Holding

There is no repugnancy between the Karnataka Contract Carriages (Acquisition) Act, 1976 and the Motor Vehicles Act, 1988; the two statutes address different subjects and Article 254 does not apply, so the state provisions remain in force.

Summary

The petitioners, a group of contract carriage operators, were denied fresh permits under the Motor Vehicles Act, 1988 because the Karnataka Contract Carriages (Acquisition) Act, 1976 (ss. 14 and 20) barred any new applications and gave a monopoly to the State Transport Undertaking. They challenged the refusals before the Supreme Court, arguing that the state provisions were repugnant to the central Motor Vehicles Act and should be void under Article 254 of the Constitution. The respondents contended that the acquisition act was enacted under a different entry in the Concurrent List, had received presidential assent, and therefore prevailed over the later central legislation. The Court examined whether the two statutes occupied the same field, applied the doctrine of dominant purpose and pith‑and‑substance, and considered the effect of Article 254(2). It held that the Karnataka Act dealt with acquisition of contract carriages (Entry 42) while the Motor Vehicles Act regulated the operation of motor vehicles (Entry 35), so they did not cover the same subject matter and no repugnancy arose. Consequently, the state provisions remained valid and the writ petitions were dismissed.

Issues considered

Whether sections 14 and 20 of the Karnataka Contract Carriages (Acquisition) Act, 1976 are repugnant to sections 73, 74 and 80 of the Motor Vehicles Act, 1988 under Article 254 of the Constitution.
Whether the doctrine of pith and substance or dominant purpose is applicable to determine repugnancy between a State law and a Parliamentary law in the Concurrent List.
Whether the Karnataka Act, having been reserved for the President’s consideration and receiving assent, prevails over the later Motor Vehicles Act despite any inconsistency.
Whether the Motor Vehicles Act, 1988 impliedly repeals the restrictive provisions of the Karnataka Acquisition Act.

Legislation cited

Constitution of Indias. Article 246(1), s. Article 246(2), s. Article 246(3), s. Article 254
Karnataka Contract Carriages (Acquisition) Act, 1976s. 14, s. 20
Motor Vehicles Act, 1939
Motor Vehicles Act, 1988s. 217(1), s. 73, s. 74, s. 80

Subjects

RepugnancyArticle 254Concurrent ListPith and substanceMotor Vehicles ActContract carriageAcquisition ActImplied repealConstitutional law

Judgment

VIJAY KUMAR SHARMA & ORS. ETC.
A
v.
STATE OF KARNATAKA & ORS. ETC. ·-
FEBRUARY27, 1990

B [RANGANATH MISRA, P.B. SAWANT, AND
K. RAMASWAMY, JJ.]

Karnataka Contract Carriages (Acquisition) Act, 1976: ss. 14, &
20-Whether repugnant toss. 74 & 80, Motor Vehicles Act, 1988-State
Act whether impliedly repealed by Parliamentary Act-State Act
whether hit by Article 254 of the Constitution.
c
Constitution of India, Article 254: Repugnancy between the
Parliamentary Act and the State Act in respect of matters in the Concur-
rent List, Seventh Schedule-When arises-Karnataka Contract
Carriages (Acquisition) Act, 1976-Whether repugnant to the Motor
D Vehicles Act, 1988.

Statutory interpretation-Doctrine of pith and substance or .domi-
nant purpose-Scope of-Whether applicable to find repugnancy under
Article 254 of the Constitution between Parllamentary and State laws in
respect of matters in List III. Seventh Schedule to _the Constitution.-
E
The Karnataka Contract Carriages (Acquisition) Act, 1976 enac-
ted by the State Legislature by taking aid of Entry 42 List III of the
Seventh Schedule and Articles 31 and 39 (b) and (c) of the Constitution
was reserved for consideration and received the assent of the President
of March 11, 1976. Section 4 of that Act provided for vesting of contract
P carriages along with the respective permits and/or certificates of regist-
ration issued under the Motor Vehicles Act, 1939 in the State absolutely
free from encumbrances. Sub-section (1) of s. 14 prohibited applica-
tions for fresh permits or renewal of existing permits on or from the
date of vesting. Section 14(2) provided for abatement of all applications,
appeals or revisions pending before the appropriate authority as on the
G notified date. Sub-section (1) of s. 20 provided for calcellation of,
notwithstanding anything in the 1939 Act, all contract carriage permits
granted or renewed in respect of any vehicle, other than a vehicle
acquired under the Act or belonging to the State Road Transport
Corporation. Sub-section (2) entitled the Corporation to the grant or
renewal of contract carriage permits to the exclusion of all other
· Ff persons, while sub-section (3) restrained the authority concerned from

614
V.K. SHARMA v. STATE OF KARNATAKA 615

entertaining applications from persons other than the Corporation.
A
Section 73 of the Motor Vehicles Act, 1988 (enacted to replace the
1939 Act) lays down the mode of application for a contract carriage
permit. Section 74(1) empowers the Regional Transport Authority to
grant such permits. Sub-section (2) enumerates conditions that could be
attached to such permit. Sub-section (3) empowers the State Govern- B
ment when directed by the Central Government to limit the number of
contract carriages on the city routes. Under s. 80(1) such application

-
could be made at any time. Sub-section (2) posits that a Regional Trans-
port Authority shall not ordinarily refuse to grant such application.
Section 217(1) repealed all the laws which were inconsistent with the
provisions of the Act.
c
The petitioners, a group of contract carriage operators who were
denied permits that they had applied for under ss. 73, 74 and 80 of the
Motor Vehicles Act, 1988 in view of the provisions ofss. 14 and 20 of the
Karnataka Contract Carriages (Acquisition) Act, 1976, filed writ peti-
tions under Article 32 <if the Constitution questioning the action of the D
R. T.A. It was contended that the provisions of ss. 14 and 20 of the
Karnataka Act were in direct conflict with the provisions of ss. 74 and
80(2) of.the M. V. Act, 1988 in as much as while the Regional Transport
Authority was enjoined by the said provisions of the 1988 Act ordinarily ·
not to refuse to grant an application for permit of any kind, the said

- provisions of the Karnataka Act prohibited any person from applying E
for, and any officer or authority from entertaining or granting applica-
tion for running any contract carriage in the State; that since the M. V.
Act, 1988 was a later legislation operating in the same area, it should be
deemed to have impliedly repealed the provisions ofss. 14 and 20 of the
Karnataka Act even if the latter Act had received the assent of the
President, in view of the proviso to sub-clause (2) of Article 254 of the F
Constitution; that when there is a repugnancy under Article 2~'! of the
Constitution, the doctrine of pith and substance does not apply, and
even if some of the provisions of the State Legislation are in conflict with
some of the provisions of the Central legislation, the conflicting provi-
sions of the State legislation, will be invalid and that, therefore, their
applications under ss. 74 and 80 were maintainable without reference to G
the provisions of the Karnataka Act.

For the respondents it was contended that the Acquisition Act was
made in exercise of the power under a different entry and was not on the
same subject, therefore, the matter did not come within the ambit of
Art. 254 of the Constitution, and that the Acquisition Act having been H
616 SUPREME COURT REPORTS [1990] 1 S.C.R.

A reserved ,for consideration under Art. 254(2) and having received the
assent of the President, it prevails over the Parliamentary Act in the
'r
State of Karnataka.

On the question: Whether there is repugnancy between the provi-
sions of ss. 14 and 20 of the Karnataka Contract Carriages (Acquisi-
B lion) Act, 1976 and ss. 74 and 80 of the Motor Vehicles Act, 1988 and f
whether the doctrine of dominant purpose and pith and substance is I

applicable while examining the repugnancy of the two statutes?

Per Misra, J. (Concurring with Sawant, J.)

There is no direct inconsistency between the Karnataka Con-
c tract I.Carriages (Acquisition) Act, 1976 and the Motor Vehicles Act,
'
~
1988. [631G-HJ

2.1 In cl. (l) of Art. 254 of the Constitution it has been clearly
indicated that the competing legislations must be in respect of one of the
D matters enumerated in the Concurrent List. In the instant case, the
State Act was an Act for acquisition and came within Entry 42 of The
Concurrent List. The Parliamentary Act on the other hand is a legisla-
tion coming within Entry 35 of the Concurrent List. Therefore, the said )-....
· two Acts as such do not relate to one common head of legislation
enumerated in the Concurrent List. Clause (2) also refers to the law with
E respect to the same matter. [628F; 629A] ......
2.2 Repugnancy between two statutes would arise if there is
direct conflict between the two provisions and if the law made by Parlia-
.,
ment and the law made by the State Legislature occupy the same field.
In the instant case, the State Act intended to eliminate private operators y
f from the State in regard to contract carriages acquired under the exist-
ing permits, vehicles and ancillary property and with a view to giving
effect to a monopoly situation for the State Undertaking made provision
in s. 20. The Parliamentary Act does not purport to make any provision
in regard to acquisition of contract carriage permits which formed the
dominant theme or the core of the State Act. Nor does it in s. 73 ands. 74
G indicate as to who the applicant shall be while laying down how an
application for a contract carriage permit shall be made and how such a ~'
permit shall be granted. Section 80 of the Parliamentary Act does con-
lain a liberalised provision in the matter of grant of permits but even
then there again the ancillary provision contained in s. 20 of the State
Act to effectuate acquisition does not directly run counter to the 1988
H provision. [630G; 631C]
V.K. SHARMA v. STATE OF KARNATAKA 617

There does not thus appear to be any repugnancy between the two
A
Acts for invoking Art. 254 of the Constitution. [6310-E]

Bar Council of Uttar Pradesh v. State of U.P. & Anr., [1973] 2
SCR 1073; Kera/a State Electricity Board v. Indian Aluminium Com-
pany, [1916] l SCR 552; Deep Chand v. State of Uttar Pradesh & Ors.,
·~·· [1959] 2 Suppl. SCR 8; T. Barai v. Henry Ah Hoe & Anr., [1983] 1 B
SCR 905; Hoechst Pharmaceuticals Ltd. & Anr. v. State of Bihar &
Ors., [1983] 3 SCR 130; Zaverbhai Amaidas v. State of Bombay, [1955]

-
1 SCR 799; M. Karunanidhi v. Union of India, [1979] 3 SCR 254 and
State of Karna/aka & Anr. v. Ranganatha Reddy & Anr., [1978] 1 SCR
641, referred to.

Per Sawant, J:
c

1. There is no repugnancy in the provisions ofss. 14 and 20 of the
Karnataka Contract Carriages (Acquisition) Act, 1976 and ss. 74 and
80 of the Motor Vehicles Act, 1988. Hence the provisions of Article 254
of the Constitution do not come into play. [652F; 636C] D

2.1 Whenever. repugnancy between the State and Central Legisla-
, -~· tion is alleged, what has to be first examined is whether the two legisla-
tions cover or relate to the same subject matter. The test for determin·
ing the same is to find out the dominant intention of the two legislations.
If the dominant intention of the two legislations is different, they cover E
different subject matters. If the subject matters covered by the legisla-
tion are thus different, then merely because the two legislations refer to
some allied or cognate subjects they do not cover the same field. The
legislation to be on the same subject matter must further cover the
entire field covered by the other. [652C-D]
F
A provision in one legislation to give effect to its dominant
purpose may incidentally be on the same subject as covered by the
provision of the other legislation. But such partial coverage of the same
area in a different context and to achieve a different purpose does not
bring about the repugnancy which is intended to be covered by Article
254(2). Both the legislations must be substantially on the same subject G
to attract the Article. [652E]

Municipal Council Palai v. T.J. Joseph & Ors., [1964] 2 SCR 87;
Tika Ramji & Ors. etc. v. State of U.P. & Ors., [1956] SCR 393 and
State of Karnataka & Anr. etc. v. Ranganatha Reddy & Anr. etc.,
[1978] 1SCR641, referred to. H
618 SUPREME COURT REPORTS I 1990] I S.C.R.
Ratan Lal Adukia v. Union of India, [1989] 3 SCR 537,
A
distinguished.

l.2 In the instant case, the objects and the subject matters of the
two enactments were materially different. The Karnataka Act was
enacted by the State Legislature for acquisition of contract carriages
B under Entry 42 of the Concurrent List read with Article 31 of the Con-
stitution to give effect to the provisions of Articles 39(b) and (c) thereof.
The MV Act 1988 on the other hand was enacted by the Parliament
under Entry 35 of the Concurrent List to regulate the operation of the
motor vehicles. They thus occupy different areas. [636C, B-C]

2.3 Unlike the MV Act 1988 which was enacted to regulate the
c operation of the motor vehicles, the object of the Karnataka Act was
not only the regulation of the operation of the motor vehicles. Nor was
its object merely to prevent the private owners from operating their
vehicles with the exclusive privilege of such operation being reserved in
favour of the State or the State Undertaking. For if that were the only object,
D the same could have been achieved by the Transport Undertakings of the
State following the special provisions relating to State Transport Under-
takings in Chapter IV-A of the Motor Vehicle Act, 1939 which was in
operation when the Karnataka Act was bronght into force. The very fact
that instead the State undertook the exercise of enacting the Karnataka
Act shows that the object of the State Legislature in enacting it was
E materially different i.e. to nationalise the contract carriage services in the
State with a view to provide better transport facilities to the public and
also to prevent concentration of wealth in the hands of the few and to utilise
the resources of the country to subserve the interests of all. [634D-F; B-C]

3.1 A comparison of the provisions of the MV Act, 1939 and MV
F Act, 1988 shows that the latter has merely replaced the former. The
special provisions relating to the State Transport Undertakings which
are contained in Chapter VI of the MV Act, 1988 are pari-materia with
those of Chapter IV-A of the MV Act, 1939 with only this difference
that whereas under the old Act it was the State Transport Undertaking
which had to prepare a scheme for running and operating the transport
G service by it in relation to any area or route or portion thereof exclu-
sively, under the new Act such a scheme has to be prepared by the State
Government itself. There is no difference in the legal consequences of
the schemes under the two enactments. Both envisage the operation of
the services by the State Transport Undertaking to the exclusion of the
rest, and cancellation of the existing permits and compensation only for
H the deprivation of the balance of the period of the permit. No acquisi-
V.K. SHARMA v. STATE OF KARNATAKA 619

tion of the vehicles or the paraphernalia connected with such vehicles is A
en visaged as is the case under the Karnataka Act. I634G; 635E-G]

3.2 Section 1)8 of the MV Act 1988 in terms clearly states (as
did Section 68B of the MV Act 1939) that Chapter VI relating to the
special provisions about the State Transport Undertaking and the rules· B
and orders made thereunder, shall have effect notwithstanding any-
thing inconsistent therewith contained in Chapter V or in any other law
for the time being in force or in any instrument having effect by virtue
of any snch law. Sections 74 and 80 relating to the grant of the contract

.. carriage permit and the procedure in applying for the grant of such
permits respectively, are in Chapter V. This means that when under
Chapter VI, a scheme is prepared by the State Govt. entrusting the c
contract carriage services in relation to any area or route or portion
thereof, to a State Transport Undertaking to the exclusion--mmplete
or partial of other persons, the provisions of ss. 74 and 80 would have
no application, and the private transport operators cannot apply for the
grant of contract carriage permits under s. 80 nor can such permits be
D
granted by the Transport Authority. The MV Act 1988 thus also makes
a provision for nationalisation of routes, and envisages a denial of
permits to private operators when routes are so nationalised. Hence it
cannot be said that there was a conflict between the provisions of the
Karnataka Act and the M. V. Act, 1988. [637H; 638D]
E
4. When the legislative encroachment is under consideration the
; doctrine of pith and substance comes to the aid to validate a legislation
which would otherwise be invalid for the very want of legislative com-
petence. When the repugnancy between the two legislations is under
consideration, what is in issue is whether the provision of the State
enactment though otherwise constitutionally valid, has lost its validity
F
because the Parliament has made a legislation with a conflicting provi-
sion on allegedly th~ same matter. If it is open to resolve the conflict
between two entries in different Lists, viz., the Union and the State List
by examining the dominant purpose and therefore the pith and sub-
stance of the two legislations, there is no reason why the repugnancy
under Article 254 of the Constitution between the provisions of the two G
legislations under different entries in the same List, viz. the Concurrent
List should not be resolved by scrutinizing the same by the same touch-
stone. What is to be ascertained in each case is whether the legislations
are on the same matter or not. In both cases the cause of conflict is the
apparent identity of the subject matters. The tests for resolving it there-
fore cannot be different. [639E-H] H
620 SUPREME COURT REPORTS (1990] 1 S.C.R.

A Meghraj & Ors. v. Allahrakhiya & Ors., AIR 1942 FC 27
distinguished.
y
Per K. Ramaswamy, J. (Dissenting)

l. Section 14(1) of Karnataka Contract Carriages (Acquisition)
B
Act, 1976 to the extent of prohibiting to make fresh application for
grant of permits to run the contract carriages other than those acquired
under that Act and the embargo and prohibition created under s. 20(3)
thereof on the respective Regional Transport Authority in the State of
Karnataka to invite/receive the application to consider the grant of
permits to such contract carriages according to law, are void. [686C-D]
c
2.1 The Parliament and the legislature of a State derive their
exclusive power to legislate on a subject/subjects in List I and List II of I

Seventh SChedule to the Constitution from Art. 246(1) and (3) respec- ;--.
tively. Both derive their power from Art. 246(2) to legislate upon a
D matter in the Concurrent List III subject to Art. 254 of the Constitution.
The entries in the three lists merely demarcate the legislative field or
legislative heads. Their function is not to confer powers on either the
Parliament or the State Legislature. [682E-D]

Subrahmanyam Chettiar v. Muttuswami Goundan., AIR 1941 FC
E 47; Governor General in Council v. The Reliegh Investment Co. Ltd.,
[1944] FCR 229; Harakchand Ratanchand Banthia v. Union of India,
(1970] l SCR 479 AND Union of Inida v. H.S. Dhillon, [1972] 2 SCR
33, referred to.

2.2 Clause (1) of Art. 254 posits as a rule that in case of
repugnancy or inconsistency between the State Law and the Union Law
F relating to the same matter in the Concurrent List occupying the same
field, the Union law shall prevail and the State law will fail to the extent
of the repugnancy or inconsistency whether the Union law is prior or
later in point of time to the State law. To this general rule, an exception
has been engratled in cl. (2) thereof, viz., provided the State law is
reserved for consideration of the President and it has received his
G assent, and then it will prevail in that State notwithstanding its
repugnancy or inconsistency with the Union law. This exception again is
to be read subject to the proviso to cl. (2) thereof, which empowers the
Parliament to make law afresh or repeal or amend, modify or vary the
repugnant State law and it became_ void even though it received Presi-
H dent's assent. [659D-F]
V.K. SHARMA v. STATE OF KARNATAKA 621

.""-,{~ 2..1 The question of repugnancy under Article 254 of the Con-
A
\ stitution arises when the provisions of both laws are fully inconsistent or
are absolutely irreconcilable and it is impossible to obey without dis-
obeying the other, or conflicting results are produced when both the
statutes covering the same field are applied to a given set of facts. It
matters little whether the provisions fall under one or other entry in the
Concurrent I,ist. The substance of the same matter occupying the sa1ne B
field by both the pieces of the legislation is material and not the form.
The repugnancy to be found is the repugnancy of the provisions of the
two laws and not the predominant object of the subject matter of the
two laws. The proper test is whether effect can be given to the provisions of
both the laws or whether both the laws can stand together. If both the pieces of
legislation deal with separate and distinct matters though of cognate and allied
character repugnancy does not arise. [660A-B; 675B.C; 660C; 674H; 675A]
c

Tika Ramji v. State of U.P .• [1956] SCR 393; A.S. Krishna v.
Madras State, [1957] SCR 399; Prem Nath Kaul v. State of J & K.
[ i952] 2 Supp. SCR 273; Bar Council of U.F. v. State of U.P., [1973] 2
SCR 1073; Deep Chand v. State of V.P., [1959] Supp. 2 SCR 8; State of 0
Orissa v. M.A. Tulloch & Co., [1964] 4 SCR 461; State of Assam v.
Horizon Union, [1967] I SCR 484; State of J & K v. M.S. Farooqi,
[1972] .I SCR 881; Kera/a State Electricity Board v. Indian Aluminium
Co.. [ 1976] I SCR 552; Basu's Commentary on the Constitution of
India (Silver Jubilee Editinn) Volume K 144; Clyde Engineering Co. v.
Cowburn, [1926] 37 CLR 466; Hume v. Palmer, [1926] 38 CLR 441; E
Brisbane Licensing Court, [1920] 28 CLR 23; Colvin v. Bradley Bros.
Pvt. Ltd., [1943] 68 CLR 151; In Re Ex Parte Maclean, [1930] 43 CLR
472; Wenn v. Attorney General (Victoria), [1948] 77 CLR 84; O'Sullivan
v. Noarlunga Meat Co. Ltd., [1954] 92 CLR 565; O'Sullivan v.
Noarlunga Meat Co. Ltd., [1957] AC l and Blackley v. Devondale
Cream (Vic.) Pvt. Ltd., [1968] ll7 CLR 253, referred to. F

2.4 Section 14 read with s. 20 of th.e Acquisition Act freezed the
right of a citizen to apply for and to obtain permit or special permit to
run a contract carriage in terms of the permit and monopoly to run a
contract carriage was conferred on the S. T. U., Karnataka. But the
M. V. Act, 1988 evinces its intention to liberalise the grant of contract G
carriage permit by saying in s. 80(2) that the Regional Transport
Authority "shall not ordinarily refuse to grant the permit". It also
confers the right on an applicant to apply for and authorises the
Regional Transport Authority to grant liberally contract carriage
permit except in the area covered by s. 80(3) and refusal appears to be
an exception, that too, obviously for reasons to be recorded. It may be H
622 SUPREME COURT REPORTS [ 1990] 1 S.C.R.

