TaxTMI 
TaxTMI 
2018 (2) TMI 1326
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....ss in force in any State, a transaction between a banking company and its debtor shall not be reopened by any court on the ground that the rate of interest charged by the banking company in respect of such transaction is excessive." 2. It will be seen that Section 21A interdicts the reopening by courts of a debt between a banking company and its debtor, on the ground that the rate of interest charged by the banking company, in respect of a loan transaction, is excessive. The section seeks to keep out of harm's way the Usurious Loans Act, 1918 and/or any other State legislation relating to indebtedness, and then declares that no such loan transaction shall be reopened by any court on the ground of charging of excessive rates of interest. The writ petition has been filed by certain public spirited citizens, who rely on the report of the Parliamentary Standing Committee on Agriculture for the year 2006-2007 to say that Section 21A should be abolished, insofar as it applies to rural indebtedness. The Standing Committee's Report reads as follows: "The Committee feels that the worst exploitation of farmers is through the adverse credit policies of the financial institutions which comp....
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.... that total interest debited to an account should not exceed the principal amount in respect of short term loans advanced to small and marginal farmers. As per the extant RBI instructions, banks are not allowed to compound interest on current dues of crop loans and term loans in respect of direct agricultural advances granted to farmers. If such loans become overdue banks have been advised that where the default is due to genuine reasons, they should extend the period of loan or reschedule the installments under term loans. Once such a relief has been extended the over dues become current dues and hence banks should not compound interest thereon. In case of long duration crops, interest is recovered only annually. COMMENTS OF THE COMMITTEE 1.24 The Committee are dismayed to know that the Department has not paid any heed to the recommendation of the Committee to scrap Section 21 (A) of Banking Regulation Act, 1949 which hinders the provision of Usurious Loans Act, 1918 under which it was, inter alia, provided that the total amount of interest on a loan taken by a farmer could not be higher than the original capital. The Committee, therefore, reiterate their earlier recommendation....
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....d to and relied upon a proposed amendment by Shri Shibban Lal Saxena, by which it was sought to place the aforesaid Entry 30 into the Concurrent List, so that Parliament may also have a say in the relief of agricultural indebtedness. However, this was turned down by the Constituent Assembly, so that this subject is exclusively within the domain of the State legislature. 4. He next relied upon a decision of a single Judge of the Andhra Pradesh High Court reported as State Bank of India, In re, AIR 1986 AP 291 and commended its acceptance by us. He then referred to this Court's judgment reported as State Bank of India v. Yasangi Venkateswara Rao (1999) 2 SCC 375. He fairly pointed out that the aforesaid single Judge judgment has been set aside by this Court, but stated that no ratio decidendi was forthcoming from the Supreme Court judgment. This was because paragraph 7 of the aforesaid judgment was both laconic and contained only conclusions without any reasoning. He also argued that the said decision is per incuriam, not having referred to the number of judgments that were relied upon by the learned single Judge. He also pointed out that arguments were made only by the appellant, t....
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....the provisions of the Banking Regulation Act. According to her, "relief of agricultural indebtedness", that is in the latter part of Entry 30, List II of the Seventh Schedule to the Constitution, should be read along with "money lending and money lenders" which is the first part of the said entry. This being the case, relief of agricultural indebtedness would apply only to money lenders and money lending and not to banks at all. If the subject of relief of agricultural indebtedness were not linked to money lending, it would have found itself in a separate entry in the State List, which is not the case. She also relied upon a number of judgments to buttress her submissions, and read copiously from the two counter affidavits filed by the Union of India to show how the Central Government was fully alive to the plight of poor farmers, and had set up expert groups to report on the same. 7. Having heard learned counsel for both parties, it is necessary to first set out the relevant provisions of the Government of India Act, 1935 and the Constitution. "Government of India Act, 1935 List I- Federal Legislative List 38. Banking, that is to say, the conduct of banking business by cor....
