IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT:- THE HONOURABLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE A.K.BASHEER WEDNESDAY, THE 16TH JULY 2008 / 25TH ASHADHA 1930 W.A.No.577 of 2004 -------------------------------- AGAINST THE JUDGEMENT IN O.P.9126/2003 DATED 18/12/2003 .................... APPELLANT: PETITIONER:- ------------------------------------- VIVEKA CHANDRIKA SABHA, REPRESENTED BY ITS PRESIDENT V.V.SREEDHARAN, SECRETARY, K.P.BABU, TREASURER M.K.MANI, MANAGER, M.V.VARIJAKSHAN AS AUTHORISED BY CLAUSE 30 OF BYELAWS ACCEPTED AND APPROVED ON 2.8.1998, PUTHENVELIKKARA, ERNAKULAM DISTRICT. BY ADV. SRI.B.GOPAKUMAR SMT.CHINCY GOPAKUMAR RESPONDENTS: RESPONDENTS:- ------------------------------------------------ 1. UNION OF INDIA, REPRESENTED BY THE SECRETARY TO GOVERNMENT, MINISTRY OF FINANCE, DEPARTMENT OF ECONOMIC AFFAIRS (BANKING DIVISION) SOUTH BLOCK, NEW DELHI.. 2. STATE OF KERALA, REPRESENTED BY ITS SECRETARY TO GOVERNMENT, FINANCE DEPARTMENT SECRETARIAT, TRIVANDRUM. 3. INSPECTOR GENERAL OF REGISTRATION, GOVERNMENT OF KERALA, TRIVANDRUM. WA.No.577 of 2004 -2- 4. RESERVE BANK OF INDIA, REPRESENTED BY ITS ASSISTANT GENERAL MANAGER, DEPARTMENT OF NON-BANKING SUPERVISION, CENTRAL OFFICE, 2ND FLOOR, WORLD TRADE CENTRE, CUFFE PARADE, COLLABA, MUMBAI - 400 005. R1 BY ASSISTANT SOLICITOR GENERAL SRI.P.PARAMESWARAN NAIR. R2 & R3 BY SENIOR GOVERNMENT PLEADER SMT.K.MEERA. SMT.T.D.RAJALAKSHMI, SCGSC SC, RBI THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 16/07/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:- H.L.Dattu, C.J. & A.K.Basheer, J. --------------------------------------------- W.A.No.577 of 2004 --------------------------------------------- Dated, this the 16th day of July, 2008 JUDGMENT H.L.Dattu,C.J. This Writ Appeal is directed against the orders passed by the learned Single Judge in O.P.No.9126 of 2003 dated 18.12.2003. 2. In the writ petition filed, the petitioner had primarily called in question the legality or otherwise of the amendment that that brought into the provisions of the Kerala Chitties Act, 1975. 3. The issues raised in the writ petition as well as in the Writ Appeal are identical with the issues raised and considered by a Division Bench of this Court in the case of Dharmodayam Company v. Union of India [2005 (3) KLT 332]. In the said decision, the Court has stated as under: “On a comparison of the various provisions in the Chit Funds Act and the Kerala Chitties Act we have come across several such inconsistent and hostile provisions which is repugnant to each other. Suffice to say that if sub-s.(1)(a) of S.4 is given effect to, a foreman who has already got the registration under the Central Act and governed by the provisions of that Act would also be subjected to various provisions of the Kerala Act which are inconsistent and repugnant to the Central Act. If S.4(1)(e) is therefore given effect to it would have extra territorial operation. State Legislature, in our view, cannot compel those registered chits under the Central Act in other States to open branch in State of Kerala to obtain sanction and registration under the Kerala Chitties Act, 1975 on the mere fact that some of them may have more than 20% subscribers residing in State of Kerala. Subscribers may reside in various parts of the country for which W.A.No.577 of 2004 - 2 - the foreman has no control. Factum of residence of the subscribers in the State of Kerala is not a reason to compel those registered chitties situated outside the State of Kerala to open a branch in State of Kerala and to obtain sanction and registration under the provisions of the Kerala Chitties Act, 1975. Kerala Chitties Act can operate only within the territory of State of Kerala. State cannot compel the firms which have already been registered outside State of Kerala under the Central Act or other State Act or unregistered chitties to open a branch in State of Kerala. Persons residing in the State of Kerala is free to join any chitty conducted in other States and the mere fact that 20% or more of the subscribers in State of Kerala have joined in the chitties conducted various places outside the State of Kerala would not cast any obligation on the foreman to open a branch in the State of Kerala and to obtain registration under the provisions of the Kerala Chitties Act, 1975. Sub-s.(1)(a) of S.4 is therefore clearly discriminatory, beyond the legislative competence of the State Legislature and violates Art.19(1)(g) of the Constitution of India. The Kerala Chitties Act, 1975 has been included in the 9th Schedule as item No.149. Art.31-B gives protection to all the statutes listed to the IX Schedule of the Constitution from any challenge on the ground of violation of any of the fundamental rights secured under Part III of the Constitution. But S.4(1)(a) introduced by the Kerala Chitties (Amendment) Act 7 of 2002 was not included in the IX Schedule. It is trite the protection afforded by Art.31-B to the Act included in the IX Schedule would not take in the amendments effected to the Act, unless it is specifically included in the schedule. Sub-s.(1)(a) of S.4 has not been included in the 9th Schedule, hence be made subject to judicial review. We hold that sub-s.(1)(a) of S.4 of the Kerala Chitties Act introduced by the Finance Act 7 of 2002 is discriminatory and violative of Art.19(1)(g) of the Constitution of India and beyond the legislative competence of the State Legislature and W.A.No.577 of 2004 - 3 - would not bind chitties started and conducted outside the State of Kerala and therefore declared void and unconstitutional”. 4. Respectfully following the observations made in the aforesaid decision, this Writ Appeal is disposed of in the same terms, observations, conditions and directions. Ordered accordingly. H.L.Dattu Chief Justice A.K.Basheer Judge vku/-