A rejected if the permit applied for relate to an approved or notified
route. The M.V. Act accords the right, while the Acquisition Act,
·y
negates and freezes the self-same right to obtain a permit and to run a
contract carriage and prohibits the authorities to invite or entertain an
application and to grant a permit to run contract carriage. The Act anrl
the relevant rules cover the entire field of making an application in thr
B prescribed manner and directs the Regional Transport Authority to ,iii
grant permit with condition attached thereto to run contract carriages ..
vide ss. 66(1), 73, 74 and 80. Thus the existence of two sets of provisions
in the Motor Vehicles Act 59 of 1988 and Acquisition Act 21of1976 is
sufficient to produce conflicting results in their operation .in the same
occupied filed. The two sets of provisions run on collision course,
C though an applicant may waive to make an application for a permit.
Thereby there exists the operational incompatibility and irreconcilabi-
lity of the two sets of provisions. Sections 14(1) and 20(3) of the Acquisi" )~
tion Act are repugnant and inconsistent toss. 73, 74 and 80 of the Act.
By operation of proviso to Art. 254(2) of the Constitution, the embargo
created by ss. 14(1) and 20(3) of the Acquisition Act to make or invite
D an application and injuction issued to Regional Transport Authority pro-
hibiting to grant contract carriage permit to anyone except to S. T.U.,
Karnataka within the State of Karnataka became void. [682H; 683E]

3.1 The Parliament with a view to lay down general principles
makes law or amends the existing law. The State Legislature still may
E feel that its local conditions may demand amendment or modification of
the Central Law. Their reserve power is Art. 254(2). After making the
Act 59 of 1988 the power of the State Legislature under Art. 254(2) is not
exhansted and is still available to be invoked from time to time. But
unless it again enacts law and reserves it for consideration and obtains
the assent of the President afresh, there is no prohibition for the
F petitioners to make applications for the grant of contract carriage permits
under the Act and consideration and grant or refusal thereof according
to law by the concerned Regional Transport Authority. [685E; 686B]

3.2 The Karnataka State Legislature is, therefore, at liberty to make
afresh the law similar toss. 14(1) and 20(3) of the Acquisition Act with
G appropriate phraseology and to obtain the assent of the President. [686B]

4. Parliament may repeal the State law either expressly or by
necessary implication but Courts would not always favour repeal by
..
'-
1,

implication. Repeal by implication may be found when the State law is
repugnant or inconsistent with the Union law in its scheme or opera-
H tion. The principle would be equally applicable to a question under
V.K. SHARMA v. STATE OF KARNATAKA 623

Article 254(2) of the Constitution. In the instant case, s. 217(1) of the A
Union law does not expressly repeal ss. 14(1) and 20(3) of the State law.
They are repugnant with the Union law. '[676C-D; 670E-F; 669F]

Zaveribhai v. State of Bombay, [1955] l SCR 799; M .

i.. Karunanidhi v. Union offndia, [1979] 3 SCR 254; T. Barai v. Henry
· Ah Hoe, [1983] l SCR 905 and Mis Hoechst Pharmaceuticals Ltd. v.
·· State of Bihar, [1983] 3 SCR 130, referred to.
B

5. For the applicability of the principle that special law prevails
over the general law, the special law must be valid law in operation.
Voidity of law obliterates it from the statute from its very inception. In
the instant case, since ss. 14(1) and 20(3) are void the said principle is C
~ · not applicable. [683FI

Justiniano Augusto De Peidada Barreto v. Antonia Vicente De
Fonseca & Ors., [1979] 3 SCR 494, distinguished.

6.1 The doctrine of pith and substance or the predominant D
purpose or true nature and character of law is applied to determine
" whether the impugned legislation is within the legislative competence
•" under Arts. 246( 1) and 246(3) of the Constitution, and to resolve the
conflict of jurisdiction. If the Act in its pith and substance falls in one
~- List it must be deemed not to fall in another List, despite incidental
" ' encroachment and its validity should be determined accordingly. The E
!' pith and substance rule, thereby, resolves the problem of overlapping o!
''any two entries of two different Lists vis-a-vis the Act" on the basis of
an inquiry into the "true nature and chafacter" of the legislation as a
whole and tries to find whether the impugned law is substantially within
the competence of the Legislature which enacted it, even if it incidentally
trespasses into the legislative field of another Legislature. [680C; 677~'; 678A I F

6.2 The doctrine has no application when the matter in question
is covered by an entry or entries in tlie Concurrent List and has occupied
the same field both in the Union and the State Law. It matters little as to
in which entry or entries in the Concurrent List the subject-matter falls
or in exercise whereof the Act/provision or provisions therein was G
made. The Parliament and Legislature of the State have exclusive power
to legislate upon any subject or subjects in the Con_!'urrent List. The
question of incidental or ancillary encroachment or to trench into
forbidden field does not arise. The determination of its 'true nuture and
chracter' also is immaterial. [680C-D I
H
SUPREME COURT REPORTS [1990] I S.C.R., j

Prafulla Kumar v. Bank of Commerce, Khulna, AIR 1947 PC 60; "
A
State of Bombay v. F.N. Balsara, [1951] SCR 682; Atiabari Tea Co.
Ltd. v. State of Assam, [1961] 1 SCR 809 and Meghraj & Ors. v.
Allaharakhiya & Ors., AIR 1942 FC 27, referred to.

ORIGINAL JURISDICTION: Writ Petition No. 723 of
B etc.

(Under Article 32 of the Constitution oflndia).

G. Ramaswamy, Additional Solicitor General (N.P.), F.S. Nari- ~
man, G.L. Sanghi, G..Prabhakar, M. Rangaswamy, N.D.B. Raju, Ms. ~
C.K. Sucharita, S.K. Agnihotri, P.R. Ramashesh, K.R. Nagaraja and ~
c Ms. Anita Sanghi for the appearing parties. .;-:

The following Judgments of the Court were delivered:

RANGANATH MISRA, J. I have the benefit of reading the
D judgment prepared by my esteemed brethren Sawant and K. Ramas-
wamy, JJ. Brother Sawant has taken the view that s. 20 of the
Karnataka Act has not become void with the enforcement of the
Motor Vehicles Act, 1988, while Brother K. Ramaswamy has come to ~
the contrary conclusion. Agreeing with the conclusion of Sawant, J., I·.,
have not found it possible to concur with Ramaswamy, J. Since an ·d
E interesting question has arisen and in looking to the two judgments I '1
have found additional reasons to support the conclusion of Sawant, J., 'ii
I proceed to indicate the same in my separate judgment. i
These applications under Article 32 of the Constitution by a
group of disgruntled applicants for contract carriage permits call in
F question action of the concerned transport authorities in not entertain-
ing their applications under the provisions of the Motor Vehicles Act,
1988.

Motor Vehicles Act (4 of 1939) made provision for grant of con-
tract carriage permits. The Karnataka Contract Carriages (Acquisi-
G tion) Act (Karnataka Act 21 of 1976) received assent of the President
on 11th of March, 1976, but was declared to have come into force from
30th of January ,_1976, when the corresponding Karnataka Ordinance 7
of 1976 had come into force. The long title of the Act indicated that it
was an Act to provide for the acquisition of contract carriages and for
matters incidental, ancillary <.•r subservient thereto. and the preamble
H stated;
V.K. SHARMA v. STATE OF KARNATAKA [MISRA, J.[ 625

y "Whereas contract carriages and certain other cate-
gories of public service vehicles are being operated in the
A
State in a matter highly detrimental and prejudicial to
public interest;

And whereas with a view to prevent such misuse and
also to provide better facilities for the transport of passen-
gers by road and to give effect to the policy of the State
towards securing that the ownership and control of the

-
material resources of the community are so distributed as
best to subserve the common good and that the operation
of the economic system does not result in the concentration
of wealth and means of production to the commort detri'
ment; 'C

And whereas for the aforesaid purposes ii is consi-
dered necessary to provide for the acquisition of contract
carriages and certain other categories of public service veh-
icles in the State and for matters incidental, ancillary or D
subserv.ienl thereto . ..... "

_,y· Section 2 contains the declaration to the following effeci:

"It is hereby declared that this Aci is for giving effect to the
policy of the State towards securing the principles specified E
in clauses (b) and (c} of Article 39 of the Constitution of
India and the acquisition therefor of the contract carriages
and other property referred to in.sectioh 4."

tJrtder s, 4 contract carriages owned or operated by contrai;t
carriage operators along with the respective permits ahd/or certificates
of registration, as the case may be, vested in the State absolutely free
from encumbrances, and compensation for such acquisition was
provided under the scheme of the Act. Section 14 prohibited applica-
tion for any permit or fresh permit ot renewal of existing permits for
running of any contract carriage in the State by any private operator
and all pendirtg proceedings in relation to grahi or renewal abated.
Consequential provisions were made in ss. 15 and 16 of the Act. Sec-
--< tion 20 gave the Corporation the exclusive privilege of running con-
tract carria~s within the State to the exclusion of atiy provision tinder
the 1939 Act.

The vires of the Act was the subject-matter of the decision of this H
626 SUPREME COURT REPORTS [1990) 1 S.C.R.

A Court in a group of appeals in the case of the State of Karnataka &
Anr. v. Shri Ranganatha Reddy & Anr., [1978) 1 SCR 641. A Seven-
y
Judge Bench upheld the validity of the statute holding that the
impugned statute was an 'acquisition Act' within the ambit of Entry 42
of the Concurrent List under Schedule VII of the Constitution. The
Court took note of the fact that even though it may have had some
B
incidental impact on inter-State trade or commerce it did not suffer
from any lacuna on that count. Since the Act had been reserved for
Presidential assent, to the extent s. 20 made provisions contrary to
(
those in the Motor Vehicles Act of 1939, was taken to be valid under

c
Art. 254(2) of the Constitution.

The Motor Vehicles Act (59 of 1988) being a Parliamentary legis-
lation was brought into force with effect from 1.7.1989. Under s. 1(2),
the Act extended to the whole of India and, therefore, the Act became
-
applicable to the State of Karnataka by the notification appointing the
date of commencement of the Act.

The 1988 Act has admittedly liberalised the provisions relating to
grant of permits of every class including contract carriages. Sections
73, 74 and 80 contain the relevant provisions in this regard. Whiles. 73
provides for an application for such permit, s. 74 contains the proce-
dure for the consideration of the grant and s. 80 contains a general
provision that the transport authority shall not ordinarily refuse to
E grant an application for permit of any kind made at any time.under the
Act. It is the contention of the petitioners that with the enforcement of
the Motor Vehicles Act of 1988 as a piece of central legislation, the
provisions of s. 20 of the Karnataka Act became void to the extent the
state law was inconsistent with the provisions of the 1988 Act and,
therefore, by operation of the provisions contained in Art. 254 of the
F Constitution, s. 20 stood abrogated and the scheme of the 1988 Act
became operative. The applications of the petitioners for grant of
contract carriage permits were maintainable and should have been
entertained and disposed of in accordance with the provisions of the
1988 Act.
G It is the stand of the respondents, in particular of the Karnataka
State Transport Undertaking, that the State Act is a legislation under a
different entry and was not on the same subject. Therefore, the matter
did not come within the ambit of Art. 254 of the Constitution. The
State Act continues to hold the field and the transport authorities had
H rightly refused to entertain the petitioners' applications.
V.K. SHARMA v. STATE OF KARNATAKA \MISRA. J.] 627

Y The question for consideration is: Whether Art. .~54( I) of the
Constitution applies to the situation in hand and whether s. 20 of the
A

Karnataka Act being inconsistent with the provisions of ss. 73, 74 and
80 of the 1988 Motor Vehicles Act became void. It would be con-
venient to extract the provisions of Art. 254 of the Constitution at this
stage and recount the background in which such provision was war-
B
ranted. It is the common case of the parties that with the introduction
of federalism and distribution of legislative powers and accepting a
Con_current List wherein in regard to specified subjects the Federal

- and the Federating State Legislatures had power to legislate, a provi-
sion of rationalisation became necessary. Section 107 of the Govern-
ment of India Act, 1935, contained the provision to deal with such a
situation. The Constituent Assembly accepted a similar mechanism
' .1· '· and added a proviso to clause (2) of Art. 254 to meet the difficulties
c
~ experienced in the intervening years. The Article reads thus:

"254( I) If any provision of a law made by the Legis-
lature of a State is repugnant to any provision of a law
made by Parliament which Parliament is competent to D
enact, or to any provision of any existing law with respect
to one of the matters enumerated in the Concurrent List,
then, subject to the provisions of clause (2), the law made
by Parliament, whether passed before or after the law
made by the Legislature of such State, or, as the case may
be, the existing law, shall prevail and the Jaw made by the E
Legislature of the State shall, to the extent of the repu-
gnancy, be void.

(2) Where a Jaw made by the Legislature of a State
with respect to one of the matters enumerated in the Con-
current List contains any provision repugnant to the provi- F
sions of an earlier law made by Parliament or an existing
law with respect to that matter, then, the law so made by
the Legislature of such State shall, if it has been reserved
for the consideration of the Pre.sident and has received his
assent, prevail in that State:
G
Provided that nothing in this clause shall prevent
Parliament from enacting at any time any Jaw with respect
to the same matter including a law adding to, amending,
varying or repealing the Jaw so made by the Legislature of
the State."
H
628 SUPR.EME COURT REPORTS [1990] 1 S.C.R.

A Though for some time there was difference of judicial opinion as
to in what situation Art. 254 applies, decisions of this Court by over-
y
ruling the contrary opinion have now concluded the position that the
question of repugnancy can arise only with reference to a legislation
falling m;id.er the Concurrent List: Bar Council of Uttar Pradesh v.
State of U. P. & Anr., [ 1973] 2 SCR 1073 and Kera/a State Electricity
B Board v. Indian Aluminium Company, [ 1976] l SCR 552.

This Court in Deep Chand v. State of Uttar Pradesh & Ors.,
[1959] 2 Suppl. SCR 8; T. Barai v. Henry Ah Hoe & Anr., [1983] 1
SCR 905 and Hoechst Pharmaceutica/s1Ltd. & Anr. v. State of Bihar &
Ors., [ 1983] 3 SCR 130 has laid down that cl. ( l) of Art. 254 lays down
C the general rule and cl. (2) is an exception thereto; the proviso qual-
ifies the exception. Therefore, while interpreting Art. 254 this position
has to be kept in view. The situation of the 1939 Motor Vehicles Act
being existing law and the Karnataka Act containing provision
repugnant to that Act with Presidential assent for the State Act
squarely came within the ambit of cl. (2) of the Article. That is how the
D State Act had overriding effect.

The consideration of the present question has to be within the
ambit of cl. ( 1) as the State law is the earlier legislation and the
Parliamentary Act of 1988 came later and it is contended that the State
legislation has provisions repugnant to provisions made in the 1988
E Act. There can be no controversy that if there is repugnancy, the
Parliamentary legislation has to prevail and the law made by the State
Legislature to the extent of repugnancy becomes void.

In cl. ( 1) of Art. 254 it has been clearly indicated that the com-
peting legislations must be in respect of one of the matters enumerated
F. in the Concurrent List. The seven-Judge Bench examining the vires of
the Karnataka Act did hold that the State Act was an Act for acquisi-
tion and came within Entry 42 of the Concurrent List. That position is
not disputed before us. There is unanimity at the Bar that the Motor
Vehicles Act is a legislation coming within Entry 35 of the Concurrent
List. Therefore, the Acquisition Act and the 1988 Act as such do not
G relate to one common head of legislation enumerated in the Concur-
rent List and the State Act and the Parliamentary statute deal with
different matters of legislation.

'(he lang1,iage qf cl. (2) is also similar though applicable in a,
different situation. Apparently in· one sense bot.h t))e clauses operate
H; on a similar level though ip dissimilar context. In cl. (2) what is rele-
V.K. SHARMA v. STATE OF KARNATAKA {MISRA, J.] 629

'( vant is the words: 'with respect to that matter'. A Constitution Bench
of this court in Zaverbhai Amaidas v. State of Bombay, I 1955) 1 SCR A
799 emphasised that aspect. Venkatarama Ayyar, J. pointed out:

"The important thing to consider with reference to
this provision is whether the legislation is 'in respect of the
same matter'. If the later legislation deals not with the B
matters which formed the subject of the earlier legislation
but with other and distinct matters though of a cognate and
allied character, then Art. 254(2) will have no application."

A lot of light relevant to the aspect under consideration is avail-
able from another decision of a Constitution Bench of this Court: (M.
Karunanidhi v. Union of India, I 1979) 3 SCR 254)' At p. 263 of the c
Reports, it has been said:

"It would be seen that so far as clause ( l) of Article 254 is
concerned it clearly lays down that where there is a direct
collision between a provision of a law made by the State D
and that made by Parliament with respect of one of the
matters enumerated in the Concurrent List, then, subject
to the provisions of clause (2), the State law would be void
to the extent of the repugnancy. This naturally means that
where both the State and Parliament occupy the field con-
templated by the Concurrent List then the Act passed by E
Parliament being prior in point of time will prevail and
consequently the State Act will have to yield to the Central
Act. In fact, the scheme of the Constitution is a scientific
and equitable distribution of legislative powers between
Parliament and the State Legislatures. First; regarding the
matters contained in List I, i.e., the Union List to the F
Seventh Schedule, Parliament alone is empowered to
legislate and the State Legislatures have no authority to
make any law in respect of the Entries contained in List I.
Secondly, so far as the Concurrent List is concerned, both
Parliament and the State Legislatures are·entitled to legis-
la_te in regard _to any of the Entries appearing therein, but G
that is subject to the condition laid down by Article 254( 1)
discussed above. Thirdly, so far as the matters in List II,
i.e., the State List are concerned, the State Legislatures
alone are competent to legislate on them and only under
certain conditions Parliament can do so. It is, therefore,
obvious that in such matters repugnancy may result from H
the following circumstances:
t
630 SUPREME COURT REPORTS l 19901 I S.C.R.

A
I. Where the provisions of a Centrnl Act and a State Act in ·y
the Concurrent List are fully inconsistent (Emphasis added)
and are absolutely irreconcilable. the Central Act will pre-
vail and the State Act will become void in view of the
repugnancy.

B 2. Where, however, a law passed by the State comes into
collision with a law passed by Parliament on an Entry in the
Concurrent List, the State Act shall prevail to the extent of
the repugnancy and the provisions of the Central Act
would become void provided the State Act has been passed
in accordance with clause (2) or Article 254.

c 3. Where a law passed by the State Legislature while being
substantially within the scope of the entries in the State List
entrenches upon any of the Entries in the Central List the
constitutionality of the law may be upheld by invoking the
doctrine of pith and substance if on an analysis of the provi-
sions of the Act it appears that by and large the law falls
within the four corners of the State List and entrenchment,
if any, is purely incidental or inconsequential.

4. Where, however, a law made by the State Legislature

-
on a subject covered by the Concurrent List is inconsistent
E with and repugnant to a previous law made by Parliament,
then such a law can be protected by obtaining the assent of
the President under Article 254(2) of the Constitution. The
result of obtaining the assent of the President would be that
so far as the State Act is concerned, it will prevail in the
State and overrule the provisions of the Central Act in its
F applicability to the State only. Such a state of affairs will
exist only until Parliament may at any time make a law
adding to, or amending, varying or repealing the law made
by the State Legislature under the provision to Article
254.,,

In Deep Chand v. State of Uttar Pradesh, supra, this court had
pointed out that repugnancy between two statutes would arise if there
was direct conflict between the two provisions and if the law made by
Parliament and the law made by the State Legislature occupied the
same field.

