DOCTRINE OF PITH AND SUBSTANCE

INTRODUCTION 

The doctrine is applied when the legislative competence of a legislature with regard to a particular  enactment is challenged with reference to the entries in the various lists i.e. a law dealing with a  subject in one list is also dealing on a subject in another list. In such a case the true nature and  character of the legislation has to be ascertained. 

In ascertaining the substance of the impugned legislation, one must have regard to the enactment  as a whole, to its object and to the scope and effect of its provisions. Incidental encroachment is  not prohibited. 

The justification of the doctrine of pith and substance is that in a federal constitution, it is not  possible to make a clear-cut distinction between the powers of the Union and the State Legislatures.  There it is bound to be overlapping in all such cases, it is but reasonable to ask what in whole is  the object or purpose of the law. A strictly verbal interpretation would result in a large number of statutes being declared invalid on the ground of overlapping. If the legislature is to have the full  scope to exercise the powers granted to it, it is necessary to assume that the court does not prevent  a legislature from dealing with a matter which may incidentally affect any matter in the other list. 

Gwyer, C. J. in Subramanian Chattiar v. Muthuswami Goundan (AIR 1941 FC 47, 51) has  explained the validity of the doctrine of pith and substance as follows: 

“It is not just a question of overlapping. The situation is: The law quite competently has been made  under one list but the law as such is so broad in terms that it encroaches into a matter covered  under another list also. The entry in the first list has already been acted upon. Not a question of  interpreting the list but a question of interpreting the law made under that particular entry (express  or implied) of the list. The interpretation of the lists as such is covered under the other principles  of interpretation”

LANDMARK CASES 

1. Prafulla Kumar v. Bank of Commerce (AIR 1947 PC 60): 

In this case, The Bengal Money Lenders Act, 1940 provided for limiting the amount and the rate  of interest recoverable by a lender on any loan. The appellants had taken the money whereas the  respondents were the successors of the creditors. Significantly, the loans were secured by  promissory notes and this is what lay at the root of the controversy. The High Court held that the  Act was ultra vires the law making powers of the Bengal Legislature. 

On appeal to the Privy Council it was contended on behalf of the appellants that the act was valid  as it dealt with ‘money-lending’ and ‘money-lenders’ in the province – List II, Entry 27. The  respondents, on the other hand, contended that the act affected the rights of the promissory note  holders to recover the full amount due on the promissory notes – List I, Entry 28- Therefore, the  Act should be held ultra-vires. 

The question was; whether the law is to be treated in respect of promissory notes or relating to  money lending? If the law is not seen in relation to a promissory note, then how is the state to  regulate the law relating to money-lending as promissory notes, negotiable instruments, cheques  etc. are the modem means of money lending? If the state cannot, in turn regulate the matter, can  the parliament make laws with respect to money lending? But the problem is that ‘money lending’ is not an express subject included in the union list. The problem is that the union cannot regulate  laws relating to ‘money lending’ and the state legislature cannot do so without encroaching upon  the union list. If, in turn, we bring this encroachment, we are denying certain subjects in the  constitution. 

The appellants set out their contention under three heads: 

i. The state’s power to make laws with respect to ‘money lending necessarily imports the  power to affect the lender’s right against the borrower upon a promissory note given in the  course of a money lending transaction. In this sense Item 27. List II should be read as an  exception to Item 28, List I.

ii) The impugned Act is in pith and substance an Act with respect to money lender and money  lending and it is not rendered void in whole or in part because it incidentally touches upon matters  outside the authorized field. 

iii) Upon its true construction item 28 is confined to that part of the law relating to negotiable  instruments which has reference to their negotiability and does not extend to that part which  governs the contractual relationship existing between the immediate parties to a bill of exchange  or promissory note. That part, they said, lay in the field of contract. 

As to the Second Contention: It was concluded that not just the entries but the pith and substance  of the law itself have to be interpreted. If the pith and substance of the Act is money lending, the  Act is a valid one.  

Three questions therefore arise: 

1) Does the Act in question deal in pith and substance of money lending? 2) If it does, is it valid though it incidentally trenches upon matters reserved for the federal  legislature? 

3) Once it is determined whether the pith and substance is money lending? Is the extent to  which the federal field is invaded a material matter? 

Pith and substance has been defined in Para 37 of the judgment: 

“True nature and character of the law.” Subject must still overlap and where they do the questions  must be asked what in pith and substance is the effect of the enactment of which complaint is made  and in what list is its true nature and character to be found. 

The Act would not be invalid once its pith and substance has been established and it is also  established that the legislature is competent to enact the law. The extent of encroachment is  relevant for pith and substance and not for any other purpose. Excessive encroachment – the pith  and substance itself gets lost.  

The extent of invasion by the provinces into subject enumerated in the federal list has to be  considered. No doubt it is an important matter for determining what is the pith and substance of  the impugned Act. Its provisions may advance so far into federal territory as to show that its true  nature is not concerned with provisional matters, but the question is not, has it surpassed more or 

less, but is the surpass, whatever it be such as to show that the pith and substance of the impugned  act is not money lending but promissory notes or banking? Once that question is determined, the  Act falls on one or the other side. 

This view places the precedence accorded to the three lists in its proper perspective. No doubt  where they come in conflict List I has priority over Lists II and III and List III over List II, but the  question still remains, priority in what respect? Does the priority of the federal legislature prevent  the provisional legislature from dealing with any matter which may incidentally affect any item in  its lists or in each case has one 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? The Latter view  is correct. 

In the present case, the pith and substance of the impugned Act is “money lending”. Had it said:  “How a promissory note would be affected or regulated” – the pith and substance would have been  promissory note and not money-lending. Thus, the Act is valid. 

2. State of Rajasthan v. G. Chawla (AIR 1959 SC 544): 

State law passed upon Entry 6, List II – “Public health and sanitation”. The law restricted sound  amplifiers. Union list – Entry 31 – “P&T. Telephones, wireless, broadcasting and other like forms  of communication.” The impugned legislation in its pith and substance fell within Entry 6, List II  and hence valid. 

3. Bank of New South Wales v. The Commonwealth: 

In this case Jatham, C. J. opined that the power to make laws with respect to “a subject matter is  a power to make laws which in reality and substance are laws upon the subject matter. It is not  enough that a law should refer to the subject matter or apply to the subject matter e.g. income tax  laws apply to hotel keepers as members of the public; but no one would describe an income tax  law as being for that reason, a law with respect to hotel keepers…”

CONCLUSION 

According to the Doctrine of Pith and Substance, if the substance of legislation fits within a  legislature’s legal authority, the legislation does not become illegal just because it addresses a  problem outside of its jurisdiction. The phrase “pith and substance” refers to “true nature and  character”. This idea is concerned with an infringement on the constitutional delimitation of  legislative powers in a federal state. The Court utilizes it to decide whether the alleged intrusion is  minor or serious. Thus, the ‘pith and substance’ principle asserts that the challenged legislation  is essentially within the legislative competence of the legislature that passed it but only incidentally  intrudes into the legislative field of another legislature.