TMI Blog1977 (1) TMI 162X X X X Extracts X X X X X X X X Extracts X X X X ..... tional dilettantism often makes for the dillemma of statutory validity and the arguments addressed in the present batch of certificated appeals and writ petitions evidence this forensic quandary. Likewise, the proximity between rural-cum-clum economics and sociaL relief legislation makes for veering away from verbal obsessions in legal construction. A constitution is the documentation of the rounding faiths of a nation and the fundamental directions for their fulfilment. So much so, an organic, not pedantic, approach to interpretation, must guide the judicial process. The healing art of harmonious construction, not the tempting game of hair-splitting, promotes the rhythm of the rule of law. These prologuic observations made. we proceed to deal with the common subject matter of the appeals and the writ petitions. A bunch of counsel, led by Shri Nariman and seconded by Shri B. Sen, have lashed out against the vires of the Maharashtra Debt Relief Act, 1976 (for short, the Debt Act). The former has focused on the fatal flaw in the Act based on Art. 301 of the Constitution and the latter has concentrated his fire on the incompetency of the State Legislature to enact the Debt Act. A p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontravene freedom of trade, commerce and intercourse only if they possess the virtues of reasonableness and public interest. The injustice of wiping out the debts of marginal farmers, rural artisans, rural labourers and workers as provided in the scheme of the Act was anathematised by Shri Nariman as an unwarrantedly unrea sonable annihilation of the trade and its capital. We will deal with this contention presently but we may merely mention for later discussion another short, lethal objection to a part of the law, put forward by counsel. He stated that there was legislative incompetency for the State Legislature because it had forfeited the power to legislate on money-lending where gold loans were involved, since Parliament had occupied the field under Entry 52 of List I by enacting the Gold Control Act, 1968, and had thereby elbowed out the State Legislature from that field. Considerable eclectic study of English, Australian and American cases was displayed in the course of arguments, reverberating in Indian precedents dealing with Part XIII of the Constitution. Of course, we will refer to them with pertinent brevity, although we must administer to ourselves the caveat that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn as British India, while the remaining part of the territory of India was governed by Indian Princes and it consisted of several Indian States. A large number of these States claimed sovereign rights within the limitations imposed by the paramount power in that behalf, as they purported to exercise their legislative power of imposing taxes in respect of trade and commerce which inevitably led to the erection of customs barriers between themselves and the rest of India. In the matter of such barriers British India was governed by the provisions of s. 297 of the Constitution Act, 1935. To the provisions of this section we will have occasion later to refer during the course of this judgment. Thus, prior to 1950 the flow of trade and commerce was impeded at several points which constituted the boundaries of Indian States. After India attained political freedom in 1947 and before the Constitution was adopted the historical process of the merger and the integration of the several Indian States with the rest of the country was speedily accomplished with the result that when the Constitution was first passed the territories of India consisted of Part A States which broadly stated represe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... human reality, not mere constitutional piety, and a nonexploitative economic order outlined in Art. 38, is the bedrock of a contented and united society. Social disorder is the bete noire of commerce and trade. All this is noncontroversial ground but the learned Attorney General contests the very applicability of Art. 301 to money-lenders and moneylending visa vis the humble beneficiaries of the statute, viz., the marginal farmers, rural artisans, rural labourers, workers and small farmers. It is a cruel legal joke to legitimate as trade this age-old bleeding business of agrestic India whereby the little peasant. the landless tiller, the bonded labourer, the pavement tenant and the slum dweller have been born and buried during the Raj and the Republic in chill penury. Is trade in human bondage to be dignified legally, betraying the proletarian generation? For whom do the constitutional bells of the socialist Republic toll? Therefore, argues the Attorney General, it is juristic blasphemy to call unscrupulous moneylending --a rural spectre which stalks Maharashtra--a trade at all. These chronic operations, socially obnoxious and economically inhuman, cannot be recognised as licit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the mission of this legislation. If accepted, it will mean that moneylending, in the limited statutory setting and projected on the Indian rural-urban screen visa vis the exploited people below-the-poverty-line, cannot be regarded as trade . It is apt to be reminded of the then famous epigram of Frederick W. Maitland: A woman can never be outlawed, for a woman is never in law. Money-lending-is it in law at all? No trade, no Art. 301, and so the baptismal certificate that Art. 301 insists upon from the economic activity that seeks its free blessings is that it is trade, commerce or intercourse . Thus the critical question is as to whether money-lending and the class of money-lenders who have been preying upon the proletarian and near-proletarian segments of Indian society for generations may be legally legitimated as traders or businessmen . This is not an abstract legal question turning on semantic