H It has already been stated that the State Act intended to eli-
V.K. SHARMA v. STATE OF KARNATAKA !MISRA, J.] 631

minate private operators from the State in regard to contract carriages
A
acquired under the existing permits, vehicles and ancillary property
. and with a view to giving effect to a monopoly situation for the State
undertaking made provision in s. 20 for excluding the private
operators. The 1988 Act does not purport to make any provision in
regard to acquisition of contract carriage permits which formed the
dominant theme or the core of the State Act. Nor does it in s. 73 or B
"\! s. 74 indicate as to who the applicant shall be while laying down how an
application for a contract carriage permit shall be made and how such a

- permit shall be granted. Section 80 of the 1988 Act does contain a
liberalised provision in the matter of grant of permits but here again it
has to be pointed out that the ancillary provision contained in s. 20 of
the Acquisition Act to effectuate acq'uisition does not directly run
counter to the 1988 provision.
c
Section 20 of the State Act creates a monopoly situation in
favour of the State undertakini qua contract carriages by keeping all
private operators out of the filed. Since ss. 73, 74 and 80 of the 1988
Act do not contain any provision relating to who the applicants for D
contract carriages can or should be, and those sections can be applied
without any difficulty to the applications of the State undertaking, and
there does not appear to be any repugnancy between the two Acts for
invoking Art. 254 of the Constitution. A provision in the State Act
excluding a particular class of people for operating contract carriages
or laying down qualifications for them would not run counter to the E
relevant provisions of the 1988 Act.

A number of precedents have been cited at the hearing and those
have been examined and. even some which were not referred to at the
bar. There is no clear authority in support of the stand of the
petitioners-where the State law is under one head oflegislation in the F
Concurrent List; the subsequent Parliamentary legislation is under
another head of legislation in the same Lisi and in the working of the
two it is said to give rise to a question ofrepugnancy.

The State Act had done away with the private operators qua
contract carriages within the State. It is true that the 1988 Act is G
applicable to the whole of India and, therefore, is also applicable to
the State of Karnataka in the absence of exclusion of the State of
Karnataka from its operation. But as has been pointed out already,
there is no direct inconsistency between the two and on the facts
placed in the case there is no necessary invitation to the application of
cl. ( 1) of Art. 254 of the Constitution. H
632 SUPREME COURT REPORTS [ 1990] 1 S.C.R.

The writ petitions fail and are dismissed.
A
SAW ANT, J. This group of petitions raises a common question
of law viz.: whether the Motor Vehicles Act, 1988 {hereinafter refer-
red to as the MV Act 1988) has impliedly repealed the Karnataka
Contract Carriages (Acquisition) Act, 1976 {hereinafter referred to as
B the Karnataka Act).

2. The petitioners claim a declaration that the provisions of Sec.

C
14 and. 20 of the Karnataka Act are invalid because of their repugnancy
with the provisions of the MV Act, 1988, and a direction to respondent
nos. 2 and 3, namely the Kamataka State Transport Authority and the
Kamataka Regional Transport Authority respectively, to consider
their applications for the grant of contract carriage permits under Sec.
74 and 80 of the MV Act, 1988, without reference to the provisions of
-
the Karnataka Act. The precise question that falls for consideration,
therefore, 1s whether there is a repugnancy between the two
legislations.
D
3. The Karnataka Act, as its title shows, was enacted to provide
for the acquisition of contract carriages and for matters incidental,
ancillary and subservient thereto. It was enacted under Entry 42 of the
Concurrent List read with Article 31 of the Constitution, in fur-
therance of Article 39(b) and (c) thereof. This is evident from the
E preamble, and Section 2 of the Act. The preamble states that since the
contract carriages and certain other categories of public service vehi-
cles were being operated in the State in a manner highly detrimental
and prejudicial to public interest, it was necessary to prevent the mis-
use, and to provide better facility for the transport of the passengers by
road. It was also necessary to give effect to the policy of the State
F towards securing that the ownership and control of the material
resources of the community were so distributed as best to subserve the
common good and that the operation of the economic system did not
result in the concentration of wealth and means of production to the
common detriment. To effectuate the said intention it was considered
necessary to enact the legislation. Section 2 of the Act makes a decla-
G ration in the following words:

"It is hereby declared that this Act is for giving effect to the
policy of the State towards securing the principles specified
in Clauses (b) and (c) of Article 39 of the Constitution of
India and the acquisition therefor of the contract carriages
H and other property referred to in Section 4."
VX SHARMA v, STATE OF KARNATAKA [SAWANT, L] 633

y Under Section 4 of the Act every contract carriage owned or
operated by contract carriage operator along with the permit or the
A
certificate of registration or both as the case may be, vested in the
State Government absolutely and free from all encumbrances,
Further, all rights, title and interest of the contract carriage operators
in the lands, buildings, workshops and other places and all stores,
instruments, machinery, tools, plants, apparatus and other equip- B
ments used for the maintenance; repair of, or otherwise in connection
with the service of the contract carriage as the State Government may
specify in that behalf and all books of accounts, registers, records and
all other documents of whatever nature relating to the contract car-
riages vested in the State Government absolutely and free from all
encumbrances, and all the said property was deemed to have been
acquired for public purpose, Section 6 provided for payment of com-
c
'
pensation for the acquisition of all the said property,
~
Since the avowed object of the Act was two fold, namely (i) to
prevent the misuse of the operation of the contract carriages and to
provide better facilities for the transport of passengers, and (ii) to give D
effect to the policy underlying Clauses (b) and (c) of Article 39 of the
Constitution, it was also necessary to prevent the issue of fresh permits
or renewal of the existing permits for running the contract carriages in
the State to any private individuaL Hence, Section 14 provided for a
prohibition of the issue of fresh permit or renewal of the existing
permit to any individual or the transfer of such permit to anyone E
except to the State Government or the Corporation which it may
establish under the Karnataka State Road Transport Corporation Act,
1950, To make an alternative arrangement for running the contract
carriages and to prevent both the misuse of the permits as well as
concentration of wealth in the hands of a few individuals, Section 20 of
the Act provided that all contract carriage-permits granted or renewed F
till then would stand cancelled and the Corporation alone would be
enti_tlcd to the grant or renewal of the said pefmits tu the exclusion of
all other persons, and that applications from persons other than the
Corporation for the grant of such permit shall not be entertained, ,

In State of Karntaka & Anr, etc. v. Shri Ranganatha Reddy & G
Anr. etc., [1978] 1 SCR 641 this Court upheld the validity of the said
~' Act holding, among other things, that the Act was for acquisition of
property and was in the public interest and for a public purpose. The
Act, according to the Court, had nationalised the contract transport
service in the State and that was also for a public purpose as declared
in the Act. It was also observed that if Articles 38 and 39 are to be given H
634 SUPREME COURT REPORTS [1990] 1 S.C.R.

effect to, then the State has progressively to assume the predominant
A and direct responsibility for setting up new industrial undertakings
which would also include development of transport facilities. The
State has also to become agency for planned national development,
and the socialistic pattern of society as the national objective required
that public utility services should be in the public sector. The acquisi-
B tion of road transport undertaking by the State, therefore, undoubte-
dly served the public purpose. -t

-
4. It is thus clear from the provisions of the Karnataka Act that
the whole object of the Act is to nationalise the contract carriage
service in the State with a view to put an end to the abuse of the
contract carriage services by the private operators and to provide bet-
C ter transport facilities to the public, and also to prevent concentration
of the wealth in the hands of the few and to utilise the resources of the
country to subserve the interests of all. To secure the objective of the
·Act, it was also necessary to prohibit the grant of the contract carriage
permits to private individuals and to reserve them exclusively to the
D State Undertaking which was done by Sections 14 and 20 of the Act.
Unlike the MV Act 1988, which is admittedly enacted by the Parlia-
ment under Entry 35 of the Concurrent List, to regulate the operation
of the motor vehicles, the object of the Karnataka Act is not only the
regulation of the operation of the motor vehicles. Nor is its object
merely to prevent the private owners from operating their vehicles
E with the exclusive privilege of such operation being reserved in favour
of the State or the State Undertaking. For if that were the only object,
the same could have been achieved by the Transport Undertakings of
the State following the special provisions relating to State Transport
Undertakings in Chapter IV-A of the Motor Vehicles Act, 1939 which
was in operation when the Karnataka Act was brought into force. The f-
F very fact that instead, the State undertook the exercise of enacting the
Karnataka Act shows that the object of the State Legislature in enact-
ing it was materially different. This is also obvious from the various
provisions of the enactment pointed out above.

5. It is for this reason that the contention advanced by the
petitioners that the object of the Karnataka Act and that of the MV
G
Act, 1988 is the same and that both of them occupy the same field,
cannot be accepted. A comparison of the provisions of the MV Act,
1939 (Old Act) and MV Act, 1988 (New Act) further shows that the
latter has merely replaced the former. All that it has done is to update,
simplify and rationalize the law on the subject. For this·purpose it has
H made important provisions in the following matters, namely:
V.K. SHARMA v. STATE OF KARNATAKA {SAWANT, J.] 635

"(a) rationalisation of certain difinitions with additions of
A
certain new difinitions of new types of vehicles;

(b) Stricter procedures relating to grant of driving licences
and the period of validity thereof;

··~ (c) laying down of standards for the components and parts B
of motor vehicles;

(d) standards for anti-pollution control devices;

(e) provision for issuing fitness certificates or vehicles also
by the authorised testing stations;
c
(f) enabling provision for updating the system of registra-
tion marks;

(g) liberalised schemes for grant of stage carriage permits
on non-nationalised routes, all India Tourist permits and D
also national permits for goods carriages;

(h), (i), (j), (k), (1) .......... "

6. The special provisions relating to the State Transport Under-
takings which are contained in Chapter VI of the new Act are pari E
materia with those of Chapter IV-A of the old Act, with only this
difference that whereas under the old Act it was the State Transport
Undertaking which had to prepare a scheme for running and operating
the transport service by it in relation to any area or route or portion
thereof exclusively, under the new Act such a scheme has to be pre-
pared by the State Government itself. There is no difference in the F
legal consequences of the schemes under the two enactments. Both
envisage the operation of the services by the State Transport Under-
taking to the exclusion of the rest, and cancellation of the existing
permits and compensation only for the deprivation of the balance of
the period of the permit. No ·acquisition of the vehicles or the para-
phernalia connected with such vehicles is envisaged as is the case G
under the Karnataka Act.

It is also not correct to say that the new Act, i.e. MV Act 1988
incorporates a special policy of liberalisation for private sector opera-
tions in the transport field. We see no such provision in the Act nor
was any pointed out to us. The provisions with regard to the grant of H
636 SUPREME COURT REPORTS [1990] 1 S.C.R.
. /
permits under both the old and the new Act are the same. In any case y
A th.ere is no provision for liberalisation of the grant of contract carriage •
permits in favour of the private individuals or institutions so as to come
in conflict with the Karnataka Act.

7. ,Thus the Karnataka Act and the MV Act, 1988 deal with two
B different subject matters. As stated earlier the Karnataka Act is enac-
ted by the State Legislature for acquisition of contract carriages under
entry 42 of the Concurrent list read with Article 31 of the Constitution

-
to give effect to the provisions of Articles 39(b) and (c) thereof. The
MV Act 1988 on the other hand is enacted by the Parliament under
entry 35 of the Concurrent list to regulate the operation of the motor
vehicles. The objects and the subject matters of the two enactments
c are materially different. Hence the provisions of Article 254 do not
come into play in the present case and hence there is no question of
repugnancy between the two legislatiqns.

8. Shri Nariman, the learned counsel for the petitioners how-
D ever, contended that the provisions of Section 14 and 20 of the
Karnataka Act were in direct conflict with the provisions of Sections
74 and 80(2) of the MV Act 1988. According to him while the Regional
Transport Authority (RTA) is enjoined by the provisions of Section 74
read with Section 80(2) of the MV Act 1988, ordinarily not to refuse to
grant an application for permit of any kind, the provisions of Section
E 14 and 20 of the Karnataka Act prohibit any person from applying for,
and any officer or authority from entertaining or granting, application
for running any contract carriage in the State. Thus there is a direct
conflict between the two legislations, and since the MY Act 1988 is a
later legislation, operating in the same area, it should be deemed to
have impliedly repealed the provisions of Section 14 and 20 of the
F Karnataka Act, even if the latter Act had received the assent of the
President. This is so because of the proviso to sub-clause (2) of Article
254 of the Constitution.

This contention proceeds on the footing that the two legislations
occupy the same field. As has been pointed out earlier, the objects of
G the two legislations are materially different ..The provisions of Sections
51 and 57 of the old Act further correspond to provisions of Sections 74
and 80 of the new Act. The Karnataka Act had received the assent of
the President inspite of the provisions of Sections 51 anp 57 of the old
Act. The assent of the Presiilent, further as stated by the·respondents,
was taken by way of abundant precaution, although the subject mat-
H ters of the two Acts were different. The provisions of Sections 14 and
V.K. SHARMA v. STATE OF KARNATAKA !SAWANT, J.] 637

20 of the Kamataka Act were incidental and necessary to carry out the
A
main object of the said Act. Without the said provisions, the object of
the said Act would. have been frustrated. In the case of State of
Karnataka & Anr. Etc. v. Ranganatha Reddy & Anr. Etc., (supra)
while repelling the contention that there was a legislation encroach-
ment by the Karnataka Act because it impinged on the subject of
Inter-State Trade & Commerce in the Union List as 1t provided also B
for acquisition of transport carriages running on inter-state routes, this
Court in para 32 of the Judgment has observed as follows:

" ....·. It (the Karnataka Act) is not an Act which deals
with any Inter-State Trade and Commerce. Even assuming
• for the sake of argument that carriage of passengers from
one State to the other is in one sense a part of the Inter-
State Trade and Commerce, the impugned Act is not one
which seeks to legislate in regard to the said topic. Pri-
marily and almost wholly it is an Act to provide for the
acquisition of contract carriages, the Intra-State permits
and the other properties situated in the State of Karnataka. D
In pith and substance it is an Act of that kind. The incidental
encroachment on the topic of inter-state trade and com-
merce, even assuming there is some, cannot invalidate the
Act. The MV Act 1939 was enacted under Entry 20 of List
III of Schedule Seven of the Government of India Act 1935
corresponding to Entry 35 of List III of the · Seventh E
Schedule to the Constitution. The subject being in the Con-
current List and the Act having received the assent of the
President, even the repugnancy, if any between the Act
and the Motor Vehicles Act stands cured and cannot be a
ground to invalidate the Act. Entry 42 of List Ill deals with
acquisition of property. The State has enacted the A~t F
mainly under this entry ...... "
(emphasis supplied)

According to me these observations should put an end to any
controversy on the subject, namely, whether the two Legislations are
enacted under two different entries in the Concurrent List, and G
whether they occupy different areas or not.

I am also unable to appreciate the contention that the provisions
of Sections 14 and 20 of the Kamataka Act are in conflicf with the
provisions of Sections 74 and 80 of the New MV Act 1988. Section 98
of the MV Act 1988 in terms clearly stat.es (as did Section 68B of the H
I
638 SUPREME COURT REPORTS [1990] I S.C.R.

A MV Act 1939) that Chapter VI relating to the special provisions about
the State Transport Undertaking and the rules and orders made there-
under, shall have effect notwithstanding anything inconsistent there-
with contained in Chapter V or in any other law for the time being in
force or in any instrument having effect by virtue of any such law.
Sections 74 and 80 relating to the grant of the contract carriage permit
B and the procedure in applying for the grant of such permits respec-
tively, are in Chapter V. This means that when under Chapter VI, a ·t
scheme is prepared by the State Govt. entrusting the contract carriage
services in relation to any area or route or portion thereof, to a State
Transport Undertaking to the exclusion-complete or partial of other
persons, the provisions of Sections 74 and 80 would have no applica-
tion, and the private transport operators cannot apply for the grant of
C contract carriage permits under Section 80 nor can such permits be
granted by the Transport Authority. In other words, the MV Act 1988
also makes a provision for nationalisation of routes, and envisages a
denial of permits to private operators when routes are so nationalised.
Hence it is not correct to say that there is a conflict between the
o provisions of the two Acts.
9. It was then contended that when there is a repugnancy bet-
ween the legislations under Article 254 of the Constitution, the
doctrine of pith and substance does not apply, and even if some of the
provisions of the impugned State legislation are in conflict with some
E of the provisions of the Central legislation, the conflicting provisions
of the State legislation will be invalid. In support of this contention,
reliance was placed on two decisions one of the Federal Court in the
case of Meghraj & Ors. v. Allahrakhiya & Ors., 29 AIR 1942 FC 27
and the other of the Privy Council reported in AIR 34 1947 PC 722
confirming the former.
F
The Federal Court in the above decision has observed that when
a provincial Act is objected to as contravening not Section 100 but
Section 107(1) the Govt. of India Act 1935 (corresponding to Article
254(1) of the Constitution) the question of the pith and substance of
the impugned Act does not arise. In that case, the validity of the
G Punjab Restitution of Mortgage Lands Act was challenged on the
ground that some of its. provisions were repugnant to certain provi-
sions of the Contract Act and of the Civil Procedure Code. The Court
held that there was no repugnancy between the legislations. But while
holding so, the Court made a one sentence observation as follows: "In
the judgment of the High Court there is some discussion of the ques-
H tion of the "pith and substance" of the Act; but that question does not
V.K. SHARMA v. STATE OF KARNATAKA [SAWANT, J.I 639

arise as objection is taken not under Section 100 of the Constitution A
'""r act but Sec. 107." There is no discussion on the point. The arguments,
if any advanced on the question are neither reproduced nor dealt
with. The observation further was not necessary for the decision in
that case, since as is pointed out above, the Court had held that there
was no repugnancy between the two statutes since they covered two
B
different subject matters. Hence the issue as to whether the impugned
1 Pun jab Restitution of Mortgage Lands Act was valid because the pith
and substance of the Act covered an area different from the one
covered by the Contract Act and the Civil Procedure Code, did not fall
for consideration before the Court. What is more, when the matter
c went in appeal before the Privy Council, the said point was not even
remotely referred to and I find no observation in the judgment either c
confirming, or dissenting from the said observations. This being the
case the said observations cannot be regarded as more than general in
0 •, nature. They are not even an obiter-dicta much less are they the ratio
decidendi of the case Hence the said observations do not have a bind-
ing effect.
D
Even otherwise, I am of the view that not to apply the theory of
pith and substance when the repugnancy between the two statutes is to
2~: be considered under Article 254 of the Constitution, would be illogical
when the same doctrine is applied while considering whether there is
an encroachment by the Union or the State legislature or a subject
exclusively reserved for the other. When the legislative encroachment E
; is under consideration the doctrine of pith and substance comes to the
aid to validate a legislation which would otherwise be invalid for the
4 very want of legislative competence. When the repugnancy between
the two legislations is under consideration, what is in issue is whether

'
the provision of the State enactment though otherwise constitutionally
valid, has lost its validity because the Parliament has made a legislation F
with a conflicting provision on allegedly the same matter. If it is open
to resolve the conflict between two entries in different Lists, viz. the
Union and the State List by examining the dominant purpose and
therefore the pith and substance of the two legislations, there is no
reason why the repugnancy between the provisions of the two legisla-
tions under different entries in the same List, viz. the Concurrent List G
should not be resolved by scrutinizing the same by the same touch-
~ stone. What is to be ascertained in each case is whether the-legislations
are on the same subject matter or not. In both cases the cause of
conflict is the apparent identity of the subject matter. The tests for
resolving it therefore cannot be different.
H
640 SUPREME COURT REPORTS [1990] 1 S.C.R.

A 10. I may in this conaection refer to some of the authorities
relied upon by the parties. In Municipal Council Pa/ai v. T.J. Joseph &
Ors., [1964] 2 SCR 87 this Court had to consider the repugnancy
between the presolution passed by the appellant Municipal Council in
exercise of the powers vested in it under Section 286 and 287 of the
Travancore District Municipalities Act 1941, and the provisions of
B Section 42 of the Travancore-Cochin Motor Vehicles Act 1950 which
came into force on January 5, 1950, providing for the use of a public
bus stand constructed for Stage Carriage buses starting from and
returning to the Municipal limits or passing through its limits.

The respondent operators challenged the resolution of the
C Council by contending that the provisions of Sections 286 and 287 of the
Municipalities Act stood repealed by implication by virtue of the pro-
visions of Section 42 of 1 ravancore-Cochin Motor Vehicles Act,
1950. That Section read as follows:

"Government or any authority authorised in this behalf by
D Government may, in consultation with the local authority
having jurisdiction in the area concerned, determine places
at which motor vehicles may stand either indefinitely or for
a specified period of time, and may determine the places at
which public service vehicles may stop for a longer time
than is necessary for the taking up and setting down of
E passengers."

