JUDGMENT The Pawn Brokers' Association and others are before us challenging the order passed by a learned Single Judge of this Court dated 28-9-2000 passed in W.P. Nos. 29372 to 29377 of 1998. 2. Facts in brief are as under: The appellants-petitioners sought a declaration that Sections 4-A and 4-B of the Karnataka Pawn Brokers Act, 1961 and Sections 4, 5 and 6 of the Karnataka Act 9 of 1998, providing for amendment of Sections 4 and 4-A of Karnataka Pawn Brokers Act, prohibiting the payment of interest on security deposit with effect from 31-5-1985 as unconstitutional. They also sought for a declaration that Sections 7-A and 7-B of the Karnataka Money Lenders Act, 1961 and Sections 3, 4, 6 and 8 of the Karnataka Act 14 of 1998, providing for amendment of the Karnataka Money Lenders Act as ultra vires and unconstitutional and being contrary to the judgments of this Hon'ble Court and for a writ of mandamus restraining the respondents from collecting the security deposits under the two acts as well as the enhanced licence fee in terms of the Act. 3. The appellants are the association and individuals carrying on the business of money lending and pawn brokering in the State of Karnataka. They obtain licence under the statute as applicable to them. 4. The Karnataka Money Lenders Act was enacted to regulate the transaction of money lending in the State of Karnataka. 5. The Karnataka Pawn Brokers Act was enacted to regulate and enhance the business of Pawn Brokering. 6. Under Section 5 of the Act, no person can carry on the business of money lending in the State, except in accordance with the terms and conditions of the licence and on payment of security deposit. An application is required to be made for the purpose of licence to the Assistant Registrar of Money Lenders. Particulars are to be provided along with the application. Section 7 provides for grant of licence and entry in register. Section 7 -A provides for conditions of a licence and Section 7-B provides for forfeiture of security. These sections were inserted into the Act in terms of an amendment dated 5-12-1985. Section 8 of the Money Lenders Act deals with the grounds on which a licence can be refused. Section 9 deals with Registrar's power to cancel the licence and Section 10 deals with the term of a licence. 7. These sections were inserted into the Act in terms of an amendment dated 5-12-1985. Section 8 of the Money Lenders Act deals with the grounds on which a licence can be refused. Section 9 deals with Registrar's power to cancel the licence and Section 10 deals with the term of a licence. 7. A Pawn Broker must obtain a licence under Section 3 of the Act on payment of security deposit. Section 4 provides for a grant and renewal of licence. Section 4-A provides for conditions of licence and Section 4-B provides for forfeiture of security. For the first time, the security deposit was introduced in the table in Section 7-A of the Money Lenders Act and Section 4-A of the Act. They are in pari materia in terms of the writ averments. 8. The appellants and several others challenged the constitutional validity of the said provisions in a batch of writ petitions in this Court. This Court disposed of those petitions, by a detailed order in terms of the judgment dated 7-3-1991. This Court ruled that the deposit is proper and legal but directed the State Government to formulate the rules for the payment of interest on security deposit. 9. The appellant filed a Special Leave Petition, aggrieved by the said order and they came to be dismissed by the Apex Court. Despite directions issued by the Court, the State Government did not frame any rules with regard to the provisions of payment of interest on the security deposit and continued demanding and collecting the security deposits from the money lenders and pawn brokers. Thereafter, a Circular was issued prescribing the accounting procedure for security deposit as well as procedure for payment of interest on the deposit by the State Government. The said circular was challenged in a batch of writ petitions and the learned Single Judge upheld the said circular after clarifying the position in terms of the writ averments. 10. Thereafter Act No.9 of 1998 was gazetted on 21-4-1998. A new section was substituted providing for enhanced licence fee in the matter, sub-section (1) of Section 4-A of the Act was also amended in the matter. A validation clause was added in the act. The petitioners aggrieved by these amendments filed writ petitions in this Court. Learned Single Judge dismissed the petitions by a detailed order dated 28-9-2000. This bunch order is challenged in this appeal. 11. A validation clause was added in the act. The petitioners aggrieved by these amendments filed writ petitions in this Court. Learned Single Judge dismissed the petitions by a detailed order dated 28-9-2000. This bunch order is challenged in this appeal. 