Judgment KASLIWAL, J.:- Special leave granted in all the petitions. 2. This litigation is an upshot of the earlier case Reserve Bank of India v. Peerless General Finance and Investment Company Ltd. ((1 987) 1 SCC 424) decided on January 22, 1987. In 1978 the Prize Chits and Money Circulation Scheme (Banning) Act, 1978 (in short the Banning Act) was enacted to ban the promotion or conduct of prize chits or money circulation schemes and for matters connected therewith or incidental thereto. The question which arose in the above case was whether the Endowment Scheme piloted by the Peerless General Finance and Investment Company Ltd., (hereinafter in short the Peerless) fell within the definition of Prize Chits within the meaning of S. 2(e) of the above Banning Act. By a letter dated July 23, 1979, the Reserve Bank of India pointed out to, the Peerless that the schemes conducted by it were covered by the provisions of the Banning Act which had come into force w.e.f. December 12, 1978. On September 3, 1979 the Peerless filed a writ petition in the Calcutta High Court for a declaration that the Prize Chits Banning Act did not apply to the business carried on by the Peerless. A similar writ petition was filed questioning a notice issued by the Madhya Pradesh Government on the same lines as that issued by the West Bengal Government. A learned single Judge of the High Court dismissed both the writ petitions but appeals preferred by the Peerless under the Letters Patent were allowed by a Division Bench of the Calcutta High Court. It was declared that the business carried on by the Peerless did not come within the mischief of the Prize Chits Banning act. Against the judgment of the Division Bench of the Calcutta High Court, the Reserve Bank of India, the Union of India and the State of West Bengal preferred appeals before this Court. The question considered in the above case was "Is the endowment scheme of the Peerless Company a Prize Chit within the meaning of S. 2(e) of the Prize Chits and Money Circulation Schemes (Banning) Act?" This court held that S. 2(e) does not contemplate a scheme without a prize and, therefore, the Endowment Certificate Scheme of the Peerless Company was outside the Prize Chits Banning Act. Appeals filed by the Reserve Bank of India, the Union of India and the State of West Bengal were accordingly dismissed. Chinnappa Reddy, observed (at pp. 1043-44 of AIR): "It is open to them to take such steps as are open to them in law to regulate schemes such as those run by the Peerless Company to prevent exploitation of ignorant subscribers. Care must also be taken to protect the thousands of employees. We must also record our dissatisfaction with some of the schemes of the Life Insurance Corporation which appear to us to be even less advantageous to the subscribers than the Peerless Scheme. We suggest that there should be a complete ban on forfeiture clauses in all savings schemes, including Life Insurance Policies, since these clauses hit hardest the classes of people who need security and protection most. We have explained this earlier and we do wonder whether the weaker sections of the people are not being made to pay the more affluent sections ! Robbing Peter to pay Paul? It was further observed "We would also like to query what action the Reserve Bank of India and the Union of India are taking or proposing to take against the mushroom growth of finance and investment companies offering staggeringly high rates of interest to depositors leading us to suspect whether these companies are not speculative ventures floated to attract unwary and credulous investors and capture their savings. One has only to look at the mornings newspaper to be greeted by advertisements inviting deposits and offering interest at astronomic rates. On January 1, 1987 one of the national newspapers published from Hyderabad, where one of us happened to be spending the vacation, carried as many as ten advertisements with banner headlines covering the whole of the last page, a quarter of the first page and conspicuous spaces in other pages offering fabul us sates of interest. At least two of the advertisers offered to double the deposit in 30 months, 2000 for 1000, 10,000 for 5,000, they said..Another advertiser offered interest ranging between 30 per cent to 38 per cent for periods ranging between six months to five years. Almost all the advertisers offered extra interest ranging between 3 per cent to 6 per cent if deposits were made during the Christmas-Pongal season. Several of them offered gifts and prizes. Almost all the advertisers offered extra interest ranging between 3 per cent to 6 per cent if deposits were made during the Christmas-Pongal season. Several of them offered gifts and prizes. If the Reserve Bank of India considers the Peerless Company with eight hundred crores invested in Government securities, fixed deposits with National Banks etc. unsafe for depositors, one wonders what they have to say about the mushroom non-banking companies which are accepting deposits, promising most unlikely returns and what action is proposed to be taken to protect the investors. It does not require much imagination to realise the adventurous and precarious character of these businesses. Urgent action appears to be called for to protect the public. While on the one hand these schemes encourage two vices affecting public economy, the desire to make quick and easy money and the habit of excessive and wasteful consumer spending, on the other hand the investors who generally belong to the gullible and less affluent classes have no security whatsoever. Action appears imperative. " 3. Khalid, J., another learned Judge agreeing with the judgment of Chinnappa Reddy, J., further added his short but important concluding paragraph as under ( AIR 1987 SC 1023 , Para 42): "I share my brothers concern about the mushroom growth of financial companies all over the country. Such companies have proliferated. The victims of the schemes, that are attractively put forward in public media, are mostly middle class and lower middle class people. Instances are legion where such needy people have been reduced penniless because of the fraud played by such financial vultures. It is necessary for the authorities to evolve fool-proof schemes to see that fraud is not allowed to be played upon persons who are not conversant with the practice of such financial enterprises who pose themselves as benefactors of people." 4. Taking note of the weighty observations made by this Court, the Reserve Bank of India in exercise of the owners conferred by Ss. 45-J and 45-K of the Reserve Bank of India Act, 1934 (hereinafter referred to as the Act) and of all the powers enabling it in this behalf and considering it necessary in the public interest issued certain directions by notification No.DFC.55/DG (O)-87 dated the 15th May, 1987 (hereinafter referred to as the directions of 1987). 45-J and 45-K of the Reserve Bank of India Act, 1934 (hereinafter referred to as the Act) and of all the powers enabling it in this behalf and considering it necessary in the public interest issued certain directions by notification No.DFC.55/DG (O)-87 dated the 15th May, 1987 (hereinafter referred to as the directions of 1987). The constitutional validity of these directions of 1987 was challenged by Timex Finance and Investment Company Ltd. (hereinafter referred to as Timex Company) by filing a writ petition in the Calcutta High Court before the learned single Judge. The learned single Judge granted an interim order in terms of prayers (g) and (h) of the writ petition. The Reserve Bank of India aggrieved against the interim order filed an appeal before the Division Bench. A stay petition was also moved on behalf of the Reserve Bank of India for staying the operation of the order dated 7th October, 1988 passed by the learned single Judge. After hearing the stay petition for sometime, the Division Bench of the High Court listed the appeal as well as the stay petition for final disposal. The Division bench of the High Court disposed of the appeal as well as the writ petition by an order dated, March 23, 1990, and arrived to the following findings and conclusions. "(a) Reserve Bank of India is empowered to issue directions to the residuary non-banking companies under the provisions of Ss. 45J and 45K of the Reserve Bank of India Act, 1934 for the interest of thousands of depositors. (b) However, to the extent such directions are found to be prohibitory or not workable and as such unreasonable must be held to be beyond the powers of the Reserve Bank of India. (c) The impugned directions providing that they represent irreducible minimum for safeguarding the interest of and for preventing exploitation of small and unwary depositors cannot be implemented without suitable modification. It is not reasonably practicable to comply strictly with the directions as they stand by the writ petitioners and the similarly situated companies. The SC in Peerless case ( AIR 1987 SC 1023 ) (supra) reserved the liberty to the Reserve Bank of India to take such steps as are open to them in law to regulate the schemes such as those granted by the Peerless to prevent exploitation of subscribers and to protect thousands of employees. The SC in Peerless case ( AIR 1987 SC 1023 ) (supra) reserved the liberty to the Reserve Bank of India to take such steps as are open to them in law to regulate the schemes such as those granted by the Peerless to prevent exploitation of subscribers and to protect thousands of employees. The impugned directions without modifications will run counter to the aforesaid directions of the SC. (d) The business of savings and investments carried on by the company and similarly situated companies having not been declared unlawful or banned, power of the Reserve Bank of India to regulate such business cannot be permitted to be prohibitory resulting in the ultimate closure of the business carried on by the writ petitioner company and other similarly situated companies. If the modifications as suggested by us are not implemented and if. ultimately by the business is closed down and the company goes into liquidation, the hard earned money of thousands of depositors will be lost and the employees would also lose their job. If even after modifications are made to the impugned directions in terms of this order, any company fails to comply with such directions, the Government may take such steps as are open to them to protect the interests of the thousands of small depositors and numerous employees. (e) The reasons why the impugned directions cannot be complied with and are held to be unworkable and unreasonable are mainly because of the definition of liability assigned in the impugned directions. The impugned directions, as they stand now, cannot be implemented by the residuary non-banking companies without incurring loss irrespective of their net worth. According to the impugned directions, the liability is the amount of money deposited by the depositors plus the amount of interest whether or not due to them according to the terms of the respective contracts at the given point of them. In other words, the entire collection with the interest, bonus etc. whether payable or not would be the liability of the Company. This leaves no fund for working. If the definition of liability is amended as suggested by us, it will be possible for the companies to generate working capital. In our view, liability in Cl. In other words, the entire collection with the interest, bonus etc. whether payable or not would be the liability of the Company. This leaves no fund for working. If the definition of liability is amended as suggested by us, it will be possible for the companies to generate working capital. In our view, liability in Cl. 6 and in other clauses of the impugned directions should be construed to mean total amount of contractual dues of the depositors including interest, premium, bonus or other advantages by whatever name called, accrued on the amount according to the terms of contract. Ss. 45J and 45K of the Act do not authorise the Reserve Bank of India to introduce a concept of liability which is contrary to the accepted commercial practice and trading principles. The impugned directions have failed to make distinction between the actual liability in praesenti and a liability de futuro. Liberty must be reserved to the companies to adopt normal accountancy practice recognised and accepted in the trading circles so long as such accounting practice provides for payment of the liability to the depositors in accordance with the contractual obligations. However, the Reserve Bank of India may, having regard so that acts and circumstances of each case issue Directions regulating the administrative and management expenses and expenditure on commission and publicity. In the impugned directions no restriction has been imposed on the expenditure by a residuary non-banking company on any of these heads. In our view, the impugned directions without modifications, instead of suppressing the mischief, will only lead to adverse unworkable and/or impracticable results inasmuch as if the residuary non-banking companies cannot comply with such directions in toto, such companies have to go out of existence. This cannot be the object of the impugned directions. If the liability in terms of the contractual obligations is provided not only in the accounts but also by suitable investments in terms of Cl. 6 of the directions, in our view, all the residuary non-banking companies, irrespective of their net worth, will be able to carry on the business. (f) Every residuary non-banking company shall disclose its liability in its Books of Accounts and balance sheet the aggregate amount of liability accrued and payable to the depositors in accordance with the terms of the contract. (f) Every residuary non-banking company shall disclose its liability in its Books of Accounts and balance sheet the aggregate amount of liability accrued and payable to the depositors in accordance with the terms of the contract. (g) The directions contained in clause 6 for deposit or investment and the liability shall be read subject to the modification of the definition of the liability as aforesaid. (h) The directions are prospective. The period of deposit and the date of return with respect to all certificates issued prior to 15th May 1987 have been excluded from the purview of the directions as per clause 18(1). This exemption should include all contractual obligations on those certificates. (i) All funds prior to the issue of the directions should be allowed to be kept in the manner as was being done by the respective residuary non-banking company. the direction with regard to the investment shall be applicable from the moneys collected and/ or received on and after 15th May 1987. The companies shall be allowed reasonable time to make good the deficiency in the investment. required to be made in terms of the directions 1 after 15th May 1987. (j) We are not unmindful of the fact that exercise of power by legislature and executive is subject to judicial restraint. The only check on judicial exercise of power is the self-imposed discipline of judicial restraint. But although the courts in exercise of judicial power are not competent to direct the enactment of a particular provision of law, if the statutory directions suffer from arbitrariness, the court is competent to issue necessary directions so that the statutory directions may be brought in conformity with law. As we have held that the Reserve Bank of India has transgressed the statutory power to the extent indicated elsewhere in the judgment, we are of the view that the Reserve Bank of India shall modify the directions and make them reasonable and workable to safeguard the interest of depositors and protect employees". 