TMI Blog2007 (4) TMI 679X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal No.6077/2005 and SLP (Crl.) No.2071/2006 - Not on board] Lokeshwar Singh Panta, J. Civil Appeal No.6069/2005, Civil Appeal No.6077/2005 and SLP (Crl.) No.2071/2006 are taken on board. A Bench of two judges before which this batch of twelve civil appeals and five special leave petitions came up for consideration was of the view that looking to the issues involved and the far-reaching consequences which such a decision will leave, these matters require consideration by a larger Bench. This is what the Bench observed in the order dated 1st December, 2005. This batch of appeals/SLPs involved an important issue regarding right of recovery of debts by the co-operative banks constituted under the Co-operative Societies Acts of the States of Maharashtra and Andhra Pradesh. The issue has arisen in the context of enactment of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. Under the Co- operative Societies Acts, there is a mechanism for recovery of debts by the Banks constituted under those Acts, which are also called Co-operative Banks. After the enactment of the 1993 Act, question arose as to whether such Co-operative Banks would have right of recovery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e APCS Act, 1964 ]. The background of facts, which led to the filing of these cases, are noted from Civil Appeal No. 432 of 2004 titled The Greater Bombay Co-operative Bank Limited v. M/s United Yarn Tex Private Limited and Others filed against the judgments and orders of the Full Bench of the High Court of Judicature at Bombay and Civil Appeal No. 36 of 2006 titled A.P. State Co-operative Bank v. Samudra Shrimp Ltd. Ors. decided by the Full Bench of the High Court of Judicature of Andhra Pradesh at Hyderabad. A batch of writ petitions had been placed before Full Bench of the High Court of Judicature at Bombay in which the principal question of law that arose for consideration was: Do the courts and authorities constituted under the Maharashtra Co-operative Societies Act, 1960 (the 1960 Act) and the Multi-State Co-operative Societies Act, 2002 (the 2002 Act) continue to have jurisdiction to entertain applications/ disputes submitted before them by the Co- operative Banks incorporated under the 1960 Act and the 2002 Act for an order for recovery of debts due to them, after establishment of a Tribunal under the Recovery of Debts Due to Banks and Financial Institutions Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eties) in exercise of his powers under Section 101 of the MCS Act, 1960 and the warrant of attachment issued pursuant thereto on the application made by Jan Kalyan Sahakari Bank Limited, one of the respondents in the said petition. When that petition came up for admission before the learned Single Judge of the Bombay High Court, the petitioner therein brought to the notice of the learned Single Judge the earlier judgment of the Division Bench in Shamrao Vithalrao Co-operative Banks' case (supra). The learned Single Judge, however, was of the opinion that the Division Bench in its judgment did not consider that the MCS Act, 1960 has been enacted by the State Legislation under Entry 32, List II of the Seventh Schedule of the Constitution of India. The learned Single Judge having considered the importance of the question involved in the matter directed to place the matter before Hon'ble the Chief Justice of the High Court for Reference before the Full Bench. It appears that in the meantime, some more writ petitions came up before the Division Bench raising the same question. Hon'ble Chief Justice of the High Court decided to refer the matters to the Full Bench. This is how ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts 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 du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T, 1960] The MCS Act, 1960 was promulgated and came into force on 26th day of January, 1962 relating to co-operative societies with a view to providing for the systematic development of the co-operative movement in the State of Maharashtra in accordance with the Directive Principles of State Policy enunciated in the Constitution of India. The object and the working of the co-operative banks had become so large that it was found necessary to extract more important provisions of the Banking Regulation Act, 1949 ['the BR Act'] and allied provisions of the Reserve Bank of India Act, 1934 ['the RBI Act'] to the co-operative banks in public interest. Section 2 (10) of the MCS Act, 1960 defines co-operative bank to mean a society which is doing the business of banking as defined in clause (b) of sub-section (1) of Section 5 of the Banking Companies Act, 1949 and includes any society which is functioning or is to function as a Co-operative Agriculture and Rural Multi-purpose Development Bank under Chapter XI. In Section 2(6) of the MCS Act, 1960 - Central Bank means a co-operative bank, the objects of which include the creation of funds to be loaned to other societie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... behalf the account of every society which has been given financial assistance including guarantee by the State Government. Section 83 empowers the Registrar to conduct an inquiry into the constitution, working and financial conditions of a society. Chapter IX deals with Settlement of Disputes. A dispute