254. Inconsistency between laws made by Parliament and laws made by the Legislatures of States (1) If any provision of a law made by the Legislature of a State is repugnant to any provision of a law made by Parliament which Parliament is competent to enact, or to any provision of an 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 law made by the Legislature of the State shall, to the extent of the repugnancy, be void. (2) Where a law made by the Legislature of a State with respect to one of the matters enumerated in the concurrent List contains any provision repugnant to the provisions of an earlier law made by Parliament or an 18 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 President and has received his assent, prevail 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.”

1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO(S). 8793-8794 OF 2013
ATUL CHANDRA DAS (D) THROUGH LRS. APPELLANT(S)
VERSUS
RABINDRA NATH BHATTACHARYA (D)
THR. LRS. & ORS.ETC. RESPONDENT(S)
J U D G M E N T
K.M. JOSEPH, J.

  1. The appellants are the legal representatives of
    one Atul Chandra Das. These appeals are directed against
    the common judgment of the Calcutta High court dismissing
    the First Appeal No.7 of 1989 and First Appeal No.8 of
  2. The appeals were filed by Atul Chandra Das against
    the dismissal of E.S. No.782 of 1979 filed by him for
    ejectment of the respondents from the plaint schedule
    property and decreeing of Suit no.1271 of 1980 filed by
    the respondents which would be referred to as the title
    suit. Thus, the appeals before us are lodged against the
    2
    concurrent finding of the courts below and maintained by
    special leave granted by this Court.
  3. The case set up by Atul Chandra Das is as follows:
    By a registered deed of conveyance dated 28.11.1959
    (the parties shall be referred to as in the position in
    the trial Court), the defendants sold for consideration
    the plaint schedule property to one Bholanath Auddy
    (hereinafter referred to as “Bholanath”).
    Simultaneously, Bholanath created tenancy in favour of
    the defendants at the monthly rent of Rs.50/-. It was
    agreed that the share of corporation tax shall be paid by
    the defendants. It was also agreed between Bholanath and
    defendants that the defendants were to vacate and deliver
    possession on the expiry of two years from 28.11.1959.
    Thereafter, an agreement for sale was entered into on
    15.8.1960 between Bholanath and Atul Chandra Das. He
    agreed to sell plaint schedule property for Rs.9000/-.
    Since Bholanath failed to perform the obligation, O.S.
    No.171 of 1962 was filed by Atul Chandra Das for specific
    performance. On 30.11.1977 a decree was passed in favour
    of Atul Chandra Das. In terms of decree he deposited the
    balance consideration and finally a sale deed was
    3
    executed in his favour. He claimed to be the landlord of
    the building and alleging that defendants have no right
    to occupy the premises, he sought recovery of possession
    by evicting the defendants. The defendants filed written
    statement. That apart they also filed the other suit
    namely Suit No.1271 of 1980. Therein the following
    averments were made inter alia:
    Smt. Annapurna Devi (since deceased) was the owner for
    life of the property and on her death, her three sons
    namely Late Ashutosh Bhattacharya, Late Dulal Krishna
    Bhattacharya and Rabindra Nath Bhattacharya (hereinafter
    referred to as ‘Bhattacharyas and who are the defendants
    in the suit filed by Atul Chandra Das and plaintiffs in
    O.S. No. 1271/1980) were given absolute rights, in terms
    of the will executed by Bijoy Kr. Ghosal, the owner of
    the property. They set up the case that a sum of
    Rs.8000/- came to be borrowed from Bholanath on
    28.9.1959. To secure Rs.8000/- Bhattacharyas mortgaged
    by conditional sale, on 28.11.1959 the plaint schedule
    property in favour of Bholanath. In order to give
    effect to mortgage an agreement for sale was entered
    into on 07.12.1959 with Aboya Devi (since deceased wife
    4
    of Late Ashutosh Bhattacharya and deceased Late Karuna
    Bhattacharya, the wife of first plaintiff in a title
    suit and Late Smt. Rama Devi, daughter of Annapurna
    Devi) who were the nominees of the mortgagors for the
    agreement to sell of the house on payment of a sum of
    Rs. 10,000/- which was settled to be the mortgage money,
    no rate of interest having been stipulated. Two years
    was agreed to be the period of redemption of mortgage.