5. The Division Bench also considered an application filed by Favourite Small Investment Company and by order dated 20th December, 1990 directed that the Reserve Bank of India should revoke the prohibitory order and permit Favourite Small Investment Company to accept fresh deposits and carry on new business. 6. It may be noted that the Peerless filed a petition before the High Court for becoming a party-respondent. 6. It may be noted that the Peerless filed a petition before the High Court for becoming a party-respondent. The High Court by order dated 31st August, 1990 allowed the said Application and further ordered that the cause title and the records proceedings of appeal, memorandum of appeal and the paper book filed be amended accordingly. The Peerless also moved an application for clarification of the judgment and order dated 23rd March, 1990. It prayed that suitable provision should be made for a depositor who wants back the money before maturity. If the depositor intends to get refund of the money invested before the expiry of actual. contract period, he should be required to keep the funds for a minimum period in accordance with the contract. Before maturity he can only take loan but not the principal amount with interest. The amounts of returns should also be less than 5 per cent to provide for the collection and other expenses of the non-banking companies. The Division Bench of the High Court took the view that the order dated 23rd March, 1990 required clarification as it was not made clear as to whether non residuary banking companies are under an obligation to pay discontinued certificates before the stipulated period in the contract, if so that would be the rate of interest. The Division Bench by order dated December 24, 1990 clarified its earlier order dated 23 March, 1990 as under: "(a) If the contract by and between the company and the depositor provides that no payment on discontinued certificate will be made before the expiry of the term stipulated in the contract, in such cases, if the certificate is discontinued any time before such stipulated term and payment is made to the depositors according to the terms and conditions of the contract, in other words, on the expiry of the term stipulated in the contract, such depositor shall be paid interest at the rate of 8 compound per annum, but in such a case the company will be at liberty to deduct an amount not exceeding 5 from the total return in or to provide for collection and other expenses incurred in connection with these discontinued certificates. (b) In cases where certificates are discontinued before or after the stipulated term but the depositors obtain refund only upon maturity of the certificates, such refund shall be made to the depositors with compound interest at the rate of 8 per annum without any deduction whatsoever. (c) Since no payment will be made against the discontinued certificates to the depositors in such cases shall be permitted to take loan, if they so intend, against the payment made till discontinuance of such terms and conditions as the company may stipulate." 7. The Reserve Bank of India aggrieved against all the above orders of the Calcutta High Court has filed appeals against the orders dated 23rd March, 1990, 31st August, 1990, 20th December, 1990 and 24th December, 1990. the Peerless General Finance and Investment Company Ltd., has also filed a writ petition No. 677 of 1991 directly before this Court under Art. 32 of the Constitution of India. 8. In view of the fact that the questions raised in the appeals filed by the Reserve Bank of India against the orders of the High Court and in the civil writ petition filed by the Peerless Company are common, the same were heard together and are disposed of by a single order. Interlocutory applications were also filed on behalf of the employees of the Peerless Company, agents of Peerless Company working in the field, and some of the depositors in the Peerless Company. We have heard them also. 9. The main controversy centres round paragraphs (6) and (12) of the directions of 1987 and as such the same are reproduced in full. Interlocutory applications were also filed on behalf of the employees of the Peerless Company, agents of Peerless Company working in the field, and some of the depositors in the Peerless Company. We have heard them also. 9. The main controversy centres round paragraphs (6) and (12) of the directions of 1987 and as such the same are reproduced in full. Paragraph (6) Security for depositors on and from 15th May 1987- (1) Every residuary non-banking company shall deposit and keep deposited in fixed deposits with public sector banks or invest and keep invested in unencumbered approved securities (such securities being valued at their market value for the time being), or in other investments, which in the opinion of the company are safe, a sum which shall not, at the close of business on 31st December 1987 and thereafter at the end of each half year that is, 30th June and 31st December be less than the aggregate amounts of the liabilities to the depositors whether or not such amounts have become payable: Provided that of the sum so deposited or invested (a) not less than 10 per cent shall be in fixed deposits with any of the public sector banks; (b) not less than 70 per cent shall be in approved securities; (c) not more than 20 per cent or ten times the net owned funds of the company, whichever amount is less, shall be in other investments, provided that such investments shall be with the approval of the Board of Directors of the Company. Explanation: "Net owned funds" shall mean the aggregate of the paid-up capital and free reserves as appearing in the latest audited balance-sheet of the company as reduced by the amount of accumulated balance of loss, deferred revenue expenditure and other intangible assets, if any, as disclosed in the said balance-sheet. (2) Every residuary non-banking company shall entrust to one of the public sector banks designated in that behalf, deposits and securities referred to in clauses (a) and (b) of the proviso to sub paragraph (1) to be held by such designated bank for the benefit of the depositors. Such securities and deposits shall not be withdrawn by the residuary non-banking company, or otherwise dealt with, except for repayment to the depositors. Such securities and deposits shall not be withdrawn by the residuary non-banking company, or otherwise dealt with, except for repayment to the depositors. (3) Every residuary non-banking company shall furnish to the Reserve Bank within thirty days from the close of business on 31st December 1987 and thereafter at the end of each half year that is as on 30th June and 31st December, a certificate from its auditors, being members of Institute of Chartered Accountants, to the effect that the amounts deposited in fixed deposits and the investments made are not less than the aggregate amounts of liabilities to the depositors as on 30th June and 31st December of that year. Explanation: For the purpose of this paragraph, (a) "Aggregate amounts of liabilities" shall mean total amount of deposits received together with interest, premium, bonus or other advantage by whatever name called accrued on the amount of deposits according to the terms of contract. (b) "approved securities" means, the securities in which the Trustee is authorised to invest trust money by any law for the time being in force in India and bonds or fixed deposits issued by any Corporation established or constituted under any Central or State enactments. (c) "public sector banks" means, the State Bank of India, the Subsidiary Banks and the corresponding new banks referred to in Section 45(1) of the Reserve Bank of India Act, 1934 (2 of 1934). (d) "unencumbered approved securities" shall include the approved securities lodged by the Company with another institution for advance or any other credit arrangements to the extent to which such securities have not been drawn against or availed of. 10. Paragraph (12) - Every residuary non-banking company shall disclose as liabilities in its books of accounts and balance sheets the total amount of deposits received together with interest, bonus, premium or other advantage, accrued or payable to the depositors. 11. We would first deal with the legal objections raised on behalf of the Peerless and other companies. It has been submitted on behalf of the Peerless and other companies that the directions of 1987 are ultra vires of Ss. 45J and 45K of the Reserve Bank of India Act, 1934. 11. We would first deal with the legal objections raised on behalf of the Peerless and other companies. It has been submitted on behalf of the Peerless and other companies that the directions of 1987 are ultra vires of Ss. 45J and 45K of the Reserve Bank of India Act, 1934. None of the said sections authorises the Reserve Bank to frame any directions prescribing the manner of investment of deposits received or the method of accountancy to be followed or the manner in which its balance-sheet and books of accounts are to be drawn up. It has been contended that S. 45J has no manner of application in the present case. Section 45K (3) of the Act on which reliance has been placed on behalf of the Reserve Bank, merely provides that the Reserve Bank may, if it considers necessary in the public interest so to do, give directions to non-banking institutions either generally or to any non-banking institutions in particular in respect of any matters relating to or connected with receipts of deposits, including the rate of interest payable on such deposits and the purpose for which deposits will be received. According to S. 45K(4) if any non-banking institution fails to comply with any direction given by the bank under sub-S. (3) the Reserve Bank may prohibit the acceptance of deposits by that non-banking institution. It is thus submitted that on a plain reading of S. 45K(3) the Reserve Bank is only competent to frame the directions regarding receipt of deposits and such power of direction does not extend to providing the manner in which deposits can be invested or the manner in which the liabilities are to be disclosed in the balance-sheet or books of accounts of the company. It is further submitted that the power under sub-s. (4) is to prohibit acceptance of deposits and as such the permissible field of direction making is limited to receipt of deposits and nothing more. The Reserve Bank of India in framing the directions of 1987 which is a subordinate piece of legislation has clearly over-stepped the bounds of the parent statute of S. 45K (3) of the Act. 12. It is further argued that the Reserve Bank cannot contend that paragraphs 6 and 12 of the directions of 1987 are covered within the powers conferred on the Reserve Bank under S. 45L (1)(b) of the Act. 12. It is further argued that the Reserve Bank cannot contend that paragraphs 6 and 12 of the directions of 1987 are covered within the powers conferred on the Reserve Bank under S. 45L (1)(b) of the Act. It is submitted that the Reserve Bank had at no point of time expressed its intention to invoke its powers under S. 45L. Even before the Division Bench of the Calcutta High Court the Reserve Bank did not rely on S. 45L as alleged source of its power to issue the impugned directions nor the Reserve Bank referred to S. 45L in its pleadings before the High Court. Wherever the Reserve Bank of India wanted to invoke its power under S. 45L of the Act, it has expressly mentioned that it was exercising its powers under S. 45L. In the case of Non Banking Financial Companies (Reserve Bank) Directions 1977, or the Miscellaneous Non-Banking Companies (Reserve Bank) Directions, 1977 it has expressly said that it was invoking its powers under S. 45L of the Act, whereas in the case of the impugned directions, the Reserve Bank has only referred to Sections 45J and 45K of the Act. The Reserve Bank of India itself in the affidavit filed before the High Court had stated that the 9 directions of 1987 were framed after careful deliberations at the highest level and now it cannot take the stand that the source of its power in framing the impugned directions was exercised under S. 45L of the Act. It is further contended that in order to invoke the powers under S. 45L of the Act it has to state that the Reserve Bank was satisfied for the purpose of enabling it to regulate the credit system of the country to its advantage and it was necessary to give such institutions directions relating to the conduct of business by financial institution or institutions. In order to exercise its power under S. 45L of the Act, it has to apply its mind for the purpose of arriving at the statutorily required satisfaction. In fact, such recital is necessary since such satisfaction is a pre-condition for the Reserve Bank to exercise its powers under S. 45L of the Act. 13. In order to exercise its power under S. 45L of the Act, it has to apply its mind for the purpose of arriving at the statutorily required satisfaction. In fact, such recital is necessary since such satisfaction is a pre-condition for the Reserve Bank to exercise its powers under S. 45L of the Act. 13. On the other hand it has been contended on behalf of the Reserve Bank that the power of the Reserve Bank to regulate deposit acceptance activities of non-banking and financial institutions under Chapter IIIB of the Act cannot be disputed. The Reserve Bank has power to issue the impugned directions under Ss. 45J, 45K and 45L of the Act The pith and substance of Para 6 of the directions of 1987 is to ensure that deposits received from the public are invested in a manner to secure the repayment of the deposits. A deposit is, by definition, a sum of money received with a corresponding obligation to repay the same. Thus, the repayment of the deposit is an integral part of the transaction of a receipt of deposit. It is contended that the expression "receipt of deposit" must be construed liberally, in the light of the nature of the provisions as well as in the light of the wide language used in the provision. It is also argued that even if the impugned directions of 1987 are not covered under the powers conferred under Ss. 45J and 45K of the Act, those are squarely covered by S. 45L of the Act. It is submitted that various provisions under the Act are enabling in nature and confer overlapping powers. Even if there is no recital of S. 45L, it would not be of much consequence, if such exercise of power can be related to S. 45L of the Act. 14. We have considered the arguments advanced by learned counsel for the parties. Chapter IIIS laying down provisions relating to non-banking institutions receiving deposits and financial institutions was inserted in the Reserve Bank of India Act, 1934, by virtue of Act 55 of 1963 w.e.f. 1-2-1964. Sections 45J, 45K (3) and (4) and 45L 1(b) relevant for our purpose are given as under: Sec. 45J. Chapter IIIS laying down provisions relating to non-banking institutions receiving deposits and financial institutions was inserted in the Reserve Bank of India Act, 1934, by virtue of Act 55 of 1963 w.e.f. 1-2-1964. Sections 45J, 45K (3) and (4) and 45L 1(b) relevant for our purpose are given as under: Sec. 45J. "The Bank may, if it considers necessary in the public interest so to do, by general or special order,- (a) regulate or prohibit the issue by any non-banking institution of any prospectus or advertisement soliciting deposits of money from the public; and (b) specify, the conditions subject to which any such prospectus or advertisement, if not prohibited, may be issued. Section 45K (1) to (2)............. (3) The Bank may, if it considers necessary in the public interest so to do, give directions to non-banking institutions either generally or to any non-banking institution or group of non-banking institutions in particular, in respect of any matters relating to or connected with the receipt of deposits, including the rates of interest payable on such deposits, and the periods for which deposits may be received. (4) If any non-banking institution fails to comply with any direction given by the Bank under sub-section (3), the Bank may prohibit the acceptance of deposits by that non-banking institution. Section 45L (1). If the bank is satisfied that for the purpose of enabling it to regulate the credit system of the country to its advantage it is necessary so to do; it may- (a).......................... (b) give to such institutions either generally or to any such institution in particular, directions relating to the conduct of business by them or by it as financial institutions or institution." 