Fatehchand Himmatlal & Ors Vs.
State of Maharashtra [1977] INSC 39 (28 January 1977)
KRISHNAIYER, V.R.
KRISHNAIYER, V.R.
RAY, A.N. (CJ) BEG, M. HAMEEDULLAH BHAGWATI,
P.N.
FAZALALI, SYED MURTAZA
CITATION: 1977 AIR 1825 1977 SCR (2) 828 1977
SCC (2) 670
CITATOR INFO :
F 1978 SC 771 (4,29,57) R 1978 SC1457 (56) RF
1979 SC1459 (33) E 1980 SC 898 (29) R 1981 SC1744 (23) R 1984 SC1543 (28) R
1985 SC 389 (21,22) RF 1986 SC1541 (9)
ACT:
Constitution of India-Article
301-304(b)--Freedom of trade and commerce-Reasonable restrictions.
Article 252, 254(2), Seventh Schedule List 1,
Entry 52, 97, List II Entry 30 Doctrine of occupied field--State making a law
on a different topic but covering in part the same area--Whether irreconcilable
conflicts necessary-Whether incidental provisions can be struck down--Gold
Control Act 1968--Conflict between a Central law and a State law--Effect of the
assent of the President.
Interpretation of legislative entries in the
Seventh Schedule, whether broad and liberal construction to be
adopted.--Seventh Schedule List II Entry 30, meaning of money lending and money
lenders and relief of agricultural indebtedness--Whether impugned Act is
covered by this Entry.
Maharashtra Debt Relief Act
1976--Constitutional validity of--Whether the State legislature has legislative
competence--Whether violative of Article 304(b)--Whether the freedom of trade
is absolute--Whether money-lending to the little peasants, landless tiller,
bonded labour, the pavement tenant and the slum dweller a trade--Whether every
systematic profit oriented activity, however, sinister suppresive or socially
diabolic can be said to be trade--Whether the test of reasonableness is to be
applied in vacuum or in the context of life's realities.
Perspective of poverty jurisprudence--Whether
different from the canons of traditional Anglo-Indian jurisprudence--Whether
while testing constitutionality the principles of developmental jurisprudence
must come into play--Procedural unreasonableness--Whether the burden of proving
debtors' financial position on the lender--Issuance of certificate in favour of
debtor having presumptive value without hearing the creditor--Absence of
appeal---Obligation of the creditor to move the machinery--Deposit of the ornaments
before the proceedings can commence--Whether reasonable--Adoption of summary
proceedings, whether valid.
HEADNOTE:
The Maharashtra Legislature passed the
Maharashtra Debt Relief Act. 1976. By the said Act the existing debts of some
classes of some indigents have been liquidated. The Act is a temporary measure.
The validity of the said Act was challenged in the present writ petition and
appeals on the following grounds:
(1) Money lending was a trade covered by
Article 304 of the Constitution. The restriction both substantive and
procedural imposed by the impugned Act are not reasonable within the meaning of
Article 304(b).
(2) The State legislature has no legislative
competence to enact the statute.
(3) So far as the Gold ornaments are
concerned the field is occupied by the Gold Control Act 1968 passed by the
Parliament.
Therefore, inasmuch as the said Act deals
with Gold Ornaments it is beyond the legislative competence.
829 The respondents contended that:
(1) The money lending in the present case was
not a trade.
(2) Even if it was trade the restrictions
imposed by the statute are reasonable.
(3) The State Legislature is competent to
enact the impugned Act.
(4) The doctrine of occupied field has no
application.
(5) The Gold Control Act and the impugned Act
deal with two completely different situations.
(6) In any case, there is no inconsistency
between the two Acts.
Upholding the validity of the Act,
HELD: (1) It is cruel legal like to
legitimate as trade this age and bleeding business whereby the little peasant,
the landless tiller, the bonded labour, the pavement tenant and the slum
dweller born and buried during the Raj and the Republic in chili penury. [836
B-C] Atiabari Tea Co. (1961) 1 SCR 809, 843, referred to.
(2) The topics of legislation listed in the
7th Schedule must receive a large liberal and realistic interretation.
[836 E] (3) The freedom while it is wide is
not absolute. Every systematic, profit oriented activity, however sinster,
suppressive or socially diabole, cannot ipso facto exalt itself into a trade.
Dealings of Banks and similar institutions having some nexus with trade, actual
or potential, may itself be trade or intercourse. All modern commercial credit
and financial dealings amount 10 trade. However, 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. Such debts
ever swell. never shrink, such captive debtor never become quits.
Such countryside creditors never get off the
backs of the victims. [840 D, 841 F-H] Ibrahim (1970) 3 SCR 498, referred to.
Automobile Transport (1963) 1 SCR 491,
followed.
(4) 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.
[844 G] (5) The test of reasonableness is not to be applied in vacuum but in
the contest of life's realities. The Legislature was confronted with the cruel
species of money-lenders. The life of the law is not noisis but actual experience.The
perspective of poverty jurisprudence is radically different from the canons and
values of traditional AngloIndian Jurisprudence. The subject matter of the
impugned legislation is indebtedness, the beneficiaries are petty
farmers,manual workers and allied categories steeped in debt and bonded to the
money lending tribe. So, in passing on its constitutionality, the principles of
Developmental Jurisprudence must come into play. [846B, 848G-H] (6) The
exemption granted by the statute to credit institutions and banks is reasonable
because liabilities due to Government, local authorities and other credit
institutions are not tainted with exploitation of the debtor.
Likewise, debts due to banking companies do
not ordinary suffer from over-reaching, unscrupulous or harsh treatment.
Financial institutions have until recently
treated the village and urban worker and petty farmer as untouchables.
[849 E-H] (7) Maybe some stray money-lenders
may be good souls but the Legislature cannot easily make meticulous exceptions
and has to proceed on broad categorisations, not singular individualisations.
The creditors have not placed material before the Court to contradict the
presumption which must be made 830 in favour of the legislative judgment. Since
nice distinctions-to suit every kindly creditor is beyond the lawmaking
process, the court has to uphold the grouping as reasonable and the
restrictions as justified in the circumstances of the case. [850 C-E]
Australian Bank Nationalisation Case: Commonwealth of Australia v. Bank of New
South Wales: 1950 A.C. 235, 311, approved.
(8) The Court negatived the contention of the
petitioner that there was procedural unreasonableness in the Act. The section
which imposes the obligation on the money lender to prove the debtor's financial
position, the issuance of a certificate in favour of the debtor having a
presumptive value without hearing the creditor, the absence of appeal,
obligation of the creditor to move the machinery and the period of 7 days and
the deposit of the ornaments before the proceedings can commence are all
reasonable in the circumstances of the case. Viewed in the abstract, those
grievances look genuine but when we get down to the reality, nothing so exists
in the so-called provision. The provision requiring the creditor to move and
not the debtor is reasonable because between the two. the money-lender .,is
sure to be far shrewder and otherwise more capable of initiating proceedings.