touching the constitution, elections of the Committee or its officers other than election of committees of the specified societies including its officer, conduct of general meetings, management or business of a society is covered under sub-section (1) of Section 91 of the MCS Act, 1960. The settlement of disputes including the recovery of loan by a society from its members or sureties lies with the Co-operative Court. The Civil Court has no jurisdiction to try and entertain the suit in regard to the dispute which fall both in the purview of sub-section (1) of Section 91 of the Act. Section 92 regulates the period of limitation for different types of disputes mentioned in it and the disputes of the nature as provided in Section 91 has to be tried as a suit by the Co-operative Court as a Civil Court. Section 94 lays down the procedure for settlement of disputes and power of Co-operati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Agricultural Development Bank Limited, Hyderabad, under Act 14 of 1994 and was deemed to be registered as a Co-operative Society under the Andhra Pradesh Co-operative Societies Act of 1964 [ the APCS Act, 1964]. The APCS Act, 1964 was enacted with Statement of Objects and Reasons to consolidate and amend the law relating to Co-operative Societies in the State of Andhra Pradesh in order to facilitate and strengthen the functioning of Co-operative Societies based on Co-operative principles and Co-operative identity. Section 2 deals with definitions clause. Clause (f) defines 'financing bank' to mean 'a society, the main object of which is to assist any affiliated or other society by giving loans or advancing moneys; and includes any scheduled bank as defined in the RBI Act and such other body corporate or financial institution as may be notified by the Government from time to time, which gives financial or other aid to a society'. Chapter II of the Act deals with Registration of Societies. A society which has, its main object, the promotion of the economic interests of its members in accordance with the Co-operative principles....., the registration of a society sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the constitution, working and financial condition of the society, either suo motu or on the application of the society to which the society concerned is affiliated. Under Section 52, the Registrar may, on his own motion or on the application of a creditor of a society, inspect or direct any person authorized by him by a general or special order in this behalf to inspect the books of the society. Accounts and Books etc. of the societies are to be maintained and kept by the Chief Executive Officer of every society and the President of the society jointly and severally. Chapter VIII of the APCS Act, 1964 deals with Settlement of Disputes 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. Explanation to Section 61 prescribes the nature of the dispute for the purposes of sub-section (1) to include 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 and a claim by surety against the princ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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. If a society has failed to take action under sub-section (1) in respect of any amount due as arrears, the Registrar, after satisfying himself, may on his own motion 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 [sub-section (2)]. 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. The Registrar or any person authorized by him in this behalf shall be deemed, when exercising any power under this Act for the recovery of any amount b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m to promote their economic and social betterment and to provide functional autonomy and for matters connected therewith or incidental thereto. In Section 3(f) of the MSCS Act, 2002, a 'co-operative bank' means a multi-State co-operative society, which undertakes 'banking business'. Section 3(h) defines a 'co- operative society' to mean 'a society registered or deemed to be registered under any law relating to co-operative societies for the time being in force in any State'. In terms of Section 3(p), a 'multi-State co-operative society' means 'a society registered or deemed to be registered under this Act and includes a national co-operative society and a federal co-operative'. Chapter IV of the Act deals with members of multi-State co- operative societies and their duties, rights and liabilities. Settlement of disputes touching the constitution, management or business of a multi-State co-operative society are to be referred to an arbitration under Section 84 of Chapter IX of the Act. The order or decision recorded by the Authority under Section 39 or Section 40 or Section 83 or Section 99 or Section 101 can be executed in the mann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 591 of that Act. Chapter V of the BR Act was inserted by Act 23 of 1965 w.e.f. 1.3.1966. Section 56 of the Act provides that the provisions of this Act, as in force for the time being, shall apply to, or in relation to, banking companies subject to the following modifications namely :- 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) ............................................................................... The purpose and object of modifications were to regulate the functioning of the co-operative banks in the matter of