    The title deeds were to be kept with Bholanath by way of
    further security. The agreement which is referred to by
    Atul Chandra Das as an agreement for sale in his favour
    dated 15.8.1960 is described as a collusive and
    fraudulent agreement and it was entered into before the
    expiry of period of redemption. The plaint schedule
    property comprised of a three storied building standing
    upon an area of 1 cottah and 8 chittackas of land and
    the value at the relevant time would not have been less
    than Rs.30,000/-, the annual municipal value being
    Rs.1469/- declared at that point of time. Bholanath was
    a mere mortgagee in a mortgage by conditional sale. The
    specific performance suit was described as a collusive
    suit. Bhattacharyas claimed to be the owners being
    5
    legatees under the will. The relief sought by the
    plaintiffs in O.S. No.1271 of 1980 is relevant. The
    relevant portion reads as below:-
    “20. For the purpose of jurisdiction the suit
    is valued for declaration with consequential
    relief of perpetual injunction at Rs.51/-
    there being no objective standard of
    valuation and objectively for Rs.8500/- and
    Court fee stamp of Rs.4.15 is paid on the sum
    of Rs.51/- being the value for declaration
    with injunction and court fee stamp Rs.525.00
    is paid on the sum of Rs.6500/- being balance
    of the principal due the total court fee paid
    being Rs.529.15p.
    The plaintiffs therefore pray-
    (a) That the suit be decreed for:-
    (i) Declaration that the sale dated 28.11.59
    for the consideration of Rs.8000/- of the
    property described in the schedule “A” below
    by Sm. Annapurna Devi since
    deceased, Ashutosh Bhattacharyya, since
    deceased and the plaintiff nos.1 and 2 to
    Bhola Nath Duddya, since deceased followed by
    the condition of re-transfer as per agreement
    for sale dt. 7.12.59 by Bholanath Auddya
    since deceased in favour of Sm. Abhoya Devi,
    since deceased Sm. Karuna and Sm. Rama Devi
    since deceased, on payment of Rs.10,000/-
    within 2 years was on ostensible sale
    amounting to a mortgage by conditional sale
    and the sallers in the said deed of sale were
    mortgagors and the buyer therein was the
    mortgagee and the period of redemption was 2
    years as provided in the said agreement for
    sale dt. 7.12.59.
    (ii) declaration that either the defendant
    Nos. 2 to 7 are the present mortgagee being
    the heirs and legal representatives of the
    said Bholanath Auddya, deceased or in
    alternative the defendant no. 1 is the
    6
    present mortgages, by subrogation having
    stepped in the shoes of the said Bholanath
    Auddya by purchase.
    (iii) declaration that the right of
    redemption of the said mortgage by
    conditional sale is still subsisting and the
    plaintiffs are entitled to redeem the said
    mortgage on deposit of the mortgage money
    amounting to Rs.8500/- in court or such
    amount as may be determined by the Court or
    payment of the same to who ever may be
    declared to be the mortgages or mortgagees.
    (iv) Declaration that the agreement dated
    15.08.60 between the said Bholanath Auddya
    since deceased and the defendant No. 1 for
    sale of the property described in the
    schedule “A” below is a collusive and
    fraudulent agreement and not enforceable in
    law.
    (v) Declaration that the decree dated
    30.11.77 of the Hon’ble High Court at
    Calcutta in Suit No. 171 of 62 for specific
    performance of contract for the sale of the
    property described on the schedule “A” below
    was obtained by practising fraud upon the
    court by the defendant No. 1 and the said
    Bhola Nath Auddya since deceased collusively.
