Appeals No 632 to 646 of 1976
From the Judgment and Order dated the 22232627th of April 1976 of the Bombay High Court in SCA Nos
997 2128 2773 2077 2065 2045 1172 1193 1195 1196 1199 1200 1210 75 and 2050  2071 of 1976 and CIVIL APPEALS NOS
655  1286 of 1976 From the Judgment and Order dated the 14 5 1976 23rd 24th 27th April 1976 of the Bombay High Court in SCA No 2985 of 1976 and Misc
Petition 4 of 1976 and WRIT PETITIONS NOS
98 102 107 110 113  115 120 1976 Under article 32 of the Constitution of India B Sen in CA
632 YS Chitale in CA
633 Sachin Chowdhary in CA
634 FS Nariman and RN Bennerjee Adv
in CA
637 HP Shah in CAs
632 638 AJ Rana in CA
635 PH Parekh  Miss Manju Jetly with them for the appellants in CAs
632 637 Vallabhadas Mohta Sardar Bahadur Saharya  Vishnu Bahadur Saharya for the appellants in CAs
638 644  644
JL Nain AJ Rana Janendra Lal BR Agarwala and Gagras  Co with him for the appellants in CAs 645  646 except for appellant No 52 in CA
646 FS Nariman RN Banerjee JB Dadachanji  KJ John with him for the appellant No 62 in 64676 Madhukar Soochak K Rajendra Chowdhary KA Shah and Mrs Veena Devi Khanna Advocates for the Appellant in CA
128676 SK Dholakia VJ Kankaria  RC Bhatia for the petitioners in all the Writ Petitions
Niren De Attorney Genl
only in CAs
632 638 and WP No 9876 1
W Adik Adv
of Maharashtra MN Shroff for the Respondents in the appeals and Writ Petitions MP Chandrakantral Urs and N Nettar for the interven er in CA
63276 State of Karnataka 832 K Parasaran Adv
Tamil Nadu
A V Rangam V Sathiadev and Miss A Subhashini in the for the inter vener in CA
632 State of Tamil Nadu K Rajendra Chowdhary for the intervenersApplicants A Ratnaabhapati and Jayalakshimi  Co Ms Jeshtmal KR Chowdhary Mrs Veena Devi Khanna for the intervenerapplicant N Dhanraj
BA Desai SC Agarwala and VJ Francis for Re spondents 4  5 in CA
128676
The Judgment of the Court was delivered by KRISHNA IYER J
The distance between societal reali ties and constitutional dilettantism often makes for the dillemma of statutory validity and the arguments addressed in the present batch of certificated appeals and writ petitions evidence this forensic quandary
Likewise the proximity between rural cum clum economics and sociaL relief legislation makes for veering away from verbal obsessions in legal construction
A constitution is the documentation of the rounding faiths of a nation and the fundamental direc tions for their fulfilment
So much so an organic not pedantic approach to interpretation must guide the judicial process
The healing art of harmonious construc tion not the tempting game of hair splitting promotes the rhythm of the rule of law
These prologuic observations made
we proceed to deal with the common subject matter of the appeals and the writ petitions
A bunch of counsel led by Shri Nariman and seconded by Shri B Sen have lashed out against the vires of the Maharashtra Debt Relief Act 1976 for short the Debt Act
The former has focused on the fatal flaw in the Act based on article 301 of the Constitution and the latter has concentrated his fire on the incompetency of the State Legislature to enact the Debt Act
A plurality of submis sions by a procession of lawyers has followed although the principal points have been comprehensively covered by Shri Nariman and Shri B Sen
To encore is not to augment and yet some counsel who had not much to supplement claimed the right to
be heard and exercised it ad libiem essaying what had already been forcefully urged and forget ting that a fine fresh presentation of a case is apt to be staled by a second version of it and pejorated by a third repetition
While in constitutional issues of great moment this Court is reluctant to ratio oral submission it is important by comity of the Bench and the Bar to conserve judicial time in the name of public justice so that internal allocations avoiding over lapping may be organised among many counsel who may appear in several appeals substantial ly dealing with the same points
A happy husbandry of advo cacy is helpful for judge and lawyer alike and to streamline forensic business is the joint responsibility of both the limbs of the institution of justice
Back to the beginning
article 301 of the Constitution man dates 833 301
Freedom of trade commerce and inter course Subject to the other provisions of this Part trade commerce and intercourse through out the territory of India shall be free
 We may also read the cognate provision viz article 304 b 304 b
Restrictions on trade commerce and among States
Notwithstanding anything in Article 301 or Article 303 the Legislature of a State may by law X X X X b impose such reasonable restrictions on the freedom of trade commerce or intercourse with or within that State as may be required in the public interest Provided that no Bill or amendment for the purposes of clause b shall be introduced or moved in the Legislature of a State without the previous sanction of the President
 The unmincing submission of Shri Nariman is that money ending is very much a trade that the Debt Act deals drasti cally with moneylenders in defiance of article 301 and since the manacles on moneylenders and money lending are unreason ably harsh and callously indiscriminate the freedom which belongs constitutionally to professional money lenders is breached by the statutory liquidation of their loans
Nor can the invalidatory consequence of this violation be obvi ated by article 304b
This latter provision salvages stat utes which contravene freedom of trade commerce and inter course only if they possess the virtues of reasonableness and public interest
The injustice of wiping out the debts of marginal farmers rural artisans rural labour ers and workers as provided in the scheme of the Act was anathematised by Shri Nariman as an unwarrantedly unrea sonable annihilation of the trade and its capital
We will deal with this contention presently but we may merely mention for later discussion another short lethal objection to a part of the law put forward by counsel
He stated that there was legislative incompetency for the State Legislature because it had forfeited the power to legislate on money lending where gold loans were involved since Parliament had occupied the field under Entry 52 of List I by enacting the Gold Control Act 1968 and had thereby elbowed out the State Legislature from that field
Considerable eclectic study of English Australian and American cases was displayed in the course of arguments reverberating in Indian precedents dealing with Part XIII of the Constitution
Of course we will refer to them with pertinent brevity although we must administer to our selves the caveat that the same words used in constitutional enactments of various nations may bear different connota tions 834 and when Courts are called upon to interpret them they must acclimatize the expressions to the particular conditions prevailing in the country concerned
Different lands and life styles different value systems and economic solu tions different social milieus and thought ways different subject matters and human categories these vital variables influence statutory projects and interpretations although lexicographic aids and understandings in alien jurisdictions may also be looked into for light but not beyond that
The constitutional guarantee of the commercial mobility and unity of the country in article 301 is sought to be made the major sanctuary of money lenders  whose freedom  to lend and thereby end the lendee is by legislative judgment hand cuffed
Before unravelling the provisions of the Debt Act we must first found ourselves on the quintessentials of article 301 and the juristic and economic basics implied in that provision
We are not construing a petrified legal parchment but reading the luscent lines of a human text with a national mission
We must never forget that the life of the suprema lex is nourished by the social setting that juridical abstractions and theoretical conceptions may be fascinating forensics but jejune jurisprudence if the raw Indian realities are slurred over
We are expounding the Constitution of a nation whose people hunger for a full life for each and therefore a perception of the signature of social justice writ on it is imperative Nothing is more certain in modern society  declared the American Supreme Court at mid century than the principle that there are not absolutes 
Legal Einsteinism guides the Court not doctrinal absolutes as we will presently discuss
Since article 301 has loomed large in the debate at the bar it is pertinent to ask what is its object and design
For if the impugned legislation does violate article 301 it must perish unless rescued by article 304b
This Court in Atiabari Tea Co C tracing the roots of article 301 observed Let us first recall the political and constitutional background of Part XII
It is a matter of common knowledge that before the Constitution was adopted nearly two thirds of the territory of India was subject to British Rule and was then known as British India while the remaining part of the territory of India was governed by Indian Princes and it consisted of several Indian States
A large number of these States claimed sovereign rights within the limitations imposed by the paramount power in that behalf as they pur ported to exercise their legislative power of imposing taxes in respect of trade and com merce which inevitably led to the erection of customs barriers between themselves and the rest of India
In the matter of such barriers British India was governed by the provisions of section 297 of the Constitution Act 1935
To the provisions of this section we will have occasion later to 1   843 835 refer during the course of this judgment
Thus prior to 1950 the flow of trade and commerce was impeded at several points which constituted the boundaries of Indian States
After India attained political freedom in 1947 and before the Constitution was adopted the historical process of the merger and the integration of the several Indian States with the rest of the country was speedily accom plished with the result that when the Consti tution was first passed the territories of India consisted of Part A States which broadly stated represented the Provinces in British India and Part B States which were made up of Indian States
This merger or integra tion of Indian States with the Union of India was preceded by the merger and consolidation of some of the States inter se between them selves
It is with the knowledge of the trade barriers which had been raised by the Indian States in exercise of their legislative powers that the Constitution makers framed the Articles in Part XIII
The main object of article 301 obviously was to allow the free flow of the stream of trade commerce and inter course throughout the territory of India
 It is fair to realise that article 301 springs from Indian history and hope
We may recall the political and consti tutional background of Part XIII the divided days of Brit ish rule the united aspirations of Independent India the parochial pressures and regional pulls leading inevitably to the erection of fiscal barriers and hampering of economic oneness
The integration of India was not merely a histor ical process but a political social and economic necessity
Gajendragadkar J in Atiabari Tea Co supra pointed out In drafting the relevant Articles of Part XIII the makers of the Constitution were fully conscious that economic unity was absolutely essential for the stablity and progress of the federal polity which had been adopted by the Constitution for the governance of the coun try
Political freedom which had been won and political unity which had been accom plished by the Constitution had to be sustained and strengthened by the bond of economic unity p 843 Free movement and exchange of goods throughout the territory of India is essential for the economy of the nation and for sustain ing and improving living standards of the country