11. Smt. Nagarathna, learned Counsel argues that a Division Bench of this Court in M/s. Manakchand Motilal v State of Karnataka1, has accepted the case of the State with interest in terms of a direction contained in para 19 of the order. Thereafter, the Government has chosen to issue a circular in the matter of interest. Subsequently, the Government has chosen to amend the Act thereby depriving the petitioner of their rightful interest in the case on hand. She therefore says that the amendment without interest is hit by Article 14 of the Constitution of India and it is also in violation of Article 19 of the Constitution. She further argues that the learned Single Judge has committed a serious error in dismissing the petition by placing reliance Ferro Alloys Corporation Limited v. Andhra Pradesh State Electricity Board and Another case which is distinguishable on facts. Ferro Alloys case stands totally on a different footing compared to the present set of facts. She therefore says that the order of the learned Single Judge requires to be set aside. She further argues that the present amendment virtually overrules a binding decision of the Court and such a course is impermissible, according to her. She says that challenge to validity at a very late stage cannot be held to be improper in the light of the subsequent development. She relies on several judgments in support of her submissions. 12. Per contra, Sri Prakash Shetty, learned Counsel for the 'State argues that the State Government has necessary power and jurisdiction with regard to a demand of security deposit in the case on hand. He strongly relies on various judgments in support of his submissions. Insofar as the contention with regard to overruling of the judgment is concerned, learned Government Advocate would say that what the Government has done is only validation and validation is acceptable in Courts of law. He says that on the facts of this case, the Government in fully justified in providing these provisions in the larger interest of consumers. He also relies on a few judgments. 13. He says that on the facts of this case, the Government in fully justified in providing these provisions in the larger interest of consumers. He also relies on a few judgments. 13. After hearing, we are of the view that the following questions arise for our consideration: (1) Validity of Sections 4-A and 4-B of the Pawn Brokers Act and Sections 7-A and 7-B of the Money Lenders Act; (2) Validity of Sections 4, 5 and 6 of Karnataka Act No.9 of 1998 and Sections 3, 4, 6 and 8 of Act No. 14 of 1998; (3) Legality and validity of security deposit without interest; (4) Relief. Q. 1. Validity of Sections 4-A and 4-B etc.: 14. Section 4-A pertains to the conditions of licence and Section 4-B pertains to forfeiture of security. They were inserted into the Act by an Amendment Act 4-12-1985. Similarly, Section 7-A deals with condition of licence and Section 7-B deals with forfeiture of security. These sections were also inserted into the Act by virtue of an Amendment Act dated 5-12-1985. 15. Both these sections were challenged in this Court on the ground of violation of fundamental rights in terms of Articles 14 and 19 of the Constitution of India, in W.P. Nos. 8913 and 8914 of 1985. A Division Bench of this Court has gone into the constitutional validity of these two provisions in the judgment in M/s. Manakchand Motilal's case. The Division Bench had ruled that as can be seen from the statement of objections and reasons annexed to the appeal and paragraphs 8 and 10 the Objection statement, the provisions were intended to safeguard the interests of the borrowers, who mostly belong to poorer sections of society if and when they are adversely affected by the activities of the Money Lenders or Pawn Brokers as the case may be. The classification, therefore, has also a rational nexus to the object sought to be achieved. The restriction imposed by the amendments is neither arbitrary nor can be regarded as an unreasonable restriction on the fundamental right of the petitioners to carry out on their business. Therefore, the impugned provisions do not violate Article 14 or 19(1)(g) of the Constitution. The said finding of the Division Bench is equally applicable to the facts of the case. The restriction imposed by the amendments is neither arbitrary nor can be regarded as an unreasonable restriction on the fundamental right of the petitioners to carry out on their business. Therefore, the impugned provisions do not violate Article 14 or 19(1)(g) of the Constitution. The said finding of the Division Bench is equally applicable to the facts of the case. Therefore, we are of the view that in the light of the earlier judgments, the 4 provisions in terms of the amendment carried out by 1985 has to be declared constitutionally valid. 