To cast that obligation on the debtor when in bulk of cases he is the village
artisan, landless labourer or industrial worker is to deny relief in effect
while bestowing it in the book. There is nothing objectionable in the debtor
seeking a certificate of qualification from the small officer of the area. The
officer or the Government servant possesses familiarity with the wherewithal
and the whereabouts of the persons. Hearing the creditor before the certificate
is issued would merely prolong and puzzle the proceedings. 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 money-lender
and the petty borrower live in and around the same neighbourhood. As proforma
of the certificate to be issued needs mentioning several particulars these have
to be filled by the certifying officer who has, therefore. to make the
necessary enquiries from and about the debtor. Authorised Officer is one who
exercises quasi-judicial powers even otherwise on the Revenue side. The
adoption of the procedure under the Maharashtra Land Revenue Code is a fair
safeguard although it is a summary procedure. To equate summary with arbitrary
is contrary to common experience. The obligation for the production of the
pledged article by the creditor as a preliminary to the institution of the
proceedings is also a just measure so that when a decision is reached the
article may be returned to the debtor in the event of the verdict going in his
favour. Where the subject matter is substantial and fraught with serious
consequences and complicated quest.ions are litigatively terminated summarily,
without a second look at the findings by an appellate body it may be that
unfairness is inscribed on the face of the law but where little men with petty
debts, legally illiterate and otherwise handicapped are pitted against the
money-lenders. absence about appeal cannot invalidate the statute.
Where the enquiry is a travesty of justice or
violation 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. [852 A-H, 853 A-H, 854 A-B] (9)
Entry 30 in List II in the 7th Schedule is money lending and money lenders;
relief of agricultural indebtedness. If common sense and common English are
components of Constitutional construction relief against loans by scaling down,
discharging, reducing interest and principal, and staying the realisation of
debts will among other things fall squarely within the topic. [854 F-H] (10)
The argument that the subject matter of the present legislation would fall
under the residuary power under Entry 97 of List I is negatived. [855 B] (11)
Where Parliament has made a law under Entry 52 of List I and in the course of
it framed incidental provisions affecting gold loans and money lending business
involving gold ornaments. The State making a law on a different topic but
covering in part the same area of gold loans must not go into irreconcilable
conflicts. The doctrine of occupied field does not totally 831 deprive the
State Legislature from making any law incidentally referable to gold. In the
event of a plain conflict the State Law must step down unless Article
252(2)'can be invoked. In that case the State law would still prevail if the
assent of the President has been obtained. There is no conflict between the
Gold Control Act and the impugned Act.
Secondly, the subjects of both the
legislations can be traced to the Concurrent List and Article 254(2) validates
within the State the operation of the impugned Act since the assent of the
President has been Obtained. [858 B-D]
CIVIL APPELLATE JURISDICTION: Civil Appeals
No. 632 to 646 of 1976.
(From the Judgment and Order dated the
22/23/26/27th of April, 1976 of the Bombay High Court in S.C.A. Nos. 997, 2128,
2773, 2077, 2065, 2045, 1172, 1193, 1195, 1196, 1199, 1200, 1210/ 75 and 2050
& 2071 of 1976) and CIVIL APPEALS NOS. 655 & 1286 of 1976 (From the
Judgment and Order dated the 14-5-1976, 23rd, 24th, 27th April, 1976 of the
Bombay High Court in S.C.A.
No. 2985 of 1976 and Misc. Petition 4 of
1976) and WRIT PETITIONS NOS. 98, 102-107, 110-113 & 115-120 1976 Under
article 32 of the Constitution of India) B. Sen, (in CA. 632) Y.S. Chitale, (in
CA. 633) Sachin Chowdhary, (in CA. 634) F.S. Nariman and R.N. Bennerjee, Adv.
(in CA. 637) H.P. Shah, (in CAs. 632-638) A.J. Rana, (in CA. 635) P.H. Parekh
& Miss Manju Jetly, with them, for the appellants in CAs. 632-637
Vallabhadas Mohta, Sardar Bahadur Saharya & Vishnu Bahadur Saharya, for the
appellants in CAs. 638-644 & 644.
J.L. Nain, A.J. Rana, Janendra Lal, B.R.
Agarwala and Gagras & Co., with him for the appellants in CAs 645 & 646
except for appellant No. 52 in CA. 646 F.S. Nariman, R.N. Banerjee, J.B.
Dadachanji " K.J. John with him for the appellant No. 62 in 646/76
Madhukar Soochak, K. Rajendra Chowdhary, K.A. Shah and (Mrs.) Veena Devi
Khanna, Advocates for the Appellant in CA. 1286/76 S.K. Dholakia, V.J. Kankaria
& R.C. Bhatia, for the petitioners in all the Writ Petitions.
Niren De, Attorney Genl. (only in CAs. 632,
638 and W.P. No. 98/76 1. W. Adik, Adv. Genl. of Maharashtra, M.N. Shroff for
the Respondents in the appeals and Writ Petitions M.P. Chandrakantral Urs and
N. Nettar, for the intervener in CA. 632/76 (State of Karnataka) 832 K.
Parasaran, Adv. Genl. Tamil Nadu. A. V. Rangam, V. Sathiadev and (Miss) A.
Subhashini, in the for the intervener in CA. 632 (State of Tamil Nadu, K.
Rajendra Chowdhary, for the interveners/Applicants A Ratnaabhapati and
Jayalakshimi & Co. M/s. Jeshtmal, K.R. Chowdhary, Mrs. Veena Devi Khanna,
for the intervener/applicant N. Dhanraj. B.A. Desai, S.C. Agarwala and V.J.
Francis, for Respondents 4 & 5 in CA. 1286/76.
The Judgment of the Court was delivered by
KRISHNA IYER, J. The distance between societal realities and constitutional
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 plurality of submissions by a procession of lawyers has followed,
although the principal points have been comprehensively covered by Shri Nariman
and Shri B. Sen. To encore is not to augment, and yet, some counsel, who had
not much to supplement, claimed the right to. be heard and exercised it ad
libiem, essaying what had already been forcefully urged and forgetting that a
fine, fresh presentation of a case is apt to be staled by a second version of
it and pejorated by a third repetition. While in constitutional issues of great
moment this Court is reluctant to ratio oral submission it is important, by
comity of the Bench and the Bar, to conserve judicial time in the name of
public justice so that internal allocations avoiding over-lapping may be
organised among many counsel who may appear in several appeals, substantially
dealing with the same points. A happy husbandry of advocacy is helpful for
judge and lawyer alike and to streamline forensic business is the joint
responsibility of both the limbs of the institution of justice.
Back to the beginning. Art. 301 of the
Constitution mandates 833 "301. Freedom of trade commerce and intercourse--Subject
to the other provisions of this Part, trade, commerce and intercourse throughout
the territory of India shall be free." We may also read the cognate
provision viz., Art. 304 (b):
"304 (b). Restrictions on trade,
commerce and among States.Notwithstanding anything in Article 301 or Article
303, the Legislature of a State may by law-X X X X (b) impose such reasonable
restrictions on the freedom of trade, commerce or intercourse with or within
that State as may be required in the public interest:
Provided that no Bill or amendment for the purposes
of clause (b) shall be introduced or moved in the Legislature of a State
without the previous sanction of the President." The unmincing submission
of Shri Nariman is that moneyending is very much a trade, that the Debt Act
deals drastically with moneylenders in defiance of Art. 301 and, since the
manacles on moneylenders and money-lending are unreasonably harsh and callously
indiscriminate, the 'freedom" which belongs constitutionally to
professional money-lenders is breached by the 'statutory liquidation of their
loans. Nor can the invalidatory consequence of this violation be obviated by
Art. 304(b). This latter provision salvages statutes which contravene 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 unreasonable
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 same words used in constitutional
enactments of various nations may bear different connotations 834 and when
Courts are called upon to interpret them they must acclimatize the expressions
to the particular conditions prevailing in the country concerned. Different
lands and life-styles, different value systems and economic solutions,
different social milieus and thought-ways, different subject matters and human
categories--these vital variables influence statutory projects and
interpretations, although lexicographic aids and understandings in alien
jurisdictions may also be looked into for light, but not beyond that.