15. A combined reading of the above provisions unmistakably goes to show that the Reserve Bank if considers necessary in the public interest so to do can specify the conditions subject, to which any prospectus or advertisement soliciting deposits of money from the public may be issued. It can also give directions to non-banking institution in respect of any matters relating to or connected with the receipt of deposits, including the rates of interest payable on such deposits, and the periods for which deposits may be received. This latter power flows from sub-s (3) of S. 45K of the Act. It can also give directions to non-banking institution in respect of any matters relating to or connected with the receipt of deposits, including the rates of interest payable on such deposits, and the periods for which deposits may be received. This latter power flows from sub-s (3) of S. 45K of the Act. The Bank under this provision can give directions in respect of any matters relating to or connected with the deposits (emphasis added). In our view a very wide power is given to the Reserve Bank of India to issue directions in respect of any matters relating to or connected with the receipt of deposits. It cannot be considered as a power restricted or limited to receipt of deposits as sought to be argued on behalf of the companies that under this power the Reserve Bank would only be competent to stipulate that deposits cannot be received beyond a certain limit or that the receipt of deposits may be linked with the capital of the company. Such interpretation would be violating the language of S. 45K(3) which furnishes a wide power to the Reserve Bank to give any directions in respect of any matters relating to or connected with the receipt of deposits. The Reserve Bank under this provision is entitled to give directions with regard to the manner in which the deposits are to be invested and also the manner in which such deposits are to be disclosed in the balance sheet or books of accounts of the company. The word any qualifying matters relating to or connected with the receipt of deposits in the above provision is of great significance and in our view the impugned directions of 1987 are fully covered under S. 45K(3) of the Act, which gives power to the Reserve Bank to issue such directions. As a proposition of law we agree with the contention of the learned counsel for the Reserve Bank that when an authority takes action which is within its competence, it cannot be held to be invalid merely because it purports to be made under a wrong provision, if it can be shown to be within its power under any other provision. Learned counsel in this regard has placed re1ance on Indian Aluminium Company v. Kerala State Electricity Board, (1976) 1 SCR 70 . 16. Learned counsel in this regard has placed re1ance on Indian Aluminium Company v. Kerala State Electricity Board, (1976) 1 SCR 70 . 16. In our view, as already held above, the Reserve Bank was competent and authorised to issue the impugned directions of 1987, in exercise of powers conferred under S. 45K(3) of the Act. 17. Having cleared the ground of ultra vires, we must now turn to the main challenge posed on behalf of the Peerless and other companies and employees. 18. Mr. Harish Salve made the leading arguments on behalf of the Reserve Bank of India. His main thrust of the argument was that the Reserve Bank of India had issued these directions of 1987 in order to carry out observations made by this Court in Peerless case ( AIR 1987 SC 1023 ) (supra) and in the public interest of safeguarding the money of the depositors in such companies. The Reserve Bank considered it necessary that the interest of millions of small depositors of rural areas should be made safe and may not be devoured by a mushroom of companies with no stake. According to Mr. Salve it was not the intention of the Reserve Bank to put any restrictions in the manner to conduct of business to be done by such companies. But the most important factor weighing in the mind of the Reserve Bank was to safeguard the money of the depositors. It was not the concern of the Reserve Bank as to how and in what manner these companies would regulate their expenses or would be able to conduct such business for earning more profits. According to the Reserve Bank of India these companies cannot be allowed to spend a moiety of deposits for meeting their own expenses. They should find out their own resources for meeting the expenses. According to the Reserve Bank the rate of interest to be paid by these companies to the depositors has been fixed as 10 per cent per annum. They could easily invest such amount in bonds issued by public sector corporations and earn interest at the rate of 14 per cent per annum or more and thereby earn a profit of 4 per cent and regulate their expenses within the limits of such profits. They could easily invest such amount in bonds issued by public sector corporations and earn interest at the rate of 14 per cent per annum or more and thereby earn a profit of 4 per cent and regulate their expenses within the limits of such profits. It was submitted that the propensity of the problem has increased manifold in view of the fact that the amount of deposits and investments has gone to "3.60. The present practice obviously is not desirable. The number of such cases would be very small with the proposed restriction on the total number of attempts permitted to a candidate. Even so, we think it wrong that the very first thing a young person should do in entering public service is to ignore his obligations to the service concerned, and instead spend his time and energy in preparation for re-appearing at the UPSC examination to improve his prospect. This sets a bad example and should be discouraged. We recommend that commencing from the 1977 examination, candidates once appointed to the All India or Central Services (Class I) should not be permitted to re-appear at a subsequent examination without resigning from service. (On introduction of Phase II of the Civil Services Examination Scheme, candidates joining the Foundation Course will not be permitted to re-appear at the Main Examination.)" 39. The Thirteenth Report of the Estimates Committee (1985-86) also submitted its report on this aspect of the matter observing: "The Committee urge upon the Government to review their decision regarding allowing the probationers to reappear in the Civil Services Examination to improve their prospects. If it is still considered necessary to allow this, the Committee suggest that it may be limited to only one chance after a person enters a Civil service." 40. The Central Government after considering the recommendations of the above Committee regarding allowing probationers allocated to Civil Services to appear in the next CSE (Main), addressed the UPSC to initiate a review of the new system of CSE in pursuance of the recommendations of the Estimates Committee and thereafter, a meeting of all the cadre controlling authorities was convened by the Government and based on the consensus arrived at the meeting, Rules 4 and 17 of the Civil Services Examination Rules were amended by inserting the new provisos. 41. 41. In this regard, it will be worthwhile to refer to Article 51-A in Part IV-A under the caption 'Fundamental Duties' added by the 17 Constitution (42nd Amendment) Act, 1976 in accordance with the recommendations of the Swaran Singh Committee. The said Article contains a mandate of the Constitution that it shall be the duty of every citizen of India to do the various things specified in Clauses (a) to (j) of which clause (j) commands that it is the duty of every citizen of India to strive towards excellence in all spheres of individual and collective activity so that the nation constantly rises to higher levels of endeavour and achievement". 42. In our view, the effort taken by the Government in giving utmost importance to the training programme of the selectees so that this higher civil service being the top most service of the country is not wasted and does not become fruitless during the training period is in consonance with the provisions of Article 51 -A (j). 43. The Constitution of India has laid down some basic principles relating to public services in Part XIV entitled 'Services under the Union and the State' which has two Chapters, namely Chapter I on "Services" covering Articles 308 to 314 of which Article 314 is now repealed by the Twenty-eighth Amendment Act, 1972 and Chapter I1 on "Public Service Commissions" covering Articles 315 to 323. We feel that it is not necessary to deal with the constitutional provisions relating to the executive power of the Union under Article 53 of the Constitution or the extent of the executive power of the Union under Article 73 of the Constitution or recruitment and condition of service of persons serving the Union or the State as contemplated under Article 309 of the Constitution of India since it is not the case of the appellants that either the introduction of the proviso is in violation of any of the provisions of the Constitution or the proviso suffers for want of jurisdiction or by improper and irregular exercise of jurisdiction. However, incidentally Mrs. Chopra urged that the second proviso is bad since the authorities have stepped out of the constitutional limits in issuing the notification inserting the impugned proviso and that it has not been placed before the Houses of the Parliament. However, incidentally Mrs. Chopra urged that the second proviso is bad since the authorities have stepped out of the constitutional limits in issuing the notification inserting the impugned proviso and that it has not been placed before the Houses of the Parliament. This argument has to be simply mentioned to be rejected because the Proviso has been introduced by the Central executive authority under the powers flowing from Article 73(1)(a) of the Constitution, according to which the executive power of the Union subject to the provisions of the Constitution shall extend to the matters with respect to which Parliament has power to make laws, but of course subject to the proviso made thereunder and further this submission casually made was neither amplified nor pured. Needless to point out that whilst by virtue of clause I(a) of Article 73, the executive power of the Union which is coextensive with the legislative power of Parliament can make laws on matters enumerated in List I (Union List) and List II (Concurrent List) to the Seventh Schedule of the Constitution, under Article 162 of the Constitution, the executive power of the State executive which is co-extensive with that of the State legislature can make laws in respect of matters enumerated in List III (State List) and also in respect of matters enumerated in List II (Concurrent List), subject to the provisions of the Constitution. In the present case, the Central executive authority has not either expressly or impliedly changed the policy of the Government by exercising unreasonable and arbitrary discretion and the present Rule 4 with its newly added second proviso does not repeal the essential features of the preexisting Rule 4 but only limits the ambit of the operation of the Rule 4 under a given situation. Hence, there is no substance in contending that the second proviso is bad and that the central executive authority has transgressed the constitutional limits. 44. However, the validity of second proviso of Rule 4 is challenged on the ground that it is violative of Article 14 of the Constitution about which we will deal at the later part of the judgment. 45. We feel that it would be appropriate, in this context, to recall the observations of this Court in L.I.C. of India v. Escorts Ltd., AIR 1986 SC 1370 at page 1403. 45. We feel that it would be appropriate, in this context, to recall the observations of this Court in L.I.C. of India v. Escorts Ltd., AIR 1986 SC 1370 at page 1403. The observation reads thus: "When construing statutes enacted in the 18 national interest, we have necessarily to take the broad factual situations contemplated by the Act and interpret its provisions so as to advance and not to thwart the particular national interest whose advancement is proposed by the legislation". 46. In the above background, we shall now advert to the arguments advanced on behalf of the appellants. 47. Mr P. P. Rao, senior counsel appearing for the appellants forcibly and fervently contended that the second proviso to Rule 4 of the impugned notification is ultra vires clause (iii-a) of Regulation 4 of the Regulations, 1955 inasmuch as the power to notify exceptions does not include the power to make the candidates who are "otherwise eligible" in terms of clauses (i) (ii) and (iii) of regulation 4 as ineligible. In other words, all candidates, who satisfy the requirements of nationality, age and educational qualifications prescribed in clauses (i) to (iii) of Regulation 4, are entitled to the maximum number of attempts prescribed in clause (iii-a) which initially was three attempts, since raised to four attempts w.e.f 1-2-90. He further submits that the expression 'in this behalf' appearing in the said clause (iii-a) refers only to the number of attempts of candidates otherwise eligible in terms of clauses (i) to (iii) of Regulation 4 and that the obvious intention in conferring the power on the Central Government to notify exceptions 'in this behalf' of candidates 'otherwise eligible' was to enable the Government to increase the number of attempts in deserving cases, such as candidates belonging to Scheduled Castes and Scheduled Tribes and other weaker sections including physically handicapped category and that consequently the Central Government has no power to add more conditions of eligibility to those stipulated in Regulation 4 itself. According,to him, the second part of the impugned,proviso to Rule 4 of CSE Rules which insists that a candidate who was permitted to abstain from Probationary training in order to appear at the next Civil Services (Main) Examination ,and who accepted the allocation to a service subsequently and is appointed to the service,"shall not be eligible to appear again in the CSE (Main) unless he first resigns from the service and in other words it declares a candidate, who is otherwise eligible in terms of Regulation 4 as ineligible unless he first resigns from the service.. This additional condition of eligibility, according to him, is clearly beyond the scope of the limited power to notify exceptions to the number of attempts prescribed and, therefore, ultra vires Regulation 4 (iii-a). 48. Mr. Kapil Sibal, the learned Additional Solicitor General presented a plausible argument countering the pleadings of Mr. P. P. Rao and drew our attention to Rule 7 of IAS (Recruitment) Rules of 1954 which deals with the recruitment by competitive examination, and sub-rule (2) which states that an examination, namely, the competitive examination for recruitment to the service shall be conducted by the Commission in accordance with such regulations as the Central Government may from time to time make in consultation with the Commission and State Governments. According to him, the permissible number of attempts that a candidate can avail is also a condition of eligibility because the object is for a dual purpose, namely, 'to get the best and to retain the best', and that Regulation 4 (iii-a) should be read with Rule 4 of CSE as its part. He continues to state that under Article 73 of the Constitution, subject to the provisions of the Constitution, the Central Government in exercise of its executive power can regulate the manner in which the right of a candidate in appearing for the competitive examination is to be exercised and, therefore, the restriction imposed in the second proviso to Rule 4 of CSE Rules is in no way ultra vires clause (iii-a) of Regulation 4 of Regulations, 1955. 