send immediately, the monthwise statements of produc-
tion for March and April 1965 and a cheque in payment of the fees due
E thereon. However, the Association of Man-made Fibre Industry,
Bombay of which the appellant is a member by its letter dated May 25,
1985 advised the textile mills to keep the payment of fees in abeyance,
as it had made a representation dated May 26, 1965 on behalf of its
members to the Ministry of Commerce, Government of India and to
the Textiles Commissioner. Along with its letter, the Assocaition
F forwarded to all its members a copy of the said representation. By a
further letter dated May 29, 1965, the Association advised all the
textile mills including the appellant to send a reply to the letter addres-
sed by the Textiles Committee demanding payment of fees to the
effect that the Association had already made a represention to the
Ministry of Commerce and to the Textiles Commissioner and as soon as
G a reply was received by them, they would revert to the subject and take
such action as might be necessary in the circumstances. In the mean-
while, the Textiles Committee by its letter dated August 10, 1965 made
a demand for payment of the fees for the months of March to July
1965. The appellant in its reply expressed its inability to pay the fees in
view of the pending representation made by the Association on their
H behalf and more so because the Association had advised the members
SIRSILK LTD. v. 1EXTILES COMMIT1EE [SEN, J.J 885

that the fee would become payable by the textile mills only in connec-
tion with the inspection and examination and must b.e commensurate A
with the exact quantum of services rendered by the Committee. The
appellant were however informed that one of its members had already
remitted the fees. Consequently, !he appellant paid a sum of
Rs.40, 186.37 p. towards the fee for the period from March 1, 1965 to
February 28, 1966. It however adopted to the stand that the payment B
of the fee was under a mistake and under misconception as to its legal
rights. It accor<jingly called upon the Association to take up the matter
with the Ministry of Commerce and the Textiles Commissioner and to
lodge a strong protest against the illegal exaction of the fee by the
Textiles Committee from its members when, ;tt fact, no services of any
kind were being rendered.
c
Thereafter, the Accounts Officer, Textiles Committee by letter
dated February 26, 1969 called upon the appellant to remit a sum of
Rs.33,343.62 p. towards the fee in respect of production of rayon or
staple fibre for the period from March 1, 1966 to March 31, 1967. It
was also advised to pay the. fee upto April 1968. In response thereto, D
the appellant by its letter dated February 27, 1969 stated that the
Association had on behalf of its members addressed a letter to the
Secretary, Textiles Committee for certain clarifications and on receipt
of the reply, the Association would advise its members as to the course
of action. Eventually,. the Secretary, Textiles Committee by a letter
dated March 11, 1970, called upon the appellant that it should remit an E
amount of Rs.35, 138.63 p. being the amount of fee outstanding within
ten days failing which the said amount would be recovered as arrears
of land revenue under s. 12(2) of the Act. Aggrieved, the appellant
moved-the High Court of Andhra Pradesh under Art. 226 of the Con-
stitution challenging the validity of the fee and the threatened action
for recovery. A learned Single Judge (Parthasarthi, J.) by his judg- F
ment dated January 28, 1972 dismissed the writ petition upholding the
validity of the levy of the fee. On appeal being preferred by the appel-
lant the judgment of the learned Single Judge was upheld by a Division
Bench (Gopuirao Ekbote, CJ and Chennakesava Reddy, J.) by its
judgment dated January 22, 1973. The High Court of Andhra Pradesh
preferred to follow the view expressed by B .N. Lokur, J. of the G
Allahabad High Court in Mis. Juggilal Kamalapat Cotton Spinning &
Weaving Mills Co. Ltd. v. The Textiles Committee, Bombay, [1972]
Tax. LR 2104, and dissented from the view taken ·by Issac, J. in The
Trav·ancore Rayons Ltd. v. The Textile Committee, !LR 1972 Ker. 437
holding that the Textiles Committee was not entitled to levy any fee
under r. 4 of the Rules so long as it was not rendering any service by H
886 SUPREME COURT REPORTS [1988] Supp. 2 S.C.R.

way of inspection or examination of rayon yarn.
A
Briefly stated, the facts in transferred cases nos. 351-352 of 1983
are these. The petitioner in the first case the Century Spg. & Mfg. Co.
Ltd., Bombay carry on the busines~ of manufacture of rayon yarn and
tyre-cord yarn, both of which form species of what is popularly known
B as 'men-made rayon', while the petitioners in the second Messrs
Century Enka Limited, Bombay carry on the business of manufacture
of nylon filament yarn. By letter dated May 25, 1968 the Accounts
Officer, Textiles Committee, Bombay called upon the petitioner the
Century Spg. & Mfg. Co. Ltd. to remit a sum of Rs.5,89,187.46 p. as
fees in respect of production of 29,459,373.21 kgs. of rayon yarn for
the period from March 1, 1966 to April, 30, 1968. The petitioners were
c also called upon to pay the fees for April 1968. In reply, the petitioners
by their letter dated June 18, 1968 stated that the Association of Man-
made Fibre Industry, Bombay had addressed a letter to the Secretary,
Textiles Committee for certain clarifications in the matter and on
receipt of the reply the Association would be advising its members
D further. Thereupon, further correspondence ensued between the Tex-
tiles Committee on the one hand and the Association on the other.
Thereafter, by letter dated February 20, 1969 the Secretary, Textiles
Committee intimated the petitioner that it was proposed to initiate
immediate action to recover the outstanding fees from the petitioner
as arrears of land revenue as contemplated under s. 12(2) of the Act. It
E was further stated that in order to avoid coercive proceedings the
petitioner should pay up the arrears at least upto March 31, 1967
amounting to Rs.3,19,977.11 p.; in any case before March 1, 1969
failing which the Textiles Committee would be constrained to advise
the concerned Collector to enforce recovery of the outstanding fees as
arrears of land revenue. The petitioner accordingly moved a petition
F under Art. 226 of the Constitution before the High Court of Bombay
for quashing the impugned notice of demand dated February 20, 1969
complaining that they bad at no time made any application for inspec-
tion and/or examination of the yarn they manufacture nor did they
ever approach the said Committee to inspect and/or examine yarn
manufactured by them. They averred that neither the said Committee
G nor any one on its behalf had rendered any service whatsoever to. them
either at their instance or otherwise. Similarly, the petitioner Century
Enka Limited moved a petition under Art. 226 of the Constitution
before the High Court of Bombay contending that the Textiles Com-
mittee was not entitled to demand or recover a sum of Rs.78,553.15 p.
or any other sum by way of fees on the nylon yarn manufactured by
H them, on the ground that the element of quid pro quo was totally
SIRSILK LTD. v. TEXTILES COMMITTEE {SEN, J.J 887

absent inasmuch as no services at all were rendered by the Coinmittee A
to them. These two writ petitions were ordered to be transferred to
this Court under Art. 139 of the Constitution and numbered as trans-
ferred cases nos. 351-352 of 1983..

Similar are the facts in other cases. In transferred case no.354/83
Messrs Nirlon Synthetic Fibres & Chemicals Limited, Bombay carry B
on the ·business of manufacture ·of nylon yarn and apparently paid
Rs.8,820.40 p. by way of fees on the nylon yarn manufactured by them in
compliance with the notice of demand issued by the Accounts Officer,
Textiles Committee dated February 20, 1969. The petitioner in the
other case transferred case no. 355/83 Messrs Garwara Nylons
Limited, Bombay also carry on the business of manufacture or nylon
yarn and paid Rs.51,738.89 p. by way of fee in compliance with the
c
circular issued by the Chief Inspecting Officer, Textiles Committee,
Bombay dated May 19, 1965 and assert that the payment of the said
amount was under a mistake. Both these petitioners moved the High
Court under Art. 226 of the Constitution challenging the validity of the
levy of the fee and prayed for the issue of a writ in the nature of D
mandamu,s directing the Textiles Committee to refund the amounts
recovered from them. Both these writ petitions were also transferred
to this Court under Art. 139 and are numbered as transferred cases
nos. 354-355/83.

