Radhakrishanan, J.

Writ petitioners challenge the constitutional validity of subsection 1(a) to Section 4 of the Kerala Chitties Act, 1975 introduced by the Kerala Finance Act 2002 (Act 7 of 2002) with effect from 01.04.2002 as beyond the legislative competence of the State Legislature and also prayed for a declaration that the same is unconstitutional, void and violative of Articles 14 and 19 (1)(g) of the Constitution of India. Petitioners have also sought for a writ of mandamus directing the Union of India to exercise its powers under Section 1(3) of the Chit Funds Act, 1982 (Central Act) to notify that Act within the State of Kerala. Learned single Judge rejected the prayers of the writ petitioners and dismissed the writ petitions, against which these appeals have been preferred.

2. Before examining the above mentioned prayers we may trace the history of both the legislations, Kerala Chitties Act, 1975 as well as the Chit Funds Act, 1982 and the provisions contained therein for a proper appreciation of the contentions raised by the writ petitioners. Articles 245 to 255 of the Constitution of India deal with legislative powers of the Union and the States. Entries in List I of schedule VII reserve power exclusively to Parliament to make law and List II confines solely to the State Legislature and List III concurrent list in which both Parliament as well as State legislature have concurrent jurisdiction to make laws in the occupied field. Article 245 stipulates that subject to the provisions of the Constitution, Parliament may make laws for the whole or any part of the territory of India, and the Legislature of a State may make laws for the whole or any part of the State. No law made by Parliament shall be deemed to be invalid on the ground that it would have extra-territorial operation. Article 246 of the Constitution states that notwithstanding anything contained in clauses (2) and (3), Parliament has exclusive power to make laws with respect to any of the matters enumerated in list I in the Seventh Schedule. Legislature of a State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule. Parliament has also got power to make laws with respect to any matter for any part of the territory of India not included in a State notwithstanding that such matter is a matter enumerated in the State List. The entries in the three lists of the Seventh Schedule to the constitution are legislative heads or fields of legislation. Legislatures enact law in respect of topics covered by several entries in the three lists. Contracts dealing with chitties and other related transactions fall under Entry 7, List-III of the Seventh Schedule. The apex court in M/s. Sriram Chit and Investment (P) Ltd. (AIR 1993 SC 2063) held that the Chit Fund Act, in pith and substance, deals with special contract and consequently falls within Entry 7 List III of the Seventh Schedule. State Legislature and the Parliament therefore could legislate on those areas which squarely fall under Entry 7 List III of the 7th Schedule.

3. State Legislature has therefore enacted the Kerala Chities Act (Act 23 of 1975), which came into force on 25th August, 1975 as per the notification published in the Kerala Gazette Extra Ordinary No.480 dated 25th August 1975. The Act was also included in the 9th Schedule of the Indian Constitution as item No.149. Section 3 of the Kerala Chitties Act states that no chitty shall be started and conducted unless the previous sanction of the Government or such Officer as may be empowered by the Government on that behalf is obtained and unless the chitty is registered in accordance with the provisions of the Act. Certain categories are exempted from the above said requirement. As per subsection (2) of Section 3, certain disqualifications are made in regard to the Foreman in which case no previous sanction as contemplated in subsection (1) will be giv