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2). Now what is the meaning of the words "notwithstanding" in clause (1) and "subject to" in clause (3) ? They mean that where an entry is in general terms in List II and part of that entry is in specific terms in List I, the entry in List I takes effect notwithstanding the entry in List II. This is also on the principle that the `special' excludes the `general' and the general entry in List II is subject to the special entry in List I. For instance, though house accommodation and rent control might fall within either the State List or the Concurrent List, Entry 3 in List I of Seventh Schedule carves out the subject of rent control and house accommodation in cantonments from the general subject of house accommodation and rent control (see Indu Bhusan v. Sundari Devi(1). Furthermore, the word `notwithstanding' in clause (1) also means that if it is not possible to reconcile the two entries the entry in List I will prevail. But before that happens attempt should be made to decide in which list a particular legislation falls. For deciding under which entry a particular legislation falls the theory of "pith and substance" has been evolved by the Courts. If in pith and substance a legislation falls within one List or the other but some portion of the subject matter of that legislation incidentally trenches upon and might come to fall under another List, the Act as a whole would be valid notwithstanding such incidental trenching. These principles have been laid down in a number of decisions.

In the same case Sulaiman, J. observed :

"On a very strict interpretation of s.100, it would necessarily follow that from all matters in List II which are exclusively assigned to Provinicial Legislatures, all portions which fall in List I or List III, must be excluded. Similarly, from all matters falling in List III, all portions which fall in List I must be excluded. The section would then mean that the Federal Legislature has full and exclusive power to legislate with respect to matters in List I, and has also power to legislate with respect to matters in List III. A Provincial Legislature has exclusive power to legislate with respect to List II, minus matters falling in List I or List III, has concurrent power to legislate with respect to matters in List III, minus matters falling in List I. In its fullest scope, s. 100 would then mean that if it happens that there is any subject in List II which also falls in List I or List III, it must be taken as cut out from List II. On this strict interpretation there would be no question of any real overlapping at all. If a subject falls exclusively in List II and no other List, then the power of the Provincial Legislatures is supreme. But if it does also fall within List I, then it must be deemed as if it is not included in List II at all. Similarly, if it also falls in List III, it must be deemed to have been excluded from List II. The dominant position of the Central Legislature with regard to matters in List I and List III is thus established. But the rigour of the literal interpretation is relaxed by the use of the words "with respect to" which as already pointed out only signify "pith and substance", and do not forbid a mere incidental encroachment."

In Governor General in Council v. Province of Madras(1) the Judicial Committee of the Privy Council observed :

"For in a Federal Constitution, in which there is a division of legislative powers between Central and Provincial legislatures, it appears to be inevitable that controversy should arise whether one or other legislature is not exceeding its own, and encroaching on the other's constitutional legislative power, and in such a controversy it is a principle, which their Lordships do not hesitate to apply in the present case, that it is not the name of the tax but its real nature, its "pith and substance" as it has sometimes been said, which must determine into what category it falls."

They also held :

"Thirdly, the extent of the invasion by the Provinces into subjects enumerated in the Federal List has to be considered. No doubt, it is an important matter, not, as their Lordships think, because the validity of an Act can be determined by discriminating between degrees of invasion, but for the purpose of determining what is the pith and substance of the impugned Act. Its provisions may advance so far into Federal territory as to show that its true nature is not concerned with Provincial matters, but the question is not, has it trespassed more or less, but is the trespass, whatever it be, such as to show that the pith and substance of the impugned Act is not money lending but promissory notes or banking ? Once that question is determined the Act falls on one or the other side of the line and can be seen as valid or invalid according to its true content. This view places the precedence accorded to the three lists in its proper perspective."