    (vi) declaration that the said decree of the
    Hon’ble High Court at Calcutta and the
    conveyance executed thereunder on 26.3.79 by
    the Registrar Original Side of the said
    Hon’ble High Court for sale of the property
    described in the schedule “A” below in favour
    of the defendant No. 1 are not enforceable in
    law and the defendant No. 1 cannot take any
    advantage under the said decree and/ or the
    said conveyance in enforcement of the same.
    (vii) declaration that the defendant No.
    1 has no right title and interest in the
    property described in the schedule “A” below
    either as owner or as landlord nor has any
    right to file the Ej. Suit no. 782 of 1979 in
    the city civil court, Calcutta now pending
    before the Ld. Registrars’ Bench and/ or
    proceeding with the same.
    7
    That the suit be decreed for perpetual
    injunction restraining the defendant No. 1.
    i. From enforcing the said decree dt.
    20.11.77 in suit no. 171 of 62 of the Hon’ble
    High Court at Calcutta and/ or enforcing the
    conveyance dt. 26.3.79 executed by the
    Registrar Original side, High Court at
    Calcutta in favour of the defendant No. 1
    under the said decree and/ or taking any
    advantage under the said decree and/ or
    taking any and/ or the said conveyance and
    interfering with the possession of the
    plaintiffs in the property described in the
    schedule “A” below in any way including
    recording his name in Calcutta Corporation
    and/ or in the Calcutta Collectorate.
    ii. From preceding with the Ej. Suit No. 782
    of 79 now pending before the ld. Registrar’s
    Bench City Civil Court, Calcutta.
    iii. For temporary Injunction to the effect
    as prayed for in prayer Nos. b(i) and (ii)
    above till the disposal of this suit.
    iv. That the suit be decreed for Rs.8500/-
    or such other sum as may be determined by the
    court as the present balance of the mortgage
    money payable by the plaintiffs for
    redemption of the mortgage.
    c. That the property described in schedule
    “A” below be freed from the mortgage on
    deposit in court or payment to whoever will
    be declared to be the mortgagee or mortgagees
    by the plaintiffs of the mortgage money to be
    decreed by the court.
    d. That the suit be decreed for Costs.
    e. That the suit be decreed for any other
    relief or reliefs to which the plaintiffs may
    be entitled under law and equity. “
  4. The trial Court proceeded to consider the
    evidence and on the basis of same came to the conclusion
    8
    that there is no merit in the case set up by Atul Chandra
    Das. It was found to be a case of mortgage by conditional
    sale and suit filed by Atul Chandra Das was dismissed and
    the suit filed by the Bhattacharyas came to be decreed.
    As already noticed, the High Court has confirmed the said
    decree.
  5. We heard the learned counsel for the appellant
    and learned counsel for the Bhattacharyas.
  6. The learned counsel for the appellant would
    submit before us that the courts below have proceeded to
    find that the sale dated 28.11.1959 executed by the
    previous owners, namely the defendants in favour of
    Bholanath was a mortgage without noticing that such a
    finding will be in the teeth of the proviso to Section
    58(c) of the Transfer of Property Act. In other words,
    in order to constitute a mortgage by way of conditional
    sale, the proviso to Section 58(c) of the Transfer of
    Property Act mandates that the condition of agreement to
    sell which is what is relied upon by the Bhattacharyas to
    make Bholanath a mortgagee must have been incorporated in
    9
    one document. In this case on the other hand, there is
    no dispute that the Bhattacharyas relied upon a separate
    and distinct document namely an agreement to sell
    executed by Bholanath in favour of the Bhattacharyas
    dated 7.12.1959. There is no condition for reconveying
    the property contained in the sale deed dated 28.11.1959.
  7. The second submission is that the courts have
    gone wrong in relying on Section 37A of the Bengal MoneyLenders Act, 1940 (hereinafter referred to as ‘the State
    Act’). It is her contention that the suit filed by the
    Bhattacharhyas was not filed under the State Act. There
    was no account demanded within the meaning of the Act.
    Support was sought to be drawn from the judgment of the
    Single Bench reported in Swarnalata Tat v. Chandni Charan
    Dey and Ors. AIR 1984 Calcutta page 130.
