1992 (8) TMI 279 - SC - Indian Laws

Validity of Tamil Nadu and Karnataka Debt Relief Acts upheld, challenges rejected on legislative competence and constitutional grounds.

S. GANAPATHRAJ SURANA Versus STATE OF T.N.

S. GANAPATHRAJ SURANA Versus STATE OF T.N. - 1992 (3) SCR 721, 1993 (2) Suppl. SCC 565, 1992 (5) JT 310, 1992 (2) SCALE 379 Issues Involved:1. Legislative competence of State legislatures to enact laws on non-agricultural indebtedness.2. Violation of Article 19(1)(f) and (g) of the Constitution.3. Violation of Article 14 of the Constitution.Issue-Wise Detailed Analysis:1. Legislative Competence of State Legislatures:The petitioners, who are money lenders and pawnbrokers, argued that the State legislatures lacked the legislative competence to enact laws granting relief for non-agricultural indebtedness, adversely affecting their interests. They contended that the provisions of the Tamil Nadu Debt Relief Act, 1980, and the Karnataka Debt Relief Act, 1976, which extinguished debts incurred by small farmers, landless laborers, and weaker sections before a certain date, were ultra vires.The argument centered around Entry 30 of List II of the Seventh Schedule to the Constitution, which reads: 'Money-lending and money-lenders; relief of agricultural indebtedness.' The petitioners argued that the term 'Money-lending and money-lenders' should not be given a wider meaning due to the addition of 'relief of agricultural indebtedness,' which they claimed limited the scope to only agricultural loans and debts.The court rejected this argument, stating that the principle of interpreting constitutional provisions should be liberal to give effect to the words in their widest amplitude. The court referred to previous judgments, including the Federal Court's decision in A.L.S.P.P.L. Subrahmanyan Chettiar v. Muttuswami Goundan, which upheld the provincial law dealing with money-lending even if it incidentally affected promissory notes. The court concluded that the latter part of Entry 30 was included to illustrate the scope and object of the legislation envisaged by the opening expression and to avoid unnecessary litigation.2. Violation of Article 19(1)(f) and (g):The petitioners contended that the Karnataka Act violated Article 19(1)(f) and (g) of the Constitution, as it was passed in 1976 when sub-clause (f) was still in existence. They argued that the Act deprived creditors of their right to hold property in the form of loans due to them without any compensation, which was unreasonable and violated the fundamental rights guaranteed under Article 19.The court found no merit in this argument, stating that the impugned law did not restrict the carrying on of the business but only relieved the burden of a category of debtors who deserved assistance due to their poverty. The legislative measures were in furtherance of the directive principles of State policy, particularly Article 39, and were protected by clauses (5) and (6) of Article 19. The court emphasized that the reasonableness of the laws should be judged from the standpoint of the general public interest and the need to secure social and economic justice.3. Violation of Article 14:The petitioners argued that the Karnataka Act violated Article 14 of the Constitution by discriminating against certain creditors and depriving them of their property without compensation. They claimed that the Act was unreasonable and arbitrary.The court rejected this argument, stating that the legislation aimed to extend social justice to an underprivileged section of society. The Acts identified specific groups deserving protection, such as small farmers, landless agricultural laborers, and weaker sections, and provided precise definitions to avoid vagueness. The legislature was presumed to understand the needs of the people and to judge the necessary remedial reforms. The court held that the Acts were in line with the directive principles of State policy and were justified under clauses (5) and (6) of Article 19.Conclusion:The Supreme Court upheld the validity of the Tamil Nadu Debt Relief Act, 1980, and the Karnataka Debt Relief Act, 1976, rejecting the challenges based on legislative competence, violation of Article 19(1)(f) and (g), and violation of Article 14. The court emphasized the need to interpret constitutional provisions liberally and to consider the social and economic context in judging the reasonableness of laws. All writ petitions, civil appeals, and special leave petitions were dismissed without costs.