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M. Babu Rao and ors. Vs. Deputy Registrar of Co-operative Societies/Officer on Special Duty, the Vasavi Co-op. Urban Bank Ltd. and ors. - Court Judgment

LegalCrystal Citation
SubjectBanking;Trusts and Societies
CourtAndhra Pradesh High Court
Decided On
Case NumberWrit Appeal No. 1754 of 2004
Judge
Reported in2005(4)ALD582; 2005(4)ALT327; [2005]126CompCas708(AP); [2005]63SCL339(AP)
ActsAndhra Pradesh Co-operative Societies Act, 1964 - Sections 6, 9A, 9B, 9C, 12A, 13, 15A, 16, 17, 19, 21, 21A, 21AA, 23, 32(3), 32, 34, 34A, 56, 58, 60, 61, 61(1), 64, 66, 70, 70(2), 71, 71(1), 71(2), 71(3), 73, 76, 77, 78, 80, 115A, 115B, 117, 121 and 133; Andhra Pradesh Co-operative Societies (Amendment) Act, 1970; Andhra Pradesh Co-operative Societies Rules; Andhra Pradesh Mutually Aided Co-operative Societies Act, 1995 - Sections 36, 36A and 37; Andhra Pradesh Protection of Depositors and Financial Establishments Act, 1999; Banking Companies (Acquisition and Transfer of Undertakings) Act, 1969; Banking Companies Act, 1949; Banking Laws (Amendment) Act, 1983 - Sections 42; Banking Laws (Application to Co-operative Societies) Act, 1965; Banking Regulation Act, 1949 - Sections 2, 3,
AppellantM. Babu Rao and ors.
RespondentDeputy Registrar of Co-operative Societies/Officer on Special Duty, the Vasavi Co-op. Urban Bank Ltd
Appellant AdvocateJ.V. Suryanarayana and ;E. Manohar, Sr. Advs. assisted by ;D.V. Bhadram, ;K.V. Satyanarayana, ;Badri Premnath, ;K. Satyanarayana Murthy, ;G. Rama Gopal, ;V.S. Raju, ;M.A. Ashfaq Mohiuddin, ;Dhanamjaya
Respondent AdvocateAdv. General and ;G.P. for Co-operation, ;Nooti Ram Mohan Rao, ;S. Ashok Anand Kumar, ;K. Gopala Krishna Murthy, Advs. for Several Co-operative Banks and ;M. Ratna Reddy, Adv. Union of India, ;A.H. Ra
Excerpt:
- - section 71 (2) confers suo motu powers of the registrar to issue a certificate for recovery of amounts where he is satisfied that a society has failed to take action under section 71(1). section 71(3) ordains that a certificate issued by the registrar under sub-section (1) or (2) shall be final and conclusive proof of the arrears stated to be due therein and that the certificate shall be executed in the manner specified in sub-section (2) of section 70. for reasons alike as in the interpretation of section 61, section 71 empowers the registrar to issue a certificate for recovery of loans, advances or other debts due to a cooperative bank from its member, a certificate, which could be executed in accordance with the provisions of section 70(2). legislative history and analysis of.....ordergoda raghuram, j.1. heard - sri e. manohar, sri j.v. suryanarayana, senior advocates, sri d.v. bhadram, sri k.v. satyanarayana, sri badri premnath, advocates for the several petitioners/appellants; learned advocate general for the state of andhra pradesh; sri nooti ram mohan rao, sri ashok anand kumar, sri k. gopala krishna murthy, advocates for the several co-operative banks and sri m. ratna reddy, advocate for the union of india.2. the several writ petitions were filed at various stages of proceedings before the authorities of the registration department of the state. all the writ petitioners had obtained loans or overdraft facility from the respective co-operative banks in sums exceeding rupees ten lakhs each. in every instance there was a default in the repayment of the.....
Judgment:
ORDER

Goda Raghuram, J.

1. Heard - Sri E. Manohar, Sri J.V. Suryanarayana, Senior Advocates, Sri D.V. Bhadram, Sri K.V. Satyanarayana, Sri Badri Premnath, Advocates for the several petitioners/appellants; learned Advocate General for the State of Andhra Pradesh; Sri Nooti Ram Mohan Rao, Sri Ashok Anand Kumar, Sri K. Gopala Krishna Murthy, Advocates for the several Co-operative Banks and Sri M. Ratna Reddy, Advocate for the Union of India.

2. The several writ petitions were filed at various stages of proceedings before the authorities of the Registration Department of the State. All the writ petitioners had obtained loans or Overdraft facility from the respective Co-operative Banks in sums exceeding Rupees ten lakhs each. In every instance there was a default in the repayment of the instalments or the loan amount and consequently a violation of the terms of the loan agreement. The lending Co-operative Banks had initiated proceedings for recovery of the dues under the provisions of the Andhra Pradesh Co-operative Societies Act, 1964 [AP Act 7/64] (for short 'the 1964 Act'). In some cases awards were passed Under Section 61 or certificates issued Under Section 71 of the 1964 Act. In some of the cases the recovery claims of the Co-operative Banks were pending adjudication and in some instances execution proceedings pursuant to the awards passed were being processed. At this stage writ petitions were filed either in the nature of Prohibition or Certiorari as the case may be, assailing the jurisdiction of the authorities under the 1964 Act, to either adjudicate upon the claims of the Co-operative Banks, assailing the awards passed, certificates issued or the execution proceedings initiated. The challenge is that the claims of the respective co-operative banks for recovery of the debts due to them could be adjudicated exclusively by the Tribunals constituted under the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 [Central Act 51/93] (for short 'the 1993 Act') and the jurisdiction of the authorities under the 1964 Act is eclipsed and overborne by the provisions of the 1993 Act.

3. It requires to be noticed that the provisions of the 1964 Act have not been challenged nor any relief sought for their invalidation, in any of these writ petitions; except that in W.P.No. 5605 of 2000 the provisions of Section 71 of the 1964 Act are challenged.

4. On behalf of the State Government and the respondent Co-operative banks it is asserted that the provisions of the 1993 Act have no application and the Tribunals constituted under this Act have no jurisdiction, power or authority to entertain and decide applications from co-operative banks for recovery of debts due to them and therefore the various claim proceedings pending, awards passed, certificates issued or execution proceedings initiated under the provisions of the 1964 Act are competent, valid and operative.

5. Interpretation of the provisions of Statutes of the Union of India, including the 1993 Act and The Banking Regulation Act, 1949 [Central Act 10/49] (for short the 1949 Act), fall for consideration. As competing claims as to the vitality of the Union and State legislations fall for determination in these writ petitions, notice was issued to the Union of India in the Ministry of Finance, Department of Economic Affairs (Banking Division). Sri M. Ratna Reddy, learned counsel representing the Central Government, on instructions, has only submitted that the Union of India had not conveyed its views on the construction of the provisions of the several statutes and that it desires to await the decision of the courts on the issues.

Why the Full Bench?

6. Aggrieved by the certificate dated 14-6-2004 issued by the Deputy Registrar of Co-operative Societies and Officer on Special Duty of the Vasavi Co-operative Urban Bank Limited, Hyderabad, ordering recovery of about Rs. 33 lakhs towards the debt due to the Vasavi Bank, W.P.No. 18535 of 2004 was filed. A learned single Judge of this Court by the order dated 11-10-2004 granted interim stay of all further proceedings pursuant to the certificate dated 14-6-2004, on condition that the writ petitioner should deposit half the amount due under the certificate. Aggrieved thereby, the petitioner filed W.A.No. 1754 of 2004. By an order dated 10-11-2004 a Division Bench of this Court modified the condition imposed by the learned single Judge and continued the interim stay subject to the appellant depositing 1/4th of the amount due. The Division Bench on the same date referred for consideration by a Full Bench, the question:

'Whether or not the authorities constituted under those Acts will lose their jurisdiction to entertain the applications from Co-operative Banks in view of the provisions of Section 18 of Recovery of Debts Due to Banks and Financial Institutions Act, 1993.'

7. On 25-11-2004 the Full Bench, on its constitution, paraphrased the question that falls for consideration by the Full Bench, as under:

'Whether Registrar of Co-operative Societies would have jurisdiction to entertain and decide a dispute between a loanee and the Co-operative Bank under the Co-operative Societies Act with respect to recovery of amount in excess of Rs. 10,00,000/-, in view of the bar of jurisdiction contained in Section 18 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 read with applicable provisions of Banking Regulation Act, 1949?'

8. We have briefly indicated the competing positions of the petitioners, the State and the respective Co-operative Banks on the issues presented for resolution by this Full Bench. We shall dilate upon the adversarial positions in the course of this judgment. Certain provisions of the Constitution of India and the relevant Statutes require to be considered. To the extent relevant and material for the purpose of the case the Constitutional and statutory provisions are set out in the Annexure to this judgment.

9. As the several claims presented by the respective Co-operative Banks against the petitioners, for recovery of the debts due to them, the awards passed on such claims, the certificates issued for recovery of the debts due or the execution proceedings initiated against the petitioners, are all in purported exercise of the jurisdiction and powers under the 1964 Act, a brief analysis of the scheme and the territory covered by the provisions of this Act is relevant.

Analysis of the provisions of the 1964 Act:

The 1964 Act is a consolidating and amending Act relating to Co-operative Societies in the State of Andhra Pradesh. The provisions of the Act are arranged in XIV Chapters including Chapter XIII-A. Chapter II sets out provisions relating to registration of societies and matters connected and incidental thereto; Chapters III and IV deal with membership of the society, composition of managing committees of the societies, the rights and liabilities of the members and matters relating to management of societies including the powers and functions of the managing committee, respectively, Chapters V to VII deal with the rights and privileges, properties and funds and substantive and procedural provisions relating to audit, inquiry, inspection and surcharge in relation to a society; Chapter VII includes provisions regarding settlement of disputes and Section 61 in this Chapter is one of the provisions which confers arbitral power for recovery of dues of a Cooperative Society; Chapters IX, XI and XII contain provisions relating to winding-up and cancellation of registration of a society, to appeal, revision and review and offences and penalties, respectively; Chapter X includes provisions relating to execution of decisions and decrees and to the power of the Registrar to recover amounts and other provisions for recovery of debts due to a cooperative society; Chapter XIII includes provisions relating to the financing banks and Primary Agricultural Societies and matters connected therewith and incidental thereto; Chapter XIII-A, inserted in the 1964 Act by an amendment under AP Act No. 10 of 1970, includes special provisions applicable to eligible Co-operative Banks. Section 115-A and B in this Chapter incorporate provisions relating to winding up, sanctioning a scheme of compromise or arrangement or of amalgamation or reconstruction of eligible Co-operative Banks, winding up of such banks if so required by the RBI or for supersession of the committee of management on a direction by the RBI; Chapter XIV includes other miscellaneous provisions for effectuating the purposes of the Act. Included in this chapter is Section 121 excluding the jurisdiction of courts to adjudicate upon the validity of orders, decisions or awards passed or directions issued or action taken under the 1964 Act or the Rules made thereunder, Section 133 in this Chapter confers overriding effect to the provisions of the ACT qua any other law. The 1964 Act, as originally enacted, had received the assent of the President (on 24-2-1964).

10. Chapter VIII includes provisions for settlement of disputes. Section 61 enumerates the disputes that may be referred to the Registrar Co-operative Societies - (the Registrar). Accordingly any dispute touching, inter alia, the business of a society between a member, past member or a person claiming through a member or past member or deceased member of the society, its committee or any officer, agent or employee of the society ...shall be referred to the Registrar for a decision. The 'Explanation' to Section 61(1) provides that for the purposes of Sub-section (1) a dispute shall include -

(i) a claim by a society for any debt or other amount due to it from a member, past member, the nominee, heir or legal representative of a deceased member, whether such debt or other amount be admitted or not;

(ii) a claim by surety against the principal debtor where the society has recovered from the surety any amount in respect of any debt or other amount due to it from the principal debtor whether such debt or other amount due to be admitted or not;

(iii) a claim by a society against a member, past member, or the nominee, heir or legal representative of a deceased member for the delivery of possession to the society of land or other immovable property resumed by it for breach of the conditions of assignment or allotment of such land or other immovable property;

11. A co-operative bank provides loans and advances only to its members. On a true and fair construction of the provisions of Section 61(1) considered in the invariable factual setting that loans and advances are provided by a co-operative bank only to its members and the broad definition in the Explanation to Section 61(1) that a dispute includes 'a claim by a society for any debt or other amount due to it from a member, past member, the nominee, heir or legal representative of a deceased member', a dispute regarding recovery of the loans, advances and any debt due to a co-operative bank from its members constitutes (on a textual construction of the provision), a dispute falling within the adjudicatory domain of the Registrar.

12. Chapter X includes provisions for execution of decisions, decrees and orders of the authorities under the Act; while Section 70 incorporates provisions regarding the powers of the Registrar to recover the specified class of amounts, by attachment and sale of property and for execution of orders, Section 71 sets out provisions for recovery of debts. Section 71 (1) which begins with a non obstante provisions enables the Registrar, on the application by a society, the financing bank or federal society, as the case may be, to issue a certificate for recovery of arrears of any sum advanced to any member on the application furnishing a statement of accounts. Such certificate is to be issued after an appropriate enquiry. This mode of recovery by a power vested in the Registrar is without prejudice to any other mode of recovery provided in the Act or in any other law. Section 71 (2) confers suo motu powers of the Registrar to issue a certificate for recovery of amounts where he is satisfied that a society has failed to take action Under Section 71(1). Section 71(3) ordains that a certificate issued by the Registrar under Sub-section (1) or (2) shall be final and conclusive proof of the arrears stated to be due therein and that the certificate shall be executed in the manner specified in Sub-section (2) of Section 70. For reasons alike as in the interpretation of Section 61, Section 71 empowers the Registrar to issue a certificate for recovery of loans, advances or other debts due to a cooperative bank from its member, a certificate, which could be executed in accordance with the provisions of Section 70(2).

Legislative history and analysis of the relevant provisions of the 1993 Act:

13. The 1993 Act was enacted by the Parliament for effectuate more effective and speedier recovery of loans and enforcement of securities charged with Banks and financial institutions. The Statement of Objects and Reasons accompanying the Bill that was eventually passed as 1993 Act, is as under:

'Banks and financial institutions at present experience considerable difficulties in recovering loans and enforcement of securities charged with them. The existing procedure for recovery of debts due to the banks and financial institutions has blocked a significant portion of their funds in unproductive assets, the value of which deteriorates with the passage of time. The committee on the Financial System headed by Shri M. Narasimham has considered the setting up of the Special Tribunals with special powers for adjudication of such matters and speedy recovery as critical to the successful implementation of the financial sector reforms. An urgent need was, therefore, felt to work out a suitable mechanism through which the dues to the banks and financial institutions could be realized without delay. In 1981 a Committee under the Chairmanship of Shri T. Tiwari had examined the legal and other difficulties faced by banks and financial institutions and suggested remedial measures including changes in law. The Tiwari Committee had also suggested setting up of Special Tribunals for recovery of dues of the banks and financial institutions by following a summary procedure. The setting up of Special Tribunals will not only fulfil a long-felt need, but also will be an important step in the implementation of the Report of Narasimham Committee. Whereas on 30th September, 1990 more than fifteen lakhs of cases filed by the Public-sector Banks and about 304 cases filed by the financial institutions were pending in various Courts, recovery of debts involved more than Rs. 5622 crores in dues of Public Sector Banks and about Rs. 391 crores of dues of the financial institutions. The locking up of such huge amount of public money in litigation prevents proper utilization and recycling of the funds for the development of the country.

The Bill seeks to provide for the establishment of Tribunals and Appellate Tribunals for expeditious adjudication and recovery of debts due to banks and financial institutions. Notes on clauses explain in detail the provisions of the Bill'.

14. The Act came into force with effect from 24-06-1993 [Section 1(3)]. The provisions of the Act per se (shall not) apply where the amount of debt due to any Bank or financial institution or to a consortium of banks or financial institutions is less than ten lakh rupees. The Central Government is empowered, by notification, to apply the provisions of the Act, where the debt due is below rupees ten lakhs but not less than rupees one lakh [Section 1(4)]. Section 2(d) defines the expression 'Bank' to mean, inter alia, Banking Company. Banking Company is defined with reference to the definition of the said expression in Section 5(c) of the 1949 Act. In this Act 'debt' is defined to mean any liability (inclusive of interest) which is claimed as due from any person by a Bank or financial institution during the course of any business activity undertaken by the Bank or financial institution, in cash or otherwise, secured or unsecured, or assigned or whether payable under a decree or order of any civil Court or any arbitration award or otherwise or under a mortgage and subsisting on, and legally recoverable on the date of application. Chapter II includes provisions relating to establishment of Debt 'Recovery Tribunal and Appellate Tribunal, composition of Tribunal, establishment of an Appellate Tribunal and its composition, and incidental matters relating to qualifications for appointment of Presiding Officers of the Tribunal and Appellate Tribunal, terms of Office and staff and the like provisions. Chapter III sets out the jurisdiction, powers and authority of Tribunals constituted under the Act. Section 18 enacts a bar on the jurisdiction of any Court or other authority except of the Supreme Court and High Court, in relation to matters consecrated to the jurisdiction of the Tribunals under Section 17 of the Act. Chapter !V sets out the procedure to be followed by the Tribunal in the adjudication of the disputes presented to it. Included in this chapter are provisions relating to appeals to the Appellate Tribunal and other incidental matters. Chapter V sets out provisions relating to recovery of the debt determined by the Tribunal and appeals against the order of Recovery Officer. Chapter VI contains provisions relating to miscellaneous matters. Section 34 enacts overriding effect to the provisions of the Act. Including in this Chapter are provisions relating to rule making powers of the Central Government.

The Andhra Pradesh Mutually Aided Co-operative Societies Act, 1995 [Act 30/1995] (for short 'the 1995 Act'):-

15. Increased State's participation in financing and management of Co-operative Societies substantially eroded the autonomy of co-operative societies and even the cooperative societies for perceiving themselves as administrative arrangement of the State. These shared perceptions were inconsistent with the co-operative principles and the dynamic national goal of deregulation and liberalisation. The State Government therefore enacted this legislation to promote self-reliant and autonomous co-operative societies and to ensure a vibrant co-operative moment in the State. Suffice to notice for the purposes of this lis, that Section 36 of this Act incorporates all the provisions of Chapter X of the 1964 Act subject only to the distinction that all references to the Registrar in the 1964 Act are to be construed as references to the Co-operative Tribunal. Section 37 of this Act entrusts the settlement of disputes by which constitution, management or business of a co-operative society and matters connected therewith and incidental thereto, between a member, past member or a person claiming through a member, past member or a deceased member and the cooperative society, its Board, Director, Office-Bearer or the Liquidator, past and present, to the Co-operative Tribunal for its decision. Section 36-A of this Act incorporates the provisions of Chapter XIII-A of the 1964 Act and makes these provisions applicable to all Co-operative Banks. The explanation to Section 36-A enacts that for the purposes of this Section, Co-operative Bank means a society registered under this Act, which is doing the business of banking as defined in Section 5(1)(b) of the 1949 Act.

Legislative history and analysis of the relevant provisions of the 1949 Act.

16. This Act as originally enacted was titled the 'Banking Companies Act, 1949'. Extensive amendments were introduced in 1965 by Act 23 of 1965 including a change in the title of the Act as the 'Banking Regulation Act, 1949'. Under Section 2 of Provisions of the Act are in addition to and not in derogation of the Companies Act, 1956 or any other law for the time being in force, except as expressly provided in this Act. Section 3 enacts that the provisions of the Act do not apply to;

(a) A Primary Agricultural Credit Society;

(b) A co-operative land mortgage bank; and

(c) Any other co-operative society, except in the manner and to the extent specified in Part V.

17. Act 36 of 1957 repealed Section 56 as initially enacted. Act 23 of 1965 inserted Section 56 into the Act as a separate Part V containing provisions for application of the provisions of the Act to Co-operative Banks.

18. The salient provisions in Section 56 of the Act may be noticed:

(a) The provisions of the Act shall apply to, or in relation to, co-operative societies as they apply to, or in relation to, banking companies.

(b) Throughout the Act, unless the context excludes includes, reference to a 'banking company' shall be construed as reference to a Cooperative Bank [56(a)].

19. Section 5 of the Act is the definitions/ interpretations clause, which defines various expressions set out therein. Section 56(c) incorporates definition of certain expressions like 'Co-operative bank', 'Co-operative Credit Society' and 'Primary Agricultural Credit Society' into Section 5 of the Act. Accordingly 'Co-operative Bank and a Primary Cooperative Bank, a Central Co-operative Bank and a Primary Co-operative Bank. 'Primary Co-operative Bank' means a Co-operative society, other than a primary Agricultural Credit Society, the primary object or principal business of which is transaction of banking business, the paid-up share capital and reserves of which are not less than rupees one lakh and bye-laws of which do not permit admission of any other Co-operative society as a member. The expressions 'Central Cooperative Bank', 'Co-operative Society', 'Primary Rural Credit Society' and 'State Co-operative Bank' have meanings respectively assigned to these expressions in the National Bank for Agricultural and Rural Development Act, 1981 (Act 61 of 1981) [The 1981 Act].