The provision contained in article 301 guaranteeing the freedom of trade commerce and intercourse is not a declaration of a mere platitude or the expression of a pious hope of a declaratory character it is not also a mere statement of a directive principle of State policy it embodies and enshrines a principle of paramount importance that the economic unity of the country will provide the main sustaining force for the stability and progress of the political and cultural unity of the country p 844 836 Such being the perspective the judicial sights must be set high  while reading Article 301
Social solidarity is a human reality not mere constitutional piety and a non exploitative economic order outlined in article 38 is the bedrock of a contented and united society
Social disorder is the bete noire of commerce and trade
All this is non controversial ground but the learned Attorney General con tests the very applicability of article 301 to money lenders and moneylending visa vis the humble beneficiaries of the statute viz the marginal farmers rural artisans rural labourers workers and small farmers
It is a cruel legal joke to legitimate as trade this age old bleeding business of agrestic India whereby the little peasant
the landless tiller the bonded labourer the pavement tenant and the slum dweller have been born and buried during the Raj and the Republic in chill penury
Is trade in human bondage to be dignified legally betraying the proletarian generation For whom do the constitutional bells of the socialist Repub lic toll Therefore argues the Attorney General it is juristic blasphemy to call unscrupulous moneylending  a rural spectre which stalks Maharashtra a trade at all
These chronic operations socially obnoxious and economical ly inhuman cannot be recognised as licit and wear the armour of article 301 for this preliminary reason
Not all systematic economic activity is trade
Sinister socially shocking ones are not
Shri Nariman has counter asserted backed by a profusion of precedents that money lending in the modern complexities of business life is a lubricant for the wheels of commerce and has been treated as trade
It is the life blood of business
It needs no argument to say that the topics of legislation listed in the Seventh Schedule must receive a large and liberal yet realistic interpretation
So understood the expression trade  in its wide import covers not merely buying and selling of goods  but trading facilities like advances overdrafts mercantile documents trading intelligence telegraphic and telephonic communica tions banking and insurance and many other sophisticated operations connected with and essential for commerce and intercourse
Even travel facilities in certain circum stances have a nexus with trade and commerce and are part of them
Learned counsel referred to Ibrahim1 wherein this Court has referred to the corresponding provisions in the Australian Constitution and imparted a comprehensive meaning to trade 
American and Australian case law Halsbury and the Judicial Committee were read with special emphasis on the amplitude of the expression trade 
An inventory of Indian statutes wherein money lending  as a business was mentioned and licensed was also brought to our notice
Indeed this wealth of legal literature may well be held to make out that money lending banking insurance and other financial transactions commercial credit and mercantile advances may conceptually be characterised as busi ness 
Mercantile credit money lending pawn broking and advances on pledges are business
Otherwise the commerce of our country will grind to a halt
Can we con ceive of trade without credit or commerce without mercan tile documents discounting lending and 1 837 negotiable paper To deny to monetary dealings the status of trade is to push India into the medieval age Broadly viewed money lending amongst the commercial community is integral to trade and is trade
So far we go with Shri Nariman and others who have urged the same point with allomorphic modifications
The learned Attorney General s stance is radical and rooted in the rural bondage to break which is the mission of this legislation
If accepted it will mean that money lending in the limited statutory setting and projected on the Indian rural urban screen visa vis the exploited people below the poverty line cannot be regarded as trade 
It is apt to be reminded of the then famous epigram of Frederick W Maitland A woman can never be outlawed for a woman is never in law
 Money lending is it in law at all No trade no article 301 and so the baptismal certificate that article 301 insists upon from the economic activity that seeks its free  blessings is that it is trade commerce or intercourse 
Thus the critical question is as to whether money lending and the class of money lenders who have been preying upon the proletarian and near proletar ian segments of Indian society for generations may be legal ly legitimated as traders  or businessmen 
This is not an abstract legal question turning on semantic exercises but a living economic question of incurable indebtedness
Blood sweat and tears animate amelioratory law which exiles literal interpretation
The heartbeats of the Debt Act according to the State counsel cannot be felt without humanistic insight by first ostracising in the name of social order the die hard death grip practices which have defied legislative policing in the past and have kept in chronic servitude vast numbers of the Indian agrarian community and working class
But if as urged by the oppo sition the law flatly flouts article 301 it fails
The rule of law for functional success must run close to the rule of life
Therefore constitutional assays must be on the touchstone of societal factors
So we cannot embark upon a study of the working of stock exchanges the dependence of industry and business on credit and key loans the role of pledges in financing commercial activity when the challenge is to an economic legislation dealing with the lowliest and the lost the destitude and the desperate far from big business and industry trade and commerce and high finance and sophisticated credit
We must zero in on the social group the Debt Act seeks to save the pattern of lending the statute strikes at the heaviness of the blow and on whom it falls and the raison detre of the measure
Does this specific species of deleterious economic activity masked as moneylending trade  qualify for the freedom that article 301 confers on trade The specific social malady and the legislative therapeutics suggested guide the court
Here again relativity not absolutes rules jurisprudence
Of course while interpreting the relevant Articles in Part XIII and pronouncing upon the concept of trade  we must have regard to the general scheme of the Constitution and should not truncate the 838 scope and amplitude of economic unity free movement pro tection from discrimination unhampered financial arrange ments and the like
Undoubtedly the freedom while it is wide is not absolute
Our Constitution framed by those who were sensitive to the massive poverty of the country and determined to extirpate the social and economic backwardness of the masses could not have envisioned a development where some will be free  to keep many unfree  See Articles 38 and 39 c
That is why to make assurance doubly sure a further provision is made in article 304b by adding a rider to the freedom of commerce subjecting it to the requirement of reasonableness and imposition of restrictions in public interest
Das J in Automobile Transport 1 struck the true note if we may say so with great respect that while the text of the Articles is a vital consideration in inter preting them we must  at the same time remember that we are dealing with the Constitution of a country and the interconnection of the different parts of the Constitution forming part of an integrated whole 
The learned Judge asks Even textually we must ascertain the true meaning of the word free  occurring in article 301 From what burdens or restrictions is the freedom assured This is a question of vital importance even in the matter of construction 
Later in the  judgment Das J drives home the point that the conception of freedom of trade in a community regulated by law pre supposes some degree of restriction that freedom must necessarily be delimited by considerations of social orderliness  underscoring supplied
Even the Australian Case 1916 22 CLR 556 573 conceptulizes freedom as nothing extra legem lest freedom should be confounded with anarchy We are the slaves of the law  said Cicero that we may be free 
Sir Samuel Griffith CJ in Duncan vs State of Queensland 22 CLR556 573 said But the word free  does not mean extra legem any more than freedom means anarchy
We boast of being an absolutely free peo ple but that does not mean that we are not subject to
 The conscience of the commerce clause in India as elsewhere is the promotion of an orderly society
social justice is the core of the constitutional order
Two inter connected but different facets of freedom of trade and commerce fall for serious consideration in the light of the above discussion
Is anti social usurious unscrupulous money lending to economically weaker sec tions eligible for legal recognition as trade  within the meaning of article 301  Secondly assuming that even such activities have title to be termed trade  are the provi sions of the Debt Act reasonable regulatory and in the public interest  The learned Attorney General argued for the proposition that the narrow noxious category of money lending with which we are concerned is so oppressive and back breaking so far as the poorest sections of the community are concerned that a sense of social justice forbids the court to legiti mate it as trade 
Not all systematic economic activity even if not formally banned by the law can be christened trade  he submits and relies on Chamorbaughwala to
reinforce this reason 1 1963 1 SCR 491
2  839 ing
In that case the impugned Act was said to offend against article 301
The Court therefore considered whether gambling was not trade commerce or intercourse  and took a sky view of the numerous decisions in various countries bearing on this branch of sociological jurisprudence
One of the Australian cases dealing with lotteries Mansell vs Beck elicited the observation that lotteries not conducted under the authority of government were validly suppressed as pernicious
Taylor J made the trenchant observation   whilst asserting the width of the field in which section 92 may operate it is necessary to observe that not every transac tion which employs the forms of trade and commerce will as trade and commerce invoke its protection
The sale of stolen goods when the transaction is juristically analy sed is no different from the sale of any other goods but can it be doubted that the Parliament of any State may prohibit the sale of stolen goods without infringing section 92 of the Constitution  The only feature which distinguishes such a transaction from trade and commerce as generally understood is to be found in the subject of the transaction there is no difference in the means adopted for carrying it out
Yet it may be said that in essence such a transaction constitutes no part of trade and commerce as that expression is generally understood
Numerous examples of other transactions may be given such as the sale of a forged passport or the sale of counterfeit money which provoke the same comment and although legislation prohibiting such transactions may possibly be thought to be legally justifiable pursuant to what has on occasion been referred to as a police power  I prefer to think that the subjects of such transactions are not on any view the subjects of trade and commerce as that expres sion is used in section 92 and that the protection afforded by that section has nothing to do with such transactions even though they may require for their consummation the employment of instruments whereby inter State trade and commerce is commonly carried on RMDC Case pp 915 916 In the United States of America operators of gambling sought the protection of the commerce clause
