Holding

Section 22‑A of the Registration Act and the notifications issued under it are ultra‑vires of the Constitution, violating Articles 14 and 246, and are therefore invalid.

Summary

The respondent, Basant Nahata, sought registration of a power of attorney, which the Sub‑Registrar refused under a Rajasthan Government notification issued pursuant to Section 22‑A of the Indian Registration Act. The notification declared such documents "opposed to public policy" and barred their registration. The respondent challenged the constitutional validity of Section 22‑A and the notifications, arguing that the legislature had impermissibly delegated essential legislative power and that the term "public policy" was vague and could not be used to deny registration. The Supreme Court examined the presumption of constitutionality, the limits of delegated legislation, and the requirement that essential legislative functions not be transferred to the executive, holding that Section 22‑A and the notifications violated Articles 14 and 246 of the Constitution. Consequently, the Court affirmed the High Court's declaration that the provisions were ultra‑vires and dismissed the appeal. The decision reaffirmed that public‑policy determinations are a judicial function and cannot be left to executive notifications without clear legislative guidelines.

Issues considered

The constitutionality of Section 22‑A of the Indian Registration Act as inserted by Rajasthan
The validity of the notifications declaring certain documents "opposed to public policy"
Whether the delegation of power to the executive under Section 22‑A violates Articles 14 and 246 of the Constitution
The applicability of the presumption of validity of statutes in this context
Whether the term "opposed to public policy" provides a sufficient guideline for the executive

Legislation cited

Arbitration and Conciliation Act, 1996s. 34(2)(b)(ii)
Constitution of Indias. 14, s. 245, s. 246, s. 300-A
Foreign Awards (Recognition and Enforcement) Act, 1961s. 7(1)(b)(ii)
Indian Contract Act, 1872s. 23
Registration Act, 1908s. 17, s. 22-A, s. 32, s. 33, s. 49

Subjects

ConstitutionalityDelegated legislationPublic policyRegistration ActPresumption of validityUltra viresPower of attorneyJudicial review

Judgment

STATE OF RAJASTHAN AND ORS.
A
V.

BASANT NAHATA

SEPTEMBER 7, 2005

[ASHOK BHAN AND S.B. SINHA. JJ.] B

Statute Law;

Statute-Constitutionality of-Presumption of-Held, not an absolute
rule. c
Delegated Legislation;

Delegation-Held, cannot be wide, uncanalised or unguided-Essential
legislative function can't be delegated

Doctrines:
D

Doctrine ofPublic policy-Not capable of being given a precise meaning-
Only the judiciary has the power, a limited one, to interpret it.

The Respondent, a resident of town of Bikaner, was a Khatedar
tenant of some agricultural lands appointed one Sukhdeo Singh as his E
attorney authorizing him to look after his lands, cultivate the same and
to do all other acts, deeds and things including mortgage or sell the same,
get the requisite deeds and documents registered, by a deed of Power of
Attorney dated 16.7.1999. The said deed was presented before the Sub-
Registrar, Bikaner on 30.7.1999 for the purpose of registration which was F
refused by making an endorsement on the document that the same could
not be registered in terms of the Government Notification dated 26.3.1999
published in the Rajasthan Gazette dated 1.4.1999 as amended on
22.4.1999 whereby and whereunder registration otsuch documents have
been prohibited as being 'opposed to public policy'. The said notifications G
were said to have been issued by the State of Rajasthan in exercise of its
power conferred upon it under Section 22-A of the Act. The Respondent
questioned the constitutionality of Section 22-A of the Act as inserted by
the legislature of Rajasthan as also the aforementioned notifications by
filing a writ petition before the Rajasthan High Court. The Rajasthan High
I H
2 SUPREME COURT REPORTS (2005) SUPP. 3 S.C.R.

A Court declared Section 22-A of the Act as inserted by the Rajasthan
Amendment Act, 1976 being Act No. 16 of 1976 as unconstitutional and
consequently the notifications were also quashed.

In appeal before this court, the appellant contended that a
presumption is attached in favour of a validity of a statute and it would
B be for the person to establish who alleges violation of fundamental or other
rights for impinging upon the constitutional validity. of Section 22-A of
the Act. A legislation directing compulsory registration of a document
and/or refusal to register the same being a matter of policy so as to enable
the State to regulate registration of document or class of documents could
C not be interfered by the High Court. The terminologies 'opposed the public
policy' or 'public interest' carry precise meaning having regard to the
provisions of Section 23 of the Indian Contract Act, Section 7(l)(b)(ii) of
Foreign Awards (Recognition and Enforcement) Act, 1961, and Section
3(1) of U.P. (Temporary Control of Rent and Evictions) Act, 1947 and
Section 34(2)(b)(ii) of Arbitration and Conciliation Act, 1996 and, thus,
D cannot be said to be wholly arbitrary. In exercise of its power of judicial
review the superior courts would not invalidate a statute only on the
ground that guidelines have not been laid down by the legislature for
making subordinate legislation or that the legislature has abdicated its
essential legislative function in favour of executive but in a given case may
E strike down only the notifications issued by the State if it be found to have
exceeded its jurisdiction in that behalf. In any event as such guidelines
can be found out either from the preamble or from other provisions of
the Act; the same need not be.stated in the offending provision itself, This
Court while hearing the matter having regard to the fact that similar
amendments have been carried out by the other States and would have
F wid~ repercussions directed issuance of notice to the State of Bihar,
Gujarat, Karnataka, Maharashtra and Meghalaya. Pursuant to the said
directions, the intervenor States including the States of Maharashtra,
Gujarat, Jharkhand, Meghalaya, etc., appeared and made their
submissions.

G Dismissing the appeals, the court

HELD: 1.1. There exists a presumption as regard constitutionality
of a statute. Rule of presumption in favour of constitutionality, however,
only shifts the burden of proof and rests it on the shoulders of the person
H who attacks it. It is for that person to show that there has been a clear •
STATE OF RAJASTHAN v. BASANTNAHATA 3
transgression of constitutional principles. But this rule is subject to the A
limitation that it is operative only till the time it becomes clear and beyond
reasonable doubt that the legislature has crossed its limits. This rule in
its application as principle of construction means that if two meanings are
possible then the courts will reject the one which renders it
unconstitutional and accept the other upholding the validity of the
impugned legislation. [15-C-D-E) B
~
Charanjit Lal Chowdhury v. the Union of India and Ors .. AIR (1951)
SC 41 : (1950) SCR 869, Union ofIndia v. Elphinstone Spinning and Weaving
Co. Ltd. and Ors., AIR (2001) SC 72 : [2001) 4 SCC 139 and Seth Nand Lal
and Anr. v. State of Haryana and Ors., [1980) Supp SCC 574, referred to.
c
Craies on Statute Law, Seventh Edition, referred to.

1.2. The court shall not invalidate a legislation on the ground of
delegation of essential legislative function or on the ground of conferring
unguided, uncontrolled and vague powers upon the delegate without taking D
into account the preamble of the Act as also other provisions of the statute
in the event they provide good means of finding out the meaning of the
offending statute. [20-C-D)

People Union for Civil Liberties and Anr. v. Union of India and Ors.,
[2004) 2 SCC 476 and Andhra Bank v. B. Satyanarayana and Ors., [2004) 2 E
sec 657' referred to.
1.3. The said principle of presumption is not an absolute rule but it
is also subject to limitations. Its application in interpretation can only be
.,,
> applied to resolve a conflict when two interpretations are possible and not
when there is only one leading to the conclusion that the delegated F
legislation is unguided and excessive. If the provisions are unconstitutional
a mere presumption which decides the burden of proof cannot save them.
[16-A-B-CJ

Craies on Statute Law, seventh edition at page 95, referred to.
G
2.1. The necessity of the legislature's delegating its powers in favour
of the executive is a part of legislative function. It is a constituent element
of the legislative power as a whole under Article 245 of the Constitution.
Such delegation of power, however, cannot be wide, uncanalised or
} unguided. The legislature while delegating such power is required to lay
'" H
4 SUPREME COURT REPORTS [2005] SUPP. 3 S.C.R.