20. Section 56(7) prohibits the use of the words 'Bank' 'banker' or 'Banking' by any Co-operative Society other than a Cooperative Bank and further enjoins that no Co-operative Society shall carry on the business of banking in India unless it uses as part of its name at least one of the above words.

21. By the amendments introduced by Act 23 of 1965 several fiscal and non-fiscal regulatory measures were brought to bear on the functioning of Co-operative Banks including requirements as to minimum paid-up capital and reserves, restrictions on loans and advances, on holding shares in other Co-operative societies and several other supervisory and regulatory powers were conferred on the Reserve Bank of India to ensure effective oversight, monitoring and regulation of Co-operative banks.

22. Section 5(b) defines 'banking' as 'the accepting for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, order or otherwise.'

23. Section 5(c) defines 'banking company' as any company which transacts the business of banking in India. In view of the amendments by Act 23 of 1965, the expression 'banking company' as defined in Section 5(c) must mean any Co-operative Bank, which transacts the business of banking in India, is the contention of the petitioners. Proceeding on this construction they contend that as the debts due to the respondent Cooperative Banks are more than Rs. 10 lakhs in each case, it is the Tribunal constituted under the 1993 Act that has exclusive jurisdiction, power and authority to entertain and decide applications from the respondent Banks for recovery of the debts due to them. Consequently the authorities under the 1964 (State) Act are denuded of any jurisdiction, power and authority, argue the petitioners.

24. The respondent Co-operative Banks and the State Government contest this position. Under Section 56(a) of the 1949 Act, the expression 'Banking Company' is to be construed (throughout the Act) as referring to a Co-operative Bank, unless the context otherwise requires (emphasis). Section 2 of the 1949 Act clarifies that the provisions of this Act are in addition to and not in derogation of any other law. Hence the adjudicatory/ recovery architecture in the 1964 Act is neither eclipsed nor overborne by the provisions of the 1993 Act, is the substance of the respondents' case.

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the 2002 Act) ~ brief analysis:

25. The slow pace of recovery of defaulting loans and mounting levels of non-performing assets, absence of legal provision for facilitating securitisation of financial assets of banks and financial institutions are some of the concerns that are addressed by this legislation by the Parliament, which provides for securitisation and empowering banks and financial institutions to take possession of the securities and to sell them without the intervention of the Court. This legislation enables banks and financial institutions to realise long-term assets, manage problem of liquidity, asset liability mismatches and improve recovery by exercising powers to take possession of securities, sell them and reduce non-performing assets by adopting measures for recovery or reconstruction.

26. Section 2(c) defines the expression 'bank' to mean, inter alia, 'a banking company' and 'a banking company' is defined with reference to the meaning assigned to it in Clause (c) of Section 5 of the Banking Regulation Act, 1949 [Section 2(d)]. Section 2(f) defines 'borrower' to mean a person who has been granted financial assistance by any bank or financial institution or who has given any guarantee or created any mortgage or pledge as security for the financial assistance granted by any bank or financial institution and includes a person who becomes borrower of a securitisation company or reconstruction company consequent upon acquisition by it of any rights or interest of any bank or financial institution in relation to such financial assistance. [Section 2(f)].

27. Detailed provisions have been made in this Act for registration and regulation of securitisation companies or reconstruction companies by the Reserve Bank of India; for facilitating securitisation of financial assets of banks and financial institutions with or without the benefit of underlying securities; facilitating reconstruction of financial assets acquired by exercising powers of enforcement of securities or change of management or other powers which are conferred on banks and financial institutions, empowering banks and financial institutions to take possession of securities given for financial assistance and sell or lease the same or take over management in the event of default; and provisions for appeal against the action of any bank or financial institution to the concerned Debts Recovery Tribunal and for further appeal to the Debts Recovery Appellate Tribunal. Section 34 bars the jurisdiction of Civil Court in respect of any matter over which the Debts Recovery Tribunal or the Appellate Tribunal has jurisdiction and Section 35 confers overriding effect to the provisions of this Act over any other law.

28. By S.O. 105 (E) dated 28-01-2003, the Central Government specified 'Cooperative Banks' as defined in Clause (cci) of Section 5 of the Banking Regulation Act, 1949, as a Bank within the meaning of Section 2(c) of this Act. In view of the above notification, the respondents contend, the expression 'bank' either in the 2002 Act or the 1993 Act does not per se comprehend a Co-operative Bank. They contend that realisation of the debts due to Co-operative Banks or the magnitude and problem of non-performing assets of Co-operative Banks were not the concerns to address which the 1993 and 2002 Acts were passed. The Central Government has similarly understood the provisions of the 2000 Act, an administrative/ executive construction that is eminently persuasive and emulative, urge the respondent-Banks.

The case of the petitioners:-

(A) 'Banking' is within the exclusive legislative field of the Union - Article 246 read with Entry 45, List I of the Seventh Schedule.

(B) Each of the respondent-banks is a 'Co-operative Bank' and 'Banking Company' within the meaning of the 1949 Act, including Section 5(c) of the said Act.

(C) The debt due from each of the petitioners is in excess of Rs. 10 lakhs.

(D) In view of the definition of the expressions 'bank', 'banking company' and 'debt' in Section 2(d), (e) and (g) of the 1993 Act, every respondent-Bank a co-operative bank, is a 'banking company' and therefore a 'bank' and the debt due from every petitioner is a debt recoverable only under the provisions of the 1993 Act.

(E) The substantive and procedural prescriptions for recovery of the debt due from each of the petitioners is confined to the exclusive jurisdiction, power and authority of the Tribunal constituted under the 1993 Act and the jurisdiction, power or authority of every other court or other authority (including the Registrar-exercising powers under the 1964 Act) is excluded. The exclusive jurisdiction of the Tribunal constituted under the 1993 Act wholly eclipses the jurisdiction, power and authority of the Registrar or other authority under the 1964 Act [Section 1(4), 17, 18 and 34 of 1993 Act].

(F) Every claim preferred by a respondent-bank, cognisance taken by the Registrar of such a claim other than Under Section 61 or 71 of the 1964 Act, or an award passed, a certificate issued or execution proceedings initiated or processed, is patently devoid of jurisdiction and any award or certificate thus issued is non est and unenforceable.

In addition to the above specific positions, on behalf of the petitioners it is generally contended that the entire spectrum of 'banking', even when banking is pursued by a co-operative society, falls within the exclusive legislative field of the Union and is prohibited territory for State Legislation.

The case of the respondents:-

(A) Incorporation, regulation and winding up of co-operative societies are excluded matters from the Union Legislative field [Entry 43, List 1, Seventh Schedule]. Incorporation, regulation and winding-up of cooperative societies, is an area within the exclusive State Legislative Field [Entry 32, List II]. As a broad interpretation must be given to the fields of legislation, regulation of all aspects of co-operative societies including regulation of banking activities of co-operative societies must be considered as eminently within, the State Legislative field. Accordingly the Union legislative field of 'banking' - Entry 45 List I must be harmoniously construed, as excluding regulation of banking when banking activity is carried on by co-operative societies. This is the only way to harmoniously interpret the relevant entries in Lists I and II.

(B) The provisions of the 1949 Act are in addition to and not in derogation of any other law for the time being in force (Section 2 of the 1949 Act). The 1964 Act is also a law for the time being in force. Therefore, the provisions of the 1949 Act do not exclude the substantive and procedural provisions of the 1964 Act pertaining to recovery of debt due to a co-operative bank.

(C) References to a 'banking company' shall be construed as references to a 'co-operative bank', throughout the 1949 Act subject to a contrary context [Section 56(a)]. Therefore the provisions of the 1949 Act do not prohibit the recovery of debts due to a cooperative bank by recourse to the provisions of the 1964 Act. Under the 1993 Act 'bank' means 'banking company' and 'banking company' is defined with reference to the meaning assigned to this expression in Section 5(c) of the 1949 Act. Since the 1949 Act does not exclude or eclipse the provisions of the 1964 Act and the provisions of the 1964 Act can operate alongside the provisions of the 1949 Act (Section 2 of the 1949 Act) the impugned recovery proceedings, under the provisions of the 1964 Act are competent, valid and enforceable.

(D) Section 3 of the 1949 Act excludes application of the provisions of this Act to a Primary Agricultural Credit Society (PACS); a Co-operative Land Mortgage Bank (LMB) and any other co-operative society, except in the manner and to the extent specified in Part V. By the amendment to the 1949 Act (by Act 23/65), Part V was incorporated. By Section 56(c) Clause (cci) was inserted in Section 5 of the Act; whereunder 'co-operative bank' is defined to mean a State Co-operative Bank, a Central Co-operative Bank and a Primary Co-operative Bank. Clause (ccvii) of Section 5 of the 1949 Act defines the expression 'State Co-operative Bank' and 'Central Cooperative Bank' with reference to the meanings assigned to these expressions in the 1981 Act. 'State Co-operative Bank' and 'Central Cooperative Bank' have been defined in Clauses (u) and (d) respectively, in Section 2 of the 1981 Act. None of the respondent-banks fall within the definition of the expression 'State Co-operative Bank' or 'Central Cooperative Bank'. 'Primary Cooperative Bank' is defined in Clause (ccv) of Section 5 of the 1949 Act to mean a co-operative society other than a Primary Agricultural Credit Society, (a) the primary object or principal business of which is the transaction of banking business; and (b) the paid up share capital and reserves of which are less than One Lakh Rupees. As the paid up share capital of each of the respondent-banks is in excess of Rs. one lakh, none of the respondent Co-operative Banks constitute a 'Co-operative Bank' within the meaning of the expression in the 1949 Act. The provisions of the 1949 Act are thus inapplicable and consequently the respondent-banks are not 'Bank' or 'Banking Company' to which the provisions of the 1993 Act apply. The Tribunal constituted under the 1993 Act is incompetent to adjudicate upon the claims of the respondent-banks for recovery of debts due to them from the petitioners, notwithstanding that the value of each of the debts due is in excess of Rs. 10 lakhs. It is only the Registrar and the authorities under the 1964 Act that are empowered and have jurisdiction to try and adjudicate upon such disputes.

(E) The 1995 Act came into force on 1-6-1995. Section 36 of this Act incorporates the provisions of Chapter X of the 1964 Act. Section 37 of this Act consecrates to the Co-operative Tribunal jurisdiction, power and authority to adjudicate upon any dispute touching the constitution, management or business of the co-operative society between a member, a past member or a person claiming through a member, a past member or deceased member and the cooperative society, its Board, Director, Office-Bearer or Liquidator, past and present. The 1995 Act being subsequent to both the 1949 Act and the 1993 Act, its provisions prevail over the provisions of these earlier enactments. We do not propose to expend time on this contention. The principal issue that is presented for determination is as to the legislative competence of the Union or a State within the constitutional scheme of distribution of legislative powers. If the State Legislature is incompetent since the relevant field of legislation belongs exclusively to the Union, the discourse as to an earlier/later State enactment (prevailing over a Union Legislation) is non-sequitor.

(F) Recovery of the debt due to bank is not a matter that integrally falls within the scope of the Legislative field 'Banking' in Entry 45 of List I. It falls within the wider entry '... Regulation ... of Co-operative Societies' - Entry 32 of List II.

(G) As the petitioners voluntarily submitted to the jurisdiction of the Registrar (exercising powers under Section 61 or 71 of the 1964 Act), they are estopped from questioning such jurisdiction or the orders passed by him in exercise of the jurisdiction.

The issues for determination:

(A) Are the respondent banks, Cooperative Banks and Banking companies within the meaning of these expressions as defined in the 1949 and 1993 Acts?

(B) Do the debts due from the petitioners to the respondent-Banks constitute 'debt' within the meaning of the expression as defined in Section 2(9) of the 1993 Act; are the respondent-Banks 'Bank' within the meaning of the said Act?

(C) Do the Tribunals constituted under the 1993 Act have exclusive jurisdiction and adjudicatory domain to entertain and decide applications from the respondent-Banks for recovery of the debts due from the petitioners?

(D) Are the proceedings initiated and/or pending, the awards passed or the certificates issued under the provisions of the 1964 Act, (for recovery of the debts due from the petitioners to the respondent-Banks), incompetent and unenforceable?

(E) Is the regulation of banking business (when conducted or pursued even by a Co-operative society) within the exclusive legislative field of the Union or is it a matter falling within the exclusive State legislative field?

(F) Are the provisions of the 1964 Act (for recovery of debts due from members to Co-operative Banks), though facially falling within and trenching upon the exclusive Union Legislative field ('banking' in Entry-45, List-1), nevertheless valid since these provisions are necessary and incidental to the exercise of the State legislative field-regulation of Co-operative Societies (Entry-32, List 2)?

(G) Are the petitioners estopped from litigating by challenging the proceedings initiated by the respondent-Banks against them, since they voluntarily submitted and without demur, to the exercise of jurisdiction by the Registrar under the 1964 Act and thereby acquiesced in the proceedings of the Registrar?

(H) Is the Central Government notification in S.O. 105 (E) dated 28-01-2003 (issued under the 2002 Act), a reliable and persuasive guide to the construction of the expression 'Bank' and 'Banking Company' in the 1949 and the 1993, Acts?

Analysis of the issues:

29. Issues E & F invite interpretation of certain entries in the Seventh Schedule of the Constitution and an analysis as to the meaning, content and contours of the fields of legislation comprised in such entries. Incidental to such an exercise, however briefly or in passing, is the task of elucidating the constitutional purposes and concepts underlying the apportionment of the legislative power between the Union and the States, in our constitutional scheme.

30. A decision on constitutional principles, in particular on questions involving apportionment of governmental and legislative power among the component units in a federal Constitution, is ever a delicate and often a perilous task that should be avoided if not paramount to decision in a lis. Frankfurtur, J. in Youngstown Sheet & Tube Company v. Sawyer, 1996 L.Ed. 1153 stated this principle of judicial restraint in felicitous phrase 'A basic rule is the duty of the Court not to pass on a constitutional issue at all, however narrowly it may be confined, if the case may, as a matter of intellectual honesty be decided without even considering delicate problems of power under the Constitution. It ought to be, but apparently is not a matter of common understanding that clashes between the different branches of Government should be avoided if a legal ground of less explosive potentialities is properly available. Constitutional adjudications are apt by exposing differences to exacerbate them'. In Basheshar Nath v. Commissioner of Income-tax, Delhi and Rajasthan and Anr., : [1959]35ITR190(SC) S.R. Das C.J. in a majority opinion declined to pronounce upon the issue whether breach of fundamental rights, other than those flowing from Article 14, could be waived. Das, CJ. held:

'For disposing of this appeal it is not necessary for us to consider whether any of the other fundamental rights enshrined in Part III of our Constitution can or cannot be waived. We take view that this Court should not make any pronouncement of any question, which is not strictly necessary for the disposal of the particular case before it. We, therefore, confine our attention to Article 14 and proceed to discuss the question on that footing.'

We therefore proceed to consider the other issues in the first instance.

Analysis of issues A to D

31. Issues A to D involve integrated and overlapping analyses of provisions of several enactments. These issues generically involve the inquiry whether the debts due to the respondent-Banks from the petitioners are recoverable only in accordance with the provisions of the 1993 Act and whether the several stages of proceedings initiated or orders passed under the 1964 Act against the petitioners are valid and enforceable?

31-A. It must be noticed that none of the respondent-Banks have challenged the provisions of the 1949 Act or the 1993 Act. It is their limited contention that the provisions of the 1993 Act do not cover or comprehend the recovery of debts due to the Co-operative banks and that the respondent-Banks are not Co-operative Banks within the meaning of the provisions of the 1949 Act and therefore are also excluded from the operation of the provisions of the 1993 Act.

31-B. The Banking Companies Act, 1949 was passed with a view to consolidate and amend the law relating to Banking Companies. The Amendment Act 23 of 1965 known as the Banking Laws (Application to Co-operative Societies) Act, 1965 made applicable the Banking Companies Act, 1949, with certain modifications, to a defined and specified class of Co-operative Societies carrying on the business of banking. The nomenclature of the Act was also amended to read--The Banking Regulation Act, 1949 -in this judgment referred to as the 1949 Act. The 1949 Act applies to three (3) main classes of Banks.

(a) Banking Companies that are not nationalised;

(b) Nationalised Banks (including the State Bank of India, other nationalised Banks, regional rural Banks and any subsidiary banks); and

(c) Certain classes of Co-operative Banks.

32. All the provisions of the 1949 Act except those specified in Section 56 apply to all non-nationalised banking companies. Only some of the provisions apply to nationalised banks. Insofar as the Co-operative Banks are concerned on an integrated analysis of the provisions of the Section 3 and Section 56, the Act applies to all Co-operative Banks the paid-up share capital and reserves of which are of the value of Rs. 1 lakh above including State Co-operative Banks, Central Co-operative Banks and Primary non-agricultural credit societies including Urban Co-operative Banks that have banking as a principal business and paid-up capital and reserves of a nominal value of Rs. 1 lakh or more. Excluded from the provisions of the Act are:

(a) Primary agricultural credit societies irrespective of the value of their paid-up capital and reserves;

(b) Non-agricultural primary credit societies with paid-up capital and reserves of the value of less than Rs. 1 lakh, even though their primary object or principal business is banking and they may be accepting deposits from non-members.

(c) Co-operative credit societies, the principal business of which is not banking but is providing financial help to its members and which do not accept deposits from non-members; and

(d) Co-operative societies that do not carry on any banking business.

33. At this stage of analysis, we may dispose of a contention projected by Sri Ashok Anand Kumar, learned counsel appearing for the Vasavi Co-operative Urban Bank Limited and the Prudential Co-operative Urban Bank Limited. This contention has been briefly indicated in Sl. No. (D) of 'case of the respondents' supra in this judgment. Sri Ashok Anand Kumar learned counsel for the above Co-operative Banks has contended that where the paid-up share capital and reserves is less than Rs. 1 lakh, the Cooperative Society even if doing banking business is not a primary Co-operative Bank.

34. This contention is based on a typographical error in the provisions of the 1949 Act as reproduced in a commercial publication. Amending Act 23 of 1965 inserted Part V into the 1949 Act including in this part Section 56. Clause (c) of Section 56 incorporates several amendments to Section 5 of the Act. Clause (ccv) defines 'Primary Co-operative Banks'. Sub-clause (2) of the above clause sets out the fiscal parameters that define the characteristic of a 'Primary Co-operative Bank'. Accordingly it is prescribed that to constitute a Primary Co-operative Bank the paid-up share capital and reserves should be not less than Rs. 1 lakh (emphasis). In a quite a few commercial publications in reproducing the 1949 Act, the expression not was omitted which led to an error, that is the basis of this contention. Nothing more need be stated on this contention.

35. The core enquiry relevant to the resolution of issues A to D is whether the respondent-Banks are a 'Co-operative Bank' within the meaning of the provisions of the 1949 Act?

36. The amending Act 23 of 1965 added certain definitions to the 1949 Act. The Reserve Bank of India Act, 1934 contained certain definitions pertaining to Co-operative Societies pursuing banking business. Act 23 of 1965 introduced wide ranging amendments to the 1949 Act incorporating a legal architecture for oversight, supervision and regulation of specified classes of Co-operative Societies. To effectuate this purpose, Act 23 of 1965 incorporated certain definitions into the 1949 Act. The 1981 Act omitted certain clauses from the Reserve Bank of India Act, 1934 including those pertaining to Cooperative Societies pursuing banking business and included certain definitions in the 1981 Act itself. The 1981 Act defines 'Cooperative Society', 'Central Co-operative Bank', 'Primary Rural Credit Society' and 'State Co-operative Bank' in Clauses (f), (d), (n), (u) of Section 2. The expressions 'Cooperative Society', Central Co-operative Bank', 'Primary Rural Credit Society', 'State Co-operative Bank' are, in the 1949 Act assigned the same meanings as respectively assigned to them in the 1981 Act (vide Section 5(ccvii) of the 1949 Act). It is not the case of the respondent-Banks that these Banks are 'Central Co-operative Bank' or 'State Co-operative Bank' or even 'Primary Rural Credit Society' as defined in the 1949 Act.

37. Section 5(cciv) of the 1949 Act defines a 'Primary Agricultural Credit Society' to mean a Co-operative society, the primary object or principal business of which is to provide financial accommodation to its members for agricultural purposes or for purposes connected with agricultural activities including marketing of crops and the bye-laws of which do not permit admission of any other Co-operative Society as a member except that admission of a Co-operative Bank as a member is permitted where such Cooperative bank subscribes to the share capital of such Co-operative Society out of the funds provided by the State Government for the purpose.

