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Judgment
Kailasam, C.J.—In this batch of writ petitions, a writ of declaration to declare the Tamil Nadu Debt Relief Act 1976 (President''s Act of
Tamil Nadu 31 of 1976) as unconstitutional, illegal and void is sought.
The matter came up before Mohan J., for admission and, as the question involved the vires of the Act, the learned Judge directed the matter to
be posted before a Bench and thus these petitions have come up before us for admission.
The Tamil Nadu Debt Relief Act 31 of 1976 was enacted by the President in exercise of the powers conferred on him by S. 3 of the Tamil
Nadu State Legislature (Delegation of Powers) Act, 1976. The object of the enactment is stated to be to provide relief from indebtedness to
landless agriculture labourers, rural artisans and small farmers in the State of Tamil Nadu. Sec. 2 of the Act declares that the Act is for giving effect
to the policy of the State towards a securing the principles specified in Article 46 of the Constitution. The reason for the enactment is to implement
the liquidation of rural indebtedness in stages by imposing a moratorium on recovery of dues from the landless labourers, small farmers marginal
farmers and rural artisans and by undertaking legislation for such liquidation before the expiry of the period of moratorium. There is a moratorium
on recovery of debts of agriculturists and non-agriculturists upto 15-1-1977 under the Tamil Nadu Indebted Agriculturists (Temporary Relief) Act
1976 (President''s Act 15 of 1976) and the Tamil Nadu Indebted Persons (Temporary Relief) Act 1976 (President''s Act 16 of 1976) with some
special provisions under the Tamil Nadu Indebted Agriculturists and Indebted Persons (Special Provisions) Act 1976 (President''s Act 17 of
1976). The Government of Tamil Nadu has now taken a decision to give permanent relief by way of liquidation of debts to the weaker sections of
the rural community who are connected with agricultural production which is vital for the economic well being of the nation. Accordingly, the debts
incurred by a small farmer holding more than 2 units of land in the case of a person, who is a member of the Scheduled Tribes, and one unit of land
in the case of others, or by a rural artisan or a landless agriculture labourers whose annual household income does not exceed Rupees 2400 will be
deemed to be discharged.
Section 4 provides that every debt advanced or incurred before the commencement of the Act, including interest, and payable by the debtor to
the creditor, shall be deemed to be wholly discharged. It also requires the creditor to return any moveable property pledged by a debtor. Sec. 5(4)
provides that where the moveable property pledged by the debtor is in the possession of any transferee of the creditor, the creditor shall redeem
the property from such transferee and produce it so that it may be made available to be returned to the debtor. This section also empowers the
Tahsildars to enter the premises of the creditor or of the transferee of the creditor or of the transferee of the creditor for the purpose of the
enforcement of the provisions of this Act. Sec. 6 enables the debtor to make an application to the Tahsildar for an order releasing the mortgaged
property and for ultimate delivery to him. Sec. 9 enacts that no party to any proceeding under the Act shall be entitled to be represented by a legal
practitioner. Sec. 12 throws the burden of providing in any suit or proceeding that the debtor is not entitled to the protection of the Act on the
creditor. The Civil Court''s jurisdiction is barred as Sec. 7 provides that the order of the Tahsildar, subject to appeal as provided under the Act,
shall be final and shall not be called in question in any court.
On a reference to the various provisions of the enactment, Mr. K. K. Venugopal, learned counsel for the petitions in W. Ps. 2997 and 2998
and 3027 to 3030 of 1976, submitted that the Act is unduly harsh, most unreasonable and ruinous of the persons like the petitioners, who are
lawfully pursuing their business.
As the Emergency has been proclaimed, and under the President''s Proclamation, the right to enforce the fundamental rights is denied, the usual
attack on the validity of the enactment as infringing the fundamental right is not available. The learned counsel, therefore, restricted his attack to the
competency of the State Legislature to enact the impugned Act and on the ground that the petitioner''s unrestricted right to trade, commerce and
intercourse throughout the territory of India is affected.
The object of the legislation is to provide relief from indebtedness to landless agricultural labourers, rural artisans and small farmers in the State
of Tamil Nadu. The power of the State Government to pass a legislation on the subject is traceable to the Seventh Schedule, List II, item 30 of the
Constitution, which is as follows: ""Money lending, and money lenders; relief of agricultural indebtedness''. Item 26 in List II is '' Trade and
commerce within the State subject to the provisions of Entry 33 of List III''. Entry 33 in List III a Concurrent List, relates to trade and commerce
in and the production supply and distribution of the various articles referred to in clauses (a) to (e). An entry relating to trade and commerce is also
found in List I, item 41, which is restricted to trade and commerce with foreign countries.
