Kerala High Court
S.T.Sadiq vs State Of Kerala on 13 September, 2024
Author: P Gopinath
Bench: P Gopinath
2024:KER:70761
W.P.(C)NO.18663/2016 1
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE GOPINATH P.
FRIDAY, THE 13TH DAY OF SEPTEMBER 2024 / 22ND BHADRA, 1946
WP(C) NO. 18663 OF 2016
PETITIONER:
S.T.SADIQ
AGED 49 YEARS
S/O. THAHA, AGED ABOUT 49 YEARS, ZEENATH MAHAL,
KADAPPAKADA, KOLLAM, KERALA.
BY ADVS.
SRI.P.B.KRISHNAN
SRI.P.M.NEELAKANDAN
SRI.S.NITHIN ANCHAL
SRI.SABU GEORGE
SRI.P.B.SUBRAMANYAN
RESPONDENTS:
1 STATE OF KERALA
REPRESENTED BY ITS CHIEF SECRETARY TO
GOVERNMENT,SECRETARIAT, THIRUVANANTHAPURAM-695001.
2 THE ADDITIONAL DIRECTOR OF INDUSTRIES COMMERCE AND
SPECIAL OFFICER UNDER KERALA CASHEW FACTORIES
(ACQUISITION) ACT, 1974 VIKAS BHAVAN,
THIRUVANANTHAPURAM-695001.
3 THE CASHEW WORKERS INDUSTRIAL CO-OP. APEX SOCIETY
LIMITED
(CAPEX), MUNDAKKA, KOLLAM, REPRESENTED BY ITS MANAGING
DIRECTOR, PIN-691001.
4 UNION OF INDIA
THROUGH SECRETARY, MINISTRY OF INDUSTRIES AND COMMERCE,
UDYOG BHAWAN, NEW DELHI-110007.
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W.P.(C)NO.18663/2016 2
BY ADVS.
GOVERNMENT PLEADER
SMT.SINDHUMOL.T.P., CGC
SRI.M.K.CHANDRA MOHANDAS
SRI.JELSON J.EDAMPADAM
SRI.PIRAPPANCODE V.S.SUDHIR
ADVOCATE GENERAL OFFICE KERALA
K.GOPALAKRISHNA KURUP, ADVOCATE GENERAL()
SHRI.T.B.HOOD, SPL.G.P. TO A.G.()
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
31.05.2016 AND HAVING BEEN FINALLY HEARD ON 29.07.2024, THE COURT
ON 13.9.2024 DELIVERED THE FOLLOWING:
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W.P.(C)NO.18663/2016 3
' C.R.'
JUDGMENT
This writ petition has been filed challenging Sections 3A, 6A and 9 of
the Kerala Cashew Factories (Acquisition) Act, 1974 (hereinafter referred to
as the 1974 Act) after its amendment by the Kerala Cashew Factories
(Acquisition) Amendment Act, 2015 (hereinafter referred to as the Amending
Act, 2015) and the order dated 6.8.2015 issued by the Government of Kerala
taking over the Cashew Factory belonging to the petitioner under Section 3A
of the 1974 Act. The petitioner also prays for a direction to restore the
possession of the Cashew Factory of the petitioner and claims compensation
for the illegal acquisition/taking over of the factory.
Facts in brief:-
2. The petitioner was the owner of about 2.77 acres of land
where a Cashew Factory known as M/s. Rajmohan Cashews Limited was
functioning. According to the petitioner, the land/factory was leased out to
the aforesaid M/s. Rajmohan Cashews Limited for a period of five years from
05.05.1981. It is stated that the factory and the associated buildings etc. were
confined to about 97 cents out of the total extent of 2.77 acres and the
remaining land was being used for agricultural purposes. On 02.05.1985, the
petitioner leased out the factory and its premises to M/s. Janso Exports (P)
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Ltd., for the period from 02.05.1985 to 02.05.1987. On 19.09.1985 the
Government of Kerala issued Ext.P2 notice (under Rule 3 of the Kerala
Cashew Factories (Acquisition) Rules,1974) proposing to acquire/take over
the Cashew Factory and providing to the petitioner and to the then occupier
(M/s. Janso Exports Pvt.Ltd.) the right to make their objections. The grounds
taken in Ext.P2 were that the factory was lying closed and there was no
possibility of restarting its functioning in the immediate future. It was stated
that the Government was, therefore, of the opinion that the situation may
lead to large-scale unemployment of workers in the Cashew Factory. The
petitioner filed an objection to Ext.P2 notice and also approached this Court
by filing O.P.No.9499/1985 challenging the validity of the notice as well as the
validity of the provisions contained in the 1974 Act. On 11.06.1986, the
Government of Kerala issued an order to take over the Cashew Factory and
the entire land appurtenant to the same on the ground that there has been
large-scale unemployment. O.P.No.9499/1985 filed by the petitioner
challenging the order dated 11.06.1986 was dismissed by this Court on
20.01.1994. The petitioner preferred S.L.P.(C)No.8219/1994 to challenge the
judgment of this Court in O.P.No.9499/1985.
3. On 12.5.1994, the Supreme Court through its judgment in
Indian Nut Products & Others v. Union of India; (1994) 4 SCC 269
set aside the acquisition of various factories (other than that of the petitioner)
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on the ground that the notices issued were not in accordance with the
requirement of the provisions of sub-section (1) of Section 3 of the 1974 Act.
The State Government was required to return the possession of the factories
to the respective owners. Thereafter the case of the petitioner was disposed of
(after granting leave) and it was declared that the matter was covered by the
judgment in Indian Nut Products (supra). It was also held that the
directions issued in paragraph 13 of the judgment in Indian Nut Products
(supra) will apply to the petitioner as well. The order of the Supreme Court
in the case of the petitioner is on record as Ext.P5.
4. Out of the total number of 46 factories that had been taken
over under the 1974 Act, 36 had been entrusted to the Cashew Development
Corporation and the remaining 10 factories were entrusted to the Kerala State
Cashew Workers Apex Industrial Co-operative Society (CAPEX). Following
the orders issued by the Supreme Court, out of the total number of 46
factories taken over by the Government in the manner indicated above, all the
factories which had been taken over and entrusted to the Cashew
Development Corporation (36 in number) were returned to the respective
owners. However, the possession of the factory belonging to the petitioner
and nine others whose factories had been entrusted with the CAPEX was not
so returned.