38. The respondent-Banks are not and do not even claim to be a Primary Agricultural Credit Society. They admit to being 'Cooperative Society' within the meaning of Section 2(f) of the 1981 Act. They are thus a Co-operative Society within the meaning of the provisions of the 1949 Act as well. As we have already noticed, Section 5(cci) defines a 'Co-operative Bank' as a State Co-operative Bank, a Central Co-operative Bank and a Primary Co-operative Bank. We have concluded that the respondent-Banks are neither a Central Co-operative Bank nor a State Co-operative Bank. Are they a Primary Co-operative bank is the question? Earlier in this judgment on a broad analysis of the relevant provisions of the 1949 Act, we noticed that a primary Co-operative Bank is defined as a Co-operative Society other than the Primary Agricultural Credit Society, the primary object or principal business of which is the transaction of banking business and whose paid-up share capital or reserves are not less than Rs. 1 lakh (Section 5(ccv) of the 1949 Act).

39. Admittedly, the paid-up share capital and reserves of the respondent-Banks are in excess of Rs. 1 lakh; they are Co-operative Societies whose primary object and principal business is transaction of banking business and they do not come within the definition of a primary Agricultural Credit Society. The respondent-Banks thus are 'Co-operative Banks' as defined in Section 5(cci) of the 1949 Act.

40. Section 56 of the 1949 Act provides that the provisions of the Act, as in force for the time being, shall apply to, or in relation to, co-operative societies as they apply to, or in relation to, banking companies subject to the modifications set out in Section 56 and that references to a 'banking company' or 'the company' or 'such company' in the Act shall be construed as references to a Co-operative Bank. Section 56 enacts modifications to several provisions of the 1949 Act in their application to a Co-operative Bank. Therefore where a Co-operative Bank as defined in the 1949 Act comes up for consideration as to the applicability of the provisions of this Act, its provisions, must be construed as modified by the provisions of Section 56.

41. Section 56(f) of the 1949 Act substitutes Section 7 of the Act in its application to a Co-operative bank. As amended Section 7 of the Act ordains that no Co-operative Society other than a Cooperative Bank shall use as part of its name or in connection with its business any of the words 'bank' 'banker' or 'banking' and that no Co-operative society shall carry on the business of banking in India unless it uses as part of its name at least one of such words. Sub-section (2) of Section 7 provides that the aforesaid requirement and prohibition (in Section 7(1)) does not apply to certain classes of Co-operative Societies such as; primary credit society, a co-operative society formed for the protection of the mutual interest of Cooperative Banks or Co-operative Land Mortgage Banks, or any co-operative society not being a Primary Credit Society, formed by the employees of a banking company or the State Bank of India or corresponding new bank or a subsidiary bank of such banking company, State Bank of India or a corresponding new bank, or a Co-operative Bank or a Primary Credit Society or a Cooperative Land Mortgage Bank. The respondent-Banks do not come within the exceptions to the operation of the substituted Section 7(1) of the 1949 Act. Such is not their case either. Admittedly they are a Cooperative society carrying on banking business and also use of word 'bank' as part of their respective names and in connection with their respective business. In the aforesaid uncontested factual matrix and unambiguous statutory context it is futile for the respondents-banks to contend that they are not a 'Cooperative Bank' within the meaning of the expression in the 1949 Act.

42. In view of the provisions of Section 56(a) of the 1949 Act all references to a banking company (including in Section 5(c) of the Act) are required to be construed as reference to a Co-operative Bank wherever a Cooperative society that is a Co-operative Bank, as defined in the 1949 Act, falls for consideration. Section 5(b) of the 1949 Act defines 'banking' to mean, 'accepting for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, order or otherwise', Since, in view of the amendment to the 1949 Act by Act 23 of 1965, the expression 'banking company' must be construed as reference to a Co-operative Bank, the respondent-Banks are a Co-operative Bank within the text and structure of the 1949 Act. They are pursuing the business of 'banking' as the said expression is defined in Section 5(b); the respondent-banks use the word 'bank' as part of their respective names and in connection with their respective banking business; the respondent Banks do not fall within the excepted class of co-operative societies under the amended Section 7(2) of the Act.

43. In view of the plural factual circumstances and characteristics mentioned above, in the considered view of this Court, the respondent-banks must be held to be 'bank' within the meaning of the said expression in Section 2(d) of the 1993 Act. Admittedly the amount of debt due from each of the petitioners to the respondent-banks is Rs. 10 lakhs or more. The claims of the respondent-banks preferred before the authorities under the 1964 Act are also in respect of debts due from the petitioners in amount of Rs. 10 lakhs or more in each case. In the circumstances in view of the provisions of Sections 1(4), 2(d), (e) and (g), 17, 18 and 34 of the 1993 Act, it is the Tribunals constituted under the provisions of the 1993 Act that have the exclusive jurisdiction, power and authority to entertain and decide applications from the respondent-banks for recovery of debts due to them from the petitioners. The jurisdiction and power of every Court or other authority including the Registrar under the 1964 Act to entertain and decide applications from the respondent-banks for recovery of debts due to them from the petitioners, is wholly and comprehensively excluded.

44. On behalf of the respondent-Banks it is contended, tentatively by some of the representing counsel but emphatically by others that inasmuch as Section 2(e) of the 1993 Act defines the expression 'Banking Company' with reference to its definition in Section 5(c) of the 1949 Act and without clearly enacting that the said expression shall have the meaning assigned to it in Section 5(c) of the 1949 Act as amended by Act 23 of 1965 or read with Section 56, the provisions of the 1993 Act should properly be construed as confined to a Banking Company which is a 'Company' as defined in Section 5(d) of the 1949 Act, meaning a company as defined in Section 3 of the Companies Act, 1956 (the 1956 Act) and including a foreign company within the meaning of Section 591 of the 1956 Act. Put differently, the contention of the respondent-Banks is that as 'Bank' and 'Banking Company' are not defined in the 1993 Act with reference to the amended definitions of these expressions in the 1949 Act, (by the amendments introduced by Act 23 of 1965), Co-operative Banks must be considered as excluded from the purview of the provisions of the 1993 Act.

45. We emphatically reject the above contention of the respondent-Banks. As on the date of enactment of the 1993 Act the 1949 Act was already amended by Act 23 of 1965 and Section 56 of the 1949 Act ordains that the expressions 'Banking Company' or the Company shall be construed as references to a Co-operative Bank, throughout the 1949 Act. Absent dialectic, heuristic or other overriding public mischief concerns of compulsions, the judicial branch could not legitimately conclude that the Legislature (Parliament) while enacting the 1993 Act was oblivious to the different and contextual shades of meaning assigned to the expression 'Banking Company' under the 1949 Act including as amended by Act 23 of 1965. In our considered view, by Act 23 of 1965, the Union Legislature has included a Co-operative Bank within the same class as a Company registered under the Companies Act pursuing the business of banking, for the purposes of regulation of the banking business, by the provisions of the Act. This legislative purpose of regulating the banking business could not have been eschewed by the Parliament while enacting the 1993 Act for providing a speedier and efficacious adjudicatory mechanism for recovery of the debts due to banks and financial institutions.

46. It is a well settled principles of statutory interpretation that: 'Where an Act or other instrument refers to a particular enactment, the reference, unless the contrary intention appears, is a reference to that enactment as amended, and includes a reference thereto as extended or applied, by or under any other enactment, including any other provision of that Act or instrument.'--See Francis Bennion-Statutory Interpretation Third Edition-Section 83 at page 219.

47. As pointed out in Principles of Statutory Interpretation by Justice G.P. Singh (Eighth Edition), incorporation of an earlier Act into a later Act is a legislative device adopted for the sake of convenience in order to avoid vorbatic reproduction of the provisions of the earlier Act into the later. In Re. Woods, Estate, Exparte Works and Buildings Commissioner (1986) 31 Ch.D., 607 Lord Esher M.R. spelt out the effect of legislation by incorporation, thus:

'If a subsequent Act brings into itself by a reference some of the clauses of a former Act, the legal effect of that, as has often been held, is to write those sections into the Act as if they had been actually written in it with pen, or printed in it.'

48. Ordinarily if an Act is incorporated into a later Act the intention is to incorporate the earlier Act with all the amendments made to it up to the date of incorporation. Sikri, J, speaking for a Constitution Bench in State of Maharashtra v. Madhavrao Damodar Patil and Anr., AIR 958 SC 1395 applied this principle and concluded that by including the Maharashtra State Agricultural Lands (Ceiling on Holdings) Act, 1961 in the Ninth Schedule of the Constitution, the said Act as amended by Maharashtra Act XIII of 1962 must be deemed to have been included and not merely the original unamended Act of 1961. In Portsmouth Corporation v. Smith, (1885) 10 AC 364 Lord Blackburn spelt out the principle of construction when only particular sections of an earlier enactment are incorporated into a later enactment, thus:

'When a single section of an Act of Parliament is introduced into another Act, I think, it must be read in the sense it bore in the original Act from which it was taken, and that consequently it is perfectly legitimate to refer to all the rest of that Act in order to ascertain what the Section meant, though those other Sections are not incorporated in the new Act.'

49. The above principle, expounded by Lord Blackburn was quoted with approval by the Supreme Court in Surana Steels Pvt. Ltd. v. Dy. Commissioner of Income-Tax, : [1999]237ITR777(SC) .

50. Guided by the established principles of statutory interpretation, we hold that the expression Banking Company in Section 2(e) of the 1993 Act means a banking company as defined in Section 5(c) of the 1949 Act including as the said expression is contextually required to be construed by the provisions of Section 56 of the later Act. Thus a Co-operative Bank is a Banking Company and a Bank within the meaning of the provisions of the 1993 Act. The contrary interpretation presented for the consideration of this Bench by the respondent-Banks is misconceived, unacceptable and is accordingly rejected. Issues A to D are accordingly disposed of.

Analysis of issue-G

51. On this issue, the respondent-Banks contend that as some of the petitioners had participated in the award, certificate or execution proceedings and at any rate none of them had assailed or impeached the jurisdiction and powers of the Registrar under the 1964 Act, they must be considered as having acquiesced in the exercise of jurisdiction and powers by the Registrar and are thus estopped from maintaining the writ petitions.

52. This is a contention that is stated to be rejected.

53. Factually some of the petitioners are seen to have pleaded before the Registrar that he has no jurisdiction to entertain the claims of the respondent-Banks. The challenge by the petitioners in this batch of cases is to the validity of claim or execution proceedings initiated by the respondent-Banks and the awards or certificates issued by the Registrar, in purported exercise of powers under the 1964 Act. The issue whether a State Legislature was incompetent to legislate with regard to recovery of debts due to Co-operative banks and the issue whether in view of the provisions of the 1993 Act, the provisions of the 1964 Act empowering the Registrar to initiate proceedings or pass awards or grant certificates for recovery of debts are invalid are issues which are not within the adjudicative domain of the Registrar, a creature of the 1964 Act. These issues go to the root of the Registrar's jurisdiction and also involve pure questions of law and jurisdiction. No decision of the Registrar could be conclusive on such issues nor can a decision of the Registrar be declared final and irreviewable by this Court on the jejune grounds of waiver or estoppel--Chief Justice of Andhra Pradesh v. Dixitulu, : [1979]1SCR26 ; L. Chandrakumar v. Union of India, : [1997]228ITR725(SC) .

54. It is also a settled principle of law that a writ of Prohibition or Certiorari would issue if a Court or Tribunal proceeds to act under a law which is ultra vires or unconstitutional, acts in excess of its jurisdiction or even on an erroneous assumption of jurisdictional facts. If the jurisdiction, power or authority of the Registrar is non-existent either on account of an exclusive jurisdiction conferred on a Tribunal under the 1993 Act or as the provisions of the 1964 Act insofar as they provide for adjudicatory mechanisms for recovery of debts due to Co-operative Banks are incompetent (on the grounds of legislative competence), it cannot be contended that the determination by the Registrar or a cognisance by him of the claim preferred by a Co-operative Bank for recovery of debts due to it, is conclusive and irreviewable by this Court in exercise of its constitutional jurisdiction and complementary obligation under Article 226 of the Constitution - Govinda Menon v. Union of India, : (1967)IILLJ219SC ; S.T.O. v. Budh Prakash, : [1955]1SCR243 ; Bengal Immunity Co. Ltd. v. State of Bihar, : [1955]2SCR603 . In any event the petitioners assail the initiation of claims proceedings, the pending proceedings, the awards passed, the certificates issued or the execution proceedings initiated pursuant to awards or certificates, all within the supervisory jurisdiction of this Court and amenable to judicial review by issue of writs or orders in the nature of prohibition, certiorari, or mandamus as the case may be.

55. On the aforesaid analysis, we reject this contention urged on behalf of the respondent-Banks and hold issu-G in favour of the petitioners.

Analysis of issue-H

56. The 2002 Act defines the expression Bank as meaning inter alia Banking Company. The expression Banking Company is defined in this Act as having the same meaning as assigned to it in Section 5(c) of 1949 Act. The expressions 'Bank' and 'Banking Company' have been defined in 1993 Act substantially as in the 2002 Act. Section 2(c) of 2002 Act defines the expression 'Bank' as meaning, apart from a banking company, such other bank which the Central Government may, by notification, specify for the purposes of this Act.

57. The Central Government by a notification-dated 28-1 -2003 in S.O. 105(E), has specified a 'Co-operative Bank' as defined in Section 5(cci) of the 1949 Act, as a 'Bank'. The contention of the respondent-Banks, on the basis of the above notification is that as the Central Government must be presumed to have understood that the expression 'banking company' in the 2002 Act does not include a Co-operative Bank (an inference to be drawn from the notification dated 28-1 -03) the expression 'bank' or 'banking company' in the 1993 Act also must be construed as excluding a Co-operative Bank. The executive construction of the expression 'bank' and 'banking company' in the 2002 Act must be applied to the interpretation of the said expressions in the 1993 Act also is the case of the respondent-banks.

58. One of the recognized aids to statutory construction is known as the 'Doctrine of Executive Construction'. The principle underlying this doctrine is that a uniform and consistent departmental practice arising out of the construction placed upon an ambiguous statute by the highest executive officers at a time contemporaneous to the enactment and continuing over a considerable period of time is an admissible aid to the proper construction of the statute by the Court and such construction should not be disregarded except for cogent reasons. This aid to construction of statutes is a relatively unreliable aid to construction of statutes. The appropriateness of its application depends on variable and plural factors, including the duration of time for which the executive construction is followed, the nature and magnitude of rights affected by the construction, the injustice or public mischief resulting from its departure and the approval of such contraction as received in precedents or subsequent legislations. This aid to construction of statute has been applied in a few cases - State of Nagaland v. Ratan Singh, AIR 1957 SC 212; National and Grindlays Bank v. Municipal Corporation, Greater Bombay, : [1969]3SCR565 ; N. Suresh Nathan v. Union of India, : AIR1992SC564 . Similarly documents issued by the appropriate Government simultaneously with a notification under the statute were considered as contemporaneous expositions [contemporanea expositio] of the notification - Desh Bandhu Gupta & Co. v. Delhi Stock Exchange Association Ltd., : [1979]3SCR373 . While circulars issued under statutory power by agencies such as the Central Board of Excise and Customs, Central Board of Revenue or the Central Board of Direct Taxes have been treated as admissable aids to construction, instruments and directions issued by Revenue Department for enforcement of taxing statute have not been considered as an admissible aid - CIT Madras v. K. Srinivasan, : [1953]32ITR87(SC) ; Navnitlal C. Javeri v. K.K. Sen, : [1965]56ITR198(SC) ; Central Board of Direct Taxes v. Oberoi Hotel (India) Pvt. Ltd., : [1998]231ITR148(SC) ; The Paper Products Ltd. v. Commissioner of Central Excise, : 1999ECR284(SC) . The Supreme Court in Hindustan Aeronautics Ltd. v. Commissioner of Income, : [2000]243ITR808(SC) . Tax declined to countenance departmental circulars contrary to the law declared by the High Court or the Supreme Court as admissible aids to construction of a statute or statutory notification (applying the principle of administrative construction). It must also be noticed that sometimes as in the case of statutes administrative agencies also issue circulars or clarifications, ex abudanti cautella. The mere fact that the Central Government notified a cooperative bank as defined in Section 5(cci) of 1949 Act as a 'bank' within the meaning of the said expression in Section 2(c) of the 2002 Act does not permit the singular inference that the expression 'bank' as defined in the 2002 Act along with the expression 'banking company' as defined therein, does not include a Co-operative Bank. The notification could have been issued by the Central Government by way of abundant caution to foreclose any doubt as to whether the expression 'bank' in the 2002 Act includes a cooperative bank. In any event an administrative construction, even if it be so, of an expression in the 2002 Act cannot be a reliable guidance to the construction of a similar expressions in the 1993 Act. Further, for reasons elaborately considered and recorded earlier in this judgment we have concluded that cooperative bank falls within the expression 'bank' in the 1993 Act. In the circumstances we are not inclined to treat the Central Government notification dated 28-1-2003 as a compelling guide to the construction of the provisions of the 1993 Act or to hold that the expression 'bank' in the said Act excludes a 'co-operative Bank'.

59. We accordingly hold issue-H against the respondent-banks.

Analysis of Issues E and F:

60. In the analysis of issues A to D supra, we have considered whether the provisions of the 1993 Act exclude the adjudicative jurisdiction and domain of the Registrar under the 1964 Act. We have concluded that a Tribunal constituted under the 1993 Act has exclusive jurisdiction to entertain and decide applications from a Co-operative Bank for recovery of debts due wherever the amount of debt due is Rs. 10 lakhs or above. We have also concluded that claim of a Co-operative Bank and the proceedings consequent on the determination of such a claim, which falls within the jurisdiction and authority of a Tribunal under the 1993 Act cannot be entertained or determined by the authorities under the 1964 Act. The analysis and the conclusions above are on the basis of interpretation of the provisions of the relevant statutes.

61. In issues E and F we are called upon to determine whether adjudication of disputes relating to debts due to a Co-operative Bank constitute matters incidental and ancillary to the regulation of Co-operative Societies and therefore within the permissible spectrum of the State legislative field (Entry-32-List-II). On behalf of the respondent-Banks, it is contended that these powers conferred on the Registrar under the provisions of the 1964 Act eminently fall within the legislative field of regulation of Co-operative Societies (an exclusive State subject). It is alternatively contended that even if the aspect of recovery of debts due to a Co-operative bank falls within the field of 'banking' (an exclusive federal subject), the relevant provisions of the 1964 Act are nevertheless competent as they have but a marginal and incidental impact on a matter/aspect falling within the exclusive Union legislative field.

62. According to the respondent-Banks, the dominant feature and the pith and substance of the 1964 Act being incorporation, regulation and winding up of Co-operative societies; banking being a business that could legitimately be pursued by a Co-operative society; Co-operative Banks being permitted to lend amounts only to its members; the recovery of debts due to a Co-operative Bank from its members constitutes a species of activity belonging to the genus disputes touching the management or business of a Cooperative society, between a member and the society and is therefore eminently a matter area falling within the State legislative field.

63. On behalf of the respondent-bank, it is alternatively contended that the legislative field of 'banking' in Entry 45 of List-I excludes banking by Co-operative societies. The syllogism of the respondent-Banks in this respect is 'incorporation, regulation and winding-up of Co-operative societies' is excluded from the legislative field enumerated in Entry-43 of List-I; Entry-44 of this List enumerates the legislative field of incorporation, regulation and winding up of corporations, whether trading or not, with objects not confined to one State but not including Universities. Entry-44 of List-I thus enumerates the legislative field of incorporation, regulation and winding up of multi-State corporations, excluding Universities. The legislative field 'banking' enumerated in Entry-45 of List-I must therefore be construed as one in relation to trading or non-trading corporations including banking, insurance and financial corporations but excluding banking corporations which are Co-operative societies that are not multi-state in character, contend the petitioners.

64. The provisions set out in Part-XI, Chapter-I of the Constitution, principally govern the allocation and distribution of legislative powers between the Union and the States under the Indian Constitution. Articles 249 - 252 confer on the Parliament, the power to legislate with respect to a matter in the State list (list II, Seventh Schedule) and set out principles for resolving inconsistency between laws made by the Parliament under Articles 249 and 250 and laws made by the Legislature of a State (within the State legislative powers). With respect to any matters not enumerated in the concurrent or the State list, residuary legislative power is conferred on the Parliament (Article 248). Power to make a law for implementing or giving effect to international agreements, treaties or conventions is also conferred on the Parliament (Article 253). Article 246 sets out the distribution of legislative powers between the Union and the States in mutually exclusive lists- List-I (Union); List-II (State) and a concurrent list (List-III).

65. In the case on hand we are presented with a lis that requires interpretation of entries in the mutually exclusive, Union and State lists. Such an issue involves a determination whether a law purporting to be made under one or more legislative entries in an authorised and exclusive list is in fact legislation under one or more entries in a forbidden list. Clauses 1 and 3 of Article 246 enact that the Parliament and the Legislature of a State have exclusive power to make laws with respect to any of the matters enumerated in Lists I and II respectively. Article 246(1) fortifies such exclusive legislative power of the Parliament (to make laws with respect to any matter enumerated in List-I) with a non-obstante provision (a paramountcy provision), qua Clauses (2) and (3) of Article 246. Article 246(3) consecrates exclusive legislative power to the Legislature of a State in respect of matters enumerated in List-II, subject to Clauses 1 and 2. In the distribution of legislative powers under the concurrent field (list-III) Article 246(2) enacts that notwithstanding anything in Clause (3), the Parliament and subject to Clause (1), the Legislature of any State also, have power to make laws with respect to any of the matters enumerated in the concurrent list. Article 254 sets out principles for resolution of conflicts relating to inconsistency between the laws made by the Parliament and the laws made by the Legislature of a State, with respect to matters enumerated in the concurrent list.