The contention of the learned counsel is that entry 30 in List II as it reads, relates only to money lending and money lenders so far as it relates to
the relief of agricultural indebtedness and therefore when the Act is made applicable as defined in Sec. 3(b), not only to a landless agricultural
labourer and a small farmer but also to a rural artisan, who is not an agriculturist and as such, not confined to agricultural indebtedness, it is beyond
the scope of the legislative powers of the State. It was submitted that the words ''relief of agricultural indebtedness'' in entry 30 of List II were
introduced only in the present Constitution of India and were not in existence in the Indian Constitution of 1935. This contention cannot be
accepted for the entries would have to be read disjunctively because of the presence of the semicolon in between the two subjects. The legislative
competence would relate therefore to (1) money lending and money lenders and (2) the relief of agricultural indebtedness. There is also no
substance in the contention that agricultural indebtedness is different from rural indebtedness. The reason for the enactments stated to be liquidation
of debts to the weaker sections of the rural community who are connected with agricultural production which is vital for the economic well being of
the nation. There can be no denial of the fact that a rural artisan is as person who is intimately connected with agricultural production. A rural
artisan is defined in Sec. 3(1) as a person whose principal means of livelihood is production or repair of traditional tools, implements, and other
articles or things used for agriculture or purposes ancillary thereto. The submission that the relief of agricultural indebtedness would not cover a
rural artisan or rural indebtedness cannot be accepted as it gives a too restricted meaning to the entry. In addition to the relief of agriculture
indebtedness, the entry relates to money lending and money lenders. They would include not only the scaling down of debts due to money lenders,
but also liquidation of debts. It is well settled that a Constitution must not be constructed in a narrow or pedantic manner and that construction
most beneficial to the widest possible amplitude of its powers must be adopted. Gwyer, C. J. in AIR 1941 47 (Federal Court) has observed that a
broad and liberal spirit should inspire those whose duty it is to interpret the Constitution, but that would not imply perverting the language. The
entries in legislative lists must as far as possible be given a broad and comprehensive interpretation, the reason being that the allocation of subjects
is not by way of scientific or logical definition, but is a mere enumeration of broad and comprehensive categories. The scope of the entry ''money
lending and money lenders'' was considered by the AIR 1941 47 (Federal Court) In that case, the validity of the Madras Agriculturists'' Relief Act
4 of 1938 was challenged. The challenge was mainly on the ground that it trenched on the powers of the Federal Legislature, which had an
exclusive power to legislate with respect to cheques, bills of exchange, promissory notes and other like instruments (List I No. 28). Gwyer, C. J.
after examining the impugned Act to ascertain its pith and substance and its true nature and character, came to the conclusion that the Madras
Agriculturists'' Relief Act cannot be said to be legislation with respect to negotiable instruments or promissory notes and that it is immaterial that
many or most of the debts with which it deals are in practice evidenced by or based upon such instruments.
The learned Chief Justice held that that is an accidental circumstance which cannot affect the question. Varadachariar J., who concurred with
Gwyer C. J. examined the entry ''money-lending and money lenders'' in List II and was of the view that the entry justified the Provincial Legislature
to enact a law relating to debt relief, which might contain drastic measures and reduced substantially the rate of interest recoverable from a debtors.
