Judgment :- N. KUMAR J., 1. The constitutional validity of item (v) of clause (c) of Sub-Section (1) of Section 2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002, for short, hereinafter referred to as the 'Act' is the subject matter of W.P.No.2755/08. Further the petitioners in the said writ petition are also seeking for quashing of the notification bearing No.S.O.105 (E) issued by the Central Government, Ministry of Finance and Company Affairs (Department of Economic Affairs) (Banking Division) dated 28th January 2003, where under, the Central Government specifies 'Cooperative Bank' as defined in clause (cci) of Section 5 of Banking Regulation Act, 1949, as 'Bank' for the purpose of the Act. 2. The very same petitioners challenged the action of the authorised officer in issuing notice under Section 13(2) of the Act, on the ground that the Act is not applicable to the loans advanced by Co-operative Banks in W.P.No.23813/05. The learned Single Judge of this Court allowed the writ petition by his order dated 12.07.2007 following the judgment of the Apex Court in GREATER BOMBAY CO-OPERATIVE BANK LTD Versus M/s. UNITED YARN TEX PVT LTD., & ORS,reported in AIR 2007 SC 1584 and held that the banking company as defined under Section 5(c) of the Banking Regulation Act. 1949 does not include or encompass the co-operative bank. Therefore, the ‘Act’, is not applicable to the loans advanced by Co-operative Banks. Aggrieved by the same, the Bank has preferred Writ Appeal No.2382/07. 3. Following the judgment of the learned Single Judge, several writ petitions have been allowed and challenging those orders, writ appeals are preferred. Similarly, orders passed by the authorities under the Co-operative Societies Act, have been challenged in several writ petitions before this Court. As common question of law arise for consideration in all these matters, they are placed before this Court for decision. Hence, all these matters are taken up for consideration together and disposed of by this common order. However, for the purpose of convenience, the facts in W.P.No.2755/08 are set out to have a factual background. FACTUAL MATRIX 4. The Karnataka Rajya Kaigarika Sahakara Bank Niyamita for short hereinafter referred to as the "Bank", advanced loan to M/s. High Tech Industries, a registered partnership firm. The firm committed default in repayment of loan. However, for the purpose of convenience, the facts in W.P.No.2755/08 are set out to have a factual background. FACTUAL MATRIX 4. The Karnataka Rajya Kaigarika Sahakara Bank Niyamita for short hereinafter referred to as the "Bank", advanced loan to M/s. High Tech Industries, a registered partnership firm. The firm committed default in repayment of loan. A demand notice was forwarded to the first petitioner Versus Krishnaswamy, on the assumption that he owned and possessed the dwelling house bearing Nb.221, 2nd E Cross, 6th Main, 3rd Block, I Stage, Basaveshwara Nagar, Bangalore-86. In fact, the schedule property is owned and possessed by the second petitioner, the wife of the first petitioner. The second petitioner became the owner of the said property under a registered gift deed dated 22.07.2003 executed by the first petitioner in favour of second petitioner. According to them, it is a Stree dhana property. 5. The Bank instituted dispute No.1366/2000-01 which later came to be re-numbered as Dispute No.1244/05 under Section 70 of the Karnataka Co-operative Societies Act, 1959 and obtained exparte award against M/s Hi-tech Industries and others, including the petitioner. In appeal, the Karnataka Appellate Tribunal, Bangalore, by its order dated 09.09.2003 set aside the exparte award and remanded the matter back for fresh trial. After such remand, the second respondent initiated action under Section 13(2) of the Act, claiming itself as a "Bank" on par with Co-operative Banks through the third respondent is its authorised officer. In the said proceedings, the dwelling house belonging to the wife of the petitioner was described as owned by the first petitioner and was put up for sale. 6. The authorised officer purporting to exercise his powers under Section 13(2) of the Act, issued notice dated 01.01.2004 to M/s. High Tech Industries, calling upon it to discharge the loan borrowed by it with interest thereon, within 60 days from the date of the notice. A copy of the said notice was forwarded to the first petitioner who received it on 12.01.2004. In the notice, the first petitioner was shown the owner of the schedule property. He objected to the same by filing statement of objection on 15.02.2004. He also filed W.P.No.6537/04 on 16.02.2004 challenging the validity of the said notice. A copy of the said notice was forwarded to the first petitioner who received it on 12.01.2004. In the notice, the first petitioner was shown the owner of the schedule property. He objected to the same by filing statement of objection on 15.02.2004. He also filed W.P.No.6537/04 on 16.02.2004 challenging the validity of the said notice. In the mean while, the authorised officer proceeded to issue the possession notice dated 31.03.2004 purporting to act under Section 13(4) of the Act, which made the first petitioner to amend the writ petition, to include the prayer for quashing of the said possession notice. By order dated 16.04.2004, this Court set aside the possession notice with a direction to the respondents to consider first the objection filed by the first petitioner to the notice issued under Section 13(2) of the Act and to communicate the reasoning either accepting or rejecting the same. The second respondent sent a communication to the first petitioner rejecting his objection without assigning proper reasons and without considering the material objections. Therefore, petitioners -1 and 2 filed W.P. No.15389/05 and W.P. No.16516/05 challenging the competence and jurisdiction of the respondents to proceed against the first petitioner and the dwelling house of the 2nd petitioner under Section 13(1), (2) and (4) of the Act. The said writ petitions were rejected by order dated 24.08.2005 directing the petitioners to raise the above grounds before the Debt Recovery Tribunal as and when the cause of action arises. The second respondent took steps to publish the possession notice dated 31.03.2004 in ‘Vijaya Karnataka', Kannada Newspaper on 22.09.2005. Thereafter, the second respondent sent a communication bearing No.4280/05-06 dated 01.02.2005 threatening the first petitioner, that the property described as schedule property therein would be sold on 16.11.2005 at 11.30 a.m. In those circumstances, the petitioner filed these writ petitions seeking quashing of the notices dated 01.10.2005, publication of possession notice in the new paper and quashing the entire proceedings initiated under Section 13(2) and (4) of the Act, including the sale of the schedule property. FINDINGS & REASONING OF THE LEARNED SINGLE JUDGE 7. The learned Single Judge, who heard the writ petition filed by the petitioners, held that the definition of "Bank" under the Act, cannot be termed as Banking Company. Banking Company as defined under Section 5(c) of the Banking Regulation Act, 1949 does not include or encompass the Cooperative Bank. FINDINGS & REASONING OF THE LEARNED SINGLE JUDGE 7. The learned Single Judge, who heard the writ petition filed by the petitioners, held that the definition of "Bank" under the Act, cannot be termed as Banking Company. Banking Company as defined under Section 5(c) of the Banking Regulation Act, 1949 does not include or encompass the Cooperative Bank. Therefore, no proceedings could have been initiated by the Co-operative Bank against the petitioners under the Act. The dues of Co-operative Bank and recovery proceedings thereof are self regulated, inasmuch as, under the Karnataka Co-operative Societies Act, any amount due by a borrower to the Co-operative Bank, a dispute can be raised under Section 70 of the Cooperative Societies Act for recovery of the said amount. The meaning of ‘Banking Company’ must necessarily be strictly confined to the words used in Section 56 of the Banking Regulation Act, 1949. It was easy for the Parliament to say that Banking Company shall mean 'Banking Company' as defined in Section 56 and shall include Cooperative Bank as defined in Section 5(cci) and primary Cooperative Bank as defined in Section 5(ccv). This would necessarily lead to a logical conclusion that there was a conscious exclusion of the Co-operative Bank from the purview of the Act. The reason for excluding Co-operative Banks seems to be that Co-operative Banks have comprehensive, self-contained and less expensive remedies available to them under the Co-operative Societies Act, while other banks and financial institutions did not have such speedy remedies and they have to file suits in Civil Courts. The Apex Court in the aforesaid judgment has held that the Co-operative Banks performing functions for the public with a limited commercial function as opposed to corporate banks cannot be covered by Entry 45 of List I dealing with "banking". The subject of Co-operative societies is not included in the Union List, rather it is covered under Entry 32 of List II of Seventh Schedule appended to the Constitution. Therefore, he held that the Act is not applicable to the loans advanced by Co-operative Banks and quashed all proceedings initiated by the Co-operative Societies under the Act against the petitioners. The correctness of the said order is in appeal. 