But the Court upheld the power of the Congress to regulate and control the same
Likewise the Pure Food Act which prohib ited the importation of adulterated food was upheld
The prohibition of transportation of women for immoral purposes from one State to another or to a foreign land was held valid
Gambling itself was held in great disfavour by the Supreme Court which roundly stated that there is no consti tutional right to gamble 
Das C 1 after making a survey of judicial thought here and abroad opined that freedom was unfree when society was exposed to grave risk or held in ransom by the operation of the impugned 840 activities
The contrary argument that all economic activi ties were entitled to freedom as trade  subject to reasona ble restrictions which the Legislature might impose was dealt with by the learned Chief Justice in a sharp and forceful presentation On this argument it will follow that criminal activities undertaken and carried on with a view to earning profit will be pro tected as fundamental rights until they are restricted by law
Thus there will be a guaranteed right to carry on a business of hiring out goondas to commit assault or even murder of housebreaking of selling obscene pictures of trafficking in women and so on until the law curbs or stops such activities
This appears to us to be completely unrealis tic and incongruous
We have no doubt that there are certain activities which can under no circumstance be regarded as trade or busi ness or commerce although the usual forms and instruments are employed therein
To exclude those activities from the meaning of those words is not to cut down their meaning at all but to say only that they are not within the true meaning of those words
Learned counsel has to concede that there can be no trade  or business  in crime but submits that this principle should not be extended   We have no hesitation in our hearts and our heads to hold that every systematic profit oriented activity however sinister suppressive or socially diabolic cannot ipso facto exalt itself into a trade
Incorporation of Directive Principles of State Policy casting the high duty upon the State to strive to promote the welfare of the people by securing and protecting as effectively as it may a social order in which justice social economic and politi cal shall inform all the institutions of the national life is not idle print but command to action
We can never forget except at our peril that the Constitution obligates the State to ensure an adequate means of livelihood to its citizens and to see that the health and strength of workers men and women are not abused that exploitation moral and material shall be extradited
In short State action defending the weaker sections from social injustice and all forms of exploitation and raising the standard of living of the people necessarily imply that economic
activities attired as trade or business or commerce can be de recog nized as trade or business
At this point the legal cul ture and the public morals of a nation may merge economic justice and taboo of traumatic
trade may meet and jurispru dence may frown upon dark and deadly dealings
The consti tutional refusal to consecrate exploitation as trade  in a socialist Republic like ours argues itself
The next question then is whether rural and allied money lending is so abominable as to be bastardized  by the law for which the Attorney General pleaded
Shri Nariman controverted the vulgar generalisation that all money lend ers are vampirish as unveracious imagery
He argued that many of them were not only licenced but had complied with the conditions of their licences in doing honest lending business and supplying rural credit to those in need
He 841 pointed out that institutional credit had hardly penetrated rural India and the non institutionalised money lenders had done economic service to a primitive peasantry although several of them had abused
the situation of helplessness in which the weaker denizens of backward regions found them selves
His contention was that there was no justification for castigating money lending as non trade not was there valid material to condemn wholesale all those who had served as the financial backbone of agricultural communities in the past
Reasonable restrictions to obviate abuse were permis sible legislation but obdurate refusal to treat what in fact was trade as trade was injustice born of hostile hunches
He had separate arguments on the unreasonableness of the provisions of the Debt Act which we will deal with later
The bone of contention between the parties there fore is as to whether money lenders as a class and money lending as a systematic traditional activity in the special context of the weakest sections of agrarian humanity and the working class can be called trade 
The legal principles have already been explained by us which we may sum up brief ly by stating that generally speaking the systematic business of lending is trade as understood in the commer cial world and in ordinary monetary dealings
Moreover trade cannot be confined to the movement of goods but may extend to transactions linked with merchandise or the flow of goods the promotion of buying and selling advances borrowings discounting bills and mercantile documents banking and other forms of supply of funds
It is possible however to project a different view point and this is precisely what the learned Attorney Gener al has done
Free flow understood in Article 301 implies some movement from place to place
Freedom of trade subject to reasonable restrictions is guaranteed under article 19
The special advantage derived by the Trade by virtue of article 301 consists in the interdict on impeding directly and immediately movement of goods or money transactions con nected with movement of merchandize or commercial inter course
In short the Attorney General considers the element of movement as essential to Pat
301 in contrast with article 19
We see the force of the submission but are inclined to the view that dealings of Banks and similar institutions having some nexus with trade actual or poten tial may itself be trade or intercourse
All modern com mercial credit and financial dealings covered by the various rulings cited at the bar come under this heading
Even so the village based age old feudal pattern of money lending to those below the subsistence level to the village artisan the bonded labourer the marginal tiller and the broken farmer who borrows and repays in perpetual labour hereditary service periodical delivery of grain and unvouchered usurious interest is a countryside incubus
This is not an isolated evil but a ubiquitous agrarian bondage
Such debts ever swell never shrink
such captive debtors never become quits such countryside creditors never get off the backs of the victims
The worker and peasant of India whose lot is to be born to Endless Night  is symbol ized by Jawaharlal Nehru an architect of the Constitution as the Man with the Hoe 842 Bowed by the weight of centuries he leans Upon his hoe and gazes on the ground The emptiness of ages on his face And on his back the burden of the world
X X X X Through this dread shape the suffering ages look Time s tragedy is in that aching stoop Through this dread shape humanity betrayed Plundered profaned and disinherited Cries protest to the powers that made the world A protest that is also prophecy
 All this painful poetry and prose is borne out by the record in the case and by studies by economists
A recent issue of the Eastern Economist reads The problem of rural indebtedness is as old as Indian agriculture itself
It is the net result of usurious money lending improvident spending and adversities in agri culture
The heavy burden of debt not only continues to cripple our rural economy but it also grows in alarming magnitude
Several attempts have been made by expert bodies from time to time for a realistic estimation of rural indebtedness
Nevertheless the fact remains that the rural indebtedness in physi cal terms is mounting up and the nightmare of indebtedness continues to haunt the Indian peasants
Quite recently the report published by the All India Rural Debt and Investment Survey relating to 1971 72 also depicts an increasing trend in rural indebtedness
It has been estimated that the aggregate borrowings of all rural households on June 30 1971 was Rs3921 crores while the average per rural household being Rs503 
Fortythree per cent of the rural families had reported borrowings 
If the problem of rural indebtedness is to be kept within meaningful limits and man ageable proportions following legislative and non legislative measures should be taken 1
At present the institutional agen cies provide only 50 per cent of the total rural credit needs
Increased efforts by all the institutional agencies are called for especially in the context of the declaration of moratorium on rural debt which may affect the flow of non institutional finance
There are about 75 million marginal farmers with less than one hectare of opera tional holding 20 million artisans and 47 million agricultural labourers in rural sec tor who constitute the rural poor
Liquida tion of existing debt is an essential step in order to give relief to these weaker sec tions
The Debt Relief Acts passed in differ ent states should be effectively implemented
843 3
Institutionalisation of rural savings and inculcation of saving habits amongst rural folk is a positive step to mitigate this problem
Massive propaganda and education on economising expenditure may discourage ex travagant spending by certain categories of rural households
If necessary certain legislative measures such as abolishing dowry system and imposing austere marriages may also be resorted to 4
Attempts must also be made to bring the money lenders under some form of monetary regulation and control on the lines suggested by the Banking Commission
Though at present legislations exist in several states for the regulation of money lenders they lack enforce ment which render the ineffective emphasis added  Current Trends in Rural Indebtedness by M Gopalan  V Kulandaiswamy Eastern Economist dApril 23 1976 Vol
66 No 17 pp 826 829 Professor Panikar referring to the nightmare of debt has this to say Perhaps it may be that the need for borrowing is taken for granted
But the undisguised fear that the oppressive burden of debt on Indian farmers is the main hindrance to progress is unanimous
There are many writers who depict indebtedness of Indian farmers as an unmixed evil
Thus Alak Ghosh quotes with approbation on the French proverb that Credit supports the farmer as the hang man s rope the hanged  Rural Savings in India P GK Panikar Somaiya Publications Pvt Ltd Bombay 1970 Dr Bhattacharya in his book Social Security Measures in India  Metropolitan Book Co Delhi 1970 dwells on the problem of agri cultural indebtedness A sample survey conducted by Second Agricultural Commission revealed the grim condition of rural indebtedness
The Survey observes Of the estimated total number of 163 million agricultural labour households in the country 639 per cent were indebted and debt per indebted household was Rs138 per annum 
This is indeed a danger signal par ticularly for a country whose entire economy is dependent on the prosperity of rural population
The same source sums up the total volume of rural indebtedness in the following words Thus the total volume of debt of the indebted agricultural labour households may be estimated at about Rs143 crores in 1956 57
