PRAFULLA KUMAR MUKHERJEE v. THE BANK OF COMMERCE
(1947) 49 BOMLR 568
Q) What is Doctrine of Pith and Substance
FACTS
q In Bengal, The Bengal Moneylender Act 1940 was passed for the
greater interest for the public and set a limit, and above which no money be
collected by the money lenders.
q Even the rate of interest was limited which was recoverable
by the money lenders
q the interest of loan was so limited that the moneylenders
challenged the validity of this Act
ISSUES
q Constitutional validity of the Bengal Moneylenders Act was
challenged enacted by the State legislatures
q It was challenged on the ground that the Act was made in
relation to the Promissory note
q Promissory note falls under the category of the Union List
q Hence it was challenged that the State has no right to make
laws with respect to a union subject
DIFFERENCE IN JURISDICTION
q The federal legislature’s jurisdiction is to make law with
respect to Promissory Notes, Cheque, Bills of Exchange and other instruments
and denies the jurisdiction to provincial legislature.
q Corporation inclusive of incorporation, regulation and winding up
of trading corporation are under the jurisdiction of Central Legislature.
q The Central List however empowers the Central Government to
makes law with respect to the Trade and Commerce, Money lending and
Moneylenders
JUDGEMENT BY HIGH COURT
q The HC held that the Centre Prevails over the State and hence
judgement favoured the Appellant.
q On the ground that the Federal Structure of the Indian
Subcontinent gives supremacy of Centre over the State under article 248 of the
constitution.
q The Moneylenders Act was not completely held null and void,
but only that part which comes into the area of list 1 of the Centre.
q In their view the jurisdiction of the Provincial
Legislature is not ousted by the inclusive of provisions dealing with promissory
notes though that subject matter is to be found under the Federal Lost.
JUDGEMENT BY SUPREME COURT
q The SC held that the Pith and Substance Doctrine would apply.
Pith and substance of this Act is Money lending, and that is under the state
legislature, which is very well laid down, but the other aspect of the
Promissory note doesn't fall under state list, but in the Union list
q Now even the promissory note is not the state list but
still SC upheld the Act as they said that the objective of the Act is being
achieved and also the Act is laid down for the greater public interest.
q Even though the Act main subject is not about the
promissory note but rather money lending. Therefore, the Act is constitutional.
DOCTRINE OF INTERPRETATION
q Doctrine of Pith and Substance is also known as the Doctrine of
Predominant Purpose of true nature and character of law
q The doctrine of Pith and Substance says that where the
question arises of determining whether a law relates to a subject which is
mentioned in one list or another, the court looks to the subject of the matter.
q Normally when a matter falls within one list, then the
encroachment by law on the other state makes it invalid.
q The need for such a doctrine was required to provide a
degree of flexibility in the rigid scheme of distribution of powers.
CONCLUSION
q The Supreme Court held it rightly, that the true object, scope
and effect of the Act is money lending and the interest on the same and main
concern was not the Promissory notes and therefore the state legislature can
make Act to protect the true object, scope and effect.
q The Doctrine of Pith and Substance is of utmost importance
in this case to interpret the main subject matter of the case. The main subject
matter here is money lending and hence the doctrine is applied to protect the
rigid scheme of distribution of powers between the state and union.
q To serve the larger public interest whatever is ancillary
or incidentally effects a statute enacted by state legislature, such a matter
must be attributed to the appropriate list according to its true nature and
character.
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