[Act 23 of ]. Preamble. An Act to define, amend and consolidate the law relating to chitties in the State of Kerala;. WHEREAS it is expedient to define, amend. RBI prepared a Draft Bill. The Kerala Chitties Act. The Chit Funds Act. The laws relating to chitties in force of Kerala State. appellant was that the plaintiff has violated the Kerala Chitties Act, and contended that there was no previous sanction Government as required under .

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However, as held in numerous decisions of this Court, a law enacted by the State legislature on a topic in the Concurrent List which is inconsistent with and repugnant to the law made by the Parliament can be protected by obtaining the assent of the President under Article 2 and that the said assent would enable the State law to prevail in the State and override the provisions of the Central Act in its applicability to that State only. To sum up, our conclusions are as follows: Copies of variola to be given to subscribers and acknowledgements to be filed.

Our Constitution gives supremacy to the Parliament in the matter of making of the kerrala or legislating with respect to matters delineated in the three Lists. The lis in the present case arose under the following circumstances.

Supreme Court nullifies Kerala Chit Fund Act

Every transfer under section 31 shall be recognised by the foreman unless. Inconsistency between laws made by Parliament under Articles and and laws made by the Legislatures keraala States. By the said amendment, sub-section 1a was inserted in Section 4. In consequence, the Kerala Chitties Act, became void on Applying these tests, it was submitted that the Kerala Chitties Act, became void under Article 1 on the enactment of the Central Chit Funds Act, That, in consequence of the said repugnancy, the Kerala Chitties Kerala chitties actbecame void under Article 1 on However, according to the learned counsel, the previous operation of the Kerala Chitties Act, is chittirs affected nor any right, privilege, obligation or liability acquired under the Kerala Chitties Act shall stand affected in view of Article of the Constitution.

Thangal Chities Musaliar v. Registration Office and Fees.

Repugnancy arises when two enactments both within the competence of the two Legislatures collide and when the Constitution expressly or by necessary implication provides that the enactment of one legislature has superiority over the other then to the extent of the repugnancy the one supersedes the other.

To put the matter in another way, if the entire Act including Section 1 3 was not in operation on Section 6 3 of the Central Act states that the amount of discount referred to in Clause f of Sub-section 1 shall not exceed thirty per cent of the chit amount.

Similarly, a State legislation becomes an Act as soon as a Bill has been passed by the State Legislature and it has received the assent of the Governor in accordance with Article The statement of law laid down in Pt. That there is a clear and direct inconsistency between the Central Act and the State Act.


Further, each and every aspect relating to the conduct of a Chit as sought to be covered by the State Act has been touched upon by the Central Act.

Stay of winding up proceedings fhitties insolvency of foreman and transfer of insolvency proceedings. Power to make rules. Rishikesh supra created a doubt in the minds of the referring judges and, accordingly, the said statement of law has come before the Constitution Bench of this Court for its authoritative decision. Inspection of documents in Registrar’s Office. If any foreman makes default in complying with the requirements of this section, he shall be punishable with fine which may extend to one hundred rupees.

Giri, learned counsel for one of the private chitty firms, the judgment of this Court in Pt. Moreover, the intention to override the State laws is clearly manifested in the Central Act, especially Section 3 which makes it clear that the provisions of the Central Act shall have effect notwithstanding anything to the contrary contained in any other law for the time being in force.

But two enactments may be repugnant to each other even though obedience to each of them is possible without disobeying the other. Rishikesh and Another v. Thus, where there is a Central law which kegala to override a State law or where there is a Central law intending to occupy the field hitherto occupied by the State law or where the Central law collides with the State law in actual terms, then the State Legislature would have to take into account keeala possibility of repugnancy within the meaning of Article of the Constitution.

Learned Single Judge also found if a Foreman is registered under the Central Act in any State outside Kerala and has subscribers in Kerala, the Central Act applies to the Foreman even in regard to the business he has in Kerala, no matter the Central Act is not notified in the State and in such cases the learned Single Judge opined that the provisions of the State Act will yield to the extent the same is inconsistent with the Central Act.

The principle of supremacy of the Parliament, the distribution of legislative powers, the principle of exhaustive enumeration of matters in the three Lists are all to be seen in the context of chittis of laws and not in the context of commencement of the laws.

Provided further that such previous sanction shall not be necessary for starting and conducting any chitty by”. That, until such notification neither the Kerala Chitties Act, prevails in the State of Kerala chtities it has become void and stands kerala chitties act under Article 1 nor the Central Chit Funds Act, as it is not kerala chitties act Minutes of proceedings of drawing of chitty.

Hence, the State Legislature has full power to legislate regarding subjects in the Concurrent List, subject to Article 2i. Thus, according to the learned counsel, repugnancy arose when the Central Chit Funds Act, received the assent of the President and on its publication in the Official Gazette and not on its commencement, which till date is not there in the State of Kerala.


Short title, extent and commencement. SCCthis Court vide para 18 stated as under.

Supreme Court nullifies Kerala Chit Fund Act – News18

This contention was rejected in the following terms: Section 1 2 of the said Act states that the Act extends to the whole of India, except the State of Jammu and Kashmir whereas Section 1 3 states that it shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint and different dates may be appointed for different States. The non- obstante clause in Article 1 operates only if reconciliation is impossible.

The only question that arose was whether Parliament and the State Legislature sought to exercise their powers over the same subject matter or whether the laws enacted by Parliament were intended to be a complete exhaustive code kefala whether such Acts evinced an intention to cover the whole field.

As can be seen from the impugned judgment vide paras on comparison of the provisions of the Kerala Chitties Act,being the State Act, and the Chit Funds Act,being the Central Act, chitgies actually exist directly.

Provided that the previous Provided that a sanction obtained sanction under this sub-section under this sub-section shall lapse shall lapse chutties the keralaa is if the chit is not registered registered before the expiry of within twelve months from the date six months from the date of such of such sanction or within such sanction: Section 4 – Prohibition of invitation for subscription except under certain conditions 1 Where previous sanction is required by section 3 keralla starting and conducting a chitty, no person shall issue or publish any notice, circular, prospectus, proposal or other document inviting the public to subscribe for acct in any such chitty or containing the terms and conditions of any such chitty unless such notice, circular, prospectus, proposal or other document contains a statement that the previous sanction required by section 3 has been obtained, together with the particulars of such sanction.

No suit, prosecution or other legal proceedings shall lie against the Government or the Registrar or any other person for anything which is in good faith done or intended to be done under this Act. Before dealing with the respective submissions made by counsel before us, we need to quote Articles 112 and 31 and 31 and 2and of the Constitution, which read as follows: Such a state of affairs will exist only until Parliament may at any time make a law adding to, or amending, varying or repealing the law made by the State Legislature under the proviso to Article Provided that the chitty amount in the case of anyone chitty conducted by a foreman shall not exceed twenty-five thousand rupees: Transfer chotties rights of foreman when voidable.

Lastly, learned counsel submitted that a purposive interpretation of Article must be sct which does not lead to a legislative vacuum.