The High Court accepted the contention of the respondents and
allowed the Writ Petition. In appeal against the said decision, this
Court discussed the law relating to the repugnancy between two legis-
lations by referring to various decided cases foreign as well as Indian.
F The Court pointed out that in Daw v. The Metropolitan Board of
Works, [1862] 142 ER 1104 after stating the general principles of con-
struction, the Court there had said that when the legislation was found
dealing with the same subject matter in two Acts, so far as the later
statute derogates from and is inconsistent with the earlier one, the
legislature must be held to have intended to deal in the later statute
G with the same subject matter which was within the ambit of the earlier
one. This Court further observed that in that case the English Court
was concerned with the statutes which covered more or less the same
subject matter and had the same object to serve. That decision further
had kept open the question whether the powers conferred upon one
authority by an earlier Act, could continue to be exercised by that
H authority after the enactment of a provision in a subsequent law which
V.K. SHARMA v. STATE OF KARNATAKA [SAWANT, J.) 641

conferred wide powers on another authority which would include some A
of the powers conferred by the earlier statute till the new authority
chose to exercise the powers conferred upon it. Referring to the case
of The Great Central Gas Consumers Co. v. ciarke, [1863] 143 ER 331
the Court observed that the foundation of that decision was that the
later statute was a general one whereas the previous one was a special
one and, therefore, the special statute had to give way to the later B
general statute.

Referring to the case of Goodwin v. Phillips, [1908] 7 CLR 16 the
Court observed that the doctrine of implied repeal was well recog-
nised, and that repeal by implication was a comenient form of legisla-
tion and that by using this device, the legislature must be presumed to
intend to achieve a consistent body of law. The Court then went on to
c
say that it is undoubtedly true that the legislature can exercise the
powers of repeal by implication, but it is an equally well-settled princi-
ple of law that there is a presumption against an implied repeal. Upon
the assumption that the legislature enacts Jaws with a complete
knowledge of all existing laws pertaining to the same subject, the D
failure to add a repealing clause· indicates that the intent was not to
repeal existing legislation. This presumption is rebutted if the pro-
visions of the new Act are so inconsistent with the old ones that the
two cannot stand together. Then the Court referred to the following
observations from page 631, para 311 of Crawford on Statutory
Construction: E
;

"There must be what is often called 'such a positive
repugnancy between the two prov;3ions of the old and the
new statutes that they cannot be reconciled and made to
stand together'. In other w9rds they must be absolutely
repugnant or irreconcilable. Otherwise, there can be no F
implied repeal ..... for the intent of the legislature to
repeal the old enactment is utterly lacking."

The Court then referred to the observations made in Crosby v. Patch,
18 Calif. 438 quoted by Crawford "Statutory Construction" p. 633 to
point out the reasons of the rule that an implied repeal will take place G
in the event of clear inconsistency or repugnancy. The said observa-
tions are as follows:

"As laws are presumed to be passed with deliberation, ruid
with full knowledge of all existing ones on the same sub-
ject, it is but reasonable to conclude that the Legislature, in H
642 SUPREME COURT REPORTS [1990] I S.C.R.

A
passing a statute, did not intend to interfere with or abro- I~
gate any former law relating to the same matter, unless the
repugnancy .between the two is irreconcilable. Bowen v.
Lease, 5 Hill 226. It is a rule, says Sedgwick, that a general
statute without negative words will not repeal the particu-
Jar provisions of a former one, unless the two acts are
B irreconcilably inconsistent. 'The reason and philosophy of
the rule', says the author, 'is, that when the mind of the (
legislator has been turned to the details of a subject, and he
has acted upon it, a subsequent statute in general terms~ or
teating the subject in a general mann~r, and not expressly
contradicting the orginal act, shall not be considered as
intended to affect the more particular or positive previous
c provisions, unless it is absolutely necessary to give the lat-
ter act such a construction, in order that its words shaU
have any meaning at all."
~·

The Court then pointed out that for implying a repeal the next thing to
D be considered is whether the two statutes relate to the same subject
matter and have the same purpose. The Court in this connection
quoted the following passage at page 634 from Crawford:

"And, as we have already suggested, it is essential that the
>:---
new statute covers the entire subject matter of the old;
E otherwise there is no indication of the intent of the legislature
to abrogate the old law. Consequently, the later enactment ;
will be construed as a continuation of the old one." ;.,.
(emphasis supplied)

F
These observations are very material for considering the question with
which we are concerned in the present case, namely whether the
doctrine of pith and substance is applicable while examining the
r
repugnancy of the two statutes.

The Court then stated that the third question to be considered
was whether the new statute purports to replace the old one in its
G entirety or only partially, and the Court observed that where replace-
ment of an earlier statute is partial, a question like the one, which the
Court did not choose to answer in Daw's case (supra) would arise for
decision. The Court also stated that it has to be remembered that at
the basis of the doctrine of implied repeal is the presumption that the
legislature which must be deemed to know the existing law did not
H intend to create any confusion in the law by retaining conflicting provi-
V.K. SHARMA v. STATE OF KARNATAKA (SAWANT, J.] 643

sions on the statute book and, therefore, when the court applies this
A
doctrine, it does no more than give effect to the intention of the legis-
lature ascertained by it in the usual way, i.e., by examining the scope
and the object of the two enactments, the earlier and the later.

The Court then referred to its earlier decision in Deep Chand v.
State of U.P. & Ors., [1959] 2 SCR 8 and pointed out that in that case B
the following principles were laid down to ascertain whether there is
repugnancy or not:

.. 1. Whether there is direct conflict between the two provisions;

2. Whether the legislature intended to lay down an exhaustive
code in respect of the subject matter replacing the earlier law; c
3. Whether the two laws occupy the same field.

The Court then referred to Sutherland on Statutory Construction (Vol.
1 3rd Edn. p. 486) on the question of "repeal of special and local D
statutes by general statutes". The paragraph reads as follows:

"The enactment of a general law broad enough in its scope
and application to cover the field of operation of a special
or local statute will generally not repeal a statute which
limits its operation to a particular phase of the subject E
;
covered by the general law, or to a particular locality within
the jurisdictional scope of the general statute. An implied
repeal of prior statutes will be restricted to statutes of the
same general nature since the legislature is presumed to
have known of the existence of prior special or particular
legislation, and to have contemplated only a general treat- F
ment of the subject-matter by the general enactment.
Therefore, where the later general statute does not pro-
pose an irreconcilable conflict, the prior special statute will
be construed as remaining in effect as a qualification of or
exception to the general law."
G
--... The Court, however, hastened to add that there is no rule of law to
prevent repeal of special and local statute by a later general statute and
therefore, where the provisions of the special statute are wholly
repugnant to the general statute, it would be possible to infer that the
special statute was repealed by the general enactment. However, the
Court observed that where it is doubtful whether the special statute H
644 SUPREME COURT REPORTS [1990] I S.C.R.

was intended to be repealed by the general statute, the Court should
A try to give effect to both the enactments as far as possible, since the
general statute applies to all persons and localities within its jurisdic-
tion and scope as distinguished from the special one which in its opera-
tion is confined to a particular locality. Where the repealing effect of a
statute is doubtful, the statute is to be strictly construed to effectuate
B its consistent operation with previous legislation as observed by
Sutherland on Statutory Construction. The Court also approved of the
observations of Suleman J., in Shyamakant Lal v. Rambhajan Singh,
[ 1939] FCR 193 that repugnancy must exist in fact, and not depend
merely on a possibility. After discussing the principles of repugnancy
as above, the Court answered the question that fell for consideration
before it in favour of the Municipal Council by observing as follows:
c
"It seems to us however, clear that bearing in mind
the fact that the provisions of s. 72 of the Travancore
Cochin Motor Vehicles Act were intended to apply to a
much wider area than those of ss. 286 and 287 of the
D Travancore District Municipalities Act it cannot be said
that s. 72 was intended to replace those provisions of the
Travancore Distt. Municipalities Act. The proper way of
construing the two sets of provisions would be to regard
s. 72 of the Travancore-Cochin Motor Vehicles Act as a
provision incontinuity with ss. 286 and 287 of the Travan-
E core District Municipalities Act so that it could be availed
of by the appropriate authority as and when it chose. In
other words the intention of the legislature appears to be to
allow the two sets of provisions to co-exist because both are
enabling ones. Where such is the position, we cannot imply
repeal. The result of this undoubtedly would be that a pro-
F vision which is added subsequently, that is, which repre-
sents the latest will of the legislature will have an overriding
efffect on the earlier provision in the sense that despite the
fact that some action has been taken by the Municipal
Council by resorting to the earlier provision the appro-
priate authority may nevertheless take action under s. 72 of
G the Travancore Cochin Motor Vehicles Act, the result of
which would be to override the action taken by the Munici-
pal Council under s. 287 of the District Municipalities Act.
No action under section 72 has so far been taken by the
Government and, therefore, the resolutions of the Munici-
pal Council still hold good. Upon this view it is not neces-
H sary to consider certain other points raised by learned
counsel.''
V.K. SHARMA v. STATE OF KARNATAKA [SAWANT, J.] 645

It would thus appear from this decision that the Court held there
A
that the allegedly conflicting provisions of Travancore Cochin Motor
Vehicles Act were intended to apply to much wider area than the
relevant provisions of the Dist!. Municipalities Act and, therefore, it
could not be said that the provisions of the Motor Vehicles Act were
intended to replace the provisions of Municipalities Act. The Court
also held that the proper way of construing the two sets of provisions B
would be to regard the conflicting provisions of the Motor Vehicles
Act as provisions in continuity with the relevant provisions of the

-
Municipalities Act so that it could be availed of by the appropriate
authority as and when it chose. The Court, therefore, read into the
relevant provisions, the intention of the legislature to allow the two
sets of provisions to co-exist because both were enabling ones, and in
such circumstances no repeal could be implied. The Court also rested
c
the said decision by relying on the fact that since no action was taken
by the Government under the relevant provisions of the Motor Vehi-
cles Act, till such time as the action was taken under the said provi-
sions, the Municipal Council could act under the provisions of the
Municipalities Act. D

What is important from our point of view, is the view taken in
that case that when repugnancy is alleged between the two statutes, it
is necessary to examine whether the two laws occupy the same field,
whether the new or the later statute covers the entire subject matter of
the old, whether legislature intended to lay down an exhaustive code E
in respect of the subject matter covered by the earlier law so as to
replace it in its entirety and whether the earlier special statute can be
construed as remaining in effect as a qualification of or exception to
the later general law, since the new statute is enacted knowing fully
well the existence of the earlier law and yet it has not repealed it

'""'
I
expressly. The decision further lays down that for examining whether F
the two statutes cover the same subject matter, what is necessary to
examine is the scope and the object of the two enactments, and that
has to be done by ascertaining the intention in the usual way and what
is meant by the usual way is nothing more or less than the ascertain-
ment of the dominant object of the two legislations.
G
In Ratan Lal Adukia v. Union of India, [1989] 3 SCR 537 the
conflict was between the provisions of Section 80 of the Railways Act
1890 as amended by the Railways (Amendment) Act 1961 on the one
hand and the provisions of Section 20 of the Code of Civil Procedure,
1908 and section 18 of the Presidency Small Causes Courts Act 1882,
on the other. Section 80. of the Railways Act before its amendment had H
646 SUPREME COURT REPORTS [ 1990) 1 S.C.R.

A provided that a suit for compensation for loss of life or in jury to a y'
passenger or for loss, destruction and deterioration of animals or
goods, would lie where the passengers or the animals or goods were
booked through over the Railways of two or more Railway Administ-
rations, against the Railway Administration from which the passengers
and the goods were booked or against the Railway Administration on
B whose railway the loss injury, destruction or deterioration occurred.
By the amendment of 1961, the aforesaid provisions of Section 80 were
changed and such a suit was made maintainable-( a) if the passenger

-
or the animals or goods were booked from one station to another on
the railway of the same Railway Administration, against that Railway
Administration. (b) if they were booked through over the railway of
two or more Railway Administrations, against the Railway Administ-
C ration from which they were booked or against the Railway Administ-
ration on whose railway the destination station lay or the loss etc.
occurred. It was further provided that in either of these two cases the
suit may be instituted in a court having jurisdiction over the place at
which the passenger or the goods were booked or the place of destina-
D tion or over the place in which the destination station lies or the loss
etc. occurred. Thus the changes brought about by the amendment
were significant. The old section did not deal with the liability of
claims in respect of goods etc. carried by single railway. It only con-
cerned itself with them when they were carried by more than one
railway and provided that the suit for loss of such goods could be
E brought against either the Railway Administration with which the
booking was made or against the Railway Administration of the deli-
very station. The old section further did not speak of the places where
such suits could be laid. The choice of the forum was regulated by
section 20 of the Code of Civil Procedure or section 18 of the Presi-
dency Small Causes Courts, as the case may be. The amendment of the
F section however, made a departure in this respect, namely, it also
named the place where such suits could be instituted and it is with this
change the decision in question was concerned. Confirming the High
Court's view, the Court held that the new Section 80 prevailed over the
provisions of Section 20 of the Code of Civil Procedure and of Section
18 of the Presidency Small Causes Courts Act. The Court took the
G view that in view of the fact that the provisions of the new Section 80 as
well as the relevant provisions of the Code of Civil Procedure and the
Presidency Small Causes Courts Act dealt with the same subject
matter, namely, the forum for suits, and since the new Section 80 was a
special provision relating to special suits against the Railway Administ-
ration the special provisions would prevail over the general provisions.
H The Court also stated that Section 80, looking into its earlier history
V.K. SHARMA v. STATE OF KARNATAKA [SAWANT, J.) 647

and the other changes which were brought in it; was a code in itself A
dealing with the relevant subject matter, and therefore, it repealed the
provisions of Section 20 of the Code of Civil Procedure and of Section
18 of the Presidency Small Causes Courts Act by necessary implica-
tion. The Court also held that since the provisions of the latter two
general statutes related to territorial jurisdiction of courts and since
the amendment to Section 80 also dealt with the same subject, but in B
case of only suits for compensation against the Railway, Section 80
being the special statute should be deemed to have supplanted the

-
general statutes like the Code of Civil Procedure and general provi-
sions of section 20 of the Code and Section 18 of the Presidency of
Small Causes Courts Act.

'It will thus be apparent that in that case the provisions which
c
·v were in conflict related to the same subject matter unlike in our case.
' The provisions with regard to application and grant of permits in Sec-
tions 14 and 20 have nothing in common with the provisions of Sec-
tions 74 and 80 of the Motor Vehicles Act 1988. The former provisions
are ancillary to giving effect to the acquisition and nationalisation of D
the road transport within local territorial limits. The later provisions
are general in nature and in furtherence of the object of the Act which
~ is to regulate transport. The subject matters of both the statutes and
the object of the two sets of provisions are, therefore, materially diffe-
rent. In our case both the statutes can stand together. The legislative
intent is clear. Since, further, the Parliament had enacted the later E
statute knowing fully well the existence of the earlier statute and yet it
-4; did not expressly repeal it, it will be presumed that the Parliament felt
that there was no need to repeal the said statute.

'') In Ch. Tika Ramji & Ors. etc. v. State of U.P. & Ors., [1956]
SCR 393 what fell for consideration was the alleged repugnancy bet- F
ween the U.P. Sugarcane (Regulation of Supply and Purchase) Act
1953 and two Notifications issued by the State Government under it on
September 27, 1954 and November 9, 1955 on the one hand, and
Industries (Development & Regulation) Act 1951 and the fasential
Commodities Act 1955 and the Sugar Cane Control Order 1955 issued
under it on the other. The Court has stated there that no question of G
--\ repugnancy under Article 254 of the Constitution can arise where
. Parliamentary legislation and State legislation occupy different fields
and deal with separate and distinct matters even though of a cognate
and allied nature, and whereas in that case there was no inconsistency
in the actual terms of the Act enacted by Parliament and the State
Legislature, the test of repugnancy would be whether Parliamentary H
I

648 SUPREME COURT REPORTS I 1990] I S.C.R.
and the State Legislature in legislating under an Entry in the Concur- [ -
A rent List exercised their powers over the same subject matter or
whether the laws enacted by Parliament were intended to be exhaus-
tive so as to cover the entire field.

The Court then referred to three tests of inconsistency or
B repugnancy listed by Nicholas on p. 303 2nd Edn. of his Australian
Constitution, namely, (1) there may be inconsistency in the actual
terms of the competing statutes, (2) though there may be no direct

C
conflict, a State law may be inoperative because the Common Wealth
Law, or the Award of Common Wealth Court is intended to be a
complete exhaustive code, (3) even in the absence of intention, the
conflict may arise when both State and Common Wealth Law seek to
exercise their powers over the same subject matter. The Court also
-
quoted with approval, observations of the Calcutta High Court in G.P.
Stewart v. B.K. Roy Choudhary, AIR 1939 Cal. 628 on the subject
which are as follows:

D "It is sometimes said that two laws cannot be said to
be properly repugnant unless there is a direct conflict bet-
ween them, as when one says "do" and the other "don't",
there is no true repugnancy according to this view, if it is
possible to obey both the laws. For reasons which we shall
set forth presently, we think that this is too narrow a test:
E there may well be cases of repugnancy where both laws say
"don't" but in different ways. For example, one law may
say, "No person shall sell liquor by retail, that is, in
quantities of less than five gallons at a time" and another
law may say, "No person shall sell liquor by retail, that is,
in quantities of less than ten gallons at a time". Here, it is
F obviously possible to obey both laws, by obeying the more
stringent of the two namely the second one; yet it is equally
obvious that the two laws are repugnant, for to the extent
to which a citizen is compelled to obey one of them, the
other, though not actually disobeyed, is nullified".

G "The principle deducible from the English cases, as
from the Canadian cases, seems therefore to be the same as
that enunciated by Issacs, J:in the Australian 44hours case
(37 CLR 466) if the dominant law has expressly or
impliedly evinced its intention to cover the whole field,
then a subordinate law in the same field is repugnant and
H therefore inoperative. Whether and to what extent in a
I

V.K. SHARMA v. STATE OF KARNATAKA [SAWANT, J.! 649

given case, the dominant law evinces such an intention
A
must necessarily depend on the language of the particular
law".

The Court also approved the observations of Sulaiman, J. in Shyama-
kant Lal v. Rambhajan Singh, (supra) on the subject which are as
follows: B

"When the question is whether a Provincial legisla-

- tion is repugnant to an existing Indian law, the onus of
showing its repugnancy and the extent to which it is
repugnant should be on the party attacking its validity.
There ought to be a presumption in favour of its validity,
and every effort should be made to reconcile them and c
construe both so as to avoid their being repugnant to each
other; and care should be taken to see whether the two do
not really operate in different fields without encroachment.
Further, repugnancy must exist in fact, and not depend
merely on a possibility. Their Lordships can discover no D
adequate grounds for holding that there exists repugnancy
between the two laws in districts of the Province of Ontario
where the prohibitions of the Canadian Act are not and
may never be in force: (Attorney-General for Ontario v.

- Attorney-General for the Dominion, [1896] AC 348).

11. Referring to the case in hand, the Court then state_d that
there was no question of any inconsistency in the actual terms of the
two Acts. The only questions that arose there were whether the Parlia-
E

ment and the State Legislature sought to exercise their powers over
the same subject matter or whether the laws enacted by Parliament
were intended to be a complete exhaustive code, or in other wmds, F
expressly or impliedly evinced an intention to cover the whole field.
The Court then compared the provisions of Industries (Development
and Regulation) Act, 1951 as amended by Act XXVI of 1953, the
Essential Commodities Act X of 1955 and the Sugar Control order
1955 issued thereunder with the U.P. Act and Order of 1954 issued by
the State Government thereunder. By comparing the impugned State G
Act with the Centrat Act of 1951 as amended by the Act, 1953", the
Court held that the Central Act related to sugar as a finished product
while the State legislation covered the field· of sugar cane. Thus the
fields. of operation of the two legislations, were different and hence
there was no repugnancy between the Centrat Act and the State· Act. It
was also further pointed out there that even assuming that sugar cane H
I·

650 SUPREME COURT REPORTS [ 1990] I S.C.R.

A was an article or class of articles relatable to the.sugar industry within y
the meaning of Section 18(g) of the Central Act, no order was issued
by the Central Government in exercise of the powers vested in it under
that Section, and hence no question of repugnancy could ever arise
·because repugnancy must exist in fact and not depend merely on a
possibility. The possibility of an Order under Section 18(g) being
B issued by the Central Government would not be en·ough. The exist-
ence of such an Order would be the essential pre-requisite before any
t
repugnancy could ever arise.