In Civil Appeals Nos. 863-864/77, the appellant Baroda Rayon E
Corporation Limited, Gujarat are engaged in the business of
manufacture of rayon yarn and paid Rs.55, 100 towards the fee in
compliance with the notice of de\lland issued by the Accounts Officer,
Textiles Committee dated Marc:h 9, 1966 for the period from March 1,
1965 to February 28, 1966. They were further caf]ed upon by the
Secretary, Textiles Committee to remit a sum of Rs.39,211.26 p. F
towards the arrears upto March 31, 1967. The appellant challenged the
recovery of the said amoul)t of Rs.55,100 as well as the threatened
demand of a further sum ofRs.39,211.26 p. by the Textiles Committee
as being ultra vires ·by petitions under Art. 226 of the Constitution
before the High Court of Gujarat. A Division Bench (S. Obul Reddy,
CJ & N .H. Bhatt, J.) by its judgment dated November 18, 1976 upheld G
the Validity of the fee and accordi:n~cy dismissed the writ petitions.

The appellant in Civil Appeal No. 1460/80 Messrs Modipon
Limited, Meerut are manufacturers of nylon yarn. The Accounts
Officer, Textiles Committee by his letter dated June 11, 1960 required
the company to pay the arrears of fees for the period from March 1965 H
888 SUPREME COURT REPORTS [1988] Supp. 2 S.C.R.

A to May 1968. The company brought a suit being Original Suit No.
86/70 in the Court of the II Civil Judge, Meerut for a declaration and
perpetual injunction. In the suit it applied for grant of a temporary
injunction under Order XXXIX, r. 1 of the Code of Civil Procedure,
19.08 restraining the Textiles Committee from recovering the fees on
the ground that the nylon yarn manufactured by them did not fall
B within the definition of 'textiles' under s. 2(g) of the Act. The learned
Civil Judge by his order dated May 12, 1972 granted ad-interim
temporary injunction but fater vacated the same. The appellant
accordingly went up in appeal to the High Court. A Division Bench
(M.N. Shukla & N.N. Mithal, JJ) by its order dated April 10, 1980
substantially disallowed the application for temporary injunction while
C making a direction requiring the learned Civir Judge to examine
whether the appellant had commenced production since March 1968
and therefore the demand for fee for the period anterior to the com-
mencement of the production could not possibly be sustained.

Appellants in Civil Appeals Nos. 1133-34/79 Messrs. J .K. Cotton
0 Spg. & Wvg. Mills Co. Ltd., Kanpur carry on the business of
manufacture of rayon yarn under the name and style of J .K. Rayon,
and of nylon yarn under the name and style of J.K. Synthetics Limited.
For the period from March 1965 to February 1966 they paid
Rs.49,372.65 p. Thereafter, they fell into arrears. The two companies
filed petitions under Art. 226 of the Constitution before the High
E Court of Allahabad contending inter alia that the said payments were
made under mistake without realising the implications of the Textiles
Committee Act or the Rules, and prayed for the issue of a writ in the
nature of mandamus directing the Textiles Committee to refund the
amount in question. As already stated, B.N. Lokur; J. in Juggilal's
case by his judgment dated November 6, 1971 upheld the validity of-
F the levy of the fee and dismissed the writ petitions. On appeal, a
Division Bench (Satish Chandra, CJ and Yashoda Nandan, J.) by its
judgment dated October 24, 1978 dismissed the appeal.

In Civil Appeal No. 1281 of 1973 the Textiles Committee has
come up in appeal against the judgment of a learned Single Judge of
G the High Court of Kerala (Isaac, J.) who by his judgment dated March
3, 1972 in Travancore Rayons Ltd. held that the levy of the fee by the
Committee was without the authority of law and so long as the Com-
mittee was not rendering any service by way of inspection and exami-
nation of rayon yarn manufactured by Messrs Travancore Rayon
Limited, it was not entitled to recover the same. -
H
SIRSILK LTD. v. TEXTILES COMMITTEE !SEN, J.! 889

In order to appreciate the rival contentions, it is necessary to set A
out the background in which the Textiles Committee was constituted,
the object and purpose of the Textiles Committee Act as also the
relevant provisions of the said Act and the Rules made thereunder.
The history of the legislation has been set out in the counter-affidavit
filed on behalf of the Textiles Committee and is as follows.
B
The Second world war gave a completely sheltered market for
Indian Textiles and created an unprecedented boom for their pro-
ducts. They were, however, for a variety of reasons, unable to with-
stand the severe international competition they had to face in foreign
markets with the return of normal conditions after the war. Alive to
the various problems faced by the Textile Industry in general and the
Cotton Textile Industry in particular, the Government of India took c
timely steps to arrest the crisis by adopting various measures to
safeguard production and export of cotton textiles and to assure the
efficiency of the Cotton Textile Industry. It was in this context that the
'Cotton Textiles Fund Ordinance, 1944' was promulgated, establishing
a 'Fund' for supervising the exports of cloth and yarn and for develop- D
ment of technical education, research and other matters in relation to
the Cotton Textile Industry. The Cotton Textiles Fund Committee
which was appointed as the body to perform the various functions
imposed under the Ordinance did very useful work during the perioa
from 1945 to 1964 for the improvement of the said industry and so as to
enable it to meet the competition of foreign textiles in international E
market. The Ordinance, promulgated in 1944 establishing the Cotton
Textiles Fund Committee, had provisions to safeguard exports of Cot-
ton Textiles only. As more and more items of textiles such as wool,.
silk, art silk and other man-made fibre fabrics and yarn started finding
their way into the international market in increasing quantities, it
became necessary for the Government of India to create a homo- F
genous entity to look after and promote the improvement and safe-
guard for all such textile items. It was also necessary to take such steps
in the case of these schemes of the Textile Industry both for improving
standards in such industry and because the same were in many ways
connected and inter-related with the Textile Industry. Such action and
inter-relation arose because of the nature of the commodities and G
because in many cases composite fibres and textiles were produced and
many units engaged in production of such synthetics and other mate-
rials were also engaged in the Cotton Textile Industry.

Parliament accordingly enacted the Textiles Committee Act
(~ereinafter referred to as 'the Act') which received the assent of the H
'890 SUPREME COURT REPORTS [1988] Supp. 2 S.C.R.

A President on December 3, 1963. It was meant to re-enact the· provi-
sions of the aforesaid Ordinance and to make the same applicable to
all textiles including all synthetic fibres i.e. rayon yarn, staple fibre,
nylon yarn, man-made fibre commonly known as artificial silk.

The avowed object and purpose of the Act, as reflected in the
B
long title, is to provide for the establishment of a Committee for ensur-
ing the quality of textiles and textile machinery and for matters con-
nected therewith. S. 2(f) of the Act defines 'textile machinery' to mean
the equipment employed directly or indirectly for the processing of
textile fibre into yarn and for the manufacture of fabric therefrom by
weaving or knitting and to include equipment used either wholly or
c partly for the finishing, folding or packing of textiles. S. 2(g) defines
'textiles'. This definition as originally enacted read as follows:

"2(g). 'Textiles' means any fabric or cloth or yarn made
wholly or in part of cotton, or wool or silk or artificial silk
or other fibre."
D
By Act _No. 51 of 1973, a new definition of 'textiles' was substituted
w.e.f. January 1, 1975 and it reads:

"2(g). 'textiles' means any fabric or cloth or yarn or
gannent'or and other article made wholly or in part of-
E
(i) cotton; or

(ii) wool; or

(iii) silk; or
F
(iv) artificial silk or other fibre, and includes fibre.