8. Therefore, he held that the Act is not applicable to the loans advanced by Co-operative Banks and quashed all proceedings initiated by the Co-operative Societies under the Act against the petitioners. The correctness of the said order is in appeal. 8. After the filing of the said appeal, the petitioners in the aforesaid writ petitions have preferred these writ petitions challenging the constitutional validity of item (v) of clause (c) of sub-section (1) of Section 2 of the Act and the notification issued under the Act. RIVAL CONTENTIONS 9. The learned Counsel for the petitioner Sri Kothavale, challenging the validity of the aforesaid provisions and the notification issued under that provision contended that express exclusion of Co-operative Societies in Entry 43 of List I and the express inclusion of Co-operative Societies in Entry 32 of List II separately clearly indicated that the constitutional scheme was designed to treat Co-operative Societies as institutions distinct from corporations. Therefore, the Cooperative Societies/Banks cannot be said to have been covered by legislative Entry 45 of List I. The subject of Co-operative Societies/Banks is not included in the Union List. It is expressly included in the State List. Hence, the Central Legislation like the Act, cannot put the Co-operative Bank which in essence is a Co-operative Society constituted under the Co-operative Societies Act of the State, on par with the Corporate Banks for the purpose of recovery; of dues from the borrower under the provisions of Section 13 of the Act. The introduction of Co-operative Bank into the Act, makes that provision repugnant to the rest of the texts of the Act and to the scheme underlying the Act. The Karnataka Co-operative Societies Act is a self contained code and it provides among other things, a recovery process in respect of a claim of the Society for any debt due to it under Section 70(2) of the Karnataka Co-operative Societies Act. It is a speedy remedy available to the Co-operative Societies. Therefore, the Cooperative Societies/Banks cannot be the subject matter of the Central Legislation and they cannot be put in the same category as Corporate Banks for the purpose of enforcing security interest. The Co-operative Society/Bank cannot be a Banking company or a Corporate Bank and take the same colour for the purpose of the Act. Rule of ejusdem generis is attracted. The Co-operative Society/Bank cannot be a Banking company or a Corporate Bank and take the same colour for the purpose of the Act. Rule of ejusdem generis is attracted. It is totally alien to the scheme, scope and substance of the said Act. The power delegated to the Central Government by Section 2 (1)(c)(v) of the Act is excessive and arbitrary. No guidelines for exercise of delegated powers are laid down by Parliament. There is nothing in the Act to limit the power of the Central Government as to the framework of the policy of the legislature and its legislative intent. Therefore, the issue of notification as in Annexure-A is arbitrary and not in consonance with the principles of ancillary or subordinate legislative function governing the delegation of power. The exercise of delegated powers by the Central Government by Section 2(1)(c)(v) of the Act is not within the framework of the policy of the Central legislation. The Central legislation has indicated the class and categories of banks that were intended to be dealt by the Act. The type, nature and character of banks to be specified by the Central Government, by virtue of its delegated powers cannot be from a class of banks, which the Parliament itself cannot cover while enacting a law. Therefore, he submits that the said notification also requires to be quashed. 10. Per contra, it was contended that although Entry 43 of List I relates to incorporation, regulation and winding up of trading corporations, including banking, insurance and financial corporations but not including Co-operative Societies. Entry 45 specifically confers legislative power in relation to Banking on the Central legislature and on the Parliament. The exercise of executive power in the present case, which is co-extensive with Legislative power, is under the said Entry 45. The law relating to construction of the Legislative Entries of the various lists of the Seventh Schedule is well established and no longer res Integra. The exercise of executive power in the present case, which is co-extensive with Legislative power, is under the said Entry 45. The law relating to construction of the Legislative Entries of the various lists of the Seventh Schedule is well established and no longer res Integra. The doctrine of pith and substance postulates that where a particular action is being examined vis-a-vis conferment of power under the said schedule, the legitimacy of the action must be examined with a view on the pith and substance of the action and to examine the true character of the action, its object, its scope and effect, in order to determine whether there has been a valid exercise of the power conferred under the Schedule or whether the exercise of power has been ultra vires. Where a action is found to relate, in substance, to a topic within the competence of the Legislature and consequently the corresponding Executive, the said action is to be held intra vires, even if the same incidentally trenches upon topics which are outside the powers conferred by the applicable List of the Seventh Schedule. The mere fact that there appears to be a superficial overlap in respect of action taken as per the power conferred by one List with powers conferred by another List, would not affect the validity of the action, so long as the pith and substance thereof falls within the power conferred by the List which operates relating to the Legislature/Executive concerned. Apart from the doctrine of pith and substance, the action of the Central Government in issuing the impugned notification is also valid under the doctrine of ancillary powers, whereby the power of the Legislature and concomitantly the power of the corresponding Executive Government under the various Lists is recognized to extend to cover such ancillary and incidental topics relating to exercise of such power. It is also well established that the Entries of the Lists in Seventh Schedule must be read in the widest possible manner. So read, the power of Central Government extends to Banking which is specified at Entry 45 of List I of Seventh Schedule. In so far as Co-operative Societies engaged in banking activities are concerned, they clearly fall within the said Entry. The Central Government will indisputably have jurisdiction over them to the extent that their activities are, or relate to, banking activities. In so far as Co-operative Societies engaged in banking activities are concerned, they clearly fall within the said Entry. The Central Government will indisputably have jurisdiction over them to the extent that their activities are, or relate to, banking activities. The very fact that Entry 43 of List I specifically contains words excluding Co-operative Societies whereas Entry 45 of the said List is not so limited indicates that the latter is not to be construed as having any such limitation. They also pointed out that the question involved in this writ petition was not involved in Greater Bombay Co-operative Bank Ltd case. However, the Supreme Court in the said case specifically took notice of the impugned notification including the Co-operative Banks within the Act and relied upon such inclusion to hold that in the absence of such a notification in respect of Recovery of Debts by Banks and Financial Institutions Act, 1993, Cooperative Banks could not fall within the provisions of the said 1993 Act. Therefore, it was contended that the aforesaid provisions is intra vires of the Act and the notification issued under the said provision is legal and valid and do not suffer from any infirmity, and is not liable to be quashed. 11. The learned Single Judge in the impugned judgment did not notice clause (v) of Section 2(1)(c) and the notification issued under the said provision. All that the learned Single Judge has held is, a Co-operative Bank does not fall within a Banking Company as defined in Section 2(1)(c)(1) and therefore, it is not a Bank under the Act. In the light of the aforesaid statutory provisions, the said view is erroneous and the judgment requires to be set aside. POINTS FOR CONSIDERATION 12. In the light of the aforesaid facts and rival contentions, the points that arise for our consideration are as under: .(1) Whether item (v) of clause (c) of sub-section (1) of Section 2 of the Act is ultra vires the Constitution. .(2) Whether the provisions of the Act, in particular, Sections 13, 14, 17, 18 and 19 are applicable to Cooperative Banks constituted under the Karnataka Co-operative Societies Act. .(3) Whether the impugned notification dated 28.01.2003 bearing No.S.O.105 (E) issued under item (v) of clause (c) of subsection (1) of Section 2 is liable to be quashed. LEGISLATIVE HEADS 13. .(2) Whether the provisions of the Act, in particular, Sections 13, 14, 17, 18 and 19 are applicable to Cooperative Banks constituted under the Karnataka Co-operative Societies Act. .