49. 49. The source of power for the Central Government for making rules and regulations for 'Recruitment and the Conditions of Services of Persons appointed to All India Services in consultation with the Cuovernment of States concerned as well making regulations under or in pursuance of any such right is derived from Rule 3 of the All India Services Act, 1951. 19 50. The Regulations, 1955 were made by Central Government in pursuance of Rule 7 of IAS (Recruitment) Rules of 1954 in consultation with the State Governments and the Union Public Service Commission. Clause (iii-a) of Regulation 4 was substituted vide Department of Personnel A & R Notification No. 11028/1/78/AIS dated 13-12-1978 and the later part of which by another notification dated 23-11-1988. We are concerned only with the earlier part of the said clause as per which unless covered by any of the exceptions that may from time to time be notified by the Central Government, in this behalf, every candidate appearing for the examination after 1st January 1979, who is otherwise eligible, shall be permitted three attempts at the examination. If Rule 4 of CSE Rules is examined in juxtaposition of clause (iii-a) of Regulation 4, it is clear that both Rule 4 of CSE Rules and clause (iii-a) of the Regulation 4 show that every eligible candidate appearing at the CSE should be permitted three attempts at the examination. As we have pointed out in the earlier part of this judgment, the attempts are now increased to 4 under Rule 4 of the CSE Rules. This increase of attempts by the Government is by virtue of its power which flows under Article 73 of the Constitution of India. The eligibility of a candidate to appear in the CSE with regard to nationality, age and educational qualifications is given under clauses (i) to (iii) of Regulation 4 but the Government by exercise of its executive power has imposed certain restrictions under some specified circumstances. Even today, in the normal course, every eligible candidate can appear in the examination for all the permissible attempts and the restriction of attempts is not applicable in the case of SC/ ST who are otherwise eligible but subject to their upper age limit. Even today, in the normal course, every eligible candidate can appear in the examination for all the permissible attempts and the restriction of attempts is not applicable in the case of SC/ ST who are otherwise eligible but subject to their upper age limit. A plain and grammatical reading of clause (iii-a) of Regulation 4 shows that if the number of attempts are covered by any of the exceptions that may from time to time be notified by the Central Government in this behalf, then the notification will become enforceable and only in the absence of such notification, every candidate normally can appear for all the permitted attempts at the examination whether three or four. The impugned second proviso does not restrict or put an embargo on the number of attempts in the normal course. But the restriction is only when the conditions enumerated in the impugned proviso are satisfied. In order to appreciate and understand the restriction imposed, in its proper perspective, we shall refer to certain decisions of this Court cited by both the parties, firstly with reference to the interpretation of statutes and secondly with regard to the construction of a proviso in relation to the subject matter covered by the section/rule to which the proviso is appended. 51. Therefore we cogitate and analyse this bone of contention in some detail, it will be convenient at this stage to pore over some of the well established rules of construction which would assist us to steer clear of the impasse entertained by the learned counsel, according to whom some complications are created by the impugned notification being ultra vires clause (iii-a) of Regulation 4 of Regulations, 1955. 52. Maxwell on the "Interpretation of Statutes". 10th Edition at page 7 says thus: "..... if the choice is between two interpretations, the narrower of which would fail to achieve the manifest purpose of the legislation, we should avoid a construction which would reduce the legislation to futility and should rather accept the bolder construction based on the view that Parliament would legislate only for the purpose of bringing about an effective result." 53. In "Principles of Statutory Interpretation" by Justice G. P. Singh, 4th edition' (1988) at page 18, it is stated thus: "It is a rule now firmly established that the intention of the legislature must be found by reading the statute as a whole." 54. In "Principles of Statutory Interpretation" by Justice G. P. Singh, 4th edition' (1988) at page 18, it is stated thus: "It is a rule now firmly established that the intention of the legislature must be found by reading the statute as a whole." 54. It is said in "Craies on Statute Law 5th edition" as follows: "Manifest absurdity or futility, palpable injustice, or absurd inconvenience or anomaly to be avoided". 20 55. In the same text book, 6th edition at page 89, the following passage is found: "The argument from inconvenience and hardship is a dangerous one and is only admissible in construction where the meaning of the statute is obscure and there are alternative methods of constructions." 56. Viscount Simon in King Emperor v. Benoari Lal Sharma, AIR 1945 PC 48 has said thus: "In construing enacted words, the Court is not concerned with the policy involved or with the results, injurious or otherwise, which may follow from giving effect to the language used". 57. In Warburton v. Loveland, (1832) 2 Dow & Cl (HL) 480 at p. 489, it is observed that "Where the language of an Act is clear and explicit, we must give effect to it whatever may be the consequences for in that case the words of the statute speak the intention of the legislature" 58. See also Sutters v. Briggs, (1922) 1 AC 18. 59. This Court in Commr. of Income-tax v. S. Teja Singh, 1959 Suppl (1) SCR 394 has expressed that a construction which would defeat the object of legislature must, if that is possible, be avoided. 60. See also M. Pentiah v. Muddala Veeramallappa, AIR 1961 SC 1107 . 61. Desai, J. speaking for the bench in Lt. Col. Prithi Pal Singh Bedi v. Union of India, (1983) 1 SCR 393 at p. 404 has pointed out as follows: "The dominant purpose in construing a statute is to ascertain the intention of the Parliament. One of the well recognised canons of construction is that the legislature speaks its mind by use of correct expression and unless there is any ambiguity in the language of the provision the Court should adopt literal construction if it does not lead to an absurdity." 62. One of the well recognised canons of construction is that the legislature speaks its mind by use of correct expression and unless there is any ambiguity in the language of the provision the Court should adopt literal construction if it does not lead to an absurdity." 62. The Constitution Bench of this Court in A. R. Antulay v. R. S. Nayak, (1984) 2 SCR 914 at p 936 has observed thus: "It is a well established canon of construction that the Court should read the section as it is and cannot rewrite it to suit its convenience; nor does any canon of construction permit the Court to read the section in such manner as to render it to some extent otiose". 63. The SC in Maharashtra State Board of Secondary and Higher Secondary Education v. Paritosh Bhupesh Kurmarsheth, (1985) 1 SCR 29 , ruled that the well established doctrine of interpretation is "that the provisions contained in a statutory enactment or in rules/ regulations framed thereunder have to be so construed as to be in harmony with each other and that where under a specific section or rule a particular subject has received special treatment, such special provision will exclude the applicability of any general provision which might otherwise cover the said topic". 64. In Philips India Ltd. v. Labour Court, Madras, (1985) 3 SCC 103 , it is observed: "No canon of statutory construction is more firmly established than that the statute must be read as a whole. This is a general rule of construction applicable to all statutes alike which is spoken of as construction ex visceribus actus." 65. It has been held by this Court in Balasinor Nagrik Cooperative Bank Ltd. v. Babubhai Shankerlal Pandya, (1987) 1 SCC 606 at p 608 as follows: "It is an elementary rule that construction of a section is to be made of all parts together. It is not permissible to omit any part of it. For, the principle that the statute must be read as a whole is equally applicable to different parts of the same section". 66. In Dr. It is not permissible to omit any part of it. For, the principle that the statute must be read as a whole is equally applicable to different parts of the same section". 66. In Dr. Ajay Pradhan v. State of Madhya Pradesh, (1988) 4 SCC 514 at p. 518, this Court has registered its view in the matter of construing a statute thus : "If the precise words used are plain and unambiguous, we are bound to construe them in their ordinary sense and give them full effect. The argument of inconvenience and hardship is a dangerous one and is only admissible in construction where the meaning of the statute is obscure and there are alternative methods of construction. Where the language is explicit its consequences are for Parliament, and not for the Courts, to consider". 67. We think, it is not necessary to proliferate this judgment by citing all the judgments and extracting the textual passages from the various Text Books on the Principles of Interpretation of Statutes. However, it is suffice to say that while interpreting a statute the consideration of inconvenience and hard ships should be avoided and that when the language is clear and explicit and the words used are plain and unambiguous, we are bound to construe them in their ordinary sense with reference to other clauses of the Act or Rules as the case may be, so far as possible, to make a consistent enactment of the whole statute or series of statutes/ Rules/ Regulations relating to the subject matter. Added to this, in construing a statute, the Court has to ascertain the intention of the law making authority in the backdrop of the dominant purpose and the underlying intendment of the said statute and that every statute is to be interpreted without any violence to its language and applied as far as its explicit language admits consistent with the established rule of interpretation. 68. A proviso to a Section/ Rule is expected to except or qualify something in the enacting part and presumed to be necessary. Coming to the broad general rule of construction of a proviso, Maxwell on "The Interpretation of Statute" in the 11th edition at page 155 has quoted a passage from Kent's Commentary on American Law, 12th Edn. Vol. 68. A proviso to a Section/ Rule is expected to except or qualify something in the enacting part and presumed to be necessary. Coming to the broad general rule of construction of a proviso, Maxwell on "The Interpretation of Statute" in the 11th edition at page 155 has quoted a passage from Kent's Commentary on American Law, 12th Edn. Vol. 1, 463n, reading thus: "The true principle undoubtedly is that the sound interpretation and meaning of the statute, on a view of the enacting clause, saving clause and proviso, taken and construed together is to prevail." 69. Maxwell in his 12th Edition has quoted a passage from Att.Gen. v. Chelsea Waterworks Co., (1731) Fitzg 195 which reads that if a proviso cannot reasonably be construed otherwise than as contradicting the main enactment, then the proviso will prevail on the principle that "it speaks the last intention of the makers". 70. It is pointed out in Piper v. Harvey, (1958) 1 QB439 that if, however, the language of the proviso makes it plain that it was intended to have an operation more extensive than that of the provision which it immediately follows, it must be given such wider effect. 71. In R. v. Leeds Prison (Governor), Ex p. Stafford, (1964) 2 QB 625 it is pointed out thus : "The main part of a Section must not be construed in such a way as to render a proviso to the Section redundant." 72. A Constitution Bench of this Court in Ram Narain Sons Ltd. v. Asstt.Commissioner of Sales Tax, (1955) 2 SCR 483 , has made the following observations: "It is a cardinal rule of interpretation that a proviso to a particular provision of a statute only embraces the field which is covered by the main provision. It carves out an exception to the main provision to which it has been enacted as a proviso and to no other." 73. Another Constitution Bench in Abdul Jabar Butt v. State of Jammu and Kashmir, 1957 SCR 51 : ( AIR 1957 SC 281 ), held that it a fundamental rule of construction that a proviso must be considered with relation to the principal matter to which it stands as a proviso. 74. See also Commr., of Income-tax v. S. Teja Singh, (1959) Suppl (1) SCR 394. 75. Kapur, J. speaking for the Bench of 22 this Court in Commr. 74. See also Commr., of Income-tax v. S. Teja Singh, (1959) Suppl (1) SCR 394. 75. Kapur, J. speaking for the Bench of 22 this Court in Commr. of Income-tax, Mysore,Travancore-Cochin and Coorg, Bangalore v. Indo Mercantile Bank Limited, (1959) Suppl (2) SCR 256, reiterated the view expressed by Bhagwati, J. as he then was in Ram Narain Sons Ltd. v. Asstt. Commr. of Sales Tax, (1955) 2 SCR 483 at p. 493, and the observations by Lord Macmillan in Madras & Southern Mahratta Railway Co. v. Bezwada Municipality, (1944) 71 Ind App 113, 122, and laid down the sphere of a proviso thus: "The territory of a proviso therefore is to carve out an exception to the main enactment and exclude something which otherwise would have been within the section. It has to operate in the same field and if the language of the main enactment is clear it cannot be used for the purpose of interpreting the main enactment or to exclude by implication what the enactment clearly says unless the words of the proviso are such that that is its necessary effect. (Vide also Corporation of the City of Toronto v. Attorney-General for Canada, 1946 AC 32, 37". 76. M/s Mackinnon Mackenzie & Co Ltd. v. Audrey D'Cost, (1987) 2 SCC 469 , may also be referred to. 77. When the impugned second proviso to Rule 4 of the CSE Rules is interpreted in its grammatical meaning and cognate expressions and construed harmoniously with the substantive rule in the light of the above decisions of this Court as well as the views expressed by various authors in their Text Books on this subject, it is pellucid that the said proviso only carves out an exception to Rule 4 of the CSE Rules in given circumstances and under specified conditions and, therefore, the second proviso cannot be read in is opration and interpreted literally. On the other hand the substantive Rule 4 is to be read in conjunction with the two provisos appended thereto so as to have a correct interpretation. 78. In the proviso, in dispute, there are no positive.words or indications which would completely exclude the operation of the substantive rule the spirit of which is reflected in Regulation 4 of the Regulations, 1955. 