Supreme Court of India
STATE OF KERALA & ORS.versusM/S. MAR APPRAEM KURI CO. LTD. & ANR.
- Citation
- 2012 INSC 205
- Decided
- 8 May 2012
- Disposal
- Reference answered
- Bench
- S H KAPADIA
Holding
Repugnancy arises on the making of the central law (i.e., upon presidential assent), rendering the Kerala Chitties Act, 1975 void to the extent of the repugnancy on 19‑08‑1982.
Summary
The State of Kerala amended its Chitties Act, 1975 to bring chitties registered outside the state but with substantial Kerala subscribers within its regulatory ambit. Private chit firms challenged the amendment as repugnant to the Central Chit Funds Act, 1982 under Article 254(1). The Supreme Court was asked whether repugnancy arises on the making of a law or on its commencement. The Court held that repugnancy arises at the moment the central law is made—when it receives the President's assent—irrespective of its later commencement. Consequently, the Kerala Chitties Act, 1975 became void and was impliedly repealed on 19‑08‑1982, the date of assent to the Central Act, subject only to the limited savings under Section 6 of the General Clauses Act, 1897. The 2002 amendment inserting Section 4(1a) was therefore invalid for lack of presidential assent under Article 254(2). The Court also clarified the effect of such implied repeal and the applicability of the General Clauses Act to preserve rights accrued under the repealed state law.
Issues considered
- Whether repugnancy between a central law and a state law under Article 254(1) arises on the making of the central law or on its commencement in the state.
- Whether the Kerala Chitties Act, 1975 became void on the enactment of the Central Chit Funds Act, 1982.
- The constitutional validity of the amendment inserting Section 4(1a) into the Kerala Chitties Act, 1975 without presidential assent.
Legislation cited
- Central Chit Funds Act, 1982s. 1(3), s. 3, s. 85(a), s. 90, s. 90(2)
- Finance Act No. 7 of 2002 (Kerala)s. 4(1a)
- General Clauses Act, 1897s. 6, s. 6(b), s. 6(c)
- Kerala Chitties Act, 1975s. 1, s. 2, s. 3, s. 4, s. 4(1a), s. 6
Subjects
repugnancyArticle 254concurrent listcentral legislationstate legislationimplied repealGeneral Clauses Actchit fundslegislative competence
Judgment
[2012] 4 S.C.R. 448
A STATE OF KERALA & ORS.
v.
M/S. MAR APPRAEM KURI CO. LTD. & ANR.
(Civil Appeal No. 6660 of 2005)
MAY 08, 2012
B
[S.H.KAPADIA, CJI., D.K. JAIN, SURINDER SINGH
NIJJAR, RANJANA PRAKASH DESAI AND JAGDISH
SINGH KHEHAR, JJ.)
c Constitution of India, 1950 - Article 254 (1) and Seventh
Schedule List Ill, Entry 7 - Central Law and State Law -
Repugnancy of State Law - Whether from the date the Central
Law was made i.e. assent given by the President of India or
from the date the Central Act was enforced in that State - Held:
0 Repugnancy arises on the making of the law i.e. when the
Central Act received the assent of the President and not on
its commencement/enforcement - The Central Law though
not brought in force in that State, is still a law made, which is
alive as an existing Law - In the present case the enactment
E of Central Act covered the entire area of 'chits' under entry 7
of List Ill of VII Schedule and hence the State Act on account
of repugnancy became void and stood impliedly repeated -
On making of the Central Act, the State Act ceased to operate
except to the extent of s. 6 of General Clauses Act, 1897 -
F State Legislature could not have amended the State Act after
enactment of the Central Act save and except under Article
254(2) - Central Chit Funds Act, 1988 - Kera/a Chitties Act,
1975 - General Clauses Act, 1897 - s. 6.
In order to bring the private chitty firms (who
G remained out of the regulatory mechanism prescribed in
Kerala Chitties Act, 1975, by registering themselves
outside the State of Kerala but continued to operate in
the State of Kerala) within the ambit of the 1975 Act, the
H 448
STATE OF KERALA & ORS. v. MAR APPRAEM KURI 449
CO. LTD. & ANR.
Act was amended by inserting sub-section (1a) in Section A
4. Thereby the chitties registered_ outside the State,
having 20% or more of its subscribers normally residing
in the State were brought within the ambit of the 1975
Act. Aggrieved by the said amendment, the private chitty
firms challenged the vires of s. 4(1a) of the 1975 Act as B
repugnant, under Article 254(1) of the Constitution of India
to the Central Chit Funds Act, 1982. Single Judge of the
High Court held that as there was no notification u/s. 1(3)
of the Central Chit Funds Act, 1982, bringing the Central
Act into force in the State and since no rules were framed c
u/s. 89 of the Central Act, it cannot be said that the State
Act stood repealed on the enactment of the Central Act.
Division Bench of the High Court declared s. 4(1 a) of the
State Act as extra-territorial and unconstitutional.
In appeal to this Court, while deciding the question D
whether making of the law or its commencement brings
about repugnancy or inconsistency as envisaged in
Article 254 (1) of the Constitution, the 3 Judges Bench
doubted the correctness of the view taken by a 3-Judges
Bench of Supreme Court in Pt. Rishikesh and Anr. v. Sa/ma E
Begum (Smt.) (1995) 4 SCC 718, whereby it was held that
as soon as the assent is given by the President to the law
passed by the Parliament, it becomes law. The Court,
therefore, referred the matter to the Constitution Bench.
F
The question to be answered by the Constitution
Bench was whether the Kerala Chitties Act, 1975 became
repugnant to the Central Chit Funds Act, 1982 u/Art.
254(1) of the Constitution upon making of the Central Act
(i.e. when the President gave his assent) or whether the G
State Act would become repugnant to the Central Act as
and when notification u/s. 1(3) of the Central Act is issued
bringing the Central Act into force in the State; and that
what is the effect in law of a repeal.
H
450 SUPREME COURT REPORTS [2012] 4 S.C.R.
A Answering the reference, the Court
HELD: 1.1. Repugnancy arises on the making and
not commencement of the law. The Constitution framers
have deliberately used the word "made" or "make" in
Articles 245, 246, 250 and 251 of the Constitution.
8
Constitution of India gives supremacy to the Parliament
in the matter of making of the laws or legislating with
respect to matters delineated in the three Lists of the
Seventh Schedule. The principle of supremacy of the
C Parliament, the distribution of legislative powers, the
principle of exhaustive enumeration of matters in the
three Lists are all to be seen in the context of making of
laws and not in the context of commencement of the
laws. [Paras 16 and 28) [488-A-B; 512-A; 511-H]
D Pt. Rishikesh and Anr. v. Sa/ma Begum (Smt) (1995) 4
sec 718 - affirmed.
A.L.S.P.P.L. Subrahmanyan Chettiar v. Muttuswami
Goundan AIR 1941 F.C. 47; lndu Bhusan Bose vs. Rama
E Sundari Devi and Anr. (1970) 1 SCR 443; Amalgamated
Electricity Co. (Belgaum) Ltd. vs. Municipal Committee,
Ajmer (1969) 1 SCR 430 - relied on.
Constitutional Law of India by H.M. Seervai, Fourth
Edition Para22.6 of Vol.3 at Page 2305 - referred to.
F
1.2. Throughout Article 254, the emphasis is on law-
making by the respective Legislatures. Broadly speaking,
law-making is exclusively the function of the Legislatures.
The President and the Governor are a part of the Union
G or the Legislatures of the States. As far as the Parliament
is concerned, the legislative process is complete as soon
as the procedure prescribed by Article 107 of the
Constitution and connected provisions are followed and
the Bill passed by both the Houses of Parliament has
H received the assent of the President under Article 111.
STATE OF KERALA & ORS. v. MAR APPRAEM KURI 451
CO. LTD. & ANR.
Similarly, a State legislation becomes an Act as soon as A
a Bill has been passed by the State Legislature and it has
received the assent of the Governor in accordance with
Article 200. It is only in the situation contemplated by
Article 254(2) that a State Legislation is required to be
reserved for consideration and assent by the President. 8
Thus, irrespective of the date of enforcement of a
Parliamentary or State enactment, a Bill becomes an Act
and comes on the Statute Book immediately on receiving
the assent of the President or the Governor, as the case
may be, which assent has got to be published in the C
official gazette. The Legislature, in exercise of its
legislative power, may either enforce an Act, which has
been passed and which has received the assent of the
President or the Governor, as the case may be, from a
specified date or leave it to some designated authority to
fix a date for its enforcement. Such legislations are 0
conditional legislations as in such cases no part of the
legislative function is left unexercised. In such
legislations, merely because the Legislature has
postponed the enforcement of the Act, it does not mean
that the law has not been made. [Para 17] [489-E-H; 490- E
A-C]
1.3. The word "made" in the proviso to Article 254 (2)
has to be read in the context of law-making process and,
if so read, it is clear that to test repugnancy one has to F
go by the making of law and not by its commencement.
[Para 17] [493-A-B]
1.4. In the present case, after enactment of the Chit
Funds Act, 1982 on 19.08.1982, the said Act has been
applied to 17 States by notifications issued from time to G
time under Section 1(3). If the entire Act including Section
1(3) was not in operation on 19.08.1982, the Central
Government cannot issue any notification under that very
Section in respect of 17 States. There must be a law
H
452 SUPREME COURT REPORTS [2012] 4 S.C.R.
A authorizing the Government to bring the Act into force.
Thus, Section 1(3) came into force immediately on
passing of the Act. Thus, the material dates, are the dates
when the two enactments received the assent of the
President which in the case of Central Act is 19.08.1982
8 while in the case of the Kerala Chitties Act, 1975, it is
18.07.1975. [Para 17) [490-F-H; 491-A-C]
A. Thangal Kunju Musaliar v. M. Venkatachalam Patti
AIR 1956 SC246: 1955 SCR 1196 - referred to.
C 1.5. Articles 246(1), (2) and 254(1) provide that to the
extent to which a State law is in conflict with or repugnant
to the Central law, which Parliament is competent to
make, the Central law shall prevail and the State law shall
be void to the extent of its repugnancy. This general rule
o of repugnancy is subject to Article 254(2) which inter alia
provides that if a law made by a State legislature in
respect of matters in the Concurrent List is reserved for
consideration by the President and receives his/ her
assent, then the State law shall prevail in that State over
E an existing law or a law made by the Parliament,
notwithstanding its repugnancy. The proviso to Article
254(2) provides that a law made by the State with the
President's assent shall not prevent Parliament from
making at any time any law with respect to the same
F matter including a law adding to, amending, varying or
repealing the law so made by a State legislature. Thus,
Parliament need not wait for the law made by the State
with the President's assent to be brought into force as it
can repeal, amend, vary or add to the assented State law
no sooner it is made or enacted. There is no justification
G for inhibiting Parliament from repealing, amending or
varying any State Legislation, which has received the
President's assent, overriding within the State's territory,
an earlier Parliamentary enactment in the concurrent
sphere, before it is brought into force . Parliament can
H
STATE OF KERALA & ORS. v. MAR APPRAEM KURI 453
CO. LTD. & ANR.
repeal, amend, or vary such State law no sooner it is A
assented to by the President and that it need not wait till
such assented to State law is brought into force. [Para
19] [503-C-H]
1.6. The enactment of the Central Chit Funds Act, 8
1982, on 19.08.1982, which covered the entire field of
"chits" under entry 7 of List Ill Seventh Schedule of the
Constitution, the Kerala Chitties Act, 1975, on account of
repugnancy as enshrined in Article 254(1), became void
and stood impliedly repealed. That, on the occupation of C
the entire field of "chits", the Kerala Legislature could not
have enacted the State Finance Act No. 7 of 2002,
inserting Section 4(1a) into the Kerala Chitties Act, 1975,
particularly on the failure of the State in obtaining
Presidential assent under Article 254(2). [Para 28] [512-8-
C] D
1.7. Article 254(1) also gives supremacy to the law
made by Parliament, which Parliament is competent to
enact. In case of repugnancy, the State Legislation would
be void only to the extent of repugnancy. If there is no E
repugnancy between the two laws, there is no question
of application of Article 254(1) and both the Acts would
prevail. Thus, Article 254 is attracted only when
Legislations covering the same matter in List Ill of
Seventh Schedule made by the Centre and by the State F
operate on that subject; both of them (Parliament and the
State Legislatures) being competent to enact laws with
respect to the subject in List Ill. [Para 17] [488-E-G]
1.8. In the present case, Entry 7 of List Ill in the
Seventh Schedule deals with the subject of "Contracts". G
It also covers special contracts. Chitties are special
contracts. Thus, the Parliament and the State
Legislatures are competent to enact a law with respect
to such contracts. The question of repugnancy between
the Parliamentary Legislation and State Legislation arises H
454 SUPREME COURT REPORTS [2012] 4 S.C.R.
A in two ways. First, where the Legislations, though
enacted with respect to matters in their allotted spheres,
overlap and conflict. Second, where the two Legislations
are with respect to matters in the Concurrent List and
there is a conflict. In both the situations, the Parliamentary
B Legislation will predominate, in the first, by virtue of non-
obstante clause in Article 246(1 ); in the second, by reason
of Article 254(1). Article 254(2) deals with a situation where
the State Legislation having been reserved and having
obtained President's assent, prevails in that State; this
c again is subject to the proviso that Parliament can again
bring a legislation to override even such State
Legislation. [Para 17] [488-G-H; 489-A-C]
1.9. The intention of the Parliament was clearly to
occupy the entire field falling in Entry 7 of List Ill of
D Seventh Schedule. The 1982 Act was enacted as a
Central Legislation to "ensure uniformity in the
provisions applicable to chit fund institutions throughout
the country as such a Central Legislation would prevent
such institutions from taking advantage either of the
E · absence of any law governing chit funds in a State or
exploit the benefit of any lacuna or relaxation in any State
law by extending their activities in such States". The clear
intention of enacting the Central Act, therefore, was to
make the Central Act a complete code with regard to the
F business of conducting chit funds and to occupy the
legislative field relating to such chit funds. Moreover, the
intention to override the State laws is clearly manifested
in the Central Act, especially Section 3 which makes it
clear that the provisions of the Central Act shall have
G effect notwithstanding anything to the contrary contained
in any other law for the time being in force. Similarly,
Section 90 of the Central Act providing for the repeal of
State legislations also manifests the intention on the part
of the Parliament to occupy the field hitherto occupied by
H State Legislation. Each and every aspect relating to the
STATE OF KERALA & ORS. v. MAR APPRAEM KURI 455
CO. LTD. & ANR.
conduct of the chits as is covered by the State Act has A
been touched upon by the Central Act in a more
comprehensive manner. Thus, on 19.08.1982, the
Parliament in enacting the Central law has manifested its
intention not only to override the existing State Laws, but
to occupy the entire field relating to Chits, which is a B
special contract, coming under Entry 7 of List Ill of
Seventh Schedule. Consequently, the State Legislature
was divested of its legislative power/ authority to enact
Section 4(1 a) vi de Finance Act No. 7 of 2002 on
29.07 .2002, save and except under Article 254(2) of the c
Constitution. Thus, Section 4(1 a) became void for want
of assent of the President under Article 254(2). [Para 17]
[491-C-H; 492-A-C]
Shriram Chits and Investment (P) Ltd. v. Union of India
(1993) Supp 4 SCC 226: 1993 (1) Suppl. SCR 54 - relied D
on.