If the State Legislature has powers to reduce the rate of interest, it would follow that it will have a right to wipe out the entire interest. The learned
Judge after referring to the impugned legislation observed that it was not denied that the subject-matter of the impugned legislation was to a certain
extent at least within the jurisdiction of the Provincial Legislature. It might be that it would fall partly under one item and partly under another item in
List II or List III. Some of the debts affected by the Act might fall under the heading of ''trade'' and some under the heading of ''money lending''
and some under item 10 relating to contracts. While accepting the contention that though the Madras Act does not in terms purport to deal with
negotiable instruments, debts due under such instruments would undoubtedly fall within the definition of debts in the Act, the learned Judge held
that even where Provincial legislation contained provisions relating to subjects exclusively reserved for the Dominion legislature, the whole
enactment may be effective if the offending provisions are only incidental, or if it is possible to regard a subject as falling under the Dominion
jurisdiction in one aspect and under Provincial jurisdiction in another aspect and the impugned Provincial legislation has been enacted in respect of
the latter aspect. The impugned legislation was held to fall under the heading of ''money lending and money lenders''--item 27 of List II. The
decision of the Federal Court meets most of the objections raised by the learned counsel regarding the legislative competence of the State. The
legislation regarding debt relief has been held to fall within the entry ''money lending and money lenders'' and that even though incidentally, the
provisions of the Negotiable Instruments Act would be affected, that would not in any way invalidate the enactment. The learned Judge also
expressed the view that the enactment might fall under entry ''trade''. We have no hesitation in holding that the impugned legislation is within the
competence of the State Legislature. It may fall under entry 30 of List II ''money lending and money lenders'' relief of agricultural indebtedness and
entry 26 ''trade and commerce''.
The second contention of Mr. K. K. Venugopal, learned counsel for the petitioners, is that the enactment is in gross violation of the provisions
of Part XIII of the Constitution, which relates to trade, commerce and intercourse within the territory of India. The submission of the learned
counsel is that free trade, commerce and intercourse throughout the territory of India has been guaranteed and as money lending and pawn broking
is commerce and intercourse, it has been adversely affected. We feel that this contention is equally without basis and has to be rejected. Art. 301
in Part XIII provides that trade, commerce and intercourse throughout the territory of India shall be free. But this Article is subject to the other
provisions of that Part. Art. 304 empowers the Legislature of a State to impose restrictions on the freedom of trade, commerce and intercourse
among the State in certain circumstances. While Art. 301 starts with the words ""Subject to the other provisions of this part"", Art. 304 starts with
the words ""notwithstanding anything in Art. 301."" Therefore it is clear that the provisions of Art. 301 are subject to the powers under Art. 304.
Art. 304 would prevails over the general right of trade and commerce and guaranteed under Art. 301. The State is empowered to legislate
regarding trade and commerce--entry 26, List II, Art. 304 also specifies that the Legislature of a State may impose such reasonable restrictions on
the freedom of trade, commerce and intercourse with or within that State as may be required in the public interest. Whether the restrictions are
reasonable or not is justiciable by courts. The restrictions must also be in public interest. That the impugned legislation is for public interest cannot
admit of any doubt. As observed by Gwyer C. J. in AIR 1941 47 (Federal Court) the problem of rural indebtedness has vexed the legislators
since the days of Solomon. Varadachariar J. has pointed out that it was conceded that the Madras Agriculturists'' Relief Act was genuine and bona
fide, though drastic attempt at a solution of the problem of agricultural indebtedness which has long been recognised as a pressing problem in the
country. Various enactments like Usurious Loans Act of 1918, Debt Relief Act and other Moratoriums and reduction of interest have not achieved
the object. A permanent relief by way of liquidation of debts to the weaker sections of the rural community is not only bona fide and well meaning,
but also an urgent need to secure the economic well being of the nation. The legislation cannot therefore be attacked on the ground that it is
unreasonable, mala fide or for ulterior purposes. It is certainly in public interest and therefore even if is conceded for the purposes of the argument,
which we do not, that it is open to the petitioners to challenge the legislation as being not in conformity with Arts. 301 and 304, we would hold that
the impugned legislation is in accordance with the provisions of the Art. 304. The Act was passed with the previous sanction of the President as
required under Art. 304. The formidable objection to the learned counsel''s contention based on Part XIII for his right to freedom of trade,
commerce and intercourse is that as the fundamental rights are suspended, the petitioners are not entitled to remedy.
Art 19(1)(g) of the constitution guarantees the rights of citizen to practise any profession, or to carry on any occupation, trade or business. But
the right to enforce this fundamental rights has been suspended. The effect of such suspension during Emergency has been stated by A. N. Ray C.
J. of the Supreme Court in Additional District Magistrate, Jabalpur Vs. Shivakant Shukla, as follows--
The suspension of right to enforce fundamental rights has the effect that the emergency provisions in Part XVIII are by themselves the rule of law
during the times of emergency. There can not be any rule of law other than the constitutional rule of law. There cannot be any pre-constitution or
post-constitution rule of law which can run counter to the rule of law embodied in the Constitution, nor can there be any invocation to any rule of
law to nullify the constitutional provisions during the times of emergency.