S. 3 of the Act provides for establishment of the Textiles Committee
by the Central Government. S. 4 deals with the functions of the Com-
mittee. The functions of the Committee as stated in s. 4 generally are
G to ensure by such measures as it thinks fit, standard qualities of
textiles both for mternal marketing and export purposes and the
manufacture and use of standard type of textile machinery. It reads
follows:

"4. Functions of the Committee-(1). Subject to the provi-
I-I sions of this Act, the functions of the Committee shall
SIRSILK LTD. v. TEXTILES COMMITIEE (SEN, J.] 891

generally be to ensure by such measures, as it thinks fit,
A
standard qualities of textiles both for internal marketing
and export purposes and the manufacture and use of
standard type of textile machinery.

(2) without prejudice to the generality of the provisions of
sub-section ( 1), the Committee may- B

(a) undertake, assist and encourage, scientific, techno-
logical and economic research in textilefodustry and textile
machinery,

(b) promote export of textiles and textile machinery and
carry on propaganda for that purpose; c
( c) establish or adopt or recognise standard specifications
for-

(i) textiles, an.d D

(ii) packing materials used in the packing of textiles or
textile machinery, for the purposes of export and for in-
ternal consumption and affix suitable marks on such·
standardised varieties of textiles and packing materials;
E
(d) specify the type of quality control or inspection which
will be applied to textiles ortextile machinery;

(da) provide for training in the techniques of quality con-
trol to be applied to textiles or textile machinery;
F.
(e) provide for the inspection and examination of~

(i) textiles;

(ii) textile machinery at any stage of marnffacture and also
while it is in use at mill-heads; G

(iii) packing materials used in the packing of textiles or
textile machinery; ·

(f) establish laboratories and test houses for the testing of
textiles; .H
892 SUPREME COURT REPORTS (1988] Supp. 2 S.C.R.

(g) provide for testing textiles and textile machinery in
A
laboratories and test houses other than those established
under clause (f);

(h) collect statistic for any of the above mentioned
purposes from-
B
(i) manufacturers of, and dealers in, textiles;

(ii) manufacturers of textile machinery; and

(iii) such other persons as may be prescribed;
c (i) advice on all matters relating to the development of
textile industry and the production of textile machinery;

(j) provide for such other matters as may be prescribed.

D (3) In the discharge of its functions, the Committee shall
be bound by such directions as the Central Government.
may, for reasons to be stated in writing, give to it from time
to time."

S. 7 of the Act provides for constitution of a Fund called the Textiles
~ Fund. Fees recovered under the Act form part of this Fund. The
moneys in the Fund are applied for meeting the pay and allowances of
the officers and other employees of the Committee and other
administrative expenses of the Committee and for carrying out the
purposes of the Act. S. 11 confers on the Committee the power of
inspection and provides:
F
"(11) Inspection-(1) The Committee may, on application
made to it or otherwise, direct an officer specially
authorised in that behalf to examine the quality of textiles
or the suitability of textile machinery for use at the time of
manufacture or while in use in a textile mill and submit a
G report to the Committee.

(2) Subject to any rules made under this Act, such an
officer shall have power to-

(a) inspect any operation carried on in connection with the
H manufacture of textiles or textile machinery in r~tion io
SIRSILK LTD. v. TEXTILES COMMITIEE [SEN, J.J 893

which construction particulars, marks or inspection
A
standards have been specified,

(b) the samples of any article or of any material or subs-
tance used in any article or process in relation to which
construction particulars, marks or inspection standards
have been specified; B

(c) exercise such other powers as may be prescribed.

(3) On receipt of the report referred to in sub-section (1),
the Committee may tender such advice, as it may deem fit
to the manufacturer of textiles the manufacturer of textile
machinery and the applicant." c

S. 12 provides for levy of fees for inspection and examination and
reads as follows:

"U. (1). The Committee may levy such fees as may be D
prescribed-

(a) for inspection and examination of textiles,

(b) for inspection and examination of textile machinery,
E
(c) for any other services which the Committee may
render to the manufacturers of textile and textile
machinery:

Provided that the Central Government may by notifi-
cation in the Official Gazette, exempt from the payment of F
fees, generally or in any particular case.

(2). Any sum payable to the Committee under sub-s. (1)
may be recovered as an arrear of land revenue."

(The section quoted here is as it stood before its amend- G
mentby Act51of 1973).

S. 22(1) confers on the Central Government power to make rules for
carrying out the purposes of the Act. In particular, s, 22(2)( e) em-
powers the Central Government to make rules providing "the scale of
fees that may be levied for inspection ·and examination under s. 12". fl
894 SUPREME COURT REPORTS [1988] Supp. 2 S.C.R.

A In exercise ot the powers conferred by s. 22, the Central
Government made the Textiles Committee Rules, 1965. A levy of fee
was introduced for the first time w.e.f. March 1, 1965 by virtue of r. 21
of the Rules. The Table forming part of r . .21 under which the fee was
levied was in these terms:

B "21. Fee for inspection, examination and other services
rendered by the Committee-

( 1) The Committee may with effect from 1st March, 1965
levy and collect for inspection and examination of textiles
and textile machinery specified in col. 2 of the Table below,
the fee specified in the corresponding entry in col. 3 of that
c Table:

TABLE
D SI. Description of textiles Fee
No. and textile machinery

1 2 3

1. Cotton cloth where the average 6 paise for every 100 square
E count of yarn used in the cloth metres manufactured.
is less than 355.
2. Cotton cloth where the average 10 paise for every 100
count of yarn used in the cloth square metres manufactured
is less than 355. or finer

F 3. Woollen yarn 2 paise per kg. manufactured
4. Man-made Cellulosic or 2 paise per kg. manufactured
non-cellulosic filament yarn
5. Man-made cellulosic fibre cut 2 paise per kg. manufactured.
to staple length
0
6. Textile machinery 8 paise per Rs._ 100 ad valorem
on the ex-factory price of
the machinery manufactured.

"(2) The Committee_ may levy and collect, for any other
H service rendered bv it to the manufacturers of textiles and
SIRSILK LTD. v. TEXTILES COMMITTEE [SEN, J.] 895

textile machinery such fee as it may fix with the approval of
A
the Central Government."

With effect from the 11th June, 1966, the Table of Fee~.as revised to
reads as under:
,._:;
J B
1 TABLE

SI. Description of textiles Fee
No. and textile machinery

1 '2 3
c
I. Cotton cloth where the average 6 paise for every 100 square
count of yarn used in the cloth metres manufactured,
is less than 35 s.

2. Cotton cloth where the average 10 paise for every 100 D
count of yarn used in the cloth square metres manufactured
I is 35 s or finer.

3. (a) WQOllen yarn 2 paise per kg. manufactured
(excluding shoddy and carpet yarn)
E
(b) Shoody and carpet yarn 1 paise pe kg. manufactured.

4. (a) Man-made cellulosic or 2 paise per kg. manufactured.
non-cellulosic filament yarn
(other than nylon filament yarn)
F
(b) Nylon filament yarn 6 paise per kg. manufactured.
~
5. (a) Man-made cellulosic fibre cut 1 paise per kg. manufactured.
to staple length
~

(b) Man-made non-cellulosic fibre 2 paise per kg. manufactured. G
cut to staple length.

6. Textile machinery 8 paise per Rs.JOO ad valorem
(assembled) on the ex-factory price of
the machinery manufactured.
H
896 SUPREME COURT REPORTS . [1988) Supp. 2 S.C.R.