A down the criteria or standard so as to enable the delegate to act within
the framework of the statute. The principle on which the power of the
legislature is to be exercised is required to be disclosed. It is also trite that
essential legislative functions cannot be delegated. The procedural powers
are, therefore, normally left to be exercised by the executive by reason of
a delegated legislation. [16-F-G-H; 17-A)
B
IN re: Delhi Laws Act, 1912 (1951) SCC 747, Rajnarain Singh v. The
,
Chairman, Patna Administration Committee, Patna and Anr., (1955) 1 SCR I

290, Hamdard Dawakahana and Anr. v. The Union of India and Ors., AIR
(1960) SC 554, Krishna Mohan (P) Ltd v. Municipal Corporation of Delhi
and Ors., (2003) 7 SCC 151, Kishan Prakash Sharma and Ors. v. Union of
c India and Ors., [2001) 5 SCC 212, Ajoy Kumar Banerjee and Ors. etc. v.
Union of India and Ors., [1984) 3 SCC 127 and Agricultural Market
Committee v. Shalimar Chemical Works Ltd., [1997) 5 SCC 516, referred
to.

Ramesh Birch and Ors. etc. v. Union of India and Ors., [1989) Supp.
D sec 430, distinguished. •
2.2. A subordinate legislation which is not backed up by any statutory
guideline under the substantive law and opposed to the enforcement of
legal right would not be valid. [29-C-D)

E Renusagar Power Co. Ltd v. General Electric Co., [1994) Supp. I SCC
644 and Oil and Natural Gas Corporation Ltd. v. Saw Pipes Ltd, [2003) 5
sec 705, referred to.
2.3. A party in suit against whom illegality is pleaded also gets an
'-
opportunity to defend himself. Hence this essential function to decide on
F what is public policy can not be delegated to executive through a
subordinate legislation. The legislature of a State, however, may lay down
as to which acts would be immoral being injurious to the society. Such a
legislation being substantive in nature must receive the legislative sanction
specifically and through a subordinate legislation or executive instructions.
[24-A-B-C)
G
2.4. Essential functions of the legislature cannot be delegated and it
must be judged with touchstone of Article 14 and Article 246 of the
Constitution of India. It is, thus, only the ancillary and procedural powers
which can be delegated and not the essential legislative point. The
contention raised on behalf of the Appellants herein that the State, being ..
H
STATE OF RAJASTHAN v. BASANTNAHATA 5
"' higher authority, having been delegated with the power of making A
declaration in terms of Section 22-A of the Act, would not be abused is
stated to be rejected. Such a question does not arise herein as the provision
has been held to be ultra vires Articles 14 and 246 of the Constitution of
India. The contention raised to the effect that this Court would not
interfere with the policy decision is again devoid of any merit. A legislative
policy must conform to the provisions of the constitutional mandates. Even
B
otherwise a policy decision can be subjected to judicial review.
~
(30-C-D-EJ

Cellular Operators Association of India and Ors. v. Union of India and
Ors., [2003) 3 SCC 186 and Clariant International Ltd and Anr. v. Securities
and Exchange Board of India, (2004) 8 SCC 524, referred to.
c
3.1. Preamble and statement of object and reason can only be looked
into when there is vagueness or ambiguity present in the language of the
Act. So it is only when the language is itself capable of more than one
1 meaning, then the preamble or the statement of objects and reasons can
D
be looked into and not when something is not capable of given a precise
meaning as in case of 'Public policy'. Even if the statement of Objects and
Reasons is looked into to ascertain its meaning then also there is nothing
therein which can be said to be related to morality or public policy.
(20-D-E; 21-A-B]
E
People Union for Civil Liberties and Anr. v. Union of India and Ors.,
(2004] 2 SCC 476, Andhra Bank v. B. Satyanarayana and Ors., (2004] 2 SCC
657, Arnit Das v. State of Bihar, [2000] 5 SCC 488 and Godwat Pan Masala
Products J.P. Ltd and Anr. v. Union of India and Ors., (2004] 7 SCC 68,
"' t referred to.
F
3.2. It is always in the domain of judiciary to interpret what is
morality at a given point of time and this power can not be given to
executive. Finality cannot be attached to decisions of executive when such
things are in exclusive domain of judiciary. (21-D-E-F]

State· of Kera/a and Ors. v. Travancore Chemicals and Manufacturing G
Co. and Anr., (1998] 8 SCC 188, referred to.

3.3. It would not be correct to contend that public policy is capable
of being given a precise definition. What is 'opposed to public policy' would
be a matter depending upon the nature of the transaction. The pleadings
..I
of the parties and the materials brought on record would be relevant so H
6 SUPREME COURT REPORTS {2005] SUPP. 3 S.C.R.

A as to enable the court to judge the concept as to what is for public good.
or in the public interest or what would be injurious or harmful to the
public good or the public interest at the relevant point of time as contra-
distinguished from the policy of a particular government. A law dealing
with the rights of a citizen is required to be clear and unambiguous.
B Doctrine of public policy is contained in a branch of common law, it is
governed by precedents. This doctrine should not be taken recourse to in
'clear and incontestable cases of harm to the public though the heads are
not closed and though theoretically it may be permissible to evolve a new
head under exceptional circumstances of a changing world'.
(22-F-G-H; 23-A-B)
c Gherulal Parakh v. Mahadeodas Maiya and Ors., AIR (1959) SC 781;
(1959) 2 SCR 406 and Zoroastrian Cooperative Housing Society Ltd. and
Anr. v. District Registrar, Cooperative Societies (Urban) and Ors., (2005} 5
sec 632, referred to.

D 3.4: The phraseology 'opposed to public policy' may embrace within
its fold such acts which are likely to deprave, corrupt or injurious to the
public morality and, thus, essentially should be a matter of legislative
policy. (24-C-D]

Central Inland Water Transport Corporation Limited and Anr. v. Brojo
E Nath Ganguly and Anr. etc., [1986} 3 SCC 156, referred to.
3.5. The question as to whether the statement as regard the validity
of a contract on the ground that it is opposed to public policy must
normally be viewed within the parameters fixed therefor by longstanding
authorities or precedents but in deciding a case it may not be covered by
F ~uch ai(thorities and lacking precedents, the preamble of the Constitution
or the principles underlying the fundamental rights and the Directive
Principles in our Constitution can be taken recourse to. (24-D-E-FJ

G
"' Rattan Chand Hira Chand v. Askar Nawazjung (Dead) by lRs.. and Ors.,
1199113sec67, referred to.

Prof Winfield's Article "Public Policy in the English Common Law",
Chitty on Contracts, 28th edition at page 838, Cheshire, Fifoot and Furmst
on in their law of Contract, Fourteenth Edition, Prof Winfield in his article
"Public Policy in the English Common Law" reported in 42 Harvard law
H Review 76, referred to.
STATE OF RAJASTHAN v. BA SANT NAHA TA 7
Nagle v. Fei/den, (1966) 2 QB 633 and Newcastle Diocese Church A
Property Trustees v. Ebbeck, (1960) 34 ALJR 413, referred to.

