amendment to stamp act by Andhra Pradesh = After the 1998 amendment, Section 47A(1) of the Indian Stamp Act as applicable in the State of Andhra Pradesh reads as under : “47A Instruments of conveyance, etc. how to be dealt with

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CASE NO.:
Appeal (civil) 8270 of 2001

PETITIONER:
Government of Andhra Pradesh & Ors

RESPONDENT:
Smt. P. Laxmi Devi

DATE OF JUDGMENT: 25/02/2008

BENCH:
H.K. Sema & Markandey Katju

JUDGMENT:
J U D G M E N T

CIVIL APPEAL NO.8270 OF 2001

MARKANDEY KATJU, J.

1. This appeal by special leave has been filed against the impugned 
judgment of the Andhra Pradesh High Court dated 8.5.2001 in Writ Petition 
No.12649 of 2000.
2. Heard learned counsel for the parties and perused the record.

3. The writ petition was filed in the High Court praying for a declaration 
that Section 47A of the Indian Stamp Act as amended by A.P. Act 8 of 1998 
which requires a party to deposit 50% deficit stamp duty as a condition 
precedent for a reference to the Collector under Section 47A is 
unconstitutional. By the impugned judgment the High Court has declared it 
unconstitutional. Hence, this appeal. 

4. Under Section 3 of the Indian Stamp Act, 1899 certain instruments are 
chargeable with the duty mentioned in the Schedule to the Act. Item 23 in 
the Schedule to the Act mentions a `conveyance' as one of the documents 
requiring payment of stamp duty. A `conveyance' is defined in Section 
2(10) of the Act and includes a sale deed. Since in the present case we are 
concerned with payment of stamp duty on a sale deed, we have referred to 
the above provisions. 

5. Experience showed that there was large scale under valuation of the 
real value of the property in the sale deeds so as to defraud the 
Government's proper revenue. In the original Stamp Act there was no 
provision empowering the revenue authorities to make an enquiry about the 
value of the property conveyed for determining the correct stamp duty. 
Hence amendments were made to the Indian Stamp Act from time to time in 
several States including amendments by the Andhra Pradesh Legislature e.g. 
by the Indian Stamps (A.P. Amendment) Act 22 of 1971, Indian Stamps 
(A.P. Amendment) Act 17 of 1986 and ultimately by the AP Act 8 of 1998 
(with effect from 1.5.1998). The scheme of Section 47A was to deal with 
such cases where parties clandestinely undervalued the property to evade 
payment of the correct stamp duty.

6. After the 1998 amendment, Section 47A(1) of the Indian Stamp Act 
as applicable in the State of Andhra Pradesh reads as under :
"47A Instruments of conveyance, etc. how to be 
dealt with  (1) Where the registering officer appointed 
under the Registration Act, 1908, while registering any 
instrument of conveyance, exchange, gift, partition, 
settlement, release, agreement relating to construction, 
development or sale of any immovable property or power 
of attorney given for sale, development of immovable 
property, has reason to believe that the market value of 
the property which is the subject matter of such 
instrument has not been truly set forth in the instrument, 
or that the value arrived at by him as per the guidelines 
prepared or caused to be prepared by the Government 
from time to time has not been adopted by the parties, he 
may keep pending such instrument and refer the matter to 
the Collector for determination of the market value of the 
property and the proper duty payable thereon.

Provided that no reference shall be made by the 
registering officer unless an amount equal to fifty per 
cent of the deficit duty arrived at by him is deposited by 
the party concerned." 
7. Under sub-clause (2) of Section 47A of the Stamp Act on receipt of a 
reference under sub-section(1), the Collector has to give opportunity of 
making a representation to the parties, and after holding such enquiry as 
prescribed by the Rules, shall determine the market value of the property 
which is the subject matter of the instrument, and the duty thereon.

8. The respondent herein, had agreed to purchase land bearing 
S.No.594/B situated at village Kapra of Keesara Mandal of Ranga Reddy 
District. The agreement of sale was entered into on 25.1.1989 and as there 
was breach of performance of the contract on the part of the prospective 
vendor, a suit being O.S. No.1416 of 1997 was filed before the II Additional 
Senior Civil Judge, Hyderabad and the same was decreed. When the sale 
deed was not executed pursuant to the decree, Execution Petition No.5 of 
2000 was filed. An officer of the Court was deputed to present the sale 
deed, which was stamped according to the directions of the Senior Civil 
Judge.

9. The registering authority raised objection with regard to the quantum 
of non-judicial stamp on which the sale deed was engrossed. By letter 
no.288/2000 dated 19.2.2000, the registering authority, the Sub-Registrar, 
Malkajigiri, Ranga Reddy District, conveyed to the Second Senior Civil 
Judge, City Civil Court, Hyderabad that the document has to be referred 
under Section 47A and as a condition precedent for such reference, called 
upon the party i.e. the respondent herein, to pay duty on 50% of the 
differential amount according to the estimate made by him. Against this 
demand the respondent filed a writ petition in the High Court. 

10. In the writ petition filed by the respondent herein, it was inter-alia, 
contended that the estimate made by the registering authority was only 
provisional, and that will attain finality only after the Collector on a 
reference under Section 47A adjudicates the same, and for the reference for 
such adjudication no obligation can be imposed to deposit 50% of the deficit 
duty. Hence the said provision contained in the proviso to Section 47A is 
arbitrary and unreasonable violating the Fundamental Rights guaranteed in 
Articles 14 and 19(1)(g) of the Indian Constitution.

11. A counter affidavit was filed by the State Government in the writ 
petition. The relevant paragraphs in the counter affidavit are quoted below :
"In reply to the allegations made in the affidavit it 
is submitted that a sale deed was executed by II Senior 
Civil Judge, City Civil Court on 6.1.2000 and presented 
before me on 7.1.2000 through one of the staff members. 
The sale deed was admitted to registration and kept 
pending for want of clarification with regard to market 
value. The market value is arrived at Rs.6,17,80,500/- as 
per the market value guidelines for 33 acres 12 guntas 
whereas the sale deed executed was for a consideration of 
Rs.2,40,000/-. Thus there is huge loss to the Government 
Exchequer to a tune of Rs.70,77,160/- in stamp duty. 
Therefore, I sought clarification from the District 
Registrar, R.R. District (2nd Respondent). The 2nd 
respondent in his letter dated 473/G1/2003 dated 
9.2.2000 ordered me to take action under Section 47A of 
Indian Stamp Act for determination of market value. 
Hence the action taken by the 3rd respondent i.e. Sub-
Registrar, Malkajgiri is true and proper in the matter.

In reply to the allegations made paras 6 to 8 of the 
petitioner's affidavit it is submitted that the petitioners 
are liable to pay 50% of the deficit amount as per the 
Indian Stamp (A.P. Amendment) Act, 1998. The appeal 
filed by the petitioner is without any merits and is liable 
to be dismissed with a direction to the petitioner that 50% 
of the deficit amount assessed by the Sub-Registrar 
concerned and as per the directions of the Hon'ble Chief 
Judge, City Civil Court, Hyderabad should be deposited 
before a reference could be made under Section 47A of 
the Indian Stamp Act, as amended through Act No.8 of 
1998. It is submitted that the proviso under Section 
47A(2) was amended and the amendment has come into 
force with effect from 1.5.1998. Hence, it is necessary 
that the petitioner shall deposit the deficit duty as 
determined by the registering officer".

12. By the impugned judgment the High Court has declared Section 47A 
of the Indian Stamp Act as applicable to State Government to be 
unconstitutional.