78. In the proviso, in dispute, there are no positive.words or indications which would completely exclude the operation of the substantive rule the spirit of which is reflected in Regulation 4 of the Regulations, 1955. In fact, 'Rule 4 as stood till 1986, in its normal course allowed a candidate to appear for three attempts, since increased to 4 for 1990 and 1991 Examinations. But the restriction is imposed by the second proviso only under certain circumstances as repeatedly indicated above. Although the notification of 1986 introducing the impugned proviso, no doubt, has to be strictly construed, the Court cannot overlook the very aim and object of the proviso thereby either defeating its purpose or rendering it redundant or inane or making it otiose. Judged from any angle, we are not impressed by the contention of Mr. P. P. Rao that there is a violent breach of the provisions of the substantive Rule 4 of CSE Rules and Regulation 4 (iii-a) and we are not able to persuade ourselves to hold that the impugned second proviso either subverts or destroys the basic objectives of Rule 4 and that it is ultra vires. 79. In this connection, it may be noted that the restriction or embargo, as the one under consideration is not only placed on the candidates who on the basis of the result of the previous CSE had been allocated and appointed to IPS or Central Services Group 'A'but also on the candidates appointed in the higher echelon of Civil Service, about which we presently deal with. There is a far more restrictive rule in existence, namely Rule 8 of the CSE Rules according to which a candidate who is appointed to the Indian Administrative Service (IAS) or the Indian Foreign Service (IFS) on the result of an earlier examination before the commencement of the ensuing examination and continues to be a member of that service will not be eligible to compete at the subsequent examination, even if he/ she is disillusioned and wants to switch over. In other words, this rule precludes the candidates who have been appointed to the IAS or IFS, from sitting in the ensuing examination while in service. In other words, this rule precludes the candidates who have been appointed to the IAS or IFS, from sitting in the ensuing examination while in service. Further, this rule states that in case a candidate has been appointed to the IAS or IFS on the basis of the earlier examination and after the subsequent preliminary examination, but before the main examination, that candidate, if 23 continues to be a member of that service shall not be eligible to appear in the ensuing main examination notwithstanding that the said candidate has qualified himself in the preliminary examination. Similarly if a candidate is appointed to the IAS or IFS after the commencement of the main examination but before the announcement of the result and continues to be a member of that service the said candidate shall not be considered for appointment to any service/ post on the basis of the result of this examination. The purpose for incorporating this uncompromising and stringent provision is that the candidates appointed to the IAS and IFS are required to man the key positions both in the Central and State Services wherein the appointees have to combine their intellectual capacity and the requisite traits of personality and also to exhibit higher intellectual proficiency and leadership. Thus Rule 8 keeps up and maintains the phenomenon of the upper civil service, run under our constitution with all enduring features and facets of the said service on all India basis. But there is no bar for a candidate who is appointed to the IAS/ IFS resigning from that service and sitting in the examination for IPS or any Central Service Group 'A'. Under Rule 4 of CSE Rules notwithstanding anything contained in Rule 8, a candidate who accepts allocation to a service and appointed to that service shall not be eligible to appear again in the CSE unless he first resigns from that service. In other words, a candidate who is allocated and appointed to a service can sit in the ensuing examination provided he first resigns from that service. This restriction, in our view, is a reasonable one in order to,achieve the desired result in the background of the situations and circumstances about which we have elaborately discussed albeit. 80. In other words, a candidate who is allocated and appointed to a service can sit in the ensuing examination provided he first resigns from that service. This restriction, in our view, is a reasonable one in order to,achieve the desired result in the background of the situations and circumstances about which we have elaborately discussed albeit. 80. In conclusion, we hold that the second proviso to Rule 4 of CSE Rules does not travel beyond the intent of the main rule putting any unjustifiable embargo and that the proviso is not ultra vires Regulation 4 (iii-a) of Regulations 1955 on the ground it makes the candidates ineligible who are otherwise eligible in terms of clauses (i) to (iii) of the said Regulation and that the proviso to Rule 17 is not invalid. 81. An enactment is never to be held invalid unless it be beyond question, plainly and palpably in excess of legislative power or it is ultra vires or inconsistent with the statutory or constitutional provisions or it does not conform to the statutory or constitutional 'requirements or is made arbitrarily with bad faith or oblique motives or opposed to public policy. In our considered opinion, the second proviso to Rule 4 of CSE Rules cannot be held to be invalid on any of the grounds mentioned above. 82. The next question that has arisen for consideration is, how far the' principle of reasonable restriction can be applied in the formulation of the rules, keeping the relevance of the recruitment scheme to the civil service. Neither an omnibus answer or a simplistic solution would carry us far to face the public service reality in the modern state, the governing consideration of which is the context of actual situation, circumstances, resources and the societal goals of the particular state/country. 83. The further argument advanced in Civil Appeals Nos. 5506-5525 of 1990 (as appears from the written submission made by Mr. C. N. Sreekumar) is that on a correct interpretation of the impugned second proviso, the last clause of which reads "such candidate who accepts the service shall not be eligible to appear again in the Civil Services Examination unless he first resigns from the service" refers to only candidates, who on the basis of the result of the previous CSE had been allocated to the Central Services Group 'A' but . who expressed their intention to appear in the next CSE (Main) for competing for IAS, IFS, IPS or Central Services Group 'A' and who are permitted to abstain from the probationary training in order to so appear and who joined Group 'A' service subsequently on allocation either on the basis of the previous examination or the subsequent examination. According to him, in other words, the candidates who did not avail the benefit of abstaining from the probationary training with the permission of the Government in order to appear at the next Civil 24 Services (Main) Examination do not fall within the scope of the impugned restriction and they cannot be asked to resign as a condition precedent to their appearing again in the CSE. This tenuous argument does not appeal to us. Firstly the expression "such candidate", is not used in the proviso, on the other hand, the words used are "a candidate" (vide publication of Gazette of India dated 13-12-86). Secondly the last part of the proviso, as it stands, reads "a candidate who accepts allocation to a service and is appointed to a service shall not be eligible to appear again in the Civil Services Examination unless he has first resigned from the service ." Thirdly a correct and proper reading of the last limb of the proviso clearly demonstrates that the expression "a candidate" refers only to the candidate mentioned in the earlier part of the proviso. Lastly, if such an interpretation is to be given on the wrong reading of the proviso, then the whole object of the proviso will be defeated. Reg. Question No. 7 84. Lastly, if such an interpretation is to be given on the wrong reading of the proviso, then the whole object of the proviso will be defeated. Reg. Question No. 7 84. Mrs C. M. Chopra scathingly attacks the judgment of the Tribunal inter alia contending that the protection guaranteed to the candidates belonging to Scheduled Castes and Scheduled Tribes under the Constitution more particularly under Article 335 of the Constitution of India - cannot be taken away by an arbitrary executive action by introducing the second proviso, thereby reducing the number of permissible attempts in appearing in the CSE hitherto enjoyed by such candidates; that the right statutorily and constitutionally vested on the SC/ ST candidates, permitting them to appear to unlimited attempts, of course, subject to the upper age limit cannot be easily whittled down and that the second proviso is an independent proviso, having no relation to the first proviso and a priori it cannot control and prevail upon the first proviso which declares "that this restriction on the number of attempts will not apply in the case of Scheduled Castes and Scheduled Tribes who are otherwise eligible". According, to her, the reservation policy guaranteed to the SC/ST candidates cannot be obliterated by an unreasonable and arbitrary executive action. 85. No doubt, it is true that while the substantive Rule 4 of the CSE rules permits every candidate to appear for three attempts at the examination - which is now increased to four - the first proviso to this rule states that this restriction on the number of attempts at the examination is not applicable in the case of SC/ ST candidates who are otherwise eligible. However, even in the case of SC/ ST candidates, there is a specific restriction so far as the upper age limit is concerned as envisaged under Rule 6(b) of the CSE Rules. However, even in the case of SC/ ST candidates, there is a specific restriction so far as the upper age limit is concerned as envisaged under Rule 6(b) of the CSE Rules. Regulation 7 (2) of Regulations, 1955 states that the candidates belonging to any of the Scheduled Castes or the Scheduled Tribes may, to the extent of the number of vacancies reserved for the Scheduled Castes and Scheduled Tribes cannot be filled on the basis of the standard determined by the Commission under sub-regulation (1), be recommended by the Commission by a relaxed standard to make up the deficiency in the reserved quota, subject to the fitness of these candidates for selection to the Service, irrespective of their ranks in order of merit at the examination. Sub-Regulation (1) of Regulation 7 reads that subject to the provision of Sub-Regulation 2 the Commission (U.P.S.C.) shall forward to the Central Government a list arranged in order of merit of the candidates who have qualified by such standard as the Commission may determine. 86. In the normal course, a candidate belonging to SC/ST category can enjoy all the benefits under the rules and regulations. But the restriction imposed under the second proviso is only for a specified category of candidates by treating all such candidates at par and without making any exception to the candidates belonging to SC/ ST. The submission made by Mrs. Chopra that the second proviso is an independent one does not merit consideration because the second proviso to Rule 4 begins with the words "provided further...... which expression would mean that a strict compliance of the second proviso is an additional requirement to that of the substantive rule 4 and the first proviso. The expression "provided further" spells out that the first proviso cannot be read in isolation or independent of the second proviso but it must 25 be read in conjunction with the second proviso. which expression would mean that a strict compliance of the second proviso is an additional requirement to that of the substantive rule 4 and the first proviso. The expression "provided further" spells out that the first proviso cannot be read in isolation or independent of the second proviso but it must 25 be read in conjunction with the second proviso. To put it in other words, once the candidates belonging to SC or ST get through one common examination and interview test and are allocated and appointed to a service based on their ranks and performance and brought under the one and the same stream of category, then they too have to be treated among all other regularly and lawfully selected candidates and there cannot be any preferential treatment at that stage on the ground that they belong to SC or ST, though they may be entitled for all other statutory benefits such as to the relaxation of age the reservation etc. The unrestricted number of attempts, subject to the upper age limit, is available to the SC/ST candidates in the normal course but that is subject to the second proviso because when once they are allocated and appointed along with other candidates to a category/post, they are treated alike. 87. Ramaswami,J. speaking for the Constitution Bench in C. A. Rajendran v. Union of India, (1968)l SCR 721 at page 733 while interpreting Article 16(4) of the Constitution of India observed thus: "Our conclusion therefore is that Art. 16(4) does not confer any right on the petitioner and there is no constitutional duty imposed on the Government to make a reservation for Scheduled Castes and Scheduled Tribes, either at the initial stage of recruitment or at the stage of promotion. In other words, Art. 16(4) is an enabling provision and confers a discretionary power on the State to make a reservation of appointments in favour of backward class of citizens which ' in its opinion, is not adequately represented in the Services of the State. We are accordingly of the opinion that the petitioner is unable to make good his submission on this aspect of the case." 88. We are accordingly of the opinion that the petitioner is unable to make good his submission on this aspect of the case." 88. A seven-Judges Bench in State of Kerala v. N. M. Thomas, (1976) 2 SCC 310 before which some important questions arose with regard to the intent of Article 16 of the Constitution, referred to and relied upon the observation in Rajendran's case holding that reservation is not a constitutional compulsion, but is a discretionary one. In that case, Krishna lyer, J. agreeing with the majority view expressed his opinion thus: "The State has been obligated to promote the economic interests of harijans and like backward classes, Articles 46 and 335 being a testament and Articles 14 to 16 being the tool-kit, if one may put it that way. To blink at this panchsheel is to be unjust to the Constitution. " 89. Further, the learned Judge held: "Indeed, Article 335 is more specific and cannot be brushed aside or truncated in the operational ambit vis-a-vis Article 16(1) and (2) without hubristic aberration." 90. In Akhil Bharatiya Soshit Karamchari Sangh (Railway) v. Union of India (1981) 1 SCC 246 : Krishna Iyer, J. observed that Article 16 (4) is not a jarring note but auxiliary to fair fulfilment of Article 16(1) and further said, "Article 16(4) is not in the nature of an exception to Article 16(1). It is a facet of Article 16(1) which fosters and furthers the idea of equality of opportunity with special reference to an underprivileged and deprived class of citizens to whom egalite de droit (formal or legal equality) is not egalite de fait (practical or factual equality). 91. See also M. R. Balaji v. State of Mysore, (1963) Supp. (1) SCR 439, Triloki Nath v. State of J & K, (1969) 1 SCR 103 and T. Devadasan v. Union of India, (1964) 4 SCR 680 : ( AIR 1964 SC 179 ) and Comptroller and Auditor-General of India v. K. S. Jagannathan, (1986) 2 SCC 679 at p. 684 (Para 6). 