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....otation of the expression "Banking" in Entry 45, List I, power to legislate in respect of all commercial activities which a banker by the custom of bankers or authority of law engages in, would result in re-writing the Constitution. Investment of power to legislate on a designated topic covers all matters incidental to the topic. A legislative entry being expressed in a broad designation indicating the contour of plenary power must receive a meaning conducive to the widest amplitude, subject however to limitations inherent in the federal scheme which distributes legislative power between the Union and the constituent units. The field of "banking" cannot be extended to include trading activities which not being incidental to banking encroach upon the substance of the entry "trade and commerce" in List II." In Union of India v. Delhi High Court Bar Assn., (2002) 4 SCC 275 at 285-286, this Court was faced with the constitutional validity of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. In repelling the contention that the said Act would not fall under Entry 45, List I, this Court held: "14. The Delhi High Court and the Guwahati High Court have held that....
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.... the doctrine of pith and substance, and ultimately found that, on a proper reading of the entries concerned, there would be no clash between the Bengal Money Lenders Act, 1940, which was referable to the State List, and the Federal entries dealing with promissory notes and banking. Thus, the Court held: "35. Moreover, the British Parliament when enacting the Indian Constitution Act had a long experience of the working of the British North America Act and the Australian Commonwealth Act and must have known that it is not in practice possible to ensure that the powers entrusted to the several legislatures will never overlap. As Sir Maurice Gwyer C.J. said in Subramanyan Chettiar v. Muttuswami Goundan, 1940 FCR 188 at 201: "It must inevitably happen from time to time that legislation, though purporting to deal with a subject in one list, touches also on a subject in another list, and the different provisions of the enactment may be so closely intertwined that blind observance to a strictly verbal interpretation would result in a large number of statutes being declared invalid because the legislature enacting them may appear to have legislated in a forbidden sphere. Hence the ru....
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....d List III has priority over List II, but the question still remains, priority in what respect? Does the priority of the Federal legislature prevent the provincial legislature from dealing with any matter which may incidentally affect any item in its list or in each case has one to consider what the substance of an Act is and, whatever its ancillary effect, attribute it to the appropriate list according to its true character? In their Lordships' opinion the latter is the true view. 40. If this be correct it is unnecessary to determine whether the jurisdiction as to promissory notes given to the Federal legislature is or is not confined to negotiability. The Bengal Money Lenders Act is valid because it deals in pith and substance with money lending, not because legislation in respect of promissory notes by the Federal legislature is confined to legislation affecting their negotiability-a matter as to which their Lordships express no opinion. 41. It will be observed that in considering the principles involved their Lordships have dealt mainly with the alleged invalidity of the Act, based on its invasion of the Federal entry, "promissory notes" Item (28) in List I. They have t....
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....List II of the Seventh Schedule to the Government of India Act, 1935, which was "money-lending", in respect of which the provincial legislature was competent to legislate, or whether it fell within Entries 28 and 38 in List I which were "promissory notes" and "banking" which were within the competence of the Central Legislature. The argument was that the Bengal Money-Lenders Act was beyond the competence of the provincial legislature insofar as it dealt with promissory notes and the business of banking. The Privy Council upheld the vires of the whole of the Act because it dealt, in pith and substance, with money-lending. They observed: "Subjects must still overlap, and where they do the question must be asked what in pith and substance is the effect of the enactment of which complaint is made, and in what list is its true nature and character to be found. If these questions could not be asked, much beneficent legislation would be stifled at birth, and many of the subjects entrusted to provincial legislation could never effectively be dealt with." Examining the provisions of the U.P. Cooperative Societies Act in the light of the observations of the Privy Council we do not have....
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.... hereditary indebtedness on a colossal scale! It is commonplace to state that legislative heads must receive large and liberal meanings and the sweep of the sense of the rubrics must embrace the widest range. Even incidental and cognate matters come within their purview. The whole gamut of Money lending and debt-liquidation is thus within the State's legislative competence. The reference to the Rajahmundry Electricity case [Rajamundry Electric Supply Corporation v. State of Andhra, AIR 1954 SC 251 : 1954 SCR 779] is of no relevance. Nor is the absence of the expression "relief" in Entry 30, List II, of any moment when relief from moneylenders is eloquently implicit in the topic. Sometimes, arguments have only to be stated to be rejected." (at page 693) (Emphasis Supplied) Similarly, in Pathumma (supra), this Court was concerned with a challenge to the constitutional validity of Section 20 of the Kerala Debt Agriculturists Relief Act, 1970, which entitled debtors to recover properties sold to purchasers in execution of decrees. This Court, after referring to Fatehchand (supra) in some detail, held: "36. The avowed object of the Act seems to give substantial relief to the agricu....