13. In the impugned judgment the High Court has observed :

"The imposition of deposit of 50% of the 
differential stamp duty for referring the document to the 
Collector runs beyond the object and intendment of the 
above statutory provision. The object and intendment of 
the Stamp Act is to collect the proper stamp duty and 
such proper stamp duty is dependent upon the 
determination of the market value of the subject matter of 
the document and such determination is only made by the 
Collector and until such determination is made by the 
Collector, the document which is received for registration 
even after collection of whatever stamp duty deposited 
and the registration fee is paid by the party, is not 
released to the party, but is kept pending registration and 
such document kept pending registration is not having 
any evidentiary value and is not entered into the books of 
registration and no certified copy of the same can be 
granted and no rights flow from such document, be it 
sale, exchange, gift, mortgage, lease, etc. By keeping the 
document pending registration, there is enough safeguard 
for collecting the deficit stamp duty, as in the event of the 
Collector accepting the valuation suggested by the 
Registering Office and the party not paying the said 
stamp duty, the document remains under pending 
registration and even may be returned to the party for 
want of the payment of the differential stamp duty. This 
being the aim and intendment of the stamp duty 
protecting the public exchequer, there is absolutely no 
nexus for calling upon the party to deposit 50% of the 
differential stamp duty as a condition for making 
reference. It is not that a party seeks a reference on his 
own, but the Registering Officer is duty bound to refer 
the moment a party does not accept the valuation 
suggested by him. The party presenting a document is 
the master of his choice as to whether he should deposit 
the deficit stamp after determination of the Collector or 
not. If he feels that the market value determined by the 
Collector is exorbitant, then he may resile from going 
ahead with the registration of the document and may take 
return of the document. There is nothing to stop him 
from doing so. Stamp duty is not skin to a compulsory 
tax such as, property taxes levied upon the house 
properties, sales tax levied upon the turn-over, income-
tax levied upon the income prescribed etc. If a party 
wants to have his document registered, he should pay 
stamp duty and should he feel that it is exorbitant and he 
cannot bear the same, he can resile from the same even 
after presenting the document. The authority under the 
Stamp Act cannot force upon the party to compulsorily 
pay the stamp duty. Such compulsion is imposed only 
upon the party's insistence for registration of the 
document and not otherwise. In such circumstances, the 
imposition of deposit of 50% of the amount towards the 
differential stamp duty as a condition for referring the 
matter to the Collector runs beyond the scope, 
intendment and object of the act and, thus, offends equal 
protection of laws guaranteed under Article 14 of Indian 
Constitution and thus, is arbitrary and the said proviso to 
Section 47A of Indian Stamp Act which reads :

"Provided that no reference shall be 
made by the registering officer unless an 
amount equal to fifty per cent of the deficit 
duty arrived at by him is deposited by the 
party concerned." 

is unconstitutional and is accordingly struck down."

14. We regret our inability to agree with the view taken by the High Court 
that the amended Section 47A is unconstitutional.

15. Section 33(1) of the Stamp Act states :
"Every person having by law or consent of parties 
authority to receive evidence, and every person in charge 
of a public office, except an officer of police, before 
whom any instrument, chargeable, in his opinion, with 
duty, is produced or comes in the performance in his 
functions shall, if it appears to him that such instrument 
is not duly stamped, impound the same". 
16. A perusal of the said provision shows that when a document is 
produced (or comes in the performance of his functions) before a person 
who is authorized to receive evidence and a person who is in charge of a 
public office (except a police officer) before whom any instrument 
chargeable with duty is produced or comes in the performance of his 
functions, it is the duty of such person before whom the said instrument is 
produced to impound the document if it is not duly stamped. The use of the 
word 'shall' in Section 33(1) shows that there is no discretion in the 
authority mentioned in Section 33(1) to impound a document or not to do so. 
In our opinion, the word 'shall' in Section 33(1) does not mean 'may' but 
means `shall'. In other words, it is mandatory to impound a document 
produced before him or which comes before him in the performance of his 
functions. Hence the view taken by the High Court that the document can 
be returned if the party does not want to get it stamped is not correct.

17. In our opinion, a registering officer under the Registration Act (in this 
case the Sub-Registrar) is certainly a person who is in charge of a public 
office. Section 33(3) applies only when there is some doubt whether a 
person holds a public office or not. In our opinion, there can be no doubt that 
a Sub-Registrar holds a public office. Hence, he cannot return such a 
document to the party once he finds that it is not properly stamped, and he 
must impound it.

18. In our opinion, there is no violation of Articles 14, 19 or any other 
provision of the Constitution by the enactment of Section 47A as amended 
by the A.P Amendment Act 8 of 1998. This amendment was only for 
plugging the loopholes and for quick realization of the stamp duty. Hence it 
is well within the power of the State legislature vide Entry 63 of List II read 
with Entry 44 of List III of the Seventh Schedule to the Constitution.

19. It is well settled that stamp duty is a tax, and hardship is not relevant 
in construing taxing statutes which are to be construed strictly. As often 
said, there is no equity in a tax vide Commissioner of Income Tax vs. 
Firm Muar AIR 1965 SC 1216. If the words used in a taxing statute are 
clear, one cannot try to find out the intention and the object of the statute. 
Hence the High Court fell in error in trying to go by the supposed object and 
intendment of the Stamp Act, and by seeking to find out the hardship which 
will be caused to a party by the impugned amendment of 1998. 

20. In Partington vs. Attorney-General (1969) LR 4 HL 100, Lord 
Cairns observed as under:
"If the person sought to be taxed comes within the letter 
of the law he must be taxed, however great the hardship 
may appear to the judicial mind. On the other hand if the 
court seeking to recover the tax cannot bring the subject 
within the letter of the law, the subject is free, however 
apparently within the spirit of the law the case might 
otherwise appear to be." 

The above observation has often been quoted with approval by this Court, 
and we endorse it again. In Bengal Immunity Co. Ltd. vs. State of 
Bihar AIR 1955 SC 661 (685) this Court held that if there is hardship in a 
statute it is for the legislature to amend the law, but the Court cannot be 
called upon to discard the cardinal rule of interpretation for mitigating a 
hardship.

21. It has been held by a Constitution Bench of this Court in Income Tax 
Officer vs. T.S Devinatha Nadar AIR 1968 SC 623 (vide paragraph 23 to 
28) that where the language of a taxing provision is plain, the Court cannot 
concern itself with the intention of the legislature. Hence, in our opinion the 
High Court erred in its approach of trying to find out the intention of the 
legislature in enacting the impugned amendment to the Stamp Act. 

22. In this connection we may also mention that just as the reference 
under Section 47A has been made subject to deposit of 50% of the deficit 
duty, similarly there are provisions in various statutes in which the right to 
appeal has been given subject to some conditions. The constitutional 
validity of these provisions has been upheld by this Court in various 
decisions which are noted below.

23. In Gujarat Agro Industries Co. Ltd. vs. Municipal Corporation 
of the city of Ahmedabad and Ors. 1999(4) SCC 468, this Court referred 
to its earlier decision in Vijay Prakash D. Mehta vs. Collector of 
Customs (Preventive) 1968(4) SCC 402 wherein this Court observed : 
"The right to appeal is neither an absolute right nor an 
ingredient of natural justice the principles of which must 
be followed in all judicial and quasi-judicial 
adjudications. The right to appeal is a statutory right and 
it can be circumscribed by the conditions in the grant."

24. In Anant Mills Ltd. vs. State of Gujarat 1975(2) SCC 175 this 
Court held that the right of appeal is a creature of the statute and it is for the 
Legislature to decide whether the right of appeal should be unconditionally 
given to an aggrieved party or it should be conditionally given. The right to 
appeal which is a statutory right can be conditional or qualified.

