Internal and Forensic Audit · Forensic Audit: Laws and Regulations

Override and Interplay with Other Laws in Forensic Audit

Updated 11 October 2026 · Fact-checked

A non-obstante ("notwithstanding") clause lets a law prevail over any inconsistent law. PMLA section 71 overrides inconsistent laws. Companies Act section 378ZQ overrides inconsistent law for Producer Companies. To solve a question, find the clause, test for real inconsistency, and apply the rest of the laws together.

Understand Override and Interplay with Other Laws

Many laws can apply to one fraud. A diversion of company funds may breach the Companies Act, 2013, the Prevention of Corruption Act, 1988 and the Prevention of Money-Laundering Act, 2002 (PMLA). A forensic auditor must know which law prevails when they clash, and how they work side by side when they do not.

The tool Parliament uses is the overriding (non-obstante) clause. It starts with words like "notwithstanding anything inconsistent therewith contained in any other law". It says: if this law and another law cannot both be followed, this one wins. It does not wipe out the other law. It only displaces it to the extent of the conflict.

The official text gives three examples. PMLA section 71 says the Act has effect notwithstanding anything inconsistent in any other law for the time being in force. Companies Act section 378ZQ makes the Producer Company Chapter override inconsistent provisions of the Act or any other law or instrument. But it adds that other laws, so far as they are not varied by or inconsistent with that Chapter, still apply to the Producer Company.

Interplay is the other half. Section 18A of the Prevention of Corruption Act applies the Criminal Law Amendment Ordinance, 1944 to attachment, administration of attached property and execution of attachment or confiscation orders for property procured by an offence under that Act. It starts with "Save as otherwise provided under" PMLA. So where PMLA has its own provision, PMLA governs. Where it is silent, the Ordinance fills the gap. The 1944 Ordinance references to "District Judge" are read as "Special Judge".

A related idea is priority inside one law. Companies Act section 326 is headed "Overriding preferential payments". In winding up, workmen's dues and a limited secured-creditor portion are paid ahead of other debts. This is a priority rule, not a conflict between statutes, but the word "overriding" appears in the heading and students often mix the two ideas.

Key rules to remember

PMLA, section 71: PMLA provisions prevail over anything inconsistent in any other law for the time being in force; The override applies only to inconsistent provisions. Consistent laws continue to apply alongside PMLA.
Companies Act, section 378ZQ: Producer Company Chapter overrides inconsistent provisions of the Act, any other law, or any instrument having effect under such law; Other laws still apply to the Producer Company where they are not varied by or inconsistent with the Chapter.
Prevention of Corruption Act, section 18A(1): Save as otherwise provided in PMLA, the Criminal Law Amendment Ordinance, 1944 applies as far as may be to attachment, administration and execution of attachment or confiscation of property procured by an offence under the PC Act; PMLA takes priority where it has its own provision.
Prevention of Corruption Act, section 18A(2): References to 'District Judge' in the 1944 Ordinance are read as 'Special Judge'; Applies for the purposes of the PC Act.
Companies Act, section 326(1): Workmen's dues, and the shortfall of a secured creditor or the workmen's portion in his security (whichever is less), rank pari passu and ahead of other debts in winding up; The proviso gives the two-year workmen's dues in sub-clauses (i) and (ii) priority even over secured creditors, payable within thirty days of sale of assets.
Workmen's portion (section 326 Explanation): Workmen's portion = Value of security × Workmen's dues ÷ (Workmen's dues + Debts due to secured creditors); Illustration: ₹1,00,000 × 1,00,000 ÷ 4,00,000 = ₹25,000.

How to solve Override and Interplay with Other Laws questions

Use this method for any case question on overriding provisions or interplay of laws in an investigation.

1Read the facts and list every law that could apply, for example the Companies Act, PMLA and the Prevention of Corruption Act.
2Identify the overriding clause in each law, quoting its key words such as 'notwithstanding anything inconsistent'.
3Check the scope of the clause. Note whether it covers the whole Act, one Chapter, or one entity type such as a Producer Company.
4Test for real inconsistency. If both laws can be followed together, both apply. If they cannot, the overriding law prevails to the extent of the conflict.
5Check for saving words such as 'Save as otherwise provided' (section 18A) which give another law priority on a given point.
6Apply the conclusion to the facts, and say what the forensic auditor should do: report, preserve evidence, or coordinate with the agency.
7Close with a one-line conclusion that names the law that prevails and the extent of that prevalence.

Quickest way: Four-line override check

When to use it: When you have under ten minutes for a short-note or case question on overriding effect.

Line 1: quote the non-obstante words and the section number you are sure of.
Line 2: state that it prevails only to the extent of inconsistency.
Line 3: mention the saving or gap-filling rule, for example section 18A yielding to PMLA.
Line 4: apply to the facts in one sentence and conclude.

