JUDGMENT Satish Chandra. C.J. - The State of Uttar Pradesh and the State Sugar Corporation Ltd., appeal against the order of the learned Company Judge directing the State to pay Rs. 25 lacs to the Official Liquidator. This represented the provisional compensation for acquisition of the scheduled undertaking of Messrs. Ram Chand and Sons Sugar Mills (P) Ltd., a company in liquidation. 2. In order to provide, in the interests of the general public, for the acquisition and transfer of certain sugar undertakings, the State Legislature enacted the Uttar Pradesh Sugar Undertakings (Acquisition) Act, 1971 (No. 23 of 1971). This Act came into force on July 3, 1971. Under S. 3 of this Act, every scheduled undertaking stood transferred to and vest in the Uttar Pradesh State Sugar Corporation Ltd., a Government Company, free from any debt, mortgage, charge or other encumbrance or lien, etc. with effect from July 3, 1971. The 'scheduled undertaking' was defined by cl. (h) of S. 2 to mean an undertaking engaged in the manufacture or production of sugar in a factory specified in the schedule. The schedule specified only 12 such factories; one of them was Messrs. Ram Chand and Sons Sugar Mills (P) Ltd., Bara Banki. Under S. 7 (5) of this Act, the State Government was to pay as compensation for the acquisition of the scheduled undertakings an amount specified in col. 3 of the schedule. In respect of Messrs. Ram Chand and Sons Sugar Mills (P) Ltd., an amount of Rs. 25,00,000/- was mentioned in column 3. 3. It appears that in 1968, a winding up petition had been filed against Messrs. Ramchand and Sons Sugar Mills (P) Ltd. On Aug., 22. 1972. this Court passed a winding up order. The Official liquidator was appointed as the liquidator of the company. The official Liquidator moved the Prescribed Authority, the Sugar Corporation as well as the State Government to pay to him the sum of Rs. 25,00,000/-, the compensation payable for the acquisition of the undertaking of the company in liquidation. Having failed to get the money, the Official Liquidator filed an application before the Company Judge for a direction to the State Government to pay. 4. The Sugar Corporation as well as the State Government appeared to oppose this application. 25,00,000/-, the compensation payable for the acquisition of the undertaking of the company in liquidation. Having failed to get the money, the Official Liquidator filed an application before the Company Judge for a direction to the State Government to pay. 4. The Sugar Corporation as well as the State Government appeared to oppose this application. The learned Company Judge held; (a) The method of adjudicating the claims of the creditors and their satisfaction from the compensation as provided in the Acquisition Act was different than the method and procedure provided in the Companies Act in relation to companies in liquidation. (b) The Acquisition Act was not intended to apply to companies in liquidation. The provisions of the Companies Act will prevail over the provisions of the Acquisition Act. (c) The Official Liquidator was under the provisions of the Companies Act entitled to receive the compensation for the assets of the company in Liquidation acquired by the State. 5. The State Government was directed to pay the compensation of Rs. 25 lacs to the official Liquidator. 6. Aggrieved by this order, the State of Uttar Pradesh as well as the State Sugar Corporation have come up in appeal. 7. The principal point raised for our consideration is whether the provisions of the Indian Companies Act will prevail over the provisions of the Acquisition Act in respect of the adjudication of creditor's claims and method and manner of payment of compensation for the acquisition of sugar undertaking of the respondent company in liquidation. 8. It is not disputed that Messrs. Ramchand and Sons Sugar Mills (P) Ltd. was a company registered under the Indian Companies Act. The Acquisition Act seeks to acquire and transfer to the State Sugar Corporation the scheduled undertaking which is defined to mean an undertaking comprising of all plants, machineries and equipments, engineering workshops, chemical laboratory, motor vehicles, railway sidings pertaining to the factory all lands and buildings held or occupied for purposes of the factory, houses and residences, mining Leases, tools, spare parts and sports, sugarcane, sugar in the process of manufacture for production and stocks of sugar and molasses and all bagasse and pressumd, all books of account, registers and other documents pertaining to the factory, but excluding cash in hand, cash at Bank, advances towards any income or other tax, investment and book debts or rights, liabilities and obligations respecting any other contract. The Acquisition Act does not acquire the company as such. It only acquires the properties of the company situate in a factory and engaged in the manufacture and production of sugar by means of vacuum pans and with the aid of mechanical power. Thus the company owning the sugar undertaking remains intact and in existence. Its sugar factory which is an asset of the company is acquired on payment of compensation. Section 7 provides for payment of block compensation for the undertaking at the figure mentioned in the schedule which is Rs. 25,00,000/- to Messrs. Ram Chand and Sons Sugar Mills (P) Ltd. In addition, there is provision for payment of compensation for the sugar stocks, stocks of molasses, stocks of sugarcane, as well as for sugar in the process of production or any bagasse or pressmud comprised in the undertaking. Compensation for these items was payable in addition to the block compensation payable for the undertaking 9. Under sub-sec. (6) of S. 7, the State Government was authorised to provisionally deduct from the compensation the amounts mentioned in cls. (a) to (e). They were secured debts, dues of the cane-growers or cane-growers co-operative societies, wages and dues to persons employed as workmen in the undertaking, employer's contribution under the Employee's Provident Funds Act, 1952 or the Employee's State Insurance Act, 1948 and dues claimed by the State Government on account of any loan, tax or cess or any penalty or interest dues in respect of such loan, tax or cess. The balance alone was to be deposited with the Prescribed Authority. 