9911796707
TMI Blog1985 (12) TMI 361X X X X Extracts X X X X X X X X Extracts X X X X ..... ls shall, at any time, have deposits from more than the number of depositors specified against each in the table mentioned therein, which is as follows : (i) Individual Not more than twenty-five depositors excluding depositors who are relatives of the individual. (ii) Firm Not more than twenty-five depositors per partner and not more than two hundred and fifty depositors in all, excluding, in either case, depositors who are relatives of any of the partners. (iii) Unincorporated Not more than twenty-five depositors per association of individual and not more than two hundred individuals. and fifty depositors in all, excluding, in either case, depositors who are relatives of any of the individuals constituting the association. 3. Section 45S(2) further provides that where at the commencement of the Act, the deposits held by any such person are not in accordance with sub-section (1), he shall, before the expiry of a period of two years from the date of such commencement, repay such of the deposits as are necessary for bringing the number of depositors within the relative limits specified in that sub- section. Sub-section (5A) of section 58B has also been incorporated by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he cases to emphasise their legal contention, they may as well be briefly notice. 8. Mr. Shanti Bhushan, learned counsel who appeared for the petitioner (in C.W.No. 1183 of 1985), emphasised that the petitioner firm had two partners and was in the business since 1890 and it continued in the business till 1939 and though it had discontinued for some time, it started again in 1958 in Surat and then it shifted to Bombay in 1961. AS on February 14, 1984, it had about 2,50,000 depositors and the total deposits amounted to ₹ 63 crores. The longest deposit terms for which deposits have been accepted are stated to be 65 months. The petitioner offers varying rates of interest starting with 8% on fixed deposits for a period of 3 months and 15% for deposits for a period of 5 years. It also runs a cumulative deposits scheme with the result that at the end of 65 months, the amount deposited becomes double. The scheme is similar to the on is prevalent in various banks. As on January 31, 1985, the number of borrowers was about 5,500. The repayments are in Installments over a period which may extend to over 10 years. It is stated very candidly that at any given point of time, the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed out by Mr. Venugopal that during the period February, 1984, to February, 1986, deposits to the tune of ₹ 4.30 crores will be maturing and will have to be repaid, while the amount recoverable by the petitioner from the borrowers during the said period is about ₹ 3.60 crores. In view of the fact that the petitioners investments are on long-term basis, the restriction to bring down the number of depositors to 25 is an impossible requirement, and the provision is not saved by clause (6) of article 19 of the constitution. The petitioner justifies its activity as meeting the pressing demands of a large sector of the economy which cannot be served by commercial banking operators. It maintained that the estimated amount handled by private financial companies like the petitioner, would be to the tune of ₹ 45,000 crores per year and the number of individual citizens engaged in this profession are stated to be about 30,000. It is claimed that the monies so deposited by the general public are invested in various productive activities and the employees engaged in this profession would be to the tune of 15 lakhs and that the annual salary would be about ₹ 270 crores. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and beyond what is required in the interests of the public. the word reasonable implies intelligent care and deliberation, that is the choice of a course which reason dictates. (See Chintamanrao v. State of M.P.). It is correct, that the present business carried on by the petitioners is of a kind, different from the ones like the commercialised vice of prostitution, which was completely prohibited within the localities of municipalities and the court upheld this provision as unexpectional. (See Malerkotla Municipality v. Mohd. Mushtaq; nor is it in the nature of gambling which also cannot claim protection under article 19(1) of the Constitution (See R.M.D. Chamarbaugwalla v. Union of India), nor is the present business of the petitioners to be equated with that of the trade of intoxicants and liquor or trading in adulterated food articles, because neither of those activities, conferred any such fundamental right (See State of U.P. v. Kartar Singh and har Shankar v. Dy. E. T.Commr.). But from that, it does not follow, that simply because a person is carrying on a lawful business, any restriction placed, is per se, to be considered unreasonable, only on the ground that, as in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asonableness. Apart from pointing out the various provisions to show the unreasonableness of the impugned provisions, one of the very serious arguments advanced by counsel for the petitioners was that there was a total lack of material to support the necessity for the impugned legislation. The suggestion was made that because of the failure of Sanchaita Finance Firm, resulting in ruination of a large number of depositors as reported in State of West Bengal v. Swapan Kumar Guha, there was panic reaction resulting in the impugned legislation. It is seriously suggested that the