3.6. A doctrine which is so vague or uncertain cannot and does not
provide any guideline Whatsoever. Furthermore, the executive while
making a subordinate legislation cannot be permitted to open new heads
of public policy in its whims. Towards opposed to public policy, therefore, B
do not lay down any guidelines to render it constitutional. Execution of
)' power of attorney per se is not invalid. On the other hand, it is lawful. A
transaction between two persons capable of entering into a contract which
does not contravene any statute would be valid in law. The State of
Rajasthan does not make such transactions illegal. The Indian Contract C
Act or the Power of Attorney Act has not been amended. Execution of a
power of attorney per se, therefore, is not illegal. Registration of power
of attorney except in cases falling under Section 17(1)(g) or 17(l)(h) is not
compulsorily registrable. Sections 32 and 33 of the India Registration Act
also do not bar any such registration. The Act only strikes at the
.. documents and not at the transactions. The whole aim of the Act is to D
govern documents and not the transactions embodied therein. Thereby
only the notice of the public is drawn. (26-G-H; 27-A; 28-A-B-C-D)
'
M.E. Moo/la Sons, ltd. (in Liquidation) v. Official Assignee, Rangoon
and Ors., AIR (1936) PC 230, K. Panchapagesa Ayyar and Anr. v. K.
Kalyanasundaram Ayyar and Ors., AIR (1957) MADRAS 472 and Syed E
Abdullah Sahib v. Syed Rahmatul/a Sahib alias Baji Sahib and Ors., AIR
(1960) MADRAS 274, referred to.

3. 7. Hence, it becomes amply clear that it is not possible to define
Public policy with precision at any point of time. It is not for the executive F
to fill these grey areas as the said power rests with judiciary. Whenever
interpretation of the concept "public policy" is required to be considered
it is for the judiciary to do so and in. doing so even the power of the
judiciary is very limited. [29-G"H)

3.8. Having regard to the doctrine of separation of powers what is G
essentially within the exclusive domain of the judiciary can be delegated
to the executive unless policy behind the same is finally laid down becomes
redundant as a thing ·which itself is so uncertain cannot be a guideline for·
any thing or cannot be said to be providing sufficient framework for the
executive to work under it. (30-A-B-C)
> H
8 SUPREME COURT REPORTS (2005] SUPP. 3 S.C.R.

A CIVIL APPELLATE JURISDICTION: Civil Appeal No. 7800 of2001.

From the Judgment and Order dated 28.11.2000 of the Rajasthan High
Court in D.B.C.W.P. No. 3554 of 1999.

Aruneshwar Gupta and Naveen Kumar Singh for the Appellants.
B
Ms. Manjeet Chawla for the Respondent.

Yashank Adhyaru, Ms. Hemantika Wahi, Boby Augustine and Rutwik
Panda for State of Gujarat.

C Sanjay R. Hegde, Anil K. Mishra and A. Rohen Singh for State of
Kamataka.

U.U. Lalit, Gautam Godara, *Ms. Pinky Anand, (*also for State of
Jharkhand), Ravindra Keshavrao Adsure for State of Maharashtra.

Manish Mohan, Aman Sinha and D.K. Sinha for Ugra Shankar Prasad w
D
for State of Meghalaya.

Kumar Rajesh Singh and B.B. Singh for State of Bihar.

D.N. Goburdhun, Rajesh Pathak and Arup Banerjee for State of
E Jharkhand.

The Judgment of the Court was delivered by

S.B. SINHA, J. Constitutionality of Section 22-A of the Registration
Act (The Act) as amended by the State of Rajasthan as also the notifications
F issued by it in terms thereof are in question in this appeal which arises out
of a judgment and order dated 28. I I .2000 passed by a Division Bench of the
High Court of Judicature for Rajasthan at Jodhpur in D.B. Civil Writ Petition
No. 3554 of 1999.

FACTS:
G
The Respondent herein is a resident of town of Bikaner. He was a
Khatedar tenant of agricultural lands situated at Chak No. 13 KYD, Square
No. 110/24, Killa No. I to 25 Bighas, Tehsil Khajuwala, District Bikaner. He
appointed one Sukhdeo Singh as his attorney authorizing him to look after
his lands, cultivate the sam~ and to do all other acts, deeds and things including t
H
STATE OF RAJ AST HAN v. BASA NT NAHAT A [S. B. SINHA, J.] 9

A
mortgage or sell the same, get the requisite deeds and documents registered,
by a deed of Power of Attorney dated 16.7.1999. The said deed was presented
before the Sub-Registrar, Bikaner on 30.7.1999 for the purpose of registration
which was refused by making an endorsement on the document that the same
could not be registered in terms of the Government Notification dated
26.3.1999 published in the Rajasthan Gazette dated 1.4.1999 as amended on B
22.4.1999 whereby and whereunder registration of such documents have been
prohibited as being 'opposed to public policy'. The said notifications were
said to have been issued by the State of Rajasthan in exercise of its power
conferred upon it under Section 22-A of the Act.

The Respondent herein questioned the constitutionality of Section 22- C
A of the Act as inserted by the legislature of Rajasthan as also the
aforementioned notifications by filing a writ petition before the Rajasthan
High Court.

HIGH COURT:
• D
By reason of the impugned judgment the Rajasthan High Court declared
Section 22-A of the Act as inserted by the Rajasthan Amendment Act, 1976
being Act No. 16 of 1976 as unconstitutional and consequently the notifications
as contained in annexures 3, 4, 6 and 7 of the writ petition were also quashed.
The Sub-Registrar was also directed to register the power of attorney dated E
16.7.1999 which was presented on 30.7.1999 within two weeks from the date
of presentation of the copy of the order.

The High Court in its impugned judgment, inter a/ia, held that Section
22-A of the Act confers arbitrary powers on the State Government to determine
as regard declaring a particular document being opposed to public policy. It F
was opined that the question as to whether a transaction is opposed to public
policy or not can be determined only by the courts and not by the Sub-
Registrar. The impugned legislation invades the right of a citizen to deal with
the property and, thus, is wholly arbitrary and unreasonable. The object of
registration of a document is not achieved by the impugned legislation. The G
Act deals with the deeds and documents and not transactions and in that view
of the matter non-registration of a document per se cannot be said to be
opposed to public policy.

SECTION 22-A OF THE ACT AND THE NOTIFICATIONS:

Section 22-A of the Act reads as under: H
10 SUPREME COURT REPORTS (2005) SUPP. 3 S.C.R.

A "Documents registration of which is opposed to public policy.-(1)
The State Government may, by notification in the Official Gazette,
declare that the registration of any document or class of document is
opposed to public policy.

(2) Notwithstanding anything contained in this Act, the registering
B officer shall refuse to register any document to which a notification
issued under sub-section (I) is applicable."

The Notifications contained in annexures 3, 4, 6 and 7 of the Writ
petition are as under:

C "Annexure/3

I April, 1999

"S.0.7. In exercise of the power conferred by section 22-A of the
Indian Registration Act, 1908 [Central Act No. XVI of 1908] P.S.
applicable in the State of Rajasthan, the State Govt. hereby declares
D
that the registration of the following classes of documents is opposed
to public policy.

Any power of attorney authorizing the attorney to transfer any
immovable property for a term in excess of six months or irrevocable
or where the term is not mentioned."
E
[No. F.2(2)FD/Tax-Div/99-I 89]

By order of the Governor,

Sd/-
F
Dy. Secretary to Govt."

"Annexure/4

April 22, 1999

G "S.0. 62-In exercise of the powers conferred under Section 22-A of
the Indian Registration Act, 1908 [Central Act No. XVI of 1908] as
applicable in the State of Rajasthan, it is expedient to amend the
Notification No. F.2[3] FD-Tax-Div/99-189 dated 26.3.1999 as under;

In place of the phrase "six months" in the above notification, the
H phrase "Three years" is substituted.
STATEOFRAJASTHANv. BASANTNAHATA [S. B. SINHA, J.) 11

[No. F.2(FDffAX-DIV/99-213] A
By order of the Governor,

Sd/-

(Shikhar Agarwal) B
Dy. Secretary Govt."

"Annexure/6
26th March, 1999

S.O. 484:-In exercise of the powers conferred by Section 22-A of C
the Registration Act, 1908 (Central Act No. XVI of 1908), as
applicable in the State of Rajasthan, the State Govt. hereby declares
that the registration of any of the following documents is opposed to
public policy:-

Power of Attorney authorizing the execution of the sale deed, D
gift, mortgage or any other document of transfer of immovable·
property presentation for registration before any office other than the
Sub-Registrar or Registrar respectively in whose District or Sub-
District the whole or some part of the property to which such power
of attorney relates is situated.
E
[No. F.2[3] FDffAX-DIV./99-186].