A similar estimate was made on the basis of the results of the 1950 51 Enquiry ie the First Agricultural Commission Report and it worked out to about Rs80 crores Even though the estimated number of agriculture labour households in 3 206SCI77 844 1956 57 was lower by 16 million ascom pared with 1950 51 the total debt of indebted agriculture labourhousehold had considerably increased in 1956 57 pp
164 165 Dhires Bhattacharya in his Concise History of the Indian Economy  Progressive Publishers Calcutta 1972 refers to the Indian rural drama and the role of the anti hero played by the_ money lender Money lending thus became an easy method of earning an income and subsequently of acquiring valuable title to land in the event of default by the debtor
Throughout the nineteenth century ownership rights in land were being lost by the ryot and acquired by moneyed interests both rural and urban The situation created by such extensive loss of perry by the cultivating classes exploded into riots against money lenders and usurpers of land in several parts of the country
The agricultural riots in Poona and Ahmednagar in Bombay Presidency in 1875 are most widely known because they were followed by the appointment of a Commission of Inquiry pp 77 78 The author recounts the series of legislation made during the British Indian period and concludes These laws also failed in their purpose because no restrictions had been imposed on the transfer of land between members of the agricultural classes
Money lenders could therefore operate through a benamidar fictitious agent belonging to an agricultur al class and acquire land almost as easily as before
At the same time the bigger agricul turists had no difficulty in swallowing up the smaller ones by giving loans at exorbitant rates of interest to the latter
p 78 The economic literature official and other on agri cultural and working class indebtedness is escalating and disturbing
Indeed the money lender  is an oppressive component of the scheme
AN Agrawal in his book Indian Economy  Vikas Publishing House indicates that money lenders charge heavy interest ranging
from 15 50 and often more
In addition to high interest these people take advantage of illiteracy of agriculturists and manipulate the accounts regarding loans to their advantage
The conditions of loan repayment are so designed that the debtor is forced to sell his produce to the mahajan at low prices and purchase goods for consumption and production at high prices
In many other ways take advantage of the poverty and the helplessness of farmers and exploit them 
Unable to pay high interest and the principal 845 the farmers even lose their land or live from generation to generation under heavy debt
Unless viable alternatives are made available the mahajan will continue to hold an impor tant harmful and enervating place m this sphere 
The harmful consequences of indebtedness are economic and affect efficient farming social in that the relations between the loan givers and loan receivers take on the form of relations of hatred poisoning the social life 
The money lenders few in number belong to poor class
There are often dis putes between the two classes which get sharpened on the exploitation of the poor
In fact the social groups get split into two broad classes
The exploiting class and the exploited class
Apart from losing land and leading to tension in the villages their evil effect is rampant the heavily indebted farmers lose even their human existence
They not only render bonded labour to money lenders their very self respect and even respect of their women folk do not remain safe
They are forced to live the life of slaves
Of course laws have now been enacted which protect these debtors
But these laws are difficult to be enforced either because farmers are illiterate or they do not have enough resources to go to the courts or the money lenders prove too clever for them
 Dr CB Mamoria in his book Agricultural Problems of India  Kitab Mahal has stressed that rural indebtedness has long been one of the most pressing problems of India
Rural people have been under heavy indebtedness of the average money lenders and sahukars
The burden of this debt has been passed on from generation to generation inasmuch as the principal and interest went on increasing for most of them
According to Wold
The country has been in the grip of Mahajans
It is the bond of debt that has shackled agricul ture
 Very convincing and compelling with special reference to Maharashtra is the Report of a high powered Committee appointed by the Government of Maharashtra to make recommen dations for the relief of rural and urban indebtedness
The study is at once revealing and grim
Rural artisans industrial workers marginal farmers and indigent agricul turists have been steeped in debt despite statutory meas ures and ineffective credit institutions
These human areas have been the happy hunting ground of money lenders
The Bombay Moneylenders  Act according to the Committee hardly helped bail out the weaker sections
Despite the Act licensed and unlicensed moneylenders pursued their exploita tive profession
The Debt Act implements some of the recommendations of this Committee although positive institu tional finance to save the sunken segments from the grip of the moneylenders remains to go into action
Even enforce ment of the Bombay Moneylenders  Act appears to be lukewarm according to the Committee
Be that as it may the economic distress for which moneylenders dealing with the weaker sections are mainly responsible is clearly brought out in the Report
Nor is there anything in this Report or in any other literary material on rural economics particularly relating to artisans workers and collapsing cultivators to substantiate the dichotomy of scrupulous and unscrupulous moneylenders vehemently pressed before us by Shri 846 Nariman
The former species are more a pious wish and the latter tribe a spectre on the increase if statistical economic studies are to be trusted
The gravestone on the old moneylender  system and the cornerstone of the new liberated order are thus the programme for the Administra tion
The Debt Act is part of the package
There was much argument about the reasonableness of the restriction on moneylenders not the general category as such but the cruel species the Legislature had to confront and we have at great length gone into the gruesome background of economic illequities since the test of reasonableness is not to be applied in vacuo but in the context of life s realities
Patanjali Sastri CJ in State of Madras
VG Rao1 observed It is important in this context to bear in mind that the test of reasonableness wher ever prescribed should be applied_ to each individual statute impugned and no abstract standard or general pattern of reasonableness can be laid down as applicable to all cases
The nature of the right alleged to have been infringed the underlying purpose of the restrictions imposed the extent and urgency of the evil sought to be remedied thereby the disproportion of the imposition the prevail ing conditions at the time should all enter into the judicial verdict
 Money lending and trade financing are indubitably trade  in the broad rubric but our concern here is blinkered by a specific pattern of tragic operations with no heroes but only anti heroes and victims
Many Conferences Commissions and resultant enactments before and after Independence provided but marginal protec tion for the rural debtor
Even licensing was evaded by the money lender successfully and concilliation machinery proved a mirage
Statutes made of sterner stuff became the desideratum
In the counter affidavit filed on behalf of the State of Maharashtra a lurid presentation of the lender borrower scenario is found
The deponent states  that it was a common sight around the secretariat Government Offices Textile Mills factories and elsewhere in Bombay to find moneylenders waiting at the gates to catch workers to collect their dues
 There is also reference to a number of Official Committees which have examined the question of indebtedness in the urban and rural areas and have recommended measures of relief
The affidavit goes on to state I say that in Maharashtra and its predecessors the State of Bombay there have been several legislations on this subject including the Deccan Agricultural Debt Relief Act 1879 Bombay Agricultural Debtors Relief Act 1939 847 and in the Vidarbha areas of the State the Madhya Pradesh Postponement of Execution of Decree Act 1956
I say that there is a well established history of dealing with indebted ness in the State by means of legislation
I say that the
Reserve Bank carried out an inquiry in the matter of indebtedness in 1971 which is referred to as All India Debt and Investment Survey during 1971 72
The Reserve Bank of India survey established that the total debt liabilities in the rural areas in Maharashtra was Rs358 crores in 1971 72
A preliminary analysis made by the Reserve Bank of India also indicated weaker sections of the community thereby showing the extent of the burden of debt on the weaker sections of the community
I crave leave to refer to and rely upon the statistical tables prepared by the Reserve Bank of India in this connection when produced
I say that the extent of indebted ness may be much more than what is indicated by the statistical survey of the Reserve Bank of India
The licensed moneylenders alone in the State are known by themselves to have disbursed during 1972 73 a sum of about 7437 crores and the information gathered by the respondents indicates that the known indebted ness in the city of Bombay alone would be of the order of Rs45 crores
I say that in addition to the licensed moneylenders unli censed money lending is also carried on in the State  The Statement of Objects and Reasons of the Maharashtra Ordinance VII of 1975 which was the precursor to the impugned Act contains the following statement The problem of urban and rural in debtedness has assumed enormous proportions in recent times
The noninstitutional sources of credit namely unscrupulous
money lenders have been charging usurious rates of interest indulging in malpractices and taking undue advantage of the weak position of the economically weaker sections of the people both in rural and urban areas
The Ordinance therefore seeks to give relief to certain sections of people from indebtedness
 Even the whereas  vocabulary of the draftsman of the Act refers to the need for immediate action to provide for relief from indebtedness to certain farmers rural artisans rural labourers and workers in the State of Maharashtra
The judgment under appeal also makes reference to the continual legislative effort made in the past to save the agricultural community from chronic indebtedness
The learned Judges
observe Indeed agricultural indebtedness has always been the bane of Indian economy ever since the beginning of the twentieth cen tury
Any elementary book on
Indian econom ics will disclose that even the British Government had 848 thought it necessary to make an enquiry into agricultural indebtedness
That was one of the terms of Royal Commission on Agriculture and from time to time enquiry committees were set up including the Banking Enquiry Committee to go into the question of agricultural indebtedness with a view to find out how alternative sources of credit to be made available to the agriculturists could be brought into existence
In a sense the phrase agricultural indebtedness  has earned a connotation over the passage of years to indicate the unhappy position in which an Indian agriculturist has always found ever since the phenomenal fall of prices in 1929
It has become proverbial that an Indian agriculturist is born in debt he lives in debt and he dies in debt Eminent economists and their studies have been adverted to by the High Court and reliance has been placed on a Report of a Committee which went into the question of relief from rural and urban indebtedness which shows the dismal economic situation of the rural farmer and the labourer