their business in banking. The provisions of Section 56 itself starts with the usual phrase unless the context otherwise requires is to make the regulatory machinery provided by the BR Act to apply to co-operative banks also. The object was not to define a co-operative bank to mean a banking company, in terms of Section 5 (c) of the BR Act. This is apparent from the fact that instead of amending the original clause (c) of Section 5 separate clause (cci) was added to cover the 'co-operative b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d one of which is 'banking company'. The Central Government is authorized by Section 2 (c)(v) of the Act to specify any other bank for the purpose of the Act. In exercise of this power, the Central Government by Notification dated 28.01.2003, has specified co-operative bank as defined in Section 5 (cci) of the BR Act as a bank by lifting the definition of 'co-operative bank' and `primary co-operative bank' respectively from Section 56 Clauses 5(cci) and (ccv) of Part V. The Parliament has thus consistently made the meaning of 'banking company' clear beyond doubt to mean 'a company engaged in banking, and not a co-operative society engaged in banking' and in Act No. 23 of 1965, while amending the BR Act, it did not change the definition in Section 5 (c) or even in 5(d) to include co-operative banks; on the other hand, it added a separate definition of 'co-operative bank' in Section 5 (cci) and 'primary co-operative bank' in Section 5 (ccv) of Section 56 of Part V of the BR Act. Parliament while enacting the Securitisation Act created a residuary power in Section 2(c)(v) to specify any other bank as a bank for the purpose of tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Courts and delay in disposal of the bank suits. The Statement of Objects and Reasons for the enactment of the RDB Act are that the 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urance and financial corporations, but not including co-operative societies. Entry 44 is as follows:- Incorporation, regulation and winding up of corporations, whether trading or not, with objects not confined to one State, but not including universities. Entry 45 is as follows:- Banking. Entry 32 of List II is as follows:- 32. Incorporation, regulation and winding up of corporations, other than those specified in List I, and universities; unincorporated trading, literacy, scientific, religious and other societies and associations; co-operative societies. In the light of the factual situation and having gone through the above-said relevant provisions of different Statutes and relevant Entries of Lists I and II of the Seventh Schedule of the Constitution, we have heard the learned counsel for all the parties and with their assistance we have gone through the decisions brought before us by them. Mr. S. Ganesh, learned Senior Advocate appearing on behalf of the appellant in Civil Appeal Nos.432 to 434 of 2004, vehemently contended that the High Court of Bombay completely failed to appreciate the meaning of banking company as defined in Section 5(c) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Institutions. The Committees formed prior to the enactment of the RDB Act also more or less did not cover the co-operative banks for the purposes of the recommendations in general for improving the recovery system. He next contended that the recovery of debts by the co-operatives from their members are covered by specific Acts such as the Co-operative Societies Acts of the States, which are comprehensive and self-contained legislations. Further submission was that for multi-state co- operatives, there is a specific enactment in the form of the MSCS Act, 2002 comprehensively providing the legal framework in respect to issues pertaining to such co- operatives. Therefore, co-operative banks are, in any case, not covered by the provisions of the RDB Act by invoking the doctrine of incorporation. He next submitted that the State's power under List II, Entry 32 of Seventh Schedule of the Constitution is not subject to or subordinate to the power of the Union List I, Entry 45. Dr. Rajeev Dhavan, learned Senior Advocate, appearing for respondents in Civil Appeal No. 6069/2005 was requested to assist the Court in those matters which were listed on the Board on the day when the matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncipal business of which is the transaction of banking business and no attempt is made by the Parliament to amend Section 5(c) of the BR Act to include 'co-operative societies' doing the business of banking within the meaning of 'banking company' as defined in Section 5 (c) of the RDB Act. Mr. Bhim Rao Naik, learned senior counsel appearing on behalf of the Cosmos Co-operative Bank Ltd. in Civil Appeal No.436 of 2004, submitted that the definition of 'banking company' under Section 2(d)(i) of the RDB Act on its plain reading indicates that it does not refer to co-operative banks, but to companies incorporated under the Companies Act. He contended that Section 56 of the BR Act creates a fiction only for the purposes of the said Act and cannot be applied to another Act, viz., the RDB Act in the absence of any indication to that effect. He next contended that the State Legislature by virtue of Entry 32, List II of the Seventh Schedule has the power to make law with respect to co-operative societies including societies doing banking