By order of the Governor,

Sd/-

Dy. Secretary Govt." F
'.'Annexure/7

22nd April, 1999

S.O. 60.-ln exercise of the powers conferred under section 22-A of G
the Indian Registration Act, 1908 [Central Act No. XVI] as applicable
in the State of Rajasthan, it is expedient to amend the notification No.
F.2[16]FDffax Div./99-186 S.O. 484 dated 26.03.1999 in the public
interest as under:

) H
12 SUPREME COURT REPORTS [2005] SUPP. 3 S.C.R.

A AMENDMENT @@

· After the words 'authorising' following words are added:

"Other than the power of attorney executed in favour of brother or
sister or son or daughter or father or mother or husband or wife or
B grandsons or granddaughter".

[No. F.2(3]FD/Tax Div./99-212]

By order of the Governor,

Sd/-
c Dy. Secretary Govt."

PROCEEDING BEFORE THIS COURT:

This Court while hearing the matter having regard to the fact that
similar amendments have been carried out by the other States and would
D have wide repercussions directed issuance of notice to the States of Bihar,
Gujarat, Karnataka, Maharashtra and Meghalaya. Pursuant to the said
directions, the intervenor States including the States of Maharashtra, Gujarat,
Jharkhand, Meghalaya, etc. appeared and made their submissions.

E SUBMISSIONS:
The learned counsel appearing on behalf of the Appellant and the
intervenor States raised inter a/ia the following contentions: {

(i) That a presumption is attached in favour of a validity of a statute
F and it would be for the person to establish who alleges violation of fundamental
or other rights for impinging upon the constitutional validity of Section 22-
A of the Act.

(ii) A legislation directing compulsory registration of a document
and/or refusal to register the same being a matter of policy so as to enable
G the State to regulate registration of document or class of documents could not
be interfered by the High Court.

(iii) The terminologies 'opposed to public policy' or 'public interest'
carry precise meaning having regard to the provisions of Section 23 of the
Indian Contract Act, Section 7(1)(b)(ii) of Foreign Awards (Recognition and
H Enforcement) Act, 1961, Section 3(1) of U.P. (Temporary Control of Rent (
STATEOFRAJASTHAN v. BASANTNAl-IATA [S. B. SINHA, J.] 13

and Evictions) Act, 1947. and Section 34(2)(b)(ii) of Arbitration and A
Conciliation Act, 1996 and, thus, cannot be said to be wholly arbitrary.

(iv) In exercise of its power of )udicial review the superior courts
would not invalidate a statute only on the gr.pund that guidelines have not
been laid down by the legislature for making subordinate legislation or that
the legislature has abdicated its essential legislative function in favour of B
'.~
executive but in a given case may strike down only the notifications issued
by the State if it be found to have exceeded its jurisdiction in that behalf. In
any event as such guidelines can be found out either from the preamble or
from other provisions of the Act, the same need not be stated in the offending
provision itself.
c
THE ACT:

The Act was enacted to consolidate the enactments relating to the
Registration of Documents. Prior to enactment of the said Act, the provisions
I relating to registration of documents were scattered in seven enactments. The
D
Act was enacted in terms of Entry 18, List II and Entry 6, List III of the
Seventh Schedule of the Constitution oflndia. It mainly deals with the necessity
of getting a document registered in India so as to make them valid and even
if they are executed outside India to provide for registration thereof after
their first arrival in India.
E
Section 17 of the Act enumerates the instruments registration of which
is compulsory under the Act whereas Section 49 encompasses the effect of
a failure to register. Registration of documents, however, is not confined only
to documents relating to immovable property but also for the documents
_)
dealing with other matters as for example adoption. Section 17 of the Act has
been !!_mended inter a/ia by the State of Rajasthan. The State of Rajasthan, F
however, inserted Section 17(l)(t) and 17(J)(g) with effect from 18.9.1989
and made the registration of agreement to sale and irrevocable power to
attorney relating to transfer of immovable property in any way a C()mpulsorily
registerable document. Section 18 provides for optional registration of
documents specified therein. Section 22 provides for description of houses G
and land by reference to Government maps or surveys. Several States, however,
as noticed hereinbefore, inserted Section 22-A. In terms of Sub-Section (1)
thereof, the State Governments have been authorized to issue a notification
declaring that the registration of any document or class of document would
) be opposed to public policy. Sub-section (2) of Section 22-A starts with a
H
14 SUPREME COURT REPORTS [2005) SUPP. 3 S.C.R.

A non-obstante clause stating that notwithstanding anything contained in the
Act, the registering officer shall refuse to register any document for which a
notification issued under Sub-section ( 1) is applicable.

Section 32 occurring in Part VI provides for presentation of documents
for registration. Section 33 deals with powet of attorney recognizable for the
B said purpose. Part XI of the Act deals with the duties and powers of registering
officers. Part XII deals with documents which a Sub-Registrar may refuse to
register which, inter alia, refers to a document relating to property, which
was not situated within the district of the Registrar or which ought to be
registered in the office of Sub-Registrar or on the ground of denial of execution.
C An appeal from such orders of the Sub-Registrar is provided for under Sub-
section (2) of Section 72. Even as against the order of Registrar a suit is
maintainable. However, if and when a document is refused to be registered
by the Sub-Registrar in terms of Sub-section (2) of Section 22-A of the Act,
evidently no appeal would lie.

D POWER OF AITORNEY:
A grant of power of attorney is essentially governed by Chapter X of
the Indian Contract Act. By reason of a deed of power of attorney, an agent /
is formally appointed to act for the principal in one transaction or a series of
transactions or to manage the affairs of the principal generally conferring
E necessary authority upon another person. A deed of power of attorney is
executed by the princip~l in favour of the agent. The agent derives a right to
use his name and all acts, deeds and things done by him and subject to the
limitations contained in the said deed, the same shall be read as if done by
the donor. A power of attorney is, as is well-known, a document of
F convenience.

Besides the Indian Contract Act, the Power of Attorney Act, I 882 deals
with the subject. Section 1A of the Power of Attorney Act defines power of
attorney to include any instruments empowering a specified person to act for
and in the name of the person executing it. Section 2 of the said Act reads,
G thus:

.. Execution under power-of attorney. -The donee of a power-of-
attorney may, if he thinks fit, execute or do any instrument or thing
in and with his own name and signature, and his own seal, where
sealing is required, by the authority of the donor of the power; and
(
H every instrument and thing so executed and done, shall be as effectual
STATEOFRAJASTHANv. BASANTNAHATA[S. B. SINHA,J.] 15
in law as if it had been executed or done by the donee of the power A
in the name, and with the signature and seal, of the donor thereof.

This section applies to powers-of-attorney created by instruments
executed either before or after this Act comes into force."

Execution of a deed of power of attorney, therefore, is valid in law B
and subject to the provisions of the Act is not compulsorily registerable.

PRESUMPTION AS TO CONSTITUTIONALITY OF A STATUTE:

Indisputably, there exists a presumption as regard constitutionality of a
statute. Rule of presumption in favour of constitutionality, however, only C
shifts the burden of proof and rests it on the shoulders of the person who
attacks it. It is for that person to show that there has been a clear transgression
of constitutional principles [See Charanjit Lal Chowdhury v. The Union of
India and Ors., AIR [1951] SC 41: [1950] SCR 869]. But this rule is subject
>
to the limitation that it is operative only till the time it becomes clear and
beyond reasonable doubt that the legislature has crossed its limits. This rule D
in its application as principle of construction means that if two me~nings are
possible then the courts will reject the one which renders it unconstitutional
and accept the other upholding the validity of the impugned legislation.