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....competence of the State Legislature,- 30 -Money-lending and money-lenders; relief of agricultural indebtedness. It is therefore quite clear, and is beyond controversy, that the Act which provides for "the relief of indebted agriculturists in the State of Kerala" is within the competence of the State Legislature. Clause (1) of Section 2 of the Act defines an "agriculturist", clause (4) defines a "debt", clause (5) defines a "debtor" and the two Explanations to Section 20 define the expressions "court" and "judgment-debtor" and give an extended meaning to the expression "agriculturist" so as to include a person who would have been an agriculturist but for the sale of his immovable property. The other sections provide for the settlement of the liabilities and payment of the debt (along with the interest) of an agriculturist, including the setting aside of the sale in execution of a decree and the bar of suits. The subject-matter of the Act is therefore clearly within the purview of Entry 30 and Counsel for the appellants have not been able to advance any argument which could justify a different view. Reference in this connection may be made to this Court's decision in Fatehchand....
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....e question of relief to those who have lost the means of their livelihood because of the delay in providing them legislative relief. It is well-settled, having been decided by this Court in Navinchandra Mafatla l v . CIT [AIR 1955 SC 58 : (1955) 1 SCR 829 : (1954) 26 ITR 758] , that "in construing words in a constitutional enactment conferring legislative power the most liberal construction should be put upon the words so that the same may have effect in their widest amplitude". This has to be so lest a legislative measure may be lost for mere technicality." (at pages 31-32) (Emphasis Supplied) 11. This brings us to the sweep of the Banking Regulation Act, and to whether the said Act, which includes by way of amendment Section 21A, can be said to fall within Entry 45, List I of the Seventh Schedule to the Constitution. The relevant provisions of the Banking Regulation Act, which are necessary for us to decide the present writ petition, are as follows: "3. Act to apply to co-operative societies in certain cases.- Nothing in this Act shall apply to.- (a) a primary agricultural credit society; (b) a co-operative land mortgage bank; and (c) any other co-operative society, ....
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.... or local authority or any other person or persons; the carrying on of agency business of any description including the clearing and forwarding of goods, giving of receipts and discharges and otherwise acting as an attorney on behalf of customers, but excluding the business of a Managing Agent or Secretary and Treasurer of a company; (c) contracting for public and private loans and negotiating and issuing the same; (d) the effecting, insuring, guaranteeing, underwriting, participating in Managing and carrying out of any issue, public or private, of State, municipal or other loans or of shares, stock, debentures, or debenture stock of any company, corporation or association and the lending of money for the purpose of any such issue; (e) carrying on and transacting every kind of guarantee and indemnity business; (f) Managing, selling and realising any property which may come into the possession of the company in satisfaction or part satisfaction of any of its claims; (g) acquiring and holding and generally dealing with any property or any right, title or interest in any such property which may form the security or part of the security for any loans or advances or which may ....
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.... (ii) references to "commencement of this Act" shall be construed as references to commencement of the Banking Laws (Application to Co-operative Societies) Act, 1965 (23 of 1965);" There can be no doubt that the Banking Regulation Act deals with the subject "banking" insofar as it licenses banking companies, as defined, and cooperative banks, and seeks to regulate them. Section 21A, though by way of amendment, is undoubtedly an integral part of the aforesaid Act relating to the interdict on the reopening of loan transactions between a banking company and its debtor, on the ground that the rate of interest charged is excessive. There can be no doubt that a law relating to indebtedness of a debtor to a banking company and the interdict against a court reopening any such transaction, on the ground that interest charged by the banking company is excessive, would relate to the business of banking. We must not forget that the entries in the Lists to the Seventh Schedule have to be read in the widest possible manner, and we have seen from the judgments quoted by us above that the expression "banking" contained in Entry 45, List I is to be given a wide meaning. There can be no doubt tha....
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....new obligation which has been entered into by the parties or any persons from whom they claim at a date more than twelve years from the date of the transaction; (ii) do anything which affects any decree of a Court. Explanation.- In the case of a suit brought on a series of transactions the expression "the transaction" means, for the purposes of proviso (i), the first of such transactions. (2) (a) In this section "excessive" means in excess of that which the Court deems to be reasonable having regard to the risk incurred as it appeared, or must be taken to have appeared, to the creditor at the date of the loan. (b) In considering whether interest is excessive under this section, the Court shall take into account any amounts charged or paid, whether in money or in kind, for expenses, inquiries, fines, bonuses, premia, renewals or any other charges, and if compound interest is charged, the periods at which it is calculated, and the total advantage which may reasonably be taken to have been expected from the transaction. (c) In considering the question of risk, the Court shall take into account the presence or absence of security and the value thereof, the financial condition....