16. Sri Shetty, learned Counsel relies on several judgments in support of his submissions. In the light of our conclusion that these provisions are constitutionally valid, it is unnecessary for us to consider in depth as argued by the learned Counsel. In fact, no serious arguments are advanced by the petitioner with regard to constitutional validity in the light of M/s. Manakchand Motilal's case. However, what is argued in that the said judgment was rendered with a direction to pay interest and it was for this reason, the Court ruled that these sections are valid and legal. We would be dealing with regard to the interest aspect of the matter in the subsequent paragraphs. In fact, the power of the Government is seeking for enhancement is not seriously challenged and hence we do not want to refer to various judgments cited by Sri Shetty, learned Counsel in this case. Q. 2 and 3. Validity of Sections 4, 5 and 6 of Karnataka Act No. 9 of 1998 and Sections 3, 4, 6 and 8 of the Karnataka Act No. 14 of 1998 and legality and validity of Security Deposit without interest.-Both questions 2 and 3 are inter connected and hence can be disposed of by giving a common finding in respect of these two questions. 17. This Court, as mentioned earlier, has chosen to hold that Sections 7-A and 7-B of the Karnataka Money Lenders Act and Sections 4-A and 4-B of the Karnataka Pawn Brokers Act are constitutionally valid. However, this Court directed the respondent to pay interest on the prevailing rate of interest payable by the scheduled Bank on the fixed deposits for a period of one year on the amount deposited in security. However, this Court directed the respondent to pay interest on the prevailing rate of interest payable by the scheduled Bank on the fixed deposits for a period of one year on the amount deposited in security. The State Government was at liberty to make proper rules in this behalf and such rule may also provide for payment of accrued interest only. The Division Bench also directed to adjust the amount of deposit made during the year the amount of deposit required to be made for the succeeding year for the money lenders. This judgment has become final in the light of dismissal of SLP by the Apex Court. After this judgment was rendered the respondent has chosen to issue a circular on 6-9-1994 prescribing the accounting procedure for security deposit as well as the procedure for payment of interest on deposits. Thereafter on 21-4-1998 Karnataka Act No.9 of 1998 and Karnataka Act No. 14 of 1998 were existed in terms of the material placed before us. Act No.9 of 1998 in Section 4 is challenged in this petition. In particular, Section 4(5) substituted by a new provision by way of Section 4. In Section 4(c)(ii), the words "such security deposit shall not carry any interest" shall be deemed to have been inserted with effect from 31-5-1985. By virtue of the amendment the benefit of interest in terms of the judgment of this Court is taken away by the Government. 18. The petitioners aggrieved by the denial of interest with retrospective amendment filed writ petition as mentioned earlier by raising several contentions including constitutional and fundamental rights in terms of Articles 14 and 19 of the Constitution of India. Arguments were placed before the learned Single Judge with regard to the constitutional invalidity of the retrospective amendment providing for no interest. Learned Single Judge by a detailed order has noticed the denial of interest. Learned Single Judge noticed the judgment of this Court with reference to M/s. Jagadamba Paper Industries (Private) Limited v Haryana State Electricity Board and Others1 and with reference to Ferro Alloys case. Learned Judge after noticing these two judgments has categorically ruled that the judgment in Ferro Alloys case would be an answer with regard to constitutional arguments. Learned Judge has rejected the contention of the petitioner with regard to Article 14 in the light of Ferro Alloys Corporation Limited's case. Learned Judge after noticing these two judgments has categorically ruled that the judgment in Ferro Alloys case would be an answer with regard to constitutional arguments. Learned Judge has rejected the contention of the petitioner with regard to Article 14 in the light of Ferro Alloys Corporation Limited's case. Though the judgment is lengthy, the learned Judge has negatived the contention of no interest by relying on Ferra Alloys Corporation's case. 19. Let us see as to whether the said finding of the learned Single Judge call for an interference in the case on hand. For appreciation of this argument one has to notice the facts in Ferro Alloys Corporation Limited's case, for the purpose of proper appreciation of the arguments advanced by the parties. The facts are arrated in paragraphs 2 and 3 of the judgment. The facts of the case would show that consumption deposit was insisted upon in terms of a condition by the Board for the purpose of supply of power. The interest at 3% p.a. was also provided as interest on consumption deposit. That