It is not merely the problem of agricultural  and kindred indebtedness but the menacing proportions of the moneylend ers  activities that have  attracted the attention of the Committee
Giving facts and figures which are alarming bearing on the indebtedness amongst industrial workers and small holders the Committee has highlighted the exploita tive role of money lenders and the high proportionon of non institutional borrowings
We have made this extensive tour of the economic scene with special reference to agricultural indebtedness and the lot of industrial labour only to present vividly how the predatory money lender has had a stranglehold on rural and urban proletarians by resort to methods which are scan dalizingly calamitous and unshakably resistant to legisla tive policing
The learned Attorney General contends that the courts must have a sense of history and sociology informing their judicial perspective and then it is easy to_ understand the syndrome of village and working class indebt edness
There are commercial lendings banking loans and institutional finances
There are friendly loans and occasional accommodations
There are liabilities arising from various circumstances between citizen and citizen and citizen and State
But the pernicious species of money lending stubbornly flourishing in the rural and industrial areas of our country with the weakest sections as their bled white clientele cannot be regarded as trade because of the painful pages of economic history to which this country is witness
The life of the law is not neat noesis but actual expe rience
The perspective of Poverty Jurisprudence is radi cally different from the canons and values of traditional Anglo Indian jurisprudence
The subject matter of the impugned legislation is indebtedness the beneficiaries are petty farmers manual workers and allied categories steeped in debt and bonded to the money lending tribe
So in passing on its constitutionality the principles of Develop mental Jurisprudence  must come into play
849 We agree with Shri Nariman that the intimate unity of national life sought to be sustained by Part XIII cannot be invidiously breached against the money lenders provided they qualify to be traders
If a law cuts into the flesh of the commercial unity and integrity of the country  unreasona bly or against public interest Part XIII electrocutes it
A meaningful yet minimal analysis of the Debt Act read in the light of the times and circumstances which compelled its enactment will bring out the human setting of the statute
The bulk of the beneficiaries are rural indi gents and the rest urban workers
These are weaker sections for whom constitutional concern is shown because institu tional credit instrumentalities have ignored them
Moneylending may be ancilliary to commercial activity and benignant in its effects but money lending may also be ghastly when it facilitates no flow of trade no movement of commerce no promotion of intercourse no servicing of business but merely stagnates rural economy strangulates the borrowing community and turns malignant in its reper cussions
The former may surely be trade but the latter the law may well say is not trade
In this view we are more inclined to the view that this narrow deleteri ous pattern of moneylending cannot be classed as trade  No other question then arises since the petitioners and appellants cannot summon article 301 to their service
Assuming that all money lending is trade  can it be contended that this relief measure is invulnerable to attack on the ground that the texture of the restrictions is rea sonable and regulatory  Article 304b relaxes in favour of the State the prohi bition in article 301 provided the law imposes only such re strictions as are reasonable and in public interest
Shri Nariman s submission is that the Debt Act is too draconic to fair processually and substantively and so it cannot be rescued by article 304b
With persuasive pressure he invited us to look at the horror of procrustean infliction of equal hostility by the legislature in dealing with the asuric Shylock and the dharmic lender
The law which brands the good and the bad alike and indiscriminately discharges all debts just and unjust lacks sense con science and reasonableness
Secondly How is it fair  asks Shri Nariman that if the object of the legislation is to save the victims of rural indebtendness and working class burdens that credit institutions should be exempted while non institutionalised lenders should be picked out for hostile treatment   There is no merit in the plea
Liabilities due to government to local authorities are not tainted with exploi tation of the debtor
Likewise debts due to banking compa nies do not ordinarily suffer from overreaching unscrupu lousness or harsh treatment
Moreover financial insti tutions have until recently treated the village and urban worker and petty farmer as untouchables and so do not figure in the picture
To exempt the categories above referred to is reasonable
Many debt relief laws adopt this classifica tion and those familiar with the lowest layers of economic life will agree that this is as it should be
Money lenders of the type we are concerned with in the Debt Act are 850 by and large heartless in their lending tactics and the borrowers are anaemic mostly members of the Scheduled Castes and Scheduled Tribes nomadic groups artisans workers and the like
Section 13 of the Debt Act is illu minating regarding the handicapped humans the statute is concerned with
We quote that provision 13
Aggreement for labour in lieu of debt to become void
Any custom or tradition or any agreement whether made before or after the appointed day whereunder or by virtue of which a debtor or any member of his family is required to work as labourer or otherwise for the creditor shall be void and of no effect and shall never be enforceable in any civil court
 Maybe some stray money lenders may be good souls and to stigmatize the lovely and unlovely is simplistic betise
But the legislature
cannot easily make meticulous excep tions and has to proceed on broad categorisations not singular individualisations
So viewed pragmatics overrule punctilious and unconscionable money lenders fall into a defined group
Nor have the creditors placed material before the Court to contradict the presumption which must be made in favour of the legislative judgment
After all the law makers representatives of the people are expected to know the socio economic Conditions and customers
Since nice distinctions to suit every kindly creditor is beyond the law making process we have to uphold the grouping as reasonable and the restrictions as justified in the circum stances of the case
In this branch there are no finali ties
The observations of the Privy Council in the Austra lian Bank Nationalisation Case1 are apposite Yet about this as about every other proposition in this field a reservation must be made
For their Lordships do not intend to lay it down that in no circumstances could the exclusion of competition so as to create a monopoly either in a State or Commonwealth agency or in some other body be justified
Every case must be judged on its own facts and in its own setting of time and circumstance and it may be that in regard to some economic activities and at some state of social devel opment it might be maintained that prohibition with a view to State
monopoly was the only practical and reasonable manner or regulation and that inter State trade commerce and intercourse thus prohibited and thus monopo lized remained absolutely free
 We do not downright denounce all money lenders but the lawmakers have based on socio economic facts picked out a special class of money lenders whom they describe as unscru pulous
1 Commonwealth of Australia vs Bank of New South Wales  311
851 Every cause claims its martyr and if the law necessi tated by practical considerations makes generalisations which hurt a few it cannot be helped by the Court
Other wise the enforcement of the Debt Relief Act will turn into an enquiry into scrupulous and unscrupulous creditors frustrating through endless litigation the instant relief to the indebted which is the promise of the legislature
In this perspective we see no constitutional flaw in the Act on the score that the sheep have not been divided from the goats
Realism in the legislature is a component of reasonableness
It was urged by Shri Chitale that the definitional deficiency in ignoring the movable wealth of debtors makes the scheme arbitrary and unreasonable
A romantic view of the debtors being considerable owners of costly art pieces and sophisticated gadgets and yet eligible for relief is good rhetoric but unrealistic
A pathetic picture of the money lender being deprived of his loan assets while being forced to repay his lender was drawn but that cannot affect the reasonableness of the relief to the grass roots borrower
Nor is it value to attack the Act on the score that the whole debt ie the very capital of the business has been dissolved
More often than not the money lender would have over the Iong lived debts and repeated renewals realized more than the principal if economic studies tell the tale truly
The injustice of today is often the hangover of the injustice of yesterday as spelt out by history
The business of money lending has not been prohibited
The Act is a temporary measure limit ed to grimy levels of society
Existing debts of some classes of indigents alone have been liquidated
If impos sible burdens on huge human numbers are not lifted social orderliness will be threatened and as a regulatory measure this limited step has been taken by the Legislature
Regulation of the situation is necessitous may reach the limit of prohibition
Disorder may break out if the law does not step in to grant some relief
Trade cannot flour ish where social orderliness is not secure
H the ten sions and unrests and violence spawned by the desperation of debtors are not dissolved by State action no moneylending trade can survive
It follows that for the very survival of Trade the regulatory measure of relief of indebtedness is required
That form this relief should take is ordinarily for the legislature to decide
It is not ordinarily for the Court to play the role of Economic Adviser to the Administration
Here amelioratory measures have been laid down by the Legislature so that the socio economic scene may become more contented just and orderly
Obviously this is regulatory in the interest of Trade itself
This policy decision of the House cannot be struck down as perverse by the Court
The restrictions under the Debt Act are reason able
Equally clearly if the steps of liquidation of current debts and moratorium
are regulatory article 301 does not hit them
Even so argues Shri Nariman procedural presumptions grossly unreasonable vitiate the measure
Of course reasonableness has a processual facet and if the law is lawless in its modalities it becomes unlaw constitutional ly
We may illustratively advert to some of the criticisms but at the threshold we confess we are not impressed with the submissions
852 Shri Nariman itemised the mischievous provisions in the Debt Act from the processual angle
Others too reiterated with consternation that the provision whereby every debt of every debtor of the specified category stood wholly dis charged was improvident especially because it did not even require the debtor to move the authorities in that behalf
On the other hand the burden was on the creditor to raise the question by instituting a proceeding as to the disquali fication of his debtor for the benefit of the Debt Act
On top of this obligation to institute proceedings was the precarious prospect of the order being against the creditor because the authorised officer  had to hold in favour of the debtor if he merely produced a certificate under section 75 from one of those officials enumerated therein all minor minions of government at the local level