The constitutional guarantee of the
commercial mobility and unity of the country in Art. 301 is sought to be made
the major sanctuary of 'money-lenders' whose 'freedom' to lend and thereby end
the lendee is, by legislative judgment, hand-cuffed. Before unravelling the
provisions of the Debt Act, we must first found ourselves on the
quintessentials of Art. 301 and the juristic and economic basics implied in
that provision. We are not construing a petrified legal parchment but reading
the luscent lines of a human text with a national mission. We must never forget
that the life of the suprema lex is nourished by the social setting, that
juridical abstractions and theoretical conceptions may be fascinating forensics
but jejune jurisprudence, if the raw Indian realities are slurred over. We are
expounding the Constitution of a nation whose people hunger for a full life for
each, and therefore, a perception of the signature of social justice writ on it
is imperative. 'Nothing is more certain in modern society', declared the
American Supreme Court at mid-century, 'than the principle that there are not
absolutes'. Legal Einsteinism guides the Court, not doctrinal absolutes, as we
will presently discuss.
Since Art. 301 has loomed large in the debate
at the bar, it is pertinent to ask what is its object and design.
For, if the impugned legislation does violate
Art. 301, it must perish unless rescued by Art. 304(b).
This Court, in Atiabari Tea Co. C), tracing
the roots of Art. 301, observed:
"Let us first recall the political and
constitutional background of Part X/II. It is a matter of common knowledge
that, before the Constitution was adopted, nearly two-thirds of the territory
of India was subject to British Rule and was then known 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 (1) [1961] 1 S.C.R. 809, 843.
835 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 represented the Provinces in British India, and Part B States
which were made up of Indian States. This merger or integration of Indian
States with the Union of India was preceded by the merger and consolidation of
some of the States inter se between themselves. It is with the knowledge of the
trade barriers which had been raised by the Indian States in exercise of their
legislative powers that the Constitution-makers framed the Articles in Part
XIII. "The main object of Art. 301 obviously was to allow the free flow of
the stream of trade, commerce and intercourse throughout the territory of
India." It is fair to realise that Art. 301 springs from Indian history
and hope. We may recall the political and constitutional background of Part
XIII--the divided days of British rule, the united aspirations of Independent
India, the parochial pressures and regional pulls leading inevitably to the
erection of fiscal barriers and hampering of economic oneness. The integration
of India was not merely a historical process but a political, social and
economic necessity.
Gajendragadkar J., in Atiabari Tea Co.
(supra) pointed out:
"In drafting the relevant Articles of
Part XIII the makers of the Constitution were fully conscious that economic
unity was absolutely essential for the stablity and progress of the federal
polity which had been adopted by the Constitution for the governance of the
country. Political freedom which had been won, and political unity which had
been accomplished by the Constitution, had to be sustained and strengthened by
the bond of economic unity." (p. 843) "Free movement and exchange of
goods throughout the territory of India is essential for the economy of the
nation and for sustaining and improving living standards of the country. The
provision contained in Art. 301 guaranteeing the freedom of trade, commerce and
intercourse is not a declaration of a mere platitude, or the expression of a
pious hope of a declaratory character; it is not also a mere statement of a
directive principle of State policy; it embodies and enshrines a principle of
paramount importance that the economic unity of the country will provide the
main sustaining force for the stability and progress of the political and
cultural unity of the country." (p. 844) 836 Such being the perspective,
the judicial sights must be set high' while reading Article 301. Social
solidarity is a human reality, not mere constitutional piety, and a non exploitative
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 money lending 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 money lending'--a rural spectre which
stalks Maharashtra--a trade at all.
These chronic operations, socially obnoxious
and economically inhuman, cannot be recognised as licit and wear the armour of
Art. 301, for this preliminary reason. Not all systematic economic activity is
trade. Sinister, socially shocking ones, are not.
Shri Nariman has counter-asserted, backed by
a profusion of precedents, that money-lending in the modern complexities of
business life is a lubricant for the wheels of commerce and has been treated as
trade. It is the life-blood of business. It needs no argument to say that the
topics of legislation, listed in the Seventh Schedule, must receive a large and
liberal, yet realistic, interpretation. So understood, the expression 'trade' in
its wide import, covers not merely 'buying and selling of goods' but trading
facilities like advances, overdrafts, mercantile documents, trading
intelligence, telegraphic and telephonic communications, banking and insurance
and many other sophisticated operations connected with and essential for
commerce and intercourse. Even travel facilities in certain circumstances have
a nexus with trade and commerce and are part of them. Learned counsel referred
to Ibrahim(1) wherein this Court has referred to the corresponding provisions
in the Australian Constitution and imparted a comprehensive meaning to 'trade'.
American and Australian case law, Halsbury and the Judicial Committee, were
read with special emphasis on the amplitude of the expression 'trade'. An inventory
of Indian statutes wherein 'money-lending' as a business was mentioned and
licensed, was also brought to our notice.
Indeed, this wealth of legal literature may
well be held to make out that money-lending, banking, insurance and other
financial transactions, commercial credit and mercantile advances may,
conceptually, be characterised as 'business'. Mercantile credit, money-lending,
pawn-broking and advances on pledges are business. Otherwise, the commerce of
our country will grind to a halt. Can we conceive of trade without credit, or
commerce without mercantile documents, discounting, lending and (1) [1970] 3
S.C.R. 498.
837 negotiable paper? To deny to monetary
dealings the status of trade is to push India into the medieval age: Broadly viewed,
money-lending amongst the commercial community is integral to trade and is
trade.
So far we go with Shri Nariman and others who
have urged the same point with allomorphic modifications.
The learned Attorney General's stance is
radical and rooted in the rural bondage to break which 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 ostracising, in the name of social order, the die-hard, death-grip
practices which have defied legislative policing in the past and have kept, in
chronic servitude, vast numbers of the Indian agrarian community and working
class. But if, as urged by the opposition, the law flatly flouts Art. 301, it
fails.
The rule of law, for functional success, must
run close to the rule of life. Therefore, constitutional assays must be on the
touchstone of societal factors. So we cannot embark upon a study of the working
of stock-exchanges, the dependence of industry and business on credit and
key-loans, the role of pledges in financing commercial activity, when the
challenge is to an economic legislation dealing with the lowliest and the lost,
the destitude and the desperate, far from big business and industry, trade and
commerce and high finance and sophisticated credit. We must zero-in on the
social group the Debt Act seeks to save, the pattern of lending the statute
strikes at, the heaviness of the blow and on whom it falls, and the raison
detre of the measure.
Does this specific species of deleterious
economic activity, masked as money lending 'trade', qualify for the .freedom
that Art. 301 confers on trade? The specific social malady and the legislative
therapeutics suggested guide the court.
Here again, relativity, not absolutes, rules
jurisprudence.
Of course, while interpreting the relevant
Articles in Part XIII and pronouncing upon the concept of 'trade', we must have
regard to the general scheme of the Constitution and should not truncate the
838 scope and amplitude of economic unity, free movement, protection from
discrimination, unhampered financial arrangements and the like. Undoubtedly,
the freedom, while it is wide, is not absolute. Our Constitution, framed by
those who were sensitive to the massive poverty of the country and determined
to extirpate the social and economic backwardness of the masses, could not have
envisioned a development where some will be 'free' to keep many 'unfree' [See
Articles 38 and 39 (c)]. That is why, to make assurance doubly sure, a further
provision is made in Art. 304(b) by adding a rider to the freedom of commerce
subjecting it to the requirement of reasonableness and imposition of
restrictions in public interest. Das, J., in Automobile Transport (1) struck
the true note, if we may say so with great respect, 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 of being an absolutely free people, but that does not mean
that we are not subject to.
law." The conscience of the commerce
clause in India, as elsewhere, is the promotion of an orderly society. social
justice is the core of the constitutional order.