5. On 16.08.1995, the Kerala Cashew Factories (Acquisition)
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Amendment Act, 1995 (hereinafter referred to as the Amendment Act 1995)
was notified by the State Government by incorporating Sections 3A and 6 in
the 1974 Act (Though Section 6 of the Amendment Act 1995 introduces a
completely new provision, the Amendment Act 1995 does not specify the
number of the provision after incorporation in the 1974 Act. Therefore any
reference to Section 6 in this judgment may be read as a reference to Section 6
of the Amendment Act, 1995). Section 3A essentially provided that the
Government may by notification take over any Cashew Factory if those
factories were closed for a period of not less than three months and such
closure had prejudicially affected the interest of the majority of workers
engaged in that factory. Section 6 of the Amendment Act 1995 inter alia
provided that notwithstanding anything contained in any judgment,
agreement, decree or order of any Court, Tribunal or other authority and
notwithstanding anything contained in any other law, agreement or other
instrument for the time being in force, the Cashew Factories listed in the
Schedule to the 1974 Act stand transferred to the Government in public
interest with effect from the date noted against each.
6. The petitioner filed a writ petition namely W.P.(C)No.14084/1997
before this Court challenging the vires of Sections 3A and 6 introduced by the
1995 Amendment Act. On 11.08.2005, this Court dismissed the writ petition
and also held that the ten factories (including that of the petitioner) which
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were entrusted to CAPEX formed a separate class and stood on a different
footing from the 36 factories that were restored to the ownership and
possession of the erstwhile owners following the directions of the Supreme
Court in Indian Nut Products (supra). On 04.02.2015 the Supreme
Court reversed the judgment of this Court in O.P.No.14084/1997 and directed
that the factory of the petitioner be restored to him within a period of eight
weeks. The decision of the Supreme Court is reported as S.T. Sadiq v.
State of Kerala and others; (2015) 4 SCC 400. This direction was also
not complied with prompting the petitioner to initiate contempt of court
proceedings. The CAPEX filed a review petition seeking the review of the
judgment in S.T. Sadiq (supra) principally on the ground that eight (8) out
of ten factories which had been the subject matter of the litigation had
accepted the Judgment of the High Court and that the benefit of the judgment
may enure only to those who had approached the Supreme Court and not to
any other person. This plea was allowed by the Supreme Court and as a
consequence, the directions in S.T. Sadiq (supra) were confined only to
two factories including that of the petitioner.
7. The Amending Act, 2015 came into force on 03.08.2015, making
further amendments to Section 3A (originally incorporated through the
Amendment Act of 1995) and incorporating a new provision namely Section
6A in the 1974 Act. A further provision namely Sub-section (8) was
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incorporated into Section 9 providing for a deemed conveyance of a Cashew
Factory once the compensation had been accepted by the owner. By an order
dated 6.8.2015 issued under Section 3A of the 1974 Act (as amended by the
2015 Amending Act), the factory of the petitioner was again taken over w.e.f
the date of the original acquisition. The factory of the petitioner was also
included in the Schedule (Schedule-III) under Section 6A (inserted by the
Amending Act, 2015). By such incorporation, the factory of the petitioner was
deemed to have been transferred to and vested in the Government on the date
specified in Schedule-III. Insofar as the petitioner was concerned, this date
was 11.06.1984. The Contempt Petition filed by the petitioner alleging
violation of the directions issued in S.T. Sadiq (supra) was closed by the
Supreme Court reserving the liberty of the petitioner to challenge the validity
of the provisions incorporated vide the Amending Act, 2015.
8. The petitioner is thus before this Court challenging the validity of
the provisions of Sections 3A (as amended by the Amending Act, 2015), 6A
(inserted by the Amending Act, 2015) and 9 (as amended by the Amending
Act, 2015) of the 1974 Act and the order dated 6.8.2015 issued under Section
3A of the 1974 Act (as amended by the Amending Act, 2015).
The Submissions:-
9. Sri. P.B. Krishnan, the learned Senior Counsel appearing
for the petitioner on the instructions of Adv. P.B. Subramanyan would submit
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that though the provisions of the 1974 Act as originally enacted were entitled
to the protection of Article 31-B of the Constitution of India, the provisions of
Section 3A (as incorporated by the Amendment Act, 1995 and thereafter
amended by the Amending Act, 2015), Section 6A (inserted by the Amending
Act 2015), Section 9 (as amended by the 2015 Amending Act) and the
Schedule-III (inserted through the incorporation of Section 6A) to the 1974
Act are not protected under Article 31-B of the Constitution of India as the
provisions of the Amending Act, 2015 have not secured presidential assent. It
is submitted that the provisions can therefore be challenged on the ground
that they violate the rights conferred by Part III of the Constitution. In
support of this contention, the learned Senior Counsel placed reliance on
paragraph 7 of the judgment in Ratna Bai v. State of Kerala; 2004
KHC 316 as also on paragraph 48 of the judgment of the Supreme Court in
Pattali Makkal Katchi v. A. Mayilerumperumal and Ors.; (2023) 7
SCC 481.
10. It is next contended that the ten (10) Cashew Factories which were
entrusted with the CAPEX do not stand on a different footing from the
factories that were restored to the owners after the first round of litigation. It
is submitted that this has been held so in paragraph 23 of S.T. Sadiq
(supra). It is submitted that, following the disposal of the review petition
filed by CAPEX against the judgment in S.T. Sadiq (supra), the provisions
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introduced by the Amending Act, 2015 were confined to the factory of the
petitioner and to one other factory. It is submitted that, presently, the law is
confined to the factory of the petitioner alone as the other factory to which the
judgment in S.T. Sadiq (supra) was to apply had also given up the fight
somewhere along the line. He submits that a law which is directed only
against one or two individuals without there being any special distinguishing
feature would be ultra vires the Constitution. The learned Senior Counsel
placed reliance on the judgment of the Supreme Court in P. Venugopal v.
Union of India (2008) 5 SCC 1, in support of this contention. It was next
contended that the Legislature cannot directly annul a judgment of the Court.
It is submitted that Section 6A introduced by the the Amending Act, 2015 is
practically a verbatim reproduction of Section 6 which was struck down by
the Supreme Court in S.T. Sadiq (supra). It is submitted that, if this
course is permitted, it would be a direct affront to the doctrine of separation
of powers which is part of the basic structure of the Constitution. It is
submitted that after the action of the State Government in acquiring the
factory of the petitioner under Section 3 of the 1974 Act was annulled, the
State Government could not have taken over the factory by issuing a
notification under Section 3A and/or by including it in the Schedule under
Section 6A introduced by the Amending Act, 2015. It is pointed out that a
reading of Sections 3 and 3A indicate that there are several overlapping
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features and that after the action under Section 3 was found to be illegal in
the first round of litigation before the Supreme Court (Ext.P.5 Judgment), a
notification under Section 3A was not permissible in law. It is submitted that
in the first round of litigation, none of the provisions of the 1974 Act were
struck down by the Supreme Court and executive action which was found to
be bad in the manner of its exercise cannot be reversed through legislation.