A
7. Cotton yam for export 2 paise per kg. inspected.

8. Natural silk yarn or fabric 50 paise per Rs.100 f.o.b.
for export price of the goods
inspected.
·,
S It must be stated here that Act No. 51/73 introduced a new
provision S. 5A as a result of which a cess has been imposed in place of
a fee. Sub-s. (1) provides that there shall be levied and collected as a
cess for the purposes of this Act a duty of excise on all textiles and on
all textile machinery manufactured in India at such rate, not exceeding
1% ad valorem as the Central Government may, by notification in the
C Official Gazette, fix. Proviso thereto interdicts that no such cr<s shall
be levied on textiles manufactured from out of handloom or power-
loom industry. Sub-s. (2) of s. 5A directs that the duty of excise levied
under sub-s. ( 1) shall be in addition to any cess or duty leviable on
textiles or textile machinery under any other law for the time being in
force. Another change brought about was to delete cl. (b) of s. 12, and
I) cl. (c) relettered as cl. (b) and a proviso were inserted, with the word'
special' inserted in place of the word 'other'. The new cl. (b) so
inserted is in these terms:
''(b) for any special service which the Committee may
render to the manufacturers or exporters of .textiles and
textile machinery;
Provided that no fees shall be levied in respect of
inspection and examination of textiles on which a duty of
excise is leviable under this Act;"

All these cases pertain to the period prior to January 1, 1975 i.e. prior
F to the enactment of Act 51/73. We are here concerned with the validity
of the fee as levied under r. 21 of the Rules and the question is whether
the imposition can be justified as a fee.

We have had the benefit of hearing Shri V.M. Tarkunde, learned
counsel appearing for the appellant J.K. Cotton Spg. & Wvg. Mills
G Co. Ltd., Shri G.L. Sanghi, learned counsel appearing for the appel-
lant Baroda Rayon Corporation Limited, Shri Vinod Bobde, learned
counsel appearing, on behalf of Century Spg. & Mfg. Co. Ltd. and
Century Enka Limited, Shri N.K. Khaitan, learned counsel appearing
for Sirsilk Limited, Dr. Dhananjaya Chandrachud, learned counsel
appearing for Nirlon Synthetics Fibres and Chemicals Ltd. and
H Garware Nylons Ltd. and Shri Krishna Kumar, learned counsel for
SIRSILK LID. v. TEXTILES COMMITTEE [SEN, J.I 897

Modipon Limited.' The learned counsel presented their respective
A
points of view with much resource and learning.

On behalf of the appellants and the petitioners, the learned
counsel put forth in substance two main contentions, namely: (1) That
rayon yarn and nylon yarn manufactured by the writ petitioners bef<)>re
the High Court i.e. appellants and the petitioners before us, are made B
wholly of filaments and not at all of fibres and therefore are not tex-
tiles within the meaning of the definition of 'textiles' as contained ins.
2(g) of the Act accordingly are outside the purview of the Act and not
liable to payment of any fee in accordance with r. 21 of the Rules as
originally framed or as it existed after its amendment w .e.f. June 11,
1966. And (2) That the Textiles Committee rendered no service to the
writ petitioners in respect of their production- of rayon ya_rn and nylon c
yarn and hence it was not within its competence to levy any fee on
them under r. 21 of the Rules. According to the writ petitioners, in fact
they do not need the services of the Committee and 'the Committee is
also not in a position to render any service to the!Il, not having even
laid down standard specifications for the manufacture of rayon yarn or D
nylon yarn. It was submitted that there was no correiation between t.he
fee charged and the service rendered by the Committee and there is
complete absence of the element of quid pro quo, legally essential for
levying a fee.

Shri G. Ramaswamy, learned Additional Solicitor General, on E
the other hand, during his lucid and forceful submissions repelled the
arguments. He submitted that the levy under r. 21 of the Rules was not
correlated to the power of inspection which th~ Textiles Committee
had under s. 11 of the Act, but was relatable to its power to levy fees
under s. 12 for the performance of its functions, .powers and duties
under s. 4. He contended that the avowed object and purpose of the F
Act as is clear from s. 3 was 'quality control' of all textiles, and it would
be idle to contend that rayon yarn and nylon yarn which are but species
of what is known as man-made fibres, otherwise called artificial silk
and has a world market, should be outside the purview of the Act. He
cautioned that we have to bear in mind that the Act is not a scientific
treatise on organic and inorganic chemistry but is an Act by Parliament G
for the benefit of the indigenous textile industry so that it may be able
to hold its own in a fiercely competitive international market. He
therefore contends that the Act and the words used therein have to be
interpreted not on a technological or specialised scientific plane, but in
a popular sense as understood by experts in the sphere of the textile
industry and the commercial world dealing with it. The learned Addi- · H
898 SUPREME COURT REPORTS [1988] Supp. 2 S.C.R.

A tional Solicitor General questioned the correctness of the decision
rendered by the Madhya Pradesh High Court in The Gwalior Rayon
Silk Manufacturing (Wvg.) Co. Ltd., Birlagram, Ujjain v. The Textiles
Committee, Bombay & Anr., AIR ( 1980) MP 69 as also its interpreta-
tion of the definition of 'textiles' in s. 2(g) of the Act prior to its
amendment by Act No. 51173 as not including viscose staple fibre.
B According to him, the whole approach of the High Court in Gwalior
Rayon's case in adopting a literal construction of the definition of
'textiles' ins. 2(g) of the Act prior to its amendment was totally unsup-
portable. A literal construction of the definition of 'textiles' ins. 2(g)
of the Act prior to its amendment, it is said, would lead to a manifest
absurdity. If that view of the Madhya Pradesh High Court were to
C prevail, it is urged that the whole purpose and object of the Act would
be frustrated. The definition of textiles in s. 2(g) prior to its amend-
ment must be' given a broad and liberal construction in furtherance of
the object and purpose of the Act. The learned Additional Solicitor
General also placed before us a wealth of material showing that a huge
infra-structure has been built by the Central Government over the
D years and it has invested crores of rupees to make the establishment of
the Textiles Committee under s. 3 of the Act meaningful with a view to
maintain quality control on all textiles including man-made fibres or
artificial silk which have a world market. Finally, the learned Addi-
tional Solicitor General strongly relied upon the decision of this Court
in Sreeniwasa General Traders & Ors. v. State of Andhra Pradesh &
E Ors .. [ 1983] 3 SCR 843 for the submission that the validity of the levy
has to be sustained as there is broad co-relationship between the
imposition of the fee and the nature of the services rendered to the
entire textile industry. We shall deal with the contentions advanced by
learned counsel for the appellants and the petitioners in seriatim.

F As to the first contention that the rayon yarn and nylon yarn
manufactured by the appellants and the petitioners were filaments and
not fibres and therefore did not fall within the ambit of the definition
of textiles in s. 2(g) of the Act prior to its amendment, Shri Khaitan
who first argued the case of Sirsilk Limited and more particularly Shri
Tarkunde appearing on behalf of J.K, Cotton Spg. & Wvg. Mills Co.
G Ltd., followed by Shri Krishna Kumar appearing for Modipon Limited
placed strong reliance on scientific and technological material el\plain-
ing the manufacturing process of rayon yarn and nylon yarn to contra-
distinguish the same from fibres. The learned Additional Solicitor
General rightly drew . our attention to the averrnents made in
paragraph 1 of the writ petitions before the High Court in which each
H of the appellants and the petitioners has specifically averred that they
SIRSILK LTD. v. TEXTILES COMMIITEE (SEN, J.] 899

are manufacturers of rayon, and submitted that they cannot be heard
A
to say that the product manufactured by them was· not rayon made of
.artificial· silk or fibre. The contention of the · 1earned Additional
Solicitor General must prevail. The averments in paragraph 1 of the
'writ petitions are more or less the same. We need only reproduce
paragraph 1 of the writ petition filed by MessrnSirsilk-Hmiteel, and it
reads: ' --- - . B

"The petitioners are a Limited Company incorporated
under the Indian Companies Act and are having their
Registered ,office at Himayatnagar, .Hyderabad-29. The
Petitioners, inter alia, carry on the business of manufacture
of rayon yarn and staple fibre both of which form species of C
what is popularly known as "man made yarn". For the
purpose of manufacturing the aforesaid yarns, the peti-
tioners have established their factory at Sirpur Kagaz-
nagar."