exercises but a living economic question of incurable indebtedness. Blood, sweat and tears animate amelioratory law which exiles literal interpretation. The heartbeats of the Debt Act, according to the State counsel, cannot be felt without humanistic insight by first ost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that while the text of the Articles is a vital consideration in interpreting them, we must at the same time, remember that we are dealing with the Constitution of a country and the interconnection of the different parts of the Constitution forming part of an integrated whole . The learned Judge asks: Even textually, we must ascertain the true meaning of the word free occurring in Art. 301 From what burdens or restrictions is the freedom assured? This is a question of vital importance even in the matter of construction . Later, in the judgment, Das J., drives home the point that the conception of freedom of trade in a community regulated by law pre-supposes some degree of restriction, that freedom must necessarily be delimited by considerations of social orderliness (underscoring supplied). Even the Australian Case (1916 22 CLR 556, 573) conceptulizes freedom as nothing extra legem, lest freedom should be confounded with anarchy. We are the slaves of the law , said Cicero, that we may be free . Sir Samuel Griffith, C.J. in Duncan v. State of Queensland (22 CLR.556, 573), said: But the word free does not mean extra legem any more than freedom means anarchy. We boast ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is no difference in the means adopted for carrying it out. Yet it may be said that in essence such a transaction constitutes no part of trade and commerce as that expression is generally understood. Numerous examples of other transactions may be given, such as the sale of a forged passport, or, the sale of counterfeit money, which provoke the same comment and, although legislation prohibiting such transactions may, possibly, be thought to be legally justifiable pursuant to what has, on occasion, been referred to as a police power , I prefer to think that the subjects of such transactions are not, on any view, the subjects of trade and commerce as that expression is used in s. 92 and that the protection afforded by that section has nothing to do with such transactions even though they may require for their consummation, the employment of instruments, whereby inter-State trade and commerce is commonly carried on. (RMDC Case, pp. 915-916) In the United States of America, operators of gambling sought the protection of the commerce clause. But the .Court upheld the power of the Congress to regulate and control the same. Likewise, the Pure Food Act which prohibited the import ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State to ensure an adequate means of livelihood to its citizens and to see that the health and strength of workers, men and women, are not abused, that exploitation, moral and material, shall be extradited. In short, State action defending the weaker sections from social injustice and all forms of exploitation and raising the standard of living of the people, necessarily imply that economic. activities, attired as trade or business or commerce, can be de-recognized as trade or business. At this point, the legal culture and the public morals of a nation may merge, economic justice and taboo of traumatic. trade may meet and jurisprudence may frown upon dark and deadly dealings. The constitutional refusal to consecrate exploitation as trade in a socialist Republic like ours argues itself. The next question then is whether rural and allied moneylending is so abominable as to be bastardized by the law for which the Attorney General pleaded. Shri Nariman controverted the vulgar generalisation that all money-lenders are vampirish as unveracious imagery. He argued that many of them were not only licenced but had complied with the conditions of their licences in doing honest lending ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nks and similar institutions having some nexus with trade, actual or potential, may itself be trade or intercourse. All modern commercial credit and financial dealings, covered by the various rulings cited at the bar, come under this heading. Even so, the village-based, age-old, feudal pattern of money-lending to those below the subsistence level, to the village artisan, the bonded labourer, the .marginal tiller and the broken farmer, who borrows and repays in perpetual labour, hereditary service, periodical delivery of grain and unvouchered usurious interest, is a countryside incubus. This is not an isolated evil but a ubiquitous agrarian bondage. Such debts ever swell, never shrink. such captive debtors never become quits, such countryside creditors never get off the backs of the victims. The worker and peasant of India whose lot is to be born to Endless Night is symbolized by Jawaharlal Nehru, an architect of the Constitution, as the Man with the Hoe: Bowed by the weight of centuries he leans Upon his hoe and gazes on the ground, The emptiness of ages on his face, And on his back the burden of the world. X X X X Through this dread shape the suffering ages look, T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure may discourage extravagant spending by certain categories of rural .households. If necessary, certain legislative measures such as abolishing dowry system and imposing austere marriages may also be resorted to. 4. Attempts must also be made to bring the money lenders under some form of monetary regulation and control on the lines suggested by the Banking Commission. Though at present legislations exist in several states for the regulation of money lenders they lack enforcement which render the ineffective. (emphasis, added) ( Current Trends in Rural Indebtedness--by M. Gopalan V. Kulandaiswamy--Eastern Economist d/April 23, 1976 Vol. 66, No. 17, pp. 826-829) Professor Panikar, referring to