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2016 (2) TMI 175 - HC - Indian LawsConstitutionality of Sardar Sarovar Narmada Nigam Limited (Conferment of Powers to Redeem Bonds) Act, 2008 - Held that - The impugned Sardar Sarovar Narmada Nigam Limited (Conferment of Power to Redeem Bonds) Act, 2008 does not fall within the legislative head or legislative field either under Entry 43 in the State List being Public Debt of the State or under Entry 20 in the Concurrent List being Economic and Social Planning , to the Seventh Schedule of the Constitution nor it traces legislative field even by reading the said two Entries together. It is held that the impugned legislation is constitutionally invalid, for, the impugned legislation and the provisions thereof operate in the legislative field already occupied by the competent Central legislation, in particular Securities Contract (Regulation) Act, 1956, Security Exchange Board of India Act, 1992, the Indian Companies Act, 1956 as the provisions of these Central legislations govern the matters and aspects sought to be dealt with and provided for by the impugned legislation. The State Legislature cannot claim and does not have the legislative competence to enact the impugned law. If the legislative head is to be traced for the impugned legislation, at the best, the same may be traced in Entry 7 in the Concurrent List for the reason that the impugned legislation and the provisions enacted therein deal with the special kind of contract which would be falling within the said Entry. But then even in this purview the State law fails to co-exist and stands in conflict with the Security Contracts (Regulation) Act. The impugned legislation could be traced for its legislative head at the best, to Entry 7 in List III-the Concurrent List to the Seventh Schedule of the Constitution, as the impugned legislation and the provisions enacted therein deal with the subject-special kind contract falling within that Entry. The impugned legislation, however in its pith and substance is a law in respect of any in connection with the Regulation of Securities and the governing mechanism therefor which are provided for by the aforesaid laws made by the Parliament. The provisions of the impugned legislation are irreconcilable with the Central legislation occupying the field. The impugned law made by the State Legislature and the laws made by the Union Legislature aforesaid, having regard to their subject matter area, nature and effect cannot stand together. The impugned law cannot be obeyed without disobeying the Central legislations. Therefore the conclusion is that the enacting of impugned legislation amounts to an incompetent legislative exercise by the State Legislature. We declare that the Act is constitutionally invalid.
Issues Involved:
1. Legislative competence and constitutional validity of the Sardar Sarovar Narmada Nigam Limited (Conferment of Power to Redeem Bonds) Act, 2008. 2. Whether the impugned Act falls within the legislative competence of the State Legislature under Entry 43 of List II or Entry 20 of List III of the Seventh Schedule to the Constitution. 3. Repugnancy and conflict between the impugned Act and Central legislations such as the Securities Contracts (Regulation) Act, 1956, SEBI Act, 1992, and the Companies Act, 1956. 4. Consequential relief for the petitioners. Issue-Wise Analysis: 1. Legislative Competence and Constitutional Validity of the Impugned Act: The primary issue in the batch of petitions was the legislative competence and constitutional validity of the Sardar Sarovar Narmada Nigam Limited (Conferment of Power to Redeem Bonds) Act, 2008. The Act was challenged on the grounds that it was beyond the legislative competence of the Gujarat State Legislature. The petitioners argued that the Act did not fall under any entry in the State List (List II) or the Concurrent List (List III) of the Seventh Schedule to the Constitution. 2. Legislative Competence under Entry 43 of List II or Entry 20 of List III: The respondents contended that the Act fell under Entry 43 in List II, which pertains to "Public Debt of the State," and Entry 20 in List III, which relates to "Economic and Social Planning." However, the court held that the impugned legislation did not fall within these entries. The court emphasized that the phrase "Public Debt of the State" has a specific legal meaning and cannot be interpreted broadly to include the premature redemption of bonds issued by a state-owned corporation. The court also noted that the impugned Act did not relate to "Economic and Social Planning" as it primarily dealt with altering the financial covenants of the bonds. 3. Repugnancy and Conflict with Central Legislations: The court examined whether the impugned Act was repugnant to central legislations such as the Securities Contracts (Regulation) Act, 1956, the SEBI Act, 1992, and the Companies Act, 1956. It was found that the impugned Act conflicted with these central laws, which comprehensively regulate the issuance, listing, and redemption of securities. The court held that the central laws occupied the entire field of securities regulation, leaving no room for the state legislation. The impugned Act was found to be irreconcilable with the central laws, leading to repugnancy under Article 254 of the Constitution. 4. Consequential Relief: The petitioners sought consequential relief in the form of compensation for the financial loss suffered due to the premature redemption of the bonds. The court, however, declined to grant such relief in the writ jurisdiction, stating that the determination of financial loss and compensation would require a detailed fact-finding inquiry, which is beyond the scope of writ proceedings. The court clarified that the petitioners could pursue their claims for compensation through civil suits, as the bar on civil court jurisdiction imposed by the impugned Act was lifted by declaring the Act unconstitutional. Conclusion: The court declared the Sardar Sarovar Narmada Nigam Limited (Conferment of Power to Redeem Bonds) Act, 2008, as constitutionally invalid. It held that the Act did not fall within the legislative competence of the Gujarat State Legislature under the specified entries in the Seventh Schedule to the Constitution. The court also found the Act to be repugnant to central legislations regulating securities, leading to its invalidation. The petitioners were allowed to seek consequential relief through civil suits. The operation of the judgment was stayed for eight weeks to allow the State and SSNNL to approach a higher forum.
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