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.... Kerala Agriculturists' Debt Relief Act of 1970 because, unlike money lenders, they do not exploit needy agriculturists and impose upon them harsh and onerous terms, while granting loans to them. While this may have been the perception in the year 1982, the perception in the years after 1982 has altered as several recent State Debt Relief Acts include relief against loans granted by banks. For instance, the Kerala Farmers' Debt Relief Commission Act, 2006 defines "debt" as including liabilities, inter alia, due to institutional creditors and cooperative societies, and further defines "institutional creditors" to include the State Bank of India, its subsidiaries and "any scheduled bank". The same is the position in the Telangana State Commission for Debt Relief (Small Farmers, Agricultural Labourers and Rural Artisans) Act, 2016. Sections 11 and 12 of both Acts read: "11. Bar of suits, applications and other proceedings. No suit for recovery of debt shall be instituted, or application for execution of a decree in respect of a debt shall be made against a farmer described in clause (b) of sub-section (1) of section 5 and no appeal, revision petition or application for review aga....
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....nnot be narrowed down by any rule of noscitur a sociis, or taking colour from the former part of the entry. (In Special Reference No.1 of 2001, (2004) 4 SCC 489, the expression "gas and gas works" contained in Entry 25, List II was read in a manner that "gas" must take colour from the expression "gas works". It is clear that this was because natural gas was excluded from the said entry and was, in fact, part of Entry 53, List I, being within the expression "petroleum". It would not be possible to extend such an interpretation to a subject matter which is not directly linked with another subject matter contained in the same entry.) In fact, various State Acts were already in existence at the time of the Constitution, which dealt with the subject of relief of agricultural indebtedness from the point of view of the money lender. See, for instance, Sections 8 and 9 of the Assam Money-Lenders Act, 1934, Sections 9 and 10 of the Central Provinces Money-Lenders Act, 1934, Sections 11 and 12 of the Bihar Money-Lenders Act, 1938, Sections 9, 10 and 11 of the Orissa Money-Lenders Act, 1939, Sections 31 and 36 of the Bengal Money-Lenders Act, 1940 and Sections 23, 24 and 29 of the Bombay Mone....
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....cultural indebtedness is to free the farmer from the bonds of debts incurred, inter alia, due to adverse natural causes, and debt relief would be necessary in the case of adverse natural causes whatever be the source of the debt availed. If Ms. Khajuria is right, a farmer would then be protected only against moneylenders, but not banks, which would denude the entry of most of its content. 16. The real question that arises is how are Entry 45, List I and Entry, 30 List II to be harmonized. Shri Bhushan has relied strongly upon Article 246 of the Constitution which, according to him, lays down the federal supremacy principle. According to him, the said principle extends to edging out State legislation altogether, where reconciliation is not possible. The scope of Article 246 has been dealt with in many judgments. In Hoechst Pharmaceuticals Ltd. v. State of Bihar, (1983) 3 SCR 130 at 162-63 and 165-66, this Court laid down the federal supremacy principle thus: "It is obvious that Article 246 imposes limitations on the legislative powers of the Union and State legislatures and its ultimate analysis would reveal the following essentials: 1. Parliament has exclusive power to legisla....
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....to either of them. Secondly, an attempt should be made to see whether the two entries cannot be reconciled so as to avoid a conflict of jurisdiction. It should be considered whether a fair reconciliation can be achieved by giving to the language of the Union Legislative List a meaning which, if less wide than it might in another context bear, is yet one that can properly be given to it and equally giving to the language of the State Legislative List a meaning which it can properly bear. The non obstante clause in Article 246(1) must operate only if such reconciliation should prove impossible. Thirdly, no question of conflict between the two Lists will arise if the impugned legislation, by the application of the doctrine of "pith and substance" appears to fall exclusively under one list, and the encroachment upon another list is only incidental. xxx xxx xxx With regard to the interpretation of non obstante clause in Section 100(1) of the Government of India Act, 1935 Gwyer, C.J. observed: "It is a fundamental assumption that the legislative powers of the Centre and Provinces could not have been intended to be in conflict with one another and, therefore, we must read them t....