12. As far as the Essential Commodities Act, 1955 was con-
cerned, the Court pointed out that the Parliament was well within its
C powers in legislating in regard to sugar cane, and the Central Govern-
ment was also well within its powers in issuing the Sugar Cane Control
-
Order, 1955 because all that was in exercise of the concurrent powers
of legislation under Entry 33 of List III. That, however, did not affect
the legislative competence of the U .P. State Legislature to enact the
law in regard to sugar cane and the only question which had to be
D considered was whether there was any repugnancy between the provi-
sions of the Essential Commodities Act and the State legislation in that
behalf. The Court then pointed out that the State Government did not
at all .provide for the fixation of minimum price for sugar cane. Neither
had it provided for the regulation of movement of sugar cane as was
done by the Central Government in Clauses (3) and (4) of the Sugar
E Cane Control Order 1955. Likewise, the provision contained in Sec-
tion 17 of the State Act in regard to the payment of sugar cane price (as
fixed by the Central Govt.) and the recovery thereof as if it was an
arrear of land revenue, did not find its place in the Central Govern-
-
~·

ment Sugar Cane Control Order 1955. The provisions in the two legis-
lations were., therefore, mutually exclusive and did not impinge upon
F ·each Q_ther. By referring to the provisions of Central Government' Sugar
Cane Control Order 1955 and the U.P. Govt. Sugar Cane (Regulation
and Purchase) Order 1954 issued under the respective statutes, the
Court pointed out that none of those provisions also overlapped. The
Centre was silent with regard to some of the provisions which had been
enacted by the State and the State was silent with regard to some of the
G provisions which had been enacted by the Centre. There was no
repugnancy whatever between those provisions, and neither the State
Act nor the rules framed thereunder as well as the State Government's
Order issued under it, trenched upon the field covered by the Essential
Commodities Act . The Court therefore held that since there was no
repugnancy between the two, the provisions of Article 254(2) of the
_Ii Constitution did not come into play. The Court then considered
V.K. SHARMA v. STATE OF KARNATAKA [SAWANT, J.] 651

·-y· and
whether the repealing Section 16 of the Essential Commodities Act
clause 7 of the Sugar Cane Control Order 1955 had repealed the
A
I
State Act to the extent mentioned therein. Section 16(1)(b) provides
as follows:

"16( 1) The following laws are hereby repealed-
B
(a) x x x x

-
(b) any other law in force in any State immediately before
the commencement of this Act in so far as such law controls
or authorises the control of the production, supply and
distribution of, and trade and commerce in, any essential
commodity''. c
The contention was that the expression "any other law" covered the
impugned State Act which was in force in the State immediately before
the commencement of the Essential Commodities Act in so far as it
controlled or authorised the control of production, supply and dis- D
tribution of and trade and commerce in sugar cane (which was), an
essential commodity under the Central Act and Clause (7) of the Sugar
Cane Control Order. The contention advanced on behalf of the U .P.
State was that under the proviso to Article 254(2), the power to repeal
a law passed by the State Legislature was incidental to enacting a law
relating to the same matter as is dealt with in the State legislation and E
that a statute which merely repeals a law passed by the State Legisla-
ture without enacting substantive provisions on the subject would not
be within the proviso, as it could not have been the intention of the
Constitution that on a topic within the concurrent sphere of the legisla-
tion, there should be a vaccum. The Court observed that there was
considerable force in the said contention and there was much to be said F
for the view that a repeal simpliciter was not within the scope of
the proviso. The Court however, stated that it was not necessary to
give its decision on the said point as the petitioner in that case would
fail on another ground. The Court then observed that while the pro-
viso to Article 254(2) does confer on Parliament a power to repeal a
law passed by the State Legislature, that power is, under the terrns of G
the proviso, subject to certain limitations. It is limited to enacting a
•law with respect to the same matter adding to, amending, varying or
repealing a "law so made by the State Legislature". The law referred
. to here is the law mentioned in the body of Article 254(2). It is a law
made by the State Legislature with reference to a matter in the Con-
current List containing provisions repugnant to an earlier law made by H
652 SUPREME COURT REPORTS I 1990) l S.C.R.

A Parliament and with the consent of the President. It is only such a law ·y
_t_hat could be altered, amended or repealed under the proviso. The )
impugned Act was not a law relating to any matter, which is the subject
of an earlier legislation by Parliament. It was a substantive law coveting
a field not occupied by Parliament, and no question of its C').ntaining
B any provisions inconsistent with a law enacted by Parliament could
therefore arise. To such a _law, the proviso had no application and f
Section 16(1)(b) of Act X of 1955 and clause 7(1) of the Sugar Cane
Control.Order 1955 must, in this view, be held to be invalid. (Sic).

13. The aforesaid review of the authorities makes it clear that
whenever repugnancy between the State and Central Legislation is
C alleged, what has to be first examined is whether the two legislations
cover or relate to the same subject matter. Thje test for determining
the same is the usual one, namely, to find out the dominant intention
of the two legislations. If the dominant intention, i.e. the pith and
substance of the two legislations is different, they cover different sub-
ject matters. If the subject matters covered by the legislations are thus
D different, then merely because the two legislations refer to some allied
or cognate subjects they do not cover the same field. The legislation,
to be on the same subject matter must further cover the entire field
covered by the other. A provision in one legislation to give effect to its
dominant purpose may incidentally be on the same subject as covered
by the provision of the other legislation. But such partial coverage of
E the same area in a different context and to achieve a different purpose
does not bring about the repugnancy which is intended to be covered
by Article 254(2). Both the legislations must be substantially on the
same subject to attract the Article.

14. In this view of the matter I am of the view that there is no
F repugnancy in the provisions of Sections 14 and 20 of the Karnataka
Act and Sections 74 and 80 of the MV Act 1988. The petitions must
therefore fail and are hereby dismissed with costs.

ORDER
G 15. In view of the decision of the majority the Writ Petitions
stand dismissed and the rule in each is discharged with costs.

K. RAMASWAMY, J. 1. Despite my deep respect to my
learned brother, I express my inability to persuade myself to agree
H with the result proposed in th_e draft judgments of my brothers.
V.K. SHARMA v. STATE OF KARNATAKA [K. RAMASWAMY, J.]653

y · The notoriety of open and uninhibited misuse of contract car- A
riage as stage carriages in picking up and setting down ~he passengers·
1
en route the route for hire or reward sabotaging the ec.onomic, effi-
cient and co-ordinated transport service by the respective State Trans-
port Undertakings (for short, "the S.T.U.") had been taken cogni-
zance of by the Karnataka State Legislature. It provided the remedy
making the Karnataka Contract Carriages (Acquisition) Act (21 of B
1976), for short, "the Acquisition Act" by taking aid of the Entry 42,
List III (Concurrent List) of the Seventh Schedule to the Constitution
and Articles 31, 39(b) and (c) of the Constitution. It was reserved for
consideration and has received the assent of the President on March
11, 1976. It came into force with effect from March 12, 1976. Section
3(g) of the Acquisition Act defines "Contract Carriage" as one
covered under s. 2(4) of the Motor Vehicles Act (4 of 1939), for short,
c
1 "the Repealed Act" including public service vehicle defined under
~~, s. 63(6), etc. s. 3(a) defines "acquired property"-means the vehicles
and other immovable and movable property vesting in the State
Government under s. 4 thereof. The Acquisition Act excluded tourist
vehicles, motor cabs, etc. Section 4 de!Cares that on and from the D
notified date, every contract carriage along with permit or certificate
of registration or both, lands, buildings, workshop, etc. shall stand
,· ~·:;,;· vested in the State Government free from encumbrances. Section 6
provides machinery to determine the amount for the vesting of the
acquired property under s. 4. Section 14 which is relevant for the
purpose of this case read thus: E
.:
"Fresh permit or renewal of the existing permit barred-
Except as otherwise provided in this Act-

( 1) No person shall on or after the commencement of this Act
apply for any permit or fresh permit or for renewal of an .p
existing permit for the running of any contract carriage in
the State; and

(2) every application for the grant of a permit or fresh
permit or for the renewal of the existing permit and all
appeals or revisions arising therefrom relating thereto G
made or preferred before the commencement of this Act
and pending in any Court or with any Officer, Authority or
Tribunal constituted under the Motor yehicles Act shall
abate."

A reading thereof manifests its unequivocal declaration that on and H
654 SUPREME COURT REPORTS [ 1990] 1 S.C.R.

from the date of vesting viz., March 12, 1976, the statute prohibits any '--""-
A person to apply for, any fresh permit or renewal of an existing permit r
to run any contract carriage in that State and all applications,· appeals
or revisions pending before the appropriate authority as on the
notified date, statutorily declared to have been abated. Section 20
declares by employing non-obstenti clause in sub-s. ( 1) that notwith-
B standing anything in the repealed Act with effect from March 12, 1976
all contract carriage permits granted or renewed in respect of any
vehicle other than a vehicle acquired under the Acquisition Act, or
i
belonging to the S.T.U., Kamataka; or referred to ins. 24 thereof t
shall stand cancelled. Sub-s. (2) accords with mandatory language
that the S. T. U. "shall be entitled for or renewal of contract carriage
permits to the exclusion of all other persons" and sub-s. (3) prohibits
C by employing a negative language that "no officer or authority shall
invite any application or entertain any such application of persons \
other than the Corporation (S.T.U.) for grant of pei;mit or the running ~
of the contract carriage." By conjoint operation of ss. 14 and 20, the
right of any person other than S.T.U., Karnataka to apply for and to
D obtain any permit or renewal of an existing permit to run a motor
vehicle as a contract carriage has been frozen and issued statutory
injunction restraining the authority concerned from either inviting or .,_
entertaining any application from him for the grant or renewal of ')("' ',
contract carriage permit. Monopoly to obtain permit or renewal to run
contract carriage was conferred on S.T.U., Karnataka. The constitu-
E tional validity of the Acquisition Act was upheld by this Court in State
of Karnataka v. Ranganatha Reddy, [1978] 1SCR641. The contention
that the Acquisition Act falls under Entry 42 of List I of Seventh
Schedule to the Constitution, viz., inter-state trade and commerce and
that therefore the State Legislature lacked competence to make the
Acquisition Act was negatived. It was held that in pith and substance, ._,;'" ~
F it is an act of acquisition of the contract carriages falling in Entry 42 of (
List III. It was further held that the effect of operation of ss. 14 and 20
is incidental or ancillary to the acquisition. Having received the assent
of the President, it is saved by Art. 254(2) of the Constitution. When
an attempt to obtain renewal or fresh special permits to run contract
carriages taking aid of s. 62(1) ors. 63(6) respectively of the repealed
G Act 4 of 1939 was made on the ground that the Acquisition Act had
saved their operation, this Court in Secretary, R. T.A., Bangalore v.
P .. D. Sharma, AIR 1989 SC 509 held that by operation of ss. 14 and
>-
20(3), a public sei"ice vehicle be it a contract carriage or stage carriage
for which temporary permits under ss. 62(1) and 63(6) were issued and
were in force on January 30, 1976 are not entitled to fresh permits and
H exclusive monopoly to run contract carriages was given to S.T.U.,
Karnataka.
V.K. SHARMA v. STATE OF KARNATAKA {K. RAMASWAMY, J.]655

~/ 2. The Motor Vehicles Act, 1988 (Act 59. of 1988), for short, A
"the Act", came into force wiih effect from July 1, 1989. Section 2(7)
defines 'contract carriage'. Section 2(8) defines 'motor vehicle' or
'vehicle' to mean any mechanically propelled vehicle adapted for use
upon road whether the power of propulsion is transmitted thereto

., from an external or internal source and includes a chasis to which a
body has not been attached and a trailer ..... Section 2(34) defines
'public place' to mean, a road, street, way or other place whether a
B

thoroughfare or not, to which the public have a right of access and
includes any place or stand at which passengers are picked up or set
down by a stage carriage. Section 2(35) defines 'public service vehicle'
to mean, any motor vehicle used or adapted to be used for the carriage
of passengers for hire or reward, and includes a .... ., contract car-
riage and stage carriage. Section 2(47) defines 'transport vehicle' to
c
mean, a public service vehicle ..... , or a private service vehicle.
~ Chapter V deals with Control of Transport Vehicles, s. 66 mandates an '
owner of a motor vehicle to obtain permit to run it in accordance with
the conditions of a permit thus:
D
"(1) No owner of a motor vehicle shall use or permit the
use of the vehicle as a transport vehicle in any public place
~
whether or not such vehicle is actually carrying any passen-
gers or goods save in accordance with the conditions of a
permit granted or countersigned by a Regional Transport
Authority or any prescribed authority authorising him the E
use of the vehicle in that place in the manner in which the
vehicle is being used."
(Emphasis supplied)

(The provisos are not necessary for the purpose of this
~ case. Hence omitted) F

Section 73 requires him to make an application for permit of a contract
carriage with particulars specified therein. Section 74 deals with grant
of contract carriage permit. Sub-s. (1) thereof provides that "subject
to provisions of sub-s. (3), a Regional Transport Authority may, on an
application made to it under s. 73, grant a contract carriage permit in G
accordance with the application or with such modifications as it deems
... fit or refuse to grant such a permit, provided that no such permit shall
be granted in respect of any area not specified in the application."
Sub-s. (2) empowers the Regional Transport Authority to impose any
one or more conditions enumerated therein to be attached to the per-
mit, the details therof are redundant. Sub-s. (3) empowers a State H
656 SUPREME COURT REPORTS [1990] l S.C.R.

A Government, when directed by the Central Government, to limit the
number of contract carriages generally or a specified type as may be
fixed in the notification published in this behalf for their operation on
the city routes. The details are also not necessary for the purpose of
this case. Under s. 80( 1), an application for a permit of any kind may
be made at any time. Sub-s. (2) posits that "a Regional Transport
B Authority shall not ordinarily refuse to grant an application for permit
of any kind made at any time under this Act." (Emphasis Supplied).
The proviso are omitted as not being relevant. The petitioners have
applied under ss. 73, 74 and 80 of the Act for grant of contract carriage
permits. Placing reliance on ss. 14 and 20 of the Acquisition Act, the
concerned authorities have refused to entertain their applications. Cal-
c ling them in question the above writ petitions have been filed under
Art. 32 of the Constitution.

3. The contention of Sri Nariman, learned senior counsel for the
petitioners, is that the object of the Act is to liberalise grant of contract
carriages which do not ply on any particular routes. Contract carriage
D defined under s. 2(7) of the Act is a public service vehicle within the
meaning of s. 2(35) of the Act. Section 66 obligates the owner to
obtain permits to run contract carriages. Section 14(1) read with s.
80(1) accords the right to the petitioners to apply for, and enjoins the
authorities under s. 80(2) to consider and to grant permits to run
public service vehicles as contract carriages. Section 217(1) repealed
~ all the laws, save such of the laws which are not inconsistent with the
provisions of the Act. The operation of ss. 14 and 20 of the Acquisition
Act is inconsistent with ss. 74 and 80 of the Act. Grant of permit to run
contract carriage is covered by Entry 35 of List III of the Seventh
Schedule. Though, the Acquisition Act was made under Entry 42 of
List III and has received the assent of the President, by operation of
F s. 74 read with s. 80 and s. 217, the operation of ss. 14 and 20 became f'
void under proviso to Art. 254(2). Sections 14 and 20 also stood
repealed by implication. The authorities are, hereby, enjoined to con-
sider the petitioners' applications for grant of contract carriage permits
as per the provisions of the Act and the relevant rules. Mr. Sanghi,
learned senior counsel for the S.T.U., Karnataka, contended that the
G Acquisition Act was made in exercise of the power under Entry 42 of
List III of Seventh Schedule to the Constitution. Its constitutional
validity was upheld by this Court. It does not occupy the same field as
under the Act. The Acquisition Act, having been reserved for con-
sideration under Art. 254(2) and has received the assent of the Presi-
dent, it prevails over the Act in the State of Karnataka. The Acquisi-
H tion Act is a "special law" in juxtaposition to the general law under the
V.K. SHARMA v. STATE OF KARNATAKA [K. RAMASWAMY, J.)657

Act. The argument of Mr. Sanghi, though apparently at first blush is
A
alluring and.attractive, but on a deeper probe, I find insurmouqtable
difficulties in his way to give acceptance to them. The main questions
are whether ss. 14 and 20 of the Acquisition Act and ss. 73, 74 and 80
of the Act is "in respect of the same matter" and whether the Act
evinces its intention to occupy the same field.
B
4. At the cost of repetition, it may be stated that ss. 49 to 51 and
the relevant rules under the Repealed Act govern the grant of contract
carriage permits and in particular the rigour imposed ins. 50 thereof is

- absent in the Act. The Acquisition Act aimed to acquire the contract
carriages. They stood vested in the State Government under s. 4.
Incidental and ancillary thereto, the operation of the existing permits
or seeking renewal thereof and the pendency of the proceedings in that
regard either by way of an application or in appeal or in revision,
c
having statutorily been declared under s. 14(2) to have been abated,
the right to obtain permits or special permits afresh or renewal thereof
to run contract carriages or stage carriages after expiry of the term, has
been frozen to all citizens. Exclusive monopoly to obtain permits or of
the renewal to run them has been given to the S.T.U., Karnataka. On D
and from March 12, 1976, s. 20(3) prohibits the authorities concerned to
invite or entertain an application or to grant or renew the permits to a
contract carriage or special permit, except to the S.T.U., Karnataka.
The non-obstenti clause makes clear any cloud of doubts of the
applicability of the repealed Act 4 of 1939. After the receipt of the
assent of the President, though it is inconsistent with the Repealed E
Act, its operation is saved by Art. 254(2) of the Constitution. Sections
73 and 74 read with s. 80 of the Act gives to an applicant the right to
apply for and to obtain, and obligates the Regional Transport Autho-
rity to grant permit to run any public service vehicle as contract car-
riage throughout the country including the State of Karnataka.
Though, s. 80(1) gives discretionary power to grant permit but sub-s. F
(2) of s. 80 manifests that refusal to grant contract carriage permits
appears to be an exception for stated grounds and obviously for
reasons to be recorded.
4A. Constitutionalism is the alter to test on its anvil the constitutiona-
lity of a statute and Art. 254 is the sole fountain source concerning a G
State law in the Concurrent List. Article 254(1) deals with inconsis-
. tency of law made by Parliament and the law made by the Legislature
of a State. Clause (1) adumbrates that the existing law, if it is
repugnant with the law made by the Parliament, subject to the provi-
sions of cl. (2), the law made by the Parliament whether passed before
or after the law made by the Legislature of such state, or, as the case H
658 SUPREME COURT REPORTS [1990] i S-.C.R.
may be, the existing law shall prevail and the law made by the Legisla-
A ture of the State shall, to the extent of repugnancy, be void. Clause (2)
deals with the law made by the Legislature of a State with respect to
y
'
one of the matters enumerated in the Concurrent List contains any
provision repugnant to the provisions of an earlier law made by the
Parliament or an existing one "with respect to that matter", then the law
so made by the Legislature of such State shall, if it has been reserved
B for the consideration of the President and has received his assent,
prevails in that State; provided that nothing in this clause shall prevent
Parliament from enacting "at any time any law with respect to the same

-
matter'', including a law adding to, amending, varying or repealing the
law so made by the Legislature of the State.
(Emphasis supplied)
c 5. In a federal system like ours, there are two streams of law,
viz., Union and State. At times, the citizen subjected to both of laws
Central and State will find inconsistency between the obligations
imposed on him by those laws or finds variance to avail both laws. In
fact, both the Union and State Legislatures are competent to make
O laws on a subject enumerated in the Concurrent List. We are not
concerned in this case with regard to Union List or State List. it is
quite possible that while legislating upon the subject, they might end
up in handing down inconsistent law and the observance of one law
may result is non-observance of the other. The citizen will, in such a
situation, be at a loss to decide which of the two laws he should follow.
E To resolve the inconsistency, in other words, to bring about opera-
tional uniformity Constitution presses into Service Art. 254. Its
forerunner is s. 107 of the Government of India Act, 1935. Both the
Parliament and a State Legislature derive their power only under Art.
254 and Art. 246(2) to legislate concurrently on the subjects
enumerated in the Concurrent List. The enumeration of the subjects in
F the Concurrent List is only for demarcation of legislative heads or
distribution of the subject/subjects over which the Parliament and the
State Legislature have competence to make law. However, para-
mouncy has been accorded to the Union Law, making provision in
Art. 254 firstly as to what would happen in case of repugnancy
.
between the Central and the State law in the concurrent field and
G secondly resolving such a conflict. The reason is .that there are certain
matters which cannot be allocated exclusively either to the Parliament ·)......
or to a State Legislature and for which, though often it is desirable that
the State Legislature should make a provision in that regard. Local
conditions necessarily vary from State to State and the State Legisla-
ture ought to have the power to adopt general legislation to meet the
H particular circumstances of a State. It is equally necessary that the
V.K. SHARMA v. STATE OF KARNATAKA [K. RAMASWAMY, J.]659

Parliament should also have plenary jurisdiction to enable it in some
A
cases to secure uniformity in the main principles of law throughout the
country or in other matters to guide and encourage the States' efforts
and to provide remedies for mischiefs arising in the State sphere
extending or liable to extent beyond the boundaries of a single State.
The subjects like the Indian Penal Code, Civil Pro~edure Code, Crimi-
nal Procedure Code, Labour Laws, the Motor Vehicles Act, etc. B
occupy this area. The essential condition for the application of Art.
254( 1) is that the existing law or a law made by the Parliament subse-
quent to State law, must be with respect to one of the matters
enumerated in the Concurrent List. In other words, unless it is shown
that the repugnancy is between the provisions of a State law and an
existing or subsequent law or amended law etc. of the Parliament in
respect of the same specified matter, Art. 254 would be inapplicable. c

6. The Court has to examine in each case whether both the
legislations or the relevant provisions therein occupy the same field
with respect to one of the matters enumerated in the Concurrent List
and whether there exists repugnance between the two laws. The D
emphasis laid by Art. 254 is "with respect to that matter". Clause ( l)
of Art. 254 posits-as a rule that in case of repugnancy or inconsistency
between the State law and the Union law relating to the same matter in
the Concurrent List occupying the same field, the Union law shall
prevail and the State law will fail to the extent of the repugnancy or
inconsistency whether the Union law is prior or later in point of time to E
the State law. To this general rule, an exception has been engrafted in
cl. (2) thereof, viz., provided the State law is reserved for considera-
tion of the President and it bas received his assent, and then it will
prevail in that State notwithstanding its repugnancy or inconsistency
with the Union law. This exception again is to be read subject to the
proviso to cl. (2) thereof, which empowers the Parliament to make law F
afresh or repeal or amend, modify or vary the repugnant State law
which will become void even though it received President's assent. In
short, cl. (1) lays down a general rule; cl. (2) is an exception to cl. (1)
and proviso qualifies that exception. The premise is that the law made
by the Parliament is paramount and Union and State law must relate to
the same subject matter in the Concurrent List. It is, thus, made clear G
that the Parliament can always, whether prior or subsequent to State
law, make a law occupied by the State law. An absurd or an incon-
gruous or irreconcilable result would emerge if two inconsistent laws
or particular provisions in a statute, each of equal validity, could co-
exist and operate in the same territory.
H
660 SUPREME COURT REPORTS [1990] 1 S.C.R.