the nightmare of debt has this to say: Perhaps, it may be that the need for borrowing is taken for granted. But the undisguised fear that the oppressive burden of debt on Indian farmers is the main hindrance to progress is unanimous. There are many writers who depict indebtedness of Indian farmers as an unmixed evil. Thus, Alak Ghosh quotes with approbation on the French proverb that Credit supports the farmer as the hangman s rope the hanged . (Rural Savings in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of land between members of the agricultural classes. Money-lenders could, therefore, operate through a benamidar (fictitious agent) belonging to an agricultural class and acquire land almost as easily as before. At the same time the bigger agriculturists had no difficulty in swallowing up the smaller ones by giving loans at exorbitant rates of interest to the latter. (p. 78) The economic literature, official and other, on agricultural and working class indebtedness is escalating and disturbing. Indeed, the money-lender is an oppressive component of the scheme. A.N. Agrawal, in his book Indian Economy (Vikas Publishing House) indicates that money-lenders charge heavy interest ranging. from 15% 50% and often more. In addition to .high interest, these people take advantage of illiteracy of agriculturists and manipulate the accounts regarding loans to their advantage. The conditions of loan repayment are so designed that the debtor is forced to sell his produce to the mahajan at low prices and purchase goods for consumption and production at high prices. In many other ways take advantage of the poverty and the helplessness of farmers and exploit them .... Unable to pay high int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bombay Moneylenders Act, according to the Committee, hardly helped bail out the weaker sections. Despite the Act, licensed and unlicensed moneylenders pursued their exploitative profession. The Debt .Act implements some of the recommendations of this Committee although positive institutional finance to save the sunken segments from the grip of the moneylenders remains to go into action. Even enforcement of the Bombay Moneylenders Act appears to be lukewarm according to the Committee. Be that as it may, the economic distress, for which moneylenders dealing with the weaker sections are mainly responsible, is clearly brought out in the Report. Nor is there anything in this Report or in any other literary material on rural economics (particularly relating to artisans, workers and collapsing cultivators) to substantiate the dichotomy of scrupulous and unscrupulous moneylenders, vehemently pressed before us by Shri Nariman. The former species are more a pious wish and the latter tribe a spectre on the increase, if statistical economic studies are to be trusted. The gravestone on the old moneylender system and the cornerstone of the new liberated order .are thus the programme for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rbha areas of the State, the Madhya Pradesh Postponement of Execution of Decree Act, 1956. I say that there is a wellestablished history of dealing with indebtedness in the State by means of legislation. I say that .the Reserve Bank carried out an inquiry in the matter of indebtedness in 1971 which is referred to as All India Debt and Investment Survey during 1971-72. The Reserve Bank of India survey established that the total debt liabilities in the rural areas in Maharashtra was ₹ 358 crores in 1971-72. A preliminary analysis made by the Reserve Bank of India also indicated weaker sections of the community thereby showing the extent of the burden of debt on the weaker sections of the community. I crave leave to refer to and rely upon the statistical tables prepared by the Reserve Bank of India in this connection when produced. I say that the extent of indebtedness may be much more than what is indicated by the statistical survey of the Reserve Bank of India. The licensed moneylenders alone in the State are known by themselves to have disbursed during 1972-73 a sum of about 74.37 crores and the information gathered by the respondents indicates that the known indebtedness in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from rural and urban indebtedness which shows the dismal economic situation of the rural farmer and the labourer. It is not merely the problem of agricultural and kindred indebtedness, but the menacing proportions of the moneylenders activities that have attracted the attention of the Committee. Giving facts and figures, which are alarming, bearing on the indebtedness amongst industrial workers and small holders, the Committee has highlighted the exploitative role of money-lenders and the high proportion/on of non-institutional borrowings. We have made this extensive tour of the economic scene, with special reference to agricultural indebtedness and the lot of industrial labour, only to present vividly how the predatory money-lender has had a stranglehold on rural and urban proletarians, by resort to methods which are scandalizingly calamitous and unshakably resistant to legislative policing. The learned Attorney General contends that the courts must have a sense of history .and sociology informing their judicial perspective and then it is easy to_ understand the syndrome of village and working class indebtedness. There are commercial lendings, banking loans and institutio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Assuming that all money-lending is trade , can it be contended that this relief measure is invulnerable to attack on the ground that the texture of the restrictions is reasonable and regulatory ? Article 304(b) relaxes in favour of the State the prohibition in Art. 301 provided the law imposes only such restrictions as are reasonable and in public interest. Shri Nariman s submission is that the Debt Act is too draconic to fair, processually and substantively, and so it cannot be rescued