NBFC regulation prevails over State money-lending law where Chapter IIIB creates a complete regulatory code.

The Bombay Money-Lenders Act, 1946 does not apply to non-banking financial companies because its definition of "company" was confined to companies under the Indian Companies Act, 1913, and no notification extended the Act's reach to such entities. Chapter IIIB of the Reserve Bank of India Act, 1934 prevails where inconsistency exists, as Section 45Q and the constitutional scheme under Articles 246 and 254 give primacy to the Parliamentary code. The result is that Chapter IIIB operates as a self-contained regulatory framework for non-banking financial companies, and the State money-lending law cannot regulate or penalise them in the same field.

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Issues: (i) Whether the Bombay Money-Lenders Act, 1946 applies to non-banking financial companies. (ii) Whether Chapter IIIB of the Reserve Bank of India Act, 1934 prevails over the Bombay Money-Lenders Act, 1946 in relation to such companies.

Issue (i): Whether the Bombay Money-Lenders Act, 1946 applies to non-banking financial companies.

Analysis: The statutory definition of "company" in the Bombay Money-Lenders Act, 1946 was confined to companies as defined under the Indian Companies Act, 1913 and did not extend to companies incorporated under the Companies Act, 1956. The Act also did not bring non-banking financial companies within the definition of "money-lender" by any notification under the relevant enabling provision. In contrast, non-banking financial companies fall within the regulatory framework of the Reserve Bank of India Act, 1934 and are governed by the scheme of Chapter IIIB.

Conclusion: The Bombay Money-Lenders Act, 1946 does not apply to non-banking financial companies.

Issue (ii): Whether Chapter IIIB of the Reserve Bank of India Act, 1934 prevails over the Bombay Money-Lenders Act, 1946 in relation to such companies.

Analysis: The constitutional scheme under Article 246 and Article 254, read with the overriding clause in Section 45Q of the Reserve Bank of India Act, 1934, gives primacy to the Parliamentary enactment where inconsistency exists. Chapter IIIB was treated as a self-contained code conferring complete regulatory control over non-banking financial companies, and the State law could not occupy the same field so as to regulate or penalise those companies. The principles of repugnancy and occupied field were applied to conclude that the two enactments could not operate against each other in this area.

Conclusion: Chapter IIIB of the Reserve Bank of India Act, 1934 prevails over the Bombay Money-Lenders Act, 1946 to the extent of inconsistency.

Final Conclusion: The challenge to the earlier common judgment failed on the substantive issue of applicability of the State money-lending law to non-banking financial companies, while the direction issued in the separate writ petition was set aside.

Ratio Decidendi: Where Parliament has enacted a complete regulatory code for non-banking financial companies, a State money-lending law cannot apply to or control those companies if the State law is inconsistent or outside its defined ambit.

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