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Supreme Court Judgement.

Supreme Court Judgement.

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Supreme Court Judgement
Supreme Court Judgement

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Published by: Sree Vidyaprakasini Sabha on Jun 04, 2012
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2012 STPL(Web) 289 SC 1State of Kerala Vs. Mar Appraem Kuri Co. Ltd.Supreme Court Judgements @ www.stpl-india.in
Respondent(s)Civil Appeal No. 6660 of 2005 with Civil Appeal Nos. 6661 of 2005, 6662 of 2005, 6663 of 2005, 6664 of 2005, 6665 of 2005, 6666 of 2005, 6667 of 2005, 6668 of 2005, 6669 of 2005,6670 of 2005, 6671 of 2005, 6672 of 2005, 6673 of 2005, 6674 of 2005, 6675 of 2005, 6676 of 2005, 6677 of 2005, 6678 of 2005, 6679 of 2005, 6680 of 2005, 6681 of 2005, 7204 of 2008,7329 of 2008, 7330 of 2008, 7333 of 2008, 7334 of 2008, SLP(C) Nos. 25822 and 25823 of 2009, Civil Appeal Nos. 7008 of 2005, 7009 of 2005, 7010 of 2005, 7011 of 2005, 7012 of 2005,7013 of 2005, 7014 of 2005, 7164 of 2005, 7165 of 2005, 7166 of 2005, 7167 of 2005, 7537 of 2005, 7538 of 2005, 494 of 2006, 495 of 2006, 5031 of 2006, 7332 of 2008, 7572 of 2008 and5032 of 2006-Decided on 08-05-2012.
Constitutional Law – RepugnancyJUDGMENT
S. H. Kapadia, CJI-
Introduction1. 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 thecorrectness of the view taken by a 3-judges Bench of this Court in
Pt. Rishikesh and Another v.Salma Begum (Smt) [(1995) 4 SCC 718]
. Accordingly, the matter has come to the ConstitutionBench to decide with certitude the following core issues of constitutional importance underArticle 254(1) of the Constitution. 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 1975became 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 19.08.1982 when the President gave his assent) orwhether the Kerala Chitties Act 23 of 1975 would become repugnant to the Central Chit FundsAct 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?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 followingcircumstances:-The U.P. Civil Laws (Reforms and Amendment) Act 57 of 1976 being the State Actstood enacted on 13.12.1976; it received the assent of the President on 30.12.1976; it waspublished in the Gazette on 31.12.1976 and brought into force w.e.f. 1.01.1977 whereas
2012 STPL(Web) 289 SC 2State of Kerala Vs. Mar Appraem Kuri Co. Ltd.Supreme Court Judgements @ www.stpl-india.in
the Civil Procedure Code (Amendment) Act 104 of 1976, being the Central Act, wasenacted on 9.09.1976; it received the assent of the President on the same day; it gotpublished in the Central 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 inChandra Rani (supra) held that the U.P. Act No. 57 of 1976 was a later Act than theCentral Act No. 104 of 1976. The crucial date in the case of the said two enactmentswould 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. Thisdecision 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:“17... As soon as assent is given by the President to the law passed by the Parliament itbecomes 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, itbecomes operative. The operation may be postponed giving power to the executive ordelegated legislation to bring the Act into force at a particular time unless otherwiseprovided. The Central Act came into operation on the date it received the assent of thepresident and shall be published in the Gazette and immediately on the expiration of theday preceding its commencement it became operative. Therefore, from the mid-night onthe day on which the Central Act was published in the Gazette of India, it became thelaw. Admittedly, the Central Act was assented to by the President on 9-9-1976 and waspublished in the Gazette of India on 10-9-1976. This would be clear when we see thelegislative procedure envisaged in Articles 107 to 109 and assent of the President underArticle 111 which says that when a Bill has been passed by the House of the People, itshall be presented to the President and the President shall either give his assent to the Billor 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 ispublished in the Gazette. The making of the law is thus complete unless it is amended inaccordance with the procedure prescribed in Articles 107 to 109 of the Constitution.Equally is the procedure of the State Legislature. Inconsistency or incompatibility in thelaw on concurrent subject, by operation of Article 254, clauses (1) and (2) does notdepend upon the commencement of the respective Acts made by the Parliament and theState legislature. Therefore, the emphasis on commencement of the Act andinconsistency in the operation thereafter does not become relevant when its voidness isrequired 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 bemade 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 isvisualised by comparative study.”5. The above statement of law in Pt. Rishikesh (supra) created a doubt in the minds of thereferring judges and, accordingly, the said statement of law has come before the ConstitutionBench of this Court for its authoritative decision.Facts in the present case6. The lis in the present case arose under the following circumstances. Many of the private chittyfirms remained out of the regulatory mechanism prescribed in the Kerala Chitties Act, 1975 byregistering themselves outside the State but continued to operate in Kerala. Because of this,
2012 STPL(Web) 289 SC 3State of Kerala Vs. Mar Appraem Kuri Co. Ltd.Supreme Court Judgements @ www.stpl-india.in
investor protection became difficult. Consequently, Section 4 of the said 1975 Act was amendedvide Finance Act 7 of 2002. By the said amendment, sub-section (1a) was inserted in Section 4.This amendment intended to bring in chitties registered outside the State having 20% or more of its subscribers normally residing in the State within the ambit of the said 1975 Act. Beingaggrieved 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. Questionsto be answered7.(i) Whether making of the law or its commencement brings about repugnancy orinconsistency as envisaged in Article 254(1) of the Constitution?(ii) The effect in law of a repeal. Inconsistencies in the provisions of the Kerala ChittiesAct, 1975 vis-a-vis the Central Chit Funds Act, 19828. 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 judgment]. However, the Single Judge held that absentnotification under Section 1(3) of the Central Chit Funds Act, 1982 bringing the said 1982 Actinto force in the State and absent framing of the Rules under Section 89 of the said 1982 Act, itcannot be said that the Kerala Chitties Act, 1975 stood repealed on the enactment of the said 1982Act, which is the Central Act; whereas the Division Bench declared Section 4(1a) of the 1975 Actas extra- territorial and, consequently, unconstitutional, hence, the State of Kerala came to thisCourt by way of appeal.9. For the sake of clarity some of the conflicting provisions indicated in the impugned judgmentare set out herein below:Kerala Chitties Act, 1975 (State Act) Section 1– Short title, extent and commencementThe Chit Funds Act, 1982 (Central Act)Section 1 - Short title, extent andcommencement(1) This Act may be called the Kerala ChittiesAct, 1975(1) This Act may be called the Chit Funds Act,1982.(2) It extends to the whole of the State of Kerala.(2) It extends to the whole of India except theState of Jammu and Kashmir.(3) It shall come into force on such date as thegovernment may, by notification in theGazette, appoint.(3) It shall come into force on such date as theCentral Government may, by notification in theOfficial Gazette, appoint and different datesmay be appointed for different States.Section 2 - Definitions Section 2 - DefinitionsIn this Act, unless the context otherwiserequires,—In this Act, unless the context otherwiserequires,—(4) "discount" means the amount of money orquantity of grain or other commodity, which aprize winner has, under the terms of thevariola, to forego for the payment of veethapalisa, foreman's commission or suchother expense; as may be prescribed;(g) "discount" means the sum of money or thequantity of grain which a prized subscriber is,under the terms of the chit agreement requiredto forego and which is set apart under the saidagreement to meet the expenses of running thechit or for distribution among the subscribers orfor both;

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