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Mar Appraem Kuri Co. Introduction 1. By order dated Rishikesh and Another v. Accordingly, the matter has come to the Constitution Bench to decide with certitude the following core issues of constitutional importance under Article 1 of the Constitution. Scope of the Reference — when does repugnancy arise? In the present case, the question to be answered is — whether the Kerala Chitties Act 23 of became repugnant to the Central Chit Funds Act 40 of under Article 1 upon making of the Central Chit Funds Act 40 of i.
Chandra Rani and others v. Vikram Singh and others [ All. Act No. 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. Act was Rishikesh supra. The statement of law laid down in Pt. 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 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 and was published in the Gazette of India on 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. Equally is the procedure of the State Legislature.
Inconsistency or incompatibility in the law on concurrent subject, by operation of Article , 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 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. The above statement of law in Pt. Rishikesh supra 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, by registering themselves outside the State but continued to operate in Kerala. Because of this, investor protection became difficult. Consequently, Section 4 of the said Act was amended vide Finance Act 7 of By the said amendment, sub-section 1a was inserted in Section 4.
Being aggrieved by the said Amendment, the private chitty firms challenged the vires of Section 4 1a of the Act as repugnant under Article 1 to the Central Chit Funds Act, Questions to be answered 7. 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.
However, the Single Judge held that absent notification under Section 1 3 of the Central Chit Funds Act, bringing the said Act into force in the State and absent framing of the Rules under Section 89 of the said Act, it cannot be said that the Kerala Chitties Act, stood repealed on the enactment of the said Act, which is the Central Act; whereas the Division Bench declared Section 4 1a of the Act as extra- territorial and, consequently, unconstitutional, hence, the State of Kerala came to this Court by way of appeal.
For the sake of clarity some of the conflicting provisions indicated in the impugned judgment are set out herein below:. Section 4 — Prohibition of invitation for subscription except under certain conditions 1 Where previous sanction is required by section 3 for starting and conducting a chitty, no person shall issue or publish any notice, circular, prospectus, proposal or other document inviting the public to subscribe for tickets in any such chitty or containing the terms and conditions of any such chitty unless such notice, circular, prospectus, proposal or other document contains a statement that the previous sanction required by section 3 has been obtained, together with the particulars of such sanction.
Provided that the value of the 3 The security given by the securities referred to in clause foreman under sub-section 1 or c shall not, in any case, be any security substituted under less than one and a half times the sub-section 6 shall not be value of the chit amount. Apart from the conflicting provisions mentioned hereinabove, the impugned judgment has brought out various inconsistencies between the various provisions of the State Act and the Central Act in the following terms:.
When we scan through the various provisions of both the legislations it is clear that there is repugnancy between some of the provisions of those legislations. So also Section 4 1 of the Chit Funds Act deals with registration of chits, commencement and conduct of chit business. 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 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 application made to him in that behalf.
Section 8 of the Chit Funds Act deals with minimum capital requirement for the commencement etc. 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 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 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 is inconsistent with the Central Act.
Learned Single Judge himself has therefore noticed inconsistencies between the various provisions of the State Act and the Central Act. On a comparison of the various provisions in the Chit Funds Act and the Kerala Chitties Act we have come across several such inconsistent and hostile provisions which are sic repugnant to each other.
Suffice to say that if Sub-section 1a 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 would also be subjected to various provisions of the Kerala Act which are inconsistent and repugnant to the Central Act. If Section 4 1a sic is therefore given effect to it would have extra territorial operation.
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 Act or will it arise as and when the Central Act is brought into force in the State of Kerala? 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 a State may make laws for the whole or any part of the State.
Subject-matter of laws made by Parliament and by the Legislatures of States. Power of Parliament to legislate with respect to a matter in the State List in the national interest. Power of Parliament to legislate with respect to any matter in the State List if a Proclamation of Emergency is in operation — 1 Notwithstanding anything in this Chapter, Parliament 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.
Inconsistency between laws made by Parliament under Articles and and laws made by the Legislatures of States. Inconsistency between laws made by Parliament and laws made by the Legislatures of States —.
Shri K. Venugopal, learned senior counsel appearing for the State of Kerala and Shri V. Therefore, according to the learned counsel, the very text of Article makes it clear that a declaration of repugnance by a Court presupposes both laws actually being in operation. In this connection, it was 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 connection, learned counsel relied upon the judgment of this Court in Tika Ramji v. State of U. 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 Parliament of a law relating to a subject in List III, all State enactments on that subject become immediately void, as repugnant.
He submitted that the said words have to be given a meaning. Learned counsel submitted that the said words indicate that the entire State Act is not rendered void under Article 1 merely by enactment of a Central law.
Lastly, learned counsel submitted that a purposive interpretation of Article must be adopted which does not lead to a legislative vacuum. In this connection learned counsel submitted that the State law came into force w.
Under Section 1 3 of that Act, the Central Government has been empowered to bring the said Act into 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 Act has not been extended to the State of Kerala.
According to the learned counsel, keeping in view the provisions of Sections 1 3 , 4, 89 and 90 of the 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.
On behalf of the private chitty firms, it was submitted by Shri T. Paikeday and Shri C. Singh, that the bringing into force or commencement of the Central Act was irrelevant in considering repugnancy under Article 1 , and that the repugnancy arose when the State law came into conflict with the enactment of the Central law, even when the Central law is not brought into force in the State of Kerala.
That, under Article 1 , the repugnancy of the State law to the law made by the Parliament is to be considered with reference to the law made. Thus, according to the learned counsel, repugnancy arose when the Central Chit Funds Act, received the assent of the President and on its publication in the Official Gazette and not on its commencement, which till date is not there in the State of Kerala. In consequence, the Kerala Chitties Act, became void on Applying these tests, it was submitted that the Kerala Chitties Act, became void under Article 1 on the enactment of the Central Chit Funds Act, That, in consequence of the said repugnancy, the Kerala Chitties Act, became void under Article 1 on However, according to the learned counsel, the previous operation of the Kerala Chitties Act, is not affected nor any right, privilege, obligation or liability acquired under the Kerala Chitties Act shall stand affected in view of Article of the Constitution.
By reason of Article , the General Clauses Act, would apply to the said repeal. Thus, after According to the learned counsel for the private chitties, to bring the Central Chit Funds Act, 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, Gujarat, etc. That, until such notification neither the Kerala Chitties Act, prevails in the State of Kerala as it has become void and stands repealed under Article 1 nor the Central Chit Funds Act, as it is not notified.
Thus, according to the learned counsel, as and when the Central Government brings into force the Chit Funds Act, by a notification in the State of Kerala under Section 1 3 , Section 90 2 of the Act will come into play and thereby the Kerala Chitties Act, shall continue to apply only to the chits in operation in Kerala on the date of commencement of the Central Act, in the same manner as the Kerala Chitties Act, applied to such chits before such commencement. However, as the Kerala Act, stood repealed on 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 repugnancy primarily arises in the mind of the Legislature. That, in the case of Deep Chand v. Thus, 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 repugnancy within the meaning of Article of the 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 of the Constitution.
Mar Appraem Kuri Co. Introduction 1. By order dated Rishikesh and Another v.
Supreme Court nullifies Kerala Chit Fund Act
As per G. Application for obtaining previous sanction to commence or conduct of chit In form No. As per HO ref no. No person shall issue any notice, circular, prospectus, proposal or other documents inviting the public to subscribe for tickets in any chit, unless it contains. Compounding fee- Rs.