Two inter-connected, but different facets of
freedom of trade and commerce fall for serious consideration in the light of
the above discussion. Is anti-social, usurious, unscrupulous money-lending to
economically weaker sections, eligible for legal recognition as 'trade' within
the meaning of Art. 30,1 ? Secondly, assuming that even such activities have
title to be termed 'trade' are the provisions of the Debt Act reasonable,
regulatory and in the public interest ? The learned Attorney General argued for
the proposition that the narrow, noxious category of money-lending with which
we are concerned is so oppressive and back-breaking so far as the poorest
sections of the community are concerned that a sense of social justice forbids
the court to legitimate it as 'trade'. Not all systematic economic activity,
even if not formally banned by the law, can be christened 'trade', he submits,
and relies on Chamorbaughwala to.
reinforce this reason(1) [1963] (1) S.C.R.
491. (2) [1957] S.C.R. 930.
839 ing. In that case the impugned Act was
said to offend against Art. 301. The Court, therefore, considered whether
gambling was not 'trade, commerce or intercourse' and took a sky-view of the
numerous decisions in various countries bearing on this branch of sociological
jurisprudence. One of the Australian cases dealing with lotteries (Mansell v.
Beck) elicited the observation that lotteries, not conducted under the
authority of government, were validly suppressed as pernicious. Taylor, J. made
the trenchant observation:
" .... whilst asserting the width of the
field in which s. 92 may operate it is necessary to observe that not every
transaction which employs the forms of trade and commerce will, as trade and
commerce, invoke its protection. The sale of stolen goods, when the transaction
is juristically analysed, is no different from the sale of any other goods but
can it be doubted that the Parliament of any State may prohibit the sale of
stolen goods without infringing s. 92 of the ,Constitution ? The only feature
which distinguishes such a transaction from trade and commerce as generally
understood is to be found in the subject of the transaction; there 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 importation of adulterated food was upheld. The prohibition of
transportation of women for immoral purposes from one State to another or to a
foreign land was held valid. Gambling itself was held in great disfavour by the
Supreme Court which roundly stated that 'there is no constitutional right to
gamble'.
Das, C. 1., after making a survey of judicial
thought, here and abroad, opined that freedom was unfree when society was
exposed to grave risk or held in ransom by the operation of the impugned 840
activities. The contrary argument that all economic activities were entitled to
freedom as 'trade' subject to reasonable restrictions which the Legislature
might impose, was dealt with by the learned Chief Justice in a sharp and
forceful presentation:
"On this argument it will follow that
criminal activities undertaken and carried on with a view to earning profit
will be protected as fundamental rights until they are restricted .by law. Thus
there will be a guaranteed right to carry on a business of hiring out goondas
to commit assault or even murder, of housebreaking, of selling obscene
pictures, of trafficking in women and so on until the law curbs or stops such
activities.
This appears to us to be completely unrealistic
and incongruous. We have no doubt that there are certain activities which can
under no circumstance be regarded as trade or business or commerce although the
usual forms and instruments are employed therein. To exclude those activities
from the meaning of those words is not to cut down their meaning at all but to
say only that they are not within the true meaning of those words.
Learned counsel has to concede that there can
be no 'trade' or 'business' in crime but submits that this principle should not
be extended .... " We have no hesitation, in our hearts and our heads, to
hold that every systematic, profit-oriented activity, however sinister,
suppressive or socially diabolic, cannot, ipso facto, exalt itself into a
trade. Incorporation of Directive Principles of State Policy casting the high
duty upon the State to strive to promote the welfare of the people by securing
and protecting as effectively as it may a social order in which
justice---social, economic and political--shall inform all the institutions of the
national life, is not idle print but command to action. We can never forget,
except at our peril, that the Constitution obligates the 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 money lending 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 business and supplying
rural credit to those in need. He 841 pointed out that institutional credit had
hardly penetrated rural India and the non-institutionalised money-lenders had
done economic service to a primitive peasantry although several of them had
abused. the situation of helplessness in which the weaker denizens of backward
regions found themselves..His contention was that there was no justification
for castigating money-lending as non-trade not was there valid material to
condemn wholesale all those who had served as the financial backbone of
agricultural communities in the past. Reasonable restrictions to obviate abuse
were permissible legislation, but obdurate refusal to treat what in fact was
trade as trade was injustice born of hostile hunches. He had separate arguments
on the unreasonableness of the provisions of the Debt Act which we will deal
with later. The bone of contention between the parties, therefore, is as to whether
money-lenders as a class and moneylending as a systematic traditional activity
in the special context of the weakest sections of agrarian humanity and the
working class, can be called 'trade'. The legal principles have already been
explained by us which we may sum up briefly by stating that, generally
speaking, the systematic business of lending is trade, as understood in the
commercial world and in ordinary monetary dealings. Moreover, trade cannot be
confined to the movement of goods but may extend to transactions linked with
merchandise or the flow of goods, the promotion of buying and selling,
advances, borrowings, discounting bills and mercantile documents, banking and
other forms of supply of funds.
It is possible, however, to project a different
view point and this is precisely what the learned Attorney General has done.
Free flow, understood in Article 301, implies some movement from place to
place. Freedom of trade, subject to reasonable restrictions, is guaranteed
under Art.
19. The special advantage derived by the
Trade by virtue of Art. 301 consists in the interdict on impeding, directly and
immediately, movement of goods or money transactions connected with movement of
merchandize or commercial intercourse. In short, the Attorney General considers
the element of movement as essential to Pat. 301 in contrast with Art. 19. We
see the force of the submission but are inclined to the view that dealings of
Banks 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:
842 "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, Time's tragedy is in that aching stoop, Through this dread
shape humanity betrayed, Plundered, profaned and disinherited, Cries protest to
the powers that made the world, A protest that is also prophecy." All this
painful poetry and prose is borne out by the record in the case and by studies
by economists.
A recent issue of the Eastern Economist
reads:
"The problem of rural indebtedness is as
old as Indian agriculture itself. It is the net result of usurious money
lending, improvident spending and adversities in agriculture. The heavy burden
of debt not only continues to cripple our rural economy, but it also grows in
alarming magnitude. Several attempts have been made by expert bodies from time
to time for a realistic estimation of rural indebtedness. Nevertheless, the
fact remains that the rural indebtedness in physical terms is mounting up and
the nightmare of indebtedness continues to haunt the Indian peasants...
Quite recently the report published by the
All India Rural Debt and Investment Survey relating to 1971-72 also depicts an
increasing trend in rural indebtedness. It has been estimated that the
aggregate borrowings of all rural households on June 30, 1971 was Rs.3921
crores, while the average per rural household being Rs.503/-. Fortythree per
cent of the rural families had reported borrowings ....
If the problem of rural indebtedness is to be
kept within meaningful limits and manageable proportions, following legislative
and non-legislative measures should be taken:
1. At present the institutional agencies
provide only 50 per cent of the total rural credit needs. Increased efforts by
all the institutional agencies are called for especially in the context of the
declaration of moratorium on rural debt which may affect the flow of
non-institutional finance.
2. There are about 75 million marginal
farmers with less than one hectare of operational holding, 20 million artisans
and 47 million agricultural labourers in rural sector, who constitute the rural
poor. Liquidation of existing debt is an essential step in order to give relief
to these weaker sections. The Debt Relief Acts passed in different states
should be effectively implemented.