1.10. On the enactment of the Central Chit Funds Act
1982 on 19.08.1982, intending to occupy the entire field
of Chits under Entry 7 of List Ill of Seventh schedule the E
State Legislature was denuded of its power to enact the
Finance Act No. 7 of 2002. However, a law enacted by the
State legislature on a topic in the Concurrent List which
is inconsistent with and repugnant to the law made by
the Parliament can be protected by obtaining the assent F
of the President under Article 254(2) and that the said
assent would enable the State law to prevail in the State
and override the provisions of the Central Act in its
applicability to that State only. Thus, when the State of
Kerala intended to amend the State Act in 2002, it was G
bound to keep in mind the fact that there is already a
Central law on the same subject, made by Parliament in
1982, though not in force in Kerala, whereunder there is
a pro tanto repeal of the State Act. Therefore, the State
legislature ought to have followed the procedure in Article H
456 SUPREME COURT REPORTS [2012] 4 S.C.R.
A 254(2) and ought to have obtained the assent of the
President. [Para 18] [498-B-E]
Hingir-Rampur Coal Co. v. State of Orissa (1961) 2 SCR
537; Stateof Orissa v. M.A. Tulloch and Co. (1964) 4 SCR
461 - relied on.
8
Tika Ramji v. State of U.P. 1956 SCR 393; T. Barai v.
Henry Ah Hoe(1983) 1 SCC 177: 1983 (1) SCR 905; /. T.C.
Limited v. State ofKarnataka 1985 Supp. SCC 476; M.
Karunanidhi v. Union of India (1979) 3 SCC 431: 1979 (3)
C SCR 254 - referred to.
1.11. The definition of the expressions "laws in force"
in Article 13(3)(b) and Article 372(3), Explanation I and
"existing law" in Article 366(10) show that the laws in
0 force include laws passed or made by a legislature before
the commencement of the Constitution and not repealed,
notwithstanding that any such law may not be in
operation at all. Thus, the definition of the expression
"laws in force" in Article 13(3)(b) and Article 372(3),
E Explanation I and the definition of the expression
"existing law" in Article 366(10) demolish the plea of the
State of Kerala that a law has not been made for the
purposes of Article 254, unless it is enforced. The
expression "existing law" finds place in Article 254. There
is no difference between an "existing law" and a "law in
F force". The Kerala Chitties Act, 1975 became void on the
making of the Chit Funds Act, 1982 on 19.08.1982, [when
it received the assent of the President and got published
in the Official Gazette] as the Central Act intended to
cover the entire field with regard to the conduct of the
G Chits and further that the State Finance Act No. 7 of 2002,
introducing Section 4(1a) into the State 1975 Act, was
void as the State legislature was denuded of its authority
to enact the said Finance Act No. 7 of 2002, except under
Article 254(2), after the Central Chit Funds Act, 1982
H occupied the entire field as envisaged in Article 254(1) of
STATE OF KERALA & ORS. v. MAR APPRAEM KURI 457
CO. LTD. & ANR.
the Constitution. Thus, repugnancy arises on the making A
and not commencement of the Central Chit Funds Act,
1982. On 19.08.1982, the Kerala Chitties Act, 1975 ceased
to operate except to the extent of Section 6 of the
General Clauses Act, 1897. [Para 19) [504-A-G]
B
Edward Mills Co. Ltd. Beawar v. State of Ajmer AIR 1955
SC 25: 1955 SCR 735 - relied on.
Deep Chand v. State of UP. 1959 Suppl. (2) SCR 8 -
referred to.
c
2.1. The Central Chit Funds Act, 1982 though not
brought in force in the State of Kerala is still a law made,
which is alive as an existing law. By reason of Article 367
of the Constitution, the General Clauses Act, 1897 applies
to the repeal. Section 6 of the General Clauses Act, 1897 o
is, therefore, relevant, particularly Sections 6(b) and 6(c)
and consequently, the previous operation of the Kerala
Chitties Act, 1975 is not affected nor any right, privilege,
obligation or liability acquired or incurred under that
repealed State Act. Thus, after 19.08.1982, the Kerala E
Chitties Act, 1975 stands repealed except for the limited
purposes of Section 6 of General Clauses Act, 1897. If and
when the Central Government brings into force the Chit
Funds Act, 1982 by a notification in State of Kerala, under
Section 1 (3), Section 90(2) will come into play and
thereby the Kerala Chitties Act, 1975 shall continue to F
apply only to chits in operation on the date of
commencement of the Central Chit Funds Act, 1982 in the
same manner as the Kerala Chitties Act, 1975 applied to
chits before such commencement. [Para 28] [512-D-G]
G
2.2. When a State law is repealed expressly or by
implication by a Union law, Section 6 of the General
Clauses Act 1897 applies as to things done under the
State law which are so repealed, so that transactions
under the State law before the repeal are saved as also H
458 SUPREME COURT REPORTS [2012] 4 S.C.R.
A any rights and liabilities arising under the State Act, prior
to the enactment of the Central Act. Repeal of an
enactment is a matter of substance. It depends on the
intention of the Legislature. If by reason of the
subsequent enactment, the Legislature intended to
B abrogate or wipe off the former enactment, wholly or in
part, then, it would be a case of pro tanto repeal. [Para
24] [509-D-E]
State of Orissa v. M.A. Tulloch and Co. (1964) 4 SCR
C 461; A. Thangal Kunju Mussaliar v. M. Venkitacha/am Potti
and Anr. (1955) SCR 1196 ; T. S. Baliah v. T. S. Rengachari
(1969) 3 SCR 65; State of Punjab vs. Mohar Singh (1955) 1
SCR 893 - relied on.
2.3. In the present case, repugnancy is established
o by both the tests firstly on comparison of the provisions
of the Kerala Chitties Act, 1975, being the State Act, and
the Chit Funds Act, 1982, being the Central Act,
inconsistencies actually exist directly, and secondly the
intention of the Parliament in enacting the Central Act is
E to cover the entire field relating to or with respect to Chits.
Hence, on both counts the two Acts cannot stand
together. In consequence of this repugnancy, the Kerala
Chitties Act, 1975 became void under Article 254(1) on the
enactment of the Central Chit Funds Act, 1982 on
F 19.08.1982 and the Kerala Chitties Act, 1975 thus stood
impliedly repealed. By reason of Article 367 of the
Constitution, the General Clauses Act, however, applies
to the said repeal. Under Sections S(b) and (c) of the
General Clauses Act the previous operation of the Kerala
Chitties Act, 1975 is not affected nor any right, privilege,
G obligation or liability acquired or incurred under' the
Kerala repealed Act. This is the Constitutional position
which would prevail if Section 90(1) of the Central Chit
Funds Act, 1982 would not have been there. In other
words, Section 90(1) of the Central Chit Funds Act, 1982
H
STATE OF KERALA & ORS. v. MAR APPRAEM KURI 459
CO. LTD. & ANR.
is stated out of abundant caution. Thus, after 19.08.1982 A
the Kerala Chitties Act, 1975 stood repealed except for the
limited purposes of Section 6 of the General Clauses Act.
Likewise, the other existing six State laws on Chits,
referred to in Section 90 of the Chit Funds Act, 1982,
existing on 19.08.1982 also stood repealed subject to the B
saving under Section 6 of the General Clauses Aci. [Para
25) [509-F-H; 510-A-D]
2.4. To bring the Central Chit Funds Act, 1982 into
operation in any State, the Central Government has to
issue a notification in the Official Gazette under Section C
1(3). This has been done for some States but it has not
been done for others like Kerala. It is for the Central
Government to issue a notification bringing into force the
Chit Funds Act, 1982 in Kerala when it deems appropriate
as it has done in some States. Until such notification is o
issued neither the Kerala Chitties Act, 1975 prevails in the
State of Kerala as it has become void and has been
repealed under Article 254(1 ), nor the Central Chit Funds
Act, 1982 as it is not notified till date. If and when the
Central Government brings into force the Chit Funds Act, E
1982 by a notification in the State of Kerala, under
Section 1(3), Section 90(2) will come into play and
thereby the Kerala Chitties Act, 1975 shall continue to
apply only to chits in operation in State of Kerala on the
date of the commencement of the Central Chit Funds Act,
F
1982 in the same manner as the Kerala Chitties Act, 1975
applied to such chits before such commencement.
Moreover, Sections 85(a) and 90(2) of the Central Chit
Funds Act, 1982 provide for continuance of the
application of the provisions of the Kerala Chitties Act, G
1975 till the commencement of the Central Chit Funds Act,
1982. Such commencement is dependent upon
notification under Section 1 (3). Thus, on such
commencement of the Central Chit Funds Act, 1982, the
transactions (chits) between 19.08.1982 and the date of
commencement of the Central Act will stand protected H
460 SUPREME COURT REPORTS [2012] 4 S.C.R.
A under Section 90(2). Hence, there would be no legislative
vacuum. [Para 26) [510-E-H; 511-A-B]
3. Section 4(1 a) was inserted in Kerala Chitties Act
vide State Finance Act No. 7 of 2002. Under Section 4(1a),
in cases where a chitty is registered outside the State, say
B in Jammu & Kashmir, but having 20% or more of the
subscribers normally residing in State of Kerala, the
Foreman (who has got registration outside the State of
Kerala) has to open a branch in the State of Kerala and
obtain registration under the Kerala Chitties Act, 1975.
C This sub-section was inserted to plug a loophole. In
many cases, chitties were registered outside the State of
Kerala even when large number of subscribers were
residing in State of Kerala. It is true that on the making
of the Central Chit Funds Act, 1982, the State legislature
D could not have enacted the Finance Act No. 7 of 2002
inserting Section 4(1a) into the State Act as the entire field
stood occupied by the Central Chit Funds Act, 1982
without the assent of the President as envisaged under
Article 254(2), however, Section 4(1) of the Central Chit
E Funds Act, 1982 is much wider and more stringent than
Section 4(1 a) of the Kerala Chitties Act, 1975, as amended
by Finance Act No. 7 of 2002, inasmuch as under Section
4(1) of the Central Chit Funds Act, 1982, no chit shall be
commenced or conducted without obtaining sanction of
F the State Government within whose jurisdiction the chit
is to be commenced or conducted and unless such chit
is registered in that State in accordance with the
provisions of the Central Chit Funds Act 1982. [Para 27]
[511-C-G]
G Case Law Reference:
AIR 1941 F.C. 47 relied on Para 16
(1970) 1 SCR 443 relied on Para 16
H (1969) 1 SCR 430 relied on Para 16
STATE OF KERALA & ORS. v. MAR APPRAEM 461
KURI CO. LTD. & ANR.
1955 SCR 1196 referred to Para 17 A
relied on. Para 21
1993 (1) Suppl. SCR 54 relied on Para 17
1983 (1) SCR 905 referred to Para 18 (i) B
1985 Supp. sec 476 referred to Para 18 (ii)
1979 (3) SCR 254 referred to Para 18 (iii)
1956 SCR 393 referred to Para 18 (iv)
c
(1964) 4 SCR 461 referred to Para 18 (v)
relied on. Para 20
(1961) 2 SCR 537 relied on Para 18 (v)
1955 SCR 735 relied on Para 19 D
(1969) 3 SCR 65 relied on Para 22
(1955) 1 SCR 893 relied on Para 23
(1995) 4 sec 118 affirmed Para 28 E
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
6660 of 2005 etc.
From the Judgment & Order dated 31.05.2005 of the High
Court of Kerala at Ernakulam in W.A. No. 551 of 2004. F
WITH
C.A. Nos. 6661, 6662, 6663, 6664, 6665, 6666, 6667, 6668,
6669,6670,6671,6672,6673,6674,6675,6676,6677,6678,
6679, 6680, 6681 of 2005, 7204, 7329, 7330, 7333, 7334 of G
2008 with SLP (C) Nos. 25822 & 25823 of 2009, C.A. Nos.
7008, 7009, 7010, 7011, 7012, 7013, 7014, 7164, 7165, 7166,
7167, 7537, 7538 of 2005, 494, 495, 5031 & 5032 of 2006,
7332 & 7572 of 2008.
H
462 SUPREME COURT REPORTS [2012] 4 S.C.R.
A K.K. Venugopal, T.R. Andhyarujina, V. Giri, Chander Uday
Singh, Mathai M. Paikeday, V. Shekhar, Shyam Divan, Lis
Mathew, Ankur Talwar, Shyam Mohan, Ashwathy Balraj, Rohit
Bhat, Salman Hashmi (for P.V. Dinesh), Romy Chacko, Satya
Mitra, Dhaval Mehrotra, A. Raghunath, K.S. Bharathan,
B Mohammed Sadique, Parameshwaran, C. Mukund, Ashok
Kumar Jain, Pankaj Jain, P.V. Sarvanaraja, Bijoy Kumar Jain,
P.I. Jose, Anupam Mishra, James P. Thomas, Robson Paul,
Shishir Pinaki, Sanjay Jain, A. Raghunath, Rajith Davis
Attathara, Vijendra Kumar, Shaikh Chand Saheb, Harikumar
c G., A. Venayagam Balan, oshy Jacob, Tara Chandra Sharma,
S.W.A. Qadri, Sunita Sharma, Zaid Ali, Abhigya, Jatin Rajput,
Deepaskhi Jain, Vishal Saxena, Shaveta Chaudhary, B.K.
Prasad, Sushma Suri, Nirman Sharma, Sajith P. Warrier, R.
Chandrachud for the appearing parties.
D The Judgment of the Court was delivered by
S.H. KAPADIA, CJI.
Introduction
E 1. By order dated 18.02.2009 in Civil Appeal No. 6660 of
2005 in the case of State of Kerala v. M/s. Mar Appraem Kuri
Co. Ltd., the referring Bench of 3-judges of this Court doubted
the correctness of the view taken by a 3-judges Bench of this
Court in Pt. Rishikesh and Another v. Sa/ma Begum (Smt)
F [(1995) 4 SCC 718]. Accordingly, the matter has come to the
Constitution Bench to decide with certitude the following core
issues of constitutional importance under Article 254(1) of the
Constitution. ·
G Scope of the Reference - when does repugnancy arise?