7. Repugnancy between the two pieces of legislation, generally
A
speaking, means that conflicting results are produced when both laws
are applied to the same set of facts. Repugnancy arises when the
provisions of both laws are fully inconsistent or are absolutely irre-
concilable and that it is impossible to obey without disobeying the
other. Repugnancy would arise when conflicting results are produced
B when both the statutes covering the same field are applied to a given
set of facts. The Court should, therefore, make every attempt to re-
concile the provisions of the apparently conflicting enactments, and
would give harmoneous construction. There is no repugnancy unless
the two Acts or provisions are wholly incompatible with each other or
the two would lead to absurd result. The purpose of determining the
c inconsistency is to ascertain the intention of the Parliament which
would be gathered from a consideration of the entire field occupied by
the State Legislature. The proper test is whether the effect can be
given to the provisions of both the laws or whether both the laws can
stand together. There is no repugnaney if these two enactments relate
to different fields or different aspects operating in the same subject. In
D my considered views, Art. 254 was erigrafted in the Constitution by the
founding fathers to obviate such an absurd situation. The reason is
obvious that there is no provision in the Constitution that the law
made by the Parliament is to be void by reason of its inconsistency with
the law made by the Legislature of a State. It may be different if the
State law is only to supplement the law made by the Parliament. If
E both the laws without trenching upon another's field or colliding with
each other harmoneously operate, the question of repugnancy does
not arise. It is also axiomatic that if no law made by Parliament
occupies the field, the State Legislature is always free to make law on
any subject/subjects in the Concurrent List III of the Seventh Schedule
of the Constitution.
F
8. It is seen that the Acquisition Act was made in exercise of the
power under Entry 42 of the Concurrent List and ss. 14 and 20 thereof
are integral part of the Acquisition Act. Undoubtedly, they are conse-
quential or ancillary to s. 4 thereof. It had received the assent of the
President. But after the Act was brought on statute, the question
G emerges whether there exists no repugnancy between ss. 14(1) and
20(3) of the Acquisition Act in juxtaposition toss. 66(1), 73, 74 and 80
of the Act. Before embarking upon an enquiry into the results
produced by these provisions in the light of above discussion, let us
consider the relevant decisions and the ratio laid down therein in this
context.
H
V.K. SHARMA v. STATE OF KARNATAKA [K. RAMASWAMY, J.1661

~/ Occupied Field:
A
I
In Tika Ramji v. State of U.P., [1956] SCR 393. Bhagwati, J.
speaking for the Constitution Bench, applied three tests propounded
by Nicholas in his Australian Constitution, Second Edition, page 303,
to find the inconsistency or repugnancy thus. (1) There may be incon-
sistency in the actual terms of competing statutes; (2) Though there B
may be no direct conflict, a State law may be inoperative because the
Commonwealth law, or the award of the Commonwealth Court, is
intended to be a complete and exhaustive Code; and (3) Even in the
absence of intention, a conflict may arise when both State and Com-
monwealth seek ta exercise their power over the same subject matter.
(Emphasis supplied). The repugnancy between the two statutes should C
exist in fact and not depend merely on a possibility. In that case, the
question was whether the U.P. Sugarcane (Regulation of Supply and
Purchase) Act (Act 24 of 1953) is ultra vires of the U.P. Legislature in
view of Art. 246 read with Entry 52 of List I and Item 33 of List III of
Seventh Schedule to the Constitution. In that context, it was held that
if both the Central Legislature and the Provincial Legislatures were D
entitled to legislature in regard to this subject of production, supply
and distribution of sugarcane, there would arise no question of legisla-
tive competence of the Provincial Legislature in the matter of having
enacted the impugned Act. Repugnancy falls to be considered when the
law made by the Parliament and the law made by the Legislature occupy -
the same field, because if both these pieces of legislation deal with sepa- E
rate and distinct matters, though of a cognate and allied character,
repugnancy does not arise. (Emphasis supplied) So far as our Constitu-
tion. is concerned, repugnancy is dealt with in A rt. 254. On a compari-
son of various provisions of the State and Central laws, it was held that
there was no question of any inconsistency in the actual terms of the Act
enacted by the Parliament and the impugned Act and they did not oc- F
cupy the same field.

In A.S. Krishna v. Madras State, [1957] SCR 399, the question
was whether s. 4(2) of the Madras Prohibition Act which lays down a
presumptive evidence is repugnant to the Central legislation, viz.,
Criminal Procedure Code. Dealing with s. 107 of the Government of G
India Act, 1935 which is in pari material to Art. 254 read with Schedule
VII, List II, Items 2 and 31 and List III, Items 2 and 5 of Schedule VII
to the Constitution, Venkatarama Ayyar, J. speaking for the Constitu-
tion Bench, held that for applying s. 107 of the Government of India
Act 1935, two conditions must be fulfilled-the provisions of the
provincial law and those of the Central legislation must both be in H
662 SUPREME COURT REPORTS I 1990] I S.C.R.

A respect of a matter which is enumerated in the Concurrent List; and
they must be repugnant to each other. It is only when both these
requirements are satisfied that the provisional law will to the extent of
repu~nancy becomes void. Section 4(2) of the Prohibition Act was
held to be void.

B In Prem Nath Kaul v. State of J & K, [1959] 2 Supp. SCR 273,
another Constitution Bench held that the essential condition for appli-
cation of Art. 254( 1) is that the existing law must be with respect to

C
one of the matters enumerated in the Concurrent List; in other words,
unless it is shown that the repugnancy is between the provisions of a
subsequent law and those of an existing law in respect of the specified
matters, the Artide would be inapplicable. In Bar Council of U.P. v.
State of U.P., [1973] 2 SCR 1073 the question arose was whether the
State Government is empowered to impose stamp duty on the certifi-
-
cate of enrolment under s. 22 of the Advocates Act. In considering
schedule VII, List I, Entries 77, 78 and 96; List II, Entry 63 and List
III, Entries 44 and 26 and the relevant provisions of the Stamp Act and
D its Schedules, this Court held that the question of repugnancy can only
arise in respect of matters where both the parliament and the State
Legislature have competence to pass laws. In other words, when the
Legislative power is located in the Concurrent List, the question of
repugnancy arises. In Deep Chand v. State of U.P., [1959] Supp. 2
......
SCR 8 relied on by Sri N ariman, the Uttar Pradesh legislature made
E U.P. Transport Service (Development) Act, which had received the
assent of the President, introduced a scheme of nationalisation of the
transport service. Subsequently, Parliament has amended Act IV of
1939 through Amendment Act 100 of 1956. By reason thereof, it was
contended that the U.P. Amendment Act became void by reason of
Art. 254 of the Constitution. The matter was examined by the Con-
F stitution Bench of this Court. Subba Rao, J. (as he then was) per
majority, while considering the question, laid three propositions to
determine the repugnancy thus: (I) Whether there is direct repu-
gnancy between the two provisions; (2) Whether Parliament intended
to lay down an exhaustive code in respect of the subject matter replac-
ing the Act of the State Legislature; and (3) Whether the law made by
G the Parliament and the law made by the State Legislature occupy the
same field. After examining in detail the provisions of the respective
Acts, it was held that after the Central Amendment Act 100 of 1956, it
prevailed over the U. P. Act and prospectively became void as the
Central Amendment Act occupied the same field in respect of the
same schemes initiated under the U .P. Amendment Act and to that
H extent the State Act must yield its place to the Central Act.
V.K. SHARMA v. STATE OF KARNATAKA [K. RAMASWAMY, J.J663

~/ In State of Orissa v. M.A. Tulloch & Co., [1964] 4 SCR 461 A
another Constitution Bench of this Court held that the inconsistency
may be demonstrated not by a detailed comparison of provisions of the
two statutes but by the mere existence of the two pieces of legislation.
Meeting the argument as to on which Entry in the list the subject falls,
it was held thus:
B

~ "If by reason of the declaration by Parliament the entire
subject matter of 'conversation and development of mine-
rals' has been taken over for being dealt with by Parlia-

- '
ment, thus depriving the State of the power which it there-
fore possessed, it would follow that the 'matter' in the State
List is, to the extent of the declaration, (substracted from
the scope of the declaration) and ambit of Entry 23 of the
State List. There would, therefore after the Central Act 67
c

0 of 1957, be no matter in the List to which the fee could be
' related in order to render it valid."

It was accordingly held that the Orissa Mining Areas Development D
Fund Act (27 of-1952) to be void. Of course, this was in considering the
question under Article 246, Entry 54 of List I, and Entry 23 of List II.
-~
In State of Assam v. Horizan Union, [1967] I SCR 484 the facts
are that under the Industrial Disputes Act 1947, Section 7-A(3)(a)
provided that the appropriate Government may by notification consti- E
lute an Industrial Tribunal consisting of one person to be appointed by
the appropriate Government. The person shall not be qualified for
...... appointment as presiding officer of the Tribunal unless he is or has

....) been a Judge of a High Court or he has held the office of Chairman or
any other member of the Labour Appellate Tribunal constituted ~nder
the Industrial Disputes (Appellate Tribunal) Act, 1950, or of any Tri- F
bunal, for a period of not less than two years. Assam Act ·a of :1962
made an amendment to the above procedure and had ~cccivcd the
assent of the President, introducing clause (aa) to sub-section (3)(a) of
Section 7-A thus: ·

"He has worked as a District Judge or as an Additional G
District Judge or as both for a total period of not less than
three years or is qualified for appointment as a Judge of a
High Court; provided that the appointment to a Tribunal of
any person qualified under this clause shall not be made
without consultation with the Assam High Court."
H
664 SUPREME COURT REPORTS [1990] 1 S.C.R.

A In 1964, the Parliament made an amendment viz. Industrial Dis- ~
putes (Amendment) Act (36 of 1964) amending Section 7-A(3)(a) stat- f
ing that "he has, for a period of not less than three years, been a
District Judge or an Additional District Judge." The contention raised
was that the Assam Act became void by reason of the subsequent
Amendment Act of 1964. Both the Parliament and the State Legisla-
B lure have exercised_ their power under the Concurrent List of VII ·~
Schedule. Another Constitution Bench of this Court has held that the 1""'
Central Amendment Act 36 of 1964 intended to be an exhaustive code
in respect of the subject matter and occupies the same field. There-
fore, the Assam Act 8 of 1962 was repugnant to the Central Amend-
ment Act 36 of 1964 as it does not require the consultation with the -
C High Court for the appointment of an Industrial Tribunal. Accord-
ingly, it was held to be void.

In State of J & K v. M.S. Farooqi, [1972] 3 SCR 881 the facts )..__,-
were that the respondent was a member of the Indian Police Service
governed by the All India Services Act, 1951 and the All India Services
D (Discipline and Appeal) Rules, 1955. They provided an exhaustive
procedure to enquire into the misconduct by a member of the All India
Services. The State Legislature, exercising the concurrent power,
made Jammu and Kashmir Government Servants' Prevention of Cor- ·~
ruption (Commission) Act, 1962. The validity thereof was questioned
on the anvil of Article 254 of the Constitution. Dealing with the sub-
E ject, another Constitution Bench, speaking through Sikri, C.J. held
that the Commission Act empowers to conduct on enquiry into the
charges of corruption and misconduct against all Government Servants
including the members of All India Services. In addition to the recom- .f--
mendation for imposition of punishment engrafted in sub-section (2)
of Section 17 of the Commission Act, it also disqualifies for any public '-./,- ....,
F office to a specified period and also recommendation for prosecution r
for an offence in a Court of law. These details were not dealt with
under the Central Act and the Rules. From this conspectus, this Court
further held thus:

"It seems to us that in so far as the Commission Act deals
G with the infliction of disciplinary punishments it is repu-
gnant to Discipline and Appeal Rules. Parliament has
occupied the field and given clear indication that this was
the only manner in which any disciplinary action should be
taken against the members of the All India Services
,,
H
V.K. SHARMA v. STATE OF KARNATAKA [K. RAMASWAMY. J.1665

Accordingly it was held that the State Act must be read down so as to
A
leave the members of the All india Services outside its purview.
There_by, by implication it was held that by operation of Article 254 of
the Constitution the Commission Act is repugnant to the All India
Services Act and Rules.

In Kera/a State Electricity Board v. Indian Aluminium Co., B
I 1976) I SCR 552 another Constitution Bench of this Court held that:
"Having discussed the question of the legislative field it
might be necessary to discuss the question as to what hap-
pens if it should be held that the matter under considera-
tion in these cases falls within the concurrent list, that is,
Entry 38 in List III as contended in the alternative by some c
of the respondents. As already mentioned the question will
arise only if it should be held that the Kerala State Act falls
under Entry 38 as contended by Mr. B. Sen. If the im-
pugned legislation falls under List III tuen the question of
repugnancy of that legislation with the existing law or the D
law made by Parliament as the case may be, will have to be
considered."

In Basu's Commentary on the Constitution of India (Silver
Jubilee Edition), Volume K, at page 144, it is stated that "the
repugnancy to be found is the repugnancy in the actual provisions of E
two laws and not the subject matter of the two laws. The proper test is
whether effect can be given to the provisions of both the laws or whether
both the laws can stand together." (Emphasis added). It is trite law that
the form of the provision does not conclude the matter. It must be the
"same matter" under consideration.
F
Operational Incompatibility:

9. Repugnancy could also be angulated from the perspective of
operational incompatibility as well. The celebrated decision in Clyde
Engineering Co. v. Cowburn, [1926) 37 CLR 466 popularly known as
44-hour case, is a leading authority on this topic. The facts therein are G
that a Commonwealth Arbitration award fixed rates of pay and over-
time on the basis of 48-hour working week while Forthfour Hours
Week Act 1925 (NSW) S. 6 purported to deal with the same matter on
the basis of 44-hours working week. The respondent employee claimed
the State Act rate of pay but was denied on the basis of 48-hours
working week. When questioned, it was argued that there was no H
666 SUPREME COURT REPORTS [1990] I S.C.R.

inconsistency between the award and the State Act because the
A
employer, it was said, could obey both laws by observing the 44-hours
working week but on the basis that the pay scale determined by the
award applied to the 44-hours working week. The High Court of
Australia relying on s. 109 of Australian Constitution rejected the
argument and found that an inconsistency existed, as the State law
B operated to vary the adjustment of industrial relations established by
the Commonwealth award. Knox, C.J. held that two enactments may
be inconsistent although obedience to each of them may be possible
without disobeying the other. Statute may do more than impose

c
duties; they may for instance confer rights; and one statute is inconsis-
tent with another when it takes away a right conferred by the other
even though the right may be one which might be waived or
abandoned without disobeying the statute which conferred it. Issacc,
J. in his separate but concurrent judgment held:
-
"The vital question would be: was the second Act in its true
construction intended to cover the whole ground, and
D therefore, to supersede the first? If it was intended, then
the inconsistency would consist in giving operative effect at
all to the first Act; because the second was intended
entirely to exclude it. The suggested test however useful a
working guide it may be in some cases prove a test; cannot
be recognised as the standard measuring rod of inconsis-
E tency. If, however, a competent legislature expressly or
impliedly evinces its intention to cover the whole field, that
is a conclusive test of inconsistency where another legislature
assumes to enter to any extent upon the same field ..

If such a position as I have postulated be in fact established .,
F
the inconsistency is demonstrated not by comparison of
detailed provisions but by the existence of the two sets of
provisions; where that wholesale inconsistency does not
occur but the field in partly open, then it is necessary to
enquire further and possibly to examine and contrast
particular provisions. If one enactment makes or acts upon
G
as lawful that which the other makes unlawful or if one ~
enactment makes unlawful that which the other makes or
acts upon as lawful, the two or to that extent inconsistent. It
is plain that it may be quite possible to obey both simply by
not doing what is declared by eitber to be unlawful and yet
H there is palpably inconsistency. The basic reason is that the
V.K. SHARMA v. STATE OF KARNATAKA {K. RAMASWAMY. J.1667

Constitution clearly intended that once the Commonwealth A
settled an interstate dispute, that settlement shall stand and
that its terms should be framed by the one hand, the other ·
being necessarily excluded. Forty-four houcs shall consti-
tute a week's work. No day's work to exceed either hours
without payment for overtime, etc."
B
Higgins, J. has held that:

. "When is a law inconsistent with another law? Etimologi-
cally I presume that things are inconsistent when they can-
not stand together at the same time and law is inconsistent
with another when the command or power or provision in
c
one law conflicts directly with the command, power or other
provision of another. Where two legislations operate over
the same territory and came into collision, it is necessary
that one 'should prevail, but the necessity is confined to
actual collision as one legislature says 'do' and the other
says 'do not'. D
(Emphasis supplied)

~. [n that case it was held that there is operational incompatibility bet-
ween the Commonwealth award and the State law. The State law was
held to be void.
E
In Hume v. Palmer, [1926] 38 CLR 441 both New South Wales
Act and Commonwealth Act authorised making of the Regulations
dealing with collisions at sea. In both cases regulations had been made.
They were in identical terms except that in relation to the jurisdiction
to convict for breaches. The New South Wales regulations prescribed
summary prosecution and a maximum penalty of £ 50 whereas the F
Commonwealth regulations prescribed summary prosecution on
indictment and a maximum penalty £ 100. [t was held that the same
facts produced different legal results under the two Acts, the penalty
under State law was held displaced.

In R. v. B~isbane Licensing Court, [1920] 28 CLR 23 a section of G
--'. the Commonwealth Electoral Act provided that on a polling day fixed
for a federal election, a referandum or vote of the electors of a State or
part thereof, should not be taken. A local option poll had been taken
on such a day under Queensland legislation. It was held that a direct
inconsistency existed, and that the local option poll was, therefore,
declared to be invalid. Jn Colvin v. Bradley Bros. Pvt. Ltd., [1943] 68 H
668 SUPREME COURT REPORTS [ 1990] i S.C.R.