  8. The last submission is as follows:-
    Section 37(A) contained under the State Act is repugnant
    to Central Law namely Section 58(c) of the Transfer of
    Property Act.
    10
  9. Per contra, the learned counsel for the
    respondent supported the judgment. He submitted that
    Bholanath had not obtained any title under the purported
    sale deed dated 27.11.1959. He could not have conveyed
    any title to the Atul Chandra Das. The suit for specific
    performance was a collusive suit.
  10. Section 58(c) of the Transfer of Property Act
    reads as follows:-
    “58(c). Mortgage by conditional sale – Where,
    the mortgagor ostensibly sells the mortgaged
    propertyon condition that on default of payment of the
    mortgage-money on a certain date the sale shall
    become absolute, or
    on condition that on such payment being made
    the sale shall become void, or
    on condition that on such payment being made
    the buyer shall transfer the property to the
    seller,
    the transaction is called mortgage by
    conditional sale and the mortgagee a mortgagee
    by conditional sale,
    [Provided that no such transaction shall be
    deemed to be a mortgage, unless the condition
    is embodied in the document which effects or
    purports to effect the sale]”
    It is undoubtedly true that under Section 58(c), the
    proviso makes it indispensable to constitute a
    transaction a mortgage that one of the conditions
    11
    mentioned in Section 58(c) be incorporated in the
    document by which the conditional sale is effected.
    However, it is now time to refer to Section 37(a) of the
    State Act. It reads as under:-
    “37(a) Saving as to mortgage by conditional
    sale. – In the case where any loan is secured
    by a mortgage and the mortgagor ostensible
    sells the mortgaged property on any of the
    conditions specified in sub-section (c) of
    section 58 of the Transfer of Property Act,
    1882 (4 of 1882) then, notwithstanding anything
    to the contrary contained in the proviso to the
    said sub-section, the transaction shall always
    be deemed to be a mortgage by a conditional
    sale and the mortgagee a mortgagee by
    conditional sale for the purpose of the said
    sub-section.”
  11. Keeping Section 58(c) side by side with Section
    37(a) of the State Act, the conclusion is inevitable that
    the State legislature has intended to override the effect
    of proviso to Section 58(c) of the Transfer of Property
    Act by enacting Section 37(a) in the State Act. Section
    37(a) was incorporated by way of an amendment in the
    State Act. Reading of Section 37(a) brings out the
    Legislative intent with unambiguous clarity and therefore
    the High court was right in relying upon Section 37(a) of
    the State Act to find that though it was by agreement
    dated 07.12.1959 which is a separate document that
    12
    condition to make it a mortgage was incorporated it would
    not make any difference. We may also notice that despite
    the sale deed dated 27.11.1959, the Bhattacharyas
    continued to be in possession of the plaint scheduled
    property and it has been found that they paid the taxes.
    It is further found that the market value of the property
    would not have been less than Rs.30 thousand as on the
    date of the alleged sale namely 27.11.1959.
  12. The next contention is that suit filed by
    Bhattacharya was not under the State Act. Support was
    sought to be drawn from the judgment of the Single Judge
    reported in Swarnalata Tat case (Supra). Para 12 of the
    judgment relied upon by the appellants reads as follows:-
    “12. The first question which calls for
    determination is whether the present suit is
    a suit under the Bengal Money Lenders Act,
    1940 (hereinafter referred to as the said
    Act). Section 36(1) of the said Act empowers
    the Court to re-open a decree in any suit to
    which the Act applies or in any suit brought
    by a borrower for relief under the Section,
    to re-open the transaction whether the suit
    has been heard ex parte or otherwise. Nowhere
    in Section 36, it is provided that a fixed
    court fee of Re. 1 is to be paid for
    initiating proceeding under Section 36 of the
    said Act. Section 38 provides that any
    borrower may make any application at any time
    to a Court which would have jurisdiction to
    entertain suit by the lender for the recovery
    of the principal and interest of a loan
    13
    before or after the commencement of the said
    Act for taking accounts and for declaring
    amount due to the lender. Such application
    shall be in the prescribed form and shall be
    accompanied by a fee of one rupee and on
    receipt of such application the Court shall
    cause a notice thereon to be served on the
    lender. The Court shall thereafter take an
    account of the transaction between the
    parties and declare the amount, if any due
    and payable but not due by the borrower to
    the lender, whether as principal or interest
    or both. A proceeding under Section 38 shall
    be deemed to be a suit for the purpose of
    Section 11 of the Civil P.C. 1908.