66. From the scheme of distribution of legislative powers between the Union and the State in the mutually exclusive lists it is clear that the power of the Parliament and the Legislature of a State to make laws with respect to any of the matters in Lists-I and II of the Seventh Schedule, is exclusive. This is clear from the provisions of Article 246 and this position is normatively well established. The abstinence of the Parliament or the Legislature of a State from legislating to the full limit of its powers would not have the effect of transferring to the other legislative body the legislative power exclusively assigned to a Legislature. The inherent corollary of such exclusivity is that if the Parliament or the Legislature of a State fails to legislate, at all or to the full limit of its power, such failure does not have the effect of augmenting the powers of the other level of Government. This is the true meaning and effect of exclusivity in the distribution of legislative powers enumerated in Lists I and II. The Constitution does not countenance the delegation of legislative powers, either expressly or by abstinence in the exercise of legislative powers by the appropriate Legislature.

67. In respect of matters enumerated in the concurrent list however it is possible that laws made by the Union and the State could co-exist. Resolution of conflicts in this area is by application of the doctrine of 'the occupied field' and 'repugnancy' and such disputes are to be resolved by recourse to the principles set out in Article 254.

68. The elaborate constitutional plan of distribution of legislative powers between the Union and States enumerated in the exclusive lists (list I and II) and the concurrent list (list III) does not however avoid potential disputes as to the legitimacy of a law on the grounds of legislative competence. This is so as the matters enumerated in the several Entries in the Lists in the seventh schedule are not powers but fields of legislation and a liberal construction must be put on them. Each head of legislation carries with it all ancillary and subsidiary powers... (United Provinces v. Atiqua Begum (AIR 1941 F.C. 16); Western India Theatres Ltd. v. Cantonment Board : AIR1959SC582 ; The other substantial principle that should guide the construction and interpretation of legislative entries is that competing entries must be read harmoniously. To avoid conflict the entries must be read together and interpreted having due regard to the fact that the language of one entry defines (some times expanding, some times contracting) the contours of the other .... (Governor General in Council v. Province of Madras AIR 1945 P.C. 98; State of Bombay v. Narothamdas Jethabhai : [1951]2SCR51 ; Bar Council of U.P v. State of U.P. : [1973]2SCR1073 ; Federation of Hotel and Restaurants v. Union of India and State of West Bengal v. Kesoram Industries : [2004]266ITR721(SC) . In the distribution of legislative powers under the Indian constitutional scheme though overlapping problem present themselves even as regards entries in the exclusive (Union and State) lists, with regard to taxation entries there is a careful and comprehensive demarcation of the fields of legislation and there is no overlapping anywhere in the taxing power and the constitution-grants independent sources of taxation to the Union and the States. The taxing powers of the Union and States are thus mutually and wholly exclusive and these entries must be construed with clarity and precision so as to maintain such exclusivity and a construction of a taxation entry that might lead to overlapping or trespass must be avoided... Hoechst Pharamceuticals Ltd. v. State of Bihar : [1985]154ITR64(SC) ; State of W.B. v. Kesoram Industries Ltd. : [2004]266ITR721(SC) ; Godfrey Phillips India Ltd. v. State of U.P. : (2005)194CTR(SC)257 . illustrations of such construction are numerous. The provisions of the Hindu Succession Act, which regulated succession even to agricultural lands were upheld by the Punjab High Court which held that the words 'will, intestacy, succession' in Entry-5, List-II I must be construed widely-- Sant Ram Das v. Gurdev Singh, AIR 1960 Pune 462; In Banarasi Dass v. Wealth Tax Officer, : [1965]56ITR224(SC) Section 3 of Wealth Tax Act, 1957 which makes the Act applicable to a Hindu undivided family was uphled on the construction that the word 'individual' in Entry-86, List-I was wide enough to cover to a group of individuals such as a Hindu Undivided family; In Orient Paper Mills Ltd. v. State of Orissa, : [1962]1SCR549 Section 14(A) of Orissa Sales Tax Act, 1947 which deprives assesses of a right to obtain a refund of tax paid under an error of law and which provides that a refund could be claimed only by the person from whom the tax was realised, was upheld on the view that the granting of refund of a tax improperly or illegally collected and the restriction on the exercise of that right were both ancillary or subsidiary matters relating to the primary head of tax on sale of goods. This decision and the principle of ancillary and subsidiary powers spelt out in the above judgment were specifically approved by the Bench of seven (7) Judges in R.S. Joshi v. Ajit Mills, : [1978]1SCR338 .

69. To resolve legislative conflicts, the doctrine of pith and substance was evolved. The Privy Council with reference to the British North America Act, 1867 (which is the closest approximation to a Constitution of Canada) evolved the doctrine. Sections 91 and 92 of this Act enumerate the exclusive matters for the legislative authority of the Parliament and the provinces in Canada. Even so disputes as to whether a particular law falls within a matter exclusively authorized to the legislative domain of the Parliament or of the Provinces, cropped up.

70. The doctrine of pith and substance was applied to the provisions of the Government of India Act, 1935 by the Privy Council in Prafull Kumar Mukherjee v. Bank of Khulna, AIR 1947 PC 60. Lord Porter pointed out that despite all possible care taken in elaborating the fields of legislation there was bound to be overlap. Lord Porter observed:

'As Sir Maurice Gwyer C.J. said in Subramanyam Chettiar case: 'it must inevitably happen from time to time that legislation, though purporting to deal with a subject in one list, touches also on a subject in another list, and the different provisions of the enactment may be so closely intertwinted that blind observance to a strictly verbal interpreation would result in a large number of statutes being declared invalid because the Legislature enacting them may appear to have legislated in a forbidden sphere. Hence the rule which has been evolved by the judicial committee, whereby the impugned statute is examined to ascertain its 'pith and substance' or its 'true nature and character' for the purpose of determining whether it is legislation with respect to matters in this list or in that'. Their Lordships agree that these passage correctly describe the grounds on which the rule is founded, and that it applies to Indian as well as Domain legislation.'

71. Though considerable care had gone into enumeration of the fields of legislation and the allocation and distribution of legislative powers, into the two exclusive and one concurrent list, under the Indian Constitution, problems of overlapping of fields of legislation occur. This is so since the Constitution being a mechanism under which laws are to be made, the words of the Constitution including the enumerated fields of legislation must receive a liberal construction conducive to their widest amplitude. In interpreting the enumeration of legislative powers under Section 51 of the Australian Constitution, Dixon, J. in Bank of N.S. W. v. Commonwealth, (1948) 76 CLR 1 pointed out this principle of expansive construction:

'The purpose of the enumeration of powers in Section 51 is not to define or delimit the description of law that the Parliament may make upon any of the subjects assigned to it. Speaking generally, the legislative power so given is plenary in its quality. The purpose of the enumeration is to name a subject for the purpose of assigning it to that power. The names of descriptions employed are usually of the briefest kind. It is true that certain powers do involve a description amounting almost to a formal definition;...But more often they are the most general names of general topics.*** To borrow the words of Gray J. delivering the opinion of the Sup. Ct. in Juilliard v. Greenman, (1883) 110 US 421 'The Constitution .. by apt words of designation or general description, marks the outlines of the powers granted to the National Legislature; but it does not undertake, with the precision and detail of a code of laws, to enumerate the sub-divisions of those powers, or to specify all the means by which they may be carried into execution.'

72. This principle was first applied in India by Gwyer C.J. in the Central Provinces Case -- in re The C.P. and Berar Act, 1936, AIR 1939 F.C. 1.

73. Overlapping of fields of legislation occurs for variety of reasons. A subject of legislation of wide scope may be divided between the Union and the State fields on account of which it would be impossible to prevent overlapping by a clear cut division. The legislative power with regard to trade and commerce is enumerated in the Union List, the State list as well as the Concurrent list. The scope of trade and commerce, given to the enumerated field in each of the three lists therefore requires determination by the Courts when called upon. Another reason for overlapping is that in certain cases the exclusive field allocated to the State is described as comprised of matters not specified in the Union list. For instance Entry-13 of List-II reads:

'Communication, that is to say, roads, bridges, ferries, and other means of communication not specified in List I; municipal tramways; roadways; inland waterways and traffic thereon subject to the provisions of List I and List III with regard to such waterways; vehicles other than mechanically propelled vehicles.'

74. Entry-32 of List-II (an entry we are concerned with in this case) deals with incorporation, regulation and winding up of corporations other than those specified in List-I; whereas Entries 43 and 44 of List-I refer respectively to 'incorporation, regulation and winding up of trading corporations including banking, insurance and financial corporations but not including Co-operative societies' and 'incorporation, regulation and winding up of corporations whether trading or not with objects not confined to one State, but not including Universities.'

75. Overlapping also occurs as in several cases the exclusive field in favour of the States is made subject to an exclusive field carved out of which is reserved in favour of the Union. In some of these cases the scope of the exclusive Union field is made to depend on a declaration by the Parliament. This constitutional device in the allocation of legislative powers is adopted to promote uniform regulation under a Parliamentary enactment, of matters declared by Parliament in the legislation to be of national interest though normatively the matter was considered of a provincial interest. Such treatments in the allocation of powers provide operational flexibility-Entry. 23 of the State list and Entry-54 of the Union List; Entry-24 of the State list and Entry-52 of the Union List illustrate the above constitutional arrangement.

76. The first step towards resolution of conflicts as to allocation of legislative powers in the exclusive lists is to identify the matter of the legislation or what is known as the 'pith and substance' of the challenged law. The second step is to assign the matter or the substance of the impugned legislation to one of the heads/fields of legislation distributed in the lists in the Seventh Schedule. Often, as pointed out by Laskin (in relation to the allocation of legislative powers under the British North America Act, 1867), these two steps 'are in the nature of interlocking processes in which the constitutional provisions and the challenged legislation reject on one another and fix each one's meaning'. Nevertheless, for the purposes of analysis and resolution of the conflicts, the essentially steps involved are; (a) characterization of the challenged law; and (b) interpretation of the power-distributing provisions of the Constitution.

77. As legislative conflicts are a regnant feature of federal constitutional arrangements and we have adopted some of the principles evolved in other federal jurisdictions for resolving the legislative conflicts under our Constitution and for identification of the dominant characteristic of a challenged law in order to determine the appropriate legislative field to which it belongs; such as the 'pith and substance'; and 'incidental and ancillary matters' doctrines which invite an intrinsic judicial judgment as to the contours of the powers distribution arrangement under the constitutional plan, it is perhaps relevant to consider how the 'pith and substance' and other relevant doctrines are conceived and legislative power sharing arrangements considered, in some of the other federal jurisdictions.

78. Under the Federal Constitutions of the United States of America and Australia, the enumerated federal powers explicity include the ancillary powers. The U.S. Constitution consecrates to the Congress the power 'to make all laws which shall be necessary and proper for carrying into execution the foregoing (enumerated) powers' (Article 1, Section 8, Clause 18). Under the Constitution of Australia (Section 51 (39)), there is a grant of power to the Parliament to make laws with respect to 'matters incidental to the execution of any power vested by this Constitution in the Parliament'. Under the above constitutional arrangements there is no catalogue of enumerated State powers; the States retain a general residuary power of legislation (U.S.A.-the 10th Amendment; Australia--Section 107).

79. In contrast, the Canadian Constitution (the Constitution Act, 1982) does not explicate ancillary power in the enumerated catalogue of powers of either the Federal Parliament or the Provincial Legislatures. However, the residuary powers belong to the federal level of Government. The pith and substance doctrine enables a law that is classified as in relation to a matter/subject within the competence of the enacting Legislature (at one level) to have incidental or ancillary effects on matters/subjects outside its competence (at another level), as a matter of an incidental and privileged encroachment into a prohibited area.

80. Despite having two exclusive lists of enumerated powers (one for the Union and another for the States) and the catalogue of concurrent fields of legislation, the Indian Constitutional architecture of distribution of powers nevertheless invites application of the doctrine of pith and substance (as an aid to classify legislation for its allocation to a specific field of enumerated legislative powers) and the doctrine of ancillary and incidental powers, to accord and enable flexibility and pragmatism to the structure of the division of exclusive powers while providing a check against clear usurpation of power to an extent that disturbs the carefully construed constitutional plan of federal balance. Under this arrangement, incidental trenching in exercise of ancillary powers, into a forbidden legislative territory is permitted as a matter of privileged encroachment not amounting to usurpation.

81. Normatively 'trenching' connotes, in the context of legislations by different levels of Government and within the scheme of the exclusive Union and State fields (Lists-I and II), an unconstitutional encroachment by one Legislature on the exclusively authorized field of another. In practice however, following the employment of this device and terminology by the Privy Council in the Canadian Cases (Tennant v. Union Bank of Canada, (1894) AC 31; A.G. Ont. v. A.G. Canada, (1896) AC 348; G.T.R. v. A.G. Canada, (1907) AC 65; R. v. Thomas Fuller Construction, 1980 (1) SCR 695 and Re GST, 1992 SCR 445 the Indian Courts have adopted (a) the pith and substance doctrine to classify the legislation and concretise its allocation to a legislative field and (b) the incidental and ancillary powers test to harmonise the inevitable overlapping potency of broadly defined fields of Legislature, under the Seventh Schedule.

82. The doctrine of incidental and ancillary powers simply means that each head of legislative power, whether Union or State, authorises all provisions that have a rational connection to the exercise of that head of power. If the apparent trenching into a prohibited field is not a camouflage, a serious usurpation of the forbidden legislative territory and does not gravely intrude or pejoratively impact the effective exercise of legislative power by the other and appropriately authorized level of government, the trenching would be termed incidental and would not invalidate the legislation.

83. Before concluding that the exercise of legislative power by one level of government, though invading the authorized exclusive legislative field of another level of government is benign and permissible since the invasion is in respect of the ancillary and necessarily incidental areas of the enacting legislature's authorized field of powers, several factors should be considered;

(a) Whether the provisions of the impugned law, claimed to be within the incidental and ancillary area of the authorized legislative field substantially impact the essential area or the core of the exclusive legislative field of the other level of government; and

(b) Whether the extent and degree of invasion, in presenti inhibits or would substantially impair the effective exercise of an extant or potential legislation, by the other level of government.

(c) Where the subject matter of the impugned law falls clearly and substantively within the essential domain of the exclusively authorised field of the other level of government such circumstance would negate a construction that the area or matter is ancillary or incidental to the enumerated field of the other level of government. Where such is not the situation then perhaps the provisions of the impugned legislation could be said to fall within the penumbral area of the authorized fields of both levels of government i.e. within the area of anciallary and incidental powers of both levels of government. In classifying the law for the purpose of identification as to whether it appropriately belongs to the core or penumbral areas of a legislative field, regard must be had to the provisions of the Act as a whole in which the impugned provisions occur, the enumerated fields of legislation in the exclusive lists (I and II) and the constitutional values and purposes underlying the distribution of legislative powers to the two levels of government -- the federal and provincial. Consideration of these aspects would, in most cases provide a satisfactory resolution to legislative conflicts.

84. The difficulty in identifying the 'matter', the 'dominant feature' or the 'pith and substance' of a law is that many statutes have features which fall within one level of Government i.e., within a State field and Union field. Selection of one or the other feature as the dominant characteristic or the 'pith and substance' of the statute normally disposes of the question as to the competence of the Legislature which enacted the statute in question. This characteristic of a law is referred to as the 'double aspect' doctrine, a recognition and acknowledgment that some kinds of laws have a dual characteristic-federal as well as provincial. Identification of the 'pith and substance' of a legislation that has dual characteristics is intrinsically problematic and involves a judicial choice. Such choice is however not wholly subjective but is conditioned and processed by analysis of the constitutional context, ascertainment of the underlying purposes of the constitutional plan of distribution of legislative powers and guidance from precedents that have applied the doctrine of pith and substance. Applying the doctrine, when a law by one level of Government is characterized as having a dominant characteristic validly falling within its sphere of legislative power but is found to contain provisions which incidentally trench upon the legislative field of another level of Government, the Courts disregard such incidental trenching and uphold the law notwithstanding its impact on a forbidden legislative field. Thus even in respect of mutually exclusive lists, there is permitted concurrency of legislative power where the contrast between the relative importance of the Union and State features of the law, is not so pronounced, sharp or distinct.

85. Ascertainment of the pith and substance of the law is not a mere technical or formalistic exercise. The Court will look beyond the direct legal effects of the law to enquire into the social and economic purposes, which the law was enacted to achieve. If the Court concludes that the purpose of the law is ostensibly to substantially impact a forbidden legislative field then the law will be characterised as in pith and substance belonging to the legislative field of another level of Government and therefore invalid.

86. In order to ascertain the pith and substance and the true and dominant character of legislation regard must be had to the enactment as a whole, to its objects and to the scope and effect of the provisions. The legislation in question must be considered as an organic whole and not as mere collection of sections. This is so since on examination of the character of legislation applying the pith and substance doctrine, if the legislation substantially falls within the power expressly conferred by the Constitution upon the Legislature which enacted it, it should not be held invalid, merely because it incidentally trenches on matters assigned to another Legislature--Ramkrishna Ramnath Agarwal v. Municipal Committee Secretary, : 1978(2)ELT284(SC) ; State of Karnataka v. Ranganatha Reddy, : [1978]1SCR641 ; K.S.E. Board v. Indian Aluminium Company, : [1976]1SCR552 ; Tripura Goods Transport Association v. Commissioner of Taxes, : AIR1999SC719 .

87. The question of invasion into the territory of another Legislature must be determined not by the degree but by substance; the extent of invasion though is not altogether irrelevant; the extent of invasion into the forbidden sphere may some times determine the 'pith and substance' of the impugned legislation - Amar Singh v. State of Rajasthan, : [1955]2SCR303 .

88. In identifying the dominant characteristic or the 'pith and substance' of a legislation, the Court is also required to consider the effect of the statute. If the direct legal effects of the provisions of law are directed to the indirect achievement of other purposes or if the provisions substantially impact a field preserved exclusively for the other level of government, the statute or its provisions to the extent of the transgression will be invalidated. In characterising a law for the purpose of judicial review on legislative -competence grounds - it is relevant to look at the purpose of the statute and its effect. This scrutiny, however, does not involve a judgment on the efficacy of the statute. The analysis is only for the purpose of classifying the law, for its placing within the assigned sphere of one or the other levels of government, in the constitutional plan of power distribution. The characterization of a law analysed on the basis of the 'pith and substance' doctrine involves a policy choice and is related to the ultimate consequence of such choice - the validity or invalidity of the legislation. Such choice must be guided by the federal plan apparent from the constitutional text and structure. A relevant question in such cases is perhaps, is this the kind of the law that should be enacted at the federal or the provincial level, in the context of the power distributing architecture under the Constitution? Neither the policy choice nor the question is affected by judicial dis-approval or approval of the challenged law. The only values legitimate to judicial review in this area are those that have a constitutional dimension i.e., value that may reasonably be asserted to be enduring considerations in the allocation of power between the Union and the States under our constitutional plan. The distribution of power that is explicit in our constitution (inferable from the provisions of Article 246 and the three lists in the Seventh Schedule) should guide the analysis as to what kinds of laws should be allocated to which levels of government. Underlying all these choices is nevertheless a subjective element. For this reason it is cautioned that whenever choices between competing characterisations (on pith and substance grounds) is not clear, the choice which will support the legislation and its validity must normally be preferred. This is an instruct and guidance, for judicial restraint in areas involving legislative conflicts on federal grounds.

89. Another principle for reconciliation of legislative powers under exclusive catalogue of legislative powers is that a State law of general application is not necessarily valid in its application to undertakings or matters within the federal jurisdiction. It is possible that a State law of general application, which is in substance in relation to a State matter, may validly affect Federal matters as well. The Courts have however carved out an important exception to this general principle. If the effect of the State law would impair the status, the essential powers of the intrinsic efficacy of regulation of a matter eminently falling within the Federal field or would affect a vital area of federally regulated enterprise, then the State law although valid in the generality of its application will be held not to apply to the federally incorporated or regulated enterprise. Peter W. Hogg refers to principle as the principle of Interjurisdictional Immunity (Constitutional Law of Canada-2001 ). An illustration of the application of this principle is in the decision of the Canadian Supreme Court in Bell Canada v. Quebec (1988), 1988 (1) SCR 749. The question in this case was whether Bell Canada, an interprovincial telephone company, was bound in Quebec by a Quebec law that required the protective reassignment of pregnant workers who work with video monitors. Beetz J. held that the provincial law was constitutionally incapable of applying to the federal undertakings, and should be read down as inapplicable to it, it was held that 'it is sufficient that the provincial statute which purports to apply to the federal undertaking affects a vital or essential part of that undertaking, without necessarily going as far as impairing or paralysing it.' In the Canadian Supreme Court's view, occupational health and safety laws, because they regulated labour relations within a firm, affected a vital part of the management and operation of the firm and, therefore health and safety laws enacted by a province could not constitutionally apply to a federal undertaking. However in the subsequent year, in Irwin Toy v. Quebec (1989), 1989 (1) SCR 927, the majority (of the Canadinan Supreme Court) upheld a Quebec law, which prohibited advertising directed at Children and applicable to advertising on television as well (a federally regulated medium). The majority held that the law was applicable to advertising on television and that though advertising was a vital part of the operation of a television broadcast undertaking, the 'vital part test' applied only to a provincial laws that purported to apply directly to federal undertakings and not when the provincial law had only an indirect affect on the federal undertaking. The Canadian Supreme Court majority held that the law would be inapplicable only if it impaired, paralysed or sterilized the federal undertaking. As the Quebec law's prohibition on advertising applied to advertisers and not the media, the affect of the provincial law on a television undertaking was indirect and did not matter even if the law affected a vital part of the undertaking. These above two cases from Canada signal an incoherent and wavering approach to the problem of legislative conflicts.

