The pith and substance doctrine allows Parliament to legislate on a topic that is primarily within the competence of the State Legislature if the legislation is necessary or incidental to the effective exercise of Parliament's powers under another entry in the Union List.

GOSWAMI, C. J. :- This Miscellaneous First Appeal is directed against the judgment of the District Judge, Cachar where by he allowed the prayer of the Assam Financial Corporation, Respondent No.1. (hereinafter "the Corporation") to enforce a registered mortgage under Section 31 of the State Financial Corporations Act, 1951 (briefly the Act).

2. The facts briefly are as follows : The Corporation is established under Section 3 of the Act for carrying on business in the State of Assam with Head office at Shillong. Respondent No.2 Messrs. Kalim-pong Properties Limited borrowed a sum of Rs. 7,50,000/- from the Corporation by executing a registered mortgage deed on 15th May. 1963 and the respondents 3 to 6 stood as guarantors jointly and severally. The appellant. Chargola Tea Company Limited (here in after the Company) is the transferee from the respondent No.2 and is now admittedly answerable for the mortgage debt. The mortgage deed stipulated interest at the rate of 7½ per cent per annum. It was further stipulated that in case of breach of any of the conditions of the loan, the entire amount due on account of the loan was at once to be repayable by respondents 2 to 6 jointly and severally. The said liability by transfer, has now devolved upon the appellant, which is the admitted position. It is also admitted that a default in payment of the stipulated instalment has been made and when the debtors failed to make payment, even after notice, the Corporation filed an application under Section 31 of the Act before the District Judge to enforce the terms and conditions of the deed of mortgage of 15th May 1963, and for the realisation of Rs. 6,79,078.03 together with future interest. On a prayer of the Corporation, orders were passed in terms of Section 31 (1) of the Act.

3. The appellant admitted the claim but contended that the application was not maintainable on certain legal grounds raised before the Court. One witness was examined on behalf of the Corporation and the Company did not examine any witness. The witness for the Corporation admitted receipt of Rs. 25,000/- after filing of the application. It was contended before the District Judge that the application was not properly filed under Section 31 of the Act; secondly, it was contended that under Section 4 of the Assam Money Lenders Act. 1934, charging of compound interest was illegal and hence the application should be rejected. The learned District Judge rejected both the contentions. Hence this appeal.

4. Mr. J. P. Bhattacharjee the learned counsel for the appellant, confines his submission before us to only one point. He submits that under Section 4 of the Assam Money-Lenders Act, which applies to the Corporation, any contract made before or after the commencement of that Act for the loan of money by a money-lender shall be illegal in so far as it provides directly or indirectly for the payment of compound interest. To the identical objection before the District Judge, it was submitted by the Corporation that under Section 2 clause (3) (c) a loan advanced by Life Insurance Corporation of India, Financial Corporation of India or any other Corporate body is exempted from the provisions of the Money-Lenders Act. It is submitted that the loan advanced by the Corporation in this case does not therefore, attract, the provisions of the Assam Money-Lenders Act, The District Judge repelled an objection of the Company that that clause is not retrospective.

5. Mr. Bhattacharjee, howevermade a new submission. According to him. the Assam Money-Lenders Act is a Special Act which has been promulgated by the State Legislature in terms of Entry 30 of List II of the Seventh Schedule. Entry 30 is in the following terms :-

"Money-lending and money-lenders; relief of agricultural indebtedness."

The Corporation Act is passed according to him, under Entry 43 of List I of the Seventh Schedule. Entry 43 is in the following terms :-

"Incorporation, regulation and winding up trading corporations in