In other words, it is submitted that a binding inter partes judgment between
parties cannot be made ineffective with the aid of legislative power. The
learned Senior Counsel referred to S.T. Sadiq (supra), Medical Council
of India v. State of Kerala and others; (2019) 13 SCC 185 and G.C.
Kanungo v. State of Orissa (1995) 5 SCC 96 in support of this
contention. It is submitted that, in the facts and circumstances of this case,
the impugned provisions are manifestly arbitrary in the sense that the term
has been understood in Shayara Bano v. Union of India and Ors;
(2017) 9 SCC 1. It is next contended that the impugned provisions are
violative of Article 300A as there is practically no compensation provided for
acquisition. Reliance in this regard is placed on the judgment of the Supreme
Court in Kolkata Municipal Corporation & Anr. v. Bimal Kumar
Shah & Ors; (2024) SCC OnLine SC 968, Dinesh & Ors v. State of
Madhya Pradesh; (2024) SCC OnLine SC 937 and Dharnidhar
Mishra v. State of Bihar; (2024) SCC OnLine SC 932. It is next
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contended that by introducing the impugned provisions with retrospective
effect, the State has achieved the impermissible by tinkering with rights and
the benefits acquired by the petitioner under the then-existing rules and the
judgment of the Supreme Court. It is submitted that, in the facts and
circumstances of the case, the introduction of the impugned provisions in
2015 with retrospective effect from 1.5.1984 is without any rationale.
Reliance is placed upon the decision of the Supreme Court in State of
Gujarat and another v. Raman Lal Keshav Lal Soni and others;
(1983) 2 SCC 33 in support of this contention.
11. Sri. K. Gopalakrishna Kurup, the learned Advocate General
assisted by Sri. T.B. Hood, (Special Government Pleader to the Advocate
General) appears for the State. The learned Advocate General submits that
this is the third writ petition filed by the petitioner, the earlier ones being
O.P.No.9499/1985 and O.P. No.14084/1997. It is submitted that the validity
of Section 9 of the 1974 Act was challenged in the earlier two writ petitions
and no relief was granted to the petitioner. It is submitted that Section 9
cannot be challenged on any of the grounds raised in the present writ petition
as the provisions of the 1974 Act as originally enacted were included in the
IXth Schedule to the Constitution of India as Serial No.148 and therefore the
provisions of Article 31-B of the Constitution of India would apply. It is
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submitted that Sub-section (8) of Section 9 of the 1974 Act was introduced by
way of Amending Act, 2015. It is submitted that the said provision provides
for deemed conveyance and extinguishment of rights of owners who had
accepted the amount determined under the provisions of the Act. It is
submitted that since the petitioner had not accepted the amount offered as
compensation, the provisions of Section 9(8) would not apply to the
petitioner. It is submitted that the challenge to Section 6A of the 1974 Act
(incorporated by the Amending Act, 2015) is also misconceived as the factory
of the petitioner was taken over by a notification issued under Section 3A of
the 1974 Act and not by operation of Section 6A. It is thus submitted that the
challenge to provisions contained in Section 6A and Section 9(8) of the 1974
Act as incorporated by the Amending Act, 2015 is misconceived. It is
submitted that the challenge to Section 3A also cannot be accepted as the
provisions of Section 3A were challenged by the petitioner while filing
O.P.No.14084/1997. It is submitted that the Supreme Court in S.T. Sadiq
(supra) did not find Section 3A of the 1974 Act to be unconstitutional and
only declared Section 6 of the 1974 Act inserted by way of amendment in 1995
to be unconstitutional. It is submitted that the petitioner cannot, therefore,
challenge Section 3A by filing a fresh writ petition. It is submitted that
Section 3A of the 1974 Act was again amended in the year 2015 conferring
general power on the Government to acquire factories in public interest, if
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those factories were closed for a period of not less than three months and
such closure had prejudicially affected the interest of majority of workers
engaged in that factory. It is submitted that Section 3A of the 1974 Act as
amended in the year 2015 does not discriminate between any Cashew Factory
on any ground and therefore, the challenge to Section 3A on the ground of
alleged discrimination is devoid of merit. The learned Advocate General
placed reliance on paragraphs 11 and 12 of the judgment of the Supreme
Court in Ram Krishna Dalmia v. S.R. Tendolkar & others; AIR 1958
SC 538 and also paragraph 205 of the judgment of the Supreme Court in
K.T. Plantation Pvt. Ltd. & another v. State of Karnataka; (2011) 9
SCC 1 in support of the contention that Section 3A is not discriminatory and
violative of Article 14 of the Constitution of India.
12. The learned Advocate General submits that Section 3A of
the 1974 Act as amended in 2015 does not confer any arbitrary power on the
Government and the exercise of power under that provision is effectively
controlled by legislative scrutiny as contemplated by the proviso to the
Section. It is submitted that since the power under Section 3A is controlled
by legislative scrutiny, the said provision cannot be challenged on the ground
that it confers arbitrary power on the Government. The learned Advocate
General placed reliance on paragraphs 90 and 91 of the judgment of the
Supreme Court in Dr. Jaya Thakur v. Union of India and others;
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(2023) 10 SCC 276 in support of this contention.
13. The learned Advocate General submits that Section 3A of
the 1974 Act is not a validating Act and was not intended to remove the basis
of the judgment of the Supreme Court in S.T. Sadiq (supra). It is
submitted that Section 6 of the 1974 Act as incorporated by the Amendment
Act, 1995 was declared unconstitutional by the Supreme Court in S.T. Sadiq
(supra) on the finding that it directly seeks to upset a final inter partes
judgment. It is reiterated that the power under Section 3A of the 1974 Act (as
amended in 2015) was invoked for the first time only on 6.8.2015 in the case
of the petitioner through Ext.R1(a) Government Order. It is submitted that
the provisions of Section 3A of the 1974 Act as amended in the year 2015 are
similar to Section 15 of the Kerala Education Act, 1958 which was found to be
valid by the Supreme Court in In Re The Kerala Education Bill; AIR
1958 SC 956. Reference is made in this regard to paragraphs 10, 14, 15, 17
and 19 of the said judgment. It is also pointed out that action taken by the
Government under Section 15 of the Kerala Education Act, 1958 was upheld
by the Supreme Court in A.A Padmanbhan v. State of Kerala and
others; (2018) 4 SCC 537.
14. The learned Advocate General further submits that
Ext.R1(a) Government Order issued under Section 3A of the 1974 Act as
amended in 2015 assumes legislative character since the proviso to that
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Section requires a resolution of the Assembly. It is submitted that since the
Government Order assumes legislative character, the question of the
applicability of principles of natural justice does not arise for consideration.