2. In the present case, the question to be answered is
whether the Kerala Chitties Act 23 of 1975 became repugnant
to the Central Chit Funds Act 40 of 1982 under Article 254(1)
upon making of the Central Chit Funds Act 40 of 1982 (i.e. on
H 19.08.1982 when the President gave his assent) or whether the
STATE OF KERALA & ORS. v. MAR APPRAEM KUR! 463
CO. LTD. & ANR. [S.H. KAPADIA, CJ!.]
Kerala Chitties Act 23 of 1975 would become repugnant to the A
Central Chit Funds Act 40 of 1982 as and when notification
under Section 1(3) of the Central Chit Funds Act 40 of 1982
bringing the Central Act into force in the State of Kerala is
issued?
B
3. The question arose before the Full Bench of the
Allahabad High Court in the case of Smt. Chandra Rani and
others v. Vikram Singh and others [1979 All. L.J. 401] in the
following circumstances:-The U.P. Civil Laws (Reforms and
Amendment) Act 57 of 1976 being the State Act stood enacted
on 13.12.1976; it received the assent of the President on C
30.12.1976; it was published in the Gazette on 31.12.1976 and
brought into force w.e.f. 1.01.1977 whereas the Civil Procedure
Code (Amendment) Act 104 of 1976, being the Central Act,
was enacted on 9.09.1976; it received the assent of the
President on the same day; it got published in the Central D
Gazette on 10.09.1976; and brought into force w.e.f. 1.02.1977
(i.e. after the State Act came into force). The Full Bench of the
Allahabad High Court in Chandra Rani (supra) held that the
U.P. Act No. 57 of 1976 was a later Act than the Central Act
No. 104 of 1976. The crucial date in the case of the said two E
enactments would be the dates when they received the assent
of the President, which in the case of the Central Act was
9.09.1976 while in the case of the U.P. Act was 30.12.1976.
This decision of the Full Bench of the Allahabad High Court in
the case of Chandra Rani (supra) came for consideration F
before this Court in Pt. Rishikesh (supra).
4. The statement of law laid down in Pt. Rishikesh (supra)
was as under:
"17 ... As soon as assent is given by the President to the G
law passed by the Parliament it becomes law.
Commencement of the Act may be expressed in the Act
itself, namely, from the moment the assent was given by
the President and published in the Gazette, it becomes
operative. The operation may be postponed giving power H
464 SUPREME COURT REPORTS [2012] 4 S.C.R.
A to the executive or delegated legislation to bring the Act
into force at a particular time unless otherwise provided.
The Central Act came into operation on the date it received
the assent of the president and shall be published in the
Gazette and immediately on the expiration of the day
B preceding its commencement it became operative.
Therefore, from the mid-night on the day on which the
Central Act was published in the Gazette of India, it
became the law. Admittedly, the Central Act was assented
to by the President on 9-91976 and was published in the
c Gazette of India on 10-9-1976. This would be clear when
we see the legislative procedure envisaged in Articles 107
to 109 and assent of the President under Article 111 which
says that when a Bill has been passed by the House of
the People, it shall be presented to the President and the
President shall either give his assent to the Bill or withhold
D
his assent therefrom. The proviso is not material for the
purpose of this case. Once the President gives assent it
becomes law and becomes effective when it is published
in the Gazette. The making of the law is thus complete
unless it is amended in accordance with the procedure
E prescribed in Articles 107 to 109 of the Constitution.
Equally is the procedure of the State Legislature.
Inconsistency or incompatibility in the law on concurrent
subject, by operation of Article 254, clauses (1) and (2)
does not depend upon the commencement of the
F respective Acts made by the Parliament and the State
legislature. Therefore, the emphasis on commencement of
the Act and inconsistency in the operation thereafter does
not become relevant when its voidness is required to be
decided on the anvil of Article 254(1). Moreover the
G legislative business of making law entailing with valuable
public time and enormous expenditure would not be made
to depend on the volition of the executive to notify the
commencement of the Act. Incompatibility or repugnancy
would be apparent when the effect of the operation is
H visualised by comparative study."
STATE OF KERALA & ORS. v. MAR APPRAEM KURI 465
CO. LTD. & ANR. [S.H. KAPADIA, CJI.]
5. The above statement of law in P(. Rishikesh (supra) A
created a doubt in the minds of the referring judges and,
accordingly, the said statement of law has come before the
Constitution Bench of this Court for its authoritative decision.
Facts in the present case B
6. The lis in the present case arose under the following
circumstances. Many of the private chitty firms remained out of
the regulatory mechanism prescribed in the Kerala Chitties Act,
1975 by registering themselves outside the State but continued
to operate in Kerala. Because of this, investor protection C
became difficult. Consequently, Section 4 of the said 1975 Act
was amended vide Finance Act 7 of 2002. By the said
amendment, sub-section (1 a) was inserted in Section
4. This amendment intended to bring in chitties registered D
outside the State having 20% or more of its subscribers
normally residing in the State within the ambit of the said 1975
Act. Being aggrieved by the said Amendment, the private chitty
firms challenged the vires of Section 4(1a) of the 1975 Act as
repugnant under Article 254(1) to the Central Chit Funds Act,
E
1982.
Questions to be answered
7. (i) Whether making of the law or its commencement
brings about repugnancy or inconsistency as F
envisaged in Article 254(1) of the Constitution? CJ
(ii) The effect in law of a repeal.
Inconsistencies in the provisions of the Kerala Chitties
Act, 1975 vis-a-vis the Central Chit Funds Act. 1982 G
8. The impugned judgment of the Division Bench has
accepted the contention advanced on behalf of the private chitty
firms that there are inconsistencies between the provisions of
the two Acts. [see paras 13, 14 and 15 of the impugned H
466 SUPREME COURT REPORTS [2012] 4 S.C.R.
A judgment]. Howeyer, the Single Judge held that absent
notification under Section 1(3) of the Central Chit Funds Act,
1982 bringing the said 1982 Act into force in the State and
absent framing of the Rules under Section 89 of the said 1982
Act, it cannot be said that the Kerala Chitties Act, 1975 stood
B repealed on the enactment of the said 1982 Act, which is the
Central Act; whereas the Division Bench declared Section
4(1 a) of the 1975 Act as extra-territorial and, consequently,
unconstitutional, hence, the State of Kerala came to this Court
by way of appeal.
c 9. For the sake of clarity some of the conflicting provisions
indicated in the impugned judgment are set out herein below:
Kerala Chitties Act. 1975 The Chit Funds Act. 1982
(State Act) (Central Act)
D
Section 1 - Short title, extent Section 1 -Short title, extent
and commencement and commencement
(1) This Act may be called (1) This Act may be called
E the Kerala Chitties Act, the Chit Funds Act, 1982.
1975
(2) It extends to the whole of (2) It extends to the whole of
the State of Kerala. India except the State of
F Jammu and Kashmir.
(3) It shall come into force on (3) It shall come into force
such date as the government on such date as the Central
may, by notification in the Government may, by
G Gazette, appoint. notification in the Official
Gazette, appoint and
different dates may be
appointed for different
States.
H
STATE OF KERALA & ORS. v. MAR APPRAEM KURI 467
CO. LTD. & ANR. [S.H. KAPADIA, CJI.]
A
Section 2 -Definitions Section 2 -Definitions
In this Act, unless the context In this Act, unless the context
otherwise requires,- otherwise requires,-
(4) "discount" means the B
(g) "discount" means the
amount of money or quantity sum of money or the
of grain or other commodity, quantity of grain which a
which a prize winner has, prized subscriber is,
under the terms of the under the terms of the chit
variola, to forego for the agreement required to c
payment of veethapalisa, forego and which is set
foreman's commission or apart under the said
such other expense; as may agreement to meet the
be prescribed; expenses of running the
chit or for distribution D
among the subscribers or
for both;
Section 3 -Prohibition of Section 4 -Prohibition of
chitty not sanctioned or chits not sanctioned or E
registered under this Act registered under the Act
(1) No chitty shall, after the (1) No chit shall be
commencement of this Act, commenced State
be started and conducted Government within whose F
unless the previous sanction jurisdiction the chit is to be
of the Government or of such commenced or conducted
officer as may be or of such officer as may be
empowered by the empowered by that
Government in this behalf is Government in this behalf, G
obtained therefor and unless and unless the chit is
the chitty is registered in registered in that State in
accordance with the accordance with the
provisions of this Act: provisions of this Act:
H
468 SUPREME COURT REPORTS [2012] 4 S.C.R.
A Provided that the previous Provided that a sanction
sanction under this sub- obtained under this
section shall lapse unless subsection shall lapse if
the chitty is registered the chit is not registered
before the expiry of six within twelve months from
B months from the date of the date of such sanction
such sanction: or within such further
period or periods not
Provided further that such exceeding six months in
previous sanction shall not the aggregate as the
c be necessary for starting State Government may,
and conducting any chitty on application made to it
by- in this behalf, allow.
(i) a company owned by the
Government of Kerala; or
D
(ii) a co-operative society
registered or deemed to be
registered under the Co-
operative Societies Act for
E the time being in force; or
(iii) a scheduled bank as
defined in the Reserve
Bank of India Act, 1934 ; or
F (iv) a corresponding new
bank constituted or
conducted without
obtaining the previous
sanction of the under the
G Banking Companies
(Acquisition and Transfer of
Undertakings) Act, 1970
(Central Act 5 of 1970).
Section 4 -Prohibition of
H
STATE OF KERALA & ORS. v. MAR APPRAEM KURI 469
CO. LTD. & ANR. [S.H. KAPADIA, CJI.]
invitation for subscription A
except under certain
conditions
(1) Where previous sanction
is required by section 3 for B
starting and conducting a
chitty, no person shall issue
or publish any notice,
circular, prospectus,
proposal or other document c
inviting the public to
subscribe for tickets in any
such chitty or containing the
terms and conditions of any
such chitty unless such
D
notice, circular, prospectus,
proposal or other document
contains a statement that
the previous sanction
required by section 3 has
been obtained, together
E
with the particulars of such
sanction.
(1a)* Where a chitty is
registered outside the State F
and twenty per cent more of
the subscribers are
persons normally residing
in the State, the foreman of
the chitty shall open a G
branch in the State and
qbtain sanction and
registration under the
provisions of this Act.
H
470 SUPREME COURT REPORTS [2012] 4 S.C.R.
A (*) As Amended by
Finance Act, 2002
(2) Whoever contravenes
the provisions of subsection
B (1) shall be punishable with
imprisonment for a term
which may extend to six
months, or with fine which
may extend to three
c hundred rupees, or with
both.
Section 15 -Security to be Section 20 -Security to be
given by foreman given by foreman
D
(1) Every foreman shall, (1) For the proper conduct
before the first drawing of of the chit, every foreman
the Chitty,- shall, before applying for a
previous sanction under
(a) execute a bond in favour section 4,-
E of or in trust for the other
subscribers for the proper (a) deposit in the name of
conduct of the chitty, the Registrar, an amount
charging immovable equal to,-
property sufficient to the
F satisfaction of the Registrar (i) fifty per cent, of the
for the realization of twice chit amount in cash in
the chitty amount; or an approved bank; and
(b) deposit in an approved
bank an amount equal to (ii) fifty per cent, of the
G chit amount in the form
the chitty amount or invest
in Government securities of of bank guarantee from
the face value of note less an approved bank; or
than one and a half time's
the chitty amount and (b) transfer Government
H securities of the face
STATE OF KERALA & ORS. v. MAR APPRAEM KURI 471
CO. LTD. & ANR. [S.H.KAPADIA, CJI.]
transter the amount so value or market value A
deposited or the (whichever is less) of not
Government securities in less than one and a half
favour of the Registrar to times the chit amount in
be held in trust by him as favour of the Registrar; or
security for the due conduct B
of the chitty. (c) transfer in favour of
the Registrar such other
(2) If any foreman makes
securities, being
default in complying with the
securities in which a
requirements of sub-section
trustee may invest money C
(1 ), he shall be punishable
under section 20 of the
with fine which may extend
Indian Trusts Act, 1882 (2
to five hundred rupees.
of 1882), of such value,
(3) The security given by the as may be prescribed by
foreman under sub-section the State Government o
(1) or any security from time of time:
substituted under subsection
(6) shall not be liable to be Provided that the value
attached in execution of a of the securities
decree or otherwise until the referred to in clause (c) E
chitty is terminated and the shall not, in any case, be
claims of all are fully less than one and a half
satisfied. times the value of the
chit amount.
(4) The Registrar shall, after
F
the termination of a chitty (2) Where a foreman
and after satisfying himself conducts more than one chit,
that the claims of all the he shall furnish security in
subscribers have been fully accordance with the
satisfied, order the release provisions of sub-section (1)
of the security furnished by in respect of each chit. G
the foreman under sub-
section bank; and (3) The Registrar may, at
any time during the currency
(5) The security furnished of the chit, permit the
under sub-section (1) shall, H
472 SUPREME COURT REPORTS (2012] 4 S.C.R.
A subject to the provisions of substitution of the security:
sub-section (6), be kept
intact during the currency of Provided that the face value
the chitty and the foreman or market value (whichever
shall not commit any such is less) of the substituted
B act with respect thereto as security shall not be less than
are calculated to impair the value of the security
materially the nature of the given by the foreman under
security or the value thereof. sub-section (1 ).
(6) The Registrar may:-
c (4) The security given by the
(a) at any time during the foreman under subsection
currency of the chitty, (1), or any security
permit the substitution of substituted under sub-
the security: section (3), shall not be liable
D to be attached in execution
Provided that such of a decree or otherwise
substituted security shall not until the chit is terminated and
be less than the security the claims of all the
given by the foreman under subscribers are fully
E subsection (1); or satisfied.
(b) on the termination of the (5) Where the chit is
chitty, release a part of the terminated and the Registrar
security: has satisfied himself that the
claims of all subscribers. all
F Provided that the security
the subscribers have been
left release of the part is
fully satisfied, he shall order
sufficient to satisfy the
the release of the security
outstanding claims of all
furnished by the foreman
subscribers.
under subsection (1 ), or the
G security substituted under
subsection (3), as the case
may be, and in doing so, he
shall follow such procedure
as may be prescribed.
H
STATE OF KERALA & ORS. v. MAR APPRAEM KURI 473
CO. LTD. & ANR. [S.H.KAPADIA, CJI.]
(6) Notwithstanding anything A
to the contrary contained in
any other law for the time
being in force, the security
furnished under this section
shall not be dealt with by the B
foreman during the currency
of the chit to which it relates
and any dealing by the
foreman with respect thereto
by way of transfer or other c
encumbrances shall be null
and void."