To the same effect are the averments made in the writ petitions filed by D
the appellants M/s. J.K. Cotton Spinning & Weaving Co. Ltd., M/s.
Baroda Rayon Corporation Ltd. and M/s. Modipon Ltd. as well as by
the petitioners M/s. Century Spinning & Manufacturing Co. Ltd.,
Century Enka Ltd., M/s. Nirlon Synthetic Fibres & Chemicals Ltd.
and M/s. Garware Nylons Ltd. On their own showing, the appellants
as well as the petitioners are actually engaged in the manufacture of E
rayon yam and nylon yam both of which they aver are 'species of what
is known as man-made fibres'. In view of this undisputed factual posi-
tion, the contention that rayon yarn and nylon yarn manufactured by
them are 'filaments' and not 'fibre' or that they are not 'yarn' and
therefore do not fall within the definition of textiles under s. 2(g) of
the Act prior to its amendment, cannot be countenanced. F

The main thrust of the argument of iearned counsel f~r the
appellants and the petitioners that rayon yarn and ·nylon yarn
manufactured by the appellants and the petitioners are not fibres but
filaments, stems from the decision of the Madhya Pradesh High Court
in The Gwalior Rayon Silk Manufacturing (Wvg.) Co. Ltd., Birlagram, G
Ujjain v. The Textile Committee, Bombay (supra). In the decision, the·
Madhya Pradesh High Court assumes that a fibre in order to answer
the description of-yam, in the ordinary commercial sense must be a
spun strand meant for use in weaving, knitting or rope-making. It
proceeds upon the basis that although viscose staple fibre was
manufactured out of fibre but it had to be subjected to various other H
900 SUPREME COURT REPORTS I 19881 Supp. 2 s,c.iv.

A operations such as blending, carding, combing or hackling and
spinning before fibre could be converted into yarn. Upon that basis,
the Madhya Pradesh High Court held that viscose staple fibre
manufactured by the Gwalior Rayon Silk Manufacturing {Wvg.) Co.
Ltd. was made wholly of filaments and therefore was not fibre and
hence was not yarn and accordingly did not fall within the meaning of
B the expression textiles as defined in s. 2(g) of the Act. We are afraid,
we cannot accept this line of reasoning.

The Madhya Pradesh High Court was clearly wrong in giving \o
the expression 'textiles' in s. 2(g) of the Act a narrow and restricted
meaning. The reasoning of the Madhya Pradesh High Court is best
stated in the words of G.P. Singh, CJ. speaking for himself and C.P.
c Sen,J:

"According to this definition, textiles meant "any f!lbric or
cloth or yarn made wholly or in part of cotton, or wool or
silk, or artificial silk or other fibre''. The use of the word
D 'means' in the definition gives rise to the inference ·Of its
being restrictive and exhaustive. Further, it is clear that
what was embraced by the definition before 1st January
1975 was any fabric or cloth or yarn and not any fibre. The
definition made a distinction between yarn and fibre. The
same distinction appears in Section 2{f) in the definition of
E 'textile machinery' which expression is defined to mean the
equipment employed "for the processing of textile fibre •
into yarn ..... ". The Act does not contain any definition
of 'yarn' and hence it has to be understood in its ordinary
sense to mean "any fibre, or wool, silk, flax, cotton, nylon
etc. spun into strands for weaving, knitting or making
F thread". [Webster's New World Dictionary)."

The learned Chief Justice then added:

"A fibre in order to answer the description of 'yarn' in the
ordinary commercial sense must be a spun strand meant for
G use in weaving, knitting or rop~aking Commr. of Sales
Tax U.P. v. Sarin Textile. Mills,· AIR 1975 SC 1262 at p.
1263. It is true that yarn is manufactured out of fibre but
various operations such as blending, carding, combing or
hackling and spinning have to be performed for converting
fibre into yarn (See the New Encyclopaedia Britannica,
H 15th Edition, Vol. 18, p. 173.)"
'
SIRSILK LTD. v. TEXTILES COMMITTEE (SEN, J.I 901

There was no expliC:able reason for the legislature to have exclud.ed
A
rayon yarn and nylon yarn from the purview of the definition of tex-
tiles in s. 2(g) of the Act prior to its amendment. The expression
'textiles' has been defined in s. 2(g) of the Act in a way as to include
not only yam but also man-made fibres or artificial silk. In the pre-
mises, the expression 'textiles' as defined ins. 2(g) of the Act has to be
given a broad and liberal construction, in furtherance of the purpose B
and object of the Act.

The Madhya Pradesh High Court w;is clearly in error in constru-
ing the expression 'textiles' as defined ins. 2(g) of the Act, prior to its
amendment in a narrow and restricted sense. The particular words
used by the legislature i.e. the terms 'yarn, man-made fibres,
otherwise known as artificial silk' had to be understood according to
c
the common commercial understanding of the terms used, and not in
their scientific or technical sense. The High Court failed to bear in
mind that the Act is not a scientific treatise on organic or inorganic
chemistry but is an enactment by the Parliament for the benefit of the
indigenous textile industry, so that it may be able to hold its own in a D
fiercely competitive international market. In these circumstances, the
Act and the words used therein have to be interpreted not on a tech-
nological or specialised scientific plane but in the popular sense as.
understood by experts in the sphere of the textile industry and the
cowmercial world dealing with it. We find no discernible reason for
Parliament to have left out man-made fibres like viscose staple fibre, E
rayon yarn and nylon yarn from the purview of the definition of tex-
tiles in s. 2(g) of the Act prior to its amendment particularly when
synthetic fibres have a world market and India has entered into a
c·ompetitive international trade in all textiles in a large way.

We were referred to several Encyclopaedias, authoritative F
treatises, text-books and hand books viz., Encyclopaedia Britannica,
both Micropaedia and the 15th Edn., 'Textile Terms and Definitions',
5th Edn. published by the Textile Institute, Manchester in 1963, 1968
1 Book of American Society for Testing and Materials, Part 24, Mercury
Dictionary of Textile Terms, Standard Handbook of Textiles by A.J.
Hall, Handbook of Textile Fibres, 4th Edn. by J. Gordon Cook, Man- G
made Fibres by Mark-Atlas and Cernia, Vol. 2, Textile Fibres by
Mathews, 6th Edn. and Survey ·of Man-made Fibre Industry by Dr.
A.S. Kapur. These.Encyclopaedias and technological books contain a
.- wealth of informatioll collected by knowledgeable, and distinguished
men who have acquired distinction in their own spheres of academic
disciplines and are made use of not only by our own Courts but by H
,
902 SUPREME COURT REPORTS [ 1988] Supp. 2 S·.C.R.

A -Courts of other countries where English language is in vogue.

The words 'fibre' and 'filament' are not defined either in the Act
or the Rules thereunder. The meaning assigned to 'fibre' in Webster's
New Twentieth Century Dictionary of English Language, 2nd Edn. is
a "filament and thread like part of a substance as a filament of spun
B glass, wool, or hornblende". Even a 'filament', according to this
Dictionary, consequently constitutes 'fibre'. 'Artificial silk', according
to the Oxford Concise Dictionary, 6th Edn., 1976 means rayon.

In Encyclopaedia Britannica 14th Edn. Vol. 7, p. 257 underthe
heading 'Fibres, Man-made', the following passage occurs:
c "Man-made fibre consists of two broad grounds, based
upon the origin of the fibre-forming substance. The first
group, of which rayon and acedate are examples, are pro-
duced by modifying natural fibre-forming materials such
as cellulose. The second group, frequently called synthetics
D and including such fibres as nylon and polyester, are pro-
duced from synthetic chemicals ...... "

Again there occurs a passage at p. 260 of the same volume in the
following terms:

E "In man-made fibres, the importance of rayon is similar to
that of cotton among the natural fibres."

Under the heading 'Synthetic fibres" sub-heading "Polyamide fibres"
at p. 263 it is stated:

F "Polyamides are polymers, or chain-like structure of linked
molecular units, containing recurring amide groups as
integral parts of the main polymer chains. Synthetic
polyamide fibres form nylon, a major textile fibre."

In Encyclopaedia Britannica, Vol. 18 under the heading "Develop-
G ment of the textile industry" sub-heading 'production. of yarn', at p.
172, we notice the following passage:

"Yarn is a strand composed of fibres, filaments (individual
fibres of extreme length), or other materials, either natural ~.

or man-made, suitable for use in the construction of
H interlaced fabrics, such as woven or knitted types."
SIRSJLK LTD. v. TEXTILES COMMITTEE [SEN, J.] 903

This passage again indicates that in the textile industry 'filaments' are A
treated as individual fibres of extreme length.

Similarly, in Chamber's Encyclopaedia, Vol. 5 at p. 613, the
te.rm 'fibre' is explained thus:

"Fibre, a term used for a thread-like element of animal or B
vegetable tissue ..... : and any thread or filament used in
the manufacture of textile materials. The range of fibres
used. for making fabrics was restricted to naturally occur-
ring substances until the-introduction of man-made fibres.
These include regenerated fibres, such as those made from
cellulose, and truly synthetic fibres, such as nylon,
Terylene, and Courtelle."
c
At p. 616 of the same volume under the heading "Artificial Fibres", it
is stated:

"Artifici.al fibres can be divided into two main groups; D
regenerated and synthetic. In the first class a furtber·sub-
division can be made between fibres made from regenera-
ted cellulose, i.e. viscose, acetate and cuprammonium pro-
tein such as Fibrolane. Fibres in the second class are strictly
synthetic in the sense that they are built up from simple
chemical compounds into the complex molecular structure E
required. They are classified according. to their chemical
composition: poly amides (nylon and perlorn) .......... "

In Encyclopaedia Britannica, Micropaedia, Vol. VIII at p. 442 under
the heading 'rayon' the following passage occurs:
F
"Rayon, generic term for man-made textile fibre produced
from the plant substance cellulose. Developed in an
attempt to produce silk chemically, the fibre was originally
known by such terms as artificial silk and wood silk, but in
1924 it was given the coined name rayon. Anitrocellulose
type, first produced commercially in France in 1891 in the G
form of a nitrocellulose fibre, it was later discontinued be-
cause of its high flammability. Rayon is described as a
re-generated fibre because the cellulose is converted to a
liquid compound and then back to cellulose in the form of
fibre. The cellulose, obtained from soft woods or from the
short fibres adhering to cotton seeds (/inters), is chemically H

'
-1,
904 SUPREME COURT REPORTS I1988] Supp. 2 S.C.R.

A treated to form a solution that is forced through tiny holes in
a nozzle (spinnerets). This process of forcing a solution
through spinneret holes is called spinning; the same term is
applied to the production of yarn by twisting together fibres
that may be of natural man-made origin. Emerging in the
form of filament, a fibre of great length, the rayon is
B hardened by drying in air or by chemical means. The fila-
ment is sometimes out into shorter pieces having uniform
length, called staple, and twisted together to make yarn.
(Emphasis supplied)
The passages quoted above clearly show that even in the sphere of
textile technology distinction between 'fibre' and 'filament' has
C reached a vanishing point. They further show that both nylon and
rayon are 'artificial silk' yarn in contra-distinction to genuine silk. We
accordingly uphold the view expressed by the High Courts of
Allahabad, Andhra Pradesh, Gujarat and Madras and hold that rayon
and nylon yam are not only made of 'other fibre' but are also yarn of
'artificial silk' within the meaning of s. 2(g) of the Act. The view to the
0
contrary by the Madhya Pradesh High Court does not lay down correct
law.
Other considerations lead us to the same conclusion. The
Industries (Development and Regulation) Act, 1951 enacted by Par-
liament received the assent of the President on October 31, 1951. In
E the Statement of Objects and Reasons appended to the Bill which
became the Act, it is stated:
"The Bill brings under Central control the development
and regulation of a number of important industries, the
activities of which affect the country as a whole and the
development of which must be governed by economic
F
factors of all India import ....... The Bill confers on
Government power to make rules for the registration of
existing undertakings, for regulating the production and
development of the industries in the Schedule and for con-
sultation with Provincial Governments on these matters."
G The First Schedule of this Act sets out the various industries which if
declared that it was expedient in the public interest that the Union
should take under its control. Cl. (7) of Item No. 19 which bears the
heading "Chemicals (other than Fertilisers)" is "man-made fibres [
including regenerated cellulose-rayon, nylon and the like." Cl. (5) of w;:
Item No. 23 which bears the heading "Textiles (including those dyed,
H printed or otherwise processed)" is "made wholly or in part of syn-
SIRSILK LTD. v. TEXTILES COMMITTEE [SEN, J.] 905

thetic, artificial (inan-made) fibres, including yarn and hosiery of such A
fibres." This Parliamentary Act thus treats rayon as well as nylon as
textiles made of artificial (man-made) fibres.
The Industries (Development ind Regulation) Act, 1951, and
the Textiles Committee Act, with which we are concerned, may properly
be considered to be statutes in par/ materia. According to Sutherland:
B
"Statutes are considered to be in pari materia to pertain to
the same subject-matter when they relate to the same
person or things, or to the same class of persons or thing, or
have the same purpose orobject (Statutes and Statutory
Construction, Vol. 2, p. 535, 3rd Edn.)"
The object of either of these two Acts is to protect and to assist in the c
development of Textile Industry inter alia. "Assistance in ascertaining
the meaning of an enactment may be obtained by comparing its
language with that used in earlier statutes relating to the same subject"
(C!aies on Statute Law, P. 140, 1971 Edn.) Maxwell-also in "The
Interpretation of Statutes" ( 1976 tdn. p. 66) states thai:
D
"light may be thrown on the meaning of a phrase in a
statute by reference to a specific phrase in an earlier statute
dealing with the same subject-matter."
The Industries (Development ' and Regulation) Act, 1951 is an Act
earlier in point of time and we see no reason why if a subsequent
E
statute by the same Legislature can be pressed in aid for the purpose of
interpretating. in the event of any doubt, the provisions of an earlier
statute, the earlier statute cannot be made l!Se of for the purpose of
construing, in the event of ambiguity, the provisions of a later statute.
'
For all these reasons the contention that rayon yarn and nylon
yarn manufactured by the appellants and the petitioners are made F
wholly of filaments and not of fibres and therefore did not come within
the purview of textiles as defined in s. 2(g) of the Act prior to its
amendment and therefore they were not liable for payment of the fee
levied under r. 21 of the Rules, cannot prevail.
The various activities undertaken by the Textiles Committee for
the development of the textile industry and the promotion of textile G
exports which have expanded considerably, and the duties entrusted to
the Committee to ensure the quality of all textiles whether made
wholly or partly of cotton wool, silk, artificial fibre or silk, particularly
when Indian Textiles by and large and artificial silk or man-made fibres
like rayon yarn, viscose staple fibres and nylon yarn as well as fabrics H
made of artificial silk, are facing ever increasing competition in the
906 SUPREME COURT REPORTS [1988] Supp. 2 S.C.R.

