Abstract:
In the Indian legal system, legislative acts often include non-obstante clauses where provisions asserting that the Act shall have effect “notwithstanding anything inconsistent therewith contained in any other law.” These non-obstante clauses are meant to give a particular law an overriding effect over others. While such clauses are intended to ensure the supremacy of a statute within its fields, conflicts arise when two statutes, both equipped with overriding provisions. This paper explores how such clashes are resolved by examining the guiding legal principles and key judicial decisions. It looks closely at how courts decide whether a later law or a special law should take precedence, and how Article 254[1] of the Constitution operates when Central and State laws overlap. Drawing from landmark cases such as Innoventive Industries Ltd. v. ICICI Bank, Bank of India v. Ketan Parekh, and Principal Commissioner of Income Tax v. Monnet Ispat and Energy Ltd., the paper explains how judges interpret legislative intent to maintain consistency in the law.
Introduction
The Indian legal system is built on an elaborate framework of statutes enacted by both Parliament and State Legislatures. With the growing complexity of governance, it is natural for different laws to overlap, intersect or even contradict each other in their operation. To address such overlaps, legislatures often include a non-obstante clause where a provision that begins with the phrase “notwithstanding anything inconsistent therewith contained in any other law.” This clause is intended to give a particular statute or a part of it, an overriding effect over other existing laws.
While the purpose of such clauses is to ensure clarity and priority, they can create interpretative challenges when two or more statutes, each containing a similar overriding provision come into conflict. In such cases, the courts are faced with a delicate task of determining which law should prevail without undermining the legislative intent behind either. This issue is not merely technicalit goes to the heart of statutory interpretation and the harmony of the legal system.
Over the years, Indian courts have developed guiding principles to resolve such conflicts. These include the doctrines that a special law overrides a general law, and that a later enactment prevails over an earlier one. Additionally, when the conflict is between a Central and a State law, Article 254 of the Constitution steps in to determine which legislation holds the field. The judiciary, through a series of landmark rulings, has clarified how these principles must be applied in specific contexts involving fiscal, corporate, and insolvency laws.
Doctrinal Basis: Understanding Non-Obstante Clauses
The concept of a non-obstante clause lies at the heart of statutory interpretation when two or more laws appear to be in conflict. The term “non-obstante” is derived from Latin, meaning “notwithstanding” or “in spite of.” In legislative drafting, a non-obstante clause is inserted to indicate that the provision in which it appears will have effect despite anything inconsistent contained in another law or in the same statute.
In essence, such a clause expresses the legislative intention to give the provision an overriding effect. It serves as a legislative trump card, meant to ensure that the particular statute or section will prevail even if there is inconsistency with other legal provisions. This helps lawmakers avoid confusion and prioritize one enactment over another in case of overlap.
An example of a non-obstante clause can be found in Section 238 of the Insolvency and Bankruptcy Code, 2016, which states: “The provisions of this code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force.” This ensures that IBC overrides conflicting mechanisms in other laws such as the Companies Act or SARFASI Act. However, the presence of such clauses does not automatically resolve conflicts. Court have emphasized that a non-obstante clause must be interpreted in the context of the statute’s purpose and scope, rather than in isolation. The clause cannot be used to nullify the entire operation of another law unless the inconsistency between the two is direct and irreconcilable.
Judicial Interpretation
The Supreme Court has consistently held that the scope of a non-obstante clause must be determined contextually. Such clauses are not meant to override all other laws indiscriminately rather they must be interpreted in a way that furthers the legislative purpose of the enactment in which they appear.
In the case of ICDS Ltd. Vs Commissioner of Income Tax (2007),[2] the court observed that a non-obstante clause must be understood in the context of the provision in which it occurs and not be read mechanically as overriding everything in all situations.
Similarly, In the case of Central Bank of India vs State of Kerala (2009),[3]the Supreme Court clarified that while a non-obstante clause gives primacy to the provisions of a particular Act, it cannot be used to defeat the purpose of other statutes that operate in distinct or specialized fields. In that case, the Court held that the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and the SARFAESI Act, 2002 could not automatically override the State laws relating to the recovery of sales tax dues, since the two operated in different legislative domains. This decision underscored the principle that overlapping legislation must be harmonized rather than treated as mutually destructive.