90. The transgression by a challenged law of forbidden legislative field may be on the point of subject matter or the method of enacting the law. The transgression may be patent, manifest or direct or disguised or covert. When the transgression is not patent the legislation is termed a colourable legislation. A colourable legislation means that though apparently the Legislature enacted the statute purporting to act within the limits of its power, had in substance and reality transgressed the limits of its constitutional powers, the transgression being a camouflage, by what appears on appropriate examination, to be a mere pretence and disguise-K.C. Gajapati Narayana Deo v. State of Orissa, : AIR1953Ori185 ; Shankara Narayana, B.R. v. State of Mysore, : (1967)IILLJ751SC ; Jalan Trading Company Pvt. Ltd. v. Mill Mazdoor Sabha Union, AIR 1957 SC 691. The doctrine against colourable legislation is not concerned with the motive of legislation; it is in essence a question of vires or the power of the Legislature to enact the law in question.

91. In the limited area of ancillary and incidental powers of the two levels of Legislature, there is thus a concurrency of legislative power even in respect of the exclusive lists. In this area the apprently conflicting legislative provisions must be reconciled. When reconciliation is not however possible, the Union's exercise of legislative power in areas that are incidental and ancillary to its authorized field of legislation commands dominant treatment and paramountcy. The principle of such paramountcy of the Union legislation has been explained by Ruma Pal, J. in a concurring judgment (per majority) in ITC Ltd. v. Agricultural Produce Market Committee, : [2002]1SCR441 as under:

'...93. That the legislative power of the Parliament in certain areas is paramount under the Constitution is not in dispute. What is in dispute is the limits of those areas as judicially defined. Broadly speaking, parliamentary paramountcy is provided for under Articles 246 and 254 of the Constitution. The first three clauses of Article 246 of the Constitution relate to the demarcation of legislative powers between Parliament and the State Legislatures. Under Clause (1), notwithstanding anything contained in Clauses (2) and (3), Parliament has been given the exclusive power to make laws with respect to any of the matters enumerated in List-I or the Union List in the Seventh Schedule. Clause (2) empowers Parliament and the State Legislatures subject to the power of Parliament under Clause (1) to make laws with respect to any of the matters enumerated in List-III in the Seventh Schedule described in the Constitution, as the 'Concurrent List' notwithstanding anything contained in Clause (3). Under Clause (3) the State Legislatures have been given exclusive powers to make laws in respect of matters enumerated in List-II in the Seventh Schedule described as 'State List' but subject to Clauses (1) and (2). The three lists while enumerating in detail, the legislative authority between Parliament (List-l) and the State (List-II). The supremacy of Parliament has been provided for by the non obstante clause in Article 246(1) and the words 'subject to' in Articles 246(2) and (3). Therefore, under Article 246(1), if any of the entries in the three lists overlap, the entry in List-I will prevail [See M.P.V. Sundararamier & Co., v. State of Andhra Pradesh (AIR 1948 SC 468)]. Additionally, some of the entries in the State List have been made expressly subject to the power of Parliament to legislate either under List-I or under List-III. Entries in the lists of the Seventh Schedule have been liberally interpreted, nevertheless courts have been vary of upsetting this balance by a process of interpretation so as to deprive any entry of its content and reduce it to 'unless lumber' [see Calcutta Gas Company (Proprietory) Ltd. v. State of W.B. - : AIR1962SC1044 ). The use of the word 'exlcusive' in Clause (3) denotes that within the legislative fields contained in List-II, the State Legislatures exercise authority as plenary and ample as Parliament.

'276. The fact that under the scheme of our Constitution, greater power is conferred upon the Centre vis-a-vis the States does not mean that States are mere appendages of the Centre. Within the sphere allotted to them, States are supreme. The Centre cannot tamper with their powers. More particularly, the Courts should not adopt an approach, an interpretation, which has the effect of or tends to have the effect of whitting down the powers reserved to the States' [see S.R. Bommai v. Union of India : [1994]2SCR644 ].94. Although Parliament cannot legislate on any of the entries in the State List, it may do so incidentally while essentially legislating within the entries under the Union List. Conversely, the State Legislatures may encroach on the Union List when such an encroachment is merely ancillary to an exercise of power intrinsically under the State List. The fact of encroachment does not affect vires of the law even as regards the area of encroachment (see A.S. Krishna v. State of Madras. : 1957CriLJ409 ). This principle commonly known as the doctrine of pith and substance, does not amount to an extension of the legislative fields. Therefore, such incidental encroachment in either event does not deprive the State Legislature in the first case or Parliament in the second, of their exclusive powers under the entry so encroached upon. In the event the incidental encroachment conflicts with legislation actually enacted by the dominant power, the dominant legislation will prevail.

(Emphasis is ours).

92. The ancillary and incidental or the penumbral areas of the enumerated exclusive Legislative entries perhaps constitute the exception to the established principle that the doctrine of repugnancy or operational conflict is inapplicable to the Entries in the exclusive lists.

93. In A.S. Krishna v. State of Madras, : 1957CriLJ409 Sections 4(2) and 28 to 32 of the Madras Prohibition Act, 1937 were challenged on the ground that they impinged on conflicted with existing law under the Entries-2 and 5, List-III of Government of India Act, 1935. The Supreme Court rejected this contention and spelt out the doctrine of pith and substance which was applied in ascertaining the head of legislation under which the impugned Madras Act was held as belonging to. On behalf of the petitioners it was contended that though the State Act was within the legislative competence of the State insofar as it prohibits possession, sale, consumption, etc., of liquor under Section 4(1), the matters dealt with under Section 4(2) and Section 28 to 32 do not fall within entry-31 of List-I I but fall within Entries-5 and 2 respectively of List-I II and therefore, it was contended these provisions impacted existing federal legislation made under the concurrent power i.e., the Code of Criminal Procedure. T.L. Venkatarama Ayyar, J delivered the opinion for the Constitution Bench in which the underlying principles of distribution of legislative powers, the accompanying problems in identifying the legislative head to which a legislation belongs, the contours and principles of application of the doctrine of pith and substance and of the ancillary and subsidiary matters, have been elaborately considered. We consider it appropriate to extract these principles as have been elegantly and comprehensively summarised in the judgment::-

'...the basic assumption on which the argument of the appellants rests is that the heads of legislation set out in the several Lists are so precisely drawn as to be mutually exclusive. But then it must be remembered that we are construing a federal Constitution. It is of the essence of such a Constitution that there should be a distribution of the legislative powers of the Federation between the Centre and the Provinces. The scheme of distribution has varied with different Constitutions, but even when the Constitution enumerates elaborately the topics on which the Centre and the States could legislate, some overlapping of the fields of legislation is inevitable. The British North America Act, 1867, which established a federal Constitution for Canada, enumerated in Sections 91 and 92 the topics on which the Dominion and the Provinces could respectively legislate. Notwithstanding that the lists were framed so as to be fairly full and comprehensive, it was not long before it was found that the topics enumerated in the two sections overlapped, and the Privy Council had time and again to pass on the constitutionality of laws made by the Dominion and Provincial legislatures. It was in this situation that the Privy Council evolved the doctrine, that for deciding whether an impugned legislation was intra vires, regard must be had to its pith and substance. That is to say, if a statute is found in substance to relate to a topic within the competence of the Legislature, it should be held to be intra vires, even though it might incidentally trench on topics not within its legislative competence. The extent of the encroachment on matters beyond its competence may be an element in determining whether the legislation is colourable, that is, whether in the guise of making a law on a matter within its competence, the Legislature is, in truth, making a law on a subject beyond its competence. But where that is not the position, then the fact of encroachment does not affect the vires of the law even as regards the area of encroachment. Vide Citizens Insurance Co. of Canada v. William Parsons, 1881-7 AC 96; Attorney-General of Ontario v. Attorney-General for Dominion of Canada, 1894 AC 189; Attorney-General of Ontario v. Attorney-General for the Dominion, 1896 AC 348): Union Colliery Co. of British Columbia v. Bryden, 1899 AC 80: Attorney-General for Canada v. Attorney-General for Ontario, 1937 AC 355; Attorney-General for Alberta v. Attorney-General for Canada, 1939 AC 117; and Board of Trustees of Letherbridge Northern Irrigation District v. Independen Order of Foresters, 1940 AC 513)

The principles laid down in the above decisions have been applied in deciding questions as to the vires of statutes passed by the Indian Legislatures under the Government of India Act, 1935. In Subrahmanyan Chettiar v. Muttuswami Goundan, 1940 FCR 188: (AIR 1941 FC 47), the question was as to whether the Madras Agriculturists Relief Act, 4 of 1938, which was within the exclusive competence of the Provincial legislature under Entries 20 and 21 in List II was ultra vires, in so far as it related to promissory notes executed by agriculturists by reasons of the fact that under Entry 28m, List (('cheques, bills of exchange, promissory notes and other like instruments' were matters falling within the exclusive jurisdiction of the Centre. In holding that the legislation was intra vires, Sir Maurice Gwyer C.J. stated the reason in these terms:

'it must inevitably happen from time to time that legislation. Though purporting to deal with a subject in one list, touches also on a subject in another list, and the different provisions of the enactment may be so closely intertwined that blind adherence to a strictly verbal interpretation would result in a large number of statutes being declared invalid because the Legislature enacting them may appear to have legislated in a forbidden sphere. Hence the rule which has been evolved by the Judicial Committee whereby the impugned statute is examined to ascertain its 'pith and substance' or its 'true nature and character for the purpose of determining whether it is legislation in respect of matters in this list or in that....'This point arose directly for decision before the Privy Council in Prafulla Kumar v. Bank of Commerce, Ltd., 74 Ind APP 23: (AIR 1947 PC 60). There, the question was whether the Bengal Money Lenders Act, 1940 which limited the amount recoverable by a moneylender for principal and interest on his loans, was valid in so far as it related to promissory notes. Money-lending is within the exclusive competence of the Provincial Legislature under item 27 of List II, but promissory note is a topic reserved for the Centre, vide List I, Item 28. It was held by the Privy Council that the pith and substance of the impugned legislation being money-lending, it was valid notwithstanding that it incidentally encroached on a field of legislation reserved for the Centre under Entry 28,. After quoting with approval the observations of Sir Maurice Gwyer C.J. In Subrahmanyan Chettiar v. Muttuswami Goundan, Lord Porter observed:

'Their Lordships agree that this passage correctly describes the grounds on which the rule is founded, and that it applies to Indian as well as to Dominion legislation.

No doubt experience of past difficulties has made the provisions of the Indian Act more exact in some particulars, and the existence of the Concurrent List has made it easier to distinguish between those matters which are essential in determining to which list particular provision should be attributed and those which are merely incidental. But the overlapping of subject-matter is not avoided by substituting three lists for two, or even by arranging for a hierarchy of jurisdictions. Subjects must still overlap, and where they do, the question must be asked what in pith and substance is the effect of the enactment of which complaint is made, and in what list is its true nature and character to be found. If these questions could not be asked, much beneficent legislation would be stifled at birth, and many of the subjects entrusted to provincial legislation could never defectively be dealt with.'

Then, dealing with the question of the extent of the invasion by the Provincial legislation into the Federal fields, Lord Porter observed:

'No doubt it is an important matter, not, as their Lordships think, because the validity of an Act can be determined by discriminating between degrees of invasion, but for the purpose of determining what is the pith and substance of the impugned Act. Its provisions may advance so far into Federal territory as to show that its true nature is not concerned with provincial matters, but he question is not, has it trespassed more or less, but is the trespass, whatever it be, such as to show that the pith and substance of the impugned Act is not money-lending but promissory notes or banking? Once that question is determined the Act falls on one or the other side of the line and can be seen as valid or invalid according to its true content.'Then, there is the decision of the Federal Court in Lakhi Narayan Das v. Province of Bihar, 1949 FCR 693: (AIR 1950 FC 59) there, the question related to the validity of Ordinance No. IV of 1949, promulgated by the Governor of Bihar. It was attacked on the ground that as a legislation in terms of the Ordinance would have been void, under Section 107(1) of the Government of India Act, the Ordinance itself was void. The object of the Ordinance was the maintenance of public order, and under Entry 1 of List 11, that is a topic within the exclusive competence of the Province. Then the ordinance provided for preventive detention, imposition of collective fines, control of processions and pubic meetings, and there were special provisions for arrest and trial for offences under the Act. The contention was that though the sections of the ordinance relating to maintenance of public order might be covered by Entry I in List II, the sections constituting the offences and providing for search and trial fell within items 1 and 2 of the Concurrent List, and they were void as being repugnant to the provisions of the Criminal Procedural Code. In rejecting this contention, Mukherjea, J. observed:

'Thus all the provisions of the Ordinance relate to or are concerned primarily with the maintenance of public order in the Province of Bihar and provide for preventive detention and similar other measures in connection with the same. It is true that violation of the provisions of the Ordinance or of orders passed under it have been made criminal offences but offences against laws with respect to matters specified in List II would come within item (37) of List II itself, and have been expressly excluded from Item (1) of the concurrent List. The ancillary matters laying down the procedure for trial of such offences and the conferring of jurisdiction on certain Courts ford that purpose would be covered completely by Item (2) of List II and it is not necessary for the Provincial Legislature to invoke the powers under item (2) of the concurrent List.'He accordingly held that the entire legislation fell within Entries 1 and 2 of List II, and that no question of repugnancy under Section 107(1) arose. This reasoning furnishes a complete answer to the contention of the appellants.

The position, then, might thus be summed up: When a law is impugned on the ground that it is ultra vires the powers of the Legislature which enacted it, what has to be ascertained is the true character of the legislation. To do that, one must have regard to the enactment as a whole, to its objects and to the scope and effect of its provisions. If on such examination it is found that the legislation is in substance one on a matter assigned to the legislature, then it must be held to be valid in its entirety, even though it might incidentally trench on matters, which are beyond its competence. It would be quite an erroneous approach to the question to view such a statute not as an organic whole, but as a mere collection of sections, then disintegrate it into parts, examine under what heads of legislation those parts would severally fall, and by that process determine what portions thereof are intra vires, and what are not.

94. Under the power sharing arrangement between the federal and provincial Governments, in the British North America Act, 1867 similar legislative conflicts under the Canadian constitutional arrangements arose. In Bank of Toronto v. Lambe, (1887) 12 App. Cas. 575 the Privy Council upheld a Canadian provincial law that imposed a tax on banks as it was characterised as a law in relation to taxation (a matter within the provincial field), though the law was a significant exercise of legislative power over banks (an exclusive federal subject). The taxing statute in this case though it applied to several corporations as well as banks, did impose special rate of tax on banks alone. Nevertheless, the Privy Council characterised the law as one in relation to the taxation and not banking. In contrast, in another case arising from Canada, the Privy Council struck down an Alberta (a Canadian province) law. The law imposed a special tax only on banks. The Privy Council held that the pith and substance of the law was to discourage the operation of banks in the Alberta province. The high rate of tax imposed by the law and the fact that the law was part of package of social credit policies inimical bank credit were among the factors which led to the characterisation of the law as one in relation to banking and thus a prohibited field for provincial legislation- A.G. Alberta v. A.G. Canada (Bank taxation), (1939) AC 117.

95. In the interpretation of entries in the Lists, the devise of reading a general power in a restricted sense in favour of a specific power is employed to achieve harmony and resolve the apparent and identified conflict. In the Central Provinces Case-In re the Central Provinces and Berar Act, 1936 (23rd supra) the doctrine of 'pith and substance' as evolved by the Privy Council in relation to the provisions of the British North America Act, 1867 was first applied in India. The Court held that though under Entry-45, List-I of the Seventh schedule of the Government of India Act, 1935, a duty of excise was by itself capable of including a tax on the sale goods, since that very tax (on the sale of goods) has been assigned to the provincial legislature under Entry-48 of List-I I, the two entries must be reconciled, and each entry read in the light of the other. In a concurring judgment Jaykar. J observed: 'Item 45 (List I) may be said to contain a special power levy an excise duty at all stages. As an exception to this, a portion of the power is cut out and allocated to the province under item 48 (List II). It operates as an exception to the general power conferred by item 45'. In Province of Madras v. Boddu Paidanna, (1942) FCR 90 the Federal Court held that a tax levied on the manufacturer or purchaser on the occasion of first sale was levied on him qua seller and not qua manufacturer or producer. The Privy Council approved this decision in Governor General v. Madras, AIR 1945 F.C. 11 and observed that though a duty of excise and tax on the sale of goods may involve a factual overlapping, there was no overlapping in law, as the taxes were separate and distinct imposts. By giving a less wide meaning to the entry in the Federal List reconciliation was possible.

96. In Kerala State Electricity Board v. The Indian Aluminium Company Ltd. and Ors., : [1976]1SCR552 the principle underlying the restrictive construction of a general Entry to accommodate a specific Entry was spelt out. Alagiriswami. J (speaking for the majority of the Constitution Bench) explained (at para 5): 'Now what is the meaning of the words 'notwithstanding' in Clause (1) and 'subject to' in Clause (3)? They mean that where an entry is in general terms in List II and part of that entry is in specific terms in List I, the entry in List I takes effect notwithstanding the entry in List. II. This is also on the principle that the 'special' excludes the 'general' and the general entry in List II is subject to the special entry in List I. ___ Furthermore, the word 'notwithstanding' in Clause (1) also means that if it is not possible to reconcile the two entries the entry in List I will prevail. But before that happens attempt should be made to decide in which list a particular legislation falls.'

97. The validity of the Punjab Co-operative Societies (Amendment) Ordinance 1969 and the Punjab Co-operative Societies (Amendment) Act, 1969 were challenged in Sant Sadhu Singh and Ors. v. The State of Punjab and Anr., the petitioners contended that the Punjab Legislature was incompetent to make a law pertaining to banking corporations; Co-operative Societies doing banking business are banking corporations and, therefore the amendment Ordinance and Act are beyond the competence of the Punjab Legislature and that the State legislation was a colourable exercise of power insofar as Banking Cooperative Societies are concerned. A Division Bench of the Punjab and Haryana High Court held that in order to give a harmonious construction to Entries 43 and 45 in List-I of the Seventh schedule, it must be interpreted that only the business of 'banking' as such fell within Entry-45, whereas the incorporation, regulation and winding up of trading corporations including banking corporations fell within the ambit of Entry-43 of List-I. The Punjab Court further held that the constitution of societies and their working would have fallen within the ambit of Entry-43 of List-I but for the fact that Cooperative Societies were expressly excluded from the purview of Entry-43 of List-I and included in Entry-32 of List-11, of the Seventh schedule. For applying the doctrine of harmonious construction in relation to the above entries in the two exclusive lists, the Punjab Court relied on the observations and principles laid down in the decision of the Supreme Court in Calcutta Gas Co. (Proprietary) Ltd. v. State of West Bengal, : AIR1962SC1044 :

'But some of the entries in the different lists or in the same list may overlap and sometimes may also appear to be in direct conflict with each other. It is then the duty of the Court to reconcile the entries and bring about harmony between them. The underlying principle in such cases is that a general power ought not to be so construed as to make a nullity of a particular power conferred by the same Constitution and operating in the same field, when by reading the former in a more restricted sense effect can be given to the latter in its ordinary and natural meaning. Thus, every attempt should be made to harmonize the apparently conflicting entries not only of different Lists but also of the same List and to reject that construction which will rob one of the entries of its entire content and make it nugatory.'