(3) Whether the impugned notification dated 28.01.2003 bearing No.S.O.105 (E) issued under item (v) of clause (c) of subsection (1) of Section 2 is liable to be quashed. LEGISLATIVE HEADS 13. The Legislative field in Constitutional terms has to be determined in terms of Articles 245 and 246 and Entries 43, 44 and 45 of List I and Entry 32 of List II of Seventh Schedule of the Constitution of India. Entries 43, 44, 45 of List I reads as under: 43. Incorporation, regulation and winding up of trading corporations, including banking, insurance and financial corporations but not including co-operative societies. 44. Incorporation, regulation and winding up of corporations, whether trading or not, with objects confined to one State, but not including universities. 45. 'Banking' Entry 32 of List II reads as under: 32. Incorporation, regulation and winding up of corporations, other than those specified in List I, and universities; unincorporated trading, literary, scientific, religious and other societies and associations: co-operative societies. 14. It is necessary to carefully see what these Entries are. Entry 43 deals with incorporation, regulation and winding up of trading corporations. It does not deal with banking as such. In the said entry, the words, ‘including banking, insurance and financial corporations’ have to be understood in the context of the opening words ‘incorporation, regulation and winding up’ i.e., Entry 43 deals with incorporation, regulation and winding up of a banking institution, but not banking as such. Entry 43 expressly excludes co-operative societies from its purview. Similarly, Entry 44 deals with Multi State Corporations, whether trading or not confined to one State. It expressly excludes universities. It is in this context when we look at Entry No.32 of List II, it deals with incorporation, regulation and winding up of corporations, other than those specified in List I and universities, unincorporated trading, literary, scientific religious and other societies and associations, co-operative societies. In other words, what is excluded in Entry 43 and 44 is included in Entry 32. Therefore, Entry 43 and Entry 44 of List I and Entry 32 of List II do not deal with banking activity as such. It is because banking finds a place as separate entry at Entry 45. In other words, what is excluded in Entry 43 and 44 is included in Entry 32. Therefore, Entry 43 and Entry 44 of List I and Entry 32 of List II do not deal with banking activity as such. It is because banking finds a place as separate entry at Entry 45. Therefore in Entry 43 and Entry 44 of List I and in Entry 32 of List II, banking activity cannot be read into. Those Entries exclude banking. As pointed out by the Apex Court at paragraph 81 in the case of GREATER BOMBAY CO-OPERATIVE BANK LTD., if a co-operative society has a limited commercial function, then it is covered under Entry 32 of List II. If a co-operative society is carrying on commercial function without any limitation, then, it falls under Entry 45. Therefore, essentially, banking falls under Entry 45, whether the said commercial function is carried on by a co-operative society or by any Nationalised Bank or a banking institution. 15. Eleven Judges Bench of the Apex Court in the case of RUSTOM CAVASJEE COOPER Versus UNION OF INDIA, reported in AIR 1970 SC 564 dealing with these entries and the word 'banking' has held as under:- "33. The expression "banking" is not defined in any Indian statute except the Banking Regulation Act, 1949. It may be recalled that by Section 5(b) of that Act "banking" means "the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft or otherwise". The definition did not include other commercial activities which a banking institution may engage in. 37. In modern times in India as elsewhere, to attract business, banking establishments render and compete in rendering, a variety of miscellaneous services for their constituents. If the test for determining what "banking" means in the constitutional entry is any commercial activity which bankers at a given time engage in, great obscurity will be introduced in the content of that expression. The coverage of constitutional entry in a Federal Constitution which carves out a field of legislation must depend upon a more satisfactory basis. 38. The legislative entry in List I of the Seventh Schedule is "Banking" and not Banker" or "Banks". The coverage of constitutional entry in a Federal Constitution which carves out a field of legislation must depend upon a more satisfactory basis. 38. The legislative entry in List I of the Seventh Schedule is "Banking" and not Banker" or "Banks". To include within the connotation of the expression "Banking" in Entry 45 of List I, power to legislate in respect of all commercial activities which a banker by the custom of bankers or authority of law engages in, would result in rewriting the Constitution. Investment of power to legislate on a designated topic covers all matters incidental to the topic. A legislative entry being expressed in a broad designation indicating the contour of plenary power must receive a meaning conducive to the widest amplitude, subject however to limitations inherent in the federal scheme which distributes legislative power between the Union and the constituents unit. But the field of "banking" cannot be extended to include trading activities which not being incidental to banking encroach upon the substance of the entry "trade and commerce" in List II. DOCTRINE OF PITH AND SUBSTANCE 16. The Apex Court in the case of A S KRISHNA AND OTHERS Versus STATE OF MADRASreported in AIR 1957 SC 297 ,held as under:- The basic assumption on which the argument of the appellants rests is that the heads of legislation set out in the several Lists are so precisely drawn as to be mutually exclusive. But then, it must be remembered that we are construing a federal Constitution. It is of the essence of such a Constitution that there should be a distribution of the legislative powers of the Federation between the Centre and the Provinces. The scheme of distribution has varied with different Constitutions, but even when the Constitution enumerates elaborately the topics on which the Centre and the States could legislate, some overlapping of the fields of legislation is inevitable. The British North America Act, 1657, which established a federal Constitution for Canada, enumerated in Ss.91 and 92 the topics on which the Dominion and the Provinces could respectively legislative. Notwithstanding that the lists were framed so as to be fairly full and comprehensive, it was not long before it was found that the topics enumerated in the two sections overlapped, and the Privy Council had time and again to pass on the constitutionality of laws made by the Dominion and Provincial legislatures. Notwithstanding that the lists were framed so as to be fairly full and comprehensive, it was not long before it was found that the topics enumerated in the two sections overlapped, and the Privy Council had time and again to pass on the constitutionality of laws made by the Dominion and Provincial legislatures. It was in this situation that the Privy Council evolved the doctrine, that for deciding whether an impugned legislation was intra vires, regard must be had to its pith and substance. That is to say, if a statute is found in substance to relate to a topic within the competence of the legislature, it should be held to be intra vires, even though it might incidentally trench on topics not within its legislative competence. The extent of the encroachment on matters beyond its competence may be an element in determining whether the legislation is colourable, that is, whether in the guise of making a law on a matter within its competence, the legislature is, in truth, making a law on a subject beyond its competence. But, where that is not the position, then the fact of encroachment does not affect the vires of the law even as regards the area of encroachment." 17. The Apex Court in the case of STATE OF RAJASTHAN Versus G. CHAWALA AND ANOTHERreported in AIR 1959 PAGE 544held as under:- "After the dictum of Lord Selborne in Queen-Empress versus Burah, (1878) 3 AC 889, oft-quoted and applied, it must be held as settled that the legislatures in our Country possess plenary powers of legislation. This is so even after the division of legislative powers, subject to this that the supremacy of the legislatures is confined to the topics mentioned as Entries in the List Conferring respectively powers on them These Entries, it has been ruled on many an occasion, though meant to be mutually exclusive are sometimes not really so. They occasionally overlap, and are to be regarded as enumeratio simplex of broad categories. When in an organic instrument such enumerated powers of legislation exist and there is a conflict between rival Lists, it is necessary to examine the impugned legislation in its pith and substance, and only if that pith and substance falls substantially within an Entry or Entries conferring legislative power, is the legislation valid, a slight transgression upon a rival List, notwithstanding. This was laid down by Gwyer C.J. in Subramanyam Chetiar versus Muthuswamy Goundan, 1940 FCR 188 at P.201: (AIR 1941 FC 47 at p. 51) in the following words; "It must inevitably happen from time to time that legislation though purporting to deal with a subject in one list, touches also on a subject in another list, and the different provisions of the enactment may be so closely intertwined that blind adherence to a strictly verbal interpretation would result in a large number of statues being declared invalid because the legislature enacting them may appeal to have legislated in a forbidden sphere. Hence, the rule which has been evolved by the Judicial Committee whereby the impugned statute is examined to ascertain its 'pith and substance', or its 'true nature and character' for the purpose of determining whether it is legislation with respect to matters in this list or in that." This dictum was expressly approved and applied by the Judicial Committee in Prafulla Kumar versus Bank of Commerce, Ltd., Khulna, 74 Ind App 23: AIR 1947 PC 60, and the same view has been expressed by this Court on more than one occasion. It is equally well settled that the power to legislate on a topic of legislation carries with it the power to legislate on an ancillary matter which can be said to be reasonably included in the power given." 