business of accepting of deposits by persons like the petitioner was running smoothly and serving an economic need and there has never been any serious problem with regard to the safety of funds of the depositors or of any disruption of the money market and, therefore, the impugned legislation is uncalled for, and is an arbitrary interference with the fundamental rights of the petitioner to carry on her business. Is there any plausibility in the contention of the petitioner that the small depositors need no legislation to protect them, and that all is well in the world of money-mopping institutions like the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies generally or by any banking company in particular. Section 22(3) also required the Reserve Bank, before granting any license, that it shall, amongst others, be satisfied that the company is or will be in a position to pay its present or future depositors in full, as their claims accrue. Section 24 further requires a banking company to maintain in cash, gold or unencumbered securities, valued at a price not exceeding the current market price, an amount which shall not, at the close of the business on any day, be less than 20 per cent. of the total of its time and demand liabilities in India. Section 227 further requires every banking company to submit before the close of the month of the Reserve Bank, a return in the prescribed form and section 30 requires the previous approval of the Reserve Bank for appointing or removing any auditor of the bank. This will show the great pains that the Legislature was taking to save the deposits, made by the people in general, by providing for supervision and control by the Reserve Bank and also requiring reasonable amount of reserve funds to be maintained. However, no single legislation can possibly anticipate the various problems which arise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... free reserves, and a further direction was given that every such company shall take such steps so that the deposits received by the company are not in excess of the aforesaid limits. The validity of this direction was challenged, but was upheld in Mayavaram Financial Corporation Ltd. v. RBI [1971] 41 Comp Case 890 (Mad). Again the Reserve Bank issued the Miscellaneous certain restrictions were placed on non-banking institutions for receiving deposits from the public. The directions also specified a limit beyond which the non-banking institutions could no accept deposits from the public. Again in July, 1977, the Reserve Bank of India issued directions known as the Non-Banking Financial Companies (Reserve Bank) Directions of 1977. Sub-clause (2)(j) defined a loan company to mean a company which is a financial institution carrying on the business of providing finance whether by making loans or advances for any activity other than its own. Clause 2(1) defines non-banking financial company to mean any loan company. Clause 5 of the Directions provided that from July 1, 1977, no loan company shall receive deposits repayable on demand or on notice after a period of less than six months an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the above provisions would be applicable to persons like the petitioners who are individuals or firms or associations of persons. 20. Even the corporate sector was not free from being blamed for the damage done to the economy and ruination to the small depositors by the activities of some of the companies. The result was that Parliament had to step in by incorporating in 1974 section 58A in the Companies Act of 1956. The object of enacting the said provision as stated in the Notes on Clauses was as under : It has been the practice of the companies to take deposits from the public at high rates of interest. Experience had shown that in many cases deposits taken by the companies have not been refunded on the due dates, either the companies have gone in liquidation or funds are depleted to such an extent that the companies are not in a position to refund the deposits, it was accordingly considered necessary to control the activities of the companies when accepting deposits from the public. 21. Sub-section (1) of section 58A empowers the Central Government, in consultation with the Reserve Bank of India, to prescribe the limits up to which and the manner in which and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , brought in by amendment of 1978, requires every company to invest a sum which shall no be less than 10 % of the amounts of deposits maturing during the year ending on 31st day of March next following in one or more of the methods indicated therein. Clause (ii) of rule 3 further mandates that this amount shall not be utilised for any purpose other than repayment of deposits maturing during the year referred to in the sub-rule. The form and particulars of advertisements which can be issued by companies which intends to invite deposits are also laid down under rule 4. It will be seen that thus there are severe limitations on the amount of deposits that can be received and also the requirement of keeping liquidity of assets which every company which invites deposits and advances money is to observe whether by the constraint of section 58A of the Companies Act or of the various directions like in 1977 issued by the Reserve Bank of India. Thus a conscious effort to give protection to an unwary depositor has been the theme of these provisions. But there was no law laying down any limitation in the manner of accepting deposits, if the very same activity was carried on by an