A international market from other exporting countries like Japan, China
etc. and the production and export of textiles having substantially
increased, the legislature thought it necessary to make adequate provi-
sion and accordingly created a Textiles Fund under s. 7 of the Act to
meet the expenditure of the Textiles Committee which necessarily has
to be on a larger scale. At the time when the Textiles Committee was
B established under s. 3, the legislature accordingly provided for the
establishment of a Textiles Fund constituted under s. 7 of the Act from
out of which the expenditure of the Committee has to be defrayed.
Sub-s. ( 1) of s. 7 provides that the Committee shall have a Fund to be
called the Textiles Fund and there shall be credited thereto various
items specified in els. (a) to (d), apart from all the moneys standing to
the credit of the Cotton Textiles Fund established under the repealed
C Ordinance, immediately before the date on which the Textiles Com-
mittee came to be established, which by virtue of s. 24(2)(a) stood
transferred to and formed part of the Textiles Fund, and such sums of
money as the Central Government after due appropriation made by
Parliament in that behalf, pays to the Committee in each financial year
O by way of grant, loan or otherwise for purposes of enabling the Com-
mittee to discharge its functions under the Act. There are only two
other sources of income. One of the main sources of revenue, as indi-
cated in cl. (c), is the income derived from the levy of the fee under r.
21 of the Rules, and the other that indicated in cl. (d) viz. all moneys
received by the Committee by way of grant, gift, donation, contribu-
E tion, transfer or otherwise. After the imposition of the duty of excise
as a cess bys. SA of the Act introduced by Act No. Sl/73, the income
derived from such cess becomes another source. Sub-s. (2) of s. 7
provides that the moneys in the Fund shall be applied for (a) meeting
the pay and allowances of the officers and other employees of the
Committee and other administrative expenses of the Committee, and
F (bl carrying out the purposes of the Act. Sub-s. (3) of s. 7 provides that
all moneys in the Fund shall be deposited in the State Bank of India or
be invested in such securities, as may be approved by the Central
Government.

From these prov1s10ns, it is amply clear that all the income
G derived from the l_evy of the fee under r. 21 of the Rules has to be
credited to the Textiles Fund and the said income is utilised in defray-
ing the expenditure of the Textiles Committee in carrying on its
manifold duties. No part of the fee levied under r. 21 goes into the
Consolidated Fund of India. It is only by s. SF introduced by Act No.
51/73 which provides that proceeds of the duty of excise collected
H under s. SA reduced by the cost of collection as determined by the
SIRSILK LTD. v. TEXTILES COMMITTEE [SEN, J.] 907

Central Government, shall first be credited to the Consolidated Fund
A
of India and the Central Government may, after due appropriation
made by Parliament by law, pay to the Committee from out of such
proceeds, such sums of money as it thinks fit for being utilised for the
purposes of the Act. We are not here concerned with the duty of excise
recovered as a cess under s. SA but only with the question whether levy
of the fee under r. 21 is sustainable as a fee. That is to say, whether B
there is sufficient quid pro quo between the levy of the fee and the
services rendered. It has not been suggested that any part of the fees
levied under r. 21 can be diverted to any other purpose. When the
entire proceeds of the fee are utilised in financing the various projects
undertaken by the Textiles Committee, as also the inspection of all
textiles including man-made fibres and textile machinery, the appel-
lants cannot be heard to say that there is no reasonable and sufficient
c
correlation between the levy of the fee and the services rendered. The
learned Additional Solicitor General drew our attention to the various
averments made in the counter-affidavit filed on behalf of the Textiles
Committee as well as the Government of India showing the extent of
income from the fee levied under r. 21 and the expenditure of Textiles D
Committee in each financial year. From the material on recora,it is
amply clear that the levy of the fee under r. 21 is not commensurate
with the expenditure incurred by the Textile Committee. It is not in
dispute that the Textiles Committee has over the years built up a huge
infrastructure and the Central Government has spent crores of rupees
to make the legislation effective and meaningful and to bring about an E
overall improvement in the quality and standard of the textiles includ-
ing man-made fibres or artificial silk so that our country may continue
to retain its rightful place in the world market in a fiercely competitive
international trade.

For a proper appreciation of the point involved, it is necessary to F
set down the activities of the Committee in discharge of its functions
conferred upon it by s. 4 of the Act. The Committee with a view to
maintaining and stepping up the export of Indian Textiles, has intro-
duced a number of pre-shipment inspection schemes covering a wide
range of textiles to ensure that only quality textiles and yarns are
exported from India. Inspection and certification of Art Silk and Wol- G
!en Textiles have also been undertaken by the Committee in pursuance

-
of various Export Incentive Schemes introduced by the Government
from time to time. The Committee has set up an Inspectorate with a
large technical staff qualified in the various disciplines of textile tech-
nology. The Inspectorate has carried out inspection of various types of
textiles in large quantities. Inspection of mill•made cotton cloth and H
J
908 SUPREME COURT REPORTS [ 1988] Supp. 2 S.C.R.

A mill-made cloth yarn has been made compulsory and export thereof
without a certificate issued by the Committee has been banned. In
order to carry out the inspection as expeditiously and smoothly as
possible, the Committee besides its head office at Bombay has estab-
lished its regional offices at fourteen different textile centres, namely,
at Ahmedabad, Amritsar, Bangalore, Calcutta, Coimbatore, Indore,
B
Kanpur, Ludhiana, Madras, Madurai, Nagpur, New Delhi, Sholapur
and Surat. Besides these, wherever necessary, the Committee staff are
also attached to the textile mills at other places to render immediate
service to the mills and exporters on the spot. The learned Additional
Solicitor General placed before us the counter-affidavit of Shri C.G.
Shivdasani, Acting Secretary of the Textiles Committee. It is averred
c under the heading 'Inspection' that for ensuring standard qualities of
textiles and to satisfy that they have the characteristics necessary for
satisfactory performance, necessary tests such as identification of
fibres, fibre composition, fibre finances, shrinkage, chemical degrada-
tion, resistance to milldew and fungus etc. are carried out quite often
D by the Committee. A statement showing the income and expenditure
of the Textiles Committee for the period commencing from March 1,
1965 and ending with March 31, 1971 as well as the estimated budget
for the years 1971-72 to 1973-74 are set out to verify the ratio between
the fee collected and the expenditure incurred for achieving the object
and purpose of the Act. The statements are as detailed below:
E
EXPENDITURE AND FEES REALISED DURING THE PERIOD
FROM 1.3.1965 TO 31.3.1971.