Judicial Principles for Resolving Conflicts between Laws
When two different laws seem to overlap or contradict each other, courts apply certain well-established judicial principles to determine which law should prevail. These principles are rooted in logic, legislative intent and constitutional hierarchy, ensuring that justice and consistency in legal interpretation are maintained.
- Principle of later law prevails (Lex Posterior Derogat Prior)
One of the most important rules for resolving statutory conflict is expressed by the Latin maxim “Lex Posterior Derogat Prior” which means the later law repeals or overrides the earlier one. This principle comes into play when two laws operate in the same field and both contain non-obstante clauses, phrases such as “notwithstanding anything contained in any other law” that indicate an overriding effect. When this happens, the later law is presumed to reflect the current and dominant intention of the legislature and therefore takes precedence over the earlier one.
The logic behind this principle is quite straightforward. The legislature is always presumed to know the existing laws when it passes a new one. So, if Parliament still enacts another law in the same domain, it must have intended the newer one to either supplement or supersede the older one.
Thus, when both laws cannot operate together harmoniously, the later law is taken as the truest expression of legislative will, and it prevails over the earlier enactment.
In the case of Solidaire India Ltd vs Fairgrowth Financial Services Ltd. (2001)[4], the Supreme Court of India clarified that when two special statutes both contain overriding (non -obstante) clauses, the one enacted later in time will prevail.
The Court reasoned that the later law represents the latest declaration of legislative intent and therefore, it must be given effect even if it conflicts with the earlier statute. The decision reaffirmed that courts should always assume the legislature enacted the later law with full awareness of existing provisions, and hence, the new law’s intent should be honored above all.
- Principle of Special Law Overrides General Law (GeneralibusSpecialiaDerogant)
This rule used by courts to resolve conflicts between laws is captured by the Latin maxim “GeneralibusSpecialiaDerogant,” which means the special law overrides the general law.
This principle recognizes that when the legislature enacts a special law, it does so with a particular focus on a specific subject or issue. In contrast, a general law usually deals with broader, more general matters and applies to a wider range of situations.
Therefore, if both laws touch upon the same subject and there is an inconsistency between them, the special law is given priority. The reasoning is that the legislature, while framing the special law, intended it to be an exception to the general provisions. Even if the general law is enacted later, the courts presume that the legislature did not mean to disturb or override the special law unless it does so explicitly. Thus, special law continues to prevail in its specific domain.
In the case of Allahabad Bank vs Canara Bank (2000),[5] the court clarified the application of this principle. The issue arose between two central statutes that are Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and the Companies Act, 1956. Both laws dealt with financial matters and debt recovery, but in different ways. The RDDBFI Act was enacted specifically to provide an efficient mechanism for banks and financial institutions to recover their dues, whereas the Companies Act was a general law governing the overall administration, management and winding up of companies. Therefore, RDDBFI Act being a special law on recovery of bank debts would prevail over the Companies Act. Even though both were central laws, the RDDBFI Act was tailored specifically to deal with banking debt recovery and thus it took precedence.
- Principle of Harmonious Construction
In a complex legal system like ours, it’s natural that different laws might sometimes appear to overlap or even contradict one another. However, the judiciary does not readily assume that one law must cancel out or override the other. Instead, courts follow the Principle of Harmonious Construction, which seeks to interpret both statutes in a way that allows them to coexist and function together.
The idea is that the courts act as peacemakers between laws. When two provisions appear to be in conflict, the judge’s first duty is to interpret them in a manner that preserves both, ensuring that each law continues to operate within its intended sphere. This Principle stems from the belief that every statute has a purpose, and both should be made to coexist unless one explicitly excludes the other.
In the case of Bank of India vs Ketan Parekh (2008),[6] the court clearly emphasized the importance of harmonious interpretation. The Court observed that when two statutes seem to be in conflict, the proper judicial approach is to read them together, examining their purpose, subject matter and legislative intent.