individual, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d back their deposits with the agreed interest as quickly as possible. Because the impugned legislation by a coincidence has been brought after the judgment was given, it was sought to be contended by counsel for the petitioners, that the impugned legislation is merely a panic reaction, and that there was nothing to show that the depositors in general were in jeopardy need of economy, had in any way acted to the detriment of depositors or were responsible for distortions in the economy. The criticism thus is that there was no material which could have persuaded the Legislature to impose any restrictions on the number of depositors which should be taken by persons like the petitioners and there is thus impermissible interference with the fundamental right of the petitioners. But this argument completely ignores the historical perspective which shows that right from 1949 onwards, there has been a sustained attempt to control the menace of unrestricted deposits being accepted by various institutions including companies and attempts have been always made to see that while receiving of the deposits may be permitted, it must be only in such a manner that the protection to the depositors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng function, inasmuch as they are catering for the purposes which were not met by the organized banking system until recently, thought it recognised that with the increasing interest taken by the banking system in financing the small man, there may well be a shift of a great may be an area of credit, beyond the line representing what the commercial banks would be prepared to finance, and it is to this class of customers that NBFIs would cater. (How these assumptions are out of reality, I will show later). It recognised that as a result of the activities of NBFIs, the efforts of monetary authorities to regulate credit have been thwarted and cited the instance of England. 25. It, however, recognised the need for regulating the acceptance of deposits by NBFIs not only to ensure the safety of depositors funds but also to ensure the implementation of credit policy objectives of providing credit to neglected sectors at reasonable rates and restricting its availability for less essential purposes. But it also accepted that the regulation in the form of detailed administrative supervision and periodical inspection would pose certain problems in designing the organisation for control bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndard liquidity ratio maintained by these corporations. The operations of these corporations show that they are making advances with the deposits taken from the public and their own funds were meagre. In one case, the partners of the firm had in fact withdrawn more than 90 per cent. of their capital. It found the danger of overtrading inherent in the system. Thus, it was possible to visualise a situation when the interest of the depositors could be seriously jeopardised. 28. The Study Group gave a caution that apart from protecting the interest of the depositors, there is the question of ensuring that advances made by these corporations are not put to undesirable causes. Information was also given to the Group that these corporations could contribute to the creation and increase in the circulation of unaccounted money and that a portion of the deposits of these corporations may be coming from people who want to dodge taxes. Since, usually partnerships have a capital of one lakh or less, they were exempted from the purview of the Banking Regulation Act, as in 1963, the legislature assumed, that they are small firms which accept deposits of very small amounts. But, very rapidly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ests of the depositors, known as J S Raj Committee Report. It noted that since activities of NBFIs are not controlled by monetary authorities to the same extent as those of the commercial banks, the credit extended by them may not necessarily be in consonance with the national objectives and priorities. The Raj Committee was of the view that if deficiencies or malpractices in the working are to be minimised, it would be necessary to subject the companies to almost the same type of control as under the Banking Regulation Act (para 5.6). 30. The Group also found that the finance corporations operating in Bangalore (like the petitioner) and other places were partnership firms with a capital investment of ₹ 1 lakh and are not covered by the regulations of the Reserve Bank. They accept deposits from the public out of all proportion to their own funds and invest the funds in ventures of the choice of the partners which cover such activities as film production, hotel business, construction besides usual manufacturing and trading activities. It also found that the corporations are tempted to borrow and lock up their funds by investing them in risky assets (advances) and it also ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asked to limit themselves to the requirement of 25 depositors or 250 as the maximum, it would have disastrous consequences for the economy, considering that the total deposits with the scheduled commercial banks in the country was 72,024 crores as on December 31, 1984. I may say at once that the claim of ₹ 45,000 crores in deposit is under a misapprehension. No source is given and it is obviously not possible for the petitioners to say about this from its own knowledge. The documents filed by the petitioners show to the contrary. In one of the representations (at page 67 and 71 of the writ file), the magnitude of the problem is posed, by pointing out that the large and highly developed network of distributive trade, inclusive of nearly 3.3 million retailers alone, handled sizeable business worth ₹ 45,000 crores each year. The total investment in the trade is estimated at rupees five thousand crores. Again in a memorandum annexed to the petition of Vidharba District Saraf Association, it is reiterated that it is the retailers which handle business of ₹ 45,000 crores and the the total investment in trade is estimated at five thousand crores and the strict complianc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r loans of ₹ 10 lakhs, ₹ 12 lakhs and all these loans are mostly to companies, even automobiles. Now, it is futile to suggest that these big companies or ventures which are engaged in the business of textiles, engineering, or Chemicals and which raise loans of lakhs of rupees, are not in a position to take proper loans from the banks, provided, of course, their schemes are genuine and viable. As a matter of fact, such large advances do raise a question which was before the Supreme Court in Sanchaita's case [1983] 53 Comp Case 114, whether these large funds which are put in deposits are not those which were acquired by generating and circulating black money ? Rate of interest charged by the financial corporations has also had a disturbing effect on the economy. The Study Report had indicated that the interest rate charged by the corporations is 24 to 36 per cent. though nominally what is recorded is only 18 per cent. As against this, the bank rate in 1971 was just 6 per cent. and it could legitimately be taken that the lending rate by the commercial banks to a private borrower would have been at a figure between 8 to 9 per cent. Evidently, the activities which could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... percentage of national income had also risen from 15.9 per cent. in June, 1970, to 28.3% in June, 1984. The share of the priority sector in the total credit of public sector banks had risen from 14.6 per cent. in June, 1969, to 38.4 per cent. by June, 1984. The safety aspect of the deposits with the banks has been safeguarded by the Deposit Insurance Scheme which shows that at the end of June, 1984, the Deposit Insurance and Credit Guarantee Corporation had insured deposits to the extent of ₹ 46,339.53 crores, almost 74.8 per cent. of the assessable deposits. Every depositor's deposit up to ₹ 30,000 is fully covered. The guidelines for advances to the priority sector issued by the Reserve Bank of India show that they includes direct advances for agricultural purposes for raising crops and storage facilities by constructing godowns or cold storages. The small scale industries which require investment of plant not exceeding ₹ 20 lakhs, are also included in the priority sector. Advances are also permissible for persons like retail traders in essential commodities and persons wanting to set up small business, who may be individuals or firms, are also covered by i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cally impossible for the petitioners to comply with this direction even if they wanted to, because they cannot compel the depositors to take back their money earlier or ask for payment back of the advances which have been given, which would be necessary to repay deposits. Thus, a very sombre picture is put forth, that the petitioners are being made subject to penal action for acts which were perfectly legal prior to coming into force of the Act. This situation is said to be made worse by the absence of any provision like section 58A (8) of the Companies Act which empowers the Central Government, if it considers it necessary, for avoiding or for any other just and sufficient reason to grant extension of time to comply with all or any of the provisions of that section. It was strongly argued that there being no such enabling provision, the petitioners would immediately be subject to penal provisions after the period of 2 years has run out. Now, the respondents do not accept that there would be any genuine difficulty for petitioners to comply with the requirements, excepting the ones brought in by their own volition. In that connection, Mr. Dewan argued that these financial corporatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hed to this court and in the process obtained stay, and thus refused to supply any information as sought by the Reserve Bank of India, till that order was modified by our order of September, 1985, requiring them to give part of the information sought for by the Reserve Bank of India. As such, the grievance on this core is too vague and imaginary. 42. That apart, Mr.Dewan, appearing for the Reserve Bank of India, had also fairly stated that notwithstanding the conduct of the petitioners, the Reserve Bank of India was not in any way rushing ahead in taking penal proceedings and that it was still prepared to examine sympathetically and in depth to find out if there was any genuine hardship and if necessary take consequential steps to remove them. It was also emphasised, with some justification, that the two-year period was considered reasonable, because the Study Group of 1971 had also found that most of the deposits are for a period of two years and, therefore, it was assumed that this period will be sufficient for the deposits to be repaid. That the exercise of making amendments in order to meet a pressing situation after an experience of legislation is a common factor will be cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estors, a segment of the society which can be appropriately described as weaker in relation to the mighty corporation. 