Common mistakes in Override and Interplay with Other Laws

Saying an overriding clause repeals or wipes out the other law.
The word 'override' sounds total.
Fix: Write that the clause displaces other law only to the extent of inconsistency. Other laws continue to apply.
Applying section 378ZQ to all companies.
Students notice the Companies Act and forget the Chapter's scope.
Fix: State that section 378ZQ belongs to the Producer Company Chapter and covers Producer Companies.
Treating section 18A of the PC Act as overriding PMLA.
The section deals with attachment, so students assume it is dominant.
Fix: Note that it opens with 'Save as otherwise provided under' PMLA, so PMLA prevails where it has its own provision.
Confusing section 326 'overriding preferential payments' with a statute-over-statute override.
The heading uses the word 'overriding'.
Fix: Describe section 326 as a priority of payments in winding up, not a conflict-of-laws rule.
Quoting section numbers for provisions not in the text, or guessing them.
Pressure to look precise.
Fix: Cite only numbers you are sure of: PMLA section 71, Companies Act sections 378ZQ and 326, PC Act section 18A. Otherwise name the Act and the rule in words.
Mis-computing the workmen's portion by dividing by secured debt alone.
The denominator is misread.
Fix: Divide workmen's dues by the sum of workmen's dues and secured creditors' debts, then multiply by value of security.

Worked examples

Example 1

An investigating authority finds that funds of a company were siphoned off through corruption offences. A conflict arises between a provision of PMLA and an inconsistent provision of another law about attachment of the proceeds. Which law prevails, and what is the position of section 18A of the Prevention of Corruption Act?

Show the solution

Provision: PMLA section 71 says the Act has effect notwithstanding anything inconsistent therewith in any other law for the time being in force.
Analysis: There is a real inconsistency on attachment, so the overriding clause operates. It prevails only to the extent of the inconsistency.
Section 18A(1) of the PC Act applies the Criminal Law Amendment Ordinance, 1944 to attachment of property procured by an offence under that Act, but opens with 'Save as otherwise provided under' PMLA.
So where PMLA has its own provision, PMLA governs. The Ordinance applies only to the extent PMLA is silent.
Practical point: the forensic auditor should preserve the trail of proceeds and flag the matter so the agencies can use the right attachment route.

Answer: PMLA prevails to the extent of inconsistency under section 71. Section 18A of the PC Act is subject to PMLA and applies the 1944 Ordinance only where PMLA does not provide otherwise.

Example 2

In the winding up of a company, the value of a secured creditor's security is ₹1,00,000. Workmen's dues are ₹1,00,000 and debts due to secured creditors are ₹3,00,000. Compute the workmen's portion of the security under section 326 of the Companies Act, 2013.

Show the solution

Rule: workmen's portion = value of security × workmen's dues ÷ (workmen's dues + debts due to secured creditors).
Aggregate = ₹1,00,000 + ₹3,00,000 = ₹4,00,000.
Proportion = 1,00,000 ÷ 4,00,000 = one-fourth.
Workmen's portion = ₹1,00,000 × 1/4 = ₹25,000.
Conclusion: ₹25,000 of the security is treated as the workmen's portion, which ranks pari passu with workmen's dues if payable under the law.

Answer: The workmen's portion of the security is ₹25,000.

Exam tips

Always quote the non-obstante words and add 'to the extent of inconsistency'. This earns the analysis marks.
Cite only sections you are sure of: PMLA section 71, Companies Act sections 378ZQ and 326, PC Act section 18A.
Show the saving rule in section 18A, since examiners like the PMLA-first point.
For section 326 numericals, write the formula first, then the aggregate, then the answer.
End each case answer with the forensic auditor's practical step, such as preserving evidence or reporting.

Practice questions from Forensic Audit: Laws and Regulations

Override and Interplay with Other Laws: frequently asked questions

What does an overriding clause mean?

It says that the Act prevails over any inconsistent provision in other laws. It operates only where the two laws cannot both be followed. Where there is no conflict, both apply.

Does PMLA override all other laws?

Section 71 says its provisions have effect notwithstanding anything inconsistent in any other law for the time being in force. The override is limited to inconsistent provisions. Other laws continue to apply alongside it.

What does section 378ZQ of the Companies Act deal with?

It is in the Producer Company Chapter. That Chapter overrides inconsistent provisions of the Act, other laws and instruments. Other laws still apply to the Producer Company where they are not varied by or inconsistent with the Chapter.

How are the PC Act and PMLA connected on attachment?

Section 18A of the PC Act applies the Criminal Law Amendment Ordinance, 1944 to attachment under that Act. It applies this save as otherwise provided under PMLA, so PMLA takes priority where it has its own provision.