Reference is made in this regard to paragraph 17 of the judgment of the
Supreme Court in Rameshchandra Kachardas Porwal & Others v.
State of Maharashtra & Others; (1981) 2 SCC 722 and again to the
judgment in K.T. Plantation Pvt. Ltd.(supra).
15. It is next submitted by the learned Advocate General that
the observations of the Supreme Court in Raman Lal Keshav Lal Soni
(supra) are not applicable to the facts of the present case. It is submitted
that another Constitution Bench in State of Tamil Nadu v. Arooran
Sugars Ltd; (1997) 1 SCC 326 had held that the Legislature had the
power to amend, delete or obliterate prospectively or retrospectively and in
such process the rights of some are bound to be affected one way or the other.
It is submitted that the Supreme Court found that the observations in
Raman Lal Keshav Lal Soni (supra) were made in the peculiar facts
and circumstances of that case. It is further submitted that in Shri Krishna
Gyanoday Sugar Ltd. & another v. State of Bihar; (2003) 4 SCC
378 the Supreme Court had considered the matter of acquisition of sugar
undertakings and had also referred to the findings in Raman Lal Keshav
Lal Soni (supra) and had negatived the contentions taken in that case
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regarding the retrospective operation of the Legislation.
16. The learned Advocate General also submits that a statute
cannot be declared unconstitutional lightly and there is always a presumption
of constitutionality. It is submitted that, unless there is a flagrant violation of
constitutional provisions, the law made by Parliament or a State Legislature
cannot be declared unconstitutional and if two views are possible, one making
the Statute constitutional must always be preferred. Reference is made in this
regard to the judgment of the Supreme Court in Dr. Jaya Thakur (supra).
It is submitted that the Supreme Court in the said judgment had observed
that the Court must make every effort to uphold the constitutional validity of
a Statute even if it requires giving a strained construction or narrowing down
the scope of the provision.
17. The learned Advocate General submits that it is not
disputed that the factory of the petitioner had been closed since 1981. It is
submitted that the Government/CAPEX had infused substantial amounts for
the upkeep and maintenance of the factory and for setting up new facilities
and the details of such investments are given in paragraphs 10 and 11 of the
counter affidavit dated 6.4.2018 filed by the CAPEX. It is submitted that, in
the counter affidavit filed by the CAPEX, it is stated that at the time of taking
over of the factory, there were 1345 workers including 1300 women workers
and the factory was remaining closed and a large number of workers were
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thus rendered unemployed. It is submitted that this caused several issues in
the area and had a huge impact on the local economy. It is submitted that the
life of Cashew Factory workers therefore outweigh any rights including the
property rights of the petitioner. It is submitted that the contention that the
factory was situated only in 97 cents of land and the entire 2.77 acres were not
required to be taken over is untenable as the entire land was clearly required
for the purposes of the factory.
18. Lastly, it is submitted by the learned Advocate General
that, if at all this Court were to find in favour of the petitioner and any
directions are to be issued to handover possession of the factory to the
petitioner, the directions of the Supreme Court as contained in the last
paragraph of the judgment in India Nut Products (supra) must be made
applicable to this case also. It is submitted that in the first round of litigation,
the Special Leave Petition filed by the petitioner was disposed of on identical
terms as contained in the judgment of the Supreme Court in India Nut
Products (supra) and therefore the petitioner is also bound by the
directions contained in the last paragraph of the judgment in India Nut
Products (supra).
19. The learned Senior Counsel for the petitioner, would in
reply and upon instructions, submit that the petitioner is willing to comply
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with all the directions issued by the Supreme Court in Indian Nut
Products (supra) insofar as it relates to employees in the 'workmen'
category.
Analysis:-
20. Having considered the submissions made across the bar
and having perused the pleadings and the written submissions placed for the
consideration of this Court, I am of the view that the petitioner is entitled to
succeed.
21. The factory of the petitioner was originally taken over by
issuing a notification in terms of the provisions contained in Section 3 of the
1974 Act. This notification was issued on 11.06.1986 on the grounds relatable
to Section 3 (1) (c) of the 1974 Act. Though the present writ petition does not
seek to challenge any action taken under Section 3 of the 1974 Act, it may be
relevant to refer to the provisions of Section 3 of the 1974 Act, which read as
follows:-
"3. Order of acquisition .- (1) The Government may, if they
are satisfied-
(a) that the occupier of a cashew factory does not conform
to the provisions of law relating to safety, conditions of service
or fixation and payment of wages to the workers of the factory;
or
(b) that raw cashew nuts allotted to a cashew factory by
the Cashew Corporation of India are not being processed in the
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factory to which allotment has been made or that such nuts are
being transferred to any other cashew factory; or
(c) that there has been large-scale unemployment, other
than by way of layoff or retrenchment, of the workers of a
cashew factory;
by order published in the Gazette, declare that that cashew
factory shall stand transferred to, and vest in, the Government:
Provided that before making a declaration under this sub-
section in respect of a cashew factory, the Government shall
give the occupier of the factory and the owner of the factory,
where he is not the occupier, a notice of their intention to take
action under this sub-section and the grounds therefor and
consider the objections that may be preferred in pursuance of
such notice.
Explanation .-For the purposes of this sub-section, the
expressions "lay off" and "retrenchment" shall have the
meanings respectively assigned to them in the Industrial
Disputes Act, 1947 (Central Act 14 of 1947).
(2) The notice referred to in the provisio to sub-section (1) shall
also be published in two newspapers published in the State of
Kerala , and such publication shall be deemed to be sufficient
notice to the occupier, to the owner where he is not the occupier
and to all other persons interested in the cashew factory.
(3) On the making of a declaration under sub-section (1) the
cashew factory to which the declaration relates, together with
all machinery, other accessories and other movable properties
as were immediately before the appointed day in the
ownership, possession, power or control of the occupier in
relation to the factory and all books of accounts, registers and
other documents relating thereto shall stand transferred to,
and vest in the Government. "
The notification dated 11.06.1986 was set aside by the Supreme Court in
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Ext.P5 judgment; treating the matter as covered by the judgment in Indian
Nut Products (supra). As already noted, out of the 46 factories which
were taken over by issuing identical notifications under Section 3 of the 1974
Act, 36 factories which had been entrusted with the Cashew Development
Corporation were returned to the respective owners following the judgment of
the Supreme Court in Indian Nut Products (supra) and connected
petitions. The factory of the petitioner along with nine (9) other factories
which had been entrusted with the CAPEX were not returned. Section 3A
introduced through the Amendment Act, 1995 and Section 6 of the
Amendment Act 1995 read thus:-
"3A. Power to acquire any cashew factory in public
interest.- (1) Notwithstanding anything contained in section
3, if the Government are satisfied, in relation to a cashew
factory, that it has been closed for a period of not less than
three months and such closure has prejudicially affected the
interest of the majority of the workers engaged in that factory
and that immediate action is necessary to restart the cashew
factory and such restarting is necessary in the public interest,
they may, by order published in the Gazette, declare, that the
cashew factory shall stand transferred to, and vest in, the
Government:
Provided that no order under this sub-section shall be
published unless the proposal for such acquisition is supported
by a resolution of the Legislative Assembly.