business. Learned counsel also contended that the MCS Act, 1960 and the MSCS Act, 2002 both deal with their members and as per r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that prior to the Banking Laws (Application to Co-operative Societies) Act, 1965 (Act 23 of 1965), Co-operative Societies doing banking were not subject to regulation of their business of banking although deposits and working funds of Co- operative Banks were very large, but Act 23 of 1965 introduced a new Chapter V to the BR Act and regulated the banking business of Co-operative Societies as it had regulated banking by banking companies with necessary modification. He submitted that recovery of loan by the Co-operative Banks are ancillary and necessary for the banks and every bank must have the power to refer disputes for adjudication and recover loans, etc. as expressly conferred by special provisions in the State Co-operative Societies Acts and Regulation of Co- operative Societies which fell under Entry 32, List II. He also submitted that Entry 45, List I, is limited to laws which affect the essential business of a bank qua the bank viz. banking as defined in Section 2(b) of the BR Act. He then contended that there was a conscious and deliberate omission to exclude Co- operative Bank in the definition of Banking Company in Section 2(d) of RDB Act, whereas all other f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 the dispute which falls within the jurisdiction of Registrar are disputes between members, past members, employees, legal representatives of the deceased employees whereas the disputes between primary co-operative bank qua depositors, loanees, holder of bills of exchange giving rise to debt is beyond the scope of Section 61. He submitted that the transaction of the banking business by co-operative bank is patent, manifest and direct and it can neither be incidental nor ancillary as the definition of primary co-operative bank incorporated in Section 56 of the BR Act in no uncertain terms pronounces its primary object or principal business as banking business. Learned senior counsel lastly submitted that the RDB Act enacted by the Parliament is later in point of time than the APCS Act, 1964, both being special law for recovery of dues, the law of Parliament will override the law enacted by the State. Mr. J.V. Suryanarayana, learned senior counsel appearing on behalf of the respondents in Civil Appeal No.916 of 2006, submitted that in Section 56 of the BR Act, several sub-sections were incorporated by Amending Act No.23 of 1965 whereby the co-operative societies of three catego ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of banking company under Section 5(c) intact by adding new definition of co-operative bank in clause (cci) and primary co-operative bank in clause (ccv) of the Act No. 23 of 1965. Mr. T. Raja, learned counsel appearing on behalf of the petitioners in SLP (C) No.5598 of 2004, submitted that the RDB Act is a special Statute enacted by the Parliament and the Co-operative Societies Act is a general Statute in nature. Therefore, the RDB Act will apply for the recovery of the loans advanced by the co-operative banks whereas Co-operative Societies Act shall become inoperative. Mr. S. Nanda Kumar, Advocate appearing on behalf of respondent No. 3 in SLP (C) No.5598 of 2004, supported the contentions advanced by Mr. T. Raja, Advocate. Dr. N. M. Ghatate, learned senior counsel appearing on behalf of respondent Nos.1 to 5 in Civil Appeal No.436 of 2004, submitted that the subject of banking is covered in Entry 45, List I of the Seventh Schedule of the Constitution and as the recovery of debts/dues by the banks is an essential part of banking business, the Parliament has legislative competence to legislate on the subjects. He submitted that as soon as the Parliament legislates un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith and substance. He contended that the RDB Act enacted by the Parliament being paramount must supersede pro tanto the provisions of the MCS Act 1960, which was enacted by the State Legislature. In support of this submission, reliance was placed upon M/s Hoechst Pharmaceutical Ltd. Ors. v. State of Bihar Ors. [(1983) 4 SCC 45]. He also stated that the co-operative banks carrying on banking business as defined in Section 5(b) of the BR Act and the recovery of claims by the banks against the borrowers and debtors is a matter integrally and essentially connected with the banking business as the subject matter of banking or the legislative field of banking is covered by Entry 45, List I of the Seventh Schedule of the Constitution of India and, therefore, it is open to the Parliament to establish courts and tribunals or any other machinery for recovery of banks' claims. He submitted that the ambit and scope of Entry 32, List II is only relating to the incorporation, the management of the affairs of the co- operative society, the powers of the Managing Committee, the powers of General Body, the control of the Registrar or the State Government over the affairs of the society, adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate Co-operatives there is a specific enactment in the form of the MSCS Act, 2002 comprehensively providing the legal framework in respect to issues pertaining to such co- operatives. Therefore, when there is an admittedly existing legal framework specifically dealing with