# Definition of 'Government Securities' — Section 3(24)

## Statutory Definition

> Section 3(24): 'Government securities' shall mean securities of the Central Government or of any State Government, but in any Act or Regulation made before the commencement of the Constitution shall not include securities of the Government of any Part B State.

## Two-Part Structure

### Part 1 — General Rule

Government securities = securities of:

The Central Government, OR
Any State Government

### Part 2 — Pre-Constitution Exception

In any Act or Regulation made before the commencement of the Constitution (i.e., before 26 Jan 1950):

'Government Securities' shall NOT include securities of the Government of any Part B State

## Recap: What were Part B States?

Part B States were former princely states (e.g., Hyderabad, Jammu & Kashmir, Mysore, PEPSU, Rajasthan, etc.). They were integrated into India after 1947.

## Why the Exception?

Before the Constitution, Part B States were still in the process of integration. Their securities were not yet fully integrated into the Indian sovereign system. Therefore, pre-Constitution Acts referring to 'Government Securities' did not contemplate Part B State securities.

After the Constitution, Part B States were fully integrated, so their securities are included.

## Modern Position

Since the Constitution (Seventh Amendment) Act, 1956 abolished the Part A/B/C/D classification:

All State Government securities are 'Government Securities'
The pre-Constitution exception is largely of historical interest

## Examples

Security	Government Security?
Government of India Bonds	Yes
State Development Loans (any State)	Yes
Treasury Bills	Yes
Pre-1950 Hyderabad State bonds (under pre-1950 Act)	No (Part B exception)
Pre-1950 UP State bonds (under pre-1950 Act)	Yes (UP was Part A)

## Importance

'Government Securities' enjoy special treatment in many laws:

Higher trust/safety status
Different tax treatment
Different regulatory regime
Eligible for certain statutory investments

Worked example

### Example 1

Q: Define 'Government securities' under the General Clauses Act, 1897.

A: Under Section 3(24), 'Government securities' means securities of the Central Government or of any State Government. However, in any Act or Regulation made before the commencement of the Constitution, the term does not include securities of the Government of any Part B State.

### Example 2

Q: A pre-Constitution Act refers to 'Government Securities'. Does it include securities of the former princely state of Hyderabad?

A: No. Hyderabad was a Part B State. Section 3(24) provides that in any Act or Regulation made before the commencement of the Constitution, 'Government securities' does not include securities of the Government of any Part B State. So pre-Constitution Acts do not cover Hyderabad State securities under this term.

⚠️ Common exam mistakes

Forgetting the pre-Constitution exception relating to Part B States
Excluding State Government securities entirely — they ARE included generally
Not understanding why the Part B exception existed (integration of princely states)

Bare-Act text Section 3(24) · The General Clauses Act, 1897 · click to expand

'Government securities' shall mean securities of the Central Government or of any State Government, but in any Act or Regulation made before the commencement of the Constitution shall not include securities of the Government of any Part B State.

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Definition of 'Government Securities' [Section 3(24)]

Worked example

⚠️ Common exam mistakes