25. In M/s. Elora Construction Company vs. The Municipal 
Corporation of Gr. Bombay and Ors. AIR1980 Bombay 162, the question 
before the Bombay High Court was as to the validity of Section 217 of the 
Bombay Municipal Act which required pre-deposit of the disputed tax for 
the entertainment of the appeal. The Bombay High Court upheld the said 
provision and its judgment has been referred to with approval in the decision 
of this Court in Gujarat Agro Industries Co. Ltd. vs. Municipal 
Corporation of the city of Ahmedabad and Ors. (supra). This Court has 
also referred to its decision in Shyam Kishore and Ors. vs. Municipal 
Corporation of Delhi and Anr. 1993(1) SCC 22 in which a similar 
provision was upheld.

26. It may be noted that in Gujarat Agro Industries Co. Ltd. vs. 
Municipal Corporation of the city of Ahmedabad and Ors. (supra) the 
appellant had challenged the constitutional validity of Section 406(e) of the 
Bombay Municipal Corporation Act which required the deposit of the tax as 
a precondition for entertaining the appeal. The proviso to that provision 
permitted waiver of only 25% of the tax. In other words a minimum of 75% 
of the tax had to be deposited before the appeal could be entertained. The 
Supreme Court held that the provision did not violate Article 14 of the 
Constitution. 

 27. In view of the above, we are clearly of the opinion that Section 47A of 
the Indian Stamp Act as amended by A.P. Act 8 of 1998 is constitutionally 
valid and the judgment of the High Court declaring it unconstitutional is not 
correct.

28. We may, however, consider a hypothetical case. Supposing the 
correct value of a property is Rs. 10 lacs and that is the value stated in the 
sale deed, but the registering officer erroneously determines it to be, say, Rs. 
2 crores. In that case while making a reference to the Collector under 
Section 47A, the registering officer will demand duty on 50% of Rs.2 crores 
i.e. duty on Rs.1 crore instead of demanding duty on Rs. 10 lacs. A party 
may not be able to pay this exorbitant duty demanded under the proviso to 
Section 47A by the registering officer in such a case. What can be done in 
this situation?

29. In our opinion in this situation it is always open to a party to file a writ 
petition challenging the exorbitant demand made by the registering officer 
under the proviso to Section 47A alleging that the determination made is 
arbitrary and/or based on extraneous considerations, and in that case it is 
always open to the High Court, if it is satisfied that the allegation is correct, 
to set aside such exorbitant demand under the proviso to Section 47A of the 
Indian Stamp Act by declaring the demand arbitrary. It is well settled that 
arbitrariness violates Article 14 of the Constitution vide Maneka Gandhi 
vs. Union of India AIR 1978 SC 597. Hence, the party is not remedy-less 
in this situation.

30. However, this would not mean that the proviso to Section 47A 
becomes unconstitutional. There is always a difference between a statute 
and the action taken under a statute. The statute may be valid and 
constitutional, but the action taken under it may not be valid. Hence, merely 
because it is possible that the order of the registering authority under the 
proviso to Section 47A is arbitrary and illegal, that does not mean that the 
proviso to Section 47A is also unconstitutional. We must always keep this 
in mind when adjudicating on the constitutionality of a statute. 

31. Since we have dealt with the question about constitutionality of 
Section 47A of the Stamp Act, we think it necessary to clarify the scope of 
judicial review of statutes, since Courts often are faced with a difficulty in 
determining whether a statute is constitutionally valid or not. We are, 
therefore, going a little deep into the theory of judicial review of statutes, as 
that will give some guidance to the High Courts in future.

A. Do Courts have the power to declare an Act of the 
Legislature to be invalid?

The answer to the above question is : Yes. The theoretical reasoning for this 
view can be derived from the theory in jurisprudence of the eminent jurist 
Kelsen (The Pure Theory of Law). 

32. According to Kelsen, in every country there is a hierarchy of legal 
norms, headed by what he calls as the `Grundnorm' (The Basic Norm). If a 
legal norm in a higher layer of this hierarchy conflicts with a legal norm in a 
lower layer the former will prevail (see Kelsen's `The General Theory of 
Law and State'). 

33. In India the Grundnorm is the Indian Constitution, and the hierarchy is 
as follows :
(i) The Constitution of India;
(ii) Statutory law, which may be either law made by 
Parliament or by the State Legislature;

(iii) Delegated legislation, which may be in the form of Rules 
made under the Statute, Regulations made under the 
Statute, etc.;

(iv) Purely executive orders not made under any Statute. 

 34. If a law (norm) in a higher layer in the above hierarchy clashes with a 
law in a lower layer, the former will prevail. Hence a constitutional 
provision will prevail over all other laws, whether in a statute or in delegated 
legislation or in an executive order. The Constitution is the highest law of 
the land, and no law which is in conflict with it can survive. Since the law 
made by the legislature is in the second layer of the hierarchy, obviously it 
will be invalid if it is in conflict with a provision in the Constitution (except 
the Directive Principles which, by Article 37, have been expressly made non 
enforceable).

35. The first decision laying down the principle that the Court has power 
to declare a Statute unconstitutional was the well-known decision of the US 
Supreme Court in Marbury vs. Madison 5 U.S. (1Cranch) 137 (1803). 
This principle has been followed thereafter in most countries, including 
India.

B. How and when should the power of the Court to declare the 
Statute unconstitutional be exercised?

Since, according to the above reasoning, the power in the Courts to declare a 
Statute unconstitutional has to be accepted, the question which then arises is 
how and when should such power be exercised.

36. This is a very important question because invalidating an Act of the 
Legislature is a grave step and should never be lightly taken. As observed 
by the American Jurist Alexander Bickel "judicial review is a counter 
majoritarian force in our system, since when the Supreme Court declares 
unconstitutional a legislative Act or the act of an elected executive, it thus 
thwarts the will of the representatives of the people; it exercises control, not 
on behalf of the prevailing majority, but against it." (See A. Bickel's `The 
Least Dangerous Branch')

37. The Court is, therefore, faced with a grave problem. On the one hand, 
it is well settled since Marbury vs. Madison (supra) that the Constitution 
is the fundamental law of the land and must prevail over the ordinary statute 
in case of conflict, on the other hand the Court must not seek an unnecessary 
confrontation with the legislature, particularly since the legislature consists 
of representatives democratically elected by the people. 

38. The Court must always remember that invalidating a statute is a grave 
step, and must therefore be taken in very rare and exceptional circumstances. 

39. We have observed above that while the Court has power to declare a 
statute to be unconstitutional, it should exercise great judicial restraint in this 
connection. This requires clarification, since, sometimes Courts are 
perplexed as to whether they should declare a statute to be constitutional or 
unconstitutional. 