(2) The provisions of sub-section (3) of section 3 and section 4
shall, as far as may be, apply to a declaration made under
sub-section (1), as they apply to a declaration made under sub-
section (1) of section 3.
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(3) The provisions of sections 7 to 16 (both inclusive) shall, as
far as may be, apply to, or in relation to, the cashew factory,
in respect of which a declaration has been made under sub-
section (1), its occupier or Government, as the case may be, as
they apply to a cashew factory in relation to which a
declaration has been made under sub-section (1) of section 3."
"6. Declaration as to acquisition of certain cashew
factories.- (1) It is hereby declared that it is expedient in the
public interest that the cashew factories specified in the
Schedule to this Act shall, notwithstanding anything contained
in any judgment, decree or order of any court, tribunal or
other authority and notwithstanding anything contained in
any other law, agreement or other instrument for the time
being in force, stand transferred to, and vest in, the
Government with effect from the date noted against each.
(2) The provisions of section 4, section 7 to 16 (both inclusive)
of the principal Act shall, as far as may be, apply to, or in
relation to, the cashew factory in respect of which sub-section
(1) apply, as they apply to a cashew factory in relation to
which a declaration has been made under sub-section (1) of
section 3A.
(3) For removal of doubt it is hereby declared that the dates
mentioned in the Schedule against each factory shall be the
'appointed day' in respect of that factory for the purposes of
the principal Act.
(4) All acts, proceedings or things done or taken by the
Government or any officer or authority in respect of cashew
factories mentioned in the Schedule including all the orders
issued under sub-section (1) of section 8, during the periods
commencing on and from the dates noted against each and
ending with the date of publication of this Act in the Gazette,
shall, for all purposes, be, and shall be deemed always to have
been, as valid and effective as if the amendments made to the
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principal Act by this Act had been in force at all material
times."
The factory of the petitioner was included in the Schedule prepared under
Section 6 of the Amendment Act, 1995 at Serial No.10. In S.T. Sadiq
(supra) it was the specific case of the State Government that the factory of
the petitioner was taken over by virtue of the provisions contained in Section
6 of the Amendment Act, 1995 and on account of its inclusion in the Schedule
referred to in that provision and not with reference to Section 3 (forming part
of the 1974 Act as originally enacted) or Section 3A introduced by the
Amendment Act, 1995. The Supreme Court in S. T. Sadiq (supra) held that
Section 6 of the Amendment Act, 1995 seeks to upset a final and binding inter
partes judgment of the Supreme Court. It was held that, while the Legislature
has the power to alter the basis of a judgment by even amending the law
retrospectively, it has no authority to render a binding inter partes judgment,
a nullity. Thus, it was declared that Section 6 of the Amendment Act, 1995
was unconstitutional. It was held:-
"13. It is settled law by a catena of decisions of this Court that
the legislature cannot directly annul a judgment of a court.
The legislative function consists in "making" law (see Article
245 of the Constitution) and not in "declaring" what the law
shall be (see Article 141 of the Constitution). If the legislature
were at liberty to annul judgments of courts, the ghost of bills
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of attainder will revisit us to enable legislatures to pass
legislative judgments on matters which are inter partes.
Interestingly, in England, the last such bill of attainder
passing a legislative judgment [R. v. Fenwick, (1696) How 13
St Tr 538] against a man called Fenwick was passed as far
back as in 1696. A century later, the US Constitution expressly
outlawed bills of attainder (see Article 1 Section 9).
14. It is for this reason that our Constitution permits a
legislature to make laws retrospectively which may alter the
law as it stood when a decision was arrived at. It is in this
limited circumstance that a legislature may alter the very
basis of a decision given by a court, and if an appeal or other
proceeding be pending, enable the Court to apply the law
retrospectively so made which would then change the very
basis of the earlier decision so that it would no longer hold
good. However, if such is not the case then legislation which
trenches upon the judicial power must necessarily be declared
to be unconstitutional."
The court then referred to State of T.N. v. M. Rayappa Gounder,
(1971) 3 SCC 1, D. Cawasji and Co. v. State of Mysore 1984 Supp
SCC 490; State of Haryana v. Karnal Coop. Farmers' Society Ltd.,
(1993) 2 SCC 363; Cauvery Water Disputes Tribunal, In re, 1993
Supp (1) SCC 96; S.R. Bhagwat v. State of Mysore, (1995) 6 SCC 16
& Delhi Cloth & General Mills Co. Ltd. v. State of Rajasthan,
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(1996) 2 SCC 449 and held:-
"21. Mr Giri, learned counsel appearing for the State is correct
in saying that no section of the principal Act had been struck
down and hence Section 6 of the Amendment Act did not need
to remove the basis of any earlier decision striking down an
Act. We repeatedly asked him if action had been taken under
Section 3(1) or 3-A of the Amendment Act to acquire any of the
cashew factories before us. His candid answer was "no". The
argument that Section 6 contains a third source of power to
acquire cashew factories merely by putting them in a schedule
has to be rejected on two fundamental grounds. First, no
notice or hearing is provided as in Section 3 or Section 5-A of
the Land Acquisition Act or any other safeguard such as a
resolution of the legislative assembly supporting such
acquisition as in Section 3-A. If acquisition is to take place in
conformity with law rules of natural justice cannot be
bypassed. Further, Section 6 is aimed only at directly
upsetting a final judgment of a final court, namely, the
Supreme Court of India. This is clear from two things--(1) the
non obstante clause wiping out "any judgment", and (2) the
reference to the Schedule of the Amendment Act which
contains only the 10 cashew factories that were ordered to be
handed back by a final judgment of this Court dated 10-3-1995
[S.T. Sadiq v. State of Kerala, SLP (C) No. 8219 of 1994, order
dated 10-3-1995 (SC)] . It is clear, therefore, that Section 6
directly seeks to upset a final judgment inter partes and is bad
on this count and is thus declared unconstitutional."
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The operative portion of the judgment in S.T.Sadiq (supra) reads thus:
"24. The appeals are allowed. The judgment [S.T. Sadiq v.
State of Kerala, Original Petition No. 14084 of 1997, order
dated 11-8-2005 (Ker)] of the High Court is set aside and it is
ordered that the cashew factories and the land appurtenant
thereto that have been taken over by the State under the
amending Act must be handed back within a period of eight
weeks from the date on which this judgment is pronounced."