18. The Apex Court in the case of BHARAT HYDRO POWER CORPN. LTD., AND OTHERS VERSUS STATE OF ASSAM AND ANOTHERreported in (2004) 2 SUPREME COURT CASES 552held as under: - "In a federal constitution, in which there is a division of legislative powers between the Central and the Provincial Legislatures, controversies often arise as to whether one or the other legislature is not exceeding its legislative power, and encroaching on the other's constitutional legislative power. To resolve the dispute as to which law would prevail in a case where both the Union as well as the State Legislatures have the competence to enact laws, Article 254 provides that if any provision of a law made by the legislature of a State is repugnant to any provision of law made by Parliament, which Parliament is competent to enact, or to any provision on an existing law with respect to one of the matters enumerated in the Concurrent List, then, subject to the provisions of clause (2), the law made by Parliament shall prevail and the law made by the legislature of the State shall to the extent of the repugnancy be void. Clause (2) provides that where a law made by the legislature of a State with respect to one of the matters enumerated in the Concurrent List contains any provisions repugnant to the provisions of an earlier law made by Parliament or an existing law with respect to the matters, then, the law so made by the legislature of such State shall, if it has been reserved for the consideration of the President and has received his assent, prevail in the State. 18.) It is likely to happen from time to time that enactment though purporting to deal with a subject in one list touches also on a subject in another list and prima facie looks as if one legislature is impinging on the legislative field of another legislature. This may result in a large number of statues being declared unconstitutional because the legislature enacting law may appear to have legislated in a field reserved for the other legislature. To examine whether a legislation has impugned on the field of other legislatures. In fact or in substance, or is incidental, keeping in view the true nature of the enactment, the courts have evolved the doctrine of "pith and substance" for the purpose of determining whether it is legislation with respect to matters in one list or the other. Where the question for determination is where a particular law relates to a particular subject mentioned in one list or the other, the Courts look into the substance of the enactment. Thus, if the substance of the enactment falls within the Union List then the incidental encroachment by the enactment on the State List would not make it invalid. Where the question for determination is where a particular law relates to a particular subject mentioned in one list or the other, the Courts look into the substance of the enactment. Thus, if the substance of the enactment falls within the Union List then the incidental encroachment by the enactment on the State List would not make it invalid. This principle came to be established by the Privy Council when it determined appeals from Canada or Australia involving the question of legislative competence of the federation or the States in those countries. This doctrine came to be established in India and derives its genesis from the approach adopted by the courts including the Privy Council in dealing with controversies arising in other federations. For applying the principle of "pith and substance" regard is to be had (i) to the enactment as a whole, (ii) to its main objects, and (iii) to the scope and effect of its provisions. 19. A legislative entry being expressed in a broad designation indicating the contour of plenary power must receive a meaning conducive to the widest amplitude, subject however to limitations inherent in the federal scheme which distributes legislative power between the Union and the constituents unit. These Entries, though meant to be mutually exclusive are sometimes not really so. They occasionally overlap, and are to be regarded as enumeratio simplex of broad categories. It must inevitably happen from time to time that legislation though purporting to deal with a subject in one list, touches also on a subject in another list, and the different provisions of the enactment may be so closely intertwined that blind adherence to a strictly verbal interpretation would result in a large number of statues being declared invalid because the legislature enacting them may appear to have legislated in a forbidden sphere. To examine whether a legislation has impinged on the field of other legislatures, in fact or in substance, or is incidental, keeping in view the true nature of the enactment, the courts have evolved the doctrine of "pith and substance" for the purpose of determining whether it is legislation with respect to matters in one list or the other; to ascertain its 'pith and substance', or its 'true nature and character' for the purpose of determining whether it is legislation with respect to matters in this list or in that. When in an organic instrument such enumerated powers of legislation exist and there is a conflict between rival Lists, it is necessary to examine the impugned legislation in its pith and substance, and only if that pith and substance falls substantially within an Entry or Entries conferring legislative power, is the legislation valid, a slight transgression upon a rival List, notwithstanding. If a statute is found in substance to relate to a topic within the competence of the legislature, it should be held to be intra vires, even though it might incidentally trench on topics not within its legislative competence. The extent of the encroachment on matters beyond its competence may be an element in determining whether the legislation is colourable, that is, whether in the guise of making a law on a matter within its competence, the legislature is, in truth, making a law on a subject beyond its competence. But, where that is not the position, then the fact of encroachment does not affect the vires of the law even as regards the area of encroachment. It is equally well settled that the power to legislate on a topic of legislation carries with it the power to legislate on an ancillary matter which can be said to be reasonably included in the power given. The Courts look into the substance of the enactment. Thus, if the substance of the enactment falls within the Union List then the incidental encroachment by the enactment on the State List would not make it invalid. For applying the principle of "pith and substance" regard is to be had: .(i) to the enactment as a whole, .(ii) to its main objects, and (iii) to the scope and effect of its provisions OBJECTS OF THE ACT 20. Keeping in mind these principles let us analyse the Act. The statement of objects and reasons for enacting the act makes it clear that while the banking industry in India is progressively complying with international prudential norms and accounting practices, there are certain areas in which the banking and financial sector do not have a level playing field as compared to other participants in the financial markets in the world. There is no legal provision for facilitating securitisation of financial assets of banks and financial institutions. There is no legal provision for facilitating securitisation of financial assets of banks and financial institutions. Unlike the international banks, the banks and financial institutions in India do not have power to take possession of securities and sell them. Our existing legal framework relating to commercial transactions has not kept pace with the changing commercial practices and financial sector reforms. This has resulted in slow pace of recovery of defaulting loans and mounting levels of non-performing assets of banking and financial institutions. Narasimhan Committee I and II and Andhyarujina Committee constituted by the Central Government for the purpose of examining banking sector reforms have considered the need for changes in the legal system in respect of these areas. These committees have suggested enactment of a new legislation for securitisation and empowering banks and financial institutions, to take possession of the securities and to sell them without the intervention of the Court. It is in this background, to facilitate securitisation of financial assets of banks and financial institutions with or without the benefit of underlying securities and facilitating easy transferability of financial assets by the securitisation company or reconstruction company to acquire financial assets of banks and financial institutions by issue of debentures or bonds or any other security in the nature of debenture and empowering banks and financial institutions to take possession of securities given for financial assistance and sell or lease the same or take over management in the event of default, i.e., classification of the borrower's account as non-performing asset in accordance with the directions given or guidelines issued by the Reserve Bank of India from time to time, this legislation was enacted. DEFINITIONS Judgment :- N. KUMAR J., 1. The constitutional validity of item (v) of clause (c) of Sub-Section (1) of Section 2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002, for short, hereinafter referred to as the 'Act' is the subject matter of W.P.No.2755/08. Further the petitioners in the said writ petition are also seeking for quashing of the notification bearing No.S.O.105 (E) issued by the Central Government, Ministry of Finance and Company Affairs (Department of Economic Affairs) (Banking Division) dated 28th January 2003, where under, the Central Government specifies 'Cooperative Bank' as defined in clause (cci) of Section 5 of Banking Regulation Act, 1949, as 'Bank' for the purpose of the Act. 2. 