843
3. Institutionalisation of rural savings and
inculcation of saving habits amongst rural folk is a positive step to mitigate
this problem. Massive propaganda and education on economising 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 India--P. G.K.
Panikar--Somaiya Publications Pvt. Ltd.,
Bombay, 1970) Dr. Bhattacharya, in his book 'Social Security Measures in India'
(Metropolitan Book Co., Delhi, 1970) dwells on the problem of agricultural
indebtedness:
"A sample survey conducted by Second
Agricultural Commission revealed the grim condition of rural indebtedness. The
Survey observes, 'Of the estimated total number of
16.3 million agricultural labour households
in the country, 63.9 per cent were indebted and debt per indebted household was
Rs.138 per annum'. This is indeed a danger signal particularly for a country
whose entire economy is dependent on the prosperity .of rural population. The
same source sums up the total volume of rural indebtedness in the following
words, 'Thus the total volume of debt of the indebted agricultural labour
households may be estimated at about Rs.143 crores in 1956-57.
A similar estimate was made on the basis of
the results of the 1950-51 Enquiry (i.e., the First Agricultural Commission
Report) and it worked out to about Rs.80 crores, Even though the estimated
number of agriculture labour households in 3---206SCI/77 844 1956-57 was lower
by 1.6 million, as,compared with 1950-51, the total debt of indebted
agriculture labour.household had considerably increased in 1956-57." (pp.
1.64-165) Dhires Bhattacharya in his 'Concise History of the Indian Economy'
(Progressive Publishers, Calcutta, 1972) refers to the Indian rural drama and
the role of the anti-hero played by the_ money-lender:
"Money-lending thus became an easy
method of earning an income and subsequently of acquiring valuable title to
land in the event of default by the debtor. Throughout the nineteenth century
ownership rights in land were being lost by the ryot and acquired by moneyed
interests, both rural and urban." "The situation created by such
extensive loss of perry by the cultivating classes exploded into riots against
money-lenders and usurpers of land in several parts of the country. The
agricultural riots in Poona and Ahmednagar in Bombay Presidency in 1875 are
most widely known because they were followed by the appointment of a Commission
of Inquiry." (pp. 77-78) The author recounts the series of legislation
made during the British Indian period and concludes:
"These laws also failed in their purpose
because no restrictions had been imposed on the transfer 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 interest and the principal, 845 the
farmers even lose their land or live from generation to generation under heavy
debt...Unless viable alternatives are made available, the mahajan will continue
to hold, an important, harmful and enervating place m this sphere'. The harmful
consequences of indebtedness are economic and affect efficient farming, social
in that the 'relations between the loan givers and loan receivers take on the
form of relations of hatred, poisoning the social life'. The money-lenders, few
in number, belong to poor class. There are often disputes between the two
classes which get sharpened... on the exploitation of the poor. In fact the
social groups get split into two broad classes. The exploiting class and the
exploited class. Apart from losing land and leading to tension in the villages
their evil effect is rampant... the heavily indebted farmers lose even their
human existence.
They not only render bonded labour to
money-lenders, their very self-respect and even respect of their women folk do
not remain safe.. They are forced to live the life of slaves. Of course, laws
have now been enacted which protect these debtors. But these laws are difficult
to be enforced either because farmers are illiterate, or they do not have
enough resources to go to the courts, or the money-lenders prove too clever for
them." Dr. C.B. Mamoria in his book 'Agricultural Problems of India' (Kitab
Mahal) has stressed that rural indebtedness has long been one of the most
pressing problems of India.
"Rural people have been under heavy
indebtedness of the average money-lenders and sahukars. The burden of this debt
has been passed on from generation to generation inasmuch as the principal and
interest went on increasing for most of them..According to Wold. The country
has been in the grip of Mahajans. It is the bond of debt that has shackled
agriculture." Very convincing and compelling, with special reference to
Maharashtra, is the Report of a high-powered Committee appointed by the
Government of Maharashtra to make recommendations for the relief of rural and
urban indebtedness. The study is at once revealing and 'grim. Rural artisans,
industrial workers, marginal farmers and indigent agriculturists have been
steeped in debt despite statutory measures and ineffective credit institutions.
These human areas have been the happy hunting ground of money-lenders. The
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
846 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 Administration. The Debt Act is
part of the package.
There was much argument about the
reasonableness of the restriction on moneylenders, not the general category as
such but the cruel species the Legislature had to confront--and we have at
great length gone into the gruesome background of economic illequities, since
the test of reasonableness is not to be applied in vacuo but in the context of
life's realities. Patanjali Sastri C.J., in State of Madras v.V.G. Rao(1)
observed:
"It is important in this context to bear
in mind that the test of reasonableness wherever prescribed, should be applied_
to each individual statute impugned, and no abstract standard, or general
pattern of reasonableness can be laid down as applicable to all cases.
The nature of the right alleged to have been
infringed, the underlying purpose of the restrictions imposed, the extent and
urgency of the evil sought to be remedied thereby, the disproportion of the
imposition, the prevailing conditions at the time, should all enter into the
judicial verdict." Money-lending and trade-financing are indubitably
'trade' in the broad rubric, but our concern here is blinkered by a specific
pattern of tragic operations with no heroes but only anti-heroes and victims.
Many Conferences, Commissions and resultant
enactments before and after Independence provided but marginal protection for
the rural debtor. Even licensing was evaded by the money-lender successfully
and concilliation machinery proved a mirage. Statutes made of sterner stuff
became the desideratum.
In the counter affidavit filed on behalf of
the State of Maharashtra, a lurid presentation of the lender-borrower scenario
is found. The deponent states:
"...that it was a common sight around
the secretariat, Government Offices, Textile Mills, factories and elsewhere in
Bombay to find moneylenders waiting at the gates to catch workers to collect
their dues." There is also reference to a number of Official Committees
which have examined the question of indebtedness in the urban and rural areas
and have recommended measures of relief. The affidavit goes on to state:
"I say that in Maharashtra and its
predecessors the State of Bombay there have been several legislations on this
subject including the Deccan Agricultural Debt Relief Act, 1879, Bombay
Agricultural Debtors Relief Act, 1939, 1946 (1)[1952] S.C.R. 597.
847 and in the Vidarbha 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 Rs.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 the city of Bombay alone would be of the order of Rs.45 crores. I say that
in addition to the licensed moneylenders unlicensed money lending is also
carried on in the State.." The Statement of Objects and Reasons of the
Maharashtra Ordinance VII of 1975 which was the precursor to the impugned Act
contains the following statement:
"The problem of urban and rural indebtedness
has assumed enormous proportions in recent times.. The noninstitutional sources
of credit, namely, unscrupulous. moneylenders, have been charging usurious
rates of interest, indulging in malpractices and taking undue advantage of the
weak position of the economically weaker sections of the people both in rural
and urban areas. The Ordinance, therefore, seeks to give relief to certain
sections of people from indebtedness." Even the 'whereas' vocabulary of
the draftsman of the Act refers to the need for immediate action to provide for
relief from indebtedness to certain farmers, rural artisans, rural labourers
and workers in the State of Maharashtra.