conditional deposit and payment of interest was considered by the Apex Court in the light of the rejection of the case of the consumers by the Andhra Pradesh High Court. The Apex Court ruled that a condition of consumption security deposit towards power supply is not unreasonable or arbitrary. The Court also ruled that there is no need to indicate under the scheme of the Electricity Act, 1910 or Sixth Schedule of the Electricity (Supply) Act, 1948 that interest must be paid on the consumption security deposits made by the high tension consumers. The Apex Court ultimately ruled that denial of interest is proper. The Apex Court has provided reasoning in the judgment as to why no interest is valid and legal. The Court noticed that electricity is supplied in anticipation of payment from consumers. In almost every case, it takes nearly 2% months for the recovery of the amount by Electric Board before action for disconnection could be taken. The Apex Court noticed that the nature of consumption deposit is to secure prompt payment and is intended for appropriation. There is no liability on the Electricity Board either under the statute or common law or equity to pay interest. The Apex Court noticed that the nature of consumption deposit is to secure prompt payment and is intended for appropriation. There is no liability on the Electricity Board either under the statute or common law or equity to pay interest. Conditions and the terms of supply providing for non-payment of interest is not so unconscionable as to shock the conscience of the Court. 20. A reading of the entire judgment would show that no interest argument was accepted in the light of advance power made available to a consumer without payment. It was with reference to the provision of the Electricity (Supply) Act, 1948. That cannot be taken as a yardstick in all cases for the purpose of "no interest". The deposit in the present case stands on a different footing than the deposit in the case of power consumers. In the case of power deposit power deposit is obtained for prompt payment in the light of advance power supply without payment. Whereas, in the present cases the deposit is accepted as a security to the general public. The object, the condition, situations etc., between these two deposits stands on totally different footing in these cases. Therefore, in our view as rightly argued by Smt. Nagarathna, learned Counsel, the learned Single Judge is not correct in accepting no interest on the ground of Ferro Alloys Corporation's case. In these circumstances, we deem it proper to accept the argument of the learned Counsel with regard to interest in the light of the distinguished facts in Ferro Alloys Corporation's case. Therefore, we deem it proper to accept the arguments of the petitioners. 21. In fact, a Division Bench of this Court in the earlier judgment has noticed the object of security in terms of Money Lenders Act and Pawn Brokers Act in a detailed manner and thereafter, the Court ruled that money remains with the Government and it is most unreasonable for the State to say that no interest would be paid on the amount so deposited. The Division Bench has also noticed that but for the deposit these amounts would have been utilised by the petitioners for their business and earning profits and they have been doing so for the last more than two decades. The Division Bench has also noticed that but for the deposit these amounts would have been utilised by the petitioners for their business and earning profits and they have been doing so for the last more than two decades. It is true that the sections do not make a provision for giving interest but at the same time the sections do not prohibit the payment of interest. If the sections prohibited the payment of interest, such a provision would be arbitrary and therefore there would have been force in the argument of the petitioners that the provisions will violate Article 14 on the ground that it is arbitrary, for Article 14 strikes at arbitrariness in state action. In the light of the earlier Division Bench and in the light of the distinguished facts in Ferro Alloy's case, we are of the view that the appellants are entitled for interest in terms of the judgment of the Division Bench in the earlier case. Hence, we deem it proper to direct the respondents to continue to pay the interest. 