2. The very same petitioners challenged the action of the authorised officer in issuing notice under Section 13(2) of the Act, on the ground that the Act is not applicable to the loans advanced by Co-operative Banks in W.P.No.23813/05. The learned Single Judge of this Court allowed the writ petition by his order dated 12.07.2007 following the judgment of the Apex Court in GREATER BOMBAY CO-OPERATIVE BANK LTD Versus M/s. UNITED YARN TEX PVT LTD., & ORS,reported in AIR 2007 SC 1584 and held that the banking company as defined under Section 5(c) of the Banking Regulation Act. 1949 does not include or encompass the co-operative bank. Therefore, the ‘Act’, is not applicable to the loans advanced by Co-operative Banks. Aggrieved by the same, the Bank has preferred Writ Appeal No.2382/07. 3. Following the judgment of the learned Single Judge, several writ petitions have been allowed and challenging those orders, writ appeals are preferred. Similarly, orders passed by the authorities under the Co-operative Societies Act, have been challenged in several writ petitions before this Court. As common question of law arise for consideration in all these matters, they are placed before this Court for decision. Hence, all these matters are taken up for consideration together and disposed of by this common order. However, for the purpose of convenience, the facts in W.P.No.2755/08 are set out to have a factual background. FACTUAL MATRIX 4. The Karnataka Rajya Kaigarika Sahakara Bank Niyamita for short hereinafter referred to as the "Bank", advanced loan to M/s. High Tech Industries, a registered partnership firm. The firm committed default in repayment of loan. A demand notice was forwarded to the first petitioner Versus Krishnaswamy, on the assumption that he owned and possessed the dwelling house bearing Nb.221, 2nd E Cross, 6th Main, 3rd Block, I Stage, Basaveshwara Nagar, Bangalore-86. In fact, the schedule property is owned and possessed by the second petitioner, the wife of the first petitioner. The second petitioner became the owner of the said property under a registered gift deed dated 22.07.2003 executed by the first petitioner in favour of second petitioner. According to them, it is a Stree dhana property. 5. The Bank instituted dispute No.1366/2000-01 which later came to be re-numbered as Dispute No.1244/05 under Section 70 of the Karnataka Co-operative Societies Act, 1959 and obtained exparte award against M/s Hi-tech Industries and others, including the petitioner. According to them, it is a Stree dhana property. 5. The Bank instituted dispute No.1366/2000-01 which later came to be re-numbered as Dispute No.1244/05 under Section 70 of the Karnataka Co-operative Societies Act, 1959 and obtained exparte award against M/s Hi-tech Industries and others, including the petitioner. In appeal, the Karnataka Appellate Tribunal, Bangalore, by its order dated 09.09.2003 set aside the exparte award and remanded the matter back for fresh trial. After such remand, the second respondent initiated action under Section 13(2) of the Act, claiming itself as a "Bank" on par with Co-operative Banks through the third respondent is its authorised officer. In the said proceedings, the dwelling house belonging to the wife of the petitioner was described as owned by the first petitioner and was put up for sale. 6. The authorised officer purporting to exercise his powers under Section 13(2) of the Act, issued notice dated 01.01.2004 to M/s. High Tech Industries, calling upon it to discharge the loan borrowed by it with interest thereon, within 60 days from the date of the notice. A copy of the said notice was forwarded to the first petitioner who received it on 12.01.2004. In the notice, the first petitioner was shown the owner of the schedule property. He objected to the same by filing statement of objection on 15.02.2004. He also filed W.P.No.6537/04 on 16.02.2004 challenging the validity of the said notice. In the mean while, the authorised officer proceeded to issue the possession notice dated 31.03.2004 purporting to act under Section 13(4) of the Act, which made the first petitioner to amend the writ petition, to include the prayer for quashing of the said possession notice. By order dated 16.04.2004, this Court set aside the possession notice with a direction to the respondents to consider first the objection filed by the first petitioner to the notice issued under Section 13(2) of the Act and to communicate the reasoning either accepting or rejecting the same. The second respondent sent a communication to the first petitioner rejecting his objection without assigning proper reasons and without considering the material objections. Therefore, petitioners -1 and 2 filed W.P. No.15389/05 and W.P. No.16516/05 challenging the competence and jurisdiction of the respondents to proceed against the first petitioner and the dwelling house of the 2nd petitioner under Section 13(1), (2) and (4) of the Act. Therefore, petitioners -1 and 2 filed W.P. No.15389/05 and W.P. No.16516/05 challenging the competence and jurisdiction of the respondents to proceed against the first petitioner and the dwelling house of the 2nd petitioner under Section 13(1), (2) and (4) of the Act. The said writ petitions were rejected by order dated 24.08.2005 directing the petitioners to raise the above grounds before the Debt Recovery Tribunal as and when the cause of action arises. The second respondent took steps to publish the possession notice dated 31.03.2004 in ‘Vijaya Karnataka', Kannada Newspaper on 22.09.2005. Thereafter, the second respondent sent a communication bearing No.4280/05-06 dated 01.02.2005 threatening the first petitioner, that the property described as schedule property therein would be sold on 16.11.2005 at 11.30 a.m. In those circumstances, the petitioner filed these writ petitions seeking quashing of the notices dated 01.10.2005, publication of possession notice in the new paper and quashing the entire proceedings initiated under Section 13(2) and (4) of the Act, including the sale of the schedule property. FINDINGS & REASONING OF THE LEARNED SINGLE JUDGE 7. The learned Single Judge, who heard the writ petition filed by the petitioners, held that the definition of "Bank" under the Act, cannot be termed as Banking Company. Banking Company as defined under Section 5(c) of the Banking Regulation Act, 1949 does not include or encompass the Cooperative Bank. Therefore, no proceedings could have been initiated by the Co-operative Bank against the petitioners under the Act. The dues of Co-operative Bank and recovery proceedings thereof are self regulated, inasmuch as, under the Karnataka Co-operative Societies Act, any amount due by a borrower to the Co-operative Bank, a dispute can be raised under Section 70 of the Cooperative Societies Act for recovery of the said amount. The meaning of ‘Banking Company’ must necessarily be strictly confined to the words used in Section 56 of the Banking Regulation Act, 1949. It was easy for the Parliament to say that Banking Company shall mean 'Banking Company' as defined in Section 56 and shall include Cooperative Bank as defined in Section 5(cci) and primary Cooperative Bank as defined in Section 5(ccv). This would necessarily lead to a logical conclusion that there was a conscious exclusion of the Co-operative Bank from the purview of the Act. This would necessarily lead to a logical conclusion that there was a conscious exclusion of the Co-operative Bank from the purview of the Act. The reason for excluding Co-operative Banks seems to be that Co-operative Banks have comprehensive, self-contained and less expensive remedies available to them under the Co-operative Societies Act, while other banks and financial institutions did not have such speedy remedies and they have to file suits in Civil Courts. The Apex Court in the aforesaid judgment has held that the Co-operative Banks performing functions for the public with a limited commercial function as opposed to corporate banks cannot be covered by Entry 45 of List I dealing with "banking". The subject of Co-operative societies is not included in the Union List, rather it is covered under Entry 32 of List II of Seventh Schedule appended to the Constitution. Therefore, he held that the Act is not applicable to the loans advanced by Co-operative Banks and quashed all proceedings initiated by the Co-operative Societies under the Act against the petitioners. The correctness of the said order is in appeal. 