The judgment under appeal also makes
reference to the continual legislative effort made in the past to save the
agricultural community from chronic indebtedness. The learned Judges. observe:
"Indeed, agricultural indebtedness has
always been the bane of Indian economy ever since the beginning of the
twentieth century. Any elementary book on. Indian economics will disclose that
even the British Government had 848 thought it necessary to make an enquiry
into agricultural indebtedness. That was one of the terms of Royal Commission
on Agriculture, and from time to time enquiry committees were set up including
the Banking Enquiry Committee to go into the question of agricultural
indebtedness with a view to find out how alternative sources of credit to be
made available to the agriculturists could be brought into existence. In a
sense, the phrase 'agricultural indebtedness' has earned a connotation over the
passage of years to indicate the unhappy position in which an Indian
agriculturist has always found ever since the phenomenal fall of prices in
1929.
It has become proverbial that an Indian
agriculturist is born in debt, he lives in debt and he dies in debt."
Eminent economists and their studies have been adverted to by the High Court
and reliance has been placed on a Report of a Committee which went into the
question of relief 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 institutional finances. There
are friendly loans, and occasional accommodations. There are liabilities
arising from various circumstances between citizen and citizen and citizen and
State. But the pernicious species of moneylending stubbornly flourishing in the
rural and industrial areas of our country, with the weakest sections as their
bled-white clientele, cannot be regarded as 'trade" because of the painful
pages of economic history to which this country is witness.
The life of the law is not neat noesis but
actual experience. The perspective of Poverty Jurisprudence is radically
different from the canons and values of traditional Anglo-Indian jurisprudence.
The subject matter of the impugned legislation is indebtedness, the
beneficiaries are petty farmers, manual workers and allied categories steeped
in debt and bonded to the money-lending tribe. So, in passing on its
constitutionality, the principles of Developmental Jurisprudence' must come
into play.
849 We agree with Shri Nariman that the
intimate unity of national life sought to be sustained by Part XIII cannot be
invidiously breached against the money-lenders provided they qualify to be
traders. If a law cuts into the flesh of the commercial unity and integrity of
the country,' unreasonably or against public interest, Part XIII electrocutes
it.
A meaningful, yet minimal analysis of the
Debt Act, read in the light of the times and circumstances which compelled its
enactment, will bring out the human ;setting of the statute. The bulk of the
beneficiaries are rural indigents and the rest urban workers. These are weaker
sections for whom constitutional concern is shown because institutional credit
instrumentalities have ignored them.
Moneylending may be ancilliary to commercial
activity and benignant in its effects, but money-lending may also be ghastly
when it facilitates no flow of trade, no movement of commerce, no promotion of
intercourse, no servicing of business, but merely stagnates rural economy,
strangulates the borrowing community and turns malignant in its repercussions.
The former may surely be trade, but the latter--the law may well say--is not
trade. In this view, we are more inclined to the view that this narrow,
deleterious pattern of money lending cannot be classed as 'trade.' No other
question then arises, since the petitioners and appellants cannot summon Art.
301 to their service.
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, process ually 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
government to local authorities are not tainted with exploitation of the
debtor. Likewise, debts due to banking companies do not ordinarily suffer from
overreaching, unscrupulousness or harsh treatment. Moreover, financial institutions
have, until recently, treated the village and urban worker and petty farmer as
untouchables and so do not figure in the picture. To exempt the categories
above referred to is reasonable. Many debt relief laws adopt this classification
and those familiar with the lowest layers of economic life will agree that this
is as it should be. Money-lenders of the type we are concerned with in the Debt
Act are, 850 by and large, heartless in their lending tactics, and the
borrowers are anaemic--mostly members of the Scheduled Castes and Scheduled
Tribes, nomadic groups, artisans, workers and the like. Section 13 of the Debt
Act is illuminating, regarding the handicapped humans the statute is concerned
with. We quote that provision:
"13. Aggreement for labour in lieu of
debt to become void.-Any custom or tradition or any agreement (whether made
before or after the appointed day), where under or by virtue of which a debtor
or any member of his family is required to work as labourer or otherwise for
the creditor shall be void and of no effect and shall never be enforceable in
any civil court." Maybe, some stray money-lenders may be good souls and to
stigmatize the lovely and unlovely is simplistic betise.
But the legislature. cannot easily make
meticulous exceptions and 'has to proceed on broad categorisations, not
singular individualisations. So viewed, pragmatics overrule punctilious and
unconscionable money-lenders fall into a defined group. Nor have the creditors
placed material before the Court to contradict the presumption which must be
made in favour of the legislative judgment. After all, the law-makers,
representatives of the people, are expected to know the socio-economic
Conditions and customers. Since nice distinctions to suit every kindly creditor
is beyond the law-making process, we have to uphold the grouping as reasonable
and the restrictions as justified in the circumstances of the case. In this
branch, there are no finalities. The observations of the Privy Council in the
Australian Bank Nationalisation Case(1) are apposite:
"Yet about this, as about every other
proposition in this field, a reservation 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 [1950] A.C. 235, 311.
851 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, frustrating, through endless litigation, the instant relief to the
indebted which is the promise of the legislature.
In this perspective, we see no constitutional
flaw in the Act on the score that the sheep have not been divided from the
goats. Realism in the legislature is a component of reasonableness.. It was
urged by Shri Chitale that the definitional deficiency in ignoring the movable
wealth of debtors makes the scheme arbitrary and unreasonable. A romantic view
of the debtors being considerable owners of costly art pieces and sophisticated
gadgets and yet eligible for relief is good rhetoric but unrealistic. A
pathetic picture of the money-lender being deprived of his loan assets while
being forced to repay his lender was drawn but that cannot affect the reasonableness
of the relief to the grass-roots borrower. Nor is it value to attack the Act on
the score that the whole debt i.e., the very capital of the business, has been
dissolved. More often than not, the money-lender would have, over the
Iong-lived debts and repeated renewals, realized more than the principal if
economic studies tell the tale truly. The injustice of today is often the
hangover of the injustice of yesterday, as spelt out by history. The business
of money-lending has not been prohibited. The Act is a temporary measure limited
to grimy levels of society. Existing debts of some classes of indigents alone
have been liquidated. If impossible burdens on huge human numbers are not
lifted, social orderliness will be threatened and as a regulatory measure this
limited step has been taken by the Legislature.
Regulation, of the situation is necessitous,
may reach the limit of prohibition. Disorder may break out if the law does not
step in to grant some relief. Trade cannot flourish where social orderliness is
not secure. H the tensions and unrests and violence spawned by the desperation
of debtors are not dissolved by State action, no moneylending trade can
survive. It follows that for the very survival of Trade the regulatory measure
of relief of indebtedness is required. That form this relief should take is
ordinarily for the legislature to decide. It is not ordinarily for the Court to
play the role of 'Economic Adviser to the Administration. Here amelioratory
measures have been laid down by the Legislature so that the socio-economic
scene may become more contented, just and orderly. Obviously, 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.
852 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 Act. On top of this obligation to
institute proceedings was the precarious prospect of the order being against
the creditor because the 'authorised officer' had to hold in favour of the
debtor if he merely produced a certificate under s. 7(5) from one of those
officials enumerated therein--all minor minions of government at the local
level. Once the certificate was produced by the debtor the onus was shifted to
the creditor to make out the contrary. 'How could the moneylender prove the
debtor's financial position ?' asked Shri Nariman. Moreover, the issuance of a
certificate by the local little official was a unilateral process where the
creditor was not entitled to be heard as to the means or eligibility of the
debtor. There were two further unreasonable procedural impositions on the
creditor, argued Shri Nariman. The lender had to make his application with all
the facts within 7 days from the date of receipt of the application from the
debtor intimating that the debt stood released. The 7-day period was too short
even to make enquiries about the assets of the debtor, And worse, the
application by the creditor shall be entertained by the authorised officer only
on the creditor depositing the pledged property of its value. Thus the dice was
80 heavily loaded against the money-lender that even persons who were not petty
debtors intended to be beneficiaries might, with illegitimate success, claim
the bonus of the Debt Act.