A CLR 151 an order made pursuant to a section of New South Wales
Factories and Shops Act prohibiting the employment of women on a
''f'
;

milling machine. An award had been made by the Commonwealth
Arbitration Court under the Conciliation and Arbitration Act which
permitted the employment of females on work, which included work
on a milling machine, unless the work was declared to be unsuitable I
B for women by a Board of Reference. No such declaration had been
made by the Board. it was held that the order was inconsistent with the ~-
award by virtue of s. 109 in that it directly prohibited something which
the Commonwealth award permitted.

held:
In In Re Ex Parte Maclean, [1930] 43 CLR 472 at 483. Dixon J.
..
c
"When the Parliament of the Commonwealth and the Parli-
ament of a State each legislate upon the same subject and
prescribe what the rule of conduct should be, they make
laws which are inconsistent notwithstanding that the rule of
D conduct is identical, which each prescribes, and s. 109
applies."

It was further held that the Federal statute had evinced an intention to
cover the subject matter and provide what the Jaw upon it should be.

E In Wenn v. Attorney General (Victoria), [ 1948] 77 CLR 84 the
Re-establishment and Employment Act dealt with the obligations of
employers' to give preference to ex-servicemen in employment (but
included no provision as to the duty to give preference in promotion to
ex-servicemen already employed). The State Act dealt not only with
the same matter, but also included a provision requiring employers to
F give preference in promotion. It was held that Commonwealth Legisla-
tion was an exhaustive code allowing no room for the operation of the
State legislation relating to matter not covered by the Commonwealth
Act. The Victorian Law giving preference in promotion was, there-
fore, held to have been displaced.

G In O'Sullivan v. Noarlunga Meat Co. Ltd., [1954] 92 CLR 565
the facts are that the South Australian Act prohibited laughter of stock
for export without a State licence while the Commonwealth Act pro-
hibited export of meat from stock which had not been slaughtered on
premises registered under the regulations thereof. In an evenly divided
Court, the opinion of the Chief Justice had prevailed, it was held that
H the Commonwealth regulations were detailed enough to show that
..,., V.K. SHARMA v. STATE OF KARNATAKA [K. RAMASWAMY, J.] 669

they covered the whole field of 'slaughter for export' and, therefore,
A
the State licensing requirement did not apply. On further appeal the
Judicial Committee in 0. Sullivan v. Noarlunga Meat Co. Ltd., [1957]
AC 1at28 added that "in applying this principle it is important to bear
in mind that the relevant field or subject is that covered by the law said
to be invalid."

~. In Australian Federal Constitutional Law by Collin Howard,
B

Second Edition (1972), at page 27, it was stated that where both a
Commonwealth Law and a State law are in terms applicable to a given
set of facts, and they produce conflicting legal results on those facts,
the Commonwealth law applies and not the State law. In Blackley v.
Devondale Cream (Vic.) Pvt. Ltd., [1968] 117 CLR 253, a State wages
determination prescribed a minimum rate of pay for certain work c
~J which was also covered by a Commonwealth award. The Common-
• wealth award prescribed a lower minimum rate. It was held that there
was a direct inconsistence because on the same facts the two laws
produced different entitlements. The award rate, therefore, prevailed
over the State's determination. D

•
10. REPEAL BY IMPLICATION:

Sub-s. (1) of s. 217 of the Act repeals thus:

"The Motor Vehicles Act, 1939, and any law correspond- E
ing to that Act in force in any State immediately before the
commencement of this Act (hereafter in this section refer-

""
'
red to as the repeal enactments) are hereby repealed."

) (The other sub-sections are not relevant. Hence omitted.)
(Emphasis supplied) f

Thereby s.217(1) does not expressly repeal sections 14(1) and 20(3) of
the Acquisition Act. In Zaveribhai v. State of Bombay, [1955] I SCR
799 relied on by Sri Nariman, the facts were thats. 7 of the Essential
Supplies (Temporary Powers) Act, 1949 provides penalty for contra-
vention of orders issued under s. ·3 for a term of three years or with fine G
--". or with both. The Bombay Legislature amended the Act, by Act 52 of
1950. Section 2 of the Amendment Act provides that ·'notwithstanding
anything contained in Essential Supplies (Temporary Powers) Act,
1946, whoever contravenes an order made under Sec. 3 of the Essen-
tial Supplies (Temporary Powers) Act, shall be punishable with impri-
sonment for a term which may extend to seven years but shall not, H

I
670 SUPREME COURT REPORTS [ 1990] 1 S.C.R.

A
except for reasons to be recorded in writing, be less than six months
and shall also be liable to fine". Thus, the Bombay Act imposes 'f'1
minimum sentence while indicating maximum sentence and obtained'
the assent of the President. Later, the Central Act was amended in
1948, 1949 and 1950. In 1950 Act, Sec. 7 categorised three groups of
offences covering the same field and imposd graded sentences depend-
B ing on the character of the offence and the nature of the commodity
contravened. The Bombay Act was challenged on the ground that it ~i
was repugnant and was repealed by implication. Venkatarama Iyer, J.

c
speaking for the Constitution Bench held that repugnancy might result
when both the legislations cover the same field. It was further held:

"The important thing to consider with reference to this
provision is whether the legislation in 'in respect of the
same matter.' If the later legislation deals not with the mat-
-
ters which formed the subject of the- earlier legislation but
with other and distinct matters though of a cognate and
allied character, then Art. 254(2) will have no application.
D The principle embodied in s. 107(2) and Art. 254(2) is that
when there is legislation covering the same ground both by
the Centre and by the Province, both of them being compe-
tent to enact the same, the Jaw of the Centre should prevail
over that of the State."

E It was further held that though there is no express repeal, even then
the State law will be void under the proviso if it conflicts with later law
with respect to the same matter that may be enacted by the Parlia-
ment. The principle on which the rule of implied repeal rests, namely,
that if the subject matter of later legislation is identical with that of the
earlier, so that they cannot both stand together then the earlier is
F repealed by the later enactment, will be equally applicable to a ques-
tion under Art. 254(2) where the further legislation by Parliament is in
respect of the same matter as that of the State law. Accordingly, it was
held that Sec. 2 of the Bombay Act, No. 36 of 1947 cannot prevail as
against Sec. 7 of the Essential Supplies (Temporary Powers) Act as
amended by Act 52 of 1950.
G
The doctrine of repugnancy and implied repeal was again con-
sidered by this Court in M. Karunanidhi v. Union of India, [1979] 3
SCR 254 where the Tamil Nadu Public Men (Criminal Misconduct)
Act (2 of 1974) was assailed to be repugnant to the Indian Penal Code
and the Prevention of Corruption Act 1947. In considering that ques-
H tion, Fazal Ali, J. speaking for the Constitution Bench held:
V.K. SHARMA v. STATE OF KARNATAKA [K. RAMASWAMY, J.]671

·- " ... So far as the Concurrent List is concerned, both Parli-
amen! and the State Legislatures are entitled to legislate in
regard to any of the Entries appearing therein, but that is
subject to the condition laid down by Art. 254(1).
A

Where the provisions of the Central Act and a State Act in
~- the Concurrent List are fully inconsistent and are absolu- B
tely irreconciliable, the Central Act will prevail and the
State Act will become void in view of the repugnancy.

Where, however, a law passed by the State comes into
collision with a law passed by Parliament on an Entry in the
Concurrent List, the State Act shall prevail to the extent of
the repugnancy and the provisions of the Central Act c
-1. would become void provided the State Ac;t has been passed
in accordance with Cl. (2) of Art. 254.

Where a law passed by the State Legislature the entries in
the State List entrenches upon any of the entries in the D
Central List the consitutionality of the law may be upheld
by invoking the doctrine on a subject covered by the Con-
current List is inconsistent with and repugnant to a previ-
ous law made by the Parliament, then such a law can be
protected by obtaining the assent of the President under
Art. 254(2) of the Construction. The result of obtaining the E
assent of the President would be that so far as the State Act
is concerned, it will prevail in the State and overrule the
provisions of the Central Act in their applicability to the
State only. Such a state of affairs will exist only until Parlia-
'
men! may at any time make a law adding to, or amending,
) varying or repealing the law made by the State Legislature F
under the proviso to Article 254."

Dealing with the question of repeal by implication, it was held that
there is no repeal by implication unless the inconsistency appears on
the face of the two statutes that where two statutes occupy a particular
· field but there is a room or possibility of both the statutes operating in G
the same field without coming into collision with each other, no

' repugnancy results and that where there is no inconsistency, a statute
occupying the same field seeks to create distinct and separate offence,
no question of repugnancy arises and both the statutes continue to
operate in the same field. On a comparison of the relev.ant provisions
of the )mpugned Act and the Central Acts, it was not repealed by H
implication.
672 SUPREME COURT REPORTS [1990] l S.C.R.

In T. Barai v. Henry Ah Hoe, [1983] l SCR 905 relied on by Sri ~
A Nariman, the facts are that for an offence under Sec. 16(l)(a) read
with Sec. 7 of the Prevention of Food Adulteration Act, 1954, pre-
scribed maximum punishment of six years. But the West Bengal Legis-
lature amended the Central Act with effect from April 29, 1974 by the
Prevention of Adulteration of Food, Drugs and Cosmatics (West
B Bengal) (Amendment) Act, 1973, providing punishment with impri- J
sonment for life and triable by a Court of Sessions. It had received the
assent of the President. Later on the Parliament amended the Section
(Section 16(a) and also introduced Section 16-A in 1976 to the Preven-
tion of Food Adulteration Act, 1954, imposing punishment of three
years. Both the enactments have been made in exercise of the concur-
rent power. In considering the question whether the State Act became
C void, A.P. Sen J. speaking for three Judges' Bench has held thus:

"There is no doubt or difficulty as to the law applicable.
Art. 254 of the Constitution makes provision firstly, as to
what would happen in the case of conflict between a Cent-
D ral and State Law with regard to the subjects enumerated in
the Concurrent List, and secondly, for resolving such
conflict, Art. 254(1) enunciates the normal rule that in the
event of a conflict between a Union and a State Law in the
concurrent field, the former prevails over the latter. Clause
( 1) lays down that if a State law relating to a concurrent
E subject is 'repugnan.t' to a Union law relating to that sub-
ject, then, whether the Union law is prior or later in time,
the Union law will prevail and the State law shall, to the
extent of such repugnancy, be void. To the general rule laid
down in Clause (1), Clause (2) engrafts an exception, viz.,
that if the President assents to a State law which has been
reserved for his consideration, it will prevail notwithstand-
y
F
ing its repugnancy to an earlier law of the Union, both laws
dealing with a concurrent subject. In such a case, the Cent-
ral Act will give way to the StateAct only to the extent of in-
consistency between the two, and no more. in short, the
result of obtaining the assent of the President to a State Act
G which is inconsistent with a previous Union law relating to
a concurrent subject would be that the State Act will pre-
vail in that State and override the provisions of the Central
Act in their applicability to that State only. The predo-
minance of the State law may, however, be taken away if
Parliament legislate under the proviso to Clause (2). The
H proviso to Art. 254(2) empowers the Union Parliament to
... V.K. SHARMA v. STA1E OF KARNATAKA [K. RAMASWAMY, J.] 673

repeal or amend a repugnant State law even though it has
become valid by virtue of the President's assent. Parlia-
ment may repeal or amend the repugnant State law, either
A

directly, or by itself enacting a law repugnant to the State
law with respect to the 'same matter'. Even though the
subsequent law made by Parliament does not expressly
repeal a State law, even then, the State law will become B
void as soon as the subsequent law of Parliament creating
repugnancy is made. A State law would be repugnant to the
Union law when there is direct conflict between the two
laws. Such repugnancy may also arise where both laws
operate in the same field and the two cannot possibly stand
together, e.g. where both prescribe punishment for the
same offence but the punishment differs in degree or kind c
,-A. or in the procedure prescribed, In all such cases, the law
made by Parliament shall prevail over the State law under
Art. 254(1). That being so, when Parliament stepped in
and enacted the Central Amendment Act, it being a latter
law made by Parliament 'with respect to the same matter', D
the West Bengal Amendment Act .stood impliedly repea-
led."
t In Mis Hoeshst Pharmaceuticals Ltd. v. State of Bihar, [1983] 3
SCR 130 the Bihar Finance Act, 1981 was made in exercise of the
)
power under Entry 54 of List II of Seventh Schedule to the Constitu- E
lion amending and repealing the previous Act providing therein to
t levy tax on sale or purchase of goods. Section 5(1) imposes levy of
surcharge on every dealer whose gross turnover during an year exceeds
Rupees Five lakhs, in addition to the tax payable by him at such rate
·1 not exceeding 10 per cent of the total amount of tax. Sub-s. (3) of s. (5)
prohibits such dealer from collecting the amount of surcharge from the F
purchasers. The Essential Commodities Act made under Entry 33 of the
Concurrent List III empowering the Government to fix prices of the
essential commodities including drugs, medicines, etc. It was conten-
<led that by operation of sub-s. ( 1) of s. 5, the State Act is repugnant
and is void. In considering that question, A.P. Sen, J. speaking for
three Judges' Bench held that both the Union and the State Legisla- G
..... ture have concurrent powers of legislation with respect to any of the
' matters enumerated in List III, subject only to the proviso contained
in cl. (2) of Art. 254, i.e. provided the State Act do not conflict with
those of any Central Act on the subject . . . . The question of
repugnancy arises only when both legislatures are competent to legis-
lature in the same field, i.e. when both Union and the State laws relate H
674 SUPREME COURT REPORTS [1990] 1 S.C.R.

to a specified subject in List III and occupy the same field. Yet another
A place it was held that it is only when both these requirements are
fulfilled that the State law will, to the extent of repugnancy became
void. Art. 254(1) has no application to the cases of repugnancy due to
overlapping found between List II on the one hand and Lists I and II
on the other. If such overlapping exists in any particular case, State
B law will be ultra vires because of the non obstenti clause in Art. 246(1)
read with opening words-"Subject to" Art. 246(3). In such cases,
the State law will fail not because of repugnance in the Union List but
due to want of legislative competence. Repugnancy arises where there
is a direct conflict or collision between the Central Act and the State
Legislation and to the extent of repugnancy by necessary implication
C or by express reference the State legislation stands repealed."

11. It is true, as rightly contended by Mr. Sanghi, that ss. 14 and ),
20 are consequential or ancillary to s. 4 of the Acquisition Act 21 of /
1976 which had received the assent of the President. Its constitutiona-
lity was upheld by seven Judges' Bench of this Court, when the legisla-
D tive competence was assailed on the anvil of Entry 42 of List I of the
Seventh Schedule, but not on the touchstone of proviso to cl. (2) of
Art. 254 which gives overriding power to the Parliament to make any
law or amend, vary, modify or repeal the law made by a State Legisla- -.,
ture. Ranganatha Reddy's ratio, thereby, does not stand an impedi-
ment to go into the validity of ss. 14 and 20 of the Acquisition Act.
E
12. The result of the above discussion leads to the following
conclusions:

(a) The doctrine of repugnancy or inconsistency under Art. 254
of the Constitution would arise only when the Act or provision/
provisions in an Act made by the Parliament and by a State
Legislature on the same matter must relate to the Concurrent
List III of Seventh Schedule to the Constitution; must occupy the
same field and must be repugnant to each other;

(b) In considering repugnance under Art. 254 the question of
G legislative coinpetence of a State Legislature does not arise since
the Parliament and the Legislature of a State have undoubted
power and jurisdiction to make law on a subject, i.e. in respect of
that matter. In other words, same matter enumerated in the
Concurrent List has occupied the field.

H (c) If both the pieces of legislation deal with separate and dis-
V.K. SHARMA v. STATE OF KARNATAKA [K. RAMASWAMY, J.]675

lt' . • tine! matters though of cognate and allied character repugnancy A
I does not arise.

(d) It matters little whether the Act/Provision or Provisions in
an Act falls under one or other entry or entries in the Concurrent
List. The substance of the "same matter occupying the same field
B
by both the pieces of the legislation is material" and not the
form. The words "that matter" connotes identity of "the matter"
and not their proximity. The circumstances or motive to make
the Act/Provision or Provisions in both the pieces of legislation
are irrelevant.

(e) The repugnancy to be found is the repugnancy of Act/ C
provision/Provisions of the two laws and not the predoninant
object of the subject matter of the two laws.

(f) Repugnancy or inconsistency may arise m diverse ways,
which are only illustrative and not exhaustive:
D
(i) There may be direct repugnancy between the two provisions;

(ii) Parliament may evince its intention to cover the whole same
field by laying down an exhaustive code in respect thereof dis-
placing the State Act, provision or provisions in that Act.· The
Act of the Parliament may be either earlier or subsequent to the E
State law;

(iii) Inconsistency may be demonstrated, not necessarily by a
detailed comparison of the provisions of the two pieces of law
but by their very existence in the statutes;
F
(iv) Occupying the same field; operational incompatibility;
irreconcilability or actual collision in their operation in the same
territory by the Act/provision or provisions of the Act made by
the Parliament and their counter parts in a State Jaw are some of
the true tests;
.G
(v) Intention of the Parliament to occupy the same field held by
the State Legislature may not be expressly stated but may be
implied which may be gethered by examination of the relevant
provisions of the two pieces of the legislation occupying the same
field;
H
676 SUPREME COURT REPORTS [1990] I S.C.R.

(vi) If one Act/Provision/Provisions in an Act makes lawful that ·'f/f
which the other declares unlawful the two to that extent are
inconsistent or repugnant. The possibility of. obeying both the
laws by waiving the beneficial part in either set of the provisions
is no sure test;

B (vii) If the Parliament makes law conferring right/obligation/
privilege on a citizen/person and en joins the authorities to obey
the· 1aw but if the State law denies the self same rights or
privileges negates the obligation or freezes them and injuncts the
4
authorities to invite or entertain an application and to grant the
right/privilege conferred by the Union law subject to the condi-
tion imposed therein the two provisions run on a collision course
c and repugnancy between the two pieces of law arises thereby;

(viii) Parliament may also repeal the State law either expressly
or by necessary implication but Courts would not always favour
repeal by implication. Repeal by implication may be found when
D the State law is repugnant or inconsistent with the Union law in
its scheme or operation etc. and conflicting results would ensue
when both the laws are applied to a given same set of facts or
cannot stand together or one law says do and other law says do
not do. In other words, the Central law declares an act or omis-
sion lawful while the State law says them unlawful or prescribes
H irreconcilable penalties/punishments of different kind, degree or
variation in procedure etc. The inconsistency must appear on the
face of the impugned statutes/provision/provisions therein;

(ix) If both the pieces of provisions occupying the same field do
not deal with the same matter but distinct, though cognate or
allied character, there is no repeal by implication;

(x) The Court should endeavour to give effect to both the pieces
of legislation as the Parliament and the legislature of a State are
empowered by the Constitution to make laws on any subject or
subjects enumerated in the Concurrent List III of Seventh
G Schedule to the Constitution. Only when it finds the incompati-
bility or irresconcilability of both Acts/provision or provisions,
or the two laws cannot stand together, the Court is entitled to
declare the State law to be void or repealed by implication; and

(xi) The assent of the President of India under Art. 254(2) given
H to a State law/provision, provisions therein accord only opera-
V.K. SHARMA v. STATE OF KARNATAKA !K. RAMASWAMY, J.]677

lt/ tional validity though repugnant to the Central law but by subse-
quent law made by the Parliament or amendment/modification, A
'
variation or repeal by an act of Parliament renders the State law
void. The previous assent given by the President does not blow
life into a void law.

Scope and operation of Rule of Pith and Substance and predoninant B
purpose vis-a-vis Concurrent List.

13. The further question is whether the doctrines of dominant
purpose and pith and substance would be applied to the matter
covered under the Concurrent List. in my considered view, they do not
apply. The doctrine of pith and l"ubstance primarily concerns in
determining the legislative competence. The idea underlying the C
detailed distribution of legislative powers in three Lists was to ensure
that Parliament and State Legislatures should keep themselves within
the spheres allocated to them in List I and vice versa in List II respec-
tively. However, legislation is a very complicated matter as it reflects
life, which itself is a complicated one. Hence, it is sometimes inevit- D
able that a law passed by the Parliament may trench upon the domain
of the State Legislature and vice versa. Would such incidental
encroachment on the territory of the other invalidates the legislation?
In examining this question and finding a solution, the Courts try to
save the legislation from unconstitutionality by applying the flexible
rule of pith and substance. It is not that the Courts encourage one E
legislature to encroach upon the legislative field of another legislature
but merely recognise the reality that despite the strict demarcation of
legislative fields to respective legislatures, it is not always possible to
effectuate a legislative purpose without incidental encroachment on
another's field. In such a situation the Courts try to find out the pith
and substance of the legislation. If the legislation is found in its pith F
and substance, within the legislative competence of the particular
legislature, it is held to be valid, despite incidental encroachment on
the legislative power of another legislature. Thus, the rule of pith and
substance is applied to determine whether the impugned legislation is
within that competence under Arts. 246(1) and 246(3) of the Constitu-
tion, and to resolve the conflict of jurisdiction. If the Act in its pith and G
_., substance falls in one List it must be deemed not to fall in another List,
despite incidental encroachment and its validity should be determined
accordingly. The pith and substance rule, thereby, solves the problem
of overlapping of "any two entries of two different List vis-a-vis the
Act" on the basis of an inquiry into the "true nature and character" of
the legislation. The Court examines the legislation as a whole and tries H
678 SUPREME COURT REPORTS [1990] I S.C.R.