The Court cautioned that only in situations where a harmonious construction is not possible should one statute be held to override the other. Until such conflict is unavoidable, both laws must be given effect as far as practicable.
- When both Laws are Special Laws
In certain situations, the conflict does not arise between a general law and a special law but rather between two special laws, each enacted for a specific purpose. These laws may operate in related fields and both may contain non-obstante clauses giving them overriding power.
When this happens, courts face the challenge of deciding which special law should prevail. The guiding principle is that the later and more specific special law will override the earlier one.
One of the example for this principle can be the relationship between the Insolvency and Bankruptcy Code, 2016 and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002. Bith laws are special legislations dealing with the recovery of debts and financial restructuring. Both contain non-obstante clauses asserting their supremacy. However, when conflict arise such as which law governs in cases of corporate insolvency the courts have consistently held that the IBC prevails because IBC was enacted later and provides a comprehensive framework for insolvency resolution, covering both financial and operational creditors and aiming for the revival or liquidation of companies in a time-bound manner.
In the case of Principal Commissioner of Income Tax vs Monnet Ispat and Energy Ltd. (2018),[7] the Supreme Court unequivocally held that the provisions of the insolvency and Bankruptcy Code override all other inconsistent laws, including the Income Tax Act, by virtue of Section 238 of IBC.
This judgment reinforced that when two special statutes conflict, the IBC being both later and more comprehensive must prevail.
- Central Law vs. State Law (Article 254 of the constitution)
When a Central law and a State law cover the same subject matter and are inconsistent, the central law will prevails under Article 254(1) of the Constitution provided the subject falls within the concurrent list of the seventh schedule.
Under Article 254(1)[8], when both Parliament and a State Legislature make laws on the same subject in the Concurrent List and if there is any inconsistency between the two, the Central law will prevail because of national uniformity on matters that both levels of government are empowered to legislate upon.Thus, if both a Central and a State law deal with the same subject but contain conflicting provisions, the Central law will override the State law to the extent of the inconsistency.
However, Article 254(2) creates an exception to this general rule. It states that if a State law on a Concurrent List subject has received Presidential assent, it can prevail within that State, even if it is inconsistent with an existing Central law.
This provision ensures that States have limited autonomy to enact region-specific legislation when the Central government, through the President, expressly approves it.
But this supremacy is not absolute. Parliament still retains the power to amend, override, or re-enact its own law later. When that happens, the Central law will again prevail over the State law.
For example if there is a conflict between the Maharashtra Industrial Development Act (state law) and the IBC (central law) then IBC will prevail unless the state law has received presidential assent under Article 254(2).
Conclusion
Conflicts between statutes containing overriding clauses are common in India’s complex legal framework. Courts resolve these clashes by applying clear judicial principles such as lex posterior derogat priori (later law prevails), generalibusspecialiaderogant (special law overrides general law), and the rule of harmonious construction. These principles ensure that the legislative intent behind each statute is respected while maintaining legal consistency.
When conflicts arise between Central and State laws, Article 254 of the Constitution provides a constitutional mechanism to decide which law prevails, balancing national uniformity with State autonomy. Through landmark rulings such as Solidaire India Ltd., Central Bank of India, and Monnet Ispat, the judiciary has reaffirmed that interpretation must uphold coherence rather than confrontation between laws.
In essence, resolving statutory conflicts is not about asserting dominance of one law over another but about preserving harmony, clarity and the rule of law within India’s legislative system.
[1]The Constitution of India, Article 254.
[2]ICDS Ltd. v. Commissioner of Income Tax, (2007) 10 SCC 481.
[3]Central Bank of India v. State of Kerala, (2009) 4 SCC 94.
[4]Solidaire India Ltd. v. Fairgrowth Financial Services Ltd., (2001) 3 SCC 71.
[5]Allahabad Bank v. Canara Bank, (2000) 4 SCC 406.
[6]Bank of India v. Ketan Parekh, (2008) 8 SCC 148.
[7]Principal Commissioner of Income Tax v. Monnet Ispat and Energy Ltd., (2018) 18 SCC 786.
[8]The Constitution of India, Article 254.
Author Name- Supraja Rachagralla, ICFAI Law School, Hyderabad
