The Bengal State Government enacted Bengal Moneylenders Act under the State list. It was challenged as unconstitutional by Central Legislature as it encroached upon the Central subject namely ‘Promissory Notes’. State whether the enactment of the Act valid?
The enactment of the Bengal Moneylenders Act by Bengal State Government is valid under Art. 246(3) of the Indian Constitution which reads – the Legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule (in this Constitution referred to as the ‘State List’.
The Bengal Moneylenders Act is essentially within the exclusive power of the Legislation of Bengal State Government.
In Prafulla Kumar Mukherjee Vs. Bank of Commerce, Khulna AIR 1947 PC 60, the Privy Council held that Bengal moneylenders Act was in pith and substance, the law in the State list and hence not unconstitutional. Clear cut division of legislative powers was not possible and the areas provided under the three lists were bound to overlap.
The meaning of ‘doctrine of pith and substance’ is that the true object of the legislation or a statute, relates to a matter within the competence of Legislature which enacted it, it should be held to be intra vires even though it might incidentally trench on matters not within the competence of Legislature.