Supreme Court of India· 03 September 2026

Can a proviso to a constitutional provision itself be a substantive provision, rather than merely an exception, where its substance so requires?

SANDEEP S. GHANDAT & ORS v. RESERVE BANK OF INDIA & ORS

2026 INSC 955
Coram: Justice Pamidighantam Sri Narasimha · Justice Alok Aradhe

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Answer

Ordinarily a proviso restricts rather than enlarges the meaning of the provision to which it is appended, but whether it is an exception or condition to the substantive provision, or is itself a substantive provision, must be determined on the substance of the proviso and not its form. The third proviso to Article 243ZL(1), by making the Banking Regulation Act, 1949 also applicable to a multi-State co-operative bank, enlarges rather than restricts the scope of Article 243ZL(1), and is therefore not a proviso but an independent provision.

Headnote

Banking Regulation Act, 1949 — s.36AAA — Constitution of India — Article 243ZL — Article 243ZT — Multi-State co-operative bank — Supersession of Board — Proviso as substantive provision — Banking Regulation Act, 1949 — s.36AAA(1) — Constitution of India — Article 243ZL(1) — Third proviso incorporates BR Act into Part IXB — Held: The third proviso to Article 243ZL(1) incorporates the Banking Regulation Act, 1949 into Part IXB, for a co-operative society carrying on the business of banking, in an additive and non-restrictive sense. RBI's power to supersede such a bank's Board under Section 36AAA(1) is accordingly not limited to six months under Article 243ZL(1). (¶24, 34) Banking Regulation Act, 1949 — s.36AAA(1) — Supersession extendable beyond original Board tenure — Held further: Section 36AAA(1) contemplates that a period of supersession may be extended from time to time, subject to an outer limit of five years, and the tenure of the erstwhile Board has no bearing on RBI's power of supersession. An order of supersession can accordingly be extended beyond the term of office for which the Board was originally elected. (¶37, 38) Constitution of India — Article 243ZL(1) — Proviso as independent substantive provision — Held further: Ordinarily a proviso restricts rather than enlarges the provision to which it is appended, but whether it is itself a substantive provision must be determined on its substance, not its form; the third proviso here enlarges rather than restricts Article 243ZL(1) and is an independent provision. Finding no infirmity in the High Court's judgment, the appeals were dismissed with no order as to costs. (¶25, 26, 40)

In the Court's own words

Paragraph 25It is well-settled that, ordinarily, a proviso restricts rather than enlarges the meaning of the provision to which it is appended. However, at times, the legislature embodies a substantive provision in a proviso. The question whether a proviso is by way of an exception or a condition to the substantive provision, or whether it is in itself a substantive provision, must be determined on the substance of the proviso and not its form[^13]. A proviso can also be an independent legislative provision[^14]. A Constitution Bench of this Court has also held that generally speaking, it is true that the proviso is an exception to the main part of the section; but it is recognised that in exceptional cases a proviso may be the substantive provision itself[^15]. A two-Judge Bench of this Court[^16] took note of previous decisions[^17], summed up the purposes which a proviso may seek to serve, (i) qualifying or excepting certain provisions from the main enactment; (ii) it may entirely change the very concept of the intendment of the enactment by insisting on certain mandatory conditions to be fulfilled in order to make the enactment workable; (iii) it may be so embedded in the Act itself as to become an integral part of the enactment and thus acquire the tenor and colour of the substantive enactment itself; and (iv) it may be used merely to act as an optional addenda to the enactment with the sole object of explaining the real intendment of the statutory provision.

Paragraph 26The Parliament has enacted third proviso to the said Article which is a special provision for Boards of Societies carrying on the business of banking. In the instant case, the third proviso by making the provisions of BR Act also applicable, in case of a multi-State co-operative bank enlarges the scope of main Article that is Article 243ZL(1), instead of restricting its scope, therefore, the same is not a proviso but is an independent provision. The words “shall also apply” employed in third proviso to the said Article makes it abundantly clear that provisions of the BR Act are applicable to the multi-State co-operative bank.

Acts & Sections

Article 243ZL of the Constitution of Indias.36AAA Banking Regulation Act, 1949Article 243ZT of the Constitution of Indias.56 Banking Regulation Act, 1949Article 243ZH(c) of the Constitution of IndiaConstitution (Ninety-Seventh Amendment) Act, 2011

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Also decided in this judgment

Whether the power of the RBI to supersede the Board of Directors of a multi-State co-operative bank under Section 36AAA(1) of the Banking Regulation Act, 1949 is circumscribed by the six-month limit prescribed under Article 243ZL(1) of the Constitution?Whether an order of supersession passed under Section 36AAA(1) of the Banking Regulation Act, 1949 can be extended beyond the term of office for which the Board of Directors of a multi-State co-operative bank had originally been elected?

Plain-language answer prepared by the LexStreak Editorial Desk — verify against the judgment. Source: Supreme Court of India. Corrections