PEERLESS GENERAL FINANCE AND INVESTMENT CO LIMITED RESERVE BANK OF INDIA RESERVE BANK OF INDIA RESERVE BANK OF INDIA Vs. RESERVE BANK OF INDIA :TIMEX FINANCE AND INVESTMENT COMPANY LIMITED :TIMEX FINANCIAL AND INVESTMENT COMPANY LIMITED :TIMEX FINANCE AND INVESTMENT COMPANY LIMITED

JUDGEMENT

(1.) Special leave granted in all the petitions.

(2.) This litigation is an upshot of the earlier case Reserve Bank of India v. Peerless General Finance and Investment Company Ltd. ((1 987) 1 SCC 424: (AIR 1987 SC 1023)) decided on January 22, 1987. In 1978 the Prize Chits and Money Circulation Scheme (Banning) Act, 1978 (in short 'the Banning Act') was enacted to ' ban the promotion or conduct of prize chits or money circulation schemes and for matters connected therewith or incidental thereto.' The question which arose in the above case was whether the Endowment Scheme piloted by the Peerless General Finance and Investment Company Ltd., (hereinafter in short 'the Peerless') fell within the definition of 'Prize Chits' within the meaning of S. 2(e) of the above Banning Act. By a letter dated July 23, 1979, the Reserve Bank of India pointed out to, the Peerless that the schemes conducted by it were covered by the provisions of the Banning Act which had come into force w.e.f. December 12, 1978. On September 3, 1979 the Peerless filed a writ petition in the Calcutta High Court for a declaration that the Prize Chits Banning Act did not apply to the business carried on by the Peerless. A similar writ petition was filed questioning a notice issued by the Madhya Pradesh Government on the same lines as that issued by the West Bengal Government. A learned single Judge of the High Court dismissed both the writ petitions but appeals preferred by the Peerless under the Letters Patent were allowed by a Division Bench of the Calcutta High Court. It was declared that the business carried on by the Peerless did not come within the mischief of the Prize Chits Banning lact. Against the judgment of the Division Bench of the Calcutta High Court, the Reserve Bank of India, the Union of India and the State of West Bengal preferred appeals before this Court. The question considered in the above case was "Is the endowment scheme of the Peerless Company a Prize Chit within the meaning of S. 2(e) of the Prize Chits and Monev Circulation Schemes (Banning) Act - This court held that S. 2(e) does not contemplate a scheme without a prize and, therefore, the Endowment Certificate Scheme of the Peerless Company was outside the Prize Chits Banning Act. Appeals filed by the Reserve Bank of India, the Union of India and the State of West Bengal were accordingly dismissed. Chinnappa Reddy, observed (at pp. 1043-44 of AIR):

(3.) Khalid, J., another learned Judge agreeing with the judgment of Chinnappa Reddy, J., further added his short but important concluding paragraph as under (AIR 1987 SC 1023, Para 42):