    Admittedly, the plaintiff has not filed any
    application under Section 38 of the Act far
    less in the prescribed form. As such the
    question of payment of a fixed court fee of
    one rupee would not arise. Section 38 does
    not contemplate any suit. It enables a
    borrower to make an application in the
    prescribed form asking the Court to take an
    account and to declare the amount due to the
    lender. Merely because a fixed court fee of
    one rupee has been paid, the suit cannot be
    corrected into an application under Section
    38 of the said Act. Assuming that the Court
    should have treated the suit as an
    application under Section 38 of the said Act,
    even then the plaintiff cannot succeed in her
    contention. The requirements of Section 38
    have not been complied with. There is no
    prayer for taking account and for declaring
    the amount due to the lender. No borrower can
    call in and the procedure prescribed under
    Section 38 unless he asks for account and
    determination of the amount due to the
    lender. Even if the loan is secured, the
    borrower need not ask for redemption. He will
    be at liberty to file an application for
    determination only of the amount due from
    him. This was not done by the plaintiff, who
    claims to be the successor-in-interest of the
    borrower. On the contrary, the plaintiff has
    asked, inter alia, for the following reliefs
    in the plaint:—
    (a) For a decree declaring the aforesaid
    transaction is a loan transaction and
    14
    declaring that the aforesaid deed of sale is
    an ostensible deed of sale as a security to
    repayment of the said loan is repaid.
    (b) For a decree of permanent injunction
    restraining the defendant No. 1 from claiming
    any right of ownership in the property in
    suit by virtue of the aforesaid deed of sale.
    Having regard to the provisions of Ss. 36 and
    38 of the said Act and the averments made in
    the plaint and the reliefs claimed in the
    suit, I am unable to accept the contention of
    Mr. Mullick that the present suit is suit
    under the Bengal Money Lenders Act, 1940.”
  13. It is at once necessary to notice Section 2(12)
    of the State Act which defines the word “loan”.
    “2(12). “loan” means an advance, whether or
    money or in kind, made on condition or
    repayment with interest and includes any
    transaction which is in substance a loan but
    does not include-
    (a) * * * *
    (b) * * * *
    (c) A loan taken or advanced by, by the Central
    Government or any State Government or by any
    local authority in West Bengal;
    (d) A loan advanced before or after the
    commencement of this Act –
    (i) by a bank; or
    (ii) by a co-operative life insurance society, cooperative society, insurance company, life
    assurance company, Life Insurance Corporation
    of India, mutual insurance company, provident
    insurance society or from a provident fund;
    (e) an advance made on the basis of a negotiable
    instrument as defined in the Negotiable
    Instruments Act, 1881, (26 of 1881) other
    than a promissory note;
    (f) Omitted by W.B. Money Lender Amendment Act,
    (Act IV of 1931)
    (g) * * * *
    (h) a loan made to or by the Administrator General
    and Official Trustee of West Bengal or the
    Commissioner of Wakfs or the Official
    Assignee or the Official Receiver of the High
    15
    Court in Calcutta;
    (i) a loan or debenture in respect of which
    dealings are listed on any Stock Exchange;”
  14. Commercial loan is defined in Section 2(4) of
    the State Act. Section 2(22) defines suit to which this
    Act applies. It reads as follows:-
    “2(22) “suit to which this Act applies” means any
    suit or proceeding instituted or filed on or after
    the 1st day of January, 1939 or pending on that
    date and includes a proceeding in execution-
    (a) for the recovery of a loan advanced before or
    after the commencement of this Act;
    (b) for the enforcement of any agreement entered
    into before or after the commencement of this
    Act, whether by way of settlement of account
    or otherwise, or of any security so taken, in
    respect of any loan advanced whether before or
    after the commencement of this Act; or
    (c) for the redemption of any security given
    before or after the commencement of this Act
    in respect of any loan advanced whether before
    or after the commencement of this Act.”