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....y overlap and sometimes may also appear to be in direct conflict with each other. It is then the duty of this Court to reconcile the entries and bring about harmony between them. xxx xxx xxx Entry 24 in List II in its widest amplitude takes in all industries, including that of gas and gas-works. So too, Entry 25 of the said List comprehends gas industry. There is, therefore, an apparent conflict between the two entries and they overlap each other. In such a contingency the doctrine of harmonious construction must be invoked. Both the learned counsel accept this principle. While the learned Attorney-General seeks to harmonize both the entries by giving the widest meaning to the word "industry" so as to include the industrial aspect of gas and gas-works and leaving the other aspects to be covered by Entry 25, learned counsel for the contesting respondents seeks to reconcile them by carving out gas and gas-works in all its aspects from Entry 24. If industry in Entry 24 is interpreted to include gas and gasworks, Entry 25 may become redundant, and in the context of the succeeding entries, namely, Entry 26, dealing with trade and commerce, and Entry 27, dealing with production, ....
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.... harmonious construction suggested on behalf of the State gives full and effective scope of operation for both the entries in their respective fields, while that suggested by learned counsel for the appellant deprives Entry 25 of all its content and even makes it redundant. The former interpretation must, therefore, be accepted in preference to the latter. In this view, gas and gas-works are within the exclusive field allotted to the States. On this interpretation the argument of the learned Attorney-General that, under Article 246 of the Constitution, the legislative power of State is subject to that of Parliament ceases to have any force, for the gas industry is outside the legislative field of Parliament and is within the exclusive field of the legislature of the State. We, therefore, hold that the impugned Act was within the legislative competence of the West Bengal Legislature and was, therefore, validly made." (Emphasis Supplied) 17. At this stage, it is important to advert to a judgment of this Court in Central Bank of India v. Ravindra, (2002) 1 SCC 367 at 402. This judgment states: "55. During the course of hearing it was brought to our notice that in view of severa....
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....ct that, at present, agricultural loans are predominantly given by cooperative and other banks to farmers, the method suggested by Shri Bhushan, which is to exclude banks from the entry "relief of agricultural indebtedness", would rob the aforesaid entry of most of its force and render it largely otiose. 18. Another method of reconciling conflicting entries was discussed in Waverly Jute Mills Co. Ltd. v. Raymon & Co. (India) (P) Ltd., (1963) 3 SCR 209 at 219-220 as follows: "The rule of construction is undoubtedly well established that the entries in the Lists should be construed broadly and not in a narrow or pedantic sense. But there is no need for the appellants to call this rule in aid of their contention, as trade and commerce would, in their ordinary and accepted sense, include forward contracts. That was the view which was adopted in Bhuwalka Brothers Ltd. case [AIR (1952) Cal 740] and which commended itself to this Court in Duni Chand Rateria case [(1955) 1 SCR 1071] . Therefore, if the question were simply whether a law on Forward Contracts would be a law with respect to Trade and commerce, there should be no difficulty in answering it in the affirmative. But the point ....
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.... runs as follows: "The other problem that will have to be tackled, along with this problem of the outmoded land tenure system, will be the problem of rural indebtedness. The total rural indebtedness was estimated by the Central Banking Inquiry Committee, in the year 1929, at about 900 crores of rupees. Subsequent estimates have however, put the figure at a much higher level. The estimate according to the report of the Agricultural Credit Department of the Reserve Bank of India in the year 1937 is about 1800 crores of rupees. It is not possible that this might have reduced to any significant extent since the year 1937, nor can the so-called agricultural boom at present be said to have produced very substantial reductions. The money-lender in the country dominates more in that strata of the agricultural population which is relatively worse off." "The boom can hardly be said to have benefited that strata. On the other hand, the debt represents accumulations of decades. The debt legislation in the various provinces has not, admittedly, been able to touch even the fringe of the problem. We feel it necessary, therefore, that the debt should be compulsorily scaled down and then ta....