10. Apart from the conflicting provisions mentioned
hereinabove, the impugned judgment has brought out various D
inconsistencies between the various provisions of the State Act
and the Central Act in the following terms:
"13. When we scan through the various provisions of both
the legislations it is clear that there is repugnancy between E
some of the provisions of those legislations. The
expression "discount" in Section 2(g) of the Chit Funds Act
gives a different definition compared to Sub-section (4) of
Section 2 of the Kerala Chitties Act, 1975. So also
Section 4(1) of the Chit Funds Act deals with registration
of chits, commencement and conduct of chit business. F
Provisions of the Kerala Chitties Act, Section 3(1) are also
contextually different. Section 6(3) of the Central Act states
that the amount of discount referred to in Clause (f) of Sub-
section (1) shall not exceed thirty per cent of the chit
amount. As per Section 7(3) of the Chit Funds Act G
registration of a chit shall lapse if the declaration by the
Foreman under Sub-section (1) of Section 9 is not filed
within three months from the date of such endorsement or
within such further period or periods not exceeding three
months in_ the aggregate as the Registrar may, on an H
474 SUPREME COURT REPORTS [2012] 4 S.C.R.
A application made to him in that behalf. Section 8 of the Chit
Funds Act deals with minimum capital requirement for the
commencement etc. of a chit and creation of a reserve
fund by a company and there is no corresponding
provision in the Kerala Chitties Act.
B
14. Learned Single Judge has also found that once the
requirement of furnishing security is satisfied under
Section 20 of the Act, it would be arbitrary for the
authorities in Kerala to insist for another security for the
same chitty merely because 20% or more subscribers are
c residing in the State. Learned Single Judge further held
that the Registrar in Kerala is absolutely free to call for
details of registration and security furnished by the
Foreman in any other State under Section 20 of the
Central Act and after confirmation with the Registrar in that
D State he will record the same and shall not call for further
security being furnished under Section 15 of the Kerala Act
from the same Foreman for the same chitty. Learned
Single Judge also found if a Foreman is registered under
the Central Act in any State outside Kerala and has
E subscribers in Kerala, the Central Act applies to the
Foreman even in regard to the business he has in Kerala,
no matter the Central Act is not notified in the State and
in such cases the learned Single Judge opined that the
provisions of the State Act will yield to the extent the same
F is inconsistent with the Central Act. Learned Single Judge
himself has therefore noticed inconsistencies between the
various provisions oof the State Act and the Central Act.
15. On a comparison of the various provisions in the Chit
Funds Act and the Kerala Chitties Act we have come
G
across several such inconsistent and hostile provisions
which are (sic) repugnant to each other. Suffice to say that
if Sub-section (1 a) (sic) of Section 4 is given effect to, a
Foreman who has already got the registration under the
Central Act and governed by the provisions of that Act
H
STATE OF KERALA & ORS. v. MAR APPRAEM KURI 475
CO. LTD. & ANR. [S.H.KAPADIA, CJI.]
would also be subjected to various provisions of the Kerala A
Act which are inconsistent and repugnant to the Central
Act. If Section 4(1 a) (sic) is therefore given effect to it
would have extra territorial operation."
(il Point Of Time For Determination Of Repugnance
B
11. The key question that arises for determination is as to
from when the repugnancy of the State Act will come into
effect? Did repugnancy arise on the making of the Central
1982 Act or will it arise as and when the Central Act is brought
into force in the State of Kerala? c
12. Before dealing with the respective submissions made
by counsel before us, we need to quote Articles 245(1 ), 246(1 ),
(2) and (3), 249(1) and (3), 250(1) and (2), 251 and 254 of the
Constitution, which read as follows: D
"PART XI
RELATIONS BETWEEN THE UNION AND
THE STATES
CHAPTER !.-LEGISLATIVE RELATIONS
Distribution of Legislative Powers E
245. Extent of laws made by Parliament and by the
Legislatures of States -(1) Subject to the provisions of
this Constitution, Parliament may make laws for the whole
or any part of the territory of India, and the Legislature of F
a State may make laws for the whole or any part of the
State.
246. Subject-matter of laws made by Parliament and
by the Legislatures of States. (1) Notwithstanding
anything in clauses (2) and (3), Parliament has exclusive G
power to make laws with respect to any of the matters
enumerated in List I in the Seventh Schedule (in this
Constitution referred to as the "Union List").
(2) Notwithstanding anything in clause (3), Parliament, and, H
476 SUPREME COURT REPORTS [2012] 4 S.C.R.
A subject to clause (1 ), the Legislature of any State also,
have power to make laws with respect to any of the matters
enumerated in List Ill in the Seventh Schedule (in this
Constitution referred to as the "Concurrent List").
(3) Subject to clauses (1) and (2), the Legislature of any
B
State has exclusive power to make laws for such State or
any part thereof with respect to any of the matters
enumerated in List II in the Seventh Schedule (in this
Constitution referred to as the "State List").
c 249. Power of Parliament to legislate with respect to
a matter in the State List in the national interest. -(1)
Notwithstanding anything in the foregoing provisions of this
Chapter, if the Council of States has declared by resolution
supported by not less than two-thirds of the members
D present and voting that it is necessary or expedient in the
national interest that Parliament should make laws with
respect to any matter enumerated in the State List
specified in the resolution, it shall be lawful for Parliament
to make laws for the whole or any part of the territory of
E India with respect to that matter while the resolution remains
in force.
(2) xxx xxx xxx
(3) A law made by Parliament which Par::ament would not
F but for the passing of a resolution under clause (1) have
been competent to make shall, to the extent of the
incompetency, cease to have effect on the expiration of a
period of six months after the resolution has ceased to be
in force, except as respects things done or omitted to be
G done before the expiration of the said period.
250. Power of Parliament to legislate with respect to
any matter in the State List if a Proclamation of
Emergency is in operation -
H
STATE OF KERALA & ORS. v. MAR APPRAEM KURI 477
CO. LTD. & ANR. [S.H.KAPADIA, CJI.]
(1) Notwithstanding anything in this Chapter, Parliament A
shall, while a Proclamation of Emergency is in operation,
have power to make laws for the whole or any part of the
territory of India with respect to any of the matters
enumerated in the State List.
B
(2) A law made by Parliament which Parliament would not
but for the issue of a Proclamation of Emergency have
been competent to make shall, to the extent of the
incompetency, cease to have effect on the expiration of a
period of six months after the Proclamation has ceased C
to operate, except as respects things done or omitted to
be done before the expiration of the said period.
251. Inconsistency between laws made by Parliament
under Articles 249 and 250 and laws made by the
Legislatures of States.- D
Nothing in articles 249 and 250 shall restrict the power of
the Legislature of a State to make any law which under this
Constitution it has power to make, but if any provision of
a law made by the Legislature of a State is repugnant to E
any provision of a law made by Parliament which
Parliament has under either of the said articles power to
make, the law made by Parliament, whether passed before
or after the law made by the Legislature of the State, shall
prevail, and the law made by the Legislature of the State
F
shall to the extent of the repugnancy, but so long only as
the law made by Parliament continues to have effect, be
inoperative.
254. Inconsistency between laws made by Parliament
and laws made by the Legislatures of States- G
(1) If any provision of a law made by the Legislature of a
State is repugnant to any provision of a law made by
Parliament which Parliament is compet<:int to enact, or to
any provision of an existing law with respect to one of the H
478 SUPREME COURT REPORTS [2012] 4 S.C.R.
A matters enumerated in the Concurrent List, then, subject
to the provisions of clause (2), the law made by
Parliament, whether passed before or after the law made
by the Legislature of such State, or, as the case may be,
the existing law, shall prevail and the law made by the
B Legislature of the State shall, to the extent of the
repugnancy, be void.
(2) Where a law made by the Legislature of a State with
respect to one of the matters enumerated in the concurrent
List contains any provision repugnant to the provisions of
c an earlier law made by Parliament or an existing law with
respect to that matter, then, the law so made by the
Legislature of such State shall, if it has been reserved for
the consideration of the President and has received his
assent, prevail in that State:
D
Provided that nothing in this clause shall prevent
Parliament from enacting at any time any law with respect
to the same matter including a law adding to, amending,
varying or repealing the law so made by the Legislature
E of the State. "
(emphasis supplied)
Submissions
F 13. Shri K.K. Venugopal, learned senior counsel appearing
for the State of Kerala and Shri V. Shekhar, learned senior
counsel for Union of India submitted that the word "made" in
Article 254 is relevant only to identify the law, i.e., the
Parliamentary law or the State law and has nothing to do with
G the point of time for determination of repugnance. According
to the learned counsel, a decision by a Court, on the question
as to whether any State Act is repugnant to a Central Act, can
be made only after both laws have been brought into force for
the simple reason that the very object of determination of
H repugnance between two laws, by a Court, is to decide and
STATE OF KERALA & ORS. v. MAR APPRAEM KURI 479
CO. LTD. & ANR. [S.H.KAPADIA, CJI.)
declare as to which one of the two laws has to be obeyed or in A
the language of Article 254, which of the two laws "shall prevail".
Therefore, according to the learned counsel, the very text of
Article 254 makes it clear that a declaration of repugnance by
a Court presupposes both laws actually being in operation.
That, though the term employed in Article 254(2) is "a law made B
by the Legislature of a State", it actually refers to a stage when
the law is still a Bill passed by the State legislature which under
Article 200 is given to the Governor for his assent. According
to the learned counsel, the phrase "law made" would also
include a law which is brought in force. In this connection, it was c
submitted that if a petition is filed before a Court to declare a
State law void, as being repugnant to Parliamentary law which
has not been brought in force, the court would reject the petition
as premature as repugnancy cannot arise when the
Parliamentary law has not even been brought in force. In this
0
connection, learned counsel relied upon the judgment of this
Court in Tika Ramji v. State of U.P. [1956 SCR 393] in which
there is an observation to the effect that repugnance must exist
in fact and not depend on a mere possibility. According to the
learned counsel there is no merit in the contention advanced
on behalf of private chit firms that upon mere enactment by the E
Parliament of a law relating to a subject in List Ill, all State
enactments on that subject become immediately void, as
repugnant. Further, learned counsel emphasized on the words
"to the extent of the re pug nancy'' in Article 254( 1). He submitted
that the said words have to be given a meaning. Learned F
counsel submitted that the said words indicate that the entire
State Act is not rendered void under Article 254(1) merely by
enactment of a Central law. In this connection, it was submitted
that the words "if any provision of a law" and the words "to the
extent of repugnancy" used in Article 254(1) militate against an G
interpretation that the entire State Act is rendered void as
repugnant merely upon enactment by Parliament of a law on
the same subject. Lastly, learned counsel submitted that a
purposive interpretation of Article 254 must be adopted which
does not lead to a legislative vacuum. In this connection learned H
480 SUPREME COURT REPORTS [2012) 4 S.C.R.
A counsel submitted that the State law came into force w.e.f.
25.08.1975 as per notification published in Kerala Gazette No.
480 whereas the Chit Funds Act, 1982 came into force w.e.f.
19.08.1982. Under Section 1(3) of that Act, the Central
Government has been empowered to bring the said Act into
B force on such date as it may, by notification in the official
gazette, appoint and different dates may be appointed for
different States. Till date, the said 1982 Act has not been
extended to the State of Kerala. According to the learned
counsel, if one was to accept the contention advanced on behalf
c of the private chit firms that "when a Central law is made as
envisaged in Article 254 of the Constitution then all repugnant
State laws would immediately stand impliedly repealed, even
without the Central Act being brought into force by a notification
under Section 1(3) of the 1982 Act"; then, in that event, there
would be a total legislative vacuum particularly when
0
transactions have taken place in the State of Kerala on and
from 19.08.1982 till date and even up to the date of notification
which has not been issued under Section 1(3) till today.
According to the learned counsel, keeping in view the
E provisions of Sections 1(3), 4, 89 and 90 of the 1982 Act and
absent framing of the Rules by the State Government in terms
of Section 89, making of the central law cannot be the test for
determining repugnancy.
14. On behalf of the private chitty firms, it was submitted
F by Shri T.R. Andhyarujina, Shri Shyam Divan, Shri Mathai M.
Paikeday and Shri C.U. Singh, that the bringing into force or
commencement of the Central Act was irrelevant in considering
repugnancy under Article 254(1 ), and that the repugnancy arose
when the State law came into conflict with the enactment of the
G Central law, even when the Central law is not brought into force
in the State of Kera la. That, under Article 254(1 ), the
repugnancy of the State law to the law made by the Parliament
is to be considered with reference to the law made. The words
"law made" have reference to the enactment of the law. In this
H connection, it was pointed out that the words "law made" have
STATE OF KERALA & ORS. v. MAR APPRAEM KURI 481
CO. LTD. & ANR. [S.H.KAPADIA, CJI.]
been used at seven places but there is no mention to the A
commencement of a law in Article 254. Thus, according to the
learned counsel, repugnancy arose when the Central Chit
Funds Act, 1982 received the assent of the President and on
its publication in the Official Gazette and not on its
commencement, which till date is not cthere in the State of B
Kerala. In consequence, the Kerala Chitties Act, 1975 became
void on 19.08.1982 when the Central Chit Funds Act, 1982 was
made after receiving the assent of the President. On the
question as to whether the Kerala Chitties Act, 1975 is
repugnant to the Central Chit Funds Act, 1982 and whether c
Section 4(1 a) inserted by Finance Act No. 7 of 2002 was void,
the learned counsel submitted that the Central Act, 1982
intended to occupy the entire field of contracts in Entry 7 of the
Concurrent List; that, both the legislations are made under Entry
7 of the Ccmcurrent List and, therefore, in such a situation there 0
would be repugnancy between the State legislation existing at
the time of the enactment of the Central Act, 1982. Applying
these tests, it was submitted that the Kerala Chitties Act, 1975
became void under Article 254(1) on the enactment of the
Central Chit Funds Act, 1982. That, in consequence of the said E
repugnancy, the Kerala Chitties Act, 1975 became void under
Article 254(1) on 19.08.1982 and the Kera la Chitties Act, 1975
stood impliedly repealed. However, according to the learned
counsel, the previous operation of the Kerala Chitties Act, 1975
is not affected nor any right, privilege, obligation or liability
acquired under the Kerala Chitties Act shall stand affected in F
view of Article 367 of the Constitution. By reason of Article 367,
the General Clauses Act, 1897 would apply to the said repeal.