92. The Constitution, no doubt, has laid a special responsibility on the Government to protect the claims of SC/ ST in the matter of public appointments under various Constitutional provisions of which we shall presently refer to a few. 92. The Constitution, no doubt, has laid a special responsibility on the Government to protect the claims of SC/ ST in the matter of public appointments under various Constitutional provisions of which we shall presently refer to a few. Article 16(4), as manifested from the various decisions of this Court referred to hereinbefore, is an enabling provision conferring a discretionary power on the 26 State for making any provision or reservation of appointments or posts in favour of any backward class of citizens, which in the opinion of the State, is not adequately represented in the service under the State. The expression 'backward class' obviously takes within its fold people belonging to SC and ST (vide Janki Prasad v. State of J & K, AIR 1973 SC 930 ). Clause (4) of Article 16 has to be interpreted in the background of Article 335 as ruled by this Court in General Manager v. Rangachari, AIR 1962 SC 36 and in Rajendran's case ( AIR 1968 SC 507 ) referred to above. Article 335 enjoins that the claims of ,the members of the SC and ST shall be taken into consideration, consistently with the maintenance of efficiency of administration, in the making of appointments to services or posts in connection with the affairs of the Union or of a State. Article 320 (4) makes it clear that the Public Service Commission is not required to be consulted as respects the manner in which any provision referred to in Art. 16(4) may be made or as respects the manner in which effect may be given to article 335. 93. The query before us is not in respect of the reservation of backward classes or in respect of the claims of SC and ST to services/posts, but it is whether the candidates belonging to SC and ST are entitled to any exception from the operation of the proviso. The answer to the above querry would be in negative as we have aforesaid. 94. It may be true, as fervently submitted by Mrs. Chopra there may be some hard cases, but the hard cases cannot be allowed to make bad law. The answer to the above querry would be in negative as we have aforesaid. 94. It may be true, as fervently submitted by Mrs. Chopra there may be some hard cases, but the hard cases cannot be allowed to make bad law. Therefore, in the case on hand as long as the second proviso does not suffer from any vice, it has to be construed, uniformly giving effect to all those falling under one category in the absence of any specific provision exempting any paricular class or classes of candidates from the operation of the impugned proviso and no one can steal march over others falling under the same category. Hence, the right of candidates belonging to SC and ST competing further to improve their career opportunities is limited to the extent permissible under the second proviso to Rule 4 read with Rule 17 of the C.S.E. Rules. 95. For the aforementioned reasons, we find no merits in the submission of Mrs. Chopra that the second proviso is not applicable to the candidates belonging to SC or ST. 96. Mr. Gopal Subramanian appearing on behalf of some of the appellants supplemented the arguments of other counsel, stating that the very structure of the recruitment policy is itself disturbed to the great disadvantage of the candidates who since then have been enjoying the right to appear for 3 attempts as conferred by the substantive Rule 4 and that one of the present restrictions that the candidates should severe from the service, if intends to appear for the third time, after he has been allocated and appointed to a service is unjust, unreasonable and it seriously transgresses on the main provision and virtually interdicts the candidates from availing their statutorily conferred and protected right. Therefore, such a severance of status from the service is ex-facie wrong, even if one can understand losing of seniority. We have already discussed this interpolation in extenso while dealing with similar contentions and our considered view expressed albeit will clearly answer this contention. Hence, we hold that there is no question of severance,of status as we have come to the conclusion that the restriction imposed by the impugned proviso cannot be said to be unjust, unreasonable or arbitrary or change of any policy and moreover, the spirit of the main rule is not in any way disturbed. Hence, we hold that there is no question of severance,of status as we have come to the conclusion that the restriction imposed by the impugned proviso cannot be said to be unjust, unreasonable or arbitrary or change of any policy and moreover, the spirit of the main rule is not in any way disturbed. In the result, we conclude that there is neither any tenable reason nor any logic in the above submission. Reg. Question No. 8 97. Then a mordacious criticism was unleashed by all the learned counsel appearing on behalf of the appellants inter alia contending that the second proviso which is an administrative instruction is highly arbitrary and irrational having no nexus to the' object of the scheme of recruitment to the post of civil services and that there was inadequate attention paid to the nexus between the intent 27 of the proviso and the object to be achieved. 98. The learned Additional Solicitor General controverted the above argument stating that the working system of the civil service in relation to its logical relationship of recruitment rules on different aspects has been exclusively investigated bearing in mind the process of rapid economic development with a democratic framework of Government on Indian scenario and the present proviso is having a dynamic, reasonable and relative nexus with the object to be achieved in the present system of the civil services within its administrative framework. 99. No denying the fact that the civil service being the top most service in the country has got to be kept at height, distinct from other services since these top echelons have to govern a wide variety of departments.Therefore, the persons joining this higher service should have breadth of interest and ability to acquire new knowledge and skill since those joining the service have to be engaged in multiple and multifarious activities as pointed out supra. In order to achieve this object, the selectees of this higher civil services have to undergo training in the National Academy/Training Institutes wherein they have to undergo careful programme of specialized training as probationers. The various schemes of training are based on the conviction that splendid active experience is the real training and the selectees are to be trained in the academies in all kinds of work they have to handle afterwards with a band of senior chosen officers. The various schemes of training are based on the conviction that splendid active experience is the real training and the selectees are to be trained in the academies in all kinds of work they have to handle afterwards with a band of senior chosen officers. Training at the academy comprises a foundation course followed by another course of practical training. The rationale underlying the course at the training centres is that the officers of civil services must acquire an understanding of the constitutional, social, economic and administrative framework within which they have to function and also must have a complete sense of involvement in the training and thereafter in the service to which she is appointed. It is apparent that initial training is in the nature of providing young probationers an opportunity to counter-act their weak points and at the same time develop their social abilities and as such the aspect of training is the most important of all. 48. The High Court declared paragraphs 6 and 12 to be ultra vires of Arts. 19(1)(g) and 14 of the Constitution holding that though the directions do not expressly prohibit the business of receiving any deposit under any scheme or arrangement in lump sum or in instalment by way of contribution or subscription by R.N.B.C., in effect the operation of the directions inhibit the existing business and prohibits the future companies to come into being. As seen the public purpose of the directions is to secure for the depositors, return of the amounts payable at maturity together with interest, bonus, premium or any other advantage accrued or payable to the depositors. To achieve that object every R.N.B.C. is enjoined to deposit and keep deposited in fixed deposit and invest and keep invested in unencumbered approved securities a sum which shall not, at the close of each half year, be less than the aggregate amount of the liability to the depositors whether or not such amount has become payable. The object, thereby, is to prohibit deployment of funds by R.N.B.C. in any other manner which would work detrimental to the interest of the depositors. 49. The question emerges whether paragraphs 6 and 12 are ultra vires of Arts. 19(1) (g) and 14 of the Constitution. Art. 19(1)(g) provides fundamental rights to all citizens to carry on any occupation, trade or business. Cl. 49. The question emerges whether paragraphs 6 and 12 are ultra vires of Arts. 19(1) (g) and 14 of the Constitution. Art. 19(1)(g) provides fundamental rights to all citizens to carry on any occupation, trade or business. Cl. 6 thereof empowers the State to make any law imposing, in the interest of the general public, reasonable restrictions on the exercise of the said rights. Wherever a statute is challenged as violative of the fundamental rights, its real effect or operation on the fundamental rights is of primary importance. It is the duty of the Court to be watchful to protect the constitutional rights of a citizen as against any encroachment gradually or stealthily thereon. When a law having imposed restrictions on the fundamental rights, what the Court has to examine is the substance of the legislation without being beguiled by the mere appearance of the legislation. The Legislature cannot disobey the constitutional mandate by employing an indirect method. The Court must consider not merely the purpose of the law but also the means how it is sought to be secured or how it is to be administered. The object of the legislation is not conclusive as to the validity of the legislation. This does not mean the constitutionality of the law shall be determined with reference to the manner in which it has actually been administered or operated or probably been administered or operated by, those who are charged with its implementation. The Court cannot question the wisdom, the need or desirability of the regulation. The State can regulate the exercise of the fundamental right to save the public from a substantive evil. The existence of the evil as well as the means adopted to check it are the matters for the legislative judgment. But the Court is entitled to consider whether the degree and mode of the regulation whether is in excess of the requirement or is imposed in an arbitrary manner. The Court has to see whether the measure adopted is relevant or appropriate to the power exercised by the authority or whether over-stepped the limits of social legislation. Smaller inroads may lead to larger inroads and ultimately result in total prohibition by indirect method. If it directly transgresses or substantially and inevitably affects the fundamental right, it becomes unconstitutional, but not where the impact is only remotely possibly or incidental. Smaller inroads may lead to larger inroads and ultimately result in total prohibition by indirect method. If it directly transgresses or substantially and inevitably affects the fundamental right, it becomes unconstitutional, but not where the impact is only remotely possibly or incidental. The Court must lift the veil of the form and appearance to discover the true character and the nature of the legislation, and every endeavour should be made to have the efficacy of fundamental right maintained and the legislature is not invested with unbounded power. The Court has, therefore, always to guard against the gradual encroachments and strike down a restriction as soon as it reaches that magnitude of total annihilation of the right. 50. However, there is presumption of constitutionality of every statute and, its validity is not to be determined by artificial standards. The Court has to examine with some strictness the substance of the legislation to find what actually and really the Legislature has done. The Court would not be over persuaded by the mere presence of the legislation. In adjudging the reasonableness of the law, the Court will necessarily ask the question whether the measure or scheme is just, fair, reasonable and appropriate or is it unreasonable, unnecessary and arbitrarily interfere with the exercise of the right guaranteed in Part III of the Constitution. 51. Once it is established that the statute is prima facie unconstitutional, the State has to establish that the restrictions imposed are reasonable and the objective test which the Court to employ is whether the restriction bears reasonable relation to the authorised purpose or an arbitrary encroachment under the garb of any of the exceptions envisages in Part III. The reasonableness is to the necessity to impose restriction; the means adopted to secure that end as well as the procedure to be adapted to that end. 52. The Court has to maintain delicate balance between the public interest envisaged in the impugned provision and the individual's right; taking into account, the nature of his right said to be infringed; the underlying purpose of the impugned restriction; the extent and urgency of the evil sought to be remedied thereby; the disproportion of the restriction imposed, the prevailing conditions at the time, the surrounding circumstances; the larger public interest which the law seeks to achieve and all other relevant factors germane for the purpose. All these factors should enter into the zone of consideration to find the reasonableness of the impugned restriction. The Court weighs in each case which of the two conflicting public or private interest demands greater protection and if it finds that the restriction imposed is appropriate, fair and reasonable, it would uphold the restriction. The Court would not uphold a restriction which is not germane to achieve the purpose of the statute or is arbitrary or out of its limits. 53. This Court in Joseph Kuruvilla Vellukunnel v. Reserve Bank of India (1962) Suppl (3) SCR 632, held that the RBI is "a banker's bank and lender of the last resort." Its objective is to ensure monetary stability in India and to operate and regulate the credit system of the country. It has, therefore, to perform a delicate balance between the need to preserve and maintain the credit structure of the country by strengthening the rule as well as apparent credit worthiness of the banks operating in the country and the interest of the depositors. In underdeveloped country like ours, where majority population are illiterate and poor and are not conversant with banking operations and in underdeveloped money and capital market with mixed economy, the Constitution charges the State to prevent exploitation and so the RBI would play both promotional and regulatory roles. Thus the R.B.I. occupies place of "pre-eminence" to ensure monetary discipline and to regulate the economy or the credit system of the country as an expert body. It also advices the Government in public finance and monetary regulations. The banks or non-banking institutions shall have to regulate their operations in accordance with, not only as per the provisions of the Act but also the rules and directions or instructions issued by the RBI in exercise of the power thereunder. Chapter 3B expressly deals with regulations of deposit and finance received by the R.N.B.Cs. The directions, therefore, are statutory regulation. 