98. In R.C. Cooper v. Union of India, : [1970]3SCR530 the Supreme Court was required to consider the challenge to the validity of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1969. the petitioners challenged the legislation inter alia on the ground that while the Parliament had legislative competence in respect of banking as defined under Section 5(b) of the 1949 Act and matters incidental thereto, as also for acquisition of that part of the undertakings of each of the taken over banks which relates to the business of banking, it lacked legislative competence in respect of any other business not incidental to banking in which such bank was engaged. In the context of such challenge, the scope of the legislative field banking in Entry-45 of List-I fell for the consideration of the Supreme Court. On behalf of the Union, it was contended that the expression banking in Entry-45 of List-I means all forms of business, which since the introduction of western methods of banking, banking institutions have been carrying on in addition to banking as defined in Section 5(b) of the 1949 Act and on that account all forms of business described in Section 6(1) of the said Act are, if carried on in addition to the hard-core of banking business, the Parliament is competent to legislate within its exclusively allocated field under Entry-45 of List-I. The Union further contended that apart from the business of acceptance of money from the public for lending or investment, withdrawable by cheque, draft or otherwise, banking includes any allied business activities, which banks engage in and all such businesses fall within the legislative field of banking in Entry-45. Shah, J speaking for the majority, rejecting such expansive construction of Entry 45, held:

'37. In modern times in India as elsewhere, to attract business, banking establishments render and compete in rendering, a variety of miscellaneous services for their constituents. If the test for determining what 'banking' means in the constitutional entry is any commercial activity which bankers at a given time engage in, great obscurity will be introduced in the content of that expression. The coverage of constitutional entry in a Federal Constitution, which carves out a field of legislation, must depend upon a more satisfactory basis.

38. the legislative entry in List-I of the Seventh Schedule is 'Banking' and not 'Banker' or 'Banks'. To include within the connotation of the expression 'Banking' in Entry 45 of List-I, power to legislate in respect of all commercial activities, which a banker by the custom of bankers or authority of law engages in, would result in rewriting the Constitution. Investment of power to legislate on a designated topic covers all matters incidental to the topic. A legislative entry being expressed in a broad designation indicating the contour of plenary power must receive a meaning conducive to the widest amplitude, subject however to limitations inherent in the federal scheme which distributes legislative power between the Union and the constituent units. But the field of 'banking' cannot be extended to include trading activities which not being incidental to banking encroach upon the substance of the entry 'trade and commerce' in List-II.

99. On facts, however, the Court rejected the challenge to the validity of the impugned legislation on this ground, as there was no evidence on record that the banks subjected to the acquisition and transfer of undertakings scheme of the impugned legislation held any assets for any distinct non-banking business and that the acquisition is not shown to fall within an entry in the State List of the Seventh Schedule. As is apparent from the above judgment, though the legislative field banking is capable of bearing a more expansive meaning which includes other forms of business allied to the business of banking, the legislative field was given a restricted meaning with a view to preserve the substance of the legislative fields enumerated in the State List including the entry 'trade and commerce' (Entry-26 List-11).

100. Earlier, the Supreme Court in Bombay v. F.N. Balsara, AIR 1951 SC 318 held that the word 'import' in Entry-19, List-I, the Government of India Act, 1935, must be given a restricted meaning in order to preserve and effectuate the legislative field expressed by the very general words 'intoxicating liquors and narcotic drugs' in Entry-31 of the State List.

101. In Waverly Jute Mills Co. Ltd. v. Raymon and Co. (India) Pvt. Ltd. : [1963]3SCR209 , the legislative field 'market' (Entry-48 List-I) was construed as a specific entry which abstracts from the general entry relating to 'trade and commerce within the State' (Entry-26 of State List), the legislative field of 'future markets.' Consequently, it was held that the Forward Contracts (Regulation) Act 1952 was a law within the exclusive field enumerated in Entry-48 of Union List, even though (on a broader construction) it could be a law with reference to 'trade and commerce' Entry-26) of List-II).

102. In ITC Ltd. v. Agricultural Produce Market Committee, : [2002]1SCR441 (same as F.No.43) a Constitution Bench of the Supreme Court had to consider whether its earlier judgment in ITC Ltd., v. State of Karnataka - (the Karnataka ITC case (1985) Supp. SCC 476 was correct. In the Karnataka ITC case (44 supra), the majority had held that the provisions of the Karnataka Agricultural Produce Marketing (Regulation) Act, 1966 are invalid as repugnant to the Union legislation - the Tobacco Board Act, 1975 and that the 'Tobacco' should be excluded from the Schedule of the Karnataka law. Sabyasachi Mukharji, J recorded the minority view that the State legislation and the Tobacco Board Act, 1975 could co-exist. The constitution bench had therefore to determine whether the several State legislations relating to market committees could co-exist with the Tobacco Board Act, 1975 in respect of the sale of tobacco in market areas within the frame work of the agricultural produce marketing acts. The Constitution Bench, majority (Y.K. Sabharwal, Ruma Pal and Brijesh Kumar, JJ) in concurring opinions concluded that the word 'industry' in Entry-24 of List-II cannot be so read to include matters falling within Entries 28 and 62 of the State List, which are expressly enumerated as within the State's exclusive legislative field. Consequently, Entry-52 of List-1 which provides for paramountcy of the Union Legislation, in respect of an industry where the Parliament declares the control of such industry (specified in the Union legislation to be expedient in the public interest), must be accorded a restricted meaning so as not to eclipse the legitimate ambit and scope of other exclusively enumerated legislative heads, in the State List. The Constitution Bench majority concluded that Entry-52 of List-1 does not over-ride Entry-28 in List-1! and that Entry-28 in List-11 is not subject to Entry-52, unlike Entry-24 of List-11. As a result, the majority held that State Legislatures are competent to enact laws in respect of sale of agricultural produce including tobacco in market areas and for levy and collection of market fee on such produce and that the Parliament would not be competent to legislate in respect of subjects and matters exclusively consecrated to the State legislative fields, under the guise of legislating under Entry-52 of the Union List and that the Tobacco Board Act and the State Markets Acts operate in their respective fields.

103. In Re. Special Reference No. 1 of 2001, (2001) 4 SCC 484, the Supreme Court was required to render an advisory opinion (under Article 143 of the Constitution) on the questions:

(1) Whether natural gas in whatever physical form including liquefied natural gas (LNG) is a Union subject covered by Entry-53 of List-I and the Union has exclusive legislative competence to enact laws on natural gas.

(2) Whether States have legislative competence to make laws on the subject of natural gas and liquefied natural gas under Entry-25 of List-II of the Seventh Schedule to the Constitution.

(3) Whether the State of Gujarat had legislative competence to enact the Gujarat Gas (Regulation of Transmission, Supply and Distribution) Act, 2001.

The relevant scope and meaning of Entry-53 of List-I and Entry-25 of List-I I (of the Seventh Schedule) had to be determined. In considering whether the expression 'Petroleum and Petroleum products' or 'mineral oil resources' in Entry-53 of List-I includes 'natural gas or its derivative forms', the Supreme Court (Per K.G. Balakrishnan, J) went into the chemical and other characteristics of natural gas as defined in encyclopaedias and texts on science, the dictionary meanings of 'natural gas' and definitions of 'petroleum' in legislations of other countries such as the United Kingdom and Australia. The Supreme Court opined that Entry-25 of List-II (Gas and (Gas and Gas-works) means 'any work' or 'industry' relating to manufactured gas which is often used industrially, medically and for other similar purpose and that the word 'gas' in Entry-25 of List-II takes it is colour from other words 'gas-works'. In the result, the Supreme Court answered the Presidential reference as under:

(1) Natural gas including LNG is a Union subject covered by Entry-53 of List-I and the Union has exclusively legislative competence to enact laws on 'natural gas'.

(2) The states have no legislative competence on the subject of 'natural gas and LNG', under Entry-25 of List-II; and

(3) The Gujarat Legislation of 2001 insofar as its provisions related to 'natural gas or LNG' are concerned, are without legislative competence and the Act is pro tanto, ultra vires the Constitution.

In the case on hand, the core issue that falls for consideration (under issues E & F) is whether the legislative field of 'incorporation, regulation and winding up of co-operative societies' (Entry-32 of List-11) encompasses also the subject of 'banking' by co-operative societies and, therefore, the legislative field 'banking' (Entry-45 List-1) excludes the subject of 'banking' when carried on by a co-operative society. While on this aspect, it is instructive to notice that none of the respondents-banks have assailed the provisions of the 1949 Act though this Union law expressly enacts an elaborate and pervasive regulatory architecture for certain specified classes of co-operative societies falling to be characterised as a co-operative bank, as the expression is defined in Section 5(cci) of the 1949 Act.

104. In Union of India and Anr. v. Delhi High Court Bar Association and Ors., 2002 (2) Supreme 435 the validity of the 1993 Act was challenged, inter alia on the ground that the Parliament had no legislative competence. In considering the issues presented, the Supreme Court declared (Para 14) '...There can be little doubt that under Entry 45 of List I, it is the Parliament alone which can enact a law with regard to the conduct of business by banks. Recovery of dues is an essential function of any banking institution. In exercise of its legislative power relating to banking, the Parliament can provide the mechanism by which monies due to the Banks and Financial Institutions can be recovered. ...As none of the items in the Lists are to be read in a narrow or restricted sense, the term 'Banking' in Entry 45 would mean legislation regarding all aspects of Banking including ancillary or subsidiary matters relating to Banking. Setting up of an adjudicatory body like the Banking Tribunal relating to transactions in which banks and financial institutions are concerned would clearly fall under Entry 45 of List I giving the Parliament specific power to legislate in relation thereto'. (Emphasis added).

105. From the above decision the principle should be considered as beyond disputation that providing an institutional mechanism for resolution of disputes relating to the banking business and constitution of special Tribunals to entertain and determine the claims of banks for recovery of the debts due to them, are matters eminently and exclusively within the spectrum of the legislative field 'Banking' in Entry 45 of List I. Having regard to the exclusivity of the enumerated fields of legislation of the Union List and the paramountcy accorded to the Union legislative power (Article 246(1)), the Legislatures of the States must be considered and declared as denuded of any legislative power to regulate the business of banking, regardless of the existence or otherwise of a Union legislation covering the field. Consequently the 1964 Act - a State Act, cannot provide for the adjudication of disputes relating to banking business even where such business is pursued by a co-operative society (a co-operative bank). In view of the provisions of the 1993 Act, we hold and declare that it is the Tribunals constituted under this Act that have the sole and exclusive power, authority and jurisdiction to entertain and determine the claims of Co-operative banks (subject to the monetary parameters prescribed in Section 1(4) of the Act). This jurisdiction of the Tribunals under the 1993 Act is to the exclusion of civil courts and all other authorities (Section. 18 of the 1993 Act) - in this connection see also Allahabad Bank v. Canara Bank and Anr., AIR 2000 SC 1535.

106. In The Shamrao Vithal Co-operative Bank Ltd., Bombay and Anr. v. Star Glass Works, Mumbai and Ors., AIR 2003 Bombay 205 (D.B.) a Division Bench of the Bombay High Court had considered the' very question whether the debts to a Co-operative bank fall within the adjudicative domain of the Tribunals constituted under the provisions of the 1993 Act and whether a Co-operative Bank is a 'Banking Company' within the meaning of Section 2(e) of the said Act. R. M. Lodha. J speaking for the Division Bench in Shamrao's case observed: 'what is already covered in Section 5(c) of the Banking Regulation Act by virtue of insertion of part V and particularly Section 56(a)(i) to the effect that throughout the Act unless the context otherwise required, the references to 'banking company' or 'the company' or 'such company' shall be construed as references to the co-operative bank cannot be excluded by giving such meaning to the expression 'banking company' which was never intended and contemplated by the Legislature'. Accordingly the Bombay Division Bench held that the provisions of the 1993 Act are applicable to co-operative banks as well and declined to follow the judgment of the Division Bench of the Rajasthan High Court in Phoneix Impex v. State of Rajastan and Ors., (D.B.) characterising the reasoning adopted by the Rajastan Division Bench for coming to a contrary conclusion as 'fallacious.'

107. The question again came to be considered by a Full Bench of the Bombay High Court in Narendra Kantilal Shah v. Joint Registrar, Co-operative Societies, : AIR2004Bom166 (F.B.). Thakkar, C. J. (as his Lordship then was) approving the decision of the Division Bench in Shamrao's case (supra) observed (Para 25): 'In our opinion, once the Parliament by enacting Amending Act 23 of 1965 includes a cooperative bank in the same class as a company doing the business of banking for the purpose of regulation of the banking business would not have intended to treat the banking companies and the co-operative banks differently in relation to one aspect of the banking business namely recovery of dues. ___ Therefore, so far as the aspect of business of banking is concerned, the cooperative banks and the companies doing the business of banking are in one class'. The Bombay Full Bench further observed: (Para 26) 'There can be little doubt that under Entry 45 of List I, it is the Parliament alone which can enact a law with regard to the conduct of business by the banks. Recovery of dues is an essential function of any banking institution. In exercise of its legislative power relating to banking, Parliament can provide the mechanism by which monies due to the banks and financial institutions can be recovered. ___ As none of the items in the lists are to be read in a narrow or restricted sense, the term 'banking' in Entry 45 would mean legislation regarding all aspects of banking including ancillary or subsidiary matters relating to banking. Setting up of an adjudicatory body like Banking Tribunal relating to transactions in which banks and financial institutions are concerned would clearly fall under Entry 45 of List I giving Parliament specific power to legislate in relation thereto'. The Narendra Kantilal Shah Full Bench concurred with the Division Bench view in Shamrao's case (60 supra) in disagreeing with the approach and conclusions of the Rajastan Division Bench in Phoneix Impex case (61 supra).

108. On behalf of the respondent banks reliance is placed on certain decisions in support the contention that regulation of even the banking business activity and therefore provision of a mechanism for settlement of disputes relating to banking business of a cooperative society is ancillary and incidental to regulation of co-operative societies, a State Legislative field. We now proceed to consider these precedents.

109. In Sant Sadhu Singh's case (50 supra) a Division Bench of the Punjab and Haryana High Court considered challenge to the validity of the Punjab Cooperative Societies (Amendment) Ordinance (1969) and the Punjab Co-operative Societies (Amendment) Act, 1969. The petitioners were the elected Directors of the Central Cooperative Bank Ltd. Ropar who assailed certain provisions of the State Legislation on the ground that they substantially curtailed the rights and powers of the shareholders in managing the Co-operative Banks and that the legislations were incompetent and beyond the scope of the State's authorised legislative powers. The Division Bench repelled the challenge and held: 'In a broad sense, the controlling of the working of a Society doing banking business will in some measure concern the business of banking and thus may bring it within the ambit of entry No. 45, List I. Thus there would be some overlapping. But in order to give a harmonious construction to both the entries, No. 45 and 44, it must be held that only business of banking as such falls within the ambit of entry No. 45; whereas the incorporation of the Corporations and other matters relating to them fall within the ambit of entry No. 43. Therefore, the constitution of the Societies and their working would have fallen within the ambit of entry No. 43 but for the fact that Co-operative Societies are excluded from its purview. The very fact that in entry No. 43, Corporations engaged in the business of banking are specifically mentioned, it clearly follows that Co-operative Societies doing that business were taken out of entry No. 43, List I, and deliberately put in entry No. 32, List II; In view of the clear wording of the two entries, I am unable to agree with the contention of the Learned Counsel for the petitioners, that the State Legislature has no jurisdiction to regulate the functioning of the Co-operative Societies engaged in the Business of Banking'. It is apparent that in a limited sphere, Entries 43, 44 and 45 of List I and 32 of List II have a measure of overlapping potency. In view of established principles of construction and interpretation of Legislative fields, ancillary, incidental and subsidiary aspects of an authorised legislative field also fall within the enumerated field of legislative power. There is therefore inherent in such a scheme of power distribution a measure of concurrency of Legislative power even in the area of exclusively enumerated legislative fields, as incidental trenching is permitted when the pith and substance of the legislation is within the authorised legislative field. That is the correct approach to the understanding of the Punjab Division Bench decision in Sant Sadhu Singh's case.

110. In Nagpur District Central Cooperative Bank Ltd. Nagpur and Anr. v. Divisional Joint Registrar, Co-operative Societies, Nagpur and Anr., : AIR1971Bom365 a Division Bench considered the scope of Entries 43 and 45 of List I and 32 of List II. The petitioner co-operative bank was registered under the Maharashtra Co-operative Societies Act, 1960 and was in the banking business. The Divisional Joint Registrar of the State issued a notice proposing removal of the members of the elected management (Chairman and the Directors) for alleged irregularities. This notice was challenged along with the provisions of Section 78 of the State Act. The contention in substance was that the State Legislature was incompetent to make a law with respect to any bank including a cooperative society doing banking business or to legislate in respect of any matter, which relates directly or indirectly to banking as the subject is within the exclusive competence of the Union Legislature. The Bombay Division Bench relied on the decision and reasoning of the Punjab and Haryana Division Bench in Sant Sadhu Singh's case (50 supra) and held:

'...the legislation concerning the Co-operative Societies which would also include banking societies would fall in Entry No. 32 of List II and Section 78 of the Societies Act with which we are dealing, does fall in pith and substance under the topic in Entry 32 of List II. The aforesaid legislation is in its true nature and character for the purposes of governing or controlling the affairs of the Co-operative Societies and not 'banking''.

111. A Division Bench of the Kerala High Court adopted an identical approach in G. Gopinathan Nair and Ors. v. State of Kerala and Ors., : AIR1977Ker36 . Some shareholders of co-operative societies carrying on banking business and a co-operative bank too challenged the validity of a provision of the State co-operatives Act and the rules made there under. According to the petitioners, the State Legislature or Government had no competence to prescribe either by law or by rules the staff-pattern and conditions of service of employees of Co-operative Societies which are engaged in the business of Banking since the said subject-matter is governed exclusively by the 1949 Act. Balakrishna Eradi. J (as his Lordship then was) speaking for the Kerala Division Bench held (Para 6): 'The power to make laws in respect of Co-operative Societies registered under the Act is within the exclusive domain of the State Legislature since it is a subject covered by Entry 32 of List II in the Seventh Schedule of the Constitution. It was therefore fully open to the State Legislature to enact the provision contained in Section 80 of the Act empowering the State Government to classify co-operative societies according to their type and financial position to specify the staff pattern to be adopted by the different classes of co-operative societies and also to make rules relating to the qualifications, remuneration, allowances and other conditions of service of the officers and servants of the different classes of Co-operative Societies.' Another contention of the petitioners that the rule-making power conferred by Section 80 encroaches into the field occupied by the provisions relating to the same matters contained in the 1949 Act, was also repelled by the High Court on the ground except the areas specified and to the extent and manner specified in the 1949 Act, none of the other provisions of the said Act are applicable to Co-operative Societies and no such applicable provisions of the 1949 were shown to the Court that occupy or deal with the area covered by the impugned State Rules.

112. In Verendra Pal Singh and Ors. v. The District Assistant Registrar, Co-operative Societies, Etah and Anr., : (1980)4SCC109 the petitioners contended that the provisions of the UP. Co-operative Societies Act, 1965 were inapplicable to Co-operative Banks. Chinnappa Reddy, J Held that in pith and substance the State Act deals with co-operative societies and its provisions trench upon 'Banking' only to an incidental extant and do not take the State legislation beyond the competence of the State Legislative field. The view taken, the interpretation and approach as to the harmonising of the Entries in Lists I and II and the constructions of their relative scope adopted by the Punjab and Haryana and the Bombay Division Benches in Nagpur District Central Co-operative Bank and in Sant Sadhu Singh's cases (63 and 50 supra) were approved by the Supreme Court.

113. A Division Bench of the Andhra Pradesh High Court in B. Suryanarayana and Ors. v. The Kolluru Parvathi Co-operative Bank Ltd. and Ors., : AIR1986AP244 adopted a similar approach in upholding a challenge to the proceedings of the Registrar winding up the Co-operative Bank in exercise of powers under the provisions of the 1964 Act. The Division Bench noticed the special provisions of the State Act (Sections 115-A and B) which require the Registrar to make an order for winding up of a Co-operative Bank when so required by the Reserve Bank of India and found that the exercise of powers by the Registrar were in conformity with the Union Legislation (the 1949 Act) and the Union Legislative field as well.

114. In Mehsana District Central Co-operative Bank Ltd., and Ors. v. State of Gujarat, : AIR2004SC1576 the Supreme Court (per H.K. Sema, J.) upheld the provisions of Section 71 of the Gujarat Co-operative Societies Act, 1962 (which received the assent of the President). The provision in question specified the institutions and types of securities in which a co-operative Society could invest or deposit its funds in Relying on the principles spelt out by the Supreme Court in M. Karunanidhi v. Union of India, : 1979CriLJ773 (a case dealing with entries in the concurrent field and applying the doctrine of repugnancy applicable to resolution of legislative conflicts in the concurrent field) and on the provisions of Section 2 of 1949 Act (the provisions of the said Act are in addition to and not in derogation of any other law for the time being in force), the Supreme Court held that the impugned provisions of the State Act are the dominant Legislation (having received the assent of the President under Article 254(2)), not repugnant to the provisions of the 1949 Act and that the intendment of the provisions were benign and socially relevant as well.

115. We now consider the decisions rendered by this court on the very issue whether a co-operative bank is a banking company within the meaning of the expression in the 1993 Act.

116. A learned single judge of this court in Hyderabad Co-operative Urban Bank Limited and Ors. v. S.M. Hussain Rasheed and Ors., 2003 (6) ALT 608 held that the Arbitrator or the Co-operative Tribunal (exercising powers under the provisions of the 1964 Act) had no jurisdiction and the jurisdiction to entertain and determine the claim of a co-operative bank for the debt due to it is a matter within the exclusive jurisdiction of the Tribunal constituted under the provisions of the 1993 Act. A co-operative bank was held to be a banking company within the meaning of expression in the 1993 Act.