Thus, after 19.08.1982, the Kerala Chitties Act, 1975 stood
repealed except for the limited purposes of Section 6 of the
General Clauses Act, 1897. According to the learned counsel G
for the private chitties, to bring the Central Chit Funds Act, 1982
into operation in any State the Central Government has to issue
a notification in the Official Gazette under Section 1(3). This has
been done for several States but not for States like Kerala,
H
482 SUPREME COURT REPORTS [2012] 4 S.C.R.
A Gujarat, etc. That, until such notification neither the Kerala
Chitties Act, 1975 prevails in the State of Kerala as it has
become void and stands repealed under Article 254(1) nor the
Central Chit Funds Act, 1982 as it is not notified. Thus,
according to the learned counsel, as and when the Central
B Government brings into force the Chit Funds Act, 1982 by a
notification in the State of Kerala under Section 1(3), Section
90(2) of the 1982 Act will come into play and thereby the Kera la
Chitties Act, 1975 shall continue to apply only to the chits in
operation in Kerala on the date of commencement of the
c Central Act, 1982 in the same manner as the Kerala Chitties
Act, 1975 applied to such chits before such commencement.
However, as the Kerala Act, 1975 stood repealed on
19.08.1982, on the enactment of the Central Chit Funds Act,
1982, there could be no Amendment of the Kerala Act, 1975
by Finance Act No. 7 of 2002. In the circumstances, it was
0
submitted that Section 4(1 a) inserted in Section 4 by the Kerala
Finance Act No. 7 of 2002 was void and inoperative in law as
the President's assent under Article 254(2) has not been
obtained.
E 15. According to Shri V. Giri, learned counsel for one of
the private chitty firms, the judgment of this Court in Pt.
Rishikesh (supra) has been correctly decided. In this
connection, it was submitted that the aspect of
repugnancyprimarily arises in the mind of the Legislature. That,
F in the case of Deep Chand v. State of U.P. (1959 Suppl. (2)
SCR 8), three principles were laid down as indicative of
repugnancy between a State law and a Central law, which have
to be borne in mind by the State Legislature whenever it seeks
to enact a law under any entry in the Concurrent List. Thus,
G where there is a Central law which intends to override a State
law or where there is a Central law intending to occupy the field
hitherto occupied by the State law or where the Central law
collides with the State law in actual terms, then the State
Legislature would have to take into account the possibility of
H repugnancy owithin the meaning of Article 254 of the
STATE OF KERALA & ORS. v. MAR APPRAEM KURI 483
CO. LTD. & ANR. [S.H.KAPADIA, CJI.]
A
Constitution. In this connection, it was submitted that tests 1 and
2 enumerated in Deep Chand (supra) do not require the
Central law to be actually brought into force for repugnancy
between two competing legislations to arise, in the context of
Article 254 of the Constitution. It was submitted that in the
8
present case an intention to override the State law is clearly
manifest in the Central Law, especially Section 3 of the Central
Act which makes it clear that the provisions of the 1982 Act
shall have effect notwithstanding anything contrary contained in
any other law for the time being in force. Similarly, Section 90
of the Central Act providing for repeal of State Legislations also C
manifests an intention on the part of the Parliament to occupy
the entire field hitherto occupied by the State Legislature.
Further, each and every aspect relating to the conduct of a Chit
as sought to be covered by the State Act has been touched
upon by the Central Act. Thus, the Parliament in enacting the D
Central law has manifested its intention not only to override the
existing State laws, but also to occupy the entire field relating
to chits, which are special contracts, under Entry 7 of List Ill.
Thus, the actual bringing into force of the Central Act is not a
relevant circumstance insofar as the legislative business of the E
State Legislature is concerned. That, when the State of Kerala
intended to amend the State Act in 2002 by insertion of Section
4(1 a), it was bound to keep in mind the fact that there is already
a Central law governing chits since 19.08.1982, though not in
force in Kerala, whereby there is a pro tanto repeal of the State F
Act. Therefore, the State Legislature ought to have followed the
procedure in Article 254(2) by reserving the law for the
consideration of the President and obtained Presidential
assent. Therefore, according to the learned counsel, there is
no merit in the contention of the State that there would be a G
legislative vacuum in the State of Kerala if the propositions
advanced on behalf of the private chit firms are to be accepted.
According to the learned counsel, Section 85(a) and Section
90(2) of the Central Chit Funds Act, 1982 inter alia provide for
continuance of the application of the provisions of the Kerala H
484 SUPREME COURT REPORTS [2012] 4 S.C.R.
A Chitties Act, 1975 till the commencement of the Central Act by
issuance of notification under Section 1(3) of the Central Chit
Funds Act, 1982. On commencement of that Act there is a pro
tanto repeal of the State Act by Section 90 of the Central Act.
However, according to the learned counsel, repugnancy arose
B between two competing legislations, the moment the
Legislature took up the Kerala Chitties Act, 1975 for
amendment by Finance Act No. 7 of 2002. Such repugnancy
had to arise in the mind of the legislature and the State
Legislature was bound to take note of the 1982 Central Act. In
C this view of the matter, there is no legislative vacuum at any
point of time as urged on behalf of the State of Kerala. To hold
otherwise would mean bypassing the legislative will of the
Parliament expressed by passing the 1982 Act.
Our Answer to Question No. (i):-Point of time for
D determination of repugnance:
16. Article 254 deals with inconsistency between laws
made by Parliament and laws made by the Legislatures of
States. It finds place in Part XI of the Constitution. Part XI deals
E with relations between the Union and the States. Part XI
consists of two Chapters. Chapter I deals with Distribution of
Legislative Powers. Articles 245 to 255 find place in Chapter
I of Part XI. Article 245 deals with extent of laws made by
Parliament and by the Legislatures of States. The verb "made",
F in past tense, finds place in the Head Note to Article 245. The
verb "make", in the present tense, exists in Article 245(1)
whereas the verb "made", in the past tense, finds place in
Article 245 (2). While the legislative power is derived from
Article 245, the entries in the Seventh Schedule of the
Constitution only demarcate the legislative fields of the
G respective Legislatures and do not confer legislative power as
such. While the Parliament has power to make laws for the
whole or any part of the territory of India, the Legislature of a
State can make laws only for the State or part thereof. Thus,
Article 245, inter alia, indicates the extent of laws made by
H
STATE OF KERALA & ORS. v. MAR APPRAEM KURI 485
CO. LTD. & ANR. [S.H.KAPADIA, CJI.]
Parliament and by the State Legislatures. Article 246 deals with A
subject-matter of laws made by Parliament and by the
Legislatures of States. The verb "made" once again finds place
in the Head Note to Article 246. This Article deals with
distribution of legislative powers as between the Union and the
State Legislatures, with reference to the different Lists in the B
Seventh Schedule. In short, the Parliament has full and
exclusive powers to legislate with respect to matters in List I
and has also power to legislate with respect to matters in List
Ill, whereas the State Legislatures, on the other hand, have
exclusive power to legislate with respect to matters in List 11, c
minus matters falling in List I and List Ill and have concurrent
power with respect to matters in List Ill. [See: A.L.S.P.P.L.
Subrahmanyan Chettiar v. Muttuswami Goundan - AIR 1941
F.C. 47]. Article 246, thus, provides for distribution, as between
Union and the States, of the legislative powers which are
0
conferred by Article 245. Article 245 begins with the expression
"subject to the provisions of this Constitution". Therefore, Article
246 must be read as "subject to other provisions of the
Constitution". For the purposes of this decision, the point which
needs to be emphasized is that Article 245 deals with
conferment of legislative powers whereas Article 246 provides E
for distribution of the legislative powers. Article 245 deals with
extent of laws whereas Article 246 deals with distribution of
legislative powers. In these Articles, the Constitution framers
have used the word "make" and not "commencemenf' which has
a specific legal connotation. [See: Section 2(13) of the General F
Clauses Act, 1897]. One more aspect needs to be highlighted.
Article 246(1) begins with a non-obstante clause
"Notwithstanding anything in clauses (2) and (3)". These words
indicate the principle of federal supremacy, namely, in case of
inevitable conflict between the Union and State powers, the G
Union powers, as enumerated in List I, shall prevail over the
State powers, as enumerated in Lists II and Ill, and in case of
overlapping between Lists Ill and II, the former shall prevail. [See:
lndu Bhusan Bose versus Rama Sundari Devi & Anr. - (1970)
1 SCR 443 at 454]. However, the principle of federal H
486 SUPREME COURT REPORTS [2012] 4 S.C.R.
A supremacy in Article 246(1) cannot be resorted to unless there
is an "irreconcilable" conflict between the entries in Union and
State Lists. The said conflict has to be a "real" conflict. The non-
obstante clause in Article 246( 1) operates only if reconciliation
is impossible. As stated, Parliamentary Legislation has
B supremacy as provided in Article 246 (1) and (2). This is of
relevance when the field of legislation is in the Concurrent List.
The Union and the State Legislatures have concurrent power
with respect to the subjects enumerated in List Ill. [See: Article
246(2)]. Hence, the State Legislature has full power to legislate
c regarding subjects in the Concurrent List, (1970) 1 SCR 443
at 454]. However, the principle of federal supremacy in Article
246(1) cannot be resorted to unless there is an "irreconcilable"
conflict between the entries in Union and State Lists. The said
conflict has to be a "real" conflict. The non-obstante clause in
Article 246(1) operates only if reconciliation is impossible. As
0
stated, Parliamentary Legislation has supremacy as provided
in Article 246 (1) and (2). This is of relevance when the field of
legislation is in the Concurrent List. The Union and the State
Legislatures have concurrent power with respect to the subjects
enumerated in List Ill. [See: Article 246(2)]. Hence, the State
E Legislature has full power to legislate regarding subjects in the
Concurrent List, , i.e., provided the provisions of the State Act
do not come in conflict with those of the Central Act on the
subject. [See: Amalgamated Electricity Co. (Belgaum) Ltd.
versus Municipal Committee, Ajmer - (1969) 1 SCR 430].
F Thus, the expression "subject to" in clauses (2) and (3) of Article
246 denotes supremacy of Parliament. Further, in Article 246(1)
the expression used is "with respect to". There is a distinction
between a law "with respect to", and a law "affecting", a subject
matter. The opening words of Article 245 "Subject to the
G provisions of this Constitution" make the legislative power
conferred by Article 245 and Article 246, as well as the
legislative Lists, "subject to the provisions of the Constitution".
Consequently, laws made by a Legislature may be void not only
for lack of legislative powers in respect of the subject-matter,
H but also for transgressing constitutional limitations. [See: Para
STATE OF KERALA & ORS. v. MAR APPRAEM KURI 487
CO. LTD. & ANR. [S.H.KAPADIA, CJI.]
22.6 of Vol.3 at Page 2305 of the Constitutional Law of India A
by H.M. Seervai, Fourth Edition]. This aspect is important as
the word "void" finds place in Article 254(1) of the Constitution.
Therefore, the Union and State Legislature have concurrent
power Constitution" make the legislative power conferred by
Article 245 and Article 246, as well as the legislative Lists, B
"subject to the provisions of the Constitution". Consequently,
laws made by a Legislature may be void not only for lack of
legislative powers in respect of the subject-matter, but also for
transgressing constitutional limitations. [See: Para 22.6 of Vol.3
at Page 2305 of the Constitutional Law of India by H.M. c
Seervai, Fourth Edition]. This aspect is important as the word
"void" finds place in Article 254(1) of the Constitution. Therefore,
the Union and State Legislature have concurrent power subjects
enumerated in List Ill. Hence, the State Legislature has full
power to legislate regarding the subjects in List Ill, subject to
0
the provision in Article 254(2), i.e., provided the provisions of
the State Act do not conflict with those of the Central Act on
the subject. Where the Parliament has made no law occupying
the field in List Ill, the State Legislature is competent to legislate
in that field. As stated, the expression "subject to" in clauses E
(2) and (3) of Article 246 denotes the supremacy of the
Parliament. Thus, the Parliament and the State Legislature
derive the power to legislate on a subject in List I and List II
from Article 246 (1) and (3) respectively. Both derive their
power from Article 246(2) to legislate upon a matter in List Ill
subject to Article 254 of the Constitution. The respective Lists F
merely demarcate the legislative fields or legislative heads.
Further, Article 250 and Article 251 also use the word "make"
and not "commencement". If one reads the Head Note to Article
250 it refers to power of the Parliament to legislate with respect
to any matter in the State List if a Proclamation of Emergency G
is in operation. The word "made" also finds place in Article
250(2). In other words, the verb "make" or the verb "made" is
equivalent to the expression "to legislate". Thus, making of the
law is to legislate with respect to any matter in the State List if
Proclamation of Emergency is in operation. The importance of H
488 SUPREME COURT REPORTS [2012] 4 S.C.R.
A this discussion is to show that the Constitution framers have
deliberately used the word "made" or "make" in the above
Articles. Our Constitution gives supremacy to the Parliament
in the matter of making of the laws or legislating with respect
to matters delineated in the three Lists. The principle of
B supremacy of the Parliament, the distribution of legislative
powers, the principle of exhaustive enumeration of matters in
the three Lists are all to be seen in the context of making of
laws and not in the context of commencement of the laws.
17. Under clause (1) of Article 254, a general rule is laid
C down to say that the Union law shall prevail where the State law
is repugnant to it. The question of repugnancy arises only with
respect to the subjects enumerated in the Concurrent List as
both the Parliament and the State Legislatures have concurrent
powers to legislate over the subject-matter in that List. In such
D cases, at times, conflict arises. Clause (1) of Article 254 states
that if a State law, relating to a concurrent subject, is
"repugnanr to a Union law, relating to that subject, then, whether
the Union law is prior or later in time, the Union law will prevail
and the State law shall, to the extent of such repugnancy, be
E void. Thus, Article 254(1) also gives supremacy to the law
made by Parliament, which Parliament is competent to enact.
In case of repugnancy, the State Legislation would be void only
to the extent of repugnancy. If there is no repugnancy between
the two laws, there is no question of application of Article
F 254(1) and both the Acts would prevail. Thus, Article 254 is
attracted only when Legislations covering the same matter in
List Ill made by the Centre and by the State operate on that
subject; both of them (Parliament and the State Legislatures)
being competent to enact laws with respect to the subject in
G List Ill. In the r:Jpresent case, Entry 7 of List Ill in the Seventh
Schedule deals with the subject of "Contracts". It also covers
special contracts. Chitties..are special contracts. Thus, the
Parliament and the State Legislatures are competent to enact
a law with respect to such contracts. The question of
H repugnancy between the Parliamentary Legislation and State
STATE OF KERALA & ORS. v. MAR APPRAEM KURI 489
CO. LTD. & ANR. [S.H.KAPADIA, CJI.]