Once the certif icate was produced by the debtor the onus was shifted to the creditor to make out the contrary How could the money lender prove the debtor s financial position   asked Shri Nariman
Moreover the issuance of a certificate by the local little official was a unilateral process where the creditor was not entitled to be heard as to the means or eligibility of the debtor
There were two further unreason able procedural impositions on the creditor argued Shri Nariman
The lender had to make his application with all the facts within 7 days from the date of receipt of the application from the debtor intimating that the debt stood released
The 7 day period was too short even to make enquiries about the assets of the debtor And worse the application by the creditor shall be entertained by the authorised officer only on the creditor depositing the pledged property of its value
Thus the dice was 80 heavi ly loaded against the money lender that even persons who were not petty debtors intended to be beneficiaries might with illegitimate success claim the bonus of the Debt Act
Viewed in the abstract these grievances may look genu ine
but when we get down to the reality nothing so re volting exists in these provisions
It is true that the creditor has to move and not the debtor before the authorised officer
As between the two the moneylender is sure to be far shrewder and otherwise more capable of initiating proceedings
To cast that obligation on the debtor remember in the bull of cases he is the village artisan landless labourer or industrial worker is to deny relief in effect while bestowing it in the book
Likewise there is nothing horrendous in the debtor seeking a certifi cate of qualification from the small officer of the area
After all the officials enumerated in section 75 are govern ment servants local officials possess familiarity with the wherewithal and the whereabouts of persons within their area and are therefore accessible and competent
There is no reason whatever for allowing the creditor to be heard at the certificate stage except to prolong and puzzle the proceed ings and by dilatory tactics deny the relief to be debtor
The creditor does not suffer because the certificate that the applicant is a debtor raises only a rebuttable pre sumption and it is idle to argue that the creditor has no means of disproving the income or assets of his debtor
Ordinarily the mahajan the sowcar or money lender and the petty borrower live in and around the same neighbourhood the former knows the circumstances of the latter and often these are not 853 isolated transactions between strangers
So much so the debtor s financial horoscope or impecunious kismet is nor mally within the ken of the creditor
Moreover a perusal of the pro forma of the certificate to be issued needs mention of several particulars which have to be
filled up by the certifying officer who has therefore to make the necessary enquiries from and about the debtor
Assurance about the credibility of the certifying officer s entries is lent by the personal responsibility cast on him for the correctness of the particulars mentioned in the certificate
This is a protection for the creditor that routine and reckless entries will not be made and that the certifying officer will take care prima facie to be satisfied by proper enquiry before issuing the certificate
Such a safeguard warrants the raising of a rebuttable presumption of correctness and reduces the possibility of injustice to the creditor for not being allowed an opportunity for being heard at this stage
In this view also we see noth ing unreasonable in the presumptive evidence of the certifi cate without the hearing of the creditor
Fairplay is also afforded in the proceeding not only because the creditor can rebut the certificate but also because under section 8 6 the authorized officer has the power and duty to determine all questions in dispute
Section 77 expressly provides for an opportunity to the creditor and the debtor to be heard
After all the authorised officer is one who exercises quasi judicial powers even otherwise on the Revenue side
While the enquiry is sum mary the procedure under the Maharashtra Land Revenue Code will be adopted which is a fair safeguard
Summary trial does not dispense with evidence
or sound judgment but merely relieves the adjudicator from maintaining elaborate records
The enquiring officer may in appropriate cases examine the Debtor or others who can throw light
To equate summary  with arbitrary  is contrary to common experience
The obligation for the production of the pledged article by the creditor as a preliminary to the institution of the preceedings is also a just measure so that when a decision is reached the article may be returned to the debtor in the vent of the verdict going in his favour
The negation of a right of appeal against an order under section 76 of the Debt Act is another circumstance
Shri Nariman has pressed before us
He cited other debt relief measures where a single appeal had been provided for
Does the absence of a right of appeal render the procedure unrea sonable  It depends
Where the subject matter is substan tial and fraught with serious consequences and complicated questions are litigatively terminated summarily
Without a second look at the findings by an appellate body it may well be that unfairness is inscribed on the face of the law but where little men with petty debts legally illiterate and otherwise handicapped are pitted against money lenders with stamina astuteness awareness of legal rights and other superiority if the purpose of instant relief is to be accomplished the provision of an appeal may in many cases prove abult in booby trap that frustrates and ruins the hand to mouth debtor
No surer method of baulking the object can be devised  than enticing 854 the debtor into an appellate bout Daughter gone and ducate too will be the sequel
Of course where the enquiry is a travesty of justice or violaion of provisions where the finding is a perversity of adjudication or fraud on power the High Court is not powerless to grant remedy even after the recent package of Constitutional amendments It is true that in several cases this Court has held that a right of appeal is a gesture of statutory fairness in the disposal of cases
Our attention was drawn to the rulings reported as Jyoti Pershad 1 Mohd Faruk 1 and Ganesh Beedi Works2 and other cases hearing on the necessity of a right of appeal as an incident of fair hearing
We cannot dogmatise generalize or pontificate on questions of law whose application depends sensitively on the nature of the subject matter the total circumstances the urgency of the relief and what not We have adduced sufficient reason to hold that the Debt Act is not bad for processual perniciousness or jurisprudence of remedies
The next constitutional missile aimed at the Debt Act was the incompetency of the State Legislature to enact this law for reasons more than one
The main ground was covered by Shri Nariman but yet others made their contributions sometimes overlapping sometimes overflowing
Shri B Sen also challenged the legislative competency but on a different basis
Several citations home spun and foreign finely woven theories and subtle punditry gave a grave mein to the argument on this branch
But the point in issue in our view admits of straight solution by passing the heavy learning and jurisprudential finery
When Courts are co cooned by case law or caught in the skein of scholarly doctrines simple questions become complex
However prob lems of constitutional law can be well left alone where they do not directly demand a solution in the case on hand
Enough unto the day is the evil thereof What then is the incompetence of the State Legislature  Shri B Sen urged that the wiping out of private debts which formed the capital assets of the money lenders one of the main things done by the Debt Act was not in any of the legislative Lists and even if Parliament had residuary power under Entry 97 of List I the State had none
Entry 30 in List II is money lending and moneylenders relief of agri cultural indebtedness 
If common sense and common Eng lish are components of constitutional construction relief against loans by scaling down discharging reducing inter est and principal and staying the real isation of debts will among other things fall squarely within the topic
And that in a country of hereditary 1  2  3  855 indebtedness on a colossal scale It is commonplace to state that legislative heads must receive large and liberal meanings and the sweep of the sense of the rubrics must embrace the widest range
Even incidental and cognate matters come within their purview
The whole gamut of money lending and debt liquidation is thus us within the State s legislative competence
The reference to the Rajah mundry Electricity Case1 is of no relevance
Nor is the absence of the expression relief in Entry 30 List II of any moment when relief from moneylenders is eloquently implicit in the topic
Sometimes arguments have only stated to be rejected
The next ground of attack in its multi form presenta tion is that the gold loan  part of the Debt Act is void because Parliament has occupied file field
It has also been urged that there is inconsistency between the Debt Act and the Gold Control Act and pro tanto the former fails to have effect
Let us look at the basics of the legal situation before us before examining the wealth of learning counsel has accumulated
Article 24 6 vests exclusive power in Parlia ment over matters enumerated in List I Seventh Schedule and the State Legislature enjoys like power over topics in List II subject to clauses 1 and
2 of the Article
Plainly therefore the State can legislate upon any Entry in the State List
We may visualize situations where Parliamentary occupation may exclude the State Legislature
Where for instance Parliament while enacting on a matter in the Union List makes as it is entitled to make neces sary incidental provisions to effectuate the principal legislation such ancillary expansions may trench upon the State field in List II
In such a case if the State makes a law on an Entry in its exclusive List and such law covers and runs counter to what has already been occupied by Par liament through incidental provisions it may be argued that the State law stands pushed out on account of the superior potency of Parliament s power in our constitutional scheme
Again there are certain telltale heads of legisla tion in the Lists where one may plausibly invoke the doc trine of occupied field
Examples may perhaps be fur nished by Entries 52 and 54 of List I Entries 23 and 24 of List Ii and Entry 33 of List III
Without fear of contra diction we may assert that article 2463 read with Entry 30 in List 11 empowers the State to make the impugned law
Why then is it incompetent Because says Mr Nariman the field of gold industry is already occupied by Parliament and the State Legislature therefore stands excluded
Entry 52 in List I reads Industries the control of which by the Union is declared by Parliament by law to be expedient in the public interest
 Parliament in the Industries Development and Regula tion Act 1951 Act 65 of 1951 has made the necessary declaration contemplated in Entry 52 and has occupied the field of gold industry  as is 11954 SCR 770 856 evident from reading section 2 and item 1B2 of tile First schedule therein
This expression of Parliamentary intent to legislate upon the gold industry is enough to expel from that  field the State Legislature
This is Shri Nariman s contention
But what is the sequitur  Assuming the ap proprlation by Parliament of the power to legislate on gold what follows It can make laws directly on that industry and ancillarily on every allied area where effective exer cise of the parliamentary power necessitates it