40. The solution to this problem was provided in the classic essay of Prof 
James Bradley Thayer, Professor of Law of Harvard University entitled 'The 
Origin and Scope of the American Doctrine of Constitutional Law' which 
was published in the Harvard Law Review in 1893. In this article, 
Professor Thayer wrote that judicial review is strictly judicial and thus quite 
different from the policy-making functions of the executive and legislative 
branches. In performing their duties, he said, judges must take care not to 
intrude upon the domain of the other branches of government. Full and free 
play must be permitted to that wide margin of considerations which address 
themselves only to the practical judgment of a legislative body. Thus, for 
Thayer, legislation could be held unconstitutional only when those who have 
the right to make laws have not merely made a mistake (in the sense of 
apparently breaching a constitutional provision) but have made a very clear 
one, so clear that it is not open to rational question. Above all, Thayer 
believed, the Constitution, as Chief Justice Marshall had observed, is not a 
tightly drawn legal document like a title deed to be technically construed; it 
is rather a matter of great outlines broadly drawn for an unknowable future. 
Often reasonable men may differ about its meaning and application. In 
short, a Constitution offers a wide range for legislative discretion and choice. 
The judicial veto is to be exercised only in cases that leave no room for 
reasonable doubt. This rule recognizes that, having regard to the great, 
complex ever-unfolding exigencies of government, much which will seem 
unconstitutional to one man, or body of men, may reasonably not seem so to 
another; that the Constitution often admits of different interpretations; that 
there is often a range of choice and judgment; that in such cases the 
Constitution does not impose upon the legislature any one specific opinion, 
but leaves open this range of choice; and that whatever choice is not clearly 
in violation of a constitutional provision is valid even if the Court thinks it 
unwise or undesirable. Thayer traced these views far back in American 
history, finding, for example, that as early as 1811 the Chief Justice of 
Pennsylvania had concluded: "For weighty reasons, it has been assumed as a 
principle in constitutional construction by the Supreme Court of the United 
States, by this Court, and every other Court of reputation in the United 
States, that an Act of the legislature is not to be declared void unless the 
violation of the Constitution is so manifest as to leave no room for 
reasonable doubt" vide Commonwealth ex. Rel. O'Hara vs. Smith 4 
Binn. 117 (Pg.1811). 

41. Thus, according to Prof. Thayer, a Court can declare a statute to be 
unconstitutional not merely because it is possible to hold this view, but only 
when that is the only possible view not open to rational question. In other 
words, the Court can declare a statute to be unconstitutional only when there 
can be no manner of doubt that it is flagrantly unconstitutional, and there is 
no way of avoiding such decision. The philosophy behind this view is that 
there is broad separation of powers under the Constitution, and the three 
organs of the State  the legislature, the executive and the judiciary, must 
respect each other and must not ordinarily encroach into each other's 
domain. Also the judiciary must realize that the legislature is a 
democratically elected body which expresses the will of the people, and in a 
democracy this will is not to be lightly frustrated or obstructed. 

42. Apart from the above, Thayer also warned that exercise of the power 
of judicial review "is always attended with a serious evil", namely, that of 
depriving people of "the political experience and the moral education and 
stimulus that comes from fighting the question out in the ordinary way, and 
correcting their own errors" and with the tendency "to dwarf the political 
capacity of the people and to deaden its sense of moral responsibility". 

43. Justices Holmes, Brandeis and Frankfurter of the United States 
Supreme Court were the followers of Prof. Thayer's philosophy stated 
above. Justice Frankfurter referred to Prof Thayer as "the great master of 
constitutional law", and in a lecture at the Harvard Law School observed "if 
I were to name one piece of writing on American Constitutional Law, I 
would pick Thayer's once famous essay because it is the great guide for 
judges and therefore, the great guide for understanding by non-judges of 
what the place of the judiciary is in relation to constitutional questions". 
(vide H. Phillip's `Felix Frankfurter Reminisces' 299-300, 1960). 

44. In our opinion, there is one and only one ground for declaring an Act 
of the legislature (or a provision in the Act) to be invalid, and that is if it 
clearly violates some provision of the Constitution in so evident a manner as 
to leave no manner of doubt. This violation can, of course, be in different 
ways, e.g. if a State legislature makes a law which only the Parliament can 
make under List I to the Seventh Schedule, in which case it will violate 
Article 246(1) of the Constitution, or the law violates some specific 
provision of the Constitution (other than the directive principles). But 
before declaring the statute to be unconstitutional, the Court must be 
absolutely sure that there can be no manner of doubt that it violates a 
provision of the Constitution. If two views are possible, one making the 
statute constitutional and the other making it unconstitutional, the former 
view must always be preferred. Also, the Court must make every effort to 
uphold the constitutional validity of a statute, even if that requires giving a 
strained construction or narrowing down its scope vide Mark Netto vs. 
Government of Kerala and others AIR 1979 SC 83 (para 6). Also, it is 
none of the concern of the Court whether the legislation in its opinion is 
wise or unwise. 

45. In a dissenting judgment in Bartels vs. Iowa 262 US 404 412(1923), 
Justice Holmes while dealing with a state statute requiring the use of English 
as the medium of instruction in the public schools (which the majority of the 
Court held to invalid) observed "I think I appreciate the objection to the law 
but it appears to me to present a question upon which men reasonably might 
differ and therefore I am unable to say that the Constitution of the United 
States prevents the experiment being tried". 

46. The Court certainly has the power to decide about the constitutional 
validity of a statute. However, as observed by Justice Frankfurter in West 
Virginia vs. Barnette 319 U.S. 624 (1943), since this power prevents the 
full play of the democratic process it is vital that it should be exercised with 
rigorous self restraint.

47. In this connection we may quote from the article titled 'The Influence 
of James B Thayer Upon the Work of Holmes, Brandeis & Frankfurter' 
by Wallace Mendelson published in 31 Vanderbilt Law Review 71 (1978), 
which is as follows: 
"If, then, the Thayer tradition of judicial modesty is 
outmoded  if judicial aggression is to be the rule in 
policy matters, as in the 1930's some basic issues 
remain. First, how legitimate is government by judges ? 
Is anything to be beyond the reach of their authority ? 
Will anything be left for ultimate resolution by the 
democratic processes  for what Thayer called "that wide 
margin of considerations which address themselves only 
to the practical judgment of a legislative body" 
representing (as courts do not) a wide range of mundane 
needs and aspirations ? The legislative process, after all, 
is a major ingredient of freedom under government. 

Legislation is a process slow and cumbersome. It 
turns out a product  laws  that rarely are liked by 
everybody, and frequently little liked by anybody. When 
seen from the shining cliffs of perfection the legislative 
process of compromise appears shoddy indeed. But 
when seen from some concentration camp as the only 
alternative way of life, the compromises of legislation 
appear but another name for what we call civilization and 
even revere as Christian forbearance. 

Let philosophy fret about ideal justice. Politics is 
our substitute for civil war in a constant struggle between 
different conceptions of good and bad. It is far too wise 
to gamble for Utopia or nothing  to be fooled by its own 
romantic verbiage. Above all, it knows that none of the 
numerous clashing social forces is apt to be completely 
without both vice and virtue. By give and take, the 
legislative process seeks not final truth, but an acceptable 
balance of community interests. In this view the 
harmonizing and educational function of the process 
itself counts for more than any of its legislative products. 
To intrude upon its pragmatic adjustments by judicial fiat 
is to frustrate our chief instrument of social peace and 
political stability. 

Second, if the Supreme Court is to be the ultimate 
policy-making body  without political accountability  
how is it to avoid the corrupting effects of raw power? 
Can the Court avoid the self-inflicted wounds that have 
marked other episodes of judicial imperialism? Can the 
Court indeed satisfy the expectations it has already 
aroused? 

A third cluster of questions involves the 
competence of the Supreme Court as a legislative body. 
Can any nine men master the complexities of every phase 
of American life which, as the post 1961 cases suggest, is 
now the Court's province? Are any nine men wise 
enough and good enough to wield such power over the 
lives of millions? Are courts institutionally equipped for 
such burdens? Unlike legislatures, they are not 
representative bodies reflecting a wide range of social 
interest. Lacking a professional staff of trained 
investigators, they must rely for data almost exclusively 
upon the partisan advocates who appear before them. 
Inadequate or misleading information invites unsound 
decisions. If courts are to rely upon social science data 
as facts, they must recognize that such data are often 
tentative at best, subject to varying interpretations, and 
questionable on methodological grounds. Moreover, 
since social science findings and conclusions are likely to 
change with continuing research, they may require a 
system of ongoing policy reviews as new or better data 
become available. Is the judiciary capable of performing 
this function of supervision and adjustment traditionally 
provided by the legislative and administrative processes?