Even after the aforesaid directions were issued by the Supreme Court in
favour of the petitioner, the State refused to hand over the factory of the
petitioner back to him leading to initiation of Contempt of Court proceedings
before the Supreme Court. A review petition was filed by the CAPEX taking a
contention that the direction in S.T. Sadiq (supra) be confined to the two
out of the ten factories which had carried the matter to the Supreme Court.
This review petition was allowed by the Supreme Court by ordering that the
directions contained in S.T. Sadiq (supra) shall apply only to the two
factories including that of the petitioner that had approached the Supreme
Court. At this point, the Amending Act, 2015 was brought into force. The
Amending Act, 2015 amended Section 3A (originally introduced by the
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Amendment Act, 1995) and also incorporated Section 6A which was for all
intents and purposes a provision similar to the provision contained in Section
6 of the Amendment Act, 1995 which had been declared unconstitutional by
the Supreme Court in S.T. Sadiq (supra). The Government also proceeded
to exercise its power under Section 3A of the 1974 Act as amended by the
Amending Act, 2015 issuing a notification again acquiring the factory of the
petitioner with retrospective effect from the date of original acquisition. The
Contempt of Court case filed by the petitioner was, therefore, closed,
reserving the liberty of the petitioner to challenge the validity of the
provisions incorporated by the Amending Act, 2015 if so advised.
22. The contention urged by the learned Advocate General that the
present writ petition cannot seek to challenge Section 3A of the 1974 Act, as
amended by the Amending Act, 2015 on account of the fact that the said
provision had been challenged in the earlier proceedings which culminated in
the judgment of the Supreme Court in S.T. Sadiq (supra) need not detain
this Court even for a moment. The provisions of Section 3A have been
amended by the Amending Act, 2015 and therefore, any challenge to the
provisions as it stood prior to the Amending Act, 2015 will not preclude the
petitioner from challenging the amended provisions of Section 3A by filing
this Writ Petition. That apart, the Supreme Court specifically reserved the
liberty of the petitioner to challenge the provisions of the Amending Act, 2015
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if so advised. To be fair to the learned Advocate General he did not even
suggest that the protection afforded by Article 31-B of the Constitution of
India would be available to the provisions of Section 3A as originally enacted
in 1995 or after amendment in 2015 or to the provisions of Section 6A
introduced by the Amending Act, 2015. Therefore, I hold that the objection
raised to the maintainability of a challenge to Section 3A in the present writ
petition is only to be rejected. Resultantly, I hold the challenge to Sections 3A
(as amended in 2015) and 6A is maintainable and those provisions are not
immune to challenge on account of the provisions of Article 31-B. I hold that
the challenge to Section 9 of the 1974 Act as originally enacted is not
maintainable on account of the fact that Section 9 of the 1974 Act (as
originally enacted) is entitled to the protection of Article 31-B of the
Constitution of India. The protection of Article 31-B is, however, not available
to Section 9(8) which was incorporated by the Amending Act, 2015 as the said
provision has not received the assent of the President. However, I do not
intend to consider any challenge to Section 9(8) which was incorporated by
the Amending Act, 2015 as it is the specific case of the State Government in
this Court that the petitioner did not accept any compensation and that
provision does not apply to the case of the petitioner.
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Are Sections 3A and Section 6A of the 1974 Act Constitutionally
valid?
23. The answer to the aforesaid question must be an emphatic
'NO' for reasons already set out in the judgment of the Supreme Court in S.T.
Sadiq (supra). As already noted, in the first round of litigation, the
challenge was to the takeover of the factory of the petitioner through a
notification and on grounds relatable to Section 3(1)(c) of the 1974 Act. The
Supreme Court decided the case of the petitioner on the basis of the findings
and directions issued in Indian Nut Products (supra). In the judgment in
Indian Nut Products (supra) the following liberty was reserved to the
Government:-
"12. However, it is made clear that it shall be open to the
Government to exercise the power conferred on it by sub-
section (1) of Section 3, whenever it is satisfied on the basis of
the relevant material, that any of the three conditions
mentioned therein exists in individual factories, by following
the procedure prescribed therein."
However, the Government did not choose to initiate any fresh proceedings
under Section 3 of the 1974 Act and returned 36 out of the 46 factories that
had been taken over on identical grounds i.e. grounds relatable to
Section 3 (1)(c) of the 1974 Act. The Legislature proceeded to amend the
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1974 Act through the Amendment Act, 1995 incorporating Section 3A and
Section 6 (of the Amending Act, 2015). This permitted the Government to
retain in its possession and ownership of the 10 factories that had been
entrusted to the CAPEX for operations. The factory of the petitioner was
taken over (as already noted) by including it in the Schedule under Section 6
of the Amendment Act, 1995 and not by exercising the power under Section
3A incorporated vide the same amendment. Section 6 was declared
unconstitutional in S.T. Sadiq (supra) on the following grounds:-
a) Legislation which trenches upon the judicial power must necessarily be
declared to be unconstitutional; Section 6 directly seeks to upset a final
judgment inter partes; and
b) There is hostile discrimination as there is no difference between
factories which post-acquisition are run by Cashew Development
Corporation or CAPEX. The handing back of only 36 factories would be
patently discriminatory as all 46 factories are similarly situated and
have been treated as such by the State by issuing common notices to all
of them under Section 3 of the 1974 Act. There is no intelligible
differentia between the 36 factories and the 10 factories taken over
having any rational relation with the object sought to be achieved.
Section 6 of the Amendment Act, 1995 and Section 6A introduced by the
2024:KER:70761
Amending Act, 2015 are, for all intents and purposes, identical. One fails to
understand how a provision like Section 6A could have been enacted after
Section 6 of the Amendment Act, 1995 had been struck down as
unconstitutional by the Supreme Court. Though the Government has a
specific case before this Court that the factory of the petitioner has now been
taken over under a notification issued under the provisions of Section 3A as
amended by the Amending Act, 2015, it is necessary to consider the challenge
to Section 6A introduced by the Amending Act, 2015 also as otherwise even if
Section 3A is struck down, the factory of the petitioner will continue to vest in
the Government by operation of Section 6A introduced by the Amending Act,
2015. Section 6 of the Amendment Act, 1995 (which was declared
unconstitutional by the Supreme Court) and Section 6A introduced by the
Amending Act, 2015 are extracted below to demonstrate that, in substance,
there is no change to the provision as it originally stood except for the fact
that the new provision now contemplated that the transfer (vesting) shall be
supported by a resolution of the Legislative Assembly which shall be passed
within a period of six months from the date of publication of the Amending
Act, 2015 in the Gazette.