8. After the filing of the said appeal, the petitioners in the aforesaid writ petitions have preferred these writ petitions challenging the constitutional validity of item (v) of clause (c) of sub-section (1) of Section 2 of the Act and the notification issued under the Act. RIVAL CONTENTIONS 9. The learned Counsel for the petitioner Sri Kothavale, challenging the validity of the aforesaid provisions and the notification issued under that provision contended that express exclusion of Co-operative Societies in Entry 43 of List I and the express inclusion of Co-operative Societies in Entry 32 of List II separately clearly indicated that the constitutional scheme was designed to treat Co-operative Societies as institutions distinct from corporations. Therefore, the Cooperative Societies/Banks cannot be said to have been covered by legislative Entry 45 of List I. The subject of Co-operative Societies/Banks is not included in the Union List. It is expressly included in the State List. Hence, the Central Legislation like the Act, cannot put the Co-operative Bank which in essence is a Co-operative Society constituted under the Co-operative Societies Act of the State, on par with the Corporate Banks for the purpose of recovery; of dues from the borrower under the provisions of Section 13 of the Act. Hence, the Central Legislation like the Act, cannot put the Co-operative Bank which in essence is a Co-operative Society constituted under the Co-operative Societies Act of the State, on par with the Corporate Banks for the purpose of recovery; of dues from the borrower under the provisions of Section 13 of the Act. The introduction of Co-operative Bank into the Act, makes that provision repugnant to the rest of the texts of the Act and to the scheme underlying the Act. The Karnataka Co-operative Societies Act is a self contained code and it provides among other things, a recovery process in respect of a claim of the Society for any debt due to it under Section 70(2) of the Karnataka Co-operative Societies Act. It is a speedy remedy available to the Co-operative Societies. Therefore, the Cooperative Societies/Banks cannot be the subject matter of the Central Legislation and they cannot be put in the same category as Corporate Banks for the purpose of enforcing security interest. The Co-operative Society/Bank cannot be a Banking company or a Corporate Bank and take the same colour for the purpose of the Act. Rule of ejusdem generis is attracted. It is totally alien to the scheme, scope and substance of the said Act. The power delegated to the Central Government by Section 2 (1)(c)(v) of the Act is excessive and arbitrary. No guidelines for exercise of delegated powers are laid down by Parliament. There is nothing in the Act to limit the power of the Central Government as to the framework of the policy of the legislature and its legislative intent. Therefore, the issue of notification as in Annexure-A is arbitrary and not in consonance with the principles of ancillary or subordinate legislative function governing the delegation of power. The exercise of delegated powers by the Central Government by Section 2(1)(c)(v) of the Act is not within the framework of the policy of the Central legislation. The Central legislation has indicated the class and categories of banks that were intended to be dealt by the Act. The type, nature and character of banks to be specified by the Central Government, by virtue of its delegated powers cannot be from a class of banks, which the Parliament itself cannot cover while enacting a law. Therefore, he submits that the said notification also requires to be quashed. 10. The type, nature and character of banks to be specified by the Central Government, by virtue of its delegated powers cannot be from a class of banks, which the Parliament itself cannot cover while enacting a law. Therefore, he submits that the said notification also requires to be quashed. 10. Per contra, it was contended that although Entry 43 of List I relates to incorporation, regulation and winding up of trading corporations, including banking, insurance and financial corporations but not including Co-operative Societies. Entry 45 specifically confers legislative power in relation to Banking on the Central legislature and on the Parliament. The exercise of executive power in the present case, which is co-extensive with Legislative power, is under the said Entry 45. The law relating to construction of the Legislative Entries of the various lists of the Seventh Schedule is well established and no longer res Integra. The doctrine of pith and substance postulates that where a particular action is being examined vis-a-vis conferment of power under the said schedule, the legitimacy of the action must be examined with a view on the pith and substance of the action and to examine the true character of the action, its object, its scope and effect, in order to determine whether there has been a valid exercise of the power conferred under the Schedule or whether the exercise of power has been ultra vires. Where a action is found to relate, in substance, to a topic within the competence of the Legislature and consequently the corresponding Executive, the said action is to be held intra vires, even if the same incidentally trenches upon topics which are outside the powers conferred by the applicable List of the Seventh Schedule. The mere fact that there appears to be a superficial overlap in respect of action taken as per the power conferred by one List with powers conferred by another List, would not affect the validity of the action, so long as the pith and substance thereof falls within the power conferred by the List which operates relating to the Legislature/Executive concerned. Apart from the doctrine of pith and substance, the action of the Central Government in issuing the impugned notification is also valid under the doctrine of ancillary powers, whereby the power of the Legislature and concomitantly the power of the corresponding Executive Government under the various Lists is recognized to extend to cover such ancillary and incidental topics relating to exercise of such power. It is also well established that the Entries of the Lists in Seventh Schedule must be read in the widest possible manner. So read, the power of Central Government extends to Banking which is specified at Entry 45 of List I of Seventh Schedule. In so far as Co-operative Societies engaged in banking activities are concerned, they clearly fall within the said Entry. The Central Government will indisputably have jurisdiction over them to the extent that their activities are, or relate to, banking activities. The very fact that Entry 43 of List I specifically contains words excluding Co-operative Societies whereas Entry 45 of the said List is not so limited indicates that the latter is not to be construed as having any such limitation. They also pointed out that the question involved in this writ petition was not involved in Greater Bombay Co-operative Bank Ltd case. However, the Supreme Court in the said case specifically took notice of the impugned notification including the Co-operative Banks within the Act and relied upon such inclusion to hold that in the absence of such a notification in respect of Recovery of Debts by Banks and Financial Institutions Act, 1993, Cooperative Banks could not fall within the provisions of the said 1993 Act. Therefore, it was contended that the aforesaid provisions is intra vires of the Act and the notification issued under the said provision is legal and valid and do not suffer from any infirmity, and is not liable to be quashed. 11. The learned Single Judge in the impugned judgment did not notice clause (v) of Section 2(1)(c) and the notification issued under the said provision. All that the learned Single Judge has held is, a Co-operative Bank does not fall within a Banking Company as defined in Section 2(1)(c)(1) and therefore, it is not a Bank under the Act. In the light of the aforesaid statutory provisions, the said view is erroneous and the judgment requires to be set aside. POINTS FOR CONSIDERATION 12. All that the learned Single Judge has held is, a Co-operative Bank does not fall within a Banking Company as defined in Section 2(1)(c)(1) and therefore, it is not a Bank under the Act. In the light of the aforesaid statutory provisions, the said view is erroneous and the judgment requires to be set aside. POINTS FOR CONSIDERATION 12. In the light of the aforesaid facts and rival contentions, the points that arise for our consideration are as under: .(1) Whether item (v) of clause (c) of sub-section (1) of Section 2 of the Act is ultra vires the Constitution. .(2) Whether the provisions of the Act, in particular, Sections 13, 14, 17, 18 and 19 are applicable to Cooperative Banks constituted under the Karnataka Co-operative Societies Act. .(3) Whether the impugned notification dated 28.01.2003 bearing No.S.O.105 (E) issued under item (v) of clause (c) of subsection (1) of Section 2 is liable to be quashed. LEGISLATIVE HEADS 13. The Legislative field in Constitutional terms has to be determined in terms of Articles 245 and 246 and Entries 43, 44 and 45 of List I and Entry 32 of List II of Seventh Schedule of the Constitution of India. Entries 43, 44, 45 of List I reads as under: 43. Incorporation, regulation and winding up of trading corporations, including banking, insurance and financial corporations but not including co-operative societies. 