Finally, what kind of citizens will such a system of 
judicial activism produce a system that trains us to look 
not to ourselves for the solution of our problems, but to 
the most elite among elites: nine Judges governing our 
lives without political or judicial accountability? Surely 
this is neither democracy nor the rule of law. Such are 
the problems addressed by and  at least in the minds of 
jurists like Holmes, Brandeis, and Frankfurter  resolved 
by Thayer's doctrine of judicial restraint". 

We respectfully agree with the views expressed above, and endorse Thayer's 
doctrine of self restraint.

48. In our opinion judges must maintain judicial self-restraint while 
exercising the power of judicial review of legislation. 
"In view of the complexities of modern society", wrote 
Justice Frankfurter, while Professor of Law at Harvard 
University, "and the restricted scope of any man's 
experience, tolerance and humility in passing judgment 
on the worth of the experience and beliefs of others 
become crucial faculties in the disposition of cases. The 
successful exercise of such judicial power calls for rare 
intellectual disinterestedness and penetration, lest 
limitation in personal experience and imagination operate 
as limitations of the Constitution. These insights Mr. 
Justice Holmes applied in hundreds of cases and 
expressed in memorable language: 

 "It is a misfortune if a judge reads his conscious or 
unconscious sympathy with one side or the other 
prematurely into the law, and forgets that what seem to 
him to be first principles are believed by half his fellow 
men to be wrong." 

 (See Frankfurter's 'Mr. Justice Holmes and the Supreme Court')

 49. In our opinion the legislature must be given freedom to do 
experimentations in exercising its powers, provided of course it does not 
clearly and flagrantly violate its constitutional limits.

50. As observed by Mr. Justice Brandeis of the U.S. Supreme Court in his 
dissenting judgment in New State Ice Co. vs. Liebmann 285 U.S. 262 
(310-11) :
"The discoveries in physical science, the triumphs in 
invention, attest the value of the process of trial and 
error. In large measure, these advances have been due to 
experimentation There must be power in the States 
and the Nation to re-mould, through experimentation, our 
economic practices and in situations to meet changing 
social and economic needs.

To stay experimentation in things social and 
economic is a grave responsibility. Denial of the right to 
experiment may be fraught with serious consequences to 
the Nation." 

51. In writing a biographical essay on the celebrated Justice Holmes of 
the U.S. Supreme Court in the dictionary of American Biography, Justice 
Frankfurter wrote:
"It was not for him (Homes) to prescribe for society or to 
deny it the right of experimentation within very wide 
limits. That was to be left for contest by the political 
forces in the state. The duty of the Court was to keep the 
ring free. He reached the democratic result by the 
philosophic route of skepticism  by his disbelief in 
ultimate answers to social questions. Thereby he 
exhibited the judicial function at its purest." 

(see 'Essays on Legal History in Honour of Felix Frankfurter' 
edited by Morris D. Forkosch)

52. In this connection Justice Frankfurter while Professor of Law at 
Harvard University wrote in 'The Public and its Government' -- 
"With the great men of the Supreme Court constitutional 
adjudication has always been statecraft. As a mere 
Judge, Marshall had his superiors among his colleagues. 
His supremacy lay in his recognition of the practical 
needs of government. The great judges are those to 
whom the Constitution is not primarily a text for 
interpretation but the means of ordering the life of a 
progressive people."

 In the same book Justice Frankfurter also wrote 

"In simple truth, the difficulties that government 
encounters from law do not inhere in the Constitution. 
They are due to the judges who interpret. That document 
has ample resources for imaginative statesmanship, if 
judges have imagination for statesmanship."

53. In Keshvananda Bharati vs. State of Kerala AIR 1973 SC 1461 
(vide para 1547) Khanna J. observed:
"In exercising the power of judicial review, the Courts 
cannot be oblivious of the practical needs of the 
government. The door has to be left open for trial and 
error."

54. In our opinion adjudication must be done within the system of 
historically validated restraints and conscious minimization of the judges 
personal preferences. The Court must not invalidate a statute lightly, for, as 
observed above, invalidation of a statute made by the legislature elected by 
the people is a grave step. As observed by this Court in State of Bihar vs. 
Kameshwar Singh AIR 1952, SC 252(274) : "The legislature is the best 
judge of what is good for the community, by whose suffrage it comes into 
existence". 

55. In our opinion, the Court should, therefore, ordinarily defer to the 
wisdom of the legislature unless it enacts a law about which there can be no 
manner of doubt about its unconstitutionality.

56. As observed by the Constitution Bench decision of this Court in M.H. 
Quareshi vs. State of Bihar AIR 1958 SC 731 (vide para 15) :
"The Court must presume that the legislature understands 
and correctly appreciates the needs of its own people, 
that its laws are directed to problems made manifest by 
experience and that its discriminations are based on 
adequate grounds. It must be borne in mind that the 
legislature is free to recognize degrees of harm and may 
confine its restrictions to those cases where the need is 
deemed to be the clearest, and finally that in order to 
sustain the presumption of constitutionality the Court 
may take into consideration matters of common 
knowledge, common report, the history of the times, and 
may assume every state of facts which can be conceived 
existing at the time of the legislation. (See also Moti 
Das vs. S.P. Sahi AIR 1959 SC 942(947). 

57. In the light of the above observations, the impugned amendment is 
clearly constitutional. The amendment was obviously made to plug a 
loophole in the Stamp Act so as to prevent evasion of stamp duty, and for 
quick collection of the duty. There are other statutes e.g. the Income Tax 
Act in which there are provisions for deduction at source, advance tax, etc. 
which aim at quick collection of tax, and the constitutional validity of these 
provisions have always been upheld. 

C. Application of Thayer's Doctrine by the Courts :
In America, after the activist period of the US Supreme Court which was at 
one time declaring Act after Act of the U.S. Congress to be invalid on the 
ground that it violated the due process clause in the U.S. Constitution or the 
right to liberty of contract, there was a realization by the Judges of the U.S. 
Supreme Court that they were following a confrontationist path vis-`-vis the 
U.S. Congress which was causing all kinds of major problems. Hence in 
1937 the U.S. Supreme Court accepted Thayer's doctrine of judicial 
restraint, and the same was followed thereafter (except for the period of the 
Warren Court).

58. The U.S. Supreme Court enunciated the principle that there is a 
presumption in favour of the constitutionality of Statute, and the burden is 
always upon the person who attacks it to show that there has been a clear 
transgression of a constitutional provision. This view was adopted by the 
Constitution Bench of this Court in Charanjit Lal Chowdhury vs. Union 
of India and others AIR 1951 SC 41 (para 10), which observed : 
 "Prima facie, the argument appears to be a plausible 
one, but it requires a careful examination, and while 
examining it, two principles have to be borne in mind : 
(1) that a law may be constitutional even through it 
relates to a single individual, in those cases where on 
account of some special circumstances or reasons 
applicable to him and not applicable to others, that single 
individual may be treated as a class by himself; (2) that 
it is the accepted doctrine of the American Courts, which 
I consider to be well-founded on principle, that the 
presumption is always in favour of the constitutionality 
of an enactment, and the burden is upon him who attacks 
it to show that there has been a clear transgression of the 
constitutional principles. A clear enunciation of this 
latter doctrine is to be found in Middleton vs. Texas 
Power and L. Company, (248 U.S. 152 and 157), in 
which the relevant passage runs as follows :

It must be presumed that a legislature understands 
and correctly appreciates the need of its own 
people, that its laws are directed to problems made 
manifest by expression and that its discriminations 
are based upon adequate grounds." 