In Union of India v. Elphinstone Spinning and Weaving Co. Ltd. and E
Ors., AIR (2001) SC 72 : [2001] 4 SCC 139, it was stated:

"9. A statute is construed so as to make it effective and operative.
There is always a presumption that the legislature does not exceed its
)
jurisdiction and the burden of establishing that the legislature has
transgressed constitutional mandates, such as those relating to F
fundamental rights, is always on the person who challenges its vires.
Unless it becomes clear beyond reasonable doubt that the legislation
in question transgresses the limits laid down by the organic law of the
Constitution it must be allowed to stand as the true expression of the
national will-Shell Co. of Australia v. Federal Commr. of Taxation.
The aforesaid principle, however, is subject to one exception that if G
a citizen is able to establish that the legislation has invaded its
fundamental rights then the State must justify that the law is saved.
It is also a cardinal rule of construction that if on one construction
being given the statute will become ultra vires the powers of the
)
legislature whereas on another construction which may be open, the H
16 SUPREME COURT REPORTS [2005] SUPP. 3 S.C.R.

A statute remains effective and operative, then the court will prefer the
latter, on the ground that the legislature is presumed not to have
intended an excess of jurisdiction."

Hence, the said principle of presumption is not an absolute rule but it
is also subject to limitations. Its application in interpretation can only be
B applied to resolve a conflict when two interpretations are possible and not
when there is only one leading to the conclusion that the delegated legislation
is unguided and excessive. If the provisions are unconstitutional a mere
presumption which decides the burden of proof cannot save them.

Jn Craies on Statute Law, seventh edition at page 95, it is stated:
c
"The first business of the courts is to make sense of the ambiguous
language, and not to treat it as unmeaning, it being a cardinal rule of
. construction that a statute is not to be treated as void, however,
oracular. This was thus laid down by Bowen L.J. in Curtis v. Stovin:
"The rules for the construction of statutes are very like those which
D apply to the construction of other documents, especially as regards
one crucial rule-viz. that, if possible, the words of an Act of
Parliament must be construed so as to give a sensible meaning to
them. The words ought to be construed ut res magis valeat quam
pereat." And Fry L.J. added: "The only alternative construction offered
E to us would lead to this result that the plain intention of the legislature
has entirely failed by reason of a slight inexactitude in the language
of the section. If we were to adopt this construction, we should be
construing the Act in order to defeat its object rather than with a view
to carry its object into effect."

F DELEGATED LEGISLATION:
The necessity of the legislature's delegating its powers in favour of the
executive is a part of legislative function. It is a constituent element of the
legislative power as a whole under Article 245 of the Constitution. Such
delegation of power, however, cannot be wide, uncanalised or unguided. The
G legislature while delegating such power is required to lay down the criteria
or standard so as to enable the delegatee to act within the framework of the
statute. The principle on which the power of the legislature is to be exercised
is required to be disclosed. It is also trite that essential legislative functions
cannot be delegated.
H
STATEOFRAJASTHANv. BASANTNAHATA[S. B. SINHA,J.] 17

The procedural powers are, therefore, nonnally left to be exercised by A
the executive by reason of a delegated legislation.

LAW OPERATING IN THE FIELD:

We have been taken through a large number of decisions by the learned
counsel appearing on behalf of the parties beginning from Re: Delhi Laws B
Act, 1912 [1951] SCR 747 to Andhra Bank v. B. Satyanarayana and Ors.,
[2004] 2 SCC 657, but it may not be necessary to deal therewith separately
in great detail.

In Re: Delhi Laws Ai:t (supra) this Court in no unmistakable tenns
stated that the legislature may utilize any outside agency to the extent it finds C
necessary for doing things which it is unable to do itself or finds inconvenient
to do which would mean such things which are ancillary to the main enactment
and necessary for the full and effective exercise of its power of legislation.
Justice Mukherjea, in his opinion, stated:

"It cannot be said that an unlimited right of delegation is inherent in D
the legislative power itself. This is not warranted by the provisions of
the Constitution and the legitimacy of delegation depends entirely
upon its being used as an ancillary measure which the legislature
considers to be necessary for the purpose of exercising its legislative
. powers effectively. and completely. The legislature must retain in its E
own hands the essential legislative functions which consist in declaring
the legislative policy and laying down the standard which is to be
enacted into a rule of law, and what can be delegated is the task of
subordinate legislation which by its very nature is ancillary to the
)
statute which delegates the power to make it. Provided the legislative
policy is enunciated with sufficient clearness or a standard laid down F
the Courts cannot and should not interfere with the discretion that
undoubtedly rests with the legislature itself in detennining the extent
of delegation necessary in a particular case."

As regard delegated power to "restrict and modify", it was held:
G
"delegation .... cannot extend to the altering in essential particulars of
laws which are already in force in the area in question."

"The power to restrict and modify does not import the power to make
essential changes. It is confined to alterations of a minor character
such as are necessary to make an Act intended for one area applicable H
18 SUPREME COURT REPORTS [2005] SUPP. 3 S.C.R.
~·

A to another and to bring it into hannony with laws already in being in
the State, or to delete portions which are meant solely for another
area. To alter essential character of an Act or to change it in material
particulars is to legislate, and that, namely the power to legislature,
all authorities are agreed, cannot be delegated by a Legislature which
is not unfettered."
B J
Vivian Bose, J., however, speaking for a Constitution Bench of this
Court in Rajnarain Singh v. The Chairman, Patna Administration Committee,
Patna and Anr., [1955] 1 SCR 290 analysed the opinions of different learned
Judges in Re: Delhi Laws Act (supra) and culled out the majority view thus:
c " .. that an executive authority can be authorized to modify either
existing or future laws but not in any essential feature. Exactly what
constitutes an essential feature cannot be enunciated in general tenns,
and there was some divergence of view about this in the fonner case,
but this much is clear from the opinions set out above: it cannot
D include a change of policy."

In Hamdard Dawakahan and Anr. v. The Union ofIndia and Ors., AIR
(1960) SC 554 and Krishna Mohan (P) Ltd. v. Municipal Corporation of
Delhi and Ors., [2003] 7 SCC 151, this Court held that vague or uncanalised
or unguided power would render the delegation bad in law.
E
The legal position has been explained by a Constitution Bench of this
•
Court in Kishan Prakash Sharma and Ors. v. Union of India and Ors.,
[200 I] 5 sec 212 holding :

" ... The legislatures in India have been held to possess wide power of
F legislation subject, however, to certain limitations such as the
legislatµre cannot delegate essential legislative functions which consist
in the detennination or choosing of the legislative policy and of
fonnally enacting that policy into a binding rule of conduct. The
legislature cannot delegate uncanalised and uncontrolled power. The
legislature must set the limits of the power delegated by declaring the
G policy of the law and by laying down standards for guidance of those
on whom the power to execute the law is conferred. Thus the
delegation is valid only when the legislative policy and guidelines to
implement it are adequately laid down and the delegate is only
empowered to carry out the policy within the guidelines laid down by
the legislature. The legislature may, after laying down the legislative
..
H
STATE OF RAJASTHAN v. BASANTNAHATA [S. B. SINHA, J.] 19
policy, confer discretion on an administrative agency as to the A
execution of the policy and leave it to the agency to work out the
details within the framework of the policy. When the Constitution
entrusts the duty of law-making to Parliament and the legislatures of
States, it impliedly prohibits them to throw away that responsibility
on the shoulders of some other authority ...."
B
\ .. [See also Ajay Kumar Banerjee and Ors. etc. v. Union of India and
Ors., (1984] 3 SCC 127], Agricultural Market Committee v. Shalimar Chemical
Works Ltd., (1997] 5 SCC 516, Krishna Mohan, (supra).