issues pertaining to co-operatives and especially when the co-operative banks are, in any case, not covered by the provisions of the RDB Act specifically, there is no justification of covering the co- operative banks under the provisions of the RDB Act by invoking the Doctrine of Incorporation. In Surana Steels Pvt. Ltd. etc. v. Deputy Commissioner of Income Tax Ors. etc. [(1999) 4 SCC 306], this Court examined an incorporation by reference and concluded that the part of the incorporated Act from which a provision is taken can be looked at only to ascertain the meaning of the incorporated provision, but the other provisions cannot be deemed to be incorporated when they are not actually incorporated. The distinction between peoples' co-operative banks serving their members and corporate banks doing commercial transactions is fundamental to the constitutional dispensation and understanding co-operative ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks and about 304 cases filed by the financial institutions pending in various courts. The Statement of Objects and Reasons also refers to the Tiwari Committee which had expressly commented on delays in 'civil courts' and the Narsimhan Committee which recommended setting up of Special Tribunals. Accordingly, the burden of the Civil Courts in the matter of suits by banks and financial institutions was shifted to the Debt Recovery Tribunals. The disputes between co-operative banks and their members were being taken care of by the State Co-operative Acts and they were to remain where they were. If co-operative disputes are also to go to the Debt Recovery Tribunals, then those Tribunals will be over- burdened and the whole object of speedy recovery of debts due to banks and financial institutions would be defeated. The Co-operative Societies Acts on the one hand and RDB Act on the other cannot be regarded as supplemental to each other viz., the provisions of the said Acts cannot be said to be pari- materia. This Court in Virendra Pal Singh v. District Assistant Registrar [(1980) 4 SCC 109] directly deals with the question of the legislative competence relating to a co-oper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooperative Societies Act. We do not think that the question deserves any more consideration and, we, therefore, hold that the U.P. Cooperative Societies Act was within the competence of the State Legislature. This was also the view taken in Nagpur District Central Cooperative Bank Ltd. v. Divisional Joint Registrar, Cooperative Societies, AIR 1971 SC 365 and Sant Sadhu Singh v. the State of Punjab, AIR 1970 PLH 528. Section 31 of the RDB Act clearly refers to transfer of 'every suit or other proceeding pending before any court'. The word 'court', in the context of the RDB Act, signifies 'civil court'. It is clear that the Registrar, or an officer designated by him or an arbitrator under Sections 61, 62, 70 and 71 of the APCS Act, 1964 and under Section 91 and other provisions of Chapter IX of the MCS Act, 1960 are not 'civil courts'. In Harinagar Sugar Mills v. Shyam [1962 (2) SCR 339], this Court held: By 'courts' is meant courts of civil judicature and by 'tribunals' those bodies of men who are appointed to decide controversies arising under certain special laws. Among the power of the State is the power to decide such contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presumption is that the Legislature does not waste its words and it does not commit a mistake. It is presumed to know the law, judicial decisions and general principles of law. The elementary rule of interpretation of the Statute is that the words used in the Section must be given their plain grammatical meaning. Therefore, we cannot afford to add any words to read something into the Section, which the Legislature had not intended. Finally, it could not be said that Amendments in Chapter V, Section 56 of the RDB Act by Act No. 23 of 1965 inserting co-operative bank in Clause (cci) and primary co-operative bank in Clause (ccv) either expressly or by necessary intentment apply to the co-operative banks transacting business of banking. The constitutional validity of an Act can be challenged only on two grounds, viz. (i) lack of legislative competence; and (ii) violation of any of the Fundamental Rights guaranteed in Part III of the Constitution or of any other constitutional provision. In State of A. P. Ors. v. McDowell Co. Ors. [(1996) 3 SCC 709], this Court has opined that except the above two grounds, there is no third ground on the basis of which the law made b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other facts which are relevant. It must always be presumed that the legislature understands and correctly appreciates the need of its own people and that discrimination, if any, is based on adequate grounds and considerations. It is also well- settled that the courts will be justified in giving a liberal interpretation in order to avoid constitutional invalidity. A provision conferring very wide and expansive powers on authority can be construed in conformity with legislative intent of exercise of power within constitutional limitations. Where a Statute is silent or is inarticulate, the Court would attempt to transmutate the inarticulate and adopt a construction which would lean towards constitutionality albeit without departing from the material of which the law is woven. These