 (emphasis supplied)
and this view has been consistently followed thereafter.

59. Thus in M/s. B.R. Enterprises vs. State of U.P. and others AIR 
1999 SC 1867 this Court observed :
 "Another principle which has to be borne in mind in 
examining the constitutionality of a statute is that it must 
be assumed that the legislature understands and 
appreciates the need of the people and the laws it enacts 
are directed to problems which are made manifest by 
experience and that the elected representatives assembled 
in a legislature enact laws which they consider to be 
reasonable for the purpose for which they are enacted. 
Presumption is, therefore, in favour of the 
constitutionality of an enactment, vide Charanjit Lal 
Chowdhury vs. Union of India 1950 SCR 869: AIR 1951 
SC 41); State of Bombay vs. F.N. Bulsara, 1951 SCR 
682: (AIR 1951 SC 318), Mahant Moti Das vs. S.P. Sahi 
(AIR 1959 SC 942)".

The following passage in Seervai, Constitutional Law of 
India (3rd Edn.) page 119 found approval in Delhi 
Transport Corporation vs. D.T.C. Mazdoor Congress, 
1991 (Supp) 1 SCC 600 : (AIR 1991 SC 101). The Court 
held: 

 "Seervai in his book Constitutional Law of India 
(3rd Edn) has stated at page 119 that:

"the courts are guided by the following rules 
in discharging their solemn duty to declare laws passed 
by a legislature unconstitutional:

1) There is a presumption in favour of 
constitutionality and a law will not be declared 
unconstitutional unless the case is so clear as to be free 
from doubt; 'to doubt the constitutionality of a law is to 
resolve it in favour of its validity'.

****
2) A statute cannot be declared unconstitutional 
merely because in the opinion of the court it violates one 
or more of the principles of liberty, of the spirit of the 
Constitution, unless such principles and that spirit are 
found in the terms of the Constitution"

 (emphasis supplied)

60. Similarly in Union of India vs. Elphinstone Spinning and Weaving 
Co. Ltd. and others AIR 2001 SC 724 (vide para 9) a Constitution Bench 
of this Court observed :
"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 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 
Company of Australia vs. Federal Commissioner of 
Taxation, 1931 AC 275(Privy Council). The aforesaid 
principle, however, is subject to one exception that if a 
citizen is able to establish that the legislation has invaded 
his fundamental rights then the State must justify that the 
law is saved. It is also a cardinal rule of construction that 
if one construction being given the statute will become 
ultra vires the powers of the legislature whereas on 
another construction which may be open, the 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". 

 (emphasis supplied)

61. In State of Bihar and others vs. Bihar Distillery Ltd. AIR 1997 SC 
1511 (vide para 18) a Constitution Bench of this Court observed :

 "The approach of the Court, while examining the 
challenge to the constitutionality of an enactment, is to 
start with the presumption of constitutionality. The Court 
should try to sustain its validity to the extent possible. It 
should strike down the enactment only when it is not 
possible to sustain it. The Court should not approach the 
enactment with a view to pick holes or to search for 
defects of drafting, much less inexactitude of language 
employed. Indeed, any such defects of drafting should 
be ironed out as part of the attempt to sustain the 
validity/constitutionality of the enactment. After all, an 
Act made by the Legislature represents the will of the 
people and that cannot be lightly interfered with. The 
unconstitutionality must be plainly and clearly 
established before an enactment is declared as void."

62. The same view has been taken by the Constitution Bench of this Court 
in Hamdard Dawakhana and another vs. Union of India AIR 1960 SC 
554 (vide para 9) which observed : 
 "Another principle which has to be borne in mind in 
examining the constitutionality of a statute is that it must 
be assumed that the legislature understands and 
appreciates the need of the people, that the laws it enacts 
are directed to problems which are made manifest by 
experience, and that the elected representatives 
assembled in a legislature enact laws which they consider 
to be reasonable for the purpose for which they are 
enacted. Presumption is, therefore, in favour of the 
constitutionality of an enactment. Charanjit Lal vs. Union 
of India, 1950 SCR 869: (AIR 1951 SC 41); State of 
Bombay vs. F.N. Baulsara, 1951 SCR 682 at p.708; (AIR 
1951 SC 318 at p. 326); AIR 1959 SC 942." 

63. As observed by the Privy Council in Shell Company of Australia 
vs. Federal Commissioner of Taxation (1931) AC 275 (298) :
"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." 

64. Hence if two views are possible, one making the provision in the 
statute constitutional, and the other making it unconstitutional, the former 
should be preferred vide Kedarnath vs. State of Bihar AIR 1962 SC 955. 
Also, if it is necessary to uphold the constitutionality of a statute to construe 
its general words narrowly or widely, the Court should do so vide G.P. 
Singh's `Principles of Statutory Interpretation, 9th Edition, 2004 page 497'. 
Thus the word `Property' in the Hindu Women's Right to Property Act, 
1937 was construed by the Federal Court in In re Hindu Women's Right to 
Property Act AIR 1941 FC 72 to mean `property other than agricultural 
land', otherwise the Act would have become unconstitutional.

65. The Court must, therefore, make every effort to uphold the 
constitutional validity of a Statute, even if that requires giving the statutory 
provision a strained meaning, or narrower or wider meaning, than what 
appears on the face of it. It is only when all efforts to do so fail should the 
Court declare a statute to be unconstitutional.

D. Some difficulties in the practical application of Thayer's 
Doctrine: 

After laying down the above broad principles in relation to the Thayer 
doctrine of Judicial Review of Statutes (which we respectfully agree with) 
we may now consider some practical difficulties which arise in this 
connection.

66. As stated above, it is only when there is no manner of doubt that the 
Statute is unconstitutional that it should be declared to be so. However, even 
reasonable men can sometimes differ as to whether there is a doubt or not 
about the constitutional validity. In other words, sometimes there can be a 
doubt whether there is a doubt at all. About some statutes there can be no 
doubt that they are unconstitutional e.g. if discriminatory treatment is given 
to redheads, or if a statute excluded owners of a certain make of motor 
vehicle from voting in a general election. However, there are other statutes 
about which one cannot be absolutely sure about their constitutional validity, 
and difficulties would then arise in this connection.

67. Some broad principles to resolve these difficulties are given below.

68. As regards fiscal or tax measures greater latitude is given to such 
statutes than to other statutes. Thus in the Constitution Bench decision of 
this Court in R. K. Garg vs. Union of India and others 1981 (4) SCC 675 
(vide para 8) this Court observed:
"Another rule of equal importance is that laws relating to 
economic activities should be viewed with greater 
latitude than laws touching civil rights such as freedom 
of speech, religion etc. It has been said by no less a 
person than Holmes, J. that the legislature should be 
allowed some play in the joints, because it has to deal 
with complex problems which do not admit of solution 
through any doctrinaire or strait-jacket formula and this 
is particularly true in case of legislation dealing with 
economic matters, where, having regard to the nature of 
the problems required to be dealt with, greater play in the 
joints has to be allowed to the legislature. The court 
should feel more inclined to give judicial deference to 
legislative judgment in the field of economic regulation 
than in other areas where fundamental human rights are 
involved. Nowhere has this admonition been more 
felicitously expressed than in Morey v. Doud where 
Frankfurter, J. said in his inimitable style:

In the utilities, tax and economic regulation cases, 
there are good reasons for judicial self-restraint if 
not judicial deference to legislative judgment. The 
legislature after all has the affirmative 
responsibility. The courts have only the power to 
destroy, not to reconstruct. When these are added 
to the complexity of economic regulation, the 
uncertainty, the liability to error, the bewildering 
conflict of the experts, and the number of times the 
judges have been overruled by events  self- 
limitation can be seen to be the path to judicial 
wisdom and institutional prestige and stability. 