by Art. 304(b). With persuasive pressure he invited us to look at the horror of procrustean infliction of equal hostility by the legislature in dealing with the asuric Shylock and the dharmic lender. The law which brands the good and the bad alike and indiscriminately discharges all debts, just and unjust, lacks sense, conscience and reasonableness. Secondly How is it fair, asks Shri Nariman, that, if the object of the legislation is to save the victims of rural indebtendness and working class burdens that credit institutions should be exempted while non-institutionalised lenders should be picked out for hostile treatment ? There is no merit in the plea. Liabilities due to governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion must be made. For their Lordships do not intend to lay it down that in no circumstances could the exclusion of competition so as to create a monopoly either in a State or Commonwealth agency or in some other body be justified. Every case must be judged on its own facts and in its own setting of time and circumstance, and it may be that in regard to some economic activities and at some state of social development it might be maintained that prohibition with a view to State. monopoly was the only practical and reasonable manner or regulation, and that inter-State trade, commerce and intercourse thus prohibited and thus monopolized remained absolutely free. We do not downright denounce all money-lenders but the lawmakers have, based on socio-economic facts, picked out a special class of money-lenders whom they describe as unscrupulous. (1) Commonwealth of Australia v. Bank of New South Wales. Every cause claims its martyr and if the law, necessitated by practical considerations, makes generalisations which hurt a few, it cannot be helped by the Court. Otherwise, the enforcement of the Debt Relief Act will turn into an enquiry into scrupulous and unscrupulous creditors, f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iously, this is regulatory in the interest of Trade itself. This policy decision of the House cannot be struck down as perverse by the Court. The restrictions under the Debt Act are reasonable. Equally clearly, if the steps of liquidation of current debts and moratorium. are regulatory, Art. 301 does not hit them. Even so, argues Shri Nariman, procedural presumptions grossly unreasonable, vitiate the measure. Of course, reasonableness has a processual facet and if the law is lawless in its modalities, it becomes unlaw constitutionally. We may illustratively advert to some of the criticisms but, at the threshold, we confess we are not impressed with the submissions. Shri Nariman itemised the mischievous provisions in the Debt Act from the processual angle. Others too reiterated with consternation that the provision whereby every debt of every debtor of the specified category stood wholly discharged was improvident, especially because it did not even require the debtor to move the authorities in that behalf. On the other hand, the burden was on the creditor to raise the question by instituting a proceeding as to the disqualification of his debtor for the benefit of the Debt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be heard at the certificate stage except to prolong and puzzle the proceedings and by dilatory tactics, deny the relief to be debtor. The creditor does not suffer because the certificate that the applicant is a debtor raises only a rebuttable presumption and it is idle to argue that the creditor has no means of disproving the income or assets of his debtor. Ordinarily, the mahajan, the sowcar or money-lender and the petty borrower live in and around the same neighbourhood the, former knows the circumstances of the latter and often these are not isolated transactions between strangers. So much so the debtor s financial horoscope or impecunious kismet is normally within the ken of the creditor. Moreover, a perusal of the pro-forma of the certificate to be issued needs mention-of several particulars which have to be. filled up by the certifying officer who has therefore to make the necessary enquiries from and about the debtor. Assurance about the credibility of the certifying officer s entries is lent by the personal responsibility cast on him for the correctness of the particulars mentioned in the certificate. This is a protection for the creditor that routine and reckl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriority, if the purpose of instant relief is to be accomplished, the provision of an appeal may, in many cases, prove abult-in booby trap that frustrates and ruins the hand-to-mouth debtor. No surer method of baulking the object can be devised than enticing the debtor into an appellate bout! Daughter gone and ducate too will be the sequel. Of course, where the enquiry is a travesty of justice or violaion of provisions, where the finding is a perversity of adjudication or fraud on power, the High Court is not powerless to grant remedy, even after the recent package of Constitutional amendments It is true that in several cases this Court has held that a right of appeal is a gesture of statutory fairness in the disposal of cases. Our attention was drawn to the rulings reported as Jyoti Pershad ([1962] 2 S.C.R. 125); Mohd Faruk ([1970] 1 S.C.R. 156) and Ganesh Beedi Works([1974] 3 SC.R. 221) and other cases hearing on the necessity of a right of appeal, as an incident of fair hearing. We cannot dogmatise, generalize or pontificate on questions of law whose application depends sensitively on the nature of the subject matter, the total circumstances, the urgency of the relief and what ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arguments have only stated to be rejected. The next ground of attack, in its multi-form presentation, is that the gold loan part of the Debt Act is void because Parliament has occupied file field. It has also been urged that there is inconsistency between the Debt Act and