  15. Section 36 comes under the heading ‘Reopening of
    transactions’. It deals with the power of the Court to
    exercise all or any of the various powers which are
    mentioned therein. Sub Section 4 of Section 36 reads as
    follows:-
    “36(4). This Section shall apply to any Suit,
    whatever it forms may be, if such suit is
    substantially one for the recovery of a loan or
    for the enforcement of any agreement of
    security in respect of a loan or for the
    redemption of money such security.”
    16
  16. It will be noticed that a Suit for redemption is
    mentioned as suit to which Section 36 applies. Section 38
    undoubtedly enables the borrowers to seek a direction for
    taking accounts.
  17. We have noticed the relief which was sought in
    the suit which was considered by the learned Single Judge
    in Swarnalata Tat AIR 1984 Calcutta 130. In fact, Court
    in the said case could not find a mortgage proved also.
    The reliefs on the other hand in the suit filed by
    Bhattacharya include reliefs relating to redemption in
    the form it is asked for. In fact, no issue in this
    regard was taken before the Trial Court. We see no
    reason to non-suit, the Bhattacharyas on this ground
    which is taken for the reasons which we have given.
  18. The last contention taken is that Section 37(a)
    of the State Act is repugnant to Section 58(c) of the
    Central Act namely, the Transfer of Property Act. The
    contention runs as follows:-
    Money lending falls as entry (30) in the State List.
    17
    Transfer of Property other than agricultural land falls
    in Entry 6 in the concurrent list. The State legislature
    in enacting Section 37(a) of the State Act, a law
    relating to money lending has made a law which is
    inconsistent and therefore, repugnant to the law made by
    the Parliament in Section 58(c) of the Transfer of
    Property Act.
    This contention is taken for the first time in this
    Court. We also see no merit in the same at any rate.
    Section 37(A) is traceable to the Entry ‘Transfer of
    Property’ which is found in the concurrent list. Article
    254 of the Constitution of India reads as follows:-
    “254. Inconsistency between laws made by
    Parliament and laws made by the Legislatures
    of States
    (1) If any provision of a law made by the
    Legislature of a State is repugnant to any
    provision of a law made by Parliament which
    Parliament is competent to enact, or to any
    provision of an 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 law made by the
    Legislature of the State shall, to the extent
    of the repugnancy, be void.
    (2) Where a law made by the Legislature of a
    State with respect to one of the matters
    enumerated in the concurrent List contains
    any provision repugnant to the provisions of
    an earlier law made by Parliament or an
    18
    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 President and has
    received his assent, prevail 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.”
  19. In this case proceeding on the basis that there
    is an inconsistency between Section 58(c) of the Transfer
    of Property Act and Section 37(A) of the State Act, in
    view of the assent given by the President, the matter
    falls under Article 254(2). Therefore, despite the
    inconsistency, Section 37(A) of the State Act will
    prevail in the State.
  20. The argument that being part of State Act which
    is the Money Lending Act and Money lending is in the
    state list and therefore, it is a case of legislative,
    incompetence, does not appeal to us. We have found that
    the provisions of 37(A) is traceable to the Entry
    ‘Transfer of Property’ in the Concurrent List and that
    Article 254(2) saves the provision.
    19
  21. We see no merit in the appeals and the appeals
    stand dismissed.
    …………………..J.
    [ASHOK BHUSHAN]
    …………………..J.
    [K.M. JOSEPH]
    NEW DELHI;
    APRIL 04, 2019.