45. A page 697 : Section 58A amongst various other things was designed to introduce some measure of control over the non-banking companies inviting and accepting deposits in the ultimate interest of the depositors, and by compelling limited liquidity in resources, the society at large was sought to be protected from the ever- haunting spectre of sickness in industry often conveniently resorted to by the private sector companies. 46. In view of this authoritative pronouncement, any legislation which provides for placing a ceiling on deposits and maintenance of liquidity, must necessarily be held to be reasonable. It is in this context, I must emphasise, that there is justification in the stand of the respondents that in order to meet this menace, it was necessary to have suitable legislation, but it was not possible to conceive of any legislation for financing, regulating or monitoring deposit acceptance activities of thousands of unincorporated bodies having no defined constitution, no set pattern and style of functioning who gave addresses of conven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 48. Thus, even this report shows that some kind of regulations are absolutely necessary to be imposed. Now, for the purposes of protecting the depositors interest, stringent provisions, like the ceiling on deposits, and liquidity ratio are provided in section 58A of the Companies Act and also under Chapter III-B of the Reserve Bank of India Act. These provisions have been held to be constitutional. Thus, if similar pros had been made in the present case, even the petitioners could not raise any objection. The petitioners were well aware that if they continue to function as companies, they would be within the rigours laid down in the Reserve Bank of India Directions and statute. That this is not mere guess-work would be clear from the reply filed by the reserve Bank and it is not controverter that the companies at items (ii) to (vi) which are the petitioners in C.W. Nos. 1366 of 1985, 1363 of 1985, 1370 of 1985, 1369 of 1985 and 1371 of 1985, have all got themselves converted in 1977, from private limited companies to firms and that they are having common partners, i.e., in order to avoid the rigour of Chapter III-B, the Reserve Bank of India Act and the Companies Act : the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udgment may respond closely to local needs and courts' familiarity with those needs is likely to be limited ; (See State of Gujarat v. Shri Ambica Mills Ltd. ). The respondents have explained that keeping in view the overwhelming trade of the finance corporations and in the absence of any reliable date, it was not possible, administratively to keep track of each one of them and that it was considered that the better method would be to limit the number of deposits that could be taken. This, it was stated, was also borne out by the previous reports which had found that the number of depositors normally was in hundreds. Also previous reports had recommended that it could not be in the interest of all, especially the depositors, if these bodies were to work as companies. The circumstances and the nature of the activity may be such where an activity may have to be completely banned and it would not violate article 19(1) of the Constitution, as has been held in Srinivas Enterprises v. Union of India (1981) 51 Comp Case 464 (SC), where banning of prize chits was challenged but the challenge was repelled. it was therein the court found that the resources collected by these persons were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature that only one course lone is permissible and not to permit a ply of joints would be to totally make it ineffective in meeting the challenge of the social evil. For, it must be remembered that In the ultimate analysis, the mechanics of any economic legislation has necessarily to be left to the judgment of the executive and unless it is patent that there is hostile discrimination against a class, the processual basis of price fixation has to be accepted in the generality of cases as valid. (See Prag ice and Oil Mills v. Union of India). Also such provisions check such evil must be viewed, as Krishna Iyer J. said, through a socially constructive, not legally captious, microscope to discover glaring unconstitutional infirmity, that when laws affecting large chunks of the community are enacted, stray misfortunes are inevitable and that social legislation, without tears, affecting vested rights is virtually impossible. (See B. Banerjess v. Smt. Anita Pan). 52. The stress by learned counsel for the petitioners on the private right of the petitioners to have unrestricted deposits and make advances in any manner they like must receive short shrift, for by now, it is too well sett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of its provisions. If any crudities, inequities or possibilities of abuse come to light, the Legislature can always step in and enact suitable amendatory legislation. That is the essence of the pragmatic approach which must guide and inspire the Legislature in dealing with complex economic issues. (See R.K. Garg v. Union of India. 