Viewed in the abstract, these grievances may
look genuine. but when we get down to the reality, nothing so revolting exists
in these provisions. It is true that the creditor has to move, and not the,
debtor, before the authorised officer. As between the two, the moneylender is
sure to be far shrewder and otherwise more capable of initiating proceedings.
To cast that obligation on the debtor--remember, in the bull of cases he is the
village artisan, landless labourer or industrial worker is to deny relief in
effect while bestowing it in the book. Likewise, there is nothing horrendous in
the debtor seeking a certificate of qualification from the small officer of the
area.
After all, the officials enumerated in s.
7(5) are government servants, local officials, possess familiarity with the
wherewithal and the whereabouts of persons within their area and are therefore
accessible and competent. There is no reason whatever for allowing the creditor
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 853
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 reckless entries will not be made and that the certifying officer
will take care, prima facie, to be satisfied by proper enquiry before issuing
the certificate. Such a safeguard warrants the raising of a rebuttable
presumption of correctness and reduces the possibility of injustice to the
creditor for not being allowed an opportunity for being heard at this stage. In
this view also we see nothing unreasonable in the presumptive evidence of the
certificate without the hearing of the creditor.
Fairplay is also afforded in the proceeding
not only because the creditor can rebut the certificate but also because under
s. 8 (6) the authorized officer has the power and duty to determine all
questions in dispute. Section 7(7) expressly provides for an opportunity to the
creditor and the debtor to be heard. After all, the authorised officer is one
who exercises quasi-judicial powers even otherwise on the Revenue side. While
the enquiry is summary, the procedure under the Maharashtra Land Revenue Code
will be adopted which is a fair safeguard. Summary trial does not dispense with
evidence. or sound judgment but merely relieves the adjudicator from
maintaining elaborate records. The enquiring officer, may, in appropriate
cases, examine the Debtor or others who can throw light. To equate 'summary'
with 'arbitrary' is contrary to common experience. The obligation for the
production of the pledged article by the creditor as a preliminary to the
institution of the preceedings is also a just measure so that when a decision
is reached the article may be returned to the. debtor in the vent of the
verdict going in his favour.
The negation of a right of appeal against an
order under s. 7(6) of the Debt Act is another circumstance. Shri Nariman has
pressed before us. He cited other debt relief measures where a single appeal
had been provided for. Does the absence of a right of appeal render the
procedure unreasonable ? It depends. Where the subject-matter is substantial and
fraught with serious consequences and complicated questions are litigatively
terminated summarily. Without a second look at the findings by an appellate
body, it may well be that unfairness is inscribed on the face of the law, but
where little men, with petty debts, legally illiterate and otherwise
handicapped, are pitted against money-lenders with stamina, astuteness,
awareness of legal rights and other superiority, 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 854 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 (1); Mohd Faruk (1) and Ganesh Beedi Works(2) 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 not. 'We have adduced
sufficient reason to hold that the Debt Act is not bad for processual
perniciousness or jurisprudence of remedies.
The next constitutional missile aimed at the
Debt Act was the incompetency of the State Legislature to enact this law, for
reasons more than one. The main ground was covered by Shri Nariman, but yet
others made their contributions--sometimes overlapping, sometimes overflowing.
Shri B. Sen also challenged the legislative
competency, but on a different basis.
Several citations, home-spun and foreign,
finely woven theories and subtle punditry, gave a grave mein to the argument on
this branch. But the point in issue, in our view, admits of straight solution,
by-passing the heavy learning and jurisprudential finery. When Courts are cocooned
by case-law or caught in the skein of scholarly doctrines, simple questions
become complex. However, problems of constitutional law can be well left alone
where they do not directly demand a solution in the case on hand.
Enough unto the day is the evil thereof:
What then is the incompetence of the State
Legislature ? Shri B. Sen urged that the wiping out of private debts which
formed the capital assets of the money-lenders---one of the main things .done
by the Debt Act--was not in any of the legislative Lists and even if Parliament
had residuary power under Entry 97 of List I, the State had none. Entry 30 in
List II is 'money-lending and moneylenders; relief of agricultural
indebtedness'. If common sense and common English are components of
constitutional construction, relief against loans by scaling down, discharging,
reducing interest and principal, and staying the real isation of debts will,
among other things, fall squarely within the topic.
And that, in a country of hereditary (1)
[1962] 2 S.C.R. 125.
(2) [1970] 1 S.C.R. 156.
(3) [1974] 3 SC.R. 221.
855 indebtedness on a colossal scale! It is
commonplace to state that legislative heads must receive large and liberal
meanings and the sweep of the sense of the rubrics must embrace the widest
range. Even incidental and cognate matters come within their purview. The whole
gamut of money-lending and debt liquidation is thus us within the State's
legislative competence. The reference to the Rajahmundry Electricity Case(1) is
of no relevance. Nor is the absence of the expression 'relief in Entry 30, List
II, of any moment when relief from moneylenders is eloquently implicit in the
topic. Sometimes, 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, and such law covers and
runs counter to what has already been occupied by Parliament, through
incidental provisions, it may be argued that the State law stands pushed out on
account of the superior potency of Parliament's power in our constitutional
scheme. Again, there are certain telltale heads of legislation in the Lists
where one may plausibly invoke the, doctrine of occupied field. Examples may,
perhaps, be furnished by Entries 52 and 54of List I, Entries 23 and 24 of List
Ii and Entry 33 of List III. Without fear of contradiction, we may assert that
Art. 246(3) read with Entry 30 in List 11, empowers the State to make the
impugned law.
Why then is it incompetent? Because, says Mr.
Nariman, the field of gold industry is already occupied by Parliament and the
State Legislature therefore stands excluded. Entry 52 in List I reads:
"Industries, the control of which by the
Union is declared by Parliament by law to be expedient in the public
interest." Parliament, in the Industries (Development and Regulation) Act,
1951 (Act 65 of 1951) has made the necessary declaration contemplated in Entry
52 and has occupied the field of gold industry', as is (1)[1954] S.C.R. 770.
856 evident from reading s. 2 and item 1.B(2)
of tile First schedule therein. This expression of Parliamentary intent to
legislate upon the gold industry is enough to expel from that' field the State
Legislature. This is Shri Nariman's contention. But what is the sequitur ?
Assuming the approprlation by Parliament of the power to legislate on gold,
what follows? It can make laws directly on that industry and ancillarily on
every allied area where effective exercise of the parliamentary power
necessitates it. So much so 'business in gold', licensing of gold merchants,
regulation of making or pledging of gold ornaments, keeping of jewellery,
disclosure of gold possessions and the like are incidental to the parliamentary
power and purpose and the Gold Control Act, 1968 and the Rules made there under
are valid (vide, for example, Bantha's Case: 1970 I SCR 4-79).
Several sections of the Act, some rules and a
few rulings were read before us to drive home the point that gold loans are
already within the ken of the law made under Entry 52, List I. If so, what ?
Does it spell death sentence on the Debt Act ? Or maim it ? Or leave it intact
? Here we turn to Entry 24 of List II which runs: "Industries
subject" to the 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(1) 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 can legislate on that particular industry and the States I would
lose their power to legislate on that industry. But this would not prevent the
States from legislating on subjects other than that particular industry".
(underscoring, ours).
This is authority for the proposition that
while Entry 23 of List II, in the light of the fact that under Entry 52 of List
I Parliament has made the Gold' Control Act has become inoperative to legislate
on industry, there' is no inhibition whatever on State legislation on (1)
[1973] 1 S.C.R. 356.