Legislation arises in two ways. First, where the Legislations, A
though enacted with respect to matters in their allotted spheres,
overlap and conflict. Second, where the two Legislations are
with respect to matters in the Concurrent List and there is a
conflict. In both the situations, the Parliamentary Legislation will
predominate, in the first, by virtue of non-obstante clause in B
Article 246(1); in the second, by reason of Article 254(1). Article
254(2) deals with a situation where the State Legislation having
been reserved and having obtained President's assent, prevails
in that State; this again is subject to the proviso that Parliament
can again bring a legislation to override even such State c
Legislation. In clause (1) of Article 254 the significant words
used are "provision of a law made by the Legislature of a
State", "any provision of a law made by Parliament which
Parliament is competent to enact", "the law made by Parliament,
whether passed before or after '. lthe law made by the 0
Legislature of such State", and "the law made by the Legislature
of the State shall, to the extent of repugnancy, be void". Again,
clause (2) of Article 254 speaks of "a law made by the
Legislature of a State", "an earlier law made by Parliament",
and "the law so made by the Legislature of such State". Thus,
it is noticeable that throughout Article 254 the emphasis is on · E
law-making by the respective Legislatures. Broadly speaking,
law-making is exclusively the function of the Legislatures (see
Articles 79 and 168). The President and the Governor are a
part of the Union or the Legislatures of the States. As far as
the Parliament is concerned, the legislative process is F
complete as soon as the procedure prescribed by Article 107
of the Constitution and connected provisions are followed and
the Bill passed by both the Houses of Parliament has received
the assent of the President under Article 111. Similarly, a State
legislation becomes an Act as soon as a Bill has been passed G
by the State Legislature and it has received the assent of the
Governor in accordance with Article 200. It is only in the situation
contemplated by Article 254(2) that a State Legislation is
required to be reserved for consideration and assent by the
President. Thus, irrespective of the date of enforcement of a H
490 SUPREME COURT REPORTS [2012] 4 S.C.R.
A Parliamentary or State enactment, a Bill becomes an Act and
comes on the Statute Book immediately on receiving the
assent of the President or the Governor, as the case may be,
which assent has got to be published in the official gazette. The
Legislature, in exercise of its legislative power, may either
B enforce an Act, which has been passed and which has
received the assent of the President or the Governor, as the
case may be, from a specified date or leave it to some
designated authority to fix a date for its enforcement. Such
legislations are conditional legislations as in such cases no part
c of the legislative function is left unexercised. In such legislations,
merely because the Legislature has postponed the enforcement
of the Act, it does not mean that the law has not been made. In
the present case, the Central Chit Funds Act, 1982 is a law-
made. The Chit Funds Bill was passed by both Houses of
D Parliament and received the assent of the President on
19.08.1982. It came on the Statute Book as the Chit Funds Act,
1982 (40 of 1982). Section 1(2) of the said Act states that the
Act extends to the whole of India, except the State of Jammu
and Kashmir whereas Section 1(3) states that it shall come into
force on such date as the Central Government may, by
E notification in the Official Gazette, appoint and different dates
may be appointed for different States. The point to be noted is
that the law-making process ended on 19.08.1982. Section 1(3)
is a piece of conditional legislation. As stated, in legislations
of such character, merely because the legislation has
F postponed the enforcement of the Act, it does not mean that
the law has not been made. In the present case, after enactment
of the Chit Funds Act, 1982 on 19.08.1982, the said Act has
been applied to 17 States by notifications issued from time to
time under Section 1(3). How could Section 1(3) operate and
G make the said Act applicable to 17 States between 2.04.1984
and 15.09.2008 and/ or postpone the commencement of the
Act for certain other States including State of Kerala, Gujarat,
Haryana, etc. unless that Section itself is in force? To put the
matter in another way, if the entire Act including Section 1(3)
H was not in operation on 19.08.1982, how could the Central
STATE OF KERALA & ORS. v. MAR APPRAEM KURI 491
CO. LTD. & ANR. [S.H.KAPADIA, CJI.]
Government issue any notification under that very Section in A
respect of 17 States? There must be a law authorizing the
Government to bring the Act into force. Thus, Section 1(3) came
into force immediately on passing of the Act (see A. Thangal
Kunju Musaliar v. M. Venkatachalam Potti AIR 1956 SC 246).
Thus, the material dates, in our opinion, are the dates when the B
two enactments received the assent of the President which in
the case of Central Act is 19.08.1982 while in the case of the
Kerala Chitties Act, 1975, it is 18.07.1975. There is one more
way in which this problem can be approached. Both the courts
below have proceeded on the basis that there ar~ conflicting c
provisions in the Central Act, 1982 vis-a-vis the State Act, 1975
(see paragraphs 13, 14 & 15 of the impugned judgment). In our
view, the intention of the Parliament was clearly to occupy the
entire field falling in Entry 7 of List Ill. The 1982 Act was enacted
as a Central Legislation to "ensure uniformity in the provisions
0
applicable to chit fund institutions throughout the country as such
a Central Legislation would prevent such institutions from taking
advantage either of the absence of any law governing chit funds
in a State or exploit the benefit of any lacuna or relaxation in
any State law by extending their activities in such States". The E
background of the enactment of the Central Chit Funds Act,
which refers to the Report of the Banking Commission has
been exhaustively dealt with in the case of Shriram Chits and
Investment (P) Ltd. v. Union of India ((1993) Supp 4 SCC 226]
as also in the Statement of Objects and Reasons of the 1982
Act. The clear intention of enacting the Central 1982 Act, F
therefore, was to make the Central Act a complete code with
regard to the business of conducting chit funds and to occupy
the legislative field relating to such chit funds. Moreover, the
intention to override the State laws is clearly manifested in the
Central Act, especially Section 3 which makes it clear that the G
provisions of the Central Act shall have effect notwithstanding
anything to the contrary contained in any other law for the time
being in force. Similarly, Section 90 of the Central Act providing
for the repeal of State legislations also manifests the intention
on the part of the Parliament to occupy the field hitherto H
492 SUPREME COURT REPORTS [2012] 4 S.C.R.
A occupied by State Legislation. Each and every aspect relating
to the conduct of the chits as is covered by the State Act has
been touched upon by the Central Act in a more
comprehensive manner. Thus, on 19.08.1982, the Parliament
in enacting the Central law has manifested its intention not only
B to override the existing State Laws, but to occupy the entire field
relating to Chits, which is a special contract, coming under Entry
7 of List Ill. Consequently, the State Legislature was divested
of its legislative power/ authority to enact Section 4(1a) vide
Finance Act No. 7 of 2002 on 29.07.2002, save and except
C under Article 254(2) of the Constitution. Thus, Section 4(1a)
became vofd for want of assent of the President under Article
254(2). Let us assume for the sake of argument that the State
of Kerala were to obtain the assent of the President under
Article 254(2) of the Constitution in respect of the insertion of
Section 4(1a) by Finance Act No. 7 of 2002. Now, Article 254(2)
0
deals with the situation where State Legislation is reserved and
having obtained the President's assent, prevails in the State
over the Central Law. However, in view of the proviso to Article
254(2), the Parliament could have brought a legislation even
to override such assented to State Finance Act No. 7 of 2002
E without waiting for the Finance Act No. 7 of 2002 to be brought
into force as the said proviso states that nothing in Article
254(2) shall prevent Parliament from enacting at any time, any
law with respect to the same matter including a law adding to,
amending, varying or repealing the law so made by the State
F Legislature) [emphasis supplied]. Thus, Parliament in the matter
of enacting such an overriding law need not wait for the earlier
State Finance Act No. 7 of 2002 to be brought into force. In
other words, Parliament has the power under the said proviso
to override the Finance Act No. 7 of 2002 even before it is
G brought into force. Therefore, we see no justification for
construing Article 254(2) read with the proviso in a manner
which inhibits the Parliament from repealing, amending, or
varying a State Legislation which has received the President's
assent under Article 254(2), till that State Legislation is brought
H into force. We have to read the word "made" in the proviso to
STATE OF KERALA & ORS. v. MAR APPRAEM KURI 493
CO. LTD. & ANR. [S.H.KAPADIA, CJI.]
Article 254(2) in a consistent manner. The entire above A
discussion on Articles 245, 246, 250, 251 is only to indicate
that the word "made" has to be read in the context of law-making
process and, if so read, it is clear that to test repugnancy one
has to go by the making of law and not by its commencement.
B
Case Law
18(i) In T. Barai v. Henry Ah Hoe reported in (1983) 1
SCC 177, this Court has laid down the following principles on
repugnancy.
c
"15. There is no doubt or difficulty as to the law applicable.
Article 254 of the Constitution makes provision firstly, as
to what would happen in the case of conflict between a
Central and State law with regard to the subjects
enumerated in the Concurrent List, and secondly, for o
resolving such conflict. Article 254(1) enunciates the
normal rule that in the event of a conflict between a Union
and a State law in the concurrent field, the former prevails
over the latter. Clause (1) lays down that if a State law
relating to a concurrent subject is "repugnant" to a Union E
law relating to that subject, then, whether the Union law is
prior or later in time, the Union law will prevail and the State
law shall, to the extent of such repugnancy, be void. To the
general rule laid down in Clause (1), Clause (2) engrafts
an exception viz. that if the President assents to a State
law which has been reserved for his consideration, it will
F
prevail notwithstanding its repugnancy to an earlier law of
the Union, both laws dealing with a concurrent subject. In
such a case, the Central Act will give way to the State Act
only to the extent of inconsistency between the two, and
no more. In short, the result of obtaining the assent of the G
President to a State Act which is inconsistent with a
previous Union law relating to a concurrent subject would
be that the State Act will prevail in that State and override
the provisions of the Central Act in their applicability to that
State only. The predominance of the State law may H
494 SUPREME COURT REPORTS [2012] 4 S.C.R.
A however be taken away if Parliament legislates under the
proviso to Clause (2). The proviso to Article 254(2)
empowers the Union Parliament to repeal or amend a
repugnant State law even though it has become valid by
virtue of the President's assent. Parliament may repeal or
B amend the repugnant State law, either directly, or by itself
enacting a law repugnant to the State law with respect to
the "same matter''. Even though the subsequent law made
by Parliament does not expressly repeal a State law, even
then, the State law will become void as soon as the
c subsequent law of Parliament creating repugnancy is
made. A State law would be repugnant to the Union law
when there is direct conflict between the two laws. Such
repugnancy may also arise where both laws operate in the
same field and the two cannot possibly stand together, e.g.,
D where both prescribe punishment for the same offence but
the punishment differs in degree or kind or in the procedure
prescribed. In all such cases, the law made by Parliament
shall prevail over the State law under Article 254(1)."
(ii) In /. T. C. Limited v. State of Karnataka reported in 1985
E Supp. SCC 476, this Court vide para 18 stated as under.
"18. Thus, in my opinion, the five principles have to be read
and construed together and not in isolation - where
however, the Central and the State legislation cover the
F same field then the Central legislation would prevail. It is
also well settled that where two Acts, one passed by the
Parliament and the other by a State Legislature, collide and
there is no question of harmonising them, then the Central
legislation must prevail."
G (iii) In the case of M. Karunanidhi v. Union of.India (1979)
3 sec 431, the test for determining repugnancy has been laid
down by the Supreme Court as under.
"8. It would be seen that so far as clause (1) of Article 254
H is concerned it clearly lays down that where there is a direct
STATE OF KERALA & ORS. v. MAR APPRAEM KURI 495
CO. LTD. & ANR. [S.H.KAPADIA, CJI.]
collision between a provision of a law made by the State A
and that made by Parliament with respect to one of the
matters enumerated in the Concurrent List, then, subject
to the provisions of clause (2), the State law would be void
to the extent of the repugnancy. This naturally means that
where both the State and Parliament occupy the field B
contemplated by the Concurrent List then the Act passed
by Parliament being prior in point of time will prevail and
consequently the State Act will have to yield to the Central
Act. In fact, the scheme of the Constitution is a scientific
and equitable distribution of legislative powers between c
Parliament and the State Legislatures. First, regarding the
matters contained in List I, i.e. the Union List to the Seventh
Schedule, Parliament alone is empowered to legislate and
the State Legislatures have no authority to make any law
in respect of the Entries contained in List I. Secondly, so
0
far as the Concurrent List is concerned, both Parliament
and the State Legislatures are entitled to legislate in
regard to any of the Entries appearing therein, but that is
subject to the condition laid down by Article 254(1)
discussed above. Thirdly, so far as the matters in List II, E
i.e. the State List are concerned, the State Legislatures
alone are competent to legislate on them and only under
certain conditions Parliament can do so. It is, therefore,
obvious that in such matters repugnancy may result from
the following circumstances:
F
1. Where the provisions of a Central Act and a State
Act in the Concurrent List are fully inconsistent and are
absolutely irreconcilable, the Central Act will prevail and
the State Act will become void in view of the repugnancy.
G
2. Where however a law passed by the State comes
into collision with a law passed by Parliament on an Entry
in the Concurrent List, the State Act shall prevail to the
extent of the repugnancy and the provisions of the Central
Act would become void provided the State Act has been
H
496 SUPREME COURT REPORTS [2012] 4 S.C.R.
A passed in accordance with clause (2) of Article 254.
3. Where a law passed by the State Legislature while
being substantially within the scope of the entries in the
State List entrenches upon any of the Entries in the Central
8 List the constitutionality of the law may be upheld by
invoking the doctrine of pith and substance if on an analysis
of the provisions of the Act it appears that by and large
the law falls within the four corners of the State List and
entrenchment, if any, is purely incidental or inconsequential.
c 4. Where, however, a law made by the State
Legislature on a subject covered by the Concurrent List is
inconsistent with and repugnant to a previous law made
by Parliament, then such a law can be protected by
obtaining the assent of the President under Article 254(2)
D of the Constitution. The result of obtaining the assent of the
President would be that so far as the State Act is
concerned, it will prevail in the State and overrule the
provisions of the Central Act in their applicability to the
State only. Such a state of affairs will exist only until
E Parliament may at any time make a law adding to, or
amending, varying or repealing the law made by the State
Legislature under the proviso to Article 254.
So far as the present State Act is concerned we are called
upon to consider the various shades of the constitutional
F validity of the same under Article 254(2) of the Constitution.
*** *** ***
24. It is well settled that the presumption is always in favour
G of the constitutionality of a statute and the onus lies on the
person assailing the Act to prove that it is unconstitutional.
Prima facie, there does not appear to us to be any
inconsistency between the State Act and the Central Acts.
Before any repugnancy can arise, the following conditions
must be satisfied:
H
STATE OF KERALA & ORS. v. MAR APPRAEM KURI 497
CO. LTD. & ANR. [S.H.KAPADIA, CJI.]
1. That there is a clear and direct inconsistency A
between the Central Act and the State Act.
2. That such an inconsistency is absolutely
irreconcilable.
8
3. That the inconsistency between the provisions of
the two Acts is of such nature as to bring the two Acts into
direct collision with each other and a situation is reached
where it is impossible to obey the one without disobeying
the other.
c
25. In Colin Howard's Australian Federal Constitutional
Law, 2nd Edn. the author while describing the nature of
inconsistency between the two enactments observed as
follows:
D
"An obvious inconsistency arises when the two
enactments produce different legal results when applied to
the same facts."