10. On Jan. 1, 1972 the state Government filed a statement with the prescribe Authority, indicating that in addition to Rs. 25,00,000/- as block compensation a sum of Rs. 9,15,000/- was payable as compensation for the sugar etc. in stock making a total of rupees 34,44,438.58 payable as compensation. It went on to indicate that provisional deduction were Rs. 1,02,88,154.59 on account of various amounts claimable under cls. (a) to (e) of sub-sec.(6) of S. 7 it ended by stating that the amount of compensation for deposit under section 7 (6) is therefore, nil. 11. Section 8 of the Acquisition Act provides for entertainment of claims and their adjudication by the Prescribed Authority. It also sets out priorities for the payment of debts. S. 530 of the companies Act, 1956, lays down the priority of debts. 11. Section 8 of the Acquisition Act provides for entertainment of claims and their adjudication by the Prescribed Authority. It also sets out priorities for the payment of debts. S. 530 of the companies Act, 1956, lays down the priority of debts. A perusal of that section shows that the priorities mentioned in it are different than the priorities provided for in the Acquisition Act. There is also a marked difference between the two sets of provisions with regard to the quantum of payment in respect of debts which have priorities. The debts mentioned in cls. (a), (b) and (d) of S. 350 of the companies Act have priorities but, in the circumstances mentioned in the circumstances mentioned in the section they are liable to be reduced at the time of payment. But the same kind of claims and debts do not undergo a reduction in similar circumstances, under the Acquisition Act. Under the Acquisition Act, the claims are adjudicated by the prescribed Authority while under the companies Act that function is performed by the company judge. 12. The Acquisition Act contemplates adjudication of creditor's claims by the Prescribed Authority and then satisfaction of the creditor's claim established before the Prescribed Authority from out of the compensation. On the other hand, S. 446 of the Companies Act provides that when a winding up order has been made, no suit or other legal proceeding shall be commenced, or if pending at the date of the winding up order, shall be proceeded with, against the company, except by leave of the Court and subject to such terms as the Court may impose. Under sub-sec. (2), the Company Judge is entitled to entertain and dispose of any proceeding by or against the company including any claim made against the company and any question of priorities of debts. Under S. 456 (2) of the Companies Act, all the property and effects of the company shall be deemed to be in the custody of the Court as from the date of the order for the winding up of the company. Section 536 (2) of the Companies Act provides that any disposition of the property of a company wade after the commencement of the winding up, shall, unless the Court otherwise orders, be void. 13. Section 536 (2) of the Companies Act provides that any disposition of the property of a company wade after the commencement of the winding up, shall, unless the Court otherwise orders, be void. 13. The Companies Act and the Acquisition Act make different and conflicting provisions for adjudication and satisfaction of creditor's claims and disbursement of compensation. They cannot harmoniously co-exist. 14. But, before entering into this question, it will be proper to examine the finding of the learned Company Judge that the Acquisition Act was not Intended to apply to a company in liquidation. 15. The learned Company Judge has observed;- "It would be pertinent at this stage to refer to another consideration which impels me to hold that the legislative intent was not to make the provisions of the U.P. Act applicable to companies which are wound up. Section 4 of the Act sets out the consequence of vesting and runs as under; "4. Certain consequences of vesting- Notwithstanding anything contained in any other law for the time being in force, and save as otherwise provided in this Act, on and from the appointed day- (a) every appointment of Receiver over any scheduled undertaking by any Court shall cease; (b) every lease or other arrangement where under any scheduled undertaking or the management thereof has been transferred to any person shall cease to have effect: (c) every attachment, injunction or any other order of a Court restricting or restraining the use of any scheduled undertaking or prescribing a scheme of management in respect of howsoever described, shall cease to have effect." "It is noticeable that while all lease or other arrangements and schemes of management in respect of the sugar undertaking are to cease to have effect, no mention is made of proceedings for winding up." 16. We find ourselves unable to share this view. Messrs Ramchand and Sons Sugar Mills (P) Ltd. was a company against whom a winding up petition had been filed in 1968 and was pending. The State Legislature can be deemed to know of the pendency of the winding up proceedings; yet it specifically mentioned this company in the Schedule of the Act as one of the companies whose undertaking was being acquired. Clearly the legislature intended that the provisions of the Acquisition Act will apply to the acquisition of the undertaking of its company. The State Legislature can be deemed to know of