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....hensive plan and have powers to coordinate the activities of the Centre and the Provinces. I therefore commend my amendment for the earnest consideration of the House. Mr. President: The question is: "That entry 34 of List II be transferred to List Ill." The amendment was negatived. Mr. President: The question is: "That entry No. 34 stand part of List II." The motion was adopted. Entry 34, was added to the State List." (Emphasis Supplied) The amendment was obviously rejected in keeping with the fact that agriculture and aspects of agriculture are exclusively given to the States. This will be clear from Entries 14, 18, 45 to 48 of List II, apart from Entry 30, List II, which read as under: "14. Agriculture, including agricultural education and research, protection against pests and prevention of plant diseases. 18. Land, that is to say, rights in or over land, land tenures including the relation of landlord and tenant, and the collection of rents; transfer and alienation of agricultural land; land improvement and agricultural loans; colonization. 45. Land revenue, including the assessment and collection of revenue, the maintenance of land records, survey for....
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....that, in pith and substance, the Banking Regulation Act does fall within Entry 45, List I, but given our interpretation of Entry 45, List I and Entry 30, List II of the Seventh Schedule, it is clear that, insofar as relief of agricultural indebtedness is concerned, Section 21A certainly trenches upon Entry 30, List II, read in the manner indicated above. As is well settled, the doctrine of pith and substance is only to view a legislation as a whole and see whether, as a whole, it falls within one or other entry of List I or List II of the Seventh Schedule. While thus falling as a whole within one List, certain provisions in a particular Act enacted by one legislature may incidentally trench upon a forbidden field exclusively given to another legislature. What is the position in law with respect to such incidental trenching? 23. In Subrahmanyan Chettiar v. Muttuswami Goundan, AIR 1941 FC 47, the Federal Court was faced with the constitutional validity of the Madras Agriculturists Relief Act, 1938. Gwyer, CJ, speaking for the majority, found that the Madras Act is an attempt to deal, in a very drastic manner, with the problem of rural indebtedness "which has vexed legislators since ....
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....he situation. But it would perhaps be inadvisable that I should say more on this occasion." (at page 52) (Emphasis Supplied) Sulaiman, J., however, dissented, and held that as there was a clash between the Madras Act and the Negotiable Instruments Act, the latter would prevail. Despite the fact that the law thus laid down cannot be said to be of persuasive value, being in a dissenting judgment, yet, the learned Judge dealt with the doctrine of incidental trenching in great detail, and followed Canadian cases, summarised by Lord Tomlin in Attorney General for Canada v. Attorney General for British Columbia (1930 A.C. 111 at 118) in four neat propositions on the subject, as follows: "The doctrine which has been evolved with regard to the Canadian cases is that if the encroachment is merely incidental, then there is no defect so long as the trespass is upon an unoccupied field. Engrafted upon the doctrine of incidental encroachment there is the further doctrine of unoccupied field. xxx xxx xxx In Jai Gobind Singh v. Lachmi Narain Ram (1940) 3 F.L.J. 46 p. 51, where the amount due on an earlier promissory note had formed part of the mortgage money, I distinguished the case b....
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.... a one way street, as was held in the dissenting judgment of Sulaiman, J. in Subrahmanyan Chettiar (supra), i.e. that all State legislations have to give way to a Central legislation, even if a Central legislation incidentally trenches upon a State subject, covered by State legislation. He relied upon paragraph 56 in Fatehchand (supra) in particular. Paragraph 56 is part of a long discussion, beginning from paragraph 55 and ending with paragraph 67, which deals with an argument made that that part of the Maharashtra Debt Relief Act, which deals with gold loans, is void because Parliament has occupied the field. This question was answered by referring to Entry 52, List I and Entry 24, List II. It was held that the Industrial Development and Regulation Act, 1951 has occupied the field of the gold industry under Entry 52, List I, as has the Gold Control Act, 1968, and that, therefore, Entry 24, List II, being subject to Entry 52, List I, has become inoperative. This does not however mean that Entry 30, List II, which deals with money lending, has been rendered inoperative and, therefore, the Maharashtra Debt Relief Act, made under Entry 30, List II, would remain intact. The learned Ju....