117. In K. Jayaprakash Ram and Ors. v. Additional Director General of Police, CID, Hyderabad and Ors., 2003 (2) ALT (Crl.) 233 (A.P.) = 2003 (1) ALD (Crl.) 768 (A.P.) a learned Single Judge of this Court held that the Vasavi Cooperative Urban Bank, Hyderabad 'is only a society registered under the Societies Registration Act and doing banking business and is not a 'banking company' within the meaning of Section 5(c) of the Banking Regulation Act as it was not formed under the Companies Act, and therefore Section 2(c) of Act 17 of 1999 (the A.P. Protection of Depositors and Financial Establishments Act. 1999). which excludes the applicability of the Act to a banking company, has no application to it' (Para 24). This view was taken relying on the decision of the Rajasthan High Court Division Bench judgment in Phoneix Impex case (61 supra). In fact (in Para 15) it is recorded that the Vasavi Bank was registered under the 1964 Act. The factual error with regard to the Statute under which the Vasavi Bank was registered was carried through in para 30 also and this factual error perhaps led to the conclusion that the Vasavi Bank is a banking company within the meaning of the 1949 Act and is thus excluded from the operation of the provisions of the 1999 State Act. In any event the reasoning in the judgment proceeds on substantial reliance on the ratio of the Phoneix Impex case (61 supra). We have concluded that a co-operative bank is a banking company within the meaning of the expression in the 1949 and the 1993 Acts.

118. For reasons so elegantly and elaborately recorded by the Bombay High Court, Division Bench and Full Bench in Shamrao and Narendra Kantilal Shah cases (60 and 62 supra), we respectfully hold that the Phoenix Impex decision (61 supra) is erroneous and we express our inability to be persuaded by its reasons and to concur with its conclusions. For reasons alike the decision of a Learned single judge of this Court in Jayaprakash Ram's case (70 supra) must be held to be incorrectly decided (if it were to be understood as having laid down that a co-operative bank registered under the 1964 Act is not a banking company within the meaning of the expression in the 1949 Act and therefore the 1993 Act as well). We declare accordingly.

119. That the 1949 Act is a Union legislation referable to Entry-45 List-I is not in contention. That the 1993 Act is equally a Union legislation referable to the exclusive Union field (Entry-45 of List-I) cannot be disputed - Delhi High Court Bar Association case (58 supra), where the Supreme Court has held that recovery of dues is an essential function of any banking institution and that the provision of a mechanism for recovery of such dues is eminently a matter intrinsic to the legislative field 'banking'. Since recovery of dues is an essential function of banking institutions, it would logically follow that the subject-recovery of dues to banking institutions is a core area, a basic and integral component of the legislative field 'banking' -[a field exclusively authorised to the Union and fortified by a non-obstante clause-Article 246(1)]. In our considered view, in our constitutional scheme of distribution of legislative powers, the 1993 Act is a legislation which in pith and substance is referable to an essential and core area (and not ancillary or incidental) of the legislative field, banking.

120. It is a settled principle of constitutional interpretation and in particular with respect to those areas of the Constitution dealing with distribution of legislative powers that while identifying the legislative field to which an impugned legislation appropriately belongs and by application of the pith and substance doctrine, the apparent label or title of the legislation is neither conclusive nor determinative. The legislation should be carefully examined to ascertain the underlying legislative purposes and to the achievement of which ends its provisions are directed and by what means. On such holistic ascertainment of the pith and substance of the legislation, should the ascertainment be made as to which legislative field it appropriately pertains. Applying this principle, the mere title of 1964 Act would not per se justify the conclusion that the Act as a whole legitimately pertains to the field: 'incorporation, regulation and winding-up...of co-operative societies' (Entry-32, List-I). Such of those provisions of the 1964 Act, for example Sections 61 and 71 if expansively interpreted and broadly construed could be considered as permitting arbitration or adjudication even of the claims of a cooperative bank with respect to the debts due to it from its members. These provisions would despite their occurrence in an Act referable to the State legislative field be nevertheless provisions which transgress into and deeply impact the core of the exclusive Union legislative field (viz., recovery of debts due to the banks-an integral component of the functions of banking institutions), a field allocated exclusively to the Union and fortified by a paramountcy clause. Since recovery of debts due to banks is an essential attribute of the banking business, we have held that the subject falls within the core of the Union legislative field. Consequently, we hold that the subject of recovery of debts due to cooperative banks cannot be considered as ancillary or incidental to the State legislative field: 'incorporation, regulation and winding up of co-operative societies'. Further, to reconcile and harmonise the two entries (Entry 45, List I and Entry 32, List II) with due regard to the federal architecture of the Constitution, the appropriate view is that out of the broad and generally enumerated field 'incorporation, regulation and winding up of ____ Co-operative Societies', the subject/ aspect of 'Banking' is subtracted and allocated to the Union.

121. Alternatively, even if ex-hypothesi the area of recovery of debts due to banks is considered ancillary and incidental both to the legislative field of banking and to the legislative field of regulation of co-operative societies, even so in the extant context there is a clear operational incompatibility between specific provisions of the 1964 Act and the provisions of the 1993 Act. Even if in the area of ancillary and incidental powers of two levels of Government, there is a permitted concurrency of legislative powers, the Union legislation is entitled to dominant treatment on the paramountcy principle [Article 246(1)]. Consequently the provisions of 1993 Act would prevail and comprehensively eclipse those provisions of 1964 Act that enable entertainment, adjudication and execution of claims of a co-operative bank with respect to the debts due to it from its members (to the extent such claims fall within the provisions of the 1993 Act).

122. In the considered view of this court, guided by the settled principles as to interpretation of the constitutional scheme of distribution of legislative powers between the different levels of the government, we conclude that the legislative field of 'banking' being a specific entry abstracts from the general and broad Entry 'incorporation, regulation and winding up of .... Co-operative societies' in Entry-32 of List-II the subject of 'banking' even where 'banking' is carried or pursued by a co-operative society.

123. On the above analysis those provisions of the 1964 Act which confer an adjudicatory domain on the Registrar (in respect of claims of a Co-operative bank for recovery of dues from its members) must be declared invalid as beyond the legislative competence of the State as also in clear and direct conflict with the provisions of the 1993 Act. However, on the application of yet another principle of interpretation of statutes, which is applicable eminently to the interpretation of constitutional provisions as well, it is not necessary to employ the amputational remedy. The 'Reading down' doctrine could be gainfully employed for this purpose. This doctrine requires that whenever possible a law is to be interpreted as being within the power of the enacting legislative body. In practice this means that the general language in a law, which is literally apt to extend beyond the power of the enacting legislature, will be narrowly construed so as to keep it within the permissible scope of power. 'Reading down' is a principle of interpretation. It is available only when the language of the law will bear the limited valid meaning as well as the invalid extended meaning. In such circumstances, the doctrine applies and the limited meaning is required to be selected. This doctrine is somewhat akin to the principle of severability. Both are techniques employed by courts to mitigate the impact of judicial review. Reading down achieves the remedial purpose by narrowly interpreting the challenged law while the severance doctrine involves holding a part of the law to be invalid. Reading down is also an evolution of the established principle of presumption of constitutionality, according to which the enacting legislative body is presumed to have meant to enact provisions which do not transgress the limits of its constitutional powers. For this reason, the general language in a law which appears to transgress these limits must be read down so that the law is confined within the authorized territory of the legislature. The application of this principle is richly illustrated by a number of precedents: In re, Hindu Women's Rights to Property Act, AIR 1949 F.C. 72; Kedarnath v. State of Bihar, : AIR1962SC955 ; New India Sugar Mills v. Commissioner of Sales Tax, AIR 1964 SC 1207; Githa Hariharan v. Reserve Bank of India, : [1999]236ITR380(SC) ; and B.R. Enterprises v. State of U.P., AIR 1999 SC 1906.

124. Does the phraseology employed in Sections 61 and 71 of the 1964 Act permit application of the principles of 'reading down', is an essential enquiry. The language of Section 61 is in broad terms and expansively construed would include the conferral of power on Registrar to adjudicate upon a dispute between a Co-operative Bank and its members in respect of recovery of a debt due to it from such members. The provisions of Section 61 could however be restrictively construed (read down) as to exclude the conferral of such a power on the Registrar which leads to transgression by the State legislature of the limits of its legislative territory. We therefore hold (on a restrictive construction) that Section 61 of the 1964 Act does not enable the Registrar of Co-operative Societies to adjudicate upon any dispute regarding debts due to a Co-operative Bank.

125. Section 71 begins with a non-obstante provision and confers power on the Registrar to issue a certificate for recovery of amounts advanced by a society to its members. A.P.Act 10/1970 (whereby the Registrar is empowered to issue such certificates even on an application made inter alia by a financing bank) amended the provision as initially enacted. Section 71 clearly and precisely confers powers on the Registrar to recover the arrears of any sums advanced to a member by a financing bank. In our examination of the Constitutional scheme of distribution of legislative powers and on consideration of various precedents that guide the interpretation and construction of legislative entries, in particular precedents that have elucidated the scope and content of the Entry banking in list-I, we are compelled to the conclusion that the subject - recovery of debts due to a Bank (including a Co-operative Bank) is an integral component of the banking business and therefore a core area of the legislative field banking in the Union list. Therefore, in the scheme of distribution of legislative powers, from the general Entry 'incorporation, regulation and winding up of ___ Co-operative Societies' (an exclusive State field, Entry 32, List-II), the subject banking must be understood as having been subtracted for inclusion in the exclusive Union field (Entry 45, List I). Consequently, the legislature of a State has no competence to legislate upon the subject of recovery of debts due to a Co-operative Bank, even as an ancillary, subsidiary or incidental aspect of its exclusive legislative field of incorporation, regulation and winding up of Co-operative Societies. We therefore hold that Section 71(1) of the 1964 Act insofar as it expressly enables recovery of any sum advanced to any of its members, inter alia by a financing bank must be held incompetent and ultra vires the competence of the legislature of the State of Andhra Pradesh.

126. To avoid striking down the entirety of Section 71(1) of the 1964 Act, the doctrine of severability could be employed. The principle in this area is that if a law cannot be saved by construing it consistent with its constitutionality, it must be considered whether it could be partly salvaged. When a part of the law is held to be inconsistent with a higher law such as the Constitution, it could be saved to the extent of its conformity with the higher law by applying the doctrine of severability. The principles for applying the doctrine of severability were succinctly stated by Venkatrama Aiyyar, J. in Chamarbaugwala v. Union of India, : [1957]1SCR930 . The Supreme Court on an analysis of the authorities and precedents on the aspect culled out seven principles that guide the application and method of employing the doctrine of severability:

'1. In determining whether the valid parts of a statute are separable from the invalid parts thereof, it is the intention of the legislature that is the determining factor. The test to be applied is whether the legislature would have enacted the valid part if it had known that the rest of the statute was invalid. 2. If the valid and invalid provisions are so inextricably mixed up that they cannot be separated from one another, then the invalidity of a portion must result in the invalidity of the Act in its entirety. On the other hand, if they are so distinct and separate that after striking out what is invalid, what remains is in itself a complete code independent of the rest, then it will be upheld notwithstanding that the rest has become unenforceable. 3. Even when the provisions which are valid are distinct and separate from those which are invalid, if they all form part of a single scheme which is intended to be operative as a whole, then also the invalidity of a part will result in the failure of the whole. 4. Likewise, when the valid and invalid parts of a statute are independent and do not form part of a scheme but what is left after omitting the invalid portion is so thin and truncated as to be in substance different from what it was when it emerged out of the legislature, then also it will be rejected in its entirety. 5. The separability of the valid and invalid provisions of a statute does not depend on whether the law is enacted in the same section or different section; it is not the form, but the substance of the matter that is material, and that has to be ascertained on an examination of the Act as a whole and of the setting of the relevant provisions therein. 6. If after the invalid portion is expunged from the statute what remains cannot be enforced without making alterations and modifications therein, then the whole of it must be struck down as void, as otherwise it will amount to judicial legislation. 7. In determining the legislative intent on the question of separability, it will be legitimate to take into account the history of the legislation, its object, the title and the preamble to it.

127. Applying the above principles we are of the considered view that the offending and incompetent components of Section 71(1) can be severed so as to save the rest of the provision. Accordingly the words or financing bank in Section 71(1) are struck down and declared invalid. The other provisions of Section 71(1) could be restrictively construed as we have done in respect of Section 61. On such restrictive construction, the provisions of Section 71(1) confer no power to the Registrar to issue a certificate for recovery of arrears due to a financing Bank. The provisions of Section 71(1) (after excision of the invalid words) would not trespass into unauthorised legislative territory.

128. By way of abundant caution and to avoid any misconception, we clarify and declare that it is only those adjudications, arbitrations or determinations, pursuant to claims by a Co-operative Bank for recovery of amounts due to it [lent or advanced during the course of or in pursuance of the banking business of such Co-operative Bank - banking business as restrictively construed in R.C. Cooper v. Union of India (52 supra)], that are beyond the determination or adjudicative domain of the Registrar under the provisions of the 1964 Act (State) Act. Other disputes pertaining to transactions to which a Co-operative Bank is a party and which are not part of such banking business of a Co-operative Bank could be adjudicated or determined by the Registrar under the provisions of Section 64, 71 or any other applicable provision of the 1964 Act.

CONCLUSIONS:

129. On the analysis above, we conclude, declare and hold:

(a) That recovery of monies (whether called a debt, arrears or by any other name) due to a banking institution including a Co-operative Bank is a matter that integrally falls within the core and substantative area of the legislative field Banking in Entry-45, List-I of the Seventh Schedule of the Constitution.

(b) The above subject matter is therefore excluded from the State legislative field in Entry-32, List-II of the Seventh Schedule.

(c) Recovery of monies due to a Co-operative Bank is not a matter that falls within the incidental and ancillary areas of the State legislative field in Entry-32, List-II of the Seventh Schedule.

(d) A Co-operative Bank as defined in Section 5(cci) of the Banking Regulation Act, 1949 (as amended by Act 23 of 1965) is a Bank and a Banking company within the meaning of Section 2(d) and (e) of the Recovery of Debts due to Banks and Financial Institutions Act, 1993.

(e) A Tribunal constituted under the provisions of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 has exclusive jurisdiction, powers and authority to entertain and decide application from a Co-operative bank for recovery of debts due to such bank, subject to the pecuniary limits of jurisdiction specified by or under the said Act.

(f) Section 71(1) of the 1964 Act in so far as it expressly confers power on the Registrar to issue a certificate for recovery of arrears of any sum advanced by a financing bank to its members, is beyond the legislative competence of the State.

(g) The words 'or financing bank' in Section 71(1) of the Andhra Pradesh Co-operative Societies Act, 1964 expressly result in the provisions of the Section transgressing the State's legislative limits. These words being severable are therefore declared invalid.

(h) The provisions of Section 61 and 71 {after striking down of the words in Section 71(1)} are restrictively construed as excluding any jurisdiction, powers or authority in the Registrar in respect of recovery of debts or arrears due to a Co-operative Bank, its members or others which are advanced, lent or otherwise made over to such member or person, during the course of the banking business of such Co-operative Bank.

(i) (a) No claim, application or other proceedings lodged or instituted before the Registrar, by a Co-operative Bank for recovery of the amount/ debt due from a member or other person pursuant to advances made in the course of its banking business could be entertained or determined by the Registrar.

(b) Any award or order passed, certificate issued or an order in execution proceedings, by the Registrar on any claim or application of a Co-operative Bank, is patently and inherently without jurisdiction, null, void and inoperative.

(j) During the pendency of these writ petitions, by virtue of various court orders certain amounts have been deposited by some of the writ petitioners. At no point of time these writ petitioners have disputed the liability of the amounts already deposited with the banks in pursuance of the orders of the Court.

Therefore, we direct that the amounts deposited shall be retained by the concerned banks and adjusted against the liabilities, if any, that remain to be determined pursuant to proceedings initiated by the respective banks in accordance with this judgment.

(k) In view of the declaration in this judgment, the respondent-banks are at liberty to proceed with the recovery of debts due to them, before the appropriate forum and under the appropriate law, in accordance with this judgment.

(I) As the proceedings initiated before the Registrar or any other authority under the 1964 Act were bona fide and as considerable time had been consumed in the litigation in this case also, the respondents-banks shall be entitled to set off the period spent in pursuing their claims before the Registrar or other for a and before this Court, in computing the period for filing appropriate applications/ claims before the appropriate authority/Tribunal.

130. Apart from writ petitions mentioned earlier in this judgment, this batch consists of certain other matters. Writ Appeal Nos. 664 and 669 of 2001 are directed against the dismissal of Writ Petition Nos. 3238 and 3367 of 2001. These writ petitions are filed challenging the awards passed by the Registrar on claims preferred by the Charminar Co-operative Urban Bank Limited. The value of the debt determined and directed to be paid by each of the petitioners is over Rs. 10 lakhs. The writ petitions were dismissed by the common order of the learned single Judge on the ground that each of the petitioners had pursued the alternative remedy of an appeal to the Co-operative Tribunal.

131. Civil Revision Petition Nos. 3378, 3379 and 3380 of 2002 are filed, under Article 227 of Constitution of India, against the certificates issued by the Registrar under Section 71(1) of the A.P.Co-operative Societies Act, 1964 in proceedings bearing reference Nos. ARC/16/1999/R-1, ARC/4/ 1999/R-1 and ARC/05/01-R-1 respectively, determining the liability of the respective revision petitioners to the A.P.State Co-operative Bank in amounts in excess of Rs. 10 lakhs each.

132. Writ Appeal No. 1754 of 2004 is directed against an interlocutory order of a learned single Judge granting stay of further steps in the execution proceedings pursuant to a certificate dated 14-06-2004 issued by the Registrar in respect of a claim of the Vasavi Co-operative Urban Bank Limited, Malakpet. The grievance in the appeal is as regards the condition on which the interim stay was granted viz., that the petitioner should deposit half the amount due under the impugned award. The certificate was for an amount in excess of Rs. 10 lakhs.

133. Writ Petition No. 18535 of 2004 has been filed by the appellant in Writ Appeal No. 1754 of 2004 assailing a certificate of the Registrar dated 14-06-2004 issued under Section 71(1) of the A.P.Co-operative Societies Act, 1964 determining the liability of the appellant-petitioner in amount in excess of Rs. 10 lakhs and directing payment of the said amount by him to the Vasavi Co-operative Urban Bank Limited. W.A.No. 1754 of 2004 is filed by the writ petitioner aggrieved by the conditions incorporated in an interim order of a learned single Judge. Having regard to the subject matter of the writ petition, Writ Petition No. 18535 of 2004 is taken up and disposed of in terms of the declarations and directions in this judgment and in the circumstances Writ Appeal No. 1754 of 2004 is dismissed as infructuous.

134. In the result the several Writ Petitions including W.P.No. 18535 of 2004 Writ Appeal Nos. 664 and 669 of 2001 and C.R.P. Nos. 3378, 3379 and 3380 of 2002 are allowed in terms of declarations and directions in this judgment.

135. There shall be no order as to costs.

ANNEXURE

CONSTITUTION OF INDIA

ARTICLE 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 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, 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 III in the Seventh Schedu1' (in this Constitution referred to as the 'Concurrent List').

(3) Subject to Clauses (1) and (2), the Legislature of any 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').

(4) Parliament has power to make laws with respect to any matter for any part of the territory of India not included [in a State] notwithstanding that such matter is a matter enumerated in the State list.

ARTICLE 254: Inconsistency between laws made by Parliament and laws made by the Legislatures of States

(1) If any provision of law made by the Legislature of a State is repugnant to any provision of a law made by Parliament which Parliament is competent to enact, or to any provision of an existing law with respect to one of the 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 Legislature of the State shall, to the extent of the repugnancy, be void.

(2) Where a law made by the Legislature of State [***] with respect to one of the matters enumerated in the Concurrent List contains any provision repugnant to the provisions of 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 : 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 of the State.

SEVENTH SCHEDULE

[Article 246]

LIST I - UNION LIST

43. Incorporation, regulation and winding up of trading corporations, including banking, insurance and financial corporations but not including co-operative societies.

45. Banking

LIST II - STATE LIST

32. Incorporation, regulation and winding up of corporation, other than those specified in List I, and universities; unincorporated trading, literacy, scientific, religious and other societies and associations; co-operative societies.

THE A.P.CO-OPERATIVE SOCIETIES

ACT, 1964

Chapter VIII

Settlement of Disputes

61. Disputes which may be referred to the Registrar:-- (1) Notwithstanding anything in any law for the time being in force, if any dispute touching the constitution, management or the business of a society, other than a dispute regarding disciplinary action taken by the society or its committee against a paid employee of the society, arises-

(a) among members, past members and persons claiming through members, past members and deceased members; or

(b) between a member, past member or person claming through a member, past member or deceased member and the society, its committee or any officer, agent or employee of the society; or

(c) between the society or its committee, and any past committee, any officer, agent nor employee, or any past officer, past agent, or past employee or the nominee, heir or legal representative of any deceased officer, deceased agent or deceased employee of the society; or

(d) between the society and any other society, such dispute shall be referred to the Registrar for decision.