A to find whether the impugned law is substantially within the compe-
tence of the Legislature which enacted it, even if it incidentally
trespasses into the legislative field of another Legislature. In a case
where the question of validity of an act arises, it may be that the topic
underlying the provisions of the Act may in one view of the matter falls
within the power of the Centre, and on another view within the power
B of the States. When this happens, it is necessary to examine the pith
and substance of the impugned legislation; and to see whether in its
pith and substance it falls within one, or the other of the Legislative
Lists. As stated earlier the constitutionality of the Impugned Act is not
determined by the degrees of invasion into the domain assigned to the
other legislature but its pith and substance and its true nature and
character to find whether the matter falls within the domain of the
c enacting legislature. The incidental or ancillary encroachment into
forbidden field does not effect the competence of the legislature to
make the impugned law.

14. From this scenerio let us peep into few important decisions
D touching the subject. In Prafulla Kumar v. Bank of Commerce,
Khulna, AIR 1947 PC 60 the question was whether the Bengal Money-
lenders Act (JO of 1940) is ultra vires by re~son of Schedule 7, List II,
Items 28 and 38 of the Government of India Act, 1935, and thereby is
void. In considering that question, the Judicial Committee held as
culle<:] out in Head note (b) thus:

"It is not possible to make a clean cut between the powers
of the Federal and Provincial Legislatures. They are bound
to overlap and where they do the question to be considered
is what is the pith and substance of the impugned enact-
ment and in what list is its true nature and character to be
F found. The extent of invasion by the Provinces into sub-
jects in Federal List is an important matter not because the
validity of a Provincial Act can be determined by dis-
criminating between degrees of invasion but for determin- •
ing the pith and substance of the impugned Act. The ques-
tion is not has it trespassed more or less but is the trespass,
G whatever it be, such as to show that the pith and substance
of the impugned Act is not a Provincial matter but a
Federal matter. Once that is determined the Act falls on
one or the other side of the line and can be seen as valid or
invalid according to its true import.

H No doubt where they come in conflict List I has priority
V.K. SHARMA v. STATE OF KARNATAKA [K. RAMASWAMY, J.1679

over Lists III and II and List III has priority over List II but
A
in each case one has to consider what the substance of an
Act is and whatever its ancillary effect, attribute it to the
appropriate list according to its true character"

This leading ratio formed foundation in countless cases decided by this
Court. In State of Bombay v. F.N. Balsara, [1951] SCR 682 it was held B
that:

"It is well settled that the validity of an Act is not affected
if it incidentally trenches on matters outside the authorised
field and, therefore, it is necessary to enquire in each case
what is the pith and substance of the Act impugned. If the
Act, when so viewed, substantially falls within the powers
c
,Ii., expressly conferred upon the Legislature which enacted it
then it cannot be held to be invalid merely because it inci-
dentally encroaches on matters which have been assigned
to another Legislature."
D
In Atiabari Tea Co. Ltd. v. State of Assam, [1961] 1 SCR 809 Ga-
jendragadkar, J. (as he then was) speaking per majority, has explained
t the purpose of the rule of pith and substance thus:

"The test of pith and substance is generally and more ap-
propriately applied when a dispute arises as to the legisla- E
tive competence of the legislature, and it has to be resolved
by reference to the entries to which the impugned legisla-
tion is relateable, when there is a conflict between the two
entries in the legislative list, and legislation by reference to
one entry would be competent but not by reference to
other, the doctrine of pith and substance is invoked for the F
purpose of determining the true nature and character of the
legislation in question ...

In Meghraj & Ors. v. Allaharakhiya & Ors., AIR 1942 FC 27 relied on
by Sri Nariman, the contention raised was that when the matter in the
Concurrent List had occupied the flied whether the question of pith G
and substance of the impugned Act would arise? The Federal Court
held that when the Provincial Act is objected to as contravening not
Sec. 100 but Sec. 107(1) of the Government of India Act 1935, which is
in pari materia to Art. 254 of the Constitution, that the question of
pith and substance of the impugned Act does not arise. In Tika Ramji's
case, the same question had arisen for resolution. It was held that- H
680 SUPREME COURT REPORTS i 1990] 1 S.C R.

A
"The pith and substance argument also cannot be imported --..
here for the simple reason that when both the Centre as
well as the State Legislatures were operating in the Concur-
rent field, there was no question of any trespass upon the
exclusive jurisdiction vested in the Centre under Entry 52
of List I, the only question which survived being whether,
B pudttinhg boSth the pieces of legislation enacted by the Centre ~
an t e late legislature together, there was any repu-
gnancy a contention which will be dealt with hereafter."

I have no hesitation to hold that the doctrine of pith and sub-
stance on the predoninant purpose, or true nature and character of the
law have no application when the matter in question is covered by an
c entry or entries in the Concurrent List and has occupied the same field
both in the Union and the State Law. It matters little as to in which
entry or entries in the Concurrent List the subject-matter falls or in
exercise whereof the Act/provision or provisions therein was made.
The Parliament and Legislature of the State have exclusive power to
D legislate upon any subject or subjects in a Concurrent List. The ques-
tion of incidental or ancillary encroachment or to trench into forbidder
field does not arise. The determination of its 'true nature and charac-
ter' also is immaterial.

15. Power to legislate whether derived from the concerned A rti-
E cles or legislative lists in Seventh Schedule

16. Parliament and the Legislature of any state derive their
power from Art. 246(2) of the Constitution to make laws with respect
to any of the matters enumerated in List III of the Vllth Schedule to
the Constitution. With a non-ohstanti clause engrafted therein namely '(
F notwithstanding anything in Clause :;, the Parliament, and, subject to
Clause 1, the Legislature of any State also have power to make laws
with respect to any of the matters enumerated in List Ill. List Ill of
Seventh Schedule enumerates the Iegislativ,e heads over which the
appropriate Legislature can operate. The function of the list is not to
confer power on either the Parliament or a State Legislature. Article
G 254 of the Constitition removes the inconsistency between the law
made by the Parliament and by the Legislatures of States. Thus the ;.
power to legislate on the Concurrent List is derived by the Parliament
and the Legislature of any State from Article 246(2) read with Article
254 only. Paramouncy to the law made by the Parliament is given by
Article 254(1) and proviso to Article 254(2). The Parliament derives
H its exclusive power under Article 246( 1) to legislate upon any of the
.- V.K. SHARMA v. STATE OF KARNATAKA. [K. RAMASWAMY, J.J 681

subjects enumerated in List I of the Seventh Schedule in the Constitu-
tion. Similarly the Legislature of a State derives its exclusive power
from Article 246(3) to make laws on any matters in List II. When the
A

,
Parliament or the Legislature of a State while making legislation
within its exclusive domain, namely, List I or List II respectively if it
incidentally trenches upon the forbidden flied, namely, the field
demarcated or distributed to the State Legislature and vice versa by B
the Legislature into List I the doctrine of Pith and Substance was
applied to find the. "true purpose and character of the Legislation". In
considering the question of the doctrine of Pith and Substance in Sub-
rahmanyam Chettiar v. Muttuswami Goundan, A.LR. 1941 F.C. 47 at
p. 51 held that it must inevitably happen from time to time that legisla-
tion, though purporting to deal with a subject in one list, touches also
on a subject in another list, and the different provisions of the enact- c
_;i ment may be so closely intertwined that blind adherence to a strictly
verbal interpretation would result in a large number of statutes being
declared invalid because the Legislature enacting them may appear to
have legislated in a forbidden sphere. Hence the rule which has been
evolved by the Judicial Committee whereby the impugned statute is D
examined to ascertain its "pith and substance", or its "true natue and
character", for the purpose of determining whether it is legislation

t ,
with respect to matters in this list or in that. In that case the question
was whether the Madras Agriculturists Relief Act 4 of 1938, Section 8
thereto is invalid, since the matter is in Schedule VII, List I or List II
of the Government of India Act, 1935. The contention was that the E
negotiable instrument; promissory notes are covered by List I of the
Seventh Schedule, therefore, the Act is invalid. In considering that
"' question and negativing the contention the above ratio was enun-

·r· ciated.
(emphasis supplied)
F
In Governor General in Council v. The Reliegh Investment Co. Ltd.,
[1944] F.C.R. 229 at p. 261 in considering the question whether the
Federal Legislature's power is not limited to cases specified in clauses
(a) to (e) of sub-section (2) of Section 99 from Entry No. 23 of the List
I of the Seventh Schedule; it was held by Spens, C.J. that it would not
be right that the Legislature would derive the power to legislate on this G
~ , topic merely from the reference to it in the List, because the purpose of
the Lists was not to create or confer powers, but only to distribute
between the Federal and the Provincial Legislatures, the powers which
had been conferred by Section 99 and 100.
(emphasis added)
H
61>2 SUPREME COURT REPORTS [1990] 1 S.C.R.

A In Harakchand Ratanchand Banthia v. Union of India, [1970] 1 ' 111111
SCR 479 at p. 489 the Constitution Bench speaking through ,.
Ramaswami, J. dealing with the Gold (Control) Act (45 of 1968)
observed thus:

"Before construing these entries it is useful to notice some
B of the well-settled rules of interpretation laid down by the
Federal Court and by this Court in the matter of construing
the entries. The power to legislate is given to the appropriate
legislature by Article 246 of the Constitution. The entries in
the three Lists are only legislative heads or fields of legisla-
tion; they demarcate the area over which the appropriate
legislatures can operate."
c (emphasis added)

In Union of India v. H.S. Dhillion, I 1972] 2 SCR 33 at p. 52 Sikri,
)-
C.J. speaking per majority of Seven Judges' Bench held that it must be
remembered tbat the function of the lists is not to confer powers; they
D merely demarcate the legislative field. The Constitution Bench
followed the ratio in Releigh Investment case, etc.
(emphasis supplied)

16. Thus I hold that the Parliament and the legislature of a State
derive their power to legislate on a subject/subjects in Lists I and List
£ II of Seventh Schedule to the Constitution from Art. 246(1) and (3)
respectively. Both derive their power from Art. 246(2) to legislate
upon a matter in the Concurrent List III subject to Art. 254 of the
Constitution. The respective lists merely demarcate the legislative
field or legislative heads. The Parliament and the legislature of a State
have concurrent power to legislate upon any subject/subjects in the
F Concurrent list III of Seventh Schedule to the Constitution. Art. 254(1)
and proviso to Art. 254(2) give paramouncy to the law made by the
Parliament, whether existing or made afresh or amended, modified,
added or repealing the law subsequent in point of time to the state law
made under Art. 254(2). The exercise of the power by a state legisla-
ture to make impugned law under one entry or other in the concurrent
G list is not decisive. The concerned entry or entries is not the source of
power to make impugned law.

17. Keeping the principles laid hereinbefore at the back of our
mind, let us consider the impugned provision. Section 14 read with
s. 20 of the Acquisition Act (21 of 1976) freezed the right of a citizen to
H apply for an to obtain permit or special permit to run a contract car-
V.K. SHARMA '· STATE OF KARNATAKA {K. RAMASWAMY, J.1683

.,, riage in terms of the permit and monopoly to run a contract carriage
A
was conferred on the S.T.U., Karnataka. But the Act evinces its inten-
lion to liberalise the grant of contract carriage permit by saying in
s. 80(2) that the Regional Transport Authority "shall not ordinarily
refuse to grant the permit." It also confers the right on an applicant to
apply for and authorises and Regional Transport Authority to grant

~
liberally contract carriage permit except in the area covered bys. 80(3) B
and refusal appears to be an exception, that too, obviously for reasons
to be recorded. It may be rejected if the permit applied for relate to an
approved or notified route. The Act accords the right, while the
Acquisition Act negates and freezes the self-same right to obtain a
permit and to run a contract carriage and prohibits the authorities to
invite or entertain an application and to grant a permit to run contract
carriage. the Act and the relevant rules cover the entire field of mak- c
( ing an application in the prescribed manner and directs the Regional
Transport Authority to grant permit with condition attached thereto to
._run contract carriages vide ss. 66(1), 73, 74 and 80 of the Act. Thus,
ti)e existence of two se!l_ of provisions in the Act 59 of 1988 and
ACquisition Act 21of1976 is sufficient to produce conflicting results in D
theii' ()peration in the same occupied field. The two sets of provisions
run on. collision course, though an applicant may waive to make an

r application for a permit. Thereby, there exists the operational incom!
patibility and irreconcilability of the two sets of provisions. Sections
14( 1) and 20(3) of the Acquisition' Act are repugnant and inconsistent
of ss. 73, 74 and 80 of the Act. By operation of proviso to Art. 254(2) E
of the Constitution, the embargo created by ss. 14(1) and 20(3) of the
Acquisition Act (21 of 1976) to make or invite an application and
injunction issued to Regional Transport Authority prohibiting to grant
contract carriage permit to anyone except to S.T.U., Karnataka.within
the State of Karnataka became void.
F
18. For the applicability of the principle that special law prevails
over the general law, the special law must be a valid law in operation.
Voidity of law obliterates it from the statute from its very inception. In
view of the finding that ss. 14(1) and 20(3) are void the contention that
the ·special law prevails over the general law is without substance. In
Justiniano Augusto De Peidada Barreto v. Antonia Vicenta De Fonseca G
& Ors., [1979] 3 SCR 494 s. 5(1) of the Goa, Daman and Diu
.( (Administration) Act, 1962 declared that all laws in force immediately
before December 20, 1961 in Goa, Daman and Diu or in part thereof
shall continue to be in force therein until amended or repealed by a
competent Legislature or other competent authority. Pursuant to the
powers conferred by Art. 240 of the Constitution, the President pro- H
684 SUPRE.\IE COURT REPORTS I 19901 I S.C.R.
A mulgated Goa, Daman and Diu (Laws) Regulations from time to time.
These regulations were extended with specified modification to Goa,
Daman and Diu like Civil Procedure Code, 1908 and the Arbitration
Act, 1940, but the Limitation Act, 1908 was not extended by any
regulation made by the President. The Portuguese Civil Code inter alia
provides limitation to lay suits which is different from the periods
B prescribed in Limitation Act 1963. It was contended that the Portu·
guese Civil Code is void by operation of Art. 254 of the Constitution.
While considering this question this Court at page 500 has stated thus:

"We are not here concerned with the provisions of cl. (2).
For the purpose of the present appeals, we will assume that
the Portuguese Civil Code which was continued by Parlia·
c ment to be in force in Goa, Daman and Diu was a law made
by the State, though there may be several objections to so )I
doing .... Without doubt the provisions of the Portuguese
Civil Code, unless they are saved bys. 29(2) of the Limita-
tion Act, are repugnant to the !l{OVisions of the Portuguese
D Civil Code are saved bys. 29(2) then there can be no ques·
tion of any repugnancy. So the question whether the provi·
sions of Portuguese Civil Code are void on the ground that
they are repugnant to the provisions of the Limitation Act ",
depends on the question whether the Portuguese Civil
Code is saved bys. 29(2) of the Limitation Act, 1963."
E
19. After exhaustive consideration of that question it was held
by Chinnappa Reddy, J. speaking for a bench of twci Judges that the
provisions of the Portuguese Civil Code deal with the subject of limita·
tion of suits etc. and in force in the Union Territory of Goa, Daman
and Diu only is 'local law' within the meaning of s. 29(2) of the Limita· -
F tion Act and they have to read into the Limitation Act 1963, as if the
schedule to the Limitation Act is amended mutatis mutandis. Thus, it
is clear that the question of repugnancy in cl. (2) of Art. 254 did not
arise in that case. On the other hand, operation of Portuguese Civil \
Code was saved bys. 29(2) of the Limitation Act as a local law.

G 20. The doctrine of predominant purpose of Acquisition Act (21
of 1976) as discussed by my learned brothers is to achieve the objective ~
of preventing the flagrant and blatant misuse or abuse of the contract
carriages as stage carriages by eliminating that class nf private pliers
from all Karnataka roads. I am in complete agreement with it. It is a
laudable object to subserve public purpose. But the operation of its
H incidental or ancillary provisions, i.e. Arts. 14(1) and 20(3) to the
V.K. ,SHARMA v. STATE OF KARNATAKA [K. RAMASWAMY. J.[685

t- primary or predominant purpose is nailed by the altered situation,
viz., making the law under the Act 59 of 1988. It is already held that A
Art. 254 applies only to repugnancy arising between an existing or
subsequent Union law and State law on any one or more subjects in
the Concurrent List lII of Seventh Schedule to the Constitution. The
inconsistency arising between laws on the other two Lists, i.e. Lists I
and II, of Seventh Schedule to the Constitution, has been taken care of B
t by the opening non obstenti clause of Art. 246(1) of the Cons.titution
which gives Supremacy of List I o'ver List II. Laws made by Parliament
in its residuary jurisdiction will be governed by the same provision
because Art. 248 is to be read with Entry 97 of List I. Same is the
position under Art. 252 of the Constitution. Once Parliament has
made a law under that Article on a matter in State List, the Legisla-
tures of those States on whose resolution the law was passed by Parlia- c

l' mentor which subsequently adopt it ceases to have a power to make a
law relating to that matter, and, therefore, there is no question of
retaining any legislative competence to make law on that matter. Same
should be the position under Art. 253 of the Constitution. The position
under temporary measures are, therefore, dealt with by Art. 251 that D
in case of inconsistency between the Union and State law, the former
shall prevail and the latter will be only 'inoperative' but not 'null and

r void'. Under Arts. 252 and 253, the loss of legislative power of the
States is complete and, thereafter, the States can no longer make any
law on a subject on which Parliament has made a law and, therefore,
their existing laws and any laws that they may venture to make in E
future will be null and void and for that matter Art. 254(1) cannot be
invoked. But that is not the case with matter enumerated in the Con-
current List. The State Legislature did not surrender its power or
jurisdiction. The Parliament, with a view to lay down general princi-
pies makes law or amends the existing law. The State Legislature still
may feel that its local conditions may demand amendment or modifica- F
tion of the Central law. Their reserve power is Art. 254(2). If the
"" Parliament expressly repeals the repugnant law made under Art.
254(2) different considerations may arise for which no final pronoun-
cement is needed here. It is already found that ss. 14(1) and 20(3) of
the Acquisition Act (21 of 1976) became void. But after making the
Act 59 of 1988, the power of the State Legislature under Art. 254(2) is G
not exhausted and is still available to be invoked from time to time.
~\ Though, there is opposite school of juristic thought, in my considered
view the interpretation I have but up will subserve the animation of the
fou.•·ding fathers of the Constitution; the Constitutional Scheme and
purpo•e envisioned by Art. 254. Therefore, after the Act has come
into force, the State legislature has its reserve power under Art. 254(2) H
686 SUPREME COURT REPORTS I1990] 1 S.C.R.
A to make law. But unless it again enacts law and reserves it for consi, ',
deration and obtains the assent of the President afresh, there is no 1
prohibition for the petitioners to make applications for the grant of
contract carriage permits under the Act and consideration and grant or
refusal thereof according to law by the concerned Regional Transport
B Authority. It is, therefore, made clear that this order does not preclude
the Kamataka State Legislature to make afresh the law similar to
ss. 14(1) and 20(3) of the Acquisition Act with appropriate phraseo,
logy and to obtain the assent of the President. The authorities have
misconstrued the effect of the Act.

21. Accordingly I hold thats. 14(1) to the extent of prohibiting
C to make fresh application for grant of permits to run the contract
carriages other than those acquired under Act 21of1976 (Acquisition
Act) and the embargo and prohibition created under s. 20(3) thereof
on the respective Regional Transport Authority in the State of _,<
Kamataka to invite/receive the application to consider the grant of
D permits to such contract carriages according to law, are hereby,
declared to be void.

22. The writ petitions are accordingly allowed, but, in the
circumstances, without costs.

P.S.S. Petitions dismissed.