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....est whether a particular legislation is referable, as a whole, to an entry in List I or to the competing entry in List II. Once it is found that the legislation as a whole is referable to an entry in List I, but it incidentally encroaches upon an entry in List II, there is no reason for the doctrine of unoccupied field not to apply to federal legislation. The expression "with respect to" appears in all the sub-articles of Article 246, which expression, so far as sub-articles (1) to (3) are concerned, imports the twin doctrines of incidental trenching and unoccupied field, which applies, therefore, to legislation made under sub-articles (1) to (3) of Article 246, thus making it clear that incidental encroachment by Parliament cannot be tolerated when the exclusive field allotted to the State legislature is not unoccupied. 29. The paramountcy principle contained in Article 246, as we have seen, is only taken as a last resort after harmonious construction fails, and, that too, qua entries in competing lists. Once legislation is referable to one list or the other, the doctrine of incidental trenching and unoccupied field would apply equally to both Parliamentary and State legislations....
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....gment of this Court, this has, in fact, been held. In UCO Bank v. Dipak Debbarma, (2017) 2 SCC 585 at 596, this Court held: "13. The federal structure under the constitutional scheme can also work to nullify an incidental encroachment made by the parliamentary legislation on a subject of a State legislation where the dominant legislation is the State legislation. An attempt to keep the aforesaid constitutional balance intact and give a limited operation to the doctrine of federal supremacy can be discerned in the concurring judgment of Ruma Pal, J. in ITC Ltd. v. Agricultural Produce Market Committee [ITC Ltd. v. Agricultural Produce Market Committee, (2002) 9 SCC 232], wherein after quoting the observations of this Court in S.R. Bommai v. Union of India [S.R. Bommai v. Union of India, (1994) 3 SCC 1], the learned Judge has gone to observe as follows: (ITC Ltd. case [ITC Ltd. v. Agricultural Produce Market Committee, (2002) 9 SCC 232], SCC p. 282, paras 93-94) "93. ... '276. The fact that under the scheme of our Constitution, greater power is conferred upon the Centre vis-à-vis the States does not mean that States are mere appendages of the Centre. Within the sphere allo....
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....nd Enforcement of Security Interest Act, 2002 (SARFAESI), which was enacted under Entry 45, List I, and the Tripura Land Revenue and Reforms Act, 1960, referable to Entry 18 of List II, SARFAESI would prevail since Section 187 of the Tripura Act (which prohibited banks from transferring property which has been mortgaged by a member of a Scheduled Tribe to any person other than a member of a Scheduled Tribe), is a provision which is outside Entry 18, List II and, therefore, incidentally trenches upon Entry 45, List I. On the facts of the case, therefore, it was found that since legislation had been made by Parliament under Entry 45, List I and the SARFAESI Act dealt exclusively with activities relating to sale of secured assets by banks, Section 187 of the Tripura Act, to the extent it is inconsistent with the SARFAESI Act, must give way. 31. It is also important to notice that paragraph 12 of the aforesaid judgment sets out paragraphs 13 to 15 of the Constitution Bench judgment in Special Reference No.1 of 2001, (2004) 4 SCC 489.(In this case, a Constitution Bench of this Court had to decide on whether a Gujarat statute, which defined "gas" as being predominantly methane gas, was ....
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....ef Acts, to the extent that they cover relief of agriculturists from debts due to banks. It is clear that where Section 21A of the Banking Regulation Act incidentally trenches upon the State Debt Relief Acts, enacted under Entry 30, List II, so far as relief of agricultural indebtedness is concerned, where there is State legislation on the same subject matter which directly clashes with Section 21A, Section 21A will have to give way to the State Debt Relief Acts insofar as relief from agricultural indebtedness due to banks is concerned. The non-obstante clause in Section 21A cannot override a State Debt Relief Act in this situation, as Parliament cannot give itself supremacy over State legislation where none exists under the Constitution. If this were not the case, the exclusive power of the States to make laws within List II would become illusory, and "Parliamentary paramountcy" would trap many a beneficent State legislation made within its exclusive domain, contrary to the statement of law laid down by the Privy Council in Prafulla Kumar (supra), and contrary to principle (4) laid down by Jayakar, J. in In Re CP & Berar Sales (supra), both of which have been consistently followed....
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....e of national importance." Yet another delineation of the legislative power of the States is made by Entries 32 and 63 of List II, which speak of a particular subject and then give a residuary power qua the same subject over matters not specified in List I. "32. Incorporation, regulation and winding up of corporations, other than those specified in List I, and universities; unincorporated trading, literary, scientific, religious and other societies and associations; co-operative societies. 63. Rates of stamp duty in respect of documents other than those specified in the provisions of List I with regard to rates of stamp duty." (Entry 32, List II is to be read with Entries 43 and 44 of List I; and Entry 63, List II is to be read with Entry 91, List I.) 36. All the other entries of the State List give exclusive power to the States to legislate on the subject matters mentioned therein. If Shri Jayant Bhushan's submission is to be accepted, this threefold scheme contained within List II itself would be violated. If Parliamentary legislation were to invade an exclusive sphere of the State, and were to prevail over State legislation made within the States' exclusive powers, all the....