Our attention, however, has been drawn to a decision of this Court in
Ramesh Birch and Ors. etc. v. Union of India and Ors., [ 1989] Supp. 1 SCC c
430] wherein Ranganathan, J. speaking for a 2-Judge Bench while construing
the provisions of Section 87 of the Reorganisation Act empowering the Central
Government to extend with such restrictions or modifications as it may think
fit any enactment which is in force in a State at the date of notification to the
Union Territory of Chandigarh observed: D
"23. But, these niceties apart, we think that Section 87 is quite
valid even on the "policy and guideline" theory if one has proper
regard to the context of the Act and the object and purpose sought to
be achieved by Section 87 of the Act. The judicial decisions referred
to above make it clear that it is not necessary that the legislature E
should "dot all the l's and cross all the t's" of its policy. It is sufficient
if it gives the broadest indication of a general policy of the legislature.
If we bear this in mind and have regard to the history of this type of
legislation, there will be no difficulty at all .... "
-~

Their Lordships in the fact and circumstance of the case were of the F
view that such delegation of power being confined to a 'transplantation of
law' and not 'enacting a law' shall be valid.

Our attention lfas also been drawn to a Constitution Bench decision of
this Court in Seth Nand Lal and Anr. v. State of Haryana and Ors., (1980]
Supp SCC 574 for the proposition that unless the provisions are so vague, the G
same cannot be declared unconstitutional.

In that case, the Constitution Bench of this Court was concerned with
certain provisions of Haryana Ceiling on Land Holdings Act, 1972 and the
)
validity thereof was upheld in the touchstone of Articles 31-A and 31-B of
H
20 SUPREME COURT REPORTS [2005) SUPP. 3 S.C.R.

A the Constitution of India opining that the impugned Act was within the
legislative competence of the State. The question as regard vagueness of
definition of 'family' etc. came up for consideration and it was held that the
legislature is legally entitled to create legal fiction for the purpose of the said
Act.

B ANALYSIS:

There cannot be any doubt-whatsoever that the court shall not invalidate
a legislation on the ground of delegation of essential legislative function or
on the ground of conferring unguided, uncontrolled and vague powers upon
C the delegate without taking into account the preamble of the Act as also other
provisions of the statute in the event they provide good means of finding out
the meaning of the offending statute. This aspect of the matter has been
considered in some details in People Union for Civil Liberties and Anr. v.
Union of India and Ors., (2004] 2 SCC 476 and Andhra Bank v. B.
Satyanarayana and Ors., (2004] 2 SCC 657 in which one of us was a member.
D
But preamble and statement or"object and reason can only be looked
into when there is vagueness or ambiguity present in the language of the Act
as in Amit Das v. State of Bihar, [2000] 5 SCC 488 wherein this Court has
held:

E "22. All this exercise would have been avoided if only the
legislature would have taken care not to leave an ambiguity in the
definition of ''.juvenile" and would have clearly specified the point of
time by reference to which the age was to be determined to find a
person to be a juvenile. The ambiguity can be resolved by taking into
consideration the Preamble and the Statement of Objects and Reasons. •..
F The Preamble suggests what the Act was intended to deal with. If the
language used by Parliament is ambiguous the court is permitted to
look into the Preamble for construing the provisions of an Act
(Burrakur Coal Co. Ltd. v. Union of India,). A Preamble of a statute
has been said to be a good means of finding out its meaning and, as
G it were, the key of understanding of it, said this Court in A. Thangal
Kunju Musaliar v. M Venkotachalam Patti. The Preamble is a key to
unlock the legislative intent. If the words employed in an enactment
may spell a doubt as to their meaning it would be useful to so interpret
the enactment as to harmonise it with the object which the legislature
had in its view"
H '
STATE OF RAJASTHAN v. BASANT NAHATA [S. B. SINHA, J.) 21
....
So it is only when the language is itself capable of more than one A
meaning, then the preamble or the statement of objects and reasons can be
looked into and not when something is not capable of given a precise meaning
as in case of 'Public policy'. Even ifthe·Statement of Objects and Reasons
is looked into to ascertain its meaning then also there is nothing therein
which can be said to be related to morality or public policy. We have,
furthermore, not been shown as to how the preamble or any other provisions B
of the Act would provide for any guideline in construing Section 22-A of the
t
Act. The principal contention raised on behalf of the counsel for the Appellants,
as noticed hereinbefore, is that the terminology 'opposed to public policy'
itself provide for such guidelines ......

The phraseology 'in the interest of public health' came up for
c
consideration before a Division Bench of this Court in Godwat Pan Masala
Prod~cts J.P. Ltd and Anr v. Union of India and Ors., [2004] 7 SCC 68,
wherein it was held that it cannot operate as an incantation or mantra to get
over all the constitutional difficulties posited. As regard application of doctrine
~ of 'res extra commercium' in relation to tobacco, the court held 'that the same D
is a matter of legislative policy and must arise out of an Act of legislature and
not by a mere notification issued by an executive authority. It is always in
the domain of judiciary to interpret what is morality at a given point of time
and this power can not be given to executive.

Finality cannot be attached to decisions of executive when such things E
are in exclusive domain of judiciary as stated in State of Kera/a and Ors. v.
Travancore Chemicals and Manufacturing Co. and Anr., [1998] 8 SCC 188
observing:

-• "13. Section 59-A enables the Government to pass an
F
administrative order which has the effect of negating the statutory
provisions of appeal, revision etc. contained in Chapter VII of the
Act which would have enabled the appellate or revisional authority
to decide upon questions in relation to which an order under Section
59-A is passed. Quasi-judicial or judicial determination stands replaced
by the power to take an administrative decision. There is nothing in G
- Section 59-A which debars the Government from exercising the power
even after a dealer has succeeded on a question relating to the rate of
tax before an appellate authority. The power under Section 59-A is
so wide and unbridled that it can be exercised at any time and the
). decision so rendered shall be final. It may well be that the effect of
H
22 SUPREME COURT REPORTS [2005) SUPP. 3 S.C.R.

A this would be that such a decision may even attempt to override the
appellate or the revisional power exercised by the High Court under
Section 40 of the Act as the case may be. The section enables passing
of an executive order which has the effect of subverting the scheme
of a quasi-judicial and judicial resolution of the lis between the State
and the dealer."
B
We are not oblivious of the decisions of this Court laying down the
proposition of law that the statute dealing with fiscal matters and I or laying
down a provision or enforcing the doctrine of social justice adumbrated in
the Directive Principles of State Policy as contained in Part JV of the
C Constitution of India ordinarily would not be interfered with by the superior
courts in exercise of their power of judicial review. The Act is neither a fiscal
statute nor deals with any matter falling under Part IV of the Constitution of
India.

PUBLIC POLICY:
D
The words 'Public policy' or 'opposed to public policy', inter alia, find
reference in Section 23 of the Indian Contract Act, Section 7(1 )(b )(ii) of
Foreign Awards (Recognition and Enforcement) Act, 1961, Section 3(1) of
U.P. (Temporary Control of Rent and Evictions) Act, 1947 and Section
34(2)(b )(ii) of Arbitration and Conciliation Act, 1996.
E
By reason of the said provisions the judiciary has been conferred with
power to determine as to the factors of public policy which may form the
basis for interference with a contract or award.