So much so business in gold  licensing of gold merchants regula tion of making or pledging of gold ornaments keeping of jewellery disclosure of gold possessions and the like are incidental to the parliamentary power and purpose and the Gold Control Act 1968 and the Rules made thereunder are valid vide for example Bantha s Case 1970 I SCR 4 79
Several sections of the Act some rules and a few rulings were read before us to drive home the point that gold loans are already within the ken of the law made under Entry 52 List I
If so what  Does it spell death sentence on the Debt Act  Or maim it  Or leave it intact  Here we turn to Entry 24 of List II which runs Indus tries subject to the provisions of entries 7 and 52 of List I
This means that the State Legislature loses its power to make laws regarding gold industry since Entry 24 
List II is expressly subject to the provisions of Entry 52 of List I
This does not mean that other entries in the State List become impotent even regarding gold 
The State Legislature can make laws regarding money lending even where gold is involved under Entry 30 List II even as it can regulate gambling in gold  under Entry 34  impose sales tax on gold sales under Entry 54 regulate by munici pal law under Entry 5 and by trade restrictions under Entry 26 the type of buildings for gold shops and the kind of receipts for purchase or sale of precious metal
To multiply instances is easy but the core of the matter is that where under its this power Parliament has made a law which over rides an entry in the State List that area is abstracted from the State List
Nothing more
In the Kannan Devan Mills Case1 this Court put the point tersely while dealing with Entry 52 of the Union List Once it is declared by Parliament by law to be expedient in the public interest to control the industry Parliament can legis late on that particular industry and the States I would lose their power to legislate on that industry
But this would not prevent the States from legislating on subjects other than that particular industry
underscor ing ours
This is authority for the proposition that while Entry 23 of List II in the light of the fact that under Entry 52 of List I Parliament has made the Gold  Control Act has become inoperative to legislate on industry there  is no inhibition whatever on State legislation on 1  857 subjects other than that particular industry
Moneylending is one such subject and the power to legislate thereon remains intact
We are free to agree that the word industry  as a legislative topic has to be interpreted in the widest ampli tude
We also find as a fact that dealings in gold including pledging have been covered in part by the Gold Control Act 1958 even so nothing prevents the State from making the impugned Act
In Paresh Chandra Chatterice1 Subba Rao J as he then was  dealt with an apparent con flict between the Central Act The Tea Act and a State legislation The Assam Land Requisition and Acquisition Act 1948
After examining the scheme of the two Laws the learned Judge concluded A comparative study of both the Acts makes it clear that the two Acts deal with different matters and were passed for differ ent purposes Unreal and imaginary conflicts between the Central and the State Acts cannot be the foundation for invalidation of the latter
In Kanan Devan Supra it was further pointed out If the Act the Tea Act is within the competence of Parliament and the impugned Act is within the competence of the State the  petitioners must show that the im pugned Act is repugnant to the Tea Act but we can see no conflict between the provisions of the impugned Act and the Tea Act Banthia2 was referred to in the course of the arguments and various passages were stressed by different counsel
The essential question there was as to whether manufacture of gold ornaments
by goldsmiths fell within the connotation of the word industry 
It did
It was further pointed out by Ramaswami J in that case that some of the entries overlap and seem to be in direct conflict but the duty of the Court is to reconcile and harmonize while giving the widest ampli tude to the language of the Entries
We see nothing in that decision which contradicts the position that while the Gold Control Act fell within Entry 52 of List I the State List was not totally suspended for that reason for purposes of legislating on subjects which fell within that List but incidentally referred also to gold transactions
Nobody disputes the paramountcy of parliamentary power
We have to reconciIe the paramountcy principle with the trenching  doctrine
In the Canadian Constitution the question of conflict and coincidence in the domain in which provincial and domin ion legislation overlap has been considered
If both may overlap and co exist without conflict neither legislation is ultra vires
But if there is confrontation and conflict the question of paramountcy and occupied field may crop up
It has been held that the rule as to predominance of domin ion legislation can only be invoked in case of absolutely conflicting legislation in pari materia when it will be an impossibility to give effect to both 1 2  858 the dominion and provincial enactments
There must be a real conflict between the two Acts ie the two enactments must come into collision
The doctrine of Dominion paramountey does not operate merely because the Dominion has legislated on the same subject matter
The doctrine of occupied field  applies only where there is a clash between Dominion Legis latic and Provincial Legislation within an area common to both
Where both can co exist peacefully both reap their respective harvests Please see Canadian Constitutional Law by Laskin pp 52 54  1951 Edn
We may sum up the legal position to the extent necessary for our case
Where Parliament has made a law under Entry 52 of List I and in the course of it framed incidental provisions affecting gold loans and money lending business involving gold ornaments the State making a law on a different topic but covering in part the same area of gold loans  must not go into irreconcilable conflicts
Of course if article 2542 can be invoked We will presently examine it then the State law may stir prevail since the assent of the
President has been obtained for the Debt Act
Thirdly the doctrine of occupied field  does not totally deprive the State Legislature from making any law incidentally referable to gold
In the event of a plain conflict the State law must step down unless as
pointed out earlier in the previous passage article 2542 comes to the rescue
Many more decisions were brought to our notice bearing on paramountcy occupied field  repugnancy and inconsist ency
They were elaborated by counsel sufficiently to convince us that lawyer s law is divorced from plain seman tics and common understanding of Constitutional provisions becomes a casualty when doctrinal complexities are injected
May be every profession has a vested interest in the learned art of incomprehensibility for the laity
Law in the administration of which the Bench and the Bar are partners probably lives up to this reputation
All these questions become academic for two reasons
Firstly there is no conflict between the Gold Control Act and the Debt Act
Secondly the subjects of both the legis lations can be traced to the Concurrent List and article 2542 validates within the State the operation of the Debt Act
We are of the view as earlier discussed and without citing further cases on the point that the State s legisla tive power save under the Entry 24 of List II is not denuded
Nor is there any conflict between the two Acts
A detailed study section by section of both the legisla tions has convinced us that they can stand together and that the two authorities and modalities do not contradict each other and that by elementary comity a modus vivendi between the Gold Act and the Debt Act can be worked out
The provisions in the Gold Act for declarations and other formalities may not collide with the obligations and appli cations under the Debt Act
We have no doubt that the authorities charged with enforcement under the two statutes will understand the sense and spirit of the provisions and 859 see that the object of the Debt Act is not frustrated or its processes paralysed
Indeed the learned Attorney General showed how by reading together the two Acts and remember ing their respective purposes a viable resolution of possi ble imbroglios is simple although officialdom is not unfa miliar with the art of embroilment where artless customers are involved or ulterior ends are to be served
The State through an effective programme of legal aid and advice and other prompt instructions to the agencies involved should avoid harassments hold ups and red tapes which are the bane of processual justice
The jurisprudence of remedies is still a Cinderella of our system
The Advocate General of Maharashtra assured the Court that in the fair enforcement of the law and the follow up of creating alternative credit agencies his client will take quick and impartial care
The learned Attorney General it may be mentioned before winding up this part of the discussion did draw our atten tion to article 2542 which is self explanatory
The State law will prevail in the State even if there be repugnancy with a Central or existing law given Presidential assent provided both the legislations fall under the Concurrent List
Do they  He says yes and points inter alia to Entry 6 transfer of property and Entry 7 contracts
Of course the law of contracts deals with pledges so does the Gold Control Act
The latter does not prohibit pawns where gold is involved but policies it to prevent evils by prescribing special modalities
The Debt Act relates to contracts and has fulfilled the requirement in Art2542
We have nearly come to the end of the judicatory journey and have reached the constitutional conclusion that the guarantee that Trade and Commerce and Intercourse shall be free does not necessitate that the little lendee shall remain unfree
Article
301 does permit in our view legislative action to break agrarian indebtedness and urban usurious bondage lest social disorder disruptive of Trade break out
The impugned Act is a partial implementation of the economic thesis of Adam Smith when he wrote two hundred obsolescentyears ago No society can surely be flourishing and happy of which by far the greater part of the numbers are poor and miserable
 We are in a Republic with social justice as its indeli ble signature
And the measure under challenge
promotes social justice social order and better conditions for the business of healthy money lending
The appalling indebtness which cripples our people is an unhappy heritage of our economic system
The bonded yes terday the yoke today and the hope of tomorrow obligate the State to spell out the future tense of the rural human order and to focus on the legislative strategies of allevia tion before the backlash of social confusion begins and to administer through working mechanisms and direct 7 206SCI77 860 through social cybernetics our disenchanted society into fresh formulations of a free future
Without such govern mental measures of rural regeneration even the good money lenders may have to fold up and the better businessmen wind up
The larger interests of Trade Commerce and Intercourse whose
freedom is a constitutional norm demand that social order shall be preserved through legislative methodolo gy now radical now reformatory but always motivated and moderated by the felt necessities of the times
To come to humane terms with harsh realities by subjecting itself to the reasonable though unpalatable regulations of the Debt Act and like measures or to face the adaptational break down where law may fail to keep order against those who have nothing to lose except their chains this is the sort of sociological Hobson s choice before the money lenders  of Maharashtra