the pendency of the winding up proceedings; yet it specifically mentioned this company in the Schedule of the Act as one of the companies whose undertaking was being acquired. Clearly the legislature intended that the provisions of the Acquisition Act will apply to the acquisition of the undertaking of its company. The Acquisition Act was concerned with the distribution of the compensation payable for the acquisition of the undertaking. It was not at all concerned with the fate of the company whose undertaking was being acquired. The winding up proceedings were against the company and not against any particular asset of the company like its undertaking. They ultimately result in the dissolution of the company if the Court makes an order to that effect. The Acquisition Act had no such effect. It was hence unnecessary for the legislature to have made any special provision with respect to winding up proceedings or the appointment of the Official Liquidator in the course of winding up. Since the Company was facing winding up proceedings at the time when the Act was passed and since, in spite of it, it was specifically mentioned in the Schedule, it cannot be said that the legislature did nor intend to make the provisions of the Acquisition Act applicable to companies which were facing winding up proceedings 17. It is not disputed that the Acquisition Act received the assent of the President of India on Aug. 22, 1971. 18. The learned Company Judge has rightly held that the Acquisition Act was enacted in exercise of the legislative power conferred under Entry No. 42 of List III in the Seventh Sch. of the Constitution, while the Indian Companies Act was enacted under Entries 43 and 44 of List I of that Schedule. The learned Company Judge was correct in his view that the two enactments being of different legislatures, the principle of one being general and the other special does not apply. It is also clear that the State Legislature has no power in respect of matters dealt with in List I of the Seventh Sch. and, therefore, it could not validly legislate in respect of matters relating to winding up of Companies. 19. It is also clear that the State Legislature has no power in respect of matters dealt with in List I of the Seventh Sch. and, therefore, it could not validly legislate in respect of matters relating to winding up of Companies. 19. The adjudication of claims against a company in liquidation, the determination of priorities of debts, provision for appropriate reduction of the various categories of debts are all matters within the purview of winding up proceedings. There are specific provisions therefor in the Indian Companies Act, 1956. It is clear that in these respects the Indian Companies Act was a complete and exhaustive Code. Parliament by enacting the Indian Companies Act evinced a desire to completely occupy the field of winding up of companies. 20. The Acquisition Act in providing that the Prescribed Authority shall adjudicate the claims of creditors and shall lay down priorities in accordance with the provisions of the Act and will reduce the claims according to it, made provisions which are in fact inconsistent with the actual terms of the Indian Companies Act. There is direct conflict between the two sets of provisions on a subject matter which is completely occupied by Parliamentary legislation. Thus all the tests of repugnancy are satisfied [(a) Deep Chand v. State of U.P. ( AIR 1959 SC 648 ); (b) Tika Ramji v. State of U.P., ( AIR 1956 SC 676 ),] 21. Even though these various matters may be ancillary or incidental to the power of acquisition vested in the State Legislature, and so the Acquisition Act may be valid as being within the legislative competence of the State Legislature, yet there can be no doubt that these provisions are inconsistent with, or repugnant, to, winding, up provisions of the Indian Companies Act. 22. Article 246 of the Constitution provides;- "246. Subject matter of laws made by Parliament and by the Legislatures of States:- (1) Notwithstanding anything in cls. (2) and (3). Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule (in this Constitution referred to as the 'Union List'). (2) Notwithstanding anything in cl. (3), Parliament, and, subject to cl. (2) and (3). Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule (in this Constitution referred to as the 'Union List'). (2) Notwithstanding anything in cl. (3), Parliament, and, subject to cl. (1), the Legislature of any State also, have power to make laws with respect to any of the matters enumerated in List III in the Seventh Schedule (in this Constitution referred to as the 'Concurrent List'). (3) Subject to cls. (1) and (2), 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'), (4) Parliament has power to make laws with respect to any matter for any part of the territory of India not included in a State notwithstanding that such matter is a matter enumerated in the State List." 23. Sub-Art. (1) of Article 246 gives undoubted primacy to laws made by Parliament with respect to matters enumerated in the Union List. Under sub-art. (2) the power of the Legislature of a State to make laws with respect to any of the matters enumerated in List III is subject to Cl. (1). 