the Gold Control Act, and pro tanto the former fails to have effect. Let us look at the basics of the legal situation before us, before examining the wealth of learning counsel has accumulated. Article 24-6 vests exclusive power in Parliament over matters enumerated in List I (Seventh Schedule) and the State Legislature enjoys like power over topics in List II, subject to clauses (1) and. (2) of the Article. Plainly, therefore, the State can legislate upon any Entry in the State .List. We may visualize situations where Parliamentary occupation may exclude the State Legislature. Where, for instance, Parliament while enacting on a matter in the Union List, makes as it is entitled to make, necessary incidental provisions to effectuate the principal legislation, such ancillary expansions may trench upon the State field in List II. In such a case, if the State makes a law on an Entry in its exclusive List, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of entries 7 and 52 of List I . This means that the State Legislature loses its power to make laws regarding gold industry since Entry 24 . List II is expressly subject to the provisions of Entry 52 of List I. This does not mean that other entries in the State List become impotent even regarding gold . The State Legislature can make laws regarding money-lending even where gold is involved under Entry 30, List II, even as it can regulate gambling in gold under Entry 34-, impose sales tax on gold sales under Entry 54, regulate by municipal law under Entry 5 and by trade restrictions under Entry 26, the type of buildings for gold shops and the kind of receipts for purchase or sale of precious metal. To multiply instances is easy, but the core of the matter is that where under its this power Parliament has made a law which overrides an entry in the State List, that area is abstracted from the State List. Nothing more. In the Kannan Devan Mills Case([1973] 1 S.C.R. 356) this Court put the point tersely while dealing with Entry 52 of the Union List: Once it is declared by Parliament by law to be expedient - in the public interest to control the industry, Parliament ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Entries. We see nothing in that decision which contradicts the position that while the Gold Control Act fell within Entry 52 of List I, the State List was not totally suspended for that reason for purposes of legislating on subjects which fell within that List, but incidentally referred also to gold transactions. Nobody disputes the paramountcy of parliamentary power. We have to reconciIe the paramountcy principle with the trenching doctrine. In the Canadian Constitution, the question of conflict and coincidence in the domain in which provincial and dominion legislation overlap has been considered. If both may overlap and co-exist without conflict, neither legislation is ultra vires. But if there is confrontation and conflict the question of paramountcy and occupied field may crop up. It has been held that the rule as to predominance of dominion legislation can only be invoked in case of absolutely conflicting legislation in pari materia when it will be an impossibility to give effect to both the dominion and provincial enactments. There must be a real conflict between the two Acts i.e. the two enactments must come into collision. The doctrine of Dominion paramountey does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gislations, has convinced us that they can stand together and that the two authorities and modalities do not contradict each other and that, by elementary comity, a modus vivendi between the Gold Act and the Debt Act can be worked out. The provisions in the Gold Act for declarations and other formalities may not collide with the obligations and appli cations under the Debt Act. We have no doubt that the authorities charged with enforcement under the two statutes will understand the sense and spirit of the provisions and see that the object of the Debt Act is not frustrated or its processes paralysed. Indeed, the learned Attorney General showed how by reading together the two Acts and remembering their respective purposes a viable resolution of possible imbroglios is simple, although officialdom is not unfamiliar with the art of embroilment where artless customers are involved or ulterior ends are to be served. The State, through an effective programme of legal aid and advice and other prompt instructions-to the agencies involved, should avoid harassments, hold-ups and red-tapes which are the bane of processual justice. The jurisprudence of remedies is still a Cinderella of our syst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the good moneylenders may have to fold up and the better businessmen wind up. The larger interests of Trade, Commerce and Intercourse whose. freedom is a constitutional norm demand that social order shall be preserved through legislative methodology, now radical, now reformatory but always motivated and moderated by the felt necessities of the times. To come to humane terms with harsh realities by subjecting itself to the reasonable, though unpalatable, regulations of the Debt Act and like measures or to face the adaptational breakdown where law ,may fail to keep order against those who have nothing to lose except their chains this is the sort of sociological Hobson s choice before the money-lenders of Maharashtra. The option is obviously the former and that is the constitutional vindication of the impugned legislation. All these laws, in themselves marginal, are part of the programschrift for a New Deal which is the cornerstone of the Constitution. We have been addressed many minor criticisms which have chopped little logic and made out small discriminations but serious constitutional decisions go on major considerations, not gossamer-web flimsiness. We have listened to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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