It may not be necessary for us to deal with extensively the case laws ..
F dealing with the relevant provisions of the said statutes but it would not, in
our opinion, be correct to contend that public policy is capable of being given
a precise definition. What is 'opposed to public policy' would be a matter
depending upon the nature of the transaction. The pleadings of the parties
and the materials brought on record would be relevant so as to enable the
G court to judge the concept as to what is for public good or in the public
interest or what would be injurious or harmful to the public good or the
public interest at the relevant point of time as contra-distinguished from the
policy of a particular government. A law dealing with the rights of a citizen
is required to be clear and unambiguous. Doctrine of public policy is contained
in a branch of common law, it is governed by precedents.
H
STATE OF RAJASTHAN v. BASANT NAHA TA [S. B. SINHA, J.] 23
~
The principles have been crystallized under different heads and though A
it may be possible for the courts to expound and apply them to different
situations but it is trite that the said doctrine should not be taken recourse to
in 'clear and incontestable cases of harm to the public though the heads are
not closed and though theoretically it may be permissible to evolve a new
head under exceptional circumstances of a changing world': [See Gherulal
Parakh v. Mahadeodas Maiya and Ors., AIR (1959) SC 781 : [1959] 2 SCR B
406]

In Zoroastrian Cooperative Housing Society Ltd. and Anr v. District
Registrar, Cooperative Societies (Urban) and Ors., [2005] 5 SCC 632,
however, this Court observed:
c
"In the context of Section 23 of the Contract Act, something more
than a possible or plausible argument based on the constitutional
scheme is necessary to nullify an agreement voluntarily entered into
by a person."

It was further observed:
D

"Normally, as stated by this Court in Gherulal Parakh v. Mahadeodas
Maiya, the doctrine of public policy is governed by precedents, its principles
have been crystalised under the different heads and though it was permissible
to expound and apply them to different situations it could be applied only to E
clear and undeniable cases of harm to the public. Although, theoretically it
was permissible to evolve a new head of public policy in exceptional
circumstances, such a course would be inadvisable in the interest of stability
of society."

> A contract being "opposed to public policy" is a defence under section F
23 of the Indian contract Act and the courts while deciding the validity of a
contract has to consider:

(a) Pleadings in terms of Order VI, Rule of the Code of Civil
Procedure.
(b) Statute governing the case G
(c) Provisions of Part III and IV of the Constitution of India
(d) Expert evidence, if any.

(e) The materials brought on record of the case.
~
H
24 SUPREME COURT REPORTS [2005] SUPP. 3 S.C.R.
!"·
A (f) Other relevant factors, if any.

A party in a suit against whom illegality is pleaded also gets an
opportunity to defend himself. Hence this essential function to decide on
what is public policy can not be delegated to executive through a subordinate
legislation.
B
The legislature of a State, however, may lay down as to which acts
would be immoral being injurious to the society. Such a legislation being
substantive in nature must receive the legislative sanction specifically and not
through a subordinate legislation or executive instructions.

C The phraseology 'opposed to public policy' may embrace within its
fold such acts which are likely to deprave, corrupt or injurious io the public
morality and, thus, essentially should be a matter of legislative policy.

The said phraseology came up for consideration before this Court in
Central Inland Water Transport Corporation Limited and Anr. v. Brojo Nath
D Ganguly and Anr etc., [1986] 3 sec 156 where a note of caution has been
sounded that it being a 'very unruly horse', once when gets astride one does
not know how far it would carry him. The question as to whether the statement
as regard the validity of a contract on the ground that it is opposed to public
policy must normally be viewed within the parameters fixed therefor by
E longstanding authorities or precedents but in deciding a case it may not be
covered by such authorities and lacking precedents, the preamble of the
Constitution or the principles underlying the fundamental rights and the
Directive Principles in our Constitution can be taken recourse to. This Court
in Rattan Chand Hira Chand v. Askar Nawazjung (Dead) by LRs.. and Ors., ·
[1991] 3 SCC 67 quoted the following from Prof. Winfield's Article "Public •
F Policy in the English Common Law" :

"Some judges appear to have thought it [the unruly horse of
public policy] more like a tiger, and refused to mount it at all, perhaps
because they feared the fate of the young lady of Riga. Others have
regarded it like Balaam 's ass which would carry its rider nowhere.
G But none, at any rate at the present day, has looked upon it as a
Pegasus that might soar beyond the momentary needs of the
community."

It was further observed:

H "All courts have at one time or the other felt the need to bridge the
STATEOFRAJASTHANv. BASANTNAHATA [S. B. SINHA,J.) 25
4r
gap between what is and what is intended to be. The courts cannot A
in such circumstances shirk from their duty and refuse to fill the gap.
In .performing this duty they do not foist upon the society their value
judgments. They respect and accept the prevailing values, and do
what is expected of them. The courts will, on the other hand, fail in
their duty if they do not rise to the occasion but approve helplessly
of an interpretation of a statute or a document or of an action of an B
individual which is certain to subvert the societal goals and endanger
the public good."

In Chitty on Contracts, 28th edition at page 838, it is stated:

"Objects which on grounds of public policy invalidate contracts may, c
for convenience, be generally classified into five groups : first, objects
which are illegal by common law or by legislation; secondly, objects
injurious to good government either in the field of domestic or foreign
affairs; thirdly, objects which interfere with the proper working of the
machinery of justice; fourthly, objeds injurious to marriage and D
morality; and fifthly, objects economic~lly against the public interest.
This classification is adopted primarily for case of exposition. Certain
cases do not fit clearly into any of these five categories."

The learned author observed that doctrine of public policy is somewhat
open-textured and flexible which has been the cause of judicial censure of E
the doctrine and has been seen by the courts as being vague and unsatisfactory,
a treacherous ground for legal decision, a very unstable and dangerous
foundation on which to build until made safe by decision as also being not
immutable, stating that the commercial practice which ·was once permissible
.. may be found to be mischievous and vice-versa.
F
In Cheshire, Fifoot and Furmston in their Law of Contract, Fourteenth
Edition at page 407 states:

"Assuming, then, that contracts vitiated by some improper element
must be divided into two classes, how are the more serious examples
of 'illegality' at common law to be distinguished from the less serious? G
Which of the contracts that have been frowned upon by the courts are
so patently reprehensible - so obviously contrary to public policy -
that they must be peremptorily styled illegal? Judicial authority is
lacking, but it is submitted that the epithet 'illegal' may aptly and
,., correctly be applied to the following six types of contract:
.::i H
26 SUPREME COURT REPORTS [2005] SUPP. 3 S.C.R.

A A contract to commit a crime, a tort or a fraud on a third party.

A contract that is sexually immoral.

A contract to the prejudice of the public safety.

A contract prejudicial to the administration of justice.
B
A contract that tends to corruption in public life.

A contract to defraud the revenue.

There remain three types of contract which offend 'public policy',
C but which are inexpedient rather than unprincipled.

A contract to oust the jurisdiction of the court.

A contract that tends to prejudice the status of marriage.

A contract in restraint of trade."
D
Prof. Winfield in his article "Public Policy in the English Common
Law" reported in 42 Harvard Law Review 76 stated:

"First among these is the principle that it cannot conflict with existing
Parliamentary legislation. It may be useful in resolving a doubtful
E point in the interpretation of an enactment. But there cannot be public
policy leading to one conclusion when there is a statute directing a
precisely opposite conclusion. Moreover, where a rule of the common
law is itself clear, arguments based upon public policy are beside the
mark, however useful and admissible they may be where a new or
doubtful question arises. There has been a noticeable tendency to
F regard public policy as a last resort for molding the law." •.
Despite the words of caution that the court's duty is to expound the
law and not expand, new heads of illegality of contract being opposed to
public policy have been found out and in any event there exists such a
possibility. (See Nagle v. Feilden, (1966) 2 QB 633 and Newcastle Diocese
G Chufch Property Trustees v. Ebbeck, (1960) 34 ALJR 413].

A doctrine which is so vague or uncertain, in our opinion, thus, cannot
and does not provide any guideline whatsoever. Furthermore, the executive
while making a subordinate legislation cannot be permitted to open new
H heads of public policy in its whims. The provisions of the Act, therefore, do
STA TE OF RAJASTHAN v. BASANT NAHATA (S. B. SINHA, J.) 27

not lay down any guidelines to render it constitutional. Execution of power A
of attorney per se is not invalid. On the other hand, it is lawful.

