CENTRAL BANK OF INDIA versus STATE OF KERALA AND ORS.

Citation: [2009] 3 S.C.R. 735 · Decided: 27-02-2009 · Supreme Court of India · Bench: B.N. AGRAWAL · Disposal: Dismissed

Cited by 10 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

[2009] 3 S.C.R. 735 
.) 
CENTRAL BANK OF INDIA 
A 
.._ 
v. 
STATE OF KERALA AND ORS. 
(Civil Appeal No. 95 of 2005) 
FEBRUARY 27, 2009 
B 
[B.N. AGRAWAL, G.S. SINGHVI AND AFTAB ALAM, JJ.] 
Debt Recovery: Recovery of Debts Due to Banks and 
Financial Institutions Act, 1993 - s.34 - Securitisation and 
Reconstruction of Financial Assets and Enforcement of c 
Security Interest Act, 2002 - s.35 - Bombay Sales Tax Act, 
1959 - s.38C- Kera/a General Sales Tax Act, 1963- s.26B 
First charge- Held: Tax payable under State legislations 
.. 
would be first charge on the property of the dealer- ORT Act D 
and Securitisation Act do not create first charge in favour of 
banks, financial institutions and other secured creditors -
Provisions contained in s.38C of the Bombay Sales Tax Act 
and s.26B of Kera/a General Sales Tax Act are not 
inconsistent with the provisions of the ORT Act and E 
Securitisation Act so as to attract non- obstante clauses 
contained in s.34(1) of ORT Act or s.35 of Securitisation Act 
- Transfer of Property Act, 1882 - ss.69, 69A - Companies 
..; 
Act, 1956 - s.529A - Employees Provident Funds and 
~ 
Miscellaneous Provisions Act, 1952- s.11(2)- Interpretation 
F 
' 
of statutes - Non-obstante clause. 
-
Invoking of Article 254 of the Constitution - Held: ORT 
Act and Securitisation Act were enacted by Parliament under 
Entry 45 in List I in the Seventh Schedule whereas Bombay 
Sales Tax Act and Kera/a General Sales Tax Act were G 
--1 
enacted by concerned State legislatures under Entry 54 in 
List II in the Seventh Schedule - The two sets of legislations 
were enacted with reference to entries in different lists in the 
Seventh Schedule -
Therefore, Article 254 can not be 
735 
H 
, 
736 
SUPREME COURT REPORTS 
[2009] 3 S.C.R. 
A invoked for striking down State legislations on the ground that 
l 
the same were in conflict with the Central legislations -
~
Constitution of India, 1950 - Arlicle 254. 
DRT Act and Securitisation Act - Enactment of -
B Legislative intent - Discussed. 
Interpretation of statutes: 
Non-obstante clause - Held: Is incorporated in statute to 
give overriding effect to a particular section or the statute as a 
c whole - While interpreting Non-obstante clause, Court is 
required to find out the extent to which legislature intended to 
do so and the context in which the non-obstante clause is used. 
Contextual interpretation - Rule of - Held: Requires that 
Courl should examine every word of a statute in its context -
,.. 
D In doing so, Courl has to keep in view preamble of the statute, 
other provisions thereof, pari material statutes. 
The questions which arose for consideration in these 
appeals were whether Section 38C of the Bombay Sales 
E Tax Act, 1959 and Section 26B of the Kerala General Sales 
Tax Act, 1963 and similar provision contained in other 
State legislations by which first charge has been created 
on the property of the dealer or such other person, who 
is liable to pay sales tax etc., are inconsistent with the 
.. • 
F provisions contained in the Recovery of Debts Due to 
Banks and Financial Institutions Act, 1993 for recovery 
of 'debt' and the Securitisation and Reconstruction of 
Financial Assets and Enforcement of Security Interest 
Act, 2002 for enforcement of 'security interest' and 
G whether by virtue of non obstante clauses contained in 
Section 34(1) of the ORT Act and Section 35 of the 
Securitisation Act, two Central legislations would have 
•·· 
primacy over State legislations. 
H 
CENTRAL BANK OF INDIA v. STATE OF KERALA AND 737 
ORS. 
) 
Dismissing the appeals, the Court 
A 
HELD: 1. The Recovery of Debts Due to Banks and 
Financial Institutions Act, 1993 and the Securitisation and 
Reconstruction of Financial Assets and Enforcement of 
Security Interest Act, 2002 do not create first charge in 
favour of banks, financial institutions and other secured 
B 
creditors and the provisions contained in Section 38C of 
·1 
the Bombay Act and Section 26B of the Kerala Act are 
not inconsistent with the provisions of the ORT Act and 
Securitisation Act so as to attract non obstante clauses c 
contained in Section 34(1) of the ORT Act or Section 35 
of the Securitisation Act. [Para 48] [819-H; 820-A] 
2. The ORT Act and Securitisation Act were enacted 
by Parliament under Entry 45 in List I in the Seventh 
Schedule whereas Bombay Sales Tax Act and Kerala 
D 
General Sales Tax Act were enacted by the concerned 
State legislatures under Entry 54 in List II i

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