857 subjects other than that particular
industry. Money lending is one such subject and the power to legislate thereon
remains intact.
We are free to agree that the word 'industry'
as a legislative topic has to be interpreted in the widest amplitude. We also
find, as a fact, that dealings in gold, including pledging, have been covered
in part by the Gold Control Act, 1958; even so nothing prevents the State from
making the impugned Act. In Paresh Chandra Chatterice(1) Subba Rao J (as he
then was ) dealt with an apparent conflict between the Central Act (The Tea
Act) and a State legislation [The Assam Land (Requisition and Acquisition) Act,
1948]. After examining the scheme of the two Laws, the learned Judge concluded:
"A comparative study of both the Acts
makes it clear that the two Acts deal with different matters and were passed
for different purposes." Unreal and imaginary conflicts between the
Central and the State Acts cannot be the foundation for invalidation of the
latter.
In Kanan Devan (Supra) it was further pointed
out:
"If the Act (the Tea Act) is within the
competence of Parliament and the impugned Act is within the competence of the
State, the' petitioners must show that the impugned Act is repugnant to the Tea
Act but we can see no conflict between the provisions of the impugned Act and
the Tea Act." Banthia(2) was referred to in the course of the arguments
and various passages were stressed by different counsel.
The essential question there was as to
whether manufacture of gold ornaments. by goldsmiths fell within the
connotation of the word 'industry'. It did. It was further pointed out by
Ramaswami J in that case that some of the entries overlap and seem to be in
direct conflict but the duty of the Court is to reconcile and harmonize while
giving the widest amplitude to the language of 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 para mountcy
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 (1) [1961] 3 S.C.R. 88.
(2) [1970] 1 S.C.R. 479.
858 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 not operate
merely because the Dominion has legislated on the same subject matter. The
doctrine of 'occupied field' applies only where there is a clash between
Dominion Legislatic and Provincial Legislation within an area common to both.
Where both can co-exist peacefully, both reap their respective harvests (Please
see; Canadian Constitutional Law by Laskin--pp. 52-54-, 1951 Edn).
We may sum up the legal position to the
extent necessary for our case. Where Parliament has made a law under Entry 52
of List I and in the course of it framed incidental provisions affecting gold
loans and money-lending business involving gold ornaments, the State, making a
law on a different topic but covering in part the same area of gold loans',
must not go into irreconcilable conflicts. Of course, if Art. 254(2) can be
invoked--We will presently examine it--then the State law may stir prevail
since the assent of the. President has been obtained for the Debt Act. Thirdly,
the doctrine of 'occupied field' does not totally deprive the State Legislature
from making any law incidentally referable to gold. In the event of a plain
conflict, the State law must step down unless, as. pointed out earlier in the
previous passage, Art. 254(2) comes to the rescue.
Many more decisions were brought to our
notice, bearing on paramountcy, 'occupied field,' repugnancy and inconsistency.
They were elaborated by counsel sufficiently to convince us that lawyer's law
is divorced from plain semantics and common understanding of Constitutional
provisions becomes a casualty when doctrinal complexities are injected.
May be every profession has a vested interest
in the learned art of incomprehensibility for the laity. Law, in the
administration of which the Bench and the Bar are partners, probably lives up
to this reputation.
All these questions become academic for two
reasons.
Firstly, there is no conflict between the
Gold Control Act and the Debt .Act. Secondly, the subjects of both the legislations
can be traced to the Concurrent List and Art.
254(2) validates within the State the
operation of the Debt Act.
We are of the view, as earlier discussed, and
without citing further cases on the point, that the State's legislative power,
save under the, Entry 24 of List II, is not denuded. Nor is there any conflict
between the two Acts.
A detailed study, section by section, of both
the legislations, 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
applications 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 859 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
system. The Advocate General of Maharashtra assured the Court that in the fair
enforcement of the law and the follow-up of creating alternative credit
agencies his client will take quick and impartial care.
The learned Attorney General, it may be
mentioned before winding up this part of the discussion, did draw our attention
to Art. 254(2) which is self-explanatory. The State law will prevail in the
State, even if there be repugnancy with a Central or existing law, given
Presidential assent--provided both the legislations fall under the Concurrent
List. Do they ? He says, yes; and points, inter alia, to Entry 6 (transfer of
property) and Entry 7 (contracts). Of course, the law of contracts deals with
pledges; so does the Gold Control Act. The latter does not prohibit pawns where
gold is involved, but policies it to prevent evils by prescribing special
modalities. The Debt Act relates to contracts and has fulfilled the requirement
in Art.254(2).
We have nearly come to the end of the
judicatory journey and have reached the constitutional conclusion that the
guarantee that Trade and Commerce and Intercourse shall be free does not
necessitate that the little lendee shall remain unfree. Article. 301 does
permit, in our view, legislative action to break agrarian indebtedness and
urban usurious bondage lest social disorder disruptive of Trade, break out.
The impugned Act is a partial implementation
of the economic thesis of Adam Smith when he wrote, two hundred
obsolescent.years ago:
"No society can surely be flourishing
and happy, of which by far the greater part of the numbers are poor and
miserable." We are in a Republic with social justice as its indelible
signature. And the measure under challenge. promotes social justice, social
order and better conditions for the business of healthy money lending.
The appalling indebtness which cripples our
people is an unhappy heritage of our economic system. The bonded yesterday, the
yoke today, and the hope of tomorrow obligate the State to spell out the future
tense of the rural human order and to focus on the legislative strategies of
alleviation before the backlash of social confusion begins, and to administer,
through working mechanisms, and direct, 7--206SCI/77 860 through social
cybernetics, our disenchanted society into fresh formulations of a free future.
Without such governmental measures of rural regeneration even 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
sortof 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 these meticulous submissions but are not persuaded that we
should even mention them in our longish judgment.
A concluding caveat. The poignant purpose of
ending exploitatire rural-urban lending to the weaker members of society is the
validating virtue of this legislation, viewed from the constitutional angle.
But, as Shri Nariman at some stage mentioned--and the learned Attorney General
also concurred--mere farewell to existing debts is prone to prove a teasing
illusion or promise of unreality unless the Administration fills the credit gap
by an easy, accessible and needbased network of humane credit agencies, coupled
with employment opportunities for the small man. The experience of the. past
has not inspired adequate confidence. Authoritative official pronouncement,
however, owns that "Arrangements so far made to. give credit and inputs
(for rural credit) have had only limited impact. The problem is a vast one and
seems to be growing in size. Rural banks, credit societies, farmers' service
societies--all these have to be strengthened and their activities expanded. To
give purposeful direction to, this task and to ensure that the interests of
agriculturists and farmers, especially the small farmer, are looked after,
there is need for an Apex Agricultural Development Bank in India." The legislation we uphold is an added responsibility on the State. it shall be
vigorously enforced with sympathy for the victim class, lest the progressive
measure. prove a paper tiger. The cadres charged with enforcement must have
right orientation correct grasp and social activism, if this law is not to
leave a yawning implementation 861 gap. Hercics in court and hortation in the
House must be followed by effective enforcement in the field. We state this not
because the State is not in great earnest--it is--but because many a welfare
legislation in the country reportedly remains a cloistered virtue or slumbrous
in effect. The finest hour of the rule of law is when law disciplines life and
matches promise with performance. On this note of hopeful valediction we wind
up.
We dismiss the appeals and the writ
petitions, leaving.
the parties to bear their costs, although we
had at least on one occasion, sufficient provocation to make a different direction.
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