KERALA SMALL FINANCIERS ASSOCIATION Vs. UNION OF INDIA

JUDGEMENT

(1.) Special leave granted.

(2.) The only contention raised in these cases is with regard to the legislative competence of the Parliament to enact Section 45-S of the Reserve Bank of India Act. The main ground in this regard which is urged by the learned Counsel for the Appellants is that in respect of persons who are registered under the Money Lenders Acts passed by the various States, their business cannot be brought to an end by virtue of Section 45-S. It is contended that the Acts have been passed in exercise of the powers conferred on the State Legislatures under Entry 30 of List II and inherent in the right of carrying on the business of money lending is the option to take money on deposit. The enactment of Section 45-S now prevents an unincorporated body or person from accepting a deposit even though the person may be a registered money lender.

(3.) In our opinion, this question is no longer res integra. In Kanta Mehta V/s. Union of India and Ors., 1987 62 CompCas 769, the High Court of Delhi considered such a contention which had been raised with regard to the validity of Section 45-S which had been incorporated at that point of time on the ground of legislative competence. The High Court came to the conclusion that under Entry 45, List I of the Seventh Schedule the said provision had been validly enacted. This case came up for consideration before a Bench of three Judges of this Court in T. Velayudhan Achari and Anr. V/s. Union of India and Ors., 1993 1 JT 580. After setting out the conclusions of the High Court, this Court had upheld the legislative competence of the Parliament to enact the said provision. This. Court in no uncertain terms observed that the decision of the Delhi High Court was correct. In paragraph 32, this Court stated that, "We approve the reasoning of the Delhi High Court in Kanta Merita's case." Again in paragraph 43, this Court stated that, "Therefore, we are in entire agreement with the Delhi High Court". The aforesaid decision of this Court in T. Velayudhan Achari's case , is binding on us and following the ratio of the said decision the conclusion which we can arrive at is that even the new Section 45-S has been Validly enacted. The provisions of the State law relating to money lending cannot have the effect of overriding the provisions of Section 45-S of the Reserve Bank of India Act. Section 45-S is a valid piece of legislation and it binds all persons referred to therein.