Explanation:-- For the purpose of this sub-section a dispute shall include-

(i) a claim by a society for any debt or other amount due to it from a member, past member, the nominee, heir or legal representative of a deceased member, whether such debt or other amount be admitted or not.

(ii) a claim by surety against the principal debtor where the society has recovered from the surety any amount in respect of any debt or other amount due to it from the principal debtor as a result of the default of the principal debtor whether such debt or other amount due to be admitted or not.

(iii) a claim by a society against a member, past member, or the nominee, heir or legal representative of a deceased member for the delivery of possession to the society of land or other immovable property resumed by its for breach of the conditions of assignment or allotment of such land or other immovable property.

(2) If any question arises whether a dispute referred to the Registrar under this section is a dispute touching the constitution, management or the business of a society, such question shall be decided by the Registrar.

(3) Every dispute relating to, or in connection with, any election to a committee of a society shall be referred for decision to the Tribunal having jurisdiction over the place where the main office of the society is situated, whose decision thereon shall be final.]

(4) Every dispute relating to, or in connection with any election shall be referred under Sub-section (3) only after the date of declaration of the result of such election.

70. Power of the Registrar to recover certain amount by attachment and sale of property and execution of orders:--(1) The Registrar or any person authorised by him in this behalf may, without prejudice to any other mode of recovery provided by or under this Act, recover-

(a) any amount due under a decision or an order of the Registrar, or any person authorised by him, or an arbitrator;

(b) any amount ordered to be paid towards the expenses of a general meeting of a society called under Section 32;

(c) any amount awarded by way of costs under Section 56 to a society including a financing bank or a Federal society;

(d) any amount payable towards fees under Section 58;

(e) any amount ordered under Section 60 to be repaid to a society or recovered as a contribution to its assets; or

(f) any amount ordered under Section 66 to be recovered as a contribution to its assets, together with the interest, if any, due on such amount and the costs of process by the attachment and sale or by sale without attachment of the property of the person or the society against whom such decision or order, has been passed or obtained.

(2) Every order or decision made under Section 60, Section 71, Section 76 Section 77 or Section 78 for the recovery of any amount may be executed in the following manner:--

(a) by the Civil Court having local jurisdiction on a certificate signed by the Registrar or any person authorised by him in this behalf as if the order or decision were a decree of that Court; or

(b) by the Collector, on an application made to him within twelve years from the date fixed for payment in the order or decision and if no such date fixed from the date of the order or decision, along with a certificate signed by the Registrar or by any person authorised by him in this behalf, as if the amount due under the order or decision were an arrear of land revenue; or

(c) by the Registrar or any other person authorised by him, in this behalf, in the manner provided under Sub-section (1).

71. Recovery of debts:-- (1) Notwithstanding anything in this Act or in any other law for the time being in force and without prejudice to any other mode of recovery which is being taken or may be taken, the Registrar may, on the application made by a society or financing bank or federal society as the case may be, for the recovery of arrears of any sum advanced to any of its members and on furnishing a statement of accounts in respect of the arrears and after making such inquiry as he deems fit issue a certificate for the recovery of the amount stated therein to be due as arrears.

(2) Where the Registrar is satisfied that a society has failed to take action under Sub-section (1) in respect of any amount due as arrears, he may on his own motion, and after making such enquiry as he deems fit, issue a certificate for the recovery of the amount stated therein to be due as arrears and such a certificate shall be deemed to have been issued on an application made by the society concerned.

(3) A certificate issued by the Registrar under Sub-section (1) or Sub-section (2) shall be final and conclusive proof of the arrears stated to be due therein and the certificate shall be executed in the manner specified in Sub-section (2) of Section 70.

76. Appeal:-- (1) Any person or society aggrieved by any decision passed or order made under Section 6, Section 9A, Section 9B, Section 9C, Section 12A, Section 13, Section 15A, Section 16, Section 17, Section 19, Section 21, Section 21 A, Section 21AA, Section 23, Sub-section (3) of Section 32, Section 34, Section 34A, Section 60, Section 62, Section 64, Section 66, Section 70, Section 71, Section 73 and Section 117 may appeal to the Tribunal:

Provided that nothing in this sub-section shall apply to any order of withdrawal or transfer of a dispute under Sub-section (3) of Section 62.

(2) On a reference made by the Registrar of Co-operative Societies, the Tribunal shall call for and examine the records of any proceeding which is appealable to it for the purpose of satisfying itself as to the legality or propriety of any decision or order passed and where it appears to the Tribunal that any such decision or order should be modified, annulled or reversed, the Tribunal may pass such order thereon as it may deem fit:

(3) Any appeal under Sub-section (1) shall, subject to the other provisions of this Act, be preferred within sixty days from the date of communication to the appellant of the decision, refusal or order complained of but the Tribunal may admit an appeal preferred after the said period of sixty days, if it is satisfied that the appellant has sufficient cause for not preferring the appeal within the said period.

(4) In disposing of an appeal under this section, the Tribunal may, after giving the parties an opportunity of making their representations, pass such order thereon as it may deem fit.

(5) The decision or order of the Tribunal on appeal shall be final.

(6) The Tribunal may pass such interim orders pending the decision on the appeal as may deem fit.

(7) The Tribunal may award costs in any proceedings before that authority to be paid either out of the funds of the society or by such party to the appeal as the Tribunal may deem fit.

CHAPTER XIII-A

Eligible Co-operative Banks

115-A. Definitions:-- In this Chapter-

(a) The said Act' means the Deposit Insurance Corporation Act, 1961 (Central Act 47 of 1961).

(b) 'eligible Co-operative Bank' means a co-operative bank as defined in Clause (gg) of Section 2 of the said Act.

(c) 'Corporation' means the Deposit Insurance Corporation established under Section 3 of the said Act.

(d) 'Reserve bank' means the Reserve Bank of India constituted under the Reserve Bank of India Act, 1934 (Central Act 2 of 1934).

(e) all other expressions used in this Chapter but not defined shall have the meaning respectively assigned to them in the said Act.

115-B. Special Provisions applicable to eligible Co-operative Banks:--Notwithstanding anything in this Act, the following provisions shall apply to an eligible co-operative bank, namely:--

(i) an order for the winding up, or an order sanctioning a scheme of compromise or arrangement or of amalgamation or reconstruction, of the bank may be made under the provisions of this Act only with the previous sanction in writing of the Reserve Bank;

(ii) an order of the winding up of the bank shall be made under the provisions of this Act, if so required by the Reserve Bank in the circumstances referred to in Section 13-D of the said Act;

(iii) if so required by the Reserve Bank in the public interest or for preventing the affairs of the bank being conducted in a manner detrimental to the interests of the depositors or for securing the proper management of the bank, an order shall be made under the provisions of this Act for the supersession of the committee of management or other managing body (by whatever name called) of the bank and the appointment of a special officer therefor for such periods not exceeding five years in the aggregate as may, from time to time, be specified by the Reserve Bank;

(iv) an order for the winding up of the bank or an order sanctioning a scheme of compromise or arrangement or of amalgamation or reconstruction or an order for the supersession of the committee of management or other managing body (by whatever name called) of the bank and appointment of a special officer therefor made with the previous sanction in writing or on the requisition of the Reserve Bank shall not be liable to be called in question in any manner; and

(v) the liquidator or the insured bank or the transferee bank, as the case may be, shall be under an obligation to repay the corporation in the circumstances to the extent and in the manner referred to in Section 21 of the Act.]

121. Bar of jurisdiction of Court:--(1) Save as otherwise expressly provided in this Act, all orders, refusals, decisions or awards passed or directions issued or actions taken in accordance with this Act or the Rules made thereunder shall be final subject to the provisions for appeal, revision and review and no such order, refusal, decision, award, direction or action taken shall be liable to be called in question in any Court or Forum.

(2) While a society is being wound up, no suit or other legal proceedings relating to the business of such society shall be proceeded with, or instituted against, the liquidator as such or against the society or any member thereof on any matter touching the affairs of the society except by leave of the Registrar and subject to such terms and conditions as he may impose:

Provided that where the order of winding up is cancelled, the provisions of this sub-section shall cease to apply in relation to the society and any member thereof, but shall continue to apply to the person who acted as liquidator.

133. Act to override other laws:-- The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law.

***

THE BANKING REGULATION ACT, 1949

Section 2. Application of other laws not barred:

The provisions of this Act shall be in addition to and not, save as hereinafter expressly provided, in derogation of the Companies Act, 1956, and any other law for the time being in force.

Section 3. Act to apply to co-operative societies in certain cases:

Nothing in this Act shall apply to-

(a) a primary agricultural credit society.

(b) a co-operative land mortgage bank; and

(c) any other co-operative society, except in the manner and to the extent specified in Pan V.]

Section 5 Interpretation:

In this Act, unless there is anything repugnant in the subject or context,-

(b) 'banking' means the accepting, for the purpose of lending or investment, of deposits of money from the public repayable on demand or otherwise, and withdrawable by cheque, draft, order or otherwise.

(c) 'banking company' means any company which transacts the business of banking in India.

(d) 'company' means any company as defined in Section 3 of the Companies Act, 1956 (1 of 1956); and includes a foreign company within the meaning of Section 591 of that Act;

PART V

Application of the Act to Co-operative

Banks

Section 56 Act to apply to co-operative societies subject to modifications:

The provisions of this Act, as in force for the time being, shall apply to, or in relation to, co-operative societies as they apply to; or in relation to, banking companies subject to the following modifications, namely:--

(a) Throughout this Act, unless the context otherwise, requires,-

(i) references to a 'banking company' or 'the company' or 'such company' shall be construed as references to a co-operative bank,

(ii) references to 'commencement of this Act' shall be construed as references to commencement of the Banking Laws (Application to Co-operative Societies) Act, 1965.

(b) in Section 2, the words and figures 'the Companies Act, 1956, and' shall be omitted.

(c) in Section 5-

(i) after Clause (cc), the following clauses shall be inserted, namely:--

(cci) 'co-operative bank' means a state co-operative bank, a central co-operative bank and a primary co-operative bank.

(ccii) 'co-operative credit society' means a co-operative society, the primary object of which is to provide financial accommodation to its members and includes a co-operative land mortgage bank;

(cciii) 'director', in relation to a co-operative society, includes a member of any committee or body for the time being vested with the management of the affairs of that society;

(cciv) 'primary agricultural credit society' means a co-operative society,-

(1) the primary object or principal business of which is to provide financial accommodation to its members for agricultural purposes or for purposes connected with agricultural activities (including the marketing of crops); and

(2) the bye-laws of which do not permit admission of any other co-operative society as a member: Provided that this sub-clause shall not apply to the admission of a co-operative bank as a member by reason of such co-operative bank subscribing to the share capital of such co-operative society out of funds provided by the State Government for the purposes;

(ccv) 'primary co-operative bank' means a co-operative society, other than a primary agricultural credit society,-

(1) The primary objector principal business of which is the transaction of banking business;

(2) The paid-up share capital and reserves of which are not less than one lakh of rupees; and

(3) the bye-laws of which do not permit admission of any other co-operative society as a member: Provided that this sub-clause shall not apply to the admission of a co-operative bank as a member by reason of such co-operative bank subscribing to the share capital of such co-operative society out of funds provided by the State Government for the purpose;

(ccvi) 'primary credit society' means a co-operative society, other than a primary agricultural credit society.

(1) the primary object or principal business of which is the transaction of banking business;

(2) the paid-up share capital and reserves of which are less than one lakh of rupees; and

(3) the bye-laws of which do not permit admission of any other co-operative society as a member: Provided that this sub-clause shall not apply to the admission of a co-operative bank as a member by reason of such co-operative bank subscribing to the share capital of such co-operative society out of funds provided by the State Government for the purpose.

Explanation: If any dispute arises as to the primary object or principal business of any co-operative society referred to in Clauses (cciv), (ccv) and (ccvi), a determination thereof by the Reserve Bank shall be final.

(ccvii) 'central co-operative bank', 'co-operative society', 'primary rural credit society' and 'state co-operative bank' shall have the meanings respectively assigned to them in the National Bank for Agriculture and Rural Development Act, 1981.

(ii) 'Clauses (ff), (h) and (nb) shall be omitted.'(d) for Section 5A, the following section shall be substituted, namely:--

'5A. Act to override bye-laws, etc-

(1) The provisions of this Act shall have effect, notwithstanding anything to the contrary contained in the bye-laws of a co-operative society, or in any agreement executed by it, or in any resolution passed by it in general meeting, or by its Board of Directors or other body entrusted with the management of its affairs, whether the same be registered, executed or passed as the case may be, before or after the commencement of the Banking Laws (Application to Co-operative Societies) Act, 1965.

(2) Any provision contained in the bye-laws, agreement or resolution aforesaid shall, to the extent to which it is repugnant to the provisions of this Act become or be void, as the case may be'.

(e) in Section 6, in Sub-section (1),-

(i) in Clause (b), the words 'but excluding the business of a managing agent or secretary and treasurer of a company' shall be omitted:

(ii) in Clause (d), after the word 'company', the words 'co-operative society' shall be inserted;

(iii) in Clause (m), after the word 'company', the words 'or co-operative society' shall be inserted,

(f) for Section 7, the following section shall be substituted, namely:--

'7. Use of words 'bank', 'banker' or 'banking'.

(1) No co-operative society other than a co-operative bank shall use as part of its name or in connection with its business any of the words 'bank', 'banker' or 'banking', and no co-operative society shall carry on the business of banking in India unless it uses as part of its name at least one of such words.

(2) Nothing in this section shall apply to-

(e) a primary credit society, or

(b) a co-operative society formed for the protection of the mutual interest of co-operative banks or co-operative land mortgage banks, or

(c) any co-operative society, not being a primary credit society, formed by the employees of-

(i) a banking company or the State Bank of India or a corresponding new bank or a subsidiary bank of such banking company. State Bank of India or a corresponding new bank, or

(ii) a co-operative bank or a primary credit society or a co-operative land mortgage bank,

in so far as the words 'bank', 'banker' or 'banking' appears as part of the

name of the employer bank', or as the case may be, of the bank, whose subsidiary the employer bank is.']

(fi) in Section 8, for the proviso, the following proviso shall be substituted, namely:-

'PROVIDED that this section shall not apply-

(a) to any such business as aforesaid which was in the course of being transacted on the commencement of Clause (iii) of Section 42 of the Banking Laws (Amendment) Act, 1983, so, however, that the said business shall be completed before the expiry of one year from such commencement, or

(b) to any business as is specified in pursuance of Clause (o) of Sub-section (1) of Section 6;'

(fii) in Section 9, for the second proviso, the following provisos shall be substituted, namely:-

'PROVIDED FURTHER that in the case of a primary credit society which becomes a primary co-operative bank after the commencement of Clause (iii) of Section 42 of the Banking Laws (Amendment) Act, 1983, the period of seven years shall commence from the day it so becomes a primary co-operative bank.

PROVIDED ALSO that the Reserve Bank may, in any particular case extend the aforesaid period of seven years by such period as it may consider necessary where it is satisfied that such extension would be in the interests of the depositors of the co-operative bank'.']

(g) Sections 10, 10A, 10B, 10BB, 10C and 10D shall be omitted.

THE NATIONAL BANK FOR

AGRICULTURE AND RURAL

DEVELOPMENT ACT, 1981

SECTION 2: In this Act, unless the context otherwise requires,-

(c) 'Central co-operative bank' means the principal co-operative society in a district in a State, the primary object of which is the financing of other co-operative societies in that district;Provided that in addition to such principal society in a district, or where there is no such principal society in a district, the State Government may declare any one or more co-operative societies carrying on the business of financing other co-operative societies in that district to be also or to be a central co-operative bank or central co-operative banks within the meaning of this definition.

(f) 'co-operative society' means a society registered, or deemed to be registered, under the Co-operative Societies Act, 1912 (2 of 1912), or any other law relating to co-operative societies for the time being in force in any state.

(I) 'National Bank' means the National Bank for Agriculture and Rural Development established under Section 3.

(n) 'primary rural credit society' means a co-operative society by whatever name called,--

(1) which has as its object or business the provisions of financial accommodation to its members for agriculture or agricultural operations or for the marketing of crops, or for rural development; and

(2) the bye-laws of which do not permit admission of any other co-operative society as member;

Provided that this sub-clause shall not apply to the admission, as a member, of a co-operative society, which is a state co-operative bank or a central co-operative bank by reason of such bank subscribing to the share capital of the co-operative society out of funds provided by the state Government for the purpose;

(u) 'state co-operative bank' means the principal co-operative society in a state, the primary object of which is the financing of other co-operative societies in the state;Provided that in addition to such principal society in a state, or where there is no such principal society in a State, the State Government may declare any one or more co-operative societies carrying on business in that State to be also or to be a State co-operative bank or State co-operative banks within the meaning of this definition.

RECOVERY OF DEBTS DUE TO BANKS

AND FINANCIAL INSTITUTIONS ACT, 1993

Section 1: Short title, extent, commencement and application

(1) This Act may be called the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.

(2) It extends to the whole of India except the State of Jammu and Kashmir.

(3) It shall be deemed to have come into force on the 24th day of June, 1993.

(4) The provisions of this Act shall not apply where the amount of debt due to any bank or financial institution or to a consortium of banks or financial institutions is less than ten lakh rupees or such other amount, being not less than one lakh rupees, as the Central Government may, by notification, specify.

Section 2 Definitions:

In this Act, unless the context otherwise requires,-

(d) 'bank' means-

(i) a banking company,

(ii) a corresponding new bank,

(iii) State Bank of India,

(iv) a subsidiary bank; or

(v) a Regional Rural Bank;

(e) 'banking company' shall have the meaning assigned to it in Clause (c) of The Banking Regulation Act, 1949 (10 of 1949).

'(g) 'debt' means any liability (inclusive of interest) which is claimed as due from any person by a bank or a financial institution or by a consortium of banks or financial institutions during the course of any business activity undertaken by the banks or the financial institution or the consortium under any law for the time being in force, in cash or otherwise, whether secured or unsecured, or assigned, or whether payable under a decree or order of any civil court or any arbitration award or otherwise or under a mortgage and subsisting on, and legally recoverable on, the date of the application;'

Section 17 Jurisdiction, powers and authority of Tribunals:

(1) A Tribunal shall exercise, on and from the appointed day, the jurisdiction, powers and authority to entertain and decide applications from the banks and financial institutions for recovery of debts due to such banks and financial institutions.

(2) An Appellate Tribunal shall exercise, on and from the appointed day, the jurisdiction, powers and authority to entertain appeals against any order made, or deemed to have been made, by a Tribunal under this Act.

Section 18 Bar of jurisdiction:

On and from the appointed day, no court or other authority shall have, or be entitled to exercise, any jurisdiction, powers or authority (except the Supreme Court, and a High Court exercising jurisdiction under Article 226 and 227 of the Constitution) in relation to the matters specified in Section 17

Section 34 Act to have overriding effect:

(1) Save as provided under Sub-section (2), the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act.

(2) The provisions of this Act or the rules made thereunder shall be in addition to, and not in derogation or, the Industrial Finance Corporation Act, 1948 (15 of 1948), the State Financial Corporations Act, 1951 (63 of 1951), the Unit Trust of India Act, 1963 (52 of 1963), the Industrial Reconstruction bank of India Act, 1984 (52 of 1984) 'the Sick Industrial Companies (Special Provisions) Act, 1985 and the small Industries Development Bank of India Act, 1989 (39 of 1989)'.

THE SECURITISATION AND

RECONSTRUCTION OF FINANCIAL

ASSETS AND ENFORCEMENT OF

SECURITY INTEREST ACT, 2002

2. Definitions:--(1) In this Act, unless the context otherwise requires,-

(c) 'Bank' means-

(i) a banking company; or

(ii) a corresponding new bank; or

(iii) the State Bank of India; or

(iv) a subsidiary bank; or

(v) such other bank which the Central Government may, by notification 1, specify for the purposes of this Act;

(d) 'banking company' shall have the meaning assigned to it in Clause (c) of Section 5 of the Banking Regulation Act, 1949 (10 of 1949);

(f) 'borrower' means any person who has been granted financial assistance by any bank or financial institution or who has given any guarantee or created any mortgage or pledge as security for the financial assistance granted by any bank or financial institution and includes a person who becomes borrower of a securitisation company or reconstruction company consequent upon acquisition by it of nay rights or interest of any bank or financial institution in relation to such financial assistance.

(i) 'Debts Recovery Tribunal' means the Tribunal established under Sub-section (1) of Section 3 of the Recovery of Debts Due to banks and Financial Institutions Act, 1993 (51 of 1993).

1. The Central Government has specified 'Co-operative Banks' as defined in Clause (cci) of Section 5 of the Banking Regulation Act, 1949 (10 of 1949) as 'bank', vide S.O.105 (E), dated 28-1-2003, published in the Gazette of India, Ext., Pt.II, Section 3(ii), dated 28-1 -2003.


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