Section 6 of the Amendment Act, Section 6A introduced by the
1995 (which was declared Amending Act, 2015
unconstitutional by the Supreme
Court) in S.T. Sadiq (supra)
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"6. Declaration as to "6A. Acquisition of factories
acquisition of certain cashew specified in Schedule III:-
factories:-
Notwithstanding anything
(1) It is hereby declared that it is
contained in any judgment,
expedient in the public interest
decree or order of any court,
that the cashew factories
tribunal or other authority and
specified in the Schedule to this
notwithstanding anything
Act shall, notwithstanding
contained in any other law,
anything contained in any
agreement or other instrument
judgment, decree or order of any
for the time being in force, it is
court, tribunal or other authority
hereby declared that it is
and notwithstanding anything
expedient in public interest that
contained in any other law,
the cashew factories specified in
agreement or other instrument
Schedule III of this Act shall,
for the time being in force, stand
stand transferred to, and vest in,
transferred to, and vest in, the
the Government with effect from
Government with effect from the
the date noted against each:
date noted against each.
(2) The provisions of section 4, Provided that such transfer shall
section 7 to 16 (both inclusive) of be supported by a resolution of
the principal Act shall, as far as the Legislative Assembly which
may be, apply to, or in relation to, shall be passed within a period of
the cashew factory in respect of six months from the date of
which sub-section (1) apply, as publication of the Kerala Cashew
they apply to a cashew factory in Factories (Acquisition)
relation to which a declaration Amendment Act, 2015 in the
has been made under sub-section Gazette.
(1) of section 3A. (2) The provisions of section 4,
(3) For removal of doubt it is sections 7 to 16 (both inclusive) of
hereby declared that the dates the Act shall as far as may be,
mentioned in the Schedule apply to, or in relation to, the
against each factory shall be the cashew factory in relation to
'appointed day' in respect of that which a declaration has been
factory for the purposes of the made under sub-section (l) of
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principal Act. section 3A.
(3) For the removal of doubt it is
(4) All acts, proceedings or things
hereby declared that the dates
done or taken by the Government
mentioned in the Schedule
or any officer or authority in
against each factory shall be the
respect of cashew factories
appointed day, in respect of that
mentioned in the Schedule
factory for the purposes of the
including all the orders issued
Act.
under sub-section (1) of section 8,
(4) All acts, proceedings or things
during the periods commencing
done or taken by the Government
on and from the dates noted
or any officer or authority in
against each and ending with the
respect of cashew factories
date of publication of this Act in
mentioned in the Schedule III
the Gazette, shall, for all
including all the orders issued
purposes, be, and shall be
under sub-section (l) of section g
deemed always to have been, as
during the periods commencing
valid and effective as if the
on and from the dates noted
amendments made to the
against each and ending with the
principal Act by this Act had been
date of publication of the Kerala
in force at all material times."
cashew Factories (Acquisition)
Amendment Act, 2015 in the
Gazette, shall, for all purposes be
and shall be deemed always to
have been as valid and effective as
if the amendments made to the
Act by the said amendment Act
had been in force at all material
times"
Schedule III referred to in Section 6A introduced by the Amending Act, 2015
to the extent it relates to the factory of the petitioner reads thus:-
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Name, description and Date from which it is vested
details of factories in Government
Rajmohan Cashew Limited,
Eruva, located at Eruva, 11.6.1984
Kayamkulam in Karthikappally
Taluk, Alappuzha District'
Section 6A is thus nothing but a reincarnation of the earlier Section 6 of the
Amendment Act, 1995, which was declared unconstitutional by the Supreme
Court. The only difference between Section 6 of the Amendment Act, 1995
[which was declared unconstitutional by the Supreme Court in S.T. Sadiq
(supra)] and Section 6A introduced by the Amending Act, 2015 is that
Section 6A provided for a resolution by the Legislature. Though the learned
Advocate General attempted to establish that the provision requiring
resolution by the Legislature (in Sections 3A and 6A) saved those provisions
from being challenged on the ground that it conferred arbitrary power on the
Government, no authority was cited for this proposition. I find it difficult to
accept this contention of the learned Advocate General. The fact that the
provisions contemplate the support of a resolution of the Legislative
Assembly for action taken in terms of those provisions do not by itself make
the provisions immune from challenge on the ground that they are arbitrary
and unconstitutional.
24. As in the case of Section 6 of the Amendment Act, 1995 and
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Section 6A introduced by the Amending Act, 2015, there is considerable
overlap between the provisions contained in Section 3(1)(c) & Section 3A
(which was initially introduced by the Amend Act, 1995 and amended further
by the Amending Act, 2015) of the 1974 Act. To establish this, it would be
beneficial to again refer to both provisions.
Section 3(1)(c) of the 1974 Act Section 3A of the 1974 Act
(incorporated into the act by the
Amending Act, 1995 and
amended further by the
Amending Act, 2015)
"3. Order of acquisition .- (1) "3A. Power to acquire any
The Government may, if they cashew factory in public
are satisfied- interest.- (1) Notwithstanding
a)..... anything contained in section 3,
(b)...... if the Government are satisfied,
(c) that there has been large in relation to a cashew factory,
scale unemployment, other than that it has been closed for a
by way of lay off or period of not less than three
retrenchment, of the workers of months prior to the date of
a cashew factory; coming into force of this Act or
by order published in the any day thereafter and such
Gazette, declare that that closure has prejudicially
cashew factory shall stand affected the interest of the
transferred to, and vest in, the majority of the workers
Government: engaged in that factory and that
immediate action is necessary to
restart the cashew factory and
such restarting is necessary in
the public interest, they may, by
order published in the Gazette,
declare, that the cashew factory
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shall stand transferred to, and
vest in, the Government:
Provided that no order under
this sub-section shall be
published unless the proposal
for such acquisition is supported
by a resolution of the Legislative
Assembly which shall be passed
within a period of six months
from the date of publication of
the order under sub-section (1)
of this Section.