*** *** ***
E
35. On a careful consideration, therefore, of the authorities
referred to above, the following propositions emerge:
1. That in order to decide the question of repugnancy
it must be shown that the two enactments contain
inconsistent and irreconcilable provisions, so that they F
cannot stand together or operate in the same field.
2. That there can be no repeal by implication unless
the inconsistency appears on the face of the two statutes.
G
3. That where the two statutes occupy a particular
field, but there is room or possibility of both the statutes
operating in the same field without coming into collision
with each other, no repugnancy results.
4. That where there is no inconsistency but a statute H
498 SUPREME COURT REPORTS [2012] 4 S.C.R.
A occupying the same field seeks to create distinct and
separate offences, no question of repugnancy arises and
both the statutes continue to operate in the same field."
Applying the above tests to the facts of the present case,
B on the enactment of the Central Chit Funds Act 1982 on
19.08.1982, intending to occupy the entire field of Chits under
Entry 7 of List Ill, the State Legislature was denuded of its
power to enact the Finance Act No. 7 of 2002. However, as
held in numerous decisions of this Court, a law enacted by the
C State legislature on a topic in the Concurrent List which is
inconsistent with and repugnant to the law made by the
Parliament can be protected by obtaining the assent of the
President under Article 254(2) and that the said assent would
enable the State law to prevail in the State and override the
provisions of the Central Act in its applicability to that State only.
D Thus, when the State of Kerala intended to amend the State
Act in 2002, it was bound to keep in mind the fact that there is
already a Central law on the same subject, made by Parliament
in 1982, though not in force in Kerala, whereunder there is a
pro tan to repeal of the State Act. Therefore, the State legislature
E ought to have followed the procedure in Article 254(2) and ought
to have obtained the assent of the President.
(iv) In Tika Ramji (supra), the facts were as follows:-The
State Legislature enacted the U.P. Sugarcane (Regulation of
F Supply and Purchase) Act, 1953 which empowered the State
Government to issue notifications, which were in fact issued on
27.09.1954 and 9.11.1955 regulating supply and purchase cof
sugarcane. It was inter alia contended that the U.P. Sugarcane
(Regulation of Supply and Purchase) Act, 1953, being the State
G Act was repugnant to Act LXV of 1951 enacted by the
Parliament which empowered the Central Government vide
Section 18G to issue an order regulating distribution of finished
articles at fair prices relatable to the scheduled industry. The
question that arose for determination was whether "sugar'' was
H an item covered by the Central Act No. LXV of 1951 and, if
STATE OF KERALA & ORS. v. MAR APPRAEM KURI 499
CO. LTD. & ANR. [S.H.KAPADIA, CJI.)
so, whether the State Act was void being repugnant to the A
Central Law. This Court held that the whole object of the Central
Act (LXV of 1951) was to regulate distribution of manufactured/
finished articles at fair prices and not to legislate in regard to
the raw material (sugarcane). This Court further held that Section
18G of the Central Act No. LXV of 1951 did not cover B
"sugarcane"; Section 18G of the Central Act No. LXV of 1951
only dealt with the finished products manufactured by scheduled
industries, and, hence, there was no repugnancy. In the said
judgment, this Court also referred to three tests of inconsistency
or repugnancy enumerated by Nicholas in his commentary on c
Australian Constitution, 2nd Edition, Page 303. In the said
judgment, this Court also relied upon the ratio of the judgment
in the case of Clyde Engineering Co. Ltd. v. Cowburn [1926]
37 C.L.R. 466, in which Isaacs, J. laid down one test of
inconsistency as conclusive: "If, a competent legislature
0
expressly or implicitly evinces its intention to cover the whole
field, that is a conclusive test of inconsistency where another
Legislature assumes to enter to any extent upon the same field."
Applying these tests, this Court held that there was no
repugnancy as "sugarcane" was dealt with by the impugned E
State Act whereas the Central Act dealt with supply and
distribution of manufactured articles at fair prices and, therefore,
there was no question of any inconsistency in the actual terms
of the Acts enacted by Parliament and the State. The only
question that arose was whether Parliament and the State
Legislature sought to exercise their powers over the same F
subject matter or whether the laws enacted by Parliament were
intended to be a complete exhaustive code or whether such
Acts evinced an intention to cover the whole field. This Court
held that as "sugarcane" was not the subject-matter of the
Central Act, there was no intention to cover the whole field and, G
consequently, both the Acts could co-exist without repugnancy.
Having come to the conclusion that there was no repugnancy,
the Court observed that, "Even assuming that sugarcane was
an article relatable to the sugar industry as a final product within
the meaning of Section 18G of Central Act No. LXV of 1951, it H
500 SUPREME COURT REPORTS [2012] 4 S.C.R.
A is to be noted that no order was issued by the Central
Government in exercise of the powers vested in it under that
Section and no question of repugnancy could arise because
repugnancy must exist in fact and not depend merely on a
possibility. The possibility of an order under Section 18G being
B issued by the Central Government would not be enough. The
existence of such an order was an essential pre-requisite
before repugnancy could arise." This sentence has been relied
upon by learned counsel for the State of Kerala in the present
case in support of his submission that repugnancy must exist
c in fact and not depend on a mere possibility. According to the
learned counsel, in the present case, applying the ratio of the
judgment in the case of Tika Ramji (supra), it is clear that the
repugnancy has not arisen in the present case before us for
the simple reason that the Central Chit Funds Act, 1982 has
D not come into force in the State of Kerala. That, a mere
possibility of the Central Act coming into force in future in the
State of Kerala would not give rise to repugnancy.
(v) In the case of State of Orissa v. M.A. Tulloch and Co.
reported in (1964) 4 SCR 461, the facts were as follows:-On a
E lease being granted by State of Orissa under Mines and
Minerals (Development and Regulation) Act 1948 (Central Act),
Tulloch and Company started working a manganese mine. The
State of Orissa passed Orissa Mining Areas Development
Fund Act, 1952 under which the State Government was
F authorized to levy a fee for development of "mining areas" in
the State. After bringing these provisions into operation, State
of Orissa demanded from Tulloch and Company on August 1,
1960 fees for the period July, 1957 to March, 1958. Tulloch and
Company challenged the legality of the demand before the High
G Court under Article 226 of the Constitution. The writ petition was
allowed on the ground that on the coming into force of the Mines
and Minerals (Regulation and Development) Act of 1957,
hereinafter called the "Central Act of 1957", which was brought
into force from 1st June, 1953 the Orissa Mining Areas
H Development Fund Act 1952 should be deemed to be non-
STATE OF KERALA & ORS. v. MAR APPRAEM KURI 501
CO. LTD. & ANR. [S.H.KAPADIA, CJI.]
existent. This was the controversy which came before this A
Court. One of the points which arose for determination was that
of repugnancy. It was urged that the object and purpose of
Orissa Mining Areas Development Fund Act, 1952 was distinct
and different from the object and purpose of the Central Act of
1957, with the result that both the enactments could validly co- B
exist since they did not cover the same field. This argument was
rejected by this Court. It was held that having regard to the terms
of Section 18(1) the intention of Parliament was to cover the
entire field. That, by reason of declaration by Parliament under
the said Section the entire subject matter of conservation and c
development of minerals was taken over for being dealt with
by Parliament thus depriving the State of the power hitherto
possessed. Relying on the judgment of the Constitution Bench
of this Court in the case of Hingir-Rampur Coal Co. v. State
of Orissa (1961) 2 SCR 537, it was held in Tulloch's case that D
for the declaration to be effective it is not necessary that the
rules should be made or enforced; all that was required was a
declaration by Parliament to the effect that in public interest
regulation and development of the mines should come under
the control of the Union. In such a case the test must be whether
the legislative declaration covers the field or not. Applying the E
said test, in Tulloch's case, the Constitution Bench held that
the Central Act of 1957 intended to cover the entire field dealing
with regulation and development of mines being under the
control of the Central Government. In Tulloch's case, reliance
was placed on the above underlined portion in Tika Ramji's F
case (supra) which, as stated above, was on the assumption
that sugarcane was an article relatable to sugar industry within
Section 18G of the Central Act No. LXV of 1951. It was urged
on behalf of the State of Orissa in Tulloch's case that Section
18(1) of the Central Act of 1957 merely imposes a duty on the G
Central Government to take steps for ensuring conservation and
development of mineral resources. That, since the Central
Government had not framed Rules under the Act for
development of mining areas till such Rules were framed, the
Central Act of 1957 did not cover the entire field, and, thus, the H
502 SUPREME COURT REPORTS [2012] 4 S.C.R.
A Orissa Mining Areas Development Fund Act, 1952 continued
to operate in full force till the Central Government enacted Rules
under Section 18 of the 1957 Act. The said contention of the
State of Orissa was rejected by the Constitution Bench of this
Court in Tulloch's case by placing reliance on the judgment of
B this Court in Hingir-Rampur's case (suprq) in following words:
"We consider that this submission in relation to the
Act before us is without force besides being based on a
misapprehension of the true legal position. In the first place
the point is concluded by the earlier decision of this court
c in Hingir Rampur Coal Co. Ltd. v. State of Orissa where
this court said:
"In order that the declaration should be effective it is
not necessary that rules should be made or enforced. All
D that this required is a declaration by Parliament that it was
expedient in the public interest to take the regulation of
development of mines under the control of the Union. In
such a case the test must be whether the legislative
declaration covers the field or not."
E
But even if the matter was res integra, the argument
cannot be accepted. Repugnancy arises when two
enactments both within the competence of the two
Legislatures collide and when the Constitution expressly
or by necessary implication provides that the enactment
F of one legislature has superiority over the other then to the
extent of the repugnancy the one supersedes the other. But
two enactments may be repugnant to each other even
though obedience to each of them is possible without
disobeying the other. The test of two legislations containing
G contradictory provisions is not, however, the only criterion
of repugnancy, for if a competent legislature with a superior
efficacy expressly or impliedly evinces by its legislation an
intention to cover the whole field, the enactments of the
other legislature whether passed before or after would be
H
STATE OF KERALA & ORS. v. MAR APPRAEM KURI 503
CO. LTD. & ANR. [S.H.KAPADIA, CJI.]
overborne on the ground of repugnance. Where such is the A
position, the inconsistency is demonstrated not by a
detailed comparison of provisions of the two statutes but
by the mere existence of the two pieces of legislation. In
the present case, having regard to the terms of Section
18(1) it appears clear to us that the intention of Parliament B
was to cover the entire field and thus to leave no scope
for the argument that until rules were framed, there was no
inconsistency and no supersession, of the State Act."
19. To sum up, Articles 246(1), (2) and 254(1) provide that
to the extent to which a State law is in conflict with or C
repugnant to the Central law, which Parliament is competent
to make, the Central law shall prevail and the State law shall
be void to the extent of its repugnancy. This general rule of
repugnancy is subject to Article 254(2) which inter alia provides
that if a law made by a State legislature in respect of matters D
in the Concurrent List is reserved for consideration by the
President and receives his/ her assent, then the State law shall
prevail in that State over an existing law or a law made by the
Parliament, notwithstanding its repugnancy. The proviso to
Article 254(2) provides that a law made by the State with the c
President's assent shall not prevent Parliament from making
at any time any law with respect to the same matter including
a law adding to, amending, varying or repealing the law so
made by a State legislature. Thus, Par.liament need not wait
for the law made by the State with the President's assent to F
be brought into force as it can repeal, amend, vary or add to
the assented State law no sooner it is made or enacted. We
see no justification for inhibiting Parliament from repealing,
amending or varying any State Legislation, which has received
the President's assent, overriding within the State's territory, an G
earlier Parliamentary enactment in the concurrent sphere,
before it is brought into force. Parliament can repeal, amend,
or vary such State law no sooner it is assented to by the
President and that it need not wait till such assented to State
law is brought into force. This view finds support in the judgment H
504 SUPREME COURT REPORTS [2012) 4 S.C.R.
A of this Court in Tulloch (supra). Lastly, the definition of the
expressions "laws in force" in Article 13(3)(b) and Article
372(3), Explanation I and "existing law" in Article 366(10) show
that the laws in force include laws passed or made by a
legislature before the commencement of the Constitution and
8 not repealed, notwithstanding that any such law may not be in
operation at all. Thus, the definition of the expression "laws in
force" in Article 13(3)(b) and Article 372(3), Explanation I and
the definition of the expression "existing law" in Article 366(10)
demolish the argument of the State of Kerala that a law has
C not been made for the purposes of Article 254, unless it is
enforced. The expression "existing law" finds place in Article
254. In Edward Mills Co. Ltd., Beawar v. State of Ajmer [AIR
1955 SC 25), this Court has held that there is no difference
between an "existing law" and a "law in force". Applying the
tests enumerated hereinabove, we hold that the Kerala Chitties
D Act, 1975 became void on the making of the Chit Funds Act,
1982 on 19.08.1982, [when it received the assent of the
President and got published in the Official Gazette] as the
Central 1982 Act intended to cover the entire field with regard
to the conduct of the Chits and further that the State Finance
E Act No. 7 of 2002, introducing Section 4(1 a) into the State 1975
Act, was void as the State legislature was denuded of its
authority to enact the said Finance Act No. 7 of 2002, except
under Article 254(2), after the Central Chit Funds Act, 1982
occupied the entire field as envisaged in Article 254(1) of the
F Constitution. Thus, repugnancy arises on the making and not
commencement of the Central Chit Funds Act, 1982. On
19.08.1982, the Kerala Chitties Act, 1975 ceased to operate
except to the extent of Section 6 of the General Clauses Act,
1897.