The court must always remember that "legislation is 
directed to practical problems, that the economic 
mechanism is highly sensitive and complex, that many 
problems are singular and contingent, that laws are not 
abstract propositions and do not relate to abstract units 
and are not to be measured by abstract symmetry"; "that 
exact wisdom and nice adaptation of remedy are not 
always possible" and that "judgment is largely a 
prophecy based on meagre and uninterrupted 
experience". Every legislation particularly in economic 
matters is essentially empiric and it is based on 
experimentation or what may one call trial and error 
method and therefore it cannot provide for all possible 
situations or anticipate all possible abuses. There may be 
crudities and inequities in complicated experimental 
economic legislation but on that account alone it cannot 
be struck down as invalid. The courts cannot, as pointed 
out by the United States Supreme Court in Secretary of 
Agriculture v. Central Reig Refining Company, be 
converted into tribunals for relief from such crudities and 
inequities. There may even be possibilities of abuse, but 
that too cannot of itself be a ground for invalidating the 
legislation, because it is not possible for any legislature 
to anticipate as if by some divine prescience, distortions 
and abuses of its legislation which may be made by those 
subject to its provisions and to provide against such 
distortions and abuses. Indeed, howsoever great may be 
the care bestowed on its framing, it is difficult to 
conceive of a legislation which is not capable of being 
abused by perverted human ingenuity. The court must 
therefore adjudge the constitutionality of such legislation 
by the generality of its provisions and not by its crudities 
or inequities or by the possibilities of abuse of any of its 
provisions. If any crudities, inequities or possibilities of 
abuse come to light, the legislature can always step in 
and enact suitable amendatory legislation. That is the 
essence of pragmatic approach which must guide and 
inspire the legislature in dealing with complex economic 
issues".
 (emphasis supplied)

69. All decisions in the economic and social spheres are essentially ad hoc 
and experimental. Since economic matters are extremely complicated, this 
inevitably entails special treatment for special situations. The State must 
therefore be left with wide latitude in devising ways and means of fiscal or 
regulatory measures, and the Court should not, unless compelled by the 
statute or by the Constitution, encroach into this field, or invalidate such law. 

70. As Justice Frankfurter of the U.S. Supreme Court observed in 
American Federation of Labour vs. American Sash and Door Co. 335 
U.S. 538 (1949):
"Even where the social undesirability of a law may be 
convincingly urged, invalidation of the law by a Court 
debilitates popular democratic government. Most laws 
dealing with social and economic problems are matters of 
trial and error. That which before trial appears to be 
demonstrably bad may belie prophecy in actual 
operation. But even if a law is found wanting on trial, it 
is better that its defects should be demonstrated and 
removed by the legislature than that the law should be 
aborted by judicial fiat. Such an assertion of judicial 
power defeats responsibility from those on whom in a 
democratic society it ultimately rests. Hence rather than 
exercise judicial review Courts should ordinarily allow 
legislatures to correct their own mistakes wherever 
possible".

71. Similarly, in his dissenting judgment in New State Ice Co. vs. 
Liebmann 285 U.S. 262 (1932) Mr. Justice Brandeis, the renowned Judge 
of the U.S. Supreme Court observed that the government must be left free to 
engage in social experiments. Progress in the social sciences, even as in the 
physical sciences, depends on a "process of trial and error" and Courts must 
not interfere with necessary experiments.

72. In Secretary of Agriculture vs. Central Reig Refining Co. (1949) 
338 U.S. 604 (617): 94 Law Ed. 381-292, Mr. Justice Frankfurter of the U.S. 
Supreme Court observed:
"Congress was  ... confronted with the formulation of 
policy peculiarly within its wide swath of discretion. It 
would be a singular intrusion of the judiciary into the 
legislative process to extrapolate restrictions upon the 
formulation of such an economic policy from those 
deeply rooted notions of justice which the Due Process 
Clause expresses."

73. However, though while considering economic or most other 
legislation the Court gives great latitude to the legislature when adjudging its 
constitutionality, a very different approach has to be adopted by the Court 
when the question of civil liberties and the fundamental rights under Part III 
of the Constitution arise. 

74. In paragraph 8 of the Constitution Bench decision in R.K. Garg's 
case (supra) it was observed (as quoted above) that laws relating to 
economic activities should be viewed with greater latitude than laws 
touching civil rights such as freedom of speech, freedom of religion etc. 
Thus, the Constitution Bench decision in R.K Garg's case (supra) is an 
authority for the proposition which has been stated herein, namely, when a 
law of the legislature encroaches on the civil rights and civil liberties of the 
people mentioned in Part III of the Constitution (the fundamental rights), 
such as freedom of speech, freedom of movement, equality before law, 
liberty, freedom of religion etc, the Court will not grant such latitude to the 
legislature as in the case of economic measures, but will carefully scrutinize 
whether the legislation on these subjects is violative of the rights and 
liberties of the citizens, and its approach must be to uphold those rights and 
liberties, for which it may sometimes even have to declare a statute to be 
unconstitutional.

75. Some scholars regarded it a paradox in the judgments of Justice 
Holmes (who, as we have already stated above, was a disciple of Thayer) 
that while he urged tolerance and deference to legislative judgment in broad 
areas of lawmaking challenged as unconstitutional, he seemed willing to 
reverse the presumption of constitutionality when laws inhibiting civil 
liberties were before the Court.

76. However, we find no paradox at all. As regards economic and other 
regulatory legislation judicial restraint must be observed by the Court and 
greater latitude must be given to the legislature while adjudging the 
constitutionality of the statute because the Court does not consist of 
economic or administrative experts. It has no expertise in these matters, and 
in this age of specialization when policies have to be laid down with great 
care after consulting the specialists in the field, it will be wholly unwise for 
the Court to encroach into the domain of the executive or legislative and try 
to enforce its own views and perceptions.

77. In this connection we may refer to the famous dissenting judgment of 
Mr. Justice Holmes in Lochner vs. York, 198 U.S. 45(1903). In that case, 
the validity of a law made by the New York Legislature providing for a 
maximum of 10 hour a day and 60 hour a week work in the bakery industry 
was challenged. While the majority, who believed in the laissez faire theory 
of economics, held that the law violated the liberty of contract, which they 
perceived as part of the Bill of Rights to the U.S. Constitution, Mr. Justice 
Holmes pointed out that the Constitution was not intended to embody any 
particular economic theory, whether of paternalism or of laissez faire. He 
further observed that reasonable men might think the impugned statute is a 
proper measure to ensure the health of the workers, and hence it was well 
within the power of the legislature to enact it. To use his own words in the 
judgment, "The Fourteenth Amendment (to the U.S. Constitution) does not 
enact Mr. Herbert Spencer's Social Statics".

78. However, when it came to civil liberties, Mr. Justice Holmes was an 
activist Judge. Thus, in Schenck vs. U.S. 249 U.S. 47 (1919) he laid down 
his famous "clear and present danger" test for deciding whether restriction 
on free speech was constitutionally valid. As Mr. Justice Holmes observed, 
the question in every case is "whether the words used are used in such 
circumstances and are of such a nature as to create a clear and present 
danger that they will bring about substantive evils that Congress has a right 
to prevent". 

