# STATE OF KERALA & ORS v. M/S. MAR APPRAEM KURI CO. LTD. & ANR

- **Citation:** [2012] 4 S.C.R. 448
- **Court:** Supreme Court of India
- **Decided:** 2012-05-08
- **Case number:** Civil Appeal No. 6660 of 2005
- **Bench:** S.H.Kapadia, D.K. Jain, Surinder Singh Nijjar, Ranjana Prakash Desai, Jagdish Singh Khehar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/state-of-kerala-ors-v-m-s-mar-appraem-kuri-co-ltd-anr-28408
- **Pages:** 65

## Headnote

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
8 Articles 245, 246, 250 and 251 of the Constitution.
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 mat

## Text

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[2012] 4 S.C.R. 448
A
STATE OF KERALA & ORS.
B
v.
M/S. MAR APPRAEM KURI CO. LTD. & ANR.
(Civil Appeal No. 6660 of 2005)
MAY 08, 2012
[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
8 Articles 245, 246, 250 and 251 of the Constitution.
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.
F
Constitutional Law of India by H.M. Seervai, Fourth
Edition Para22.6 of Vol.3 at Page 2305 - referred to.
1.2. Throughout Article 254, the emphasis is on lawmaking 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 0
fix a date for its enforcement. Such legislations are
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; 490E
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] [512-8C]
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 nonobstante 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
8 461 - relied on.
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]
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.
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
B
c
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. Bali ah 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,
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,
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
E
F
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
H
Case Law Reference:
AIR 1941 F.C. 47
(1970) 1 SCR 443
(1969) 1 SCR 430
relied on
relied on
relied on
Para 16
Para 16
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
E
The Judgment of the Court was delivered by
S.H. KAPADIA, CJI.
Introduction
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
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
before this Court in Pt. Rishikesh (supra).
4. The statement of law laid down in Pt. Rishikesh (supra)
was as under:
E
F
"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
A
B
c
D
E
F
G
H
464
SUPREME COURT REPORTS
[2012] 4 S.C.R.
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
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
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
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
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
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
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
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
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
B
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,
1982.
E
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:
D
Kerala Chitties Act. 1975
(State Act)
Section 1 - Short title, extent
and commencement
(1) This Act may be called
E
the Kerala Chitties Act,
1975
F
(2) It extends to the whole of
the State of Kerala.
(3) It shall come into force on
such date as the government
may, by notification in the
G
Gazette, appoint.
H
The Chit Funds Act. 1982
(Central Act)
Section 1 -Short title, extent
and commencement
(1) This Act may be called
the Chit Funds Act, 1982.
(2) It extends to the whole of
India except the State of
Jammu and Kashmir.
(3) It shall come into force
on such date as the Central
Government
may,
by
notification in the Official
Gazette,
appoint
and
different dates may be
appointed for different
States.
STATE OF KERALA & ORS. v. MAR APPRAEM KURI 467
CO. LTD. & ANR. [S.H. KAPADIA, CJI.]
Section 2 -Definitions
In this Act, unless the context
otherwise requires,-
(4) "discount" means the
amount of money or quantity
of grain or other commodity,
which a prize winner has,
under the terms of the
variola, to forego for the
payment of veethapalisa,
foreman's commission or
such other expense; as may
be prescribed;
Section 3 -Prohibition of
chitty not sanctioned or
registered under this Act
(1) No chitty shall, after the
commencement of this Act,
be started and conducted
unless the previous sanction
of the Government or of such
officer
as
may
be
empowered
by
the
Government in this behalf is
obtained therefor and unless
the chitty is registered in
accordance
with
the
provisions of this Act:
Section 2 -Definitions
In this Act, unless the context
otherwise requires,-
(g) "discount" means the
sum of money or the
quantity of grain which a
prized subscriber is,
under the terms of the chit
agreement required to
forego and which is set
apart under the said
agreement to meet the
expenses of running the
chit or for distribution
among the subscribers or
for both;
Section 4 -Prohibition of
chits not sanctioned or
registered under the Act
(1)
No
chit
shall
be
commenced
State
Government within whose
jurisdiction the chit is to be
commenced or conducted
or of such officer as may be
empowered
by
that
Government in this behalf,
and unless the chit is
registered in that State in
accordance
with
the
provisions of this Act:
A
B
c
D
E
F
G
H
A
B
c
D
468
SUPREME COURT REPORTS
[2012] 4 S.C.R.
Provided that the previous
sanction under this subsection shall lapse unless
the chitty is registered
before the expiry of six
months from the date of
such sanction:
Provided further that such
previous sanction shall not
be necessary for starting
and conducting any chitty
by-
(i) a company owned by the
Government of Kerala; or
(ii) a co-operative society
registered or deemed to be
registered under the Cooperative Societies Act for
Provided that a sanction
obtained
under this
subsection shall lapse if
the chit is not registered
within twelve months from
the date of such sanction
or within such further
period or periods not
exceeding six months in
the aggregate as the
State Government may,
on application made to it
in this behalf, allow.
E
the time being in force; or
F
G
H
(iii) a scheduled bank as
defined in the Reserve
Bank of India Act, 1934 ; or
(iv) a corresponding new
bank
constituted
or
conducted
without
obtaining the previous
sanction of the under the
Banking
Companies
(Acquisition and Transfer of
Undertakings) Act, 1970
(Central Act 5 of 1970).
Section 4 -Prohibition of
STATE OF KERALA & ORS. v. MAR APPRAEM KURI 469
CO. LTD. & ANR. [S.H.