24. In the present case we find that there is legislation by Parliament with respect to a matter in the Union List. The legislation falls under Cl. (1) of Article 246. On the other hand, we have a State legislation with respect to a matter enumerated in List III. This legislation is covered by cl. (2) of Article 246. A legislation covered by clause (2) of Article 246 is "subject to cl. (1)". In other words, the State legislation mentioned in cl. (2), of Article 246 can operate subject to the operative efficacy of legislation by Parliament under cl. (1) of Article 246. It is obvious that if there be any repugnancy between the two legislations, the parliamentary enactment will prevail, even in the State which has legislated under cl. (2) of Article 246. In this view it is apparent that the State Legislation, namely, the 'Acquisition Act, will be subservient to the provisions of the Parliamentary legislation, namely the Indian Companies Act, in relation to winding up of companies. (2) of Article 246. In this view it is apparent that the State Legislation, namely, the 'Acquisition Act, will be subservient to the provisions of the Parliamentary legislation, namely the Indian Companies Act, in relation to winding up of companies. The various provisions of the Acquisition Act dealing with adjudication of claims with regard to the financial liabilities of the Company in Liquidation, determination of priority and reduction of debts will all remain inoperative because of the prevailing provisions of Indian Companies Act. 25. Article 254 does not apply to circumstances of the present case. Article 254 provides:- "254. Inconsistency between laws made by Parliament and laws made by the Legislatures of States. (1) If any provision of 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 them subject to the provisions of cl. (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 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 asset, 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 State." 26. In P.N. Kaul's case ( AIR 1959 SC 749 ) the Supreme Court emphasised that existing law as mentioned in cl. (1) of Article 254 must be with respect to one of the matters enumerated in the Concurrent List. This principle was extended to law made by Parliament in the Bar Council's case ( AIR 1973 SC 231 para 15). In P.N. Kaul's case ( AIR 1959 SC 749 ) the Supreme Court emphasised that existing law as mentioned in cl. (1) of Article 254 must be with respect to one of the matters enumerated in the Concurrent List. This principle was extended to law made by Parliament in the Bar Council's case ( AIR 1973 SC 231 para 15). It was held that the question of repugnancy can only arise in matters where both Parliament and State Legislatures have legislative competence to pass laws. In other words, when Legislative power is located in the Concurrent List, the question of repugnancy arises. 27. Clause (1) of Article 254 envisages inconsistency between any provision of law made by the Legislature of a State on the one hand and any provision of law made by Parliament or any provision of any existing law on the other. The law made by Parliament or the existing law should be with respect to one of the matters enumerated in the Concurrent List. If that be so the parliamentary or the existing law shall prevail over the law made by Legislature of the State. But all this is subject to cl. (2). Cl. (2) provides that if the President gives his assent the State law shall prevail in that State, provided the State law is with respect to one of the matters enumerated in the Concurrent List and such law is repugnant to the provisions of an earlier law made by Parliament or an existing law with respect to that matter. The law made by Parliament or an existing law should also be with respect to one of the matters enumerated in the Concurrent List. Thus cl. (2) of Article 254 operated where there is repugnancy between two sets of laws, both of which have been made with respect to one of the matters enumerated in the Concurrent List. 28. Clause (1) of Article 254 operates subject to provisions of cl. (2). It is obvious that the subject-matters of cl. (1) and cl. (2) are the same. Else some portion of cl. (1) will not be subject to the provisions of cl. (2). Cl. (1), however, specifically makes the provisions of cl. (1) operate subject to the provisions of cl (2). Since cl. (2) applies where both the competing laws are in respect of Concurrent List, it cannot be denied that cl. (2) are the same. Else some portion of cl. (1) will not be subject to the provisions of cl. (2). Cl. (1), however, specifically makes the provisions of cl. (1) operate subject to the provisions of cl (2). Since cl. (2) applies where both the competing laws are in respect of Concurrent List, it cannot be denied that cl. (1) also applies and operates in respect of competing laws, both of which are made with respect to a matter enumerated in the Concurrent List Be it an existing law, or a law made by Parliament, in either case it ought to be law with respect to one of the matters enumerated in the Concurrent List. 29. Article 254 resolves the inconsistency between the laws made by Parliament and laws made by legislatures of States with respect to matters enumerated in the Concurrent List. It does not operate or resolve any repugnancy between laws made by the Parliament in the Union List and a law made by the State under the State List. It does not also apply where there is inconsistency between a law made by a Parliament with respect to a matter mentioned in the Union List as against a law made by a legislature of a State with respect to a matter mentioned in the Concurrent List. These aspects are dealt with by Article 246. 30. Here, of the two competing laws, the Parliamentary legislation is not with respect to a matter enumerated in the Concurrent List. The Indian Companies Act is a legislation with respect to a matter enumerated in List I. Any inconsistency between it and a State law (which is with respect to a matter enumerated in the Concurrent List), cannot be resolved with the aid of Article 254. 31. We have already seen that in view of Article 246, the Central law will prevail even in this state. The competing provisions of the State Act, namely, the Acquisition Act, will remain void. The learned single Judge was justified in directing the State Government to pay the amount of compensation to the Official Liquidator. 32. In the result, the appeal fails and