Releasing that all rights embodied in Part III and other rights which are conferred by the Constitution or any other law which can be traced to
Part III, are all suspended the learned counsel submitted that even though he cannot urge his right to trade, the right to commerce and intercourse is
still available to the petitioners. This plea is totally unacceptable, for the right to enforce the fundamental right to practise any profession or to carry
on any occupation or trade or business is suspended. It is not possible to rule out money lending and pawn broking from the purview of the words
''profession or occupation or business''. It cannot be successfully contended that money lending and pawn broking is commerce and intercourse.
The word intercourse has been construed as commercial intercourse. The legislative entries in all the three Lists relate to trade and commerce and
the word intercourse is not used as such in any of the entries. Intercourse which is referred to in Part III is therefore commercial intercourse and
would stand or fall with the word commerce. The plea that money lending and pawn broking is commerce and commercial intercourse, but not
profession, occupation, trade or business is unacceptable. If money lending and pawn broking is a trade, then the petitioners will be out of court
because the fundamental right to trade is suspended. The learned counsel has therefore necessarily to contend that money lending and pawn
broking does not come under Art. 19(1)(g) which would be attempting the impossible.
At some stage of his arguments, Mr. Venugopal submitted that pawn broking may amount to trade, which contention if accepted will be
ruinous to his case. He referred to Asakura v. City of Seattle, (1923) 265 US 332 : 68 Law Ed 1041, where it was held that a municipal
ordinance denying a licence for the transaction of pawn broker''s business to other than a citizen of the United State violated the treaty with Japan
providing that the subjects of each of the high contracting parties shall have liberty to carry on trade and generally do anything incidental to or
necessary for trade upon the same terms as native subjects. The court held that the terms ''trade'' should be construed in a broad and liberal spirit.
The court did not decide whether the business of pawn broking is trade. The ordinance defines pawn broker to ""mean and include every person
whose business or occupation it is to take and receive by way of pledge, pawn or exchange goods. wares or merchandise, or any kind of personal
property whatever for the repayment of security or any money loaned thereon, or to loan money on deposit of personal property"". The court also
held that the language of the treaty is comprehensive as the phrase ''to carry on trade'' is broad. On a construction of the treaty the court held ""that
the citizens or subjects of either shall have liberty in the territory of the other to engage in all kinds and classes of business that are or reasonably
may be embraced within the meaning of the word ''trade'' as used in the treaty"". The view that trade included pawn broking was in the peculiar
terms of the treaty. But the definition of the word ''pawnbroker'' throws light on the question we are considering. It is stated that it would include
every person whose business or occupation it is to take and receive by way of pledge. Business and occupation fall squarely under Art. 19(1)(g).
The approach for remedy for contravention of Part XIII is therefore not open to the petitioners. Both the contentions raised by Mr. Venugopal,
learned counsel for the petitioners, have to be rejected.
In conclusion Mr. Venugopal pleaded that some of the terms of the enactment are most unreasonable and ruinous to the entire profession of
money lending and pawn broking. Our attention was drawn particularly to Sec. 4(e) which requires a creditor to redeem the property from the
possession of the transferee and produce it for being handed over to the debtor. After redemption the creditor is bound to return it to the debtor.
He also referred to Sec. 12, which provides that the burden of proving that the debtor is not entitled to the protection of the Act lies on the
creditor. It was submitted that the burden of proving that a person is entitled to some exemption from the operation of the Act is on the person
who pleads exemption. It is virtually impossible for the creditor to prove that the debtor does not come within the exemption as the facts will be
within the knowledge of the debtor and will not be available to the creditor. These two provisions may make the position of the creditor difficult,
and from the point of view of money lenders and pawnbrokers unreasonable. But that would not make the legislation invalid. If the petitioners want
relief from the harsh provisions they will have to approach the legislature and not the court. Taking the interest of the community as a whole, there
can be no doubt that the impugned legislation is a beneficial one.