Accounting Revenue Capital Market Fees
Year Expenditure Expenditure Research Realised
F
on Inspectorate. on Inspectorate.
-------------------------------
March 1965 00.89 lakhs -lakhs 0.08 lakhs- lakhs
1965-66 17.71" 0.64,, 2.00,, 21.90,,
1966-67 23.05 ,, 1.28" 2.32,, 44.00,,
1967-68 24.29,, 0.91,, 2.05 ,, 30.38,,
G 1968-69 24. 73,, 0.60,, 2.66,, 34.79,,
1969-70 28.95,, 1.87,, 3.82,, 32.39,,
1970-71 34.62,, 3.14,, 4.55,, 29.79"

Total:- 154.24,, 8.44,, 17.48,, 193.25,,
H

\
SIRSILK LTD. v. TEXTILES COMMITTEE [SEN. J.J 909

STATEMENT SHOWING THE ESTIMATED REVENUE AND
A
CAPITAL EXPENDITURE AND REVENUE FOR THE YEARS
1971-72 TO 1973-74.
Year Estimated Revenue Capital Expenditure Estimated
Expenditure on on Inspectorate Fees
Inspectorate. Realisable B
1971-72 (RE) 37.35 lakhs 22.66 Iakhs 53.35 lakhs
1972-73(BE) 43.78" 19.93" 53.76,,
1973-74 52.00,, 30.00" 55.00,,

Total 133.13" 72.59" 162.11"
c
Under the heading 'Collection of Fees', the necessary averments
are there showing that the entire amount of fees levied and collected
under r. 21 of the Rules is utilised in meeting the expenses of the
Committee on account of pay and allowances of the officers and other
employees of the Committee al)d for carrying out the purposes of the D
Act. The following is the table showing the fees realisable, fees actu-
ally realised and the total expenditure of the Inspectorate during the
period from April 1, 1965 to March 31, 1971:

Period Fees Fees Total Expenditure on the
E
Realisable Realised Inspectorate, (in lakhs)

1.3.65 to
31.3.71 Rs.290.51 Rs.193.25 Revenue Rs.154.24
Capital Rs.8.44
Total Rs.162.68
F
(Actuals)
1.4.71to
31.3.72 Rs.53.35 Rs.31.03 Revenue Rs.37.35
Capital Rs.22.66
Total Rs.60.61
(Revised Estimate) G
1.4.72 to
31.3.72 Rs. 53.76 Rs.31.00 Revenue Rs.43. 73
(Estimated) Capital Rs. 19.93
Total Rs.63.71
(Budget Estimates)
Total Rs.397.62 Rs.255.28 Rs.286.40 H
910 SUPREME COURT REPORTS I 1988] Supp. 2 S.C.R.
' there is no doubt whatever that the entire pro-
On these facts,
A ceeds of the amount collected by way of fee under r. 21 of the Rules
are spent in carrying on the functions of the Textiles Committee. It
cannot be do\Ibted that the activities of the Commitee in furtherance
of the object and purpose of the Act are to ensure the quality of all
textiles whether made wholly or partly of cotton, wool,' silk, artificial
B fibre or silk. The functions of the Committee should generally be to
·ensure standard qualities of textiles for internal as well as external
marketing and manufacture and use of standard type of textile machi-
nery. The grievance of the appellants and the petitioners that there i>
no inspection of the rayon yarn and nylon yarn manufactured by them
at the stage of production is belied by the fact that there is pre-
shipment inspection of the fabrics manufactured from such fibres for
c export. The provision for the levy of fees for inspection and examina-
tion of textiles under s. 12( l)(a) of the Act or the levy of the fee under
r. 21 of the Rules cannot be challenged on the ground that there is no
reasonable relationship between the levy of the fee and the services
rendered by the Committee to the entire textile industry to which the
o appellants and the petitioners before us owning large textile mills be-
long. When the levy of the fee is for the benefit of the entire textile
industry, there is sufficient quid pro quo between the levy recovered
from the appellants and the petitioners and the services rendered to
the industry as a whole. In the premises, the principles laid down by
this Court in Sreeniwasa General Traders are clearly attracted. One of
E us (Sen, J .) speaking for the Court had observed:

"The traditional view that there must be actual quid pro
quo for a fee has undergone a sea change in the subsequent
decisions. The distinction between a tax and a fee lies
primarily in the fact that a tax is levied as part of a common
F burden, while a fee is for payment of a specific benefit or
privilege although the special advantage is secondary to the
primary motive of regulation in public interest. If the ele-
ment of revenue for general purpose of the State pre-
dominates, the levy becomes a tax. In regard to fees there
is, and must always be, correlation between the fee col-
G lected and the service intended to be rendered. In
determining whether a !ivy is a fee, the true test must be
whether its primary and essential purpose is to render
specific services to a specified area or class; it may be of no
consequence that the State may ultimately and indirectly
be benefitted by it. The power of any legislature to levy a
H fee is conditioned by the fact that it must be "by and large"
SIRSILK LTD. v. TEXTILES COMMITTEE {SEN, J.I 911

a quid pro quo for the services rendered. However,.corre- A
lationship between the levy and the services rendered or
expected is one of general character and not of mathema-
tical exactitude. All that is necessary is that there should be
a "reasonable relationship" between the levy of the fee·and
the services rendered. If authority is needed for this pro-
position, it is to be found in the several decisions of this B
Court drawing a distinction between a 'tax' and a 'fee·. See
The Commissioner, Hindu Religious Endowments, Madras
v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mull,
[1954] SCR 1005; H.H. Sudhundra Thirtha Swamiar v.
Commissioner for Hindu Religious and Charitable Endow-
ments, Mysore, [1963] Suppl. 2 SCR 302; The Hin}(ir- C
Rampur Coal Co. Ltd. v. State of Orissa, [1961] 2 SCR 537;
H.H. Shri Swamiji of Shri Admar Mutt v. Commissioner
Hindu Religious and Charitable Endowments Department,
[1980] 1 SCR 368; South Pharmaceuticals and Chemicals,
Trichur v. State of Kera/a, [1982] 1SCR519 and Municipal
Corporation of Delhi v. Mohd. Yasin, [1983] 2 SCR 999. D

There is no generic difference between a tax and a
free. Both are compulsory exactions of money by public
authorities. Compulsion lies in the fact that payment is
enforceable by law against a person in spite of his unwil-
lingness or want of consent. A levy in the nature of a fee E
does not cease to be of that character merely because there
is an element of compulsion or coerciveness present in it,
nor is it a postulate of a fee that it must have direct relation
to the actual service rendered by the authority to each indi-
vidual who o.btains the benefit of the service. It is now
increasingly realised that merely because the collections for F
the services rendered or grant of a privilege or licence are
.taken to the consolidated fund of the State and not sepa-
rately appropriated towards the expenditure for rendering
the service is not by itself decisive. Presumably, the atten-
tion of the Court in the Shirur Mutt case was not drawn to
Article 226 of the Constitution. The Constitution nowhere G
contemplates it to be an essential element of fee that it
should be credited to a separate fund and not to the con-
solidated fund. It is also increasingly realised that the ele-
ment of quid pro quo in the strict sense is not always a sine
qua non for a fee; It is needless to stress that the el.'ement of
quid pro quo is not necessarily absent in every tax.." H
912 SUPREME COURT REPORTS [1988] Supp. 2 S.C.R.

A See also Mis. Amar Nath Om Prakash & Ors. v. State of Punjab &
Ors., [1985] 2 SCR 72; City Corporation of Calicut v. Thachambalath
Sadalinan & Ors., [1985] 2 SCR 1009; I.T.C. Ltd. & Ors. v. State of
Karnataka & Ors., (per Fazal Ali & Mukharji, JJ) (1985) Suppl. SCR
476 and Om Parkash Agarwal & Ors. v. Giri Raj Kishori & Ors.,
[1986] 1SCR149.
B
Viewed from this perspective, the conclusion is inevitable that
the levy of the fee under r. 21 of the Textiles Committee Rules, 1965
by the Textiles Committee under sub-s. (1) of s. 12 of the Textiles
Committee Act, 1963 is valid and constitutionally permissible.

c All the appeals and connected writ petitions filed by the textile
mills in India must fail and are dismissed with costs. Civil appeal No.
1281of1973 preferred by the Textile Committee, Bombay against the
judgment and order of the Kerala High Court dated March 3, 1979, is
however allowed and the writ petition filed by the respondent, M/s.
Travancore Rayons Limited is dismissed with costs.
D
R.S.S.