Within their respective spheres. Parliament and the State Legislature should keep within the domain assigned to it and not trespass into domain reserved to the other, and a law made by one which trespasses or encroaches upon the field assigned to the other, is not valid.
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But before the Legislature purporting to deal with a subject in one list and touching also on a subject in another list is declared to be bad, the courts apply what is known as, the doctrine of pith and substance.
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According to this doctrine, the legislation as a whole is examined to ascertain its “true nature and character” in order to determine in what list it falls. If according to its “true nature and character” the legislation substantially falls within the powers conferred on the legislature which has enacted it, then it is not deemed to be Invalid “merely because it incidentally trenches or encroaches on matters which have been assigned to another legislature.
The doctrine of “pith and substance” postulates for its application, that the law in question is substantially within legislative competence of the particular legislature which has made it but only incidentally encroaches upon the legislative field of another legislature. The doctrine saves the incidental encroachment, if only the law is in pith and substance within the legislative field of the particular legislature which has made it.
The Privy Council applied this doctrine in Prafidla Kumar Mukheijee vs. Bank of Khulna, AIR 1947 P.C. 60. In this case the validity of Bengal Money Lender’s Act, 1946, which limited the amount and rate of interest recoverable by a money-lender on any loan was challenged on the ground that it was ultra vires the Bengal legislature in so far as it related to “Promissory Notes”, a Central subject.
The Privy Council held that Bengal Money Lender’s Act was in pith and substance a law in respect of money lending and money lenders—a State subject, and was valid even though it trenches incidentally on “Promissory Notes”— a Central subject.
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In State of Bombay v. F.N. Balsara, AIR 1951 S.C. 318, the Bombay Prohibition Act which prohibited sale and possession of liquors in the State, was challenged on the ground that it incidentally encroached upon Import and export of liquor across custom frontier—a Central subject.
It was contended that the prohibition, purchase, use, possession and sale of liquor will affect its import. The Supreme Court held the Act valid because the pith and substance of the Act fill under the State List and not under Union List even though the Act incidentally encroached upon the legislative powers of the Union.
In Ishwari Khetan Sugar Mills v. State of U.P., A.I.R. 1980 S.C. 1955, the validity of the U.P. Sugar Undertakings (Acquisitions) Act, 1971, was challenged on the ground that the State Legislature had no competence to enact the impugned law on the ground that it fell within Parliament’s legislative power under Entry 52 of List I.
It was contended that in view of the declaration, the Parliament had made under Entry 52 of List I to take the sugar industry, State Legislature was divested of all legislative powers in respect of Sugar Industry under Entry 24 of List II.
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The Supreme Court rejected these contentions and held that there was no conflict F14 between the State Act and the Central Act under Industries Act, 1951. The power of acquisition or requisition of property in Entry 42 List III is an independent power of the State Legislature which is referable to Entry 42 of List III and its control was taken over by the Central Government.