Mr. S. Chellaswami, appearing for the petitioners in W. P. 3005 and 3010 to 3014 of 1976, submitted that the impugned Act trenched on the
Negotiable Instruments Act, a Central subject, and therefore the legislation is beyond the competence of the State Legislature. He referred to the
decision in AIR 1941 47 (Federal Court) already referred to. We have pointed out that the Federal Court in that decision held that though the
Negotiable Instruments Act could be affected, the law was as regards the indebtedness of the agriculturists and was valid. The learned counsel also
referred to a passage in Seervai''s Constitutional Law of India, 2nd Edn. Vol II, page 1244. After referring to the above decision, it was stated
therein that ''though a law can be justified by reference to two or more entries, the entries cannot provide the power to make a law on a topic not
included in any single entry since the limit of each entry is fixed by the words used''. This passage does not help the learned counsel as the
legislation is well within the entries. It was contended that the debtor might have borrowed for gambling and pledged certain articles and that the
Legislature was acting beyond its powers in treating it as agricultural indebtedness, and granting relief. We are unable to accept this contention for
the debt is due by agriculturists and the legislative competence of the State cannot be denied.
The learned counsel next contended that the impugned legislation is violative of Art. 31(1) and 31(2) of the Constitution of India. The plea is
that there has been compulsory acquisition of property without provision for any compensation. the learned counsel referred to the decision in His
Holiness Kesavananda Bharati Sripadagalvaru Vs. State of Kerala, . We do not think that the provisions of Articles 31(1) and 31(2) will apply
because there is no acquisition or requisition of property in this case. This legislation is for the purpose of wiping out the debts and restoring the
articles back to the debtor. The submission is that the condition (that) the creditor should deliver the property to the Tahsildar so that it can be
returned to the debtor would amount to acquisition of property. We are not able to accept this contention.
The learned counsel then submitted that the doctrine of equitable estoppel would, be applicable as the State itself permitted the continuance of
the pawn broking trade and in fact encouraged them to continue the trade. To substantiate this contention that the Government persuaded the
pawn brokers to carry on the trade, a circular was produced before us. the contents of the circular do not support the learned counsel''s
contention. All that the circular says is that the profession should be carried on according to law and there should not be any abuse of the
provisions of the law relating to pawnbroking. The learned counsel relied on Union of India v. Anglo Afghan Agencies, AIR 1968 SC 718. But the
basis of this decision has been doubted in the subsequent decision of the Supreme Court in Assistant Custodian of Evacuee Property v. Brij
Kishore, : [1975]2SCR359 .
It was next contended that the enactment is violative of Arts. 251 and 254 of the Constitution in that there are inconsistencies between the law
made by Parliament and that by the State and that the Central law should prevail. He submitted that the provisions of the impugned legislation are
contrary to the provisions of the usurious Loans Act, Gold Control Act etc. We do not think that there is any substance in this contention, for so
far as the field in which the State is entitled to legislate is concerned, they can make provisions to achieve the object of the legislation.
The learned counsel next submitted that the enactment would fall within the scope of the entry ''banking'' in List I and therefore it is not
competent for the State to legislate upon. We do not think that the business of money lending or pawn broking will be banking. Even if it
incidentally encroaches on the field of banking, the legislation will not be bad, Profulla Kumar v. Bank of Commerce, 1947 FCR 28 : AIR 1947
PC 60.
Mr. M. S. Sethu and P. Ramaswami Pandian, learned counsel for the petitioner in W. P. 3023 and 3024 to 3031 of 1976 submitted that the
impugned legislation is bad as the law is enacted by the President and the assent was also given by him. According to the submission, as the person
who made the law and the person who assented to it are one and the same, the dual capacity can not be validly exercised. We do not see any
impediment to the President giving assent to the laws which are promulgated by him by virtue of the powers conferred on him by Parliament. It was
next submitted that the President was empowered under Act 41 of 1976, the Tamil Nadu State Legislature (Delegation of Powers) Act, 1976. But
before such confirment of powers, the President had enacted Act 31 of 1976. This statement is due to a misunderstanding and is based on the
serial numbers of the enactments. The Tamil Nadu State Legislature (Delegation of Powers) Act, 1976, Central Act 41 of 1976 was passed by
Parliament on 22-3-1976. By virtue of the powers conferred on him under this Act, the Tamil Nadu Debt Relief Act 1976 (Act 31 of 1976) was
enacted by the President on 29th July 1976.
We have carefully considered all the contentions raised by the learned counsel for the petitioners in all these writ petitions. We feel there is no
substance in any of the contentions. The impugned legislation falls well within the powers of the State Legislature and cannot be attacked on any of
the grounds raised.
These petitions are totally devoid of substance and they are dismissed.
Writ Petitions dismissed.