55. I cannot, therefore, merely because a limit has been imposed as to the number of depositors that can be accepted by an individual or an association of individuals, the legislation should be held to have imposed an unreasonable restriction. I find nothing demonstrably irrelevant or perverse in the choice made by the legislature. I have already mentioned that had the same restrictions as placed on the companies and which have been held to be constitutional been put on the petitioners, the same would have put the petitioners in a worse position; surely a legislation which imposes lesser restrictions than those which have been held constitutional cannot be held to be invalid on the ground of imposing unreasonable restrictions. Is it not a self- defeating argument to suggest that restrictions which could be validly placed one company accepting deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r right under article 19(1)(c) of the Constitution to form an association. I cannot agree. No one under the impugned legislation is being compelled to form a company. All that is provided is that in the case of an individual or an association of persons the maximum number of depositors will be 25 or 250. If, however, there is a company, which is doing the business of financial institution like accepting deposits, there are no limits to the number of depositors. Thus, there are two distinct and separate classifications of institutions which are permitted to function. If they are individuals, then only the number of depositors are limited and there are no other restrictions as to ceiling on deposits or keeping a particular liquidity as in the other case. 60. The argument of counsel for the petitioners by relying on Smt. Damyanti Naranga v. Union of India, for the observation (headnote) that the right to form an association necessarily implies that the persons forming the association have also the right to continue to be associated with only those whom they voluntarily admit in the association and Excel Weal v. Union of India, that under the circumstances, a person can be compel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel, Mr. Salve, in C.W.No. 1131 of 1983, specifically takes the plea that the business of the petitioner is fundamentally different from that of money-lenders, of course, it also pleads that it is distinct from banks. 62. Now, banking is defined in the Banking Regulation Act, 1949 to mean accepting deposits for the purposes of lending or investment of deposits of money from the public repayable on demand or otherwise and withdrawal facilities by cheques, drafts or otherwise. But for the absence of facilities to withdraw by cheque and drafts, the definition of banking in the 1949 Act applies to the activities carried on by the petitioners excepting, of course, that they have no cheque facilities. that this business of accepting of deposits by the petitioners is considered akin to banking has been accepted in the 1971 Study Report. In para 2.6 of its report, it was noted that the companies accepting deposits from the general public are carrying on other business which is akin to banking. Again, while dealing with the lending activity of these companies which accept deposits, it was observed in para 8.13 that these corporations are in essence banks in the sense that they ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation of the expressions used in Chapter III-C are to be the same as the meaning which has been given to the words used in Chapter III-B. The provisions of Chapter III-C cover the aspect of the accepting of deposits by bodies and persons other than those covered by Chapter III-B. As the Supreme Court negatived the argument of this entry falling under money-lending or money-lenders, on the same analogy, it must be held that this activity of accepting deposits by the petitioners cannot fall within entry 30. 64. In my view, this argument is concluded against the petitioners by the decision in Delhi Cloth and General Mills Co. Ltd. v. Union of India (1983) 54 Comp Case 674 (SC). In that case also, the legislative competence of section 58A of the Companies Act was challenged on the ground that acceptance of deposits was covered by entry 30 of List II of money-lending and money-lenders. Rejecting this argument, the court observed (at pages 699, 700) : Applying this doctrine of pith and substance, section 58A which is incorporated in the Companies Act is referable to entries 43 and 44 in the Union List and the enactment viewed as a whole cannot be said to be legislation on money- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... List I. In any case, the competence would be of Parliament and not of the Legislature of the state. The competence of Parliament, therefore, to frame the impugned legislation cannot be doubted. 67. I feel that the stress of the whole argument of the petitioners has suffered from the assumption that unless legislation follows closely on the basis of the Expert Body Report, it must beheld that there was no material on the basis of which Parliament could have acted. Such is not how the Governments normally function. In that connection, reference may be made to the High Powered Expert Committees Report on the Companies Act and the Monopolies and Restrictive Trade Practices Act which was submitted in 1978 and the legislation incorporating those recommendations was passed only in 1984. It sometimes becomes necessary for the executive to look into some new aspects which have since arisen and also look little more deeply into the implications of the proposed legislation. On this account alone, it cannot be said that there was no material or study before Parliament before such a legislation was introduced. There were reports from 1971 onwards and it is as a result of the cumulative effe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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