44. Incorporation, regulation and winding up of corporations, whether trading or not, with objects confined to one State, but not including universities. 45. 'Banking' Entry 32 of List II reads as under: 32. Incorporation, regulation and winding up of corporations, other than those specified in List I, and universities; unincorporated trading, literary, scientific, religious and other societies and associations: co-operative societies. 14. It is necessary to carefully see what these Entries are. Entry 43 deals with incorporation, regulation and winding up of trading corporations. It does not deal with banking as such. In the said entry, the words, ‘including banking, insurance and financial corporations’ have to be understood in the context of the opening words ‘incorporation, regulation and winding up’ i.e., Entry 43 deals with incorporation, regulation and winding up of a banking institution, but not banking as such. Entry 43 expressly excludes co-operative societies from its purview. Similarly, Entry 44 deals with Multi State Corporations, whether trading or not confined to one State. It expressly excludes universities. Entry 43 expressly excludes co-operative societies from its purview. Similarly, Entry 44 deals with Multi State Corporations, whether trading or not confined to one State. It expressly excludes universities. It is in this context when we look at Entry No.32 of List II, it deals with incorporation, regulation and winding up of corporations, other than those specified in List I and universities, unincorporated trading, literary, scientific religious and other societies and associations, co-operative societies. In other words, what is excluded in Entry 43 and 44 is included in Entry 32. Therefore, Entry 43 and Entry 44 of List I and Entry 32 of List II do not deal with banking activity as such. It is because banking finds a place as separate entry at Entry 45. Therefore in Entry 43 and Entry 44 of List I and in Entry 32 of List II, banking activity cannot be read into. Those Entries exclude banking. As pointed out by the Apex Court at paragraph 81 in the case of GREATER BOMBAY CO-OPERATIVE BANK LTD., if a co-operative society has a limited commercial function, then it is covered under Entry 32 of List II. If a co-operative society is carrying on commercial function without any limitation, then, it falls under Entry 45. Therefore, essentially, banking falls under Entry 45, whether the said commercial function is carried on by a co-operative society or by any Nationalised Bank or a banking institution. 15. Eleven Judges Bench of the Apex Court in the case of RUSTOM CAVASJEE COOPER Versus UNION OF INDIA, reported in AIR 1970 SC 564 dealing with these entries and the word 'banking' has held as under:- "33. The expression "banking" is not defined in any Indian statute except the Banking Regulation Act, 1949. It may be recalled that by Section 5(b) of that Act "banking" means "the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft or otherwise". The definition did not include other commercial activities which a banking institution may engage in. 37. In modern times in India as elsewhere, to attract business, banking establishments render and compete in rendering, a variety of miscellaneous services for their constituents. The definition did not include other commercial activities which a banking institution may engage in. 37. In modern times in India as elsewhere, to attract business, banking establishments render and compete in rendering, a variety of miscellaneous services for their constituents. If the test for determining what "banking" means in the constitutional entry is any commercial activity which bankers at a given time engage in, great obscurity will be introduced in the content of that expression. The coverage of constitutional entry in a Federal Constitution which carves out a field of legislation must depend upon a more satisfactory basis. 38. The legislative entry in List I of the Seventh Schedule is "Banking" and not Banker" or "Banks". To include within the connotation of the expression "Banking" in Entry 45 of List I, power to legislate in respect of all commercial activities which a banker by the custom of bankers or authority of law engages in, would result in rewriting the Constitution. Investment of power to legislate on a designated topic covers all matters incidental to the topic. A legislative entry being expressed in a broad designation indicating the contour of plenary power must receive a meaning conducive to the widest amplitude, subject however to limitations inherent in the federal scheme which distributes legislative power between the Union and the constituents unit. But the field of "banking" cannot be extended to include trading activities which not being incidental to banking encroach upon the substance of the entry "trade and commerce" in List II. DOCTRINE OF PITH AND SUBSTANCE 16. The Apex Court in the case of A S KRISHNA AND OTHERS Versus STATE OF MADRASreported in AIR 1957 SC 297 ,held as under:- The basic assumption on which the argument of the appellants rests is that the heads of legislation set out in the several Lists are so precisely drawn as to be mutually exclusive. But then, it must be remembered that we are construing a federal Constitution. It is of the essence of such a Constitution that there should be a distribution of the legislative powers of the Federation between the Centre and the Provinces. The scheme of distribution has varied with different Constitutions, but even when the Constitution enumerates elaborately the topics on which the Centre and the States could legislate, some overlapping of the fields of legislation is inevitable. The scheme of distribution has varied with different Constitutions, but even when the Constitution enumerates elaborately the topics on which the Centre and the States could legislate, some overlapping of the fields of legislation is inevitable. The British North America Act, 1657, which established a federal Constitution for Canada, enumerated in Ss.91 and 92 the topics on which the Dominion and the Provinces could respectively legislative. Notwithstanding that the lists were framed so as to be fairly full and comprehensive, it was not long before it was found that the topics enumerated in the two sections overlapped, and the Privy Council had time and again to pass on the constitutionality of laws made by the Dominion and Provincial legislatures. It was in this situation that the Privy Council evolved the doctrine, that for deciding whether an impugned legislation was intra vires, regard must be had to its pith and substance. That is to say, if a statute is found in substance to relate to a topic within the competence of the legislature, it should be held to be intra vires, even though it might incidentally trench on topics not within its legislative competence. The extent of the encroachment on matters beyond its competence may be an element in determining whether the legislation is colourable, that is, whether in the guise of making a law on a matter within its competence, the legislature is, in truth, making a law on a subject beyond its competence. But, where that is not the position, then the fact of encroachment does not affect the vires of the law even as regards the area of encroachment." 17. The Apex Court in the case of STATE OF RAJASTHAN Versus G. CHAWALA AND ANOTHERreported in AIR 1959 PAGE 544held as under:- "After the dictum of Lord Selborne in Queen-Empress versus Burah, (1878) 3 AC 889, oft-quoted and applied, it must be held as settled that the legislatures in our Country possess plenary powers of legislation. This is so even after the division of legislative powers, subject to this that the supremacy of the legislatures is confined to the topics mentioned as Entries in the List Conferring respectively powers on them These Entries, it has been ruled on many an occasion, though meant to be mutually exclusive are sometimes not really so. They occasionally overlap, and are to be regarded as enumeratio simplex of broad categories. They occasionally overlap, and are to be regarded as enumeratio simplex of broad categories. When in an organic instrument such enumerated powers of legislation exist and there is a conflict between rival Lists, it is necessary to examine the impugned legislation in its pith and substance, and only if that pith and substance falls substantially within an Entry or Entries conferring legislative power, is the legislation valid, a slight transgression upon a rival List, notwithstanding. This was laid down by Gwyer C.J. in Subramanyam Chetiar versus Muthuswamy Goundan, 1940 FCR 188 at P.201: (AIR 1941 FC 47 at p. 51) in the following words; "It must inevitably happen from time to time that legislation though purporting to deal with a subject in one list, touches also on a subject in another list, and the different provisions of the enactment may be so closely intertwined that blind adherence to a strictly verbal interpretation would result in a large number of statues being declared invalid because the legislature enacting them may appeal to have legislated in a forbidden sphere. Hence, the rule which has been evolved by the Judicial Committee whereby the impugned statute is examined to ascertain its 'pith and substance', or its 'true nature and character' for the purpose of determining whether it is legislation with respect to matters in this list or in that." This dictum was expressly approved and applied by the Judicial Committee in Prafulla Kumar versus Bank of Commerce, Ltd., Khulna, 74 Ind App 23: AIR 1947 PC 60, and the same view has been expressed by this Court on more than one occasion. It is equally well settled that the power to legislate on a topic of legislation carries with it the power to legislate on an ancillary matter which can be said to be reasonably included in the power given." 