The option is obviously the former and that is the constitutional vindication of the impugned legislation
All these laws in themselves marginal are part of the programschrift for a New Deal which is the cornerstone of the Constitution
We have been addressed many minor criticisms which have chopped little logic and made out small discriminations but serious constitutional decisions go on major considera tions not gossamer web flimsiness
We have listened to these meticulous submissions but are not persuaded that we should even mention them in our longish judgment
A concluding caveat
The poignant purpose of ending exploitatire rural urban lending to the weaker members of society is the validating virtue of this legislation viewed from the constitutional angle
But as Shri Nariman at some stage mentioned and the learned Attorney General also concurred mere farewell to existing debts is prone to prove a teasing illusion or promise of unreality unless the Administration fills the credit gap by an easy accessible and needbased network of humane credit agencies coupled with employment opportunities for the small man
The experience of the
past has not inspired adequate confi dence
Authoritative official pronouncement however owns that Arrangements so far made to
give credit and inputs for rural credit have had only limited impact
The problem is a vast one and seems to be growing in size
Rural banks credit societies farmers  service societies all these have to be strengthened and their activities expanded
To give pur poseful direction to this task and to ensure that the interests of agriculturists and farmers especially the small farmer are looked after there is need for an Apex Agri cultural Development Bank in India
 The legislation we uphold is an added responsibility on the State
it shall be vigorously enforced with sympathy for the victim class lest the progressive measure
prove a paper tiger
The cadres charged with enforcement must have right orientation correct grasp and social activism if this law is not to leave a yawning implementation 861 gap
Hercics in court and hortation in the House must be followed by effective enforcement in the field
We state this not because the State is not in great earnest it is but because many a welfare legislation in the country reportedly remains a cloistered virtue or slumbrous in effect
The finest hour of the rule of law is when law disciplines life and matches promise with performance
On this note of hopeful valediction we wind up
We dismiss the appeals and the writ petitions leaving
the parties to bear their costs although we had at least on one occasion sufficient provocation to make a different direction


Summary:
The Maharashtra Legislature passed the Maharashtra Debt Relief Act
By the said Act the existing debts of some classes of some indigents have been liquidated
The Act is a temporary measure
The validity of the said Act was challenged in the present writ petition and appeals on the following grounds 1 Money lending was a trade covered by Article 304 of the Constitution
The restric tion both substantive and procedural imposed by the impugned Act are not reasonable within the meaning of Article 304b
2 The State legislature has no legislative competence to enact the statute
3 So far as the Gold ornaments are concerned the field is occupied by the Gold Control Act 1968 passed by the Parliament
Therefore inasmuch as the said Act deals with Gold Ornaments it is beyond the legislative competence
829 The respondents contended that 1 The money lending in the present case was not a trade
2 Even if it was trade the restrictions imposed by the statute are reasonable
3 The State Legislature is competent to enact the impugned Act
4 The doctrine of occupied field has no application
5 The Gold Control Act and the impugned Act deal with two completely different situa tions
6 In any case there is no inconsisten cy between the two Acts
Upholding the validity of the Act HELD 1 It is cruel legal like to legitimate as trade this age and bleeding business whereby the little peasant the landless tiller the bonded labour the pave ment tenant and the slum dweller born and buried during the Raj and the Republic in chili penury
836 B C Atiabari Tea Co   843 referred to
2 The topics of legislation listed in the 7th Schedule must receive a large liberal and realistic interretation
836 E 3 The freedom while it is wide is not absolute
Every systematic profit oriented activity however sinster suppressive or socially diabole cannot ipso facto exalt itself into a trade
Dealings of Banks and similar institu tions having some nexus with trade actual or potential may itself be trade or intercourse
All modern commercial credit and financial dealings amount 10 trade
However village based age old feudal pattern of money lending to those below the subsistence level to the village artisan the bonded labourer the marginal tiller and the broken farmer who borrows and repays in perpetual labour hereditary service periodical delivery of grain and unvouchered usuri ous interest is a countryside incubus
Such debts ever swell
never shrink such captive debtor never become quits
Such countryside creditors never get off the backs of the victims
840 D 841 F H Ibrahim  referred to
Automobile Transport 1963 1 SCR 491 followed
4 The economic literature official and other on agricultural and working class indebtedness is escalating and disturbing
Indeed the money lender is an oppressive component of the scheme
844 G 5 The test of reasonableness is not to be applied in vacuum but in the contest of life s realities
The Legis lature was confronted with the cruel species of money lend ers
The life of the law is not noisis but actual experi ence
The perspective of poverty jurisprudence is radically different from the canons and values of traditional Anglo Indian Jurisprudence
The subject matter of the impugned legislation is indebtedness the beneficiaries are petty farmersmanual workers and allied categories steeped in debt and bonded to the money lending tribe
So in passing on its constitutionality the principles of Developmental Jurisprudence must come into play
846B 848G H 6 The exemption granted by the statute to credit institutions and banks is reasonable because liabilities due to Government local authorities and other credit institu tions are not tainted with exploitation of the debtor
Likewise debts due to banking companies do not ordinary suffer from over reaching unscrupulous or harsh treatment
Financial institutions have until recently treated the village and urban worker and petty farmer as untouchables
849 E H 7 Maybe some stray money lenders may be good souls but the Legislature cannot easily make meticulous exceptions and has to proceed on broad categorisations not singular indi vidualisations
The creditors have not placed material before the Court to contradict the presumption which must be made 830 in favour of the legislative judgment
Since nice dis tinctions to suit every kindly creditor is beyond the law making process the court has to uphold the grouping as reasonable and the restrictions as justified in the circum stances of the case
850 C E Australian Bank Nationalisation Case Commonwealth of Australia vs Bank of New South Wales  311 approved
8 The Court negatived the contention of the petitioner that there was procedural unreasonableness in the Act
The section which imposes the obligation on the money lender to prove the debtor s financial position the issuance of a certificate in favour of the debtor having a presumptive value without hearing the creditor the absence of appeal obligation of the creditor to move the machinery and the period of 7 days and the deposit of the ornaments before the proceedings can commence are all reasonable in the circum stances of the case
Viewed in the abstract those griev ances look genuine but when we get down to the reality nothing so exists in the so called provision
The provision requiring the creditor to move and not the debtor is reason able because between the two
the money lender is sure to be far shrewder and otherwise more capable of initiating proceedings
To cast that obligation on the debtor when in bulk of cases he is the village artisan landless labourer or industrial worker is to deny relief in effect while bestowing it in the book
There is nothing objection able in the debtor seeking a certificate of qualification from the small officer of the area
The officer or the Government servant possesses familiarity with the wherewith al and the whereabouts of the persons
Hearing the creditor before the certificate is issued would merely prolong and puzzle the proceedings
The creditor does not suffer because the certificate that the applicant is a debtor raises only a rebuttable presumption and it is idle to argue that the creditor has no means of disproving the income or assets of his debtor
Ordinarily the money lender and the petty borrower live in and around the same neighbourhood
As proforma of the certificate to be issued needs mentioning several particulars these have to be filled by the certify ing officer who has therefore
to make the necessary en quiries from and about the debtor
Authorised Officer is one who exercises quasi judicial powers even otherwise on the Revenue side
The adoption of the procedure under the Maharashtra Land Revenue Code is a fair safeguard although it is a summary procedure
To equate summary with arbitrary is contrary to common experience
The obligation for the production of the pledged article by the creditor as a preliminary to the institution of the proceedings is also a just measure so that when a decision is reached the article may be returned to the debtor in the event of the verdict going in his favour
Where the subject matter is substan tial and fraught with serious consequences and complicated questions are litigatively terminated summarily without a second look at the findings by an appellate body it may be that unfairness is inscribed on the face of the law but where little men with petty debts legally illiterate and otherwise handicapped are pitted against the money lend ers
absence about appeal cannot invalidate the statute
Where the enquiry is a travesty of justice or violation of provisions where the finding is a perversity of adjudica tion or fraud on power the High Court is not powerless to grant remedy even after the recent package of constitutional amendments
852 A H 853 A H 854 A B 9 Entry 30 in List II in the 7th Schedule is money lending and money lenders relief of agricultural indebted ness
If common sense and common English are components of Constitutional construction relief against loans by scaling down discharging reducing interest and principal and staying the realisation of debts will among other things fall squarely within the topic
854 F H 10 The argument that the subject matter of the present legislation would fall under the residuary power under Entry 97 of List I is negatived
855 B 11 Where Parliament has made a law under Entry 52 of List I and in the course of it framed incidental provisions affecting gold loans and money lending business involving gold ornaments
The State making a law on a different topic but covering in part the same area of gold loans must not go into irreconcilable conflicts
The doctrine of occupied field does not totally 831 deprive the State Legislature from making any law inciden tally referable to gold
In the event of a plain conflict the State Law must step down unless Article 2522 can be invoked
In that case the State law would still prevail if the assent of the President has been obtained
There is no conflict between the Gold Control Act and the impugned Act
Secondly the subjects of both the legislations can be traced to the Concurrent List and Article 2542 validates within the State the operation of the impugned Act since the assent of the President has been Obtained
858 B D