79. We respectfully endorse the view of Mr. Justice Holmes, as stated 
above.

80. In Abrams vs. U.S. 250 U.S. 616 624 (1919), Mr. Justice Holmes 
observed : 
"Persecution for the expression of opinions seems to me 
perfectly logical. If you have no doubt of your premises 
or your power and want a certain result with all your 
heart you naturally express your wishes in law and sweep 
away all opposition. To allow opposition by speech 
seems to indicate that you think the speech impotent, as 
when a man says that he has squared the circle, or that 
you do not care wholeheartedly for the result, or that you 
doubt either your power or your premises. But when 
men have realized that time has upset many fighting 
faiths, they may come to believe even more than they 
believe the very foundations of their own conduct that the 
ultimate good desired is better reached by free trade in 
ideas  that the best test of truth is the power of the 
thought to get itself accepted in the competition of the 
market, and that truth is the only ground upon which their 
wishes safely can be carried out. That, at any rate, is the 
theory of our Constitution. It is an experiment as all life 
is an experiment."
 (emphasis supplied)

 81. In his famous 'Footnote Four' in United States vs. Carolene 
Products Co. 304 U.S. 144, Mr. Justice Stone of the United States Supreme 
Court observed : 
 "There may be narrower scope for operation of the 
presumption of constitutionality when legislation appears 
on its face to be within a specific prohibition of the 
Constitution, such as those of the first ten amendments, 
which are deemed equally specific when held to be 
embraced within the Fourteenth".

In a letter to Stone in the first Flag Salute case, in which 
Stone was the lone dissenter, Justice Frankfurter said:

"I am aware of the important distinction which you so 
skillfully adumbrated in your footnote 4 . In the 
Carolene Products Co. case. I agree with that distinction; 
I regard it as basic. I have taken over that distinction in 
its central aspect . in the present opinion by insisting 
on the importance of keeping open all those channels of 
free expression by which undesirable legislation may be 
removed, and keeping unobstructed all forms of protests 
against what are deemed invasions of conscience".

We respectfully agree with the above views.

82. For Justice Holmes, democracy was not hurt but strengthened 
whenever courts protected the individual freedoms which alone make the 
democratic process meaningful and valid. For the substance of decisions to 
be truly democratic, the process by which they are reached must give as 
much free play as possible for the transmutation of present minorities into 
future majorities by the unencumbered operation of freedom of thought, 
communication, and discussion. From this point of view, reasonably equal 
access to the political processes and reasonably uninhibited freedom to argue 
and discuss (limited only by imminently impending danger to the state itself) 
is in fact an integral part of, although antecedent to, the formal legislative 
processes of democracy. Hence to uphold the restrictions on freedom of 
thought and communication and access to the political processes which may 
be placed in effect by a temporary majority would be actually to reduce the 
integrity of the processes of transforming that transient majority into a 
minority - a processes essential to the very concept of democracy. Professor 
Chafee years ago remarked the fact that the Justices, including Holmes, who 
tended to uphold wide legislative control over business were often the very 
same men who tended to invalidate wide legislative control over discussion. 
"These Justices", said Chafee, "know that statutes, to be sound and effective, 
must be preceded by abundant printed and oral controversy. Discussion is 
really legislation in the soft. Drastic restrictions on free discussion are 
similar to rigid constitutional limits on lawmaking".

83. In our opinion, therefore, while Judges should practice great restraint 
while dealing with economic statutes, they should be activist in defending 
the civil liberties and fundamental rights of the citizens. This is necessary 
because though ordinarily the legislature represents the will of the people 
and works for their welfare, there can be exceptional situations where the 
legislature, though elected by the people may violate the civil liberties and 
rights of the people. It was because of this foresight that the Founding 
Fathers of the Constitution in their wisdom provided fundamental rights in 
Part III of the Constitution which were modeled on the lines of the U.S. Bill 
of Rights of 1791 and the Declaration of the Rights of Man during the Great 
French Revolution of 1789. 

84. It may be mentioned that during feudal times citizens had no civil 
rights. There was no freedom of speech, no equality, no freedom to practice 
one's own religion, no liberty etc. The Great English Revolution of 1688 
emphasized the importance of liberty and the Great French Revolution of 
1789 underscored equality and freedom of religion. The Great American 
Revolution championed all these rights. Our founding fathers borrowed 
these lessons from history and provided for the fundamental rights in our 
Constitution to protect the citizens' liberties not only against the executive 
but even against the legislature, if need be.

85. It may be noted that there were no fundamental rights in the 
Government of India Act, 1935. The Founding Fathers of our Constitution, 
who were also freedom fighters for India's Independence, knew the value of 
these rights, and that is why they incorporated them in the Constitution. 

86. It must be understood that while a statute is made by the peoples' 
elected representatives, the Constitution too is a document which has been 
created by the people (as is evident from the Preamble). The Courts are 
guardians of the rights and liberties of the citizens, and they will be failing in 
their responsibility if they abdicate this solemn duty towards the citizens. 
For this, they may sometimes have to declare the act of the executive or 
legislature as unconstitutional.

87. In Terminiello vs. Chicago 337 US 1 (1949), the U.S. Supreme Court 
observed that free speech may best serve its high purpose when it induces a 
condition of unrest, creates dissatisfaction with conditions as they are, even 
stirs people to anger.

88. In Bridges vs. California 314 US 252 (1941) the U.S. Supreme Court 
observed that freedom of the press must be allowed the broadest scope 
compatible with the supremacy of order.

89. In Wood vs. Georgia 370 U.S. 375(1962), the U.S. Supreme Court 
observed that Judges may use their contempt power to punish disorder in the 
courtroom, but not to penalize any editor who assails the performance of the 
Court in print.

90. In Ghani vs. Jones (1970) 1 Q.B. 693 (709) Lord Denning observed:
"A man's liberty of movement is regarded so 
highly by the law of England that it is not to be hindered 
or prevented except on the surest ground."

91. The above observation has been quoted with approval by a 
Constitution Bench decision of this Court in Maneka Gandhi vs. Union of 
India, AIR 1978 SC 597 (vide para 99).

92. Why is it that the Courts both in India and in America have taken an 
activist approach in upholding the civil liberties and rights of the citizens? 
In our opinion, this is because freedom and liberty is essential for progress, 
both economic and social. Without freedom to speak, freedom to write, 
freedom to think, freedom to experiment, freedom to criticize (including 
criticism of the Government) and freedom to dissent there can be no 
progress.

93. Scientific ideas initially were often condemned because they were 
regarded as opposed to religious dogma. For instance, Charles Darwin's 
theory or Copernicus' theory at one time were condemned because they 
were regarded as opposed to the Bible. It was only by freedom of speech, 
freedom to think and freedom to dissent that human progress was possible. 
And it is for this reason that our founding fathers in their wisdom provided 
for the fundamental rights in Part III of the Constitution. It is the solemn 
duty of the Courts to uphold the civil rights and liberties of the citizens 
against executive or legislative invasion, and the Court cannot sit quiet in 
this situation, but must play an activist role in upholding civil liberties and 
the fundamental rights in Part III, vide Maneka Gandhi vs. Union of India, 
AIR 1978 SC 597, Joginder Kumar vs. State of U.P., AIR 1994 SC 1349, 
D. K. Basu vs. State of West Bengal, AIR 1997 SC 610, etc.

94. In view of the fact that the impugned amendment is an economic 
measure, whose aim is to plug the loopholes and secure speedy realization of 
stamp duty, we are of the opinion that the said amendment, being an 
economic measure, cannot be said to be unconstitutional.

95. In view of the above observation, this appeal is allowed and the 
impugned judgment is set aside and the constitutional validity of the 
amended Section 47A of the Stamp Act is upheld. In the facts and 
circumstances of the case, there shall be no order as to costs.