principles have given rise to rule of reading down the provisions if it becomes necessary to uphold the validity of the law. In State of Bihar Ors. v. Bihar Distillery Ltd. Ors. [(1997) 2 SCC 453], this Court indicated the approach which the Court should adopt while examining the validity/constitutionality of a legislation. It would be useful to remind ourselves of the principles laid down, which r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... na v. State of Madras [1957 SCR 399 at page 410], this Court applied these principles. In State of Rajasthan v. Chawala [1959 (Suppl.1) SCR 904 at 909] Hidayatullah J. aptly described the principles of pith and substance as under:- The pith and substance of the impugned Act is the control of the use of amplifiers in the interests of health and also tranquility, and thus falls substantially (if not wholly) within the powers conferred to preserve, regulate and promote them and does not so fall within the Entry in the Union List, even though the amplifier, the use of which is regulated and controlled is an apparatus for broadcasting or communication. As Latham, C. J., pointed out in Bank of New South Wales v. The Commonwealth: A power to make laws 'with respect to' a subject matter is a power to make laws which in reality and substance are laws upon the subject-matter. It is not enough that a law should refer to the subject-matter or apply to the subject- matter: for example, income tax laws apply to clergymen and to hotel-keepers as members of the public; but no one would describe an income-tax law as being, for that reason, a law with respect to clergymen or hot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2002 governs such multi-state co- operatives. Hence, the co-operative banks performing functions for the public with a limited commercial function as opposed to corporate banks cannot be covered by Entry 45 of List I dealing with banking . The subject of co-operative societies is not included in the Union List rather it covers under Entry 32 of List II of Seventh Schedule appended to the Constitution. We have gone through the decision of this Court in The Life Insurance Corporation of India v. D. J. Bahadur Ors. [AIR 1980 SC 2181] cited at bar. This Court held that the Industrial Disputes Act, 1947 is a special Statute devoted wholly to investigation and settlement of industrial disputes. Therefore, with reference to industrial disputes between employers and workmen, the Industrial Disputes Act is a special Statute and the Life Insurance Corporation Act (31 of 1956) does not speak at all with specific reference to workmen. The industrial disputes between workmen and the employer as such are beyond the orbit of and have no specific or special place in the scheme of the Life Insurance Corporation Act. In ITC Ltd. v. Agricultural Produce Market Committee Ors. [(2002) 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Central Bank of India Anr. [(2000) 7 SCC 93], this Court observed: Banking being included in Union List in Entry 45 List I of Seventh Schedule cannot come within the purview of Assam Money Lenders Act, while money-lending and money-lenders; relief of agricultural indebtedness under the Assam Money Lenders Act 1934 comes under Entry 30 of List II State List of the Seventh Schedule. In State of Maharashtra v. Laljit Rajshi Shah Ors. [(2000) 2 SCC 699], the question before this Court was whether a person defined as officer under Section 2(20) of the MCS Act, 1960 was a public servant within the meaning of Section 2 of the Prevention of Corruption Act, 1947 by virtue of the provisions of Section 161 of the MCS Act, 1960 read with Section 21 IPC and as such, could be proceeded against for offences under Section 5(1) read with Section 5(2) of the Prevention of Corruption Act, 1947. On analysis of the various provisions of the statutes and Articles 245, 246, 254(2) and Schedule Seven List II Entry 32 and List III Entry I, this Court held in para 6 as under:- ................ The Maharashtra Co- operative Societies Act 1960 has been enacted by the State Legislature and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge of the Section by which it is created. A legal fiction in terms enacted for the purposes of one Act is normally restricted to that Act and cannot be extended to cover another Act. When the State Legislatures make the Registrar, a person exercising the power of the Registrar, a person authorised to audit the accounts of a society under Section 81 or a person to hold an inquiry under Section 83 or to make an inspection under Section 84 and a person appointed as an Administrator under Section 78 or as a Liquidator under Section 103 shall be deemed to be 'public servants' within the meaning of Section 21 of the Indian Penal Code. Obviously, they would not otherwise come within the ambit of Section 21, the legislative intent is clear that a specific category of officers while exercising powers under specific sections have by legal fiction become 'public servant' and it Is only for the purposes of the Co- operative Societies Act. That by itself does not make those persons 'public servants' under the Indian Penal Code, so as to be prosecuted for having committed the offence under the Penal Code. When a person is deemed to be something, the only meaning poss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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