The main legal point established in the judgment is that when incidental and ancillary encroachment by a statute is coupled with conflict with the provisions of another statute, the Central Legislation must prevail.

1. This is an application by a debtor of a banking company that is being wound up under the Banking Regulation Act, 1949, praying for a declaration that no amount is due from him to the banking company, in view of the provisions in the Kerala Agriculturists' Debt Relief Act, 1970 (here in after referred to as the Act). The Official Liquidator objected to the application. His contention, very briefly stated, was that the Act would not apply as the matter was regulated by the Banking Regulation Act, 1949. Isaac J. who heard the application referred the question to a Division Bench for decision.

2. The question to be considered is whether there is conflict between the provisions in the Banking Regulation Act, 1949 and those in the Act. Such a conflict can arise even if the two enactments are in pith and substance respectively referrable to the Entries in List 1 and List 11 in the Seventh Schedule to the Constitution. The legislative Entries in the Constitution have to be interpreted not in a narrow or in a strict sense but in a broad manner. This is the meaning that has been attributed to the words "with respect to" occurring in Art.246 of the Constitution. And on such an interpretation it is possible that a statute which is in pith and substance within the competence of a State Legislature may encroach in an incidental and an ancillary manner on subjects reserved for the Parliament under List 1 in the Seventh Schedule to the Constitution. Similarly, Legislation by the Parliament in pith and substance pertaining to any of the item in List 1 in the Seventh Schedule to the Constitution can encroach upon State subjects in an incidental and ancillary manner. Such encroachments are considered permissible and as long as there is no conflict arising between statutes passed by the Central Legislature and the State Legislature there is no question of any invalidity. Difficulties will however arise when incidental and ancillary encroachment by a statute is coupled with conflict with the provisions of another statute. In such cases, the rule is that the Central Legislation must prevail. It is the Liquidator's contention that that should be the case here considering the provisions in the Act and the Banking Regulation Act, 1949. So, we must first examine the provisions in these enactments briefly, and before we do so, we would like to state that it is not contended before us that the Act is not within the competence of the State Legislature. The Act in pith and substance relates to a matter which is covered by Entry 30 of List II in the Seventh Schedule to the Constitution which is in these terms: "Money-lending and money-lenders; relief of agricultural indebtedness."

3. The Act applies only to Agriculturists and it is in relief of their indebtedness; the main and substantial provisions of the Act relate to the above subject and we have no hesitation in holding that the Act is in pith and substance within Entry 30 of List 11 in the Seventh Schedule to the Constitution.

We feel equally certain that the Banking Regulation Act, 1949 in pith and substance relates to Entries 43 and/or 45, more particularly to entry 43, of List 1 in the Seventh Schedule to the Constitution. These Entries read thus:

"43. Incorporation regulation and winding up of trading corporations, including banking, insurance and financial corporations but not including co-operative societies,

45. Banking."

4. Part III-A of the Banking Regulation Act, 1949 makes special provisions for speedy disposal of winding up proceedings and S.45-A states that the provisions in that Part will have effect notwithstanding anything inconsistent therewith contained in the Companies Act or Code of Civil Procedure, or Code of Criminal Procedure or any other law in force. The last part of that section also provides that such laws as have not been varied and which are not inconsistent with the provisions of Part 111-A of the Banking Regulation Act, 1949 will apply to proceedings under that P