P.D.DINAKARAN, J. - (1.) The Constitution is the documentation of the founding faiths of a Nation and the fundamental directions of the fulfillment. An organic, but not pedantic approach in interpreting the constitutional validity of any enactment should be the guiding principle in the judicial process. Finding of solution for the gruesome evils in economic and social life of the citizens, through the healing art of promoting Rule of Law, blending the whole statute harmoniously, without being tempted by the game of hair - splitting, to achieve the common object of the legislation should be the basic rule of construction while testing the constitutional validity of a legislation, particularly when it deals with economic and social reliefs, because the distance between societal realities and constitutional challenge often creates a dilemma while considering the legislative competency relating to a socio - economic legislation. The Court, therefore, should be more cautious as well as conscious as to its jurisdiction while irrationalising the legislative competency of the Legislature or rationalising Court's power to annul the legislation.
(2.) With this, we propose to experiment, analyze, and render our observation on the constitutional validity of the Tamil Nadu Protection of Interests of Depositors (in Financial Establishments) Act, 1997 (for brevity, "Tamil Nadu Act"), which, in fact, had already been upheld by the learned Single Judge of this Court (P.Sathasivam,J.) in Thiru Muruga Finance v. State of Tamil Nadu (2000 (II) CTC 609 = 2000 - 3 - L.W.298), and the same has become final for not having been appealed against. 2.1. Attracted by the fabulous rate of interest on the deposit, which of course is not viable commercially, the depositors, day by day started investing their savings in the financial establishments, believing the said promises of the financial establishments for higher rate of interest. The depositors, who mostly belong to the poor, lower middle and middle class, are senior citizens above 80 years, senior citizens between 60 and 80 years, widows, handicapped, driven out by wards, retired Government servants, pensioners, living below the poverty line, etc. As a result, the financial establishments, which set their business on motion on false wheels, started growing. Finding no effective remedies available, in the existing legal system to safeguard the grievance of innocent depositors, the State Government, enacted the Tamil Nadu Act. 2.2. The sole object of the Tamil Nadu Protection of Interests of Depositors (in Financial Establishments) Act, 1997 is to curb the mushroom growth of such financial establishments, which were grabbing money received as deposits from the public, on false promises for exorbitant and unprecedented high rate of interest, without any obligation to refund the deposits to the investors on maturity. The Tamil Nadu Act is also intended to provide a legal mechanism and judicious machinery to attach the properties of the financial establishments and that of the mala fide transferees, bring them for auction sale, realize the amount and to distribute the same to the depositors. Therefore, the State had carefully taken into consideration the public resentment as well as the public interest and safety, as these institutions went back of their promise not only to pay interest but also to refund the principal amount to the innocent depositors on maturity. The State had also taken note of the panic and unrest of the public, and the trauma caused to the poor and middle class people because of the false promises by the financial establishments, which dragged them to approach various authorities, executives as well as subordinate judiciary, for realization of the dues. 2.3. The Tamil Nadu Act was challenged by the financial establishments before this Court in a batch of writ petitions, viz., W.P.No.4157 of 1999 etc., on the ground that the Tamil Nadu Act is draconian, excessively harsh, more severe than the existing provisions in the different enactments, such as Companies Act, 1956, Reserve Bank of India Act, 1934, Banking Regulation Act, 1949, as well as the provisions of the Criminal Law Amendment Ordinance, 1944 as made applicable by the Criminal Law (Tamil Nadu Amendment) Act, 1997; that the same was passed in haste, lacks legislative competency, liable to be struck down for the unreasonableness of various provisions as well as for violation of principles of natural justice and therefore, ultra vires the Constitution of India. 2.4. However, the learned Single Judge of this Court (P.Sathasivam,J.) in his common and elaborate order reported in Thiru Muruga Finance v. State of Tamil Nadu (2000 (II) CTC 609 = 2000 - 3 - L.W.298) upheld the constitutional validity of the Tamil Nadu Act on all fours.
(3.) In the meanwhile, the Reserve Bank of India addressed all the State Governments to enact suitable legislation along the lines of the Tamil Nadu Act, since existing legislation was found to be inadequate to deal with the financial establishments, which have duped large number of depositors and collected crores of rupees on false promise to repay the same with higher rate of interest, which is not viable commercially. 3.1. The Maharashtra Government, therefore, enacted Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999 (hereinafter referred to as 'the Maharashtra Act') and the Pondicherry Government enacted Pondicherry Protection of Interests of Depositors in Financial Establishments Act, 2004 (hereinafter referred to as 'the Pondicherry Act'). 3.2. The Pondicherry Act incidentally was challenged before this Court in C.R.P.(PD) No.1352 of 2005 and W.P.No.1897 of 2006, etc. and the learned Single Judge of this Court (E.Dharma Rao,J.) by a common order dated 23.9.2006 reported in Indian Bank v. Chief Judicial Magistrate, Pondicherry & Others, 2006 - 4 - LW 535, upheld the constitutional validity of the Pondicherry Act, of course, following the decision of P.Sathasivam,J. reported in Thiru Muruga Finance v. State of Tamil Nadu, referred supra. 3.3. On the other hand, the Full Bench of the Bombay High Court struck down the Maharashtra Act and declared the same to be ultra vires holding that the Maharashtra Act directly conflicts with the provisions of the Central Legislation such as, Companies Act, 1956, Reserve Bank of India Act, 1934 read with Banking Regulation Act, 1949, of course, following Delhi Cloth and General Mills Co. Ltd. v. Union of India, 1983 (4) SCC 166 with reference to the provisions of the Companies Act, 1956 and the decision of the Delhi High Court in Kanta Mehta v. Union of India, 1987 (62) Com Cases 771, [the view thereunder was confirmed by the Apex Court in Velayuidhan Achari, T. v. Union of India, 1993 (2) SCC 582], with reference to the provisions of Reserve Bank of India Act, 1934, and observing that the attention of the learned Single Judge (P.Sathasivam,J.) was not adequately drawn to the reasons contained in Kanta Mehta v. Union of India, referred supra. 3.4. Placing reliance on the decision of the Full Bench of the Bombay High Court reported in Vijay C.Puljal v. State of Maharashtra (2005(4) CTC 705), the present batch of writ petitions came to be filed challenging the provisions of the Tamil Nadu Act once again, both on the ground of legislative competency and unreasonableness, violating Articles 14, 19(1)(g) and 21 of the Constitution of India as well as violation of principles of natural justice. 3.5. When this batch of writ petitions came up before the Division Bench originally on 13.11.2006, it was desired by both sides that the matter may be heard by a Full Bench as the Maharashtra Act, a statute in pari materia, was already struck down by a Full Bench of Bombay High Court. Hence, the Full Bench.;