54. In State of U.P. v. Babu Ram (1961)2 SCR 679 : (AIR 1961 SC 75 1) this Court held that rules made under a statute must be treated, for all purposes of construction or obligations, exactly as if they were in that Act and are to the same effect as if they contained in the Act and are to be judicially noticed for all purposes of construction or obligations. The statutory rules cannot be described or equated with administrative directions. In D.V.K. Prasada Rao v. Govt. of A. P., AIR 1984 Andh Pra 75, the same view was laid. Therefore, the directions are incorporated and become part of the Act itself. They must be governed by the same principles as the statute itself. The statutory presumption that the Legislature inserted every part, thereof for a purpose and the legislative intention should be given effect to, would be applicable to the impugned directions. 55. The R.B.I. issued the directions to regulate the operations of the R.N.B.Cs., to safeguard the interest of the depositors. Payment of interest, bonus, premium or other advantage, in whatever name it may be called is reward for waiting or parting with liquidity. It is paid because of positive time preference (one rupee today is preferred to one rupee tomorrow) on the part of the depositor. Therefore, the directions avowed to preserve the right of the depositors to receive back the amount deposited with the contracted rate of interest; it aims to prevent depletion of the deposits collected from the weaker segments of the society and also tends to effect free flow of the business of the R.N.B.Cs. who would desire to operate in their own way. The question, therefore, emerges whether the directions in paras 6 and 12 violate Arts. 14 and 19(1)(g) of the Constitution. 56. The solidarity of political freedom hinges upon socio-economic democracy. The right to development is one of the most important facets of basic human rights. The right to basic interest is inherent in right to life. Mahatma Gandhiji, the Father of the Nation, said that "Every human being has a right to live and therefore to find the wherewithal to feed himself and where necessary, to clothe and house himself." Art. 25 of the Universal Declaration of Human Rights provides that "everyone has a right to a standard of living adequate for the health and well being of himself and of his family, including food, clothing, housing and medical care." Right to life includes the right to live with basic human dignity with necessities of life such as nutrition, clothing, food, shelter over the head, facilities for cultural and socioeconomic well being of every individual. Art. 21 protect right to life. It guarantees and derive therefrom the minimum of the needs of existence including better tomorrow. 57. Art. 21 protect right to life. It guarantees and derive therefrom the minimum of the needs of existence including better tomorrow. 57. Poverty is not always an economic problem alone. Very often it is a social as well as human problem. An agriculturist, an industrial worker, the daily wage earner, rickshaw puller and small self-employed teacher, artisan, etc. may have an earning but may be prone to spend his/her entire earnings, apart from on daily necessities of life, on socio-religious occasions, fairs, festivals etc. The urge for better tomorrow and prosperous future; the glamour for freedom from want of any kind and social security, make the vulnerable segments of the society to sacrifice today's comforts to save for better tomorrow. The habit of saving has an educative value for thrift. It endeavours to bring an attitudinal change in life. It enables individuals to assess future specific needs and to build up a financial provision for the purpose. The habit of saving becomes a way of life and harnesses the meager resources to build up better future. During the days of rising prices, small savings serve as instrument to mop up the extra purchasing power. In addition to wage a war against poverty, waste, unwise spending, hoarding and other activities, habit of saving also enables family budgeting and postponing expenditure which can be deferred in favour of better utilisation in future. To strengthen the urge for thrift and streamline the social security, the disadvantaged need freedom from exploitation and Art.46 of the Constitution enjoins the State to protect the poor from all forms of exploitation and social injustice. 58. Investment agencies or commercial banks are intermediaries between savers and investors. They embark upon deposit mobilisation campaign to mop up the limited resources. Commercial banks or financial investment agencies, be it public sector or private sector, are vying with one another to scale new heights in deposit growth each year, devising different deposit schemes to suit the individual needs of the depositors or savers. Mushroom growth of non-banking agencies put afloat diverse schemes with alluring offers of staggering high rate of interest and other catchy advantages which would generate suspicion of the bona fides of the offer. But gullible depositors are lured to make deposits. It is not uncommon that after collecting fabulous deposits, some unscrupulous people surreptitiously close the company and decamp with the collections keeping the depositors at bay. But gullible depositors are lured to make deposits. It is not uncommon that after collecting fabulous deposits, some unscrupulous people surreptitiously close the company and decamp with the collections keeping the depositors at bay. Therefore, the need to regulate the deposits/ subscriptions, in particular, in private sector became imperative to prevent exploitation or mismanagement as social justice stratagem. 59. The directions are, therefore, a social control measure over the R.N.B.Cs., in matters connected with the operation of the schemes or incidental thereto. The direction to investment in the channelised schemes at the given percentage in Cls. (a) and (b) of proviso to para 6(1) was intended to deposit or keep deposited the collections in fixed deposit in the public sector banks or invest or keep invested in unencumbered approved securities so as tonsure safety, steady growth and due payment to the subscribers at maturity of the principal amount and the interest, bonus, premium or other advantage accrued thereon. The amounts deposited shall not be less than the total aggregate amounts of liabilities to the subscribers. The deposits or securities shall not be withdrawn or otherwise be dealt with except for repayment to the subscribers. It should always be shown to be a liability till date of the repayment. 60. This Court in Hatisingh Mfg. Co. Ltd. v. Union of India (1960) 3 SCR 528 held that freedom to carry on trade or business is not an absolute one. In the interest of the general public, the law may impose restrictions on the freedom of the citizen to start or carry on his business, whether an impugned provision imposing a fetter on the exercise of the fundamental right guaranteed by Art. 19(1)(g) amounts to a reasonable restriction imposed in the interest of general public, must be adjudged not in the background of any theoretical standard or pre-determinate patterns, but in the light of the nature and the incidence of the right, the interest of the general public sought to be secured by imposing restrictions and the reasonableness of the quality and the extent of the fetters imposed by the directions. The creditworthiness of R.N.B.Cs. undoubtedly would be sensitive. It thrives upon the confidence of the public, on the honesty of its management and its reputation of solvency. The directions intended to promote "freedom" and "facility" which are required to be regulated in the interest of all concerned. The creditworthiness of R.N.B.Cs. undoubtedly would be sensitive. It thrives upon the confidence of the public, on the honesty of its management and its reputation of solvency. The directions intended to promote "freedom" and "facility" which are required to be regulated in the interest of all concerned. The directions as a part of the scheme of the Act would be protected from the attack. Vide Latafat Ali Khan v. State of U.P. (1971) Supp SCR 719. 61. The R.N.B.C. is required to conduct its business activities in the interest of the depositors or subscribers who are unorganised, ignorant, gullible, and ignorant of the banking operations. If, however, the acts of R.N.B.C. is detrimental to the interest of the depositors, etc. the R.B.I. has power in Chapter 3B to issue directions and the R.N.B.C. is bound to comply with the directions and non-compliance thereof visits with penal action. 62. Admittedly except Peerless General Insurance, the other companies do not have either paid-up capital or reserve fund worth the name. Peerless was established in the year 1932 and over the years it built up reserve fund. R.N.B.Cs. are carrying their business by crediting the entire first year's collections as a capital receipt under actuarial accounting method. In the affidavit of Sri S. S. Karmik, the Chief Officer of the RBI filed on August 13, 1991, it was stated that prior to the directions, 747 R.N.B.Cs. were doing the business. As on that date only 392 R.N.B.Cs. were notified to be existing. Out of them 178 are in West Bengal; 15 in Assam, 26 in Orissa, 6 in Manipur and Meghalaya, 26 in Punjab, 64 in U.P., 22 in Delhi, etc. As on March 3 1, 1990 out of 185, 35 R.N.B.Cs. alone submitted annual returns, and out of them only 30 have filed their balance-sheets. 28 R.N.B.Cs. in the northern region filed their annual returns and 23 filed their balance-sheets with incomplete data. 35 of them have negative net-worth (loss for exceeding their share capital and reserve). Apart from Peerless, the aggregate capital investment of 15 companies accounted to Rs. 158 lacs. The negative net-worth of the 35 companies referred to above would aggregate to Rs. 3.6 crores. They raised, apart from Peerless, deposits to the tune of Rs. 86 crores. Many of them even not designated their banks as required under para 6 of the direction. Apart from Peerless, the aggregate capital investment of 15 companies accounted to Rs. 158 lacs. The negative net-worth of the 35 companies referred to above would aggregate to Rs. 3.6 crores. They raised, apart from Peerless, deposits to the tune of Rs. 86 crores. Many of them even not designated their banks as required under para 6 of the direction. The would be necessary to comply with the amount invested in bank deposits and approved securities fell much short of their pleaded for 40 . Further contention of Shri deposit liabilities. Verona Commercial Credit was that the actuarial accounting Credit and Investment Company, one of the neither violates any law, nor objected to by respondents, have accumulated losses to the Income-tax Department. Crediting the tune of Rs. 3.8 crores. As per balance-sheet first year's subscription in the accounts as their assets are inadequate to meet the capital receipt would generate company's liability. Favourite Small Scale Investment, working capital for its successful business by one of the respondents as on December 12, meeting the expenditure towards establish1989, even their provisional balance-sheet ment, the commission and a part of profits shows that total liability towards depositors is Forfeiture clause was already deleted before Rs. 44.62 crores while its investment in banks the directions were issued. Interest at 10 and Government security is only Rs. 13 with annual compounding would be reason crores. The cash on hand was Rs. 1.74 crores. able return to the subscribers which is being Rs. 8 crores were shown to be loans and ensured to the depositors. The directions advances. The accumulated losses are Rupees issued by the High Court, subject to the above 22.19 crores as against total share capital and reserve of Rs. 20.73 lacs. It is, thus, clear on its face that while total liabilities are Rs. 49.09 crores, the assets including doubtful loans and advances aggregate to Rs. 26 crores. An inspection into the affairs of the said company conducted in February, 1990 disclosed that up to the end of 1989 the deposit liabilities including interest would be in the region of over Rs. 132 crores. The difference between the inspection and the balance-sheet would be due to actuarial principle. It had committed default to pay to its depositors to the tune of Rs.5.4 crores, which is a gross underestimate. 63. 132 crores. The difference between the inspection and the balance-sheet would be due to actuarial principle. It had committed default to pay to its depositors to the tune of Rs.5.4 crores, which is a gross underestimate. 63. Sri Somnath Chatterjee, the learned Senior Counsel for the Peerless, adopted by other counsel, contended that paragraphs 6 and 12 are totally unworkable. Its compliance would jeopardise not only the existing companies but also the very interest of the depositors and large workmen. No new company would be set up. The direction given in the first Peerless case was to keep in view the interest of the workmen as well; in effect it was given a go-bye. At least 25 of collections would be left over as working capital of the company, to carry on its business in a manner indicated by the impugned judgment, so that no depositor would lose his money and no workman would lose his livelihood and it will be in consonance with public interest. Shri G. L. Sanghi, the learned Senior Counsel for modifications, would subserve the above purpose. Paras 6 and 12, otherwise, are arbitrary and prohibitive violating their fundamental right to do business assured by Arts. 19(1)(g) and 14. Sri Harish Salve resisted the contentions with ability. 64. Para 12 is myocardium and para 6 is the heart of the directions without which the directions would be purified corpse. On the respondents own showing, for the first two years, by actuarial accounting, the liabilities, as against deposits, are inadequate. The regulation intends to preserve the corpus of the deposits and the interest payable thereon as on date to be a tangible and unencumbered asset at all times, though not repayable. Indisputably the depositors/subscribers stand as unsecured creditors. Undoubtedly every measure cannot be viewed or interpreted in the event of catastrophe overtaking the company. The catchy and alluring but beguiled terms of offer attract the vulnerable segments of the society to subscribe and keep subscribing the small savings for better tomorrow. But many a time, by the date of maturity, their hopes are belied and aspirations are frustrated or dashed to ground. They remain to be helpless spectators with all disabilities to recover the amounts. Pathetic financial position of some of the companies enumerated hereinbefore would amply demonstrate the agony to which the poor subscribers would be subjected to. But many a time, by the date of maturity, their hopes are belied and aspirations are frustrated or dashed to ground. They remain to be helpless spectators with all disabilities to recover the amounts. Pathetic financial position of some of the companies enumerated hereinbefore would amply demonstrate the agony to which the poor subscribers would be subjected to. The fixed deposits and unencumbered securities as per Cls. (a) and (b) of the proviso to paragraph 6(1) would be 80 of the collections of the year of subscription and Shri Chatterji contends to reduce it to 75 and to allow free play to use the residue in their own way. The difference is only 5 and others at vagary. The objects of the direction are to preserve the ability of the R.N.B.C. to pay back to the subscribers/depositors at any given time; safety of the subscribers' money and his right to unencumbered repayment are thus of paramount public interest and the directions aimed to protect them. The directions cannot and would not be adjudged to be ultra vires or arbitrary by reason of successful financial management an individual company. An over all view. of the working system of the scheme is relevant and germane. 