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.... or more States deem it desirable that Parliament should pass an Act for regulating a matter exclusively in the State List, this can be done by resolutions to that effect passed by the legislatures of such States. Also, to implement a treaty, agreement or convention with other countries, Parliament, under Article 253 of the Constitution, has the power to legislate on an exclusive State subject. In an emergency, Parliament can, under Article 250, legislate on matters exclusively reserved for the States under List II. This being the case, we need not be unduly weighed down by Shri Bhushan's argument that, unless we accept his submission, Parliament would be denuded of legislative competence altogether to deal with the subject matter of relief against debts due to banks from the agricultural sector. 39. The next important question is as to whether the judgment of this Court in Yasangi Venkateswara Rao (supra) is binding on this Bench having been delivered by another earlier 2-Judge Bench of this Court. 40. In order to appreciate the answer to this question, it is necessary to indicate what was held by the judgment of the learned Single Judge of the Andhra Pradesh High Court in State....
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....respondent, though probably served, did not appear and consequently was not heard. It will also be noticed that, despite the fact that the judgment of the single Judge referred to a very large number of High Court, Federal Court, Privy Council and Supreme Court judgments, not a single judgment is adverted to in the cryptic paragraph 7 set out hereinabove. Can it be said that this judgment is a declaration of the law under Article 141 of the Constitution, which as a matter of practice we cannot differ from being a bench of coordinate strength? 42. This question is answered by referring to authoritative works and judgments of this Court. In Precedent in English Law by Cross and Harris (4th edn.), 'ratio decidendi' is described as follows: "The ratio decidendi of a case is any rule of law expressly or impliedly treated by the judge as a necessary step in reaching his conclusion, having regard to the line of reasoning adopted by him, or a necessary part of his direction to the jury." (at page 72) 43. In Dalbir Singh v. State of Punjab (1979) 3 SCR 1059 at 1073-1074, a dissenting judgment of A.P. Sen, J. sets out what is the ratio decidendi of a judgment: "According to the well-....
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....2. The C.S.I.R. is a registered society with official and non-official members appointed by Government and subject to some measure of control by Government in the Ministry of Science and Technology. The court held it was not 'State' as defined in Art. 12. It is significant that the court implicitly assented to the proposition that if the society were really an agency of the Government it would be 'State'. But on the facts and features present there the character of agency of Government was negatived. The rulings relied on are, unfortunately, in the province of Art. 311 and it is clear that a body may be 'State' under Part III but not under Part XIV. Ray, C.J., rejected the argument that merely because the Prime Minister was the President or that the other members were appointed and removed by Government did not make the Society a 'State'. With great respect, we agree that in the absence of the other features elaborated in Airport Authority case (1979) 3 SCC 489, the composition of the Governing Body alone may not be decisive. The laconic discussion and the limited ratio in Tewary (supra) hardly help either side here." Also, in Municipal Corpn. of Delhi v. Gurnam Kaur, (1989) 1 S....
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....urt by the appellant's counsel alone. That apart, where there is a detailed judgment of the High Court dealing with several authorities, and it is reversed in a cryptic fashion without dealing with any of them, the per incuriam doctrine kicks in, and the judgment loses binding force, because of the manner in which it deals with the proposition of law in question. Also, the ratio decidendi of a judgment is the principle of law adopted having regard to the line of reasoning of the Judge which alone binds in future cases. Such principle can only be laid down after a discussion of the relevant provisions and the case law on the subject. If only one side is heard and a judgment is reversed, without any line of reasoning, and certain conclusions alone are arrived at, without any reference to any case law, it would be difficult to hold that such a judgment would be binding upon us and that we would have to follow it. In the circumstances, we are of the opinion that the judgment in Yasangi Venkateswara Rao (supra) cannot deter us in our task of laying down the law on the subject. 44. In view of what has been held by us, it is not necessary for us to go into the arguments relating to Arti....