The notifications issued by the State of Rajasthan themselves show that
the uncertain position to which the parties to a transaction evidenced by a
deed or a document can be put to. By the notification dated 1st April, 1999,
any power of attorney authorizing the attorney to transfer any immovable B
property for a term in excess of six months or irrevocable or where the term
is not mentioned was declared to be opposed to public policy; whereas by
reason of a subsequent notification dated 22nd April, 1999 in place of six
months, three years was substituted. Similarly, by a notification dated 26th
March, 1999, power of attorney authorizing the execution of the sale deed, C
gift, mortgage or any other document of transfer of immovable property
presentation for registration before any office other than the Sub-Registrar or
Registrar respectively in whose District or Sub-District the whole or some
part of the property to which such power of attorney relates was declared as
opposed to public policy which was amended by a notification dated 22nd
April, 1999 exempting such power of attorney executed in favour of brother D
or sister or son or daughter or father or mother or husband or wife or grand-
sons or granddaughter.

Execution of a power of attorney in terms of the provisions of the
Indian Contract Act as also the Power of Attorney Act is valid. A power of
attorney, we have noticed hereinbefore, is executed by the donor so as to E
enable the donee to act on his behalf. Except in cases where power of attorney
is coupled with interest, it is revocable. The donee in exercise of his power
under such power of attorney only acts in place of the donor subject of
course to the powers granted to him by reason thereof. He cannot use the
power of attorney for his own benefit. He acts in a fiduciary capacity. Any p
act of infidelity or breach of trust is a matter between the donor and the
donee.

CONCLUSION :

We have noticed hereinbefore that the State of Rajasthan inserted Section G
l 7(l)(t) and (g) in the Act making the registration of agreement to sale and
irrevocable power of attorney relating to transfer of immovable property in
any way a compulsorily registrable document. The State went further to
amend Article 23 of the Second Schedule of the Stamp Act, 1899 making an
agreement to ·sale of immovable property and irrevocable power of attorney
or any other instrument executed in the course of conveyance, etc. with H

\
28 SUPREME COURT REPORTS [2005] SUPP. 3 S.C.R.
..
A possession to be deemed to be a conveyance and stamp duty is chargeable
thereon accordingly. According to the State, despite such enactments sales
were being made by seller on the basis of a power of attorney with a right
to sell the property and such powers of attorney were being executed for an
unspecified period. A transaction between two persons capable of entering
into. a contract which does not contravene any statute would be valid in law.
B The State of Rajasthan does not make such transactions illegal. The Indian
Contract Act or the Power of Attorney Act have not been amended. Execution
of a power of attorney per se, therefore, is not illegal. Registration of power
of attorney except in cases falling under Section 17(1 )(g) or 17(1 )(h) is not
compulsorily registrable. Sections 32 and 33 of the Indian Registration Act
C also do not bar any such registration.

The Act only strikes at the documents and not at the transactions. The
whole aim of the Act is to govern documents and not the transactions embodied
therein. Thereby only the notice of the public is drawn.

D In ME. Moo/la Sons, Ltd. (in Liquidation) v. Official Assignee, Rangoon
and Ors., AIR (1936) PC 230, while commenting on section 17 and section
49 of the Act, it was stated: .

"It is to be observed upon a comparison of these different sections
that while the Registration Act only requires certain documents to be
E registered on pain of the consequences entailed by S. 49, T.P. Act, by
S. 54 enacts that (with a limited exception) the sale of immovable
property can be made only by registered instrument. The provisions
of the Registration Act by themselves would not operate to render
invalid a mere oral sale. On the other hand the somewhat wide phrase
"any interest... .... to or in immovable property" which occurs in Cl.
F (b), S.17(1 ), Registration Act, does not occur in S. 54 of the other
statute."

[See also K. Panchapagesa Ayyar and Anr. v. K. Kalyanasundaram
Ayyar and Ors., AIR (1957) MADRAS 472.]

G Similar view has been taken in Syed Abdullah Sahib v. Syed Rahmatul/a
Sahib alias Baji Sahib and Ors., AIR (I 960) MADRAS 274 stating:

"14. The Transfer of Property Act requires that certain transactions
should be effectuated only by registered instruments. Apart from the
provisions contained in that enactment, the obligation to register arises
H
STATE OF RAJASTHAN v. BASANT NAHATA [S. B. SINHA, J.] 29
only under the Registration Act. Under the latter Act registration is A
made obligatory in respect of certain specified class of documents,
but there is nothing to ·require" a transaction to be effected. by a
registered instrµment. Section 17 of the Registration Act enumerates
the documents which require registration.

The necessity for registrati.on under that Act would depend upon B
what a document is or what it purports to be. A bargain or an
arrangement between the parties may comprise several transactions.
The question whether there should be a writing or registration would
depend on each of the transactions and not on their cumulative result."

Hence, Section 22-A of the Act through a subordinate legislation cannot C
control the transactions which fall out of the scope thereof.

We have noticed hereinbefore the effect of a power of attorney under
the Indian Contract Act or the Power of Attorney Act. A subordinate legislation
which is not backed up by any statutory guideline under the substantive law D
and opposed to the enforcement of a legal right, in our opinion, thus, would
not be valid.

The question can be considered from another angle. A person may not
have any near relative or is otherwise unable to attend the office of the Sub-
Registrar or Registrar within whose jurisdictions the property is situated. He E
may even be out of the country. In absence of any substantive provisions
contained in a parliamentary or legislative act, he cannot be refrained from
dealing with his property in any manner he likes. Such statutory interdict
would be opposed to one's right of property as envisaged under Section
300-A of the Constitution of India.
F
The scope and effect of public policy has been construed differently by
this Court in different cases; see for example Renusagar Power Co. Ltd. v.
General Electric Co., [1994] Supp. I SCC 644 and Oil and_ Natural Gas
Corporation Ltd. v. Saw Pipes Ltd, [2003] 5 SCC 705.
G
Hence, it becomes amply clear that it is not possible to define Public
policy with precision at any point of time. It is not for the executive to fill
these grey areas as the said power rests with judiciary. Whenever interpretation
of the concept "public policy" is required to be considered it is for the
judiciary to do so and in doing so even the power of the judiciary is very
"'· limited. H
30 SUPREME COURT REPORTS [2005) SUPP. 3 S.C.R.

A Even for the said purpose, the part dealing with public policy in Section
23 of the Indian Contract Act is required to be construed in conjunction with
other parts thereof.
A further question which arises is whether having regard to the doctrine
of separation of powers what is essentially within the exclusive domain of the
B judiciary can be delegated to the executive unless policy behind the same is
finally laid down.
A thing which itself is so uncertain cannot be a guideline for any thing
or cannot be said to be providing sufficient framework for the executive to
work under it. Essential functions of the legislature cannot be delegated and
C it must be judged with touchstone of Article 14 and Article 246 of the
Constitution of India. It is, thus, only the ancillary and procedural powers
which can be delegated and not the essential legislative point.
The contention raised on behalf of the Appellants herein that the State,
being higher authority, having been delegated with the power of making
D declaration in terms of Section 22-A of the Act, would not be abused is stated
to be rejected. Such a question does not arise herein as the provision has been
held to be ultra vires Articles 14 and 246 of the Constitution of India.
The contention raised to the effect that this Court would not interfere
with the policy decision is again devoid of any merit. A legislative policy
E must conform to the provisions of the constitutional mandates. Even otherwise
a policy decision can be subjected to judicial review. {See Cellular Operators
Association of India and Ors. v. Union of India and Ors., [2003] 3 SCC 186
and C/ariant International Ltd and Anr v. Securities and Exchange Board of
India, [2004] 8 SCC 524].

F For the reasons aforementioned, we do not find any merit in this appeal
which is dismissed accordingly. No costs.
So far as amendments made by other States are concerned, we are of
the opinion that any order passed by a Sub-Registrar or Registrar refusing to
register a document pursuant to any notification issued under Section 22-A
G of the Act would not be reopened.
B.K. Appeals dismissed.

-