65. The obligation in paragraph 12 of periodical disclosure in the accounts to a company of the deposits together with the interest accrued thereon, whether or not payable but admittedly due as a liability, is to monitor the discipline of the operation of the schemes and any infraction, would be dealt with as per law. The certificate by a qualified Chartered Accountant is to vouchsafe the correctness and authenticity of accounts and would and should adhere to the statutory compliance. 66. The settled accounting practice is that a loan or deposit received from a creditor has to be shown as a liability together with accrued interest whether due or deferred. The actuarial accounting applies to revenues and costs to which the concept of the "going concern" can be adopted. Therefore, in providing the costs of the company it can set apart its costs on the basis that liability is created for interest, bonus etc. payable in foreseeable future. Undoubtedly the actuarial principle applied by the L.I.C. or the gratuity schemes are linked with life of the assured or the premature death before retirement of an employee, but R.N.B.C. in its contract does not undertake any such risk. payable in foreseeable future. Undoubtedly the actuarial principle applied by the L.I.C. or the gratuity schemes are linked with life of the assured or the premature death before retirement of an employee, but R.N.B.C. in its contract does not undertake any such risk. The deposit or loan is a capital receipt but not a revenue receipt and its full value shall be shown in the account books or balance-sheet as liability of the company. It cannot be credited to the profit and loss account. Part II of Schedule VI of the Companies Act, 1956 requires that the amount shown in the profit and loss account should be confined to the income and expenditure of the company. Para 12 of the directions is, thus, in consonance with the Companies Act. Moreover, in its advertisement and the application forms, the R.N.B.C. expressly hold out to the public that, their monies are safe with the bank and in the Government securities. Paragraph 6(1) of the directions only mandates compliance of the promise held out by an R.N.B.C. for repayment at maturity. Sub-para (3) of para 6 keeps the deposits unencumbered and to be utilised by the company only for repayment. In other words, paragraph 6 only elongates the contract in the public interest to safeguard the interest of the vulnerable sections of the depositors. The R.B.I. cannot be expected to constantly monitor the working of the R.N.B.C. in its day-to-day function. The actuarial basis cannot be adopted by the R.N.B.Cs. and the liability must always be reflected in its balance-sheet at its full value. Compliance of the direction in para 12, dehors any method of accountancy adopted by a company, intended to discipline its operations. 67. No one can have fundamental right to do any unregulated business with the subscribers/depositors' money. Even the banks or the financial companies are regulated by eiling on public deposits fixing nexus between deposits and net-worth of the company at the ratio of 3 : 1, i.e. 25 of the capital net-worth. No one would legitimately be expected to get immediate profits or dividend without capital investment. The concept of profit or interest presupposes capital investment. The effect of the Cls. No one would legitimately be expected to get immediate profits or dividend without capital investment. The concept of profit or interest presupposes capital investment. The effect of the Cls. (a) and (b) of the proviso to paragraph 6(1) of the direction, no doubt, freezes the right to profit for a short time and fastens an incidental and consequential obligation to mop up paid up capital or investment towards establishment and commission charges to tide over teething trouble. But that is no ground to say that it is impossible of compliance, nor could it be said that the directions are palpably arbitrary or unreasonable. Anyone may venture to do business without any stake of his own but is subject to the regulations. A new company without any paid up capital, no doubt, cannot be expected to come into existence nor would operate its business at initial existence with profits. Cl. (c) of the proviso to paragraph 6(1) of the directions gives freedom or leeway to invest or rotate, not more than 20 per cent. of collections etc. in any profitable manner at its choice as a prudent businessman to generate its resources to tide over the teething troubles till it is put on rails to receive succour to its existence, without inhibiting the company's capacity to mop up small savings, and the directions do not control its operation. The only rider is the approval of the Board of Directors which is inherent. Absence of imposition of any limit on quantum of deposits with reference to paid up capital or reserve fund like non-banking financial companies, etc. is a pointer in this regard. Thus there is a reasonable nexus between the regulation and the public purpose, namely, security to the depositor's money and the right to repayment without any impediment, which undoubtedly is in the public interest. 68. Looking from operational pragmatism, the restrictions though apparently appears to be harsh in form, in its systematic working, it would inculcate discipline in the business management, subserve public confidence in the ability of the company to honour the contractual liability and assure due repayment at maturity of the amount deposited together with interest, etc. without any impediment. In other words, the restrictions in paragraph 6 of the directions intended, to elongate the twin purposes, viz. without any impediment. In other words, the restrictions in paragraph 6 of the directions intended, to elongate the twin purposes, viz. habit of thrift among the needy without unduly jeopardising the interest of the employees of the companies and the R.N.B.Cs. working system itself in addition to safety and due payment of depositor's money. True, as contended by Shri Chatterji that there arises corresponding obligation to pay higher amount of commission to its agents and the commitment should be kept performed and the confidence enthused in the agents. But it is the look out of the businessman. The absence of ceiling on the rate of commission would give choice between the company and its agents to a contract in this regard and has freedom to manage its business. The R.N.B.Cs. are free to incur such expenses and organise their business as they desire including payment of commission as they think expedient. But the subscribers/depositors' liability, under no circumstances, would be in jeopardy and the directions were designed to ensure that the interest of the subscribers/ depositors is secured at all times, prescribing investment of an equal sum to the total liability to the subscribers/ depositors. Paragraph 12 is only a bridge between the depositors and the promise held out and the contract executed in furtherance thereof as a monitoring myocardium to keep the heart in paragraph 6 functioning without any hiatus. It is settled law that regulation includes total, prohibition in a given case where the mischief to be remedied warrants total prohibition. Vide Narendra Kumar v. Union of India (1960) 2 SCR 375 . But the directions do not do that but act as a siphon between the subscriber/ depositor and the business itself. Therefore, they are neither palpably arbitrary nor unjust nor unfair. The mechanism evolved in the directions is foolproof, as directed by this court in first Peerless case to secure the interest of the depositors as well capable to monitor the business management of every R.N.B.C. It also, thereby, protects interest of the employees/ field staff commission agent etc. as on permanent basis overcoming initial convulsions. The mechanism evolved in the directions is foolproof, as directed by this court in first Peerless case to secure the interest of the depositors as well capable to monitor the business management of every R.N.B.C. It also, thereby, protects interest of the employees/ field staff commission agent etc. as on permanent basis overcoming initial convulsions. It was intended, in the best possible manner, to subserve the interest of all without putting any prohibition in the ability of a company to raise the deposit, even in the absence of any adequate paid up capital or reserve fund or such pre-commitment of the owner, to secure such deposits. 69. Thus the directions impose only partial control in the public interest of the depositors. The deposits invested or keep invested qua the company always remained its fund till date of payment at maturity or premature withdrawal in terms of the contract. The effect of the impugned judgment of the Calcutta High Court namely redefinition of the aggregate liabilities as contractual liabilities due and payable would have the effect of requiring the R.N.B.Cs. to deposit an amount equal to the sum payable only in the year of maturity allowing free play to the R.N.B.Cs. to use the subscriptions/deposits in its own manner during the entire earlier period, jeopardise the security of the subscribers/depositors and are self-defeating. The sagging mismanagement prefaced hereinabove would be perpetrated and the depositor is always at the mercy of the company with all disabilities, killing the very goose namely the thrust to save for prosperous future or to tide over future needs. 70. It is well settled that the Court is not a Tribunal from the crudities and inequities of complicated experimental economic legislation. The discretion in evolving an economic measures, rests with the policy makers and not with the judiciary. Indian social order is beset with social and economic inequalities and of status, and in our socialist secular democratic Republic, inequality is an anathema to social and economic justice. The Constitution of India charges the State to reduce inequalities and ensure decent standard of life and economic equality. The Act assigns the power to the RBI to regulate monetary system and the experimentation of the economic legislation, can best be left to the executive unless it is found to be unrealistic or manifestly arbitrary. The Constitution of India charges the State to reduce inequalities and ensure decent standard of life and economic equality. The Act assigns the power to the RBI to regulate monetary system and the experimentation of the economic legislation, can best be left to the executive unless it is found to be unrealistic or manifestly arbitrary. Even if a law is found wanting on trial, it is better that its defects should be demonstrated and removed than that the law should be aborted by judicial fiat. Such an assertion of judicial power deflects responsibilities from those on whom a democratic society ultimately rests. The Court has to see whether the scheme, measure or regulation adopted is relevant or appropriate to the power exercised by the authority. Prejudice to the interest of depositors is a relevant factor. Mismanagement or inability to pay the accrued liabilities are evils sought to be remedied. The directions designed to preserve the right of the depositors and the ability of R.N.B.C. to pay back the contracted liability. It also intended to prevent mismanagement of the deposits collected from vulnerable social segments who have no knowledge of banking operations or credit system and repose unfounded blind faith on the company with fond hope of its ability to pay back the contracted amount. Thus the directions maintain the thrift for saving and streamline and strengthen the monetary operations of R.N.B.Cs. 71. The problems of Government are practical ones and may justify if they do not require rough accommodation. Illogical it may be and unscientific it may seem to be, left to its working and if need be, can be remedied by the R.B.I. by pragmatic adjustment that may be called for by particular circumstances. The impugned directions may at first blush seem unjust or arbitrary but when broached in pragmatic perspective the mist is cleared and that the experimental economic measure is manifested to be free from the taints of unconstitutionality. 72. Para 19 of the directions empowers the RBI to extend time for compliance or to exempt a particular company or a class thereof from all or any of the provisions, either generally or for a specified period subject to such conditions as may be imposed. Power to exempt would include the power to be exercised from time to time as exigencies warrant. Power to exempt would include the power to be exercised from time to time as exigencies warrant. An individual company or the class thereof has to place necessary and relevant material facts before the R.B.I. of the hardship and the need for relief. A criticism of arbitrariness or unreasonableness may not be a ground to undo what was conceived best in the public interest. What is best is not always discernible. The wisdom of any choice may be disputed or condemned. Mere errors of Government are not subject to judicial review. The legislative remedy may be ineffective to mitigate the evil or fail to achieve its purpose, but it is the price to be paid for the trial and error inherent in the economic legislative efforts to grapple with obstinate social issues. It is proper for interference in judicial review, only, when the directions regulations or restrictions are palpably arbitrary, demonstrably irrelevant or discriminatory. Exercise of power then can be declared to be void under Art. 13 of the Constitution. So long as the exercise of power is broadly within the zone of reasonableness, the Court would not substitute its judgment for that of legislation or its agent as to matters within their prudence and power. The Court does not supplement the feel of the experts by its own values. 73. It is settled law that so long as the power is traceable to the statute, mere omission to recite the provision does not denude the power of the legislature or rule making authority to make the regulations, nor considered without authority of law. S. 114(h) of the Evidence Act draws a statutory presumption that official acts are regularly performed and reached satisfaction on consideration of relevant facts. The absence of reiteration of objectives satisfaction in the preamble as of one under S. 45L does not denude the powers, the R.B.I. admittedly has under S. 45L, to justify the actions. Though S. 45L was neither expressly stated nor mentioned in the preamble of the directions of the required recitation of satisfaction of objective facts to issue the directions from the facts and circumstances it is demonstrated that the R B.I. had such satisfaction in its considerations of its power under S. 45L, when the directions were issued. Even otherwise S. 45K(3) itself is sufficient to uphold the directions. 74. Even otherwise S. 45K(3) itself is sufficient to uphold the directions. 74. The impugned directions are thus within the power of the R.B.I. to provide tardy, stable, identifiable and monitor able method of operations by each R.N.B.C. and its compliance of the directions. This will ensure security to the depositors at all times and also make the accounts of the company accurate, accountable and easy to monitor the working system of the company itself and continuance of its workmen. The directions in paragraphs 6 and 12 are just, fair and reasonable not only to the depositors, but in the long run to the very existence of the company and its continued business itself. Therefore, they are legal, valid and constitutionally permissible. 75. The writ petition is dismissed and the appeals are allowed. The writ petitions filed in the High Court stand dismissed. No costs in this Court. Order accordingly For Citation : AIR 1992 SC 1033