18. The Apex Court in the case of BHARAT HYDRO POWER CORPN. LTD., AND OTHERS VERSUS STATE OF ASSAM AND ANOTHERreported in (2004) 2 SUPREME COURT CASES 552held as under: - "In a federal constitution, in which there is a division of legislative powers between the Central and the Provincial Legislatures, controversies often arise as to whether one or the other legislature is not exceeding its legislative power, and encroaching on the other's constitutional legislative power. To resolve the dispute as to which law would prevail in a case where both the Union as well as the State Legislatures have the competence to enact laws, Article 254 provides that if any provision of a law made by the legislature of a State is repugnant to any provision of law made by Parliament, which Parliament is competent to enact, or to any provision on an existing law with respect to one of the matters enumerated in the Concurrent List, then, subject to the provisions of clause (2), the law made by Parliament shall prevail and the law made by the legislature of the State shall to the extent of the repugnancy be void. Clause (2) provides that where a law made by the legislature of a State with respect to one of the matters enumerated in the Concurrent List contains any provisions repugnant to the provisions of an earlier law made by Parliament or an existing law with respect to the matters, then, the law so made by the legislature of such State shall, if it has been reserved for the consideration of the President and has received his assent, prevail in the State. 18.) It is likely to happen from time to time that enactment though purporting to deal with a subject in one list touches also on a subject in another list and prima facie looks as if one legislature is impinging on the legislative field of another legislature. This may result in a large number of statues being declared unconstitutional because the legislature enacting law may appear to have legislated in a field reserved for the other legislature. To examine whether a legislation has impugned on the field of other legislatures. In fact or in substance, or is incidental, keeping in view the true nature of the enactment, the courts have evolved the doctrine of "pith and substance" for the purpose of determining whether it is legislation with respect to matters in one list or the other. Where the question for determination is where a particular law relates to a particular subject mentioned in one list or the other, the Courts look into the substance of the enactment. Thus, if the substance of the enactment falls within the Union List then the incidental encroachment by the enactment on the State List would not make it invalid. Where the question for determination is where a particular law relates to a particular subject mentioned in one list or the other, the Courts look into the substance of the enactment. Thus, if the substance of the enactment falls within the Union List then the incidental encroachment by the enactment on the State List would not make it invalid. This principle came to be established by the Privy Council when it determined appeals from Canada or Australia involving the question of legislative competence of the federation or the States in those countries. This doctrine came to be established in India and derives its genesis from the approach adopted by the courts including the Privy Council in dealing with controversies arising in other federations. For applying the principle of "pith and substance" regard is to be had (i) to the enactment as a whole, (ii) to its main objects, and (iii) to the scope and effect of its provisions. 19. A legislative entry being expressed in a broad designation indicating the contour of plenary power must receive a meaning conducive to the widest amplitude, subject however to limitations inherent in the federal scheme which distributes legislative power between the Union and the constituents unit. These Entries, though meant to be mutually exclusive are sometimes not really so. They occasionally overlap, and are to be regarded as enumeratio simplex of broad categories. It must inevitably happen from time to time that legislation though purporting to deal with a subject in one list, touches also on a subject in another list, and the different provisions of the enactment may be so closely intertwined that blind adherence to a strictly verbal interpretation would result in a large number of statues being declared invalid because the legislature enacting them may appear to have legislated in a forbidden sphere. To examine whether a legislation has impinged on the field of other legislatures, in fact or in substance, or is incidental, keeping in view the true nature of the enactment, the courts have evolved the doctrine of "pith and substance" for the purpose of determining whether it is legislation with respect to matters in one list or the other; to ascertain its 'pith and substance', or its 'true nature and character' for the purpose of determining whether it is legislation with respect to matters in this list or in that. When in an organic instrument such enumerated powers of legislation exist and there is a conflict between rival Lists, it is necessary to examine the impugned legislation in its pith and substance, and only if that pith and substance falls substantially within an Entry or Entries conferring legislative power, is the legislation valid, a slight transgression upon a rival List, notwithstanding. If a statute is found in substance to relate to a topic within the competence of the legislature, it should be held to be intra vires, even though it might incidentally trench on topics not within its legislative competence. The extent of the encroachment on matters beyond its competence may be an element in determining whether the legislation is colourable, that is, whether in the guise of making a law on a matter within its competence, the legislature is, in truth, making a law on a subject beyond its competence. But, where that is not the position, then the fact of encroachment does not affect the vires of the law even as regards the area of encroachment. It is equally well settled that the power to legislate on a topic of legislation carries with it the power to legislate on an ancillary matter which can be said to be reasonably included in the power given. The Courts look into the substance of the enactment. Thus, if the substance of the enactment falls within the Union List then the incidental encroachment by the enactment on the State List would not make it invalid. For applying the principle of "pith and substance" regard is to be had: .(i) to the enactment as a whole, .(ii) to its main objects, and (iii) to the scope and effect of its provisions OBJECTS OF THE ACT 20. Keeping in mind these principles let us analyse the Act. The statement of objects and reasons for enacting the act makes it clear that while the banking industry in India is progressively complying with international prudential norms and accounting practices, there are certain areas in which the banking and financial sector do not have a level playing field as compared to other participants in the financial markets in the world. There is no legal provision for facilitating securitisation of financial assets of banks and financial institutions. There is no legal provision for facilitating securitisation of financial assets of banks and financial institutions. Unlike the international banks, the banks and financial institutions in India do not have power to take possession of securities and sell them. Our existing legal framework relating to commercial transactions has not kept pace with the changing commercial practices and financial sector reforms. This has resulted in slow pace of recovery of defaulting loans and mounting levels of non-performing assets of banking and financial institutions. Narasimhan Committee I and II and Andhyarujina Committee constituted by the Central Government for the purpose of examining banking sector reforms have considered the need for changes in the legal system in respect of these areas. These committees have suggested enactment of a new legislation for securitisation and empowering banks and financial institutions, to take possession of the securities and to sell them without the intervention of the Court. It is in this background, to facilitate securitisation of financial assets of banks and financial institutions with or without the benefit of underlying securities and facilitating easy transferability of financial assets by the securitisation company or reconstruction company to acquire financial assets of banks and financial institutions by issue of debentures or bonds or any other security in the nature of debenture and empowering banks and financial institutions to take possession of securities given for financial assistance and sell or lease the same or take over management in the event of default, i.e., classification of the borrower's account as non-performing asset in accordance with the directions given or guidelines issued by the Reserve Bank of India from time to time, this legislation was enacted. DEFINITIONS