G
(ii) Our Answer to Question No. (ii) :-The Effect in Law of
a Repeal
20. In State of Orissa v. M.A. Tulloch & Co. (supra), this
Court came to the conclusion that by reason of the declaration
H
STATE OF KERALA & ORS. v. MAR APPRAEM KURI 505
CO. LTD. & ANR. [S.H.KAPADIA, · CJI.]
by Parliament the entire subject matter of "conservation and A
development of minerals" stood taken over, for being dealt with
by Parliament, thus, denying the State of the power within it
hitherto possessed and consequently the Central Act
superseded the State law, thus effecting a repeal. After coming
oto the conclusion that the State law stood repealed, this Court B
was required to consider a submission advanced on behalf of
Tulloch & Co. It was submitted that Section 6 of the General
Clauses Act, 1897 applied only to express repeals and not to
repeals consequent upon the supersession of the State Act by
a law having the constitutional superior efficacy. It was c
submitted that a mere disappearance or supersession of the
State Act under Article 254(1) was at the highest a case of
implied repeal and not an express repeal. That, Section 6 of
the General Clauses Act applied only to express repeals and
not to implied repeals. This contention was rejected in the
0
following terms :
"The entire theory underlying implied repeals is that there
is no need for the later enactment to state in express terms
that an earlier enactment has been repealed by using any
particular set of words or form of drafting but that if the E
legislative intent to supersede the earlier law is manifested
by the enactment of provisions as to effect such
supersession, then there is in law a repeal notwithstanding
the absence of the word 'repeal' in the later statute. Now,
if the legislative intent to supersede the earlier law is the F
basis upon which the doctrine of implied repeal is founded
could there be any incongruity in attributing to the later
legislation the same intent which Section 6 presumes
where the word 'repeal' is expressly used. So far as
statutory construction is concerned, it is one of the cardinal G
principles of the law that there is no distinction or difference
between an express provision and a provision which is
necessarily implied, for it is only the form that differs in the
two cases and there is no difference in intention or in
substance. A repeal may be brought about by repugnant H
506 SUPREME COURT REPORTS [2012] 4 S.C.R.
A legislation, without even any reference to the Act intended
to be repealed, for once legislative competence to effect
a repeal is posited, it matters little whether this is done
expressly or inferentially or by the enactment of repugnant
legislation. If such is the basis upon which repeals and
B implied repeals are brought about it appears to us to be
both logical as well as in accordance with the principles
upon which the rule as to implied repeal rests to attribute
to that legislature which effects a repeal by necessary
implication the same intention as that which would attend
c the case of an express repeal. Where an intention to effect
a repeal is attributed to a legislature then the same would,
in our opinion, attract the incident of the saving found in
Section 6 for the rules of construction embodied in the
General Clauses Act are, so to speak, the basic
assumptions on which statutes are drafted."
D
21. In A. Thangal Kunju Mussaliar v. M. Venkitacha/am
Potti and Anr. [1955] 2 SCR 1196, the Travancore State
Legislature enacted Act No. XIV of 1124 on 7 .03.1949 to
provide for investigation of tax evasion cases. The Act was to
E come into force by Section 1(3) on the date appointed by the
State Government. The States of Travancore and Cochin
merged on 1.07 .1949. By Ordinance 1 of 1124, all existing laws
were to continue in force in the United State of Travancore and
Cochin. After action was taken under Act No. XIV of 1124, a
F controversy was raised that as the said Act No. XIV of 1124
was not a law in force when the United State of Travancore and
Cochin was formed, all proceedings under the Travancore Act
No. XIV of 1124 had lapsed. This contention was dismissed
by this Court in following terms:
G
''The general rule of English law, as to the date of the
commencement of a statute, since 1797, has been and is
that when no other date is fixed by it for its coming into
operation it is in force from the date when it receives the
royal assent (33 Geo. 3, c. 13). The same rule has been
H
STATE OF KERALA & ORS. v. MAR APPRAEM KURI 507
CO. LTD. & ANR. [S.H.KAPADIA, CJI.]
adopted in Section 5 of our General Clauses Act, 1897. A
We have not been referred to any Travancore law which
provides otherwise. If, therefore, the same principle
prevailed in that State, Travancore Act 14 of 1124 would
have come into force on 7-3-1949 when it was passed by
the Travancore Legislature. What prevented that result? B
The answer obviously points to Section 1 (3) which
authorises the Government to bring the Act into force on
a later date by issuing a notification. How could Section
1(3) operate to postpone the commencement of the Act
unless that section itself was in force? One must, therefore, c
concede that Section 1 (3) came into operation
immediately the Act was passed, for otherwise it could not
postpone the coming into operation of the Act. To put the
same argument in another way, if the entire Act including
Section 1(3) was not in operation at the date of its passing,
0
how could the Government issue any notification under that
very section? There must be some law authorising the
Government to bring the Act into force. Where is that law
to be found unless it were in Section 1(3)? In answer, Shri
Nambiyar referred us to the principle embodied in Section
E
37 of the English Interpretation Act which corresponds to
Section 22 of our General Clauses Act. That section does
not help the petitioner at all. All that it does is to authorise
the making of rules or byelaws and the issuing of orders
between the passing and the commencement of the
enactment but the last sentence of the section clearly says F
that "rules, bye-laws or orders so made or issued shall not
take effect till the commencement of the Act or Regulation".
Suppose Shri Nambiyar is right in saying that the
Government could issue a notification under Section 1(3)
by virtue of the principle embodied in Section 22 of the G
General Clauses Act, it will not take his argument an inch
forward, for that notification, by reason of the last sentence
of Section 22 quoted above, will not take effect till the
commencement of the Act. It will bring about a stalemate.
It is, therefore, clear that a notification bringing an Act into H
508 SUPREME COURT REPORTS [2012] 4 S.C.R.
A force is not contemplated by Section 22 of the General
Clauses Act. Seeing, therefore, that it is Section 1(3)
which operates to prevent the commencement of the Act
until a notification is issued thereunder by the Government
and that it is Section 1(3) which operates to authorise the
B Government to issue a notification thereunder, it must be
conceded that that Section 1 (3) came into force
immediately on the passing of the Act. There is, therefore,
no getting away from the fact that the Act was an "existing
law" from the date of its passing right up to 1-7-1949 and
c was, consequently, continued by Ordinance 1 of 1124. This
being the position, the validity of the notification issued on
26-7-1949 under Section 1(3), the reference of the case
of the petitioner, the appointment of Respondent 1 as the
authorised official and all proceedings under the
Travancore Act 14 of 1124 cannot be questioned on the
D
ground that the Act lapsed and was not continued by
Ordinance 1 of 1124."
22. In T.S. Ba/iah v. T.S. Rengachari [1969] 3 SCR 65,
the underlying principle of Section 6 of the General Clauses
E Act, 1897 is explained as under :
"The question is not whether the new Act expressly keeps
alive old rights and liabilities but whether it manifests an
intention to destroy them. Section 6 of the General Clauses
Act therefore will be applicable whenever there is a repeal
F
of an enactment. In such cases consequences laid down
in Section 6 will follow, unless, as the Section itself says,
a different intention appears in the repealing statute."
23. In State of Punjab vs. Mohar Singh [1955] 1 SCR 893
G prosecution was commenced against Mohar Singh under
Section 7 of the East Punjab Refugees (Registration of Land
Claims) Act, 1948. The offence was committed at a time when
the said Act was not in force. The offence was committed when
East Punjab Refugees (Registration of Land Claims)
H Ordinance of 1948 was in force. That Ordinance was for a
STATE OF KERALA & ORS. v. MAR APPRAEM KURI 509
CO. LTD. & ANR. [S.H.KAPADIA, CJI.]
temporary period. It was substituted by the Act. It is important A
to note that the Ordinance was a temporary law and the same
was repealed before it expired by efflux of time. In the above
circumstances, Section 6 of General Clauses Act, 1897 came
for interpretation before this Court. It was held : "We cannot
subscribe to the broad proposition that Section 6 is ruled out B
when there is repeal of an enactment followed by a fresh
legislation. Section 6 would be applicable in such cases unless
the new legislation manifests a contrary intention or
incompatibility. Such incompatibility has to be ascertained from
a consideration of all relevant provisions of the new law and c
mere absence of a saving clause by itself is not material."
24. Applying the tests laid down in the above judgments
of this Court, when a State law is repealed expressly or by
implication by a Union law, Section 6 of the General Clauses
Act 1897 applies as to things done under the State law which D
are so repealed, so that transactions under the State law before
the repeal are saved as also any rights and liabilities arising
under the State Act, prior to the enactment of the Central Act.
Repeal of an enactment is a matter of substance. It depends
on the intention of the Legislature. If by reason of the E
subsequent enactment, the Legislature intended to abrogate or
wipe off the former enactment, wholly or in part, then, it would
be a case of pro tanto repeal.
25. In the present case, repugnancy is established by both F
the tests. As can be seen from the impugned judgment (vide
paras 13-15) on comparison of the provisions of the Kerala
Chitties Act, 1975, being the State Act, and the Chit Funds Act,
1982, being the Central Act, inconsistencies actually exist
directly. Further, as stated above, the intention of the Parliament G
in enacting the Central Act is to cover the entire field relating
to or with respect to Chits. Hence, on both counts the two Acts
cannot stand together. In consequence of this repugnancy the
Kerala Chitties Act, 1975 became void under Article 254(1) on
the enactment of the Central Chit Funds Act, 1982 on
H
19.08.1982 and the Kerala Chitties Act, 1975 thus stood
510 SUPREME COURT REPORTS [2012] 4 S.C.R.
A impliedly repealed. By reason of Article 367 of the Constitution,
the General Clauses Act, however, applies to the said repeal.
Under Sections 6(b) and (c) of the General Clauses Act the
previous operation of the Kerala Chitties Act, 1975 is not
affected nor any right, privilege, obligation or liability acquired
B or incurred under the said Kerala repealed Act. This is the
Constitutional position which would prevail if Section 90(1) of
the Central Chit Funds Act, 1982 would not have been there.
In other words, Section 90(1) of the Central Chit Funds Act,
1982 is stated out of abundant caution. Thus, after 19.08.1982
c the Kerala Chitties Act, 1975 stood repealed except for the
limited purposes of Section 6 of the General Clauses Act.
Likewise, the other existing six State laws on Chits, referred
to in Section 90 of the Chit Funds Act, 1982, existing on
19.08.1982 also stood repealed subject to the saving under
Section 6 of the General Clauses Act.
0
26. To bring the Central Chit Funds Act, 1982 into
operation in any State the Central Government has to issue a
notification in the Official Gazette under Section 1(3). This has
been done for some States but it has not been done for others
E like Kerala. It is for the Central Government to issue a
notification bringing into force the Chit Funds Act, 1982 in
Kerala when it deems appropriate as it has done in some
States. Until such notification is issued neither the Kerala
Chitties Act, 1975 prevails in the State of Kerala as it has
F become void and has been repealed under Article 254(1), nor
the Central Chit Funds Act, 1982 as it is not notified till date. If
and when the Central Government brings into force the Chit
Funds Act, 1982 by a notification in the State of Kerala, under
Section 1(3), Section 90(2) will come into play and thereby the
G Kerala Chitties Act, 1975 shall continue to apply only to chits
in operation in State of Kerala on the date of the
commencement of the Central Chit Funds Act, 1982 in the
same manner as the Kerala Chitties Act, 1975 applied to such
chits before such commencement. Moreover, Sections 85(a)
H and 90(2) of the Central Chit Funds Act, 1982 provide for
STATE OF KERALA & ORS. v. MAR APPRAEM KUR! 511
CO. LTD. & ANR. [S.H.KAPADIA, CJI.]
continuance of the application of the provisions of the Kerala A
Chitties Act, 1975 till the commencement of the Central Chit
Funds Act, 1982. Such commencement is dependent upon
notification under Section 1(3). Thus, on such commencement
of the Central Chit Funds Act, 1982, the transactions (chits)
between 19.08.1982 and the date of commencement of the B
Central Act will stand protected under Section 90(2). Hence,
there would be no legislative vacuum.
27. Before concluding, one aspect needs to be highlighted.
Section 4( 1a) was inserted into Section 4( 1) vi de State C
Finance Act No. 7 of 2002. Under Section 4(1a), in cases
where a chitty is registered outside the State, say in Jammu &
Kashmir, but having 20% or more of the subscribers normally
residing in State of Kerala, the Foreman (who has got
registration outside the State of Kerala) has to open a branch
in the State of Kerala and obtain registration under the Kerala D
Chitties Act, 1975. This sub-section was inserted to plug a
loophole. In many cases, chitties were registered outside the
State of Kerala even when large number of subscribers were
residing in State of Kerala. It is true that on the making of the
Central Chit Funds Act, 1982, the State legislature could not E
have enacted the Finance Act No. 7 of 2002 inserting Section
4(1 a) into the State Act as the entire field stood occupied by
the Central Chit Funds Act, 1982 without the assent of the
President as envisaged under Article 254(2), however, we find
that Section 4(1) of the Central Chit Funds Act, 1982 is much F
wider and more stringent than Section 4(1 a) of the Kerala
Chitties Act, 1975, as amended by Finance Act No. 7 of 2002,
Dinasmuch as under Section 4(1) of the Central Chit Funds Act,
1982, no chit shall be commenced or conducted without
obtaining sanction of the State Government within whose G
jurisdiction the chit is to be commenced or conducted and
unless such chit is registered in that State in accordance with
the provisions of the Central Chit Funds Act 1982. Conclusions
28. To sum up, our conclusions are as follows :i) On timing, H
we hold that, repugnancy arises on the making and not
512 SUPREME COURT REPORTS [2012] 4 S.C.R.
A commencement of the law, as correctly held in the judgment of
this Court in Pt. Rishikesh and Another v. Sa/ma Begum (Smt)
[(1995) 4 sec 718).
ii) Applying the above test, we hold that, on the enactment
of the Central Chit Funds Act, 1982, on 19.08.1982, which
8
covered the entire field of "chits" under entry 7 of List Ill of the
Constitution, the Kerala Chitties Act, 1975, on account of
repugnancy as enshrined in Article 254(1), became void and
stood impliedly repealed. That, on the occupation of the entire
field of "chits", the Kerala Legislature could not have enacted
C the State Finance Act No. 7 of 2002, inserting Section 4(1a)
into the Kerala Chitties Act, 1975, particularly on the failure of
the State in obtaining Presidential assent under Article 254(2).
iii) That, the Central Chit Funds Act, 1982 though not
D brought in force in the State of Kerala is still a law made, which
is alive as an existing law. By reason of Article 367 of the
Constitution, the General Clauses Act, 1897 applies to the
repeal. Section 6 of the General Clauses Act, 1897 is,
therefore, relevant, particularly Sections 6(b) and 6(c) and
E consequently, the previous operation of the Kerala Chitties Act,
1975 is not affected nor any right, privilege, obligation or liability
acquired or incurred under that repealed State Act of 1975.
Thus, after 19.08.1982, the Kerala Chitties Act, 1975 stands
repealed except for the limited purposes of Section 6 of General
F Clauses Act, 1897. If and when the Central Government brings
into force the Chit Funds Act, 1982 by a notification in State of
Kerala, under Section 1(3), Section 90(2) will come into play
and thereby the Kerala Chitties Act, 1975 shall continue to
apply only to chits in operation on the date of commencement
G of the Central Chit Funds Act, 1982 in the same manner as the
Kerala Chitties Act, 1975 applied to chits before such
commencement.
29. The reference is answered accordingly.
H K.K.T. Reference answered.
Search Indian case law
Ask in plain English, not just keywords. 25,000 AI words free, no card.
Try "repugnancy"Sign in to search