22. Smt. Nagarathna, learned Counsel argues that in the absence of any change in circumstances, the Legislature cannot introduce an amendment thereby rendering a judgment of a Court as of no effect. For this purpose, she strongly relies on In the matter of Cauvery Water Disputes Tribunal1 and Indian Aluminium Company v State of Kerala2, the Supreme Court has provided the principles with regard to the power of Legislature. Para 56 reads as under: "In exercising legislative power, the Legislature by mere declaration, without anything more, cannot directly overrule, revise or override a judicial decision. It can render judicial decision ineffective by enacting valid law on the topic within its legislative field fundamentally altering or changing its character retrospectively. The changed or altered conditions are such that the previous decision would not have been rendered by the Court, if those conditions had existed at the time of declaring the law as invalid. It is also empowered to give effect to retrospective legislation with a deeming date or with effect from a particular date. The changed or altered conditions are such that the previous decision would not have been rendered by the Court, if those conditions had existed at the time of declaring the law as invalid. It is also empowered to give effect to retrospective legislation with a deeming date or with effect from a particular date. The Legislature can change the character of the tax or duty from impermissible to permissible tax but the tax or levy should answer such character and the Legislature is competent to recover the invalid tax validating such a tax or removing the invalid base for recovery from the subject or render the recovery from the State ineffectual. It is competent for the Legislature to enact the law with retrospective effect and authorise its agencies to levy and collect the tax on that basis, make the imposition of very collected and recovery of the tax made valid notwithstanding the declaration by the Court or the direction given for recovery thereof'. 23. In fact, the material on record in these cases would reveal that subsequent to the earlier Division Bench judgment, the State Government has chosen to issue a Circular No. 31 in the matter of rate of interest etc. These circulars were challenged by the petitioners in W.P. No. 33535 of 1994. Learned Single Judge rejected the same in terms of an order dated 30-7-1996. That order was challenged in W.A. No. 2493 of 1997. A Division Bench of this Court has chosen to reject the appeal by holding that the circular issued was in accordance with the directions of the Division Bench in Anni Krishna's case {sic}, After the said judgment is rendered, no changed circumstances or altered situation is shown to the Court by the respondent in terms of the law governing with regard to rendering a judgment ineffective in these cases. In the absence of any subsequent changed circumstances and in the light of the earlier Bench judgment, we are of the view that respondent cannot nullify a Division Bench judgment providing for interest by way of subsequent amendment as has been done in the case on hand. In the case on hand, we do not want to go into the availability power in the light of our earlier findings. This question is therefore answered in favour of the appellant-petitioners. 24. In the case on hand, we do not want to go into the availability power in the light of our earlier findings. This question is therefore answered in favour of the appellant-petitioners. 24. Reliefs.-We see from the order sheet that this Court has not granted any stay in the matter. Matters are pending right from the year 2001. Deposit must be lying fairly for a long time without interest. In these circumstances, taking into consideration the delay and the stakes involved, we deem it proper to restrict the claim interest prospectively i.e., from 1-1-2006. 25. In the result, the following order is passed: 1. Sections 4-A and 4-B of the Karnataka Pawn Brokers Act and Sections 7-A and 7-B of the Karnataka Money Lenders Act are declared to be constitutionally valid and legal; 2. We hereby declare that Section 4 of the Karnataka Pawn Brokers Act as amended by Act No. 9 of 1998 and Section 6 of the Karnataka Money Lenders Act, 1961 as amended by Act No. 14 of 1998 is declared as unconstitutional and illegal. Amended Sections 4, 5(c) and Section 4(c)(ii) are strike down as constitutionally bad insofar as denial of interest is concerned; 3. Respondents are directed to pay interest at the prevailing rate of interest payable by the Scheduled Bank on the fixed deposits for a period of one year with effect from 1-1-2006 on the amount deposited already as security by the petitioners. Liberty is allowed towards adjustment, if any, in a similar manner as in the case of M/s. Manakchand Motilal. In the event of cancellation of licence, adjustment etc., the same is required to be reconsidered in terms of this order; 4. The State Government is at liberty to make appropriate rules in this behalf. Such Rule may also provide for payment of accrued interest only at the time of refunding or adjusting the deposits for subsequent years and for forfeiting the interest together with deposit, in cases where the deposit is forfeited in terms of the earlier order; 5. Respondents are also directed to refund the amount of deposit either in the event of any person discontinuing the business or in the event of licence being refused. 26. Ordered accordingly. No costs.