As rightly pointed out by the learned Senior Counsel for the petitioner,
Section 3(1)(c) seeks to prevent large-scale unemployment, and Section 3A
deals with the closure of factories and prejudice to the employees that leads to
large-scale unemployment. Thus, it is clear that at the core of both the
Sections, though worded differently, is the giving of authority to the
Government to take over a Cashew Factory to prevent large-scale
unemployment and the notification issued in the case of the factory of the
petitioner under Section 3A (Ext. P10) indicates that the grounds were similar
or identical to the grounds set out in the notification issued under Section 3(1)
(c) of the 1974 Act (See Ext.P3). It is the specific case of the State before this
Court that taking over of the factory of the petitioner after the judgment in
S.T. Sadiq (supra) was not by virtue of the provisions contained in Section
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6A introduced by the Amending Act, 2015 but by virtue of a notification
issued under Section 3A of the 1974 Act. That being the situation, the
findings of the Supreme Court in S.T. Sadiq (supra) itself lead me to
conclude that the present notification and the taking over of the factory of the
petitioner in the exercise of the power under Section 3A of the 1974 Act
amounts to hostile discrimination and is thus unsustainable. While the
learned Advocate General may be right in contending that the provisions of
Section 3A by itself cannot be termed arbitrary or discriminatory, it remains a
fact that when for all intends and purposes the essence of both the Sections,
though different in form, speak in the same terms and provides authority to
the Government to takeover a Cashew Factory to prevent large-scale
unemployment, there is no reason to differentiate between the 36 factories
taken over on grounds relatable to Section 3(1)(c) and the factory of the
petitioner which has been taken over by issuing a notification under Section
3A. The following findings of the Supreme Court in S.T. Sadiq (supra) are
relevant in this regard:-
"23. It is clear that the objects and reasons for the Amendment
Act makes no differentiation between the 36 factories handed
back and the 10 factories taken over by the Amendment Act.
The High Court was in error in saying that there was an
intelligible differentia between the two. Further, even
otherwise, there is no difference between factories which post
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acquisition are run by Cashew Development Corpn. Or Capex
regard being had to the object sought to be achieved--namely,
to avoid unemployment of cashew workers. Whether 36
factories run by Cashew Development Corpn. are to be
acquired or 10 factories run by Capex are to be acquired makes
not the least difference to the object sought to be achieved.
Large-scale unemployment is there in both cases. And both,
Cashew Development Corpn. And Capex, along with the
Government, will suffer financially. In fact, the handing back of
only 36 factories would be patently discriminatory as all 46
factories are similarly situate and have been treated as such by
the State by issuing common notices to all of them under
Section 3 of the Act. We have been reliably informed that these
36 factories are functioning under their respective owners for
the last twenty years. In the circumstances we hold that there is
no intelligible differentia between the 36 factories and the 10
factories taken over having any rational relation with the
object sought to be achieved and on this ground also Section 6
of the Amendment Act deserves to be struck down as violating
Article 14 of the Constitution.
25. The principles laid down in Ram Krishna Dalmia
(supra) on which considerable reliance was placed by the learned Advocate
General do not, in my view, aid the State. That decision holds:-
"11. The principal ground urged in support of the contention as
to the invalidity of the Act and/or the notification is founded on
Article 14 of the Constitution. In Budhan Choudhry v. State of
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Bihar [(1955) 1 SCR 1045] a Constitution Bench of seven
Judges of this Court at p. 1048-49 explained the true meaning
and scope of Article 14 as follows;
"The provisions of Article 14 of the Constitution have come
up for discussion before this Court in a number of cases,
namely, Chiranjit Lal Choudhuri v. Union of India [1950
SCC 833 : (1950) SCR 869] , State of Bombay v. F.N.
Balsara [1951 SCC 860 : (1951) SCR 682] , State of West
Bengal v. Anwar Ali Sarkar [(1952) 1 SCC 1 : (1952) SCR
284] , Kathi Raning Rawat v. State of Saurashtra [(1952) 1
SCC 215 : (1952) SCR 435] , Lachmandas Kewalram Ahuja
v. State of Bombay [(1952) 1 SCC 726 : (1952) SCR 710] ,
Qasim Razvi v. State of Hyderabad [(1953) 1 SCC 228 :
(1953) SCR 581] and Habeeb Mohamad v. State of
Hyderabad [(1953) 1 SCC 501 : (1953) SCR 661] . It is,
therefore, not necessary to enter upon any lengthy
discussion as to the meaning, scope and effect of the article
in question. It is now well established that while article 14
forbids class legislation, it does not forbid reasonable
classification for the purposes of legislation. In order,
however, to pass the test of permissible classification two
conditions must be fulfilled, namely, (i) that the
classification must be founded on an intelligible differentia
which distinguishes persons or things that are grouped
together from others left out of the group, and (ii) that that
differentia must have a rational relation to the object
sought to be achieved by the statute in question. The
classification may be founded on different bases, namely,
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geographical, or according to objects or occupations or
the like. What is necessary is that there must be a nexus
between the basis of classification and the object of the Act
under consideration. It is also well established by the
decisions of this Court that Article 14 condemns
discrimination not only by a substantive law but also by a
law of procedure."
The principle enunciated above has been consistently adopted
and applied in subsequent cases. The decisions of this Court
further establish--
(a) that a law may be constitutional even though it relates
to a single individual if, on account of some special
circumstances or reasons applicable to him and not
applicable to others, that single individual may be treated
as a class by himself;
(b) that there is always a presumption in favour of the
constitutionality of an enactment and the burden is upon
him who attacks it to show that there has been a clear
transgression of the constitutional principles;
(c) that it must be presumed that the legislature
understands and correctly appreciates the need of its own
people, that its laws are directed to problems made
manifest by experience and that its discriminations are
based on adequate grounds;
(d) that the legislature is free to recognise degrees of harm
and may confine its restrictions to those cases where the
need is deemed to be the clearest;
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(e) that in order to sustain the presumption of
constitutionality the court may take into consideration
matters of common knowledge, matters of common
report, the history of the times and may assume every
state of facts which can be concieved existing at the time of
legislation; and
(f) that while good faith and knowledge of the existing
conditions on the part of a legislature are to be presumed,
if there is nothing on the face of the law or the
surrounding circumstances brought to the notice of the
court on which the classification may reasonably be
regarded as based, the presumption of constitutionality
cannot be carried to the extent of always holding that
there must be some undisclosed and un-known reasons for
subjecting certain individuals or corporations to hostile or
discriminating legislation.
The above principles will have to be constantly borne in mind
by the court when it is called upon to adjudge the
constitutionality of any particular law attacked as
discriminatory and violative of the equal protection of the
laws.
12. A close perusal of the decisions of this Court in which the
above principles have been enunciated and applied by this
Court will also show that a statute which may come up for
consideration on a question of its validity under Article 14 of
the Constitution, may be placed in one or other of the following
five classes:
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(i) A statute may itself indicate the persons or things to whom
its provisions are intended to apply and the basis of the
classification of such persons or things may appear on the face
of the statute or may be gathered from the surrounding
circumstances known to or brought to the notice of the court.
In determining the validity or otherwise of such a statute the
court has to examine whether such classification is or can be
reasonably regarded as based upon some differentia which
distinguishes such persons or things grouped together from
those left out of the group and whether such differentia has a
reasonable relation to the object sought to be achieved by the
statute, no matter whether the provisions of the statute are
intended to apply only to a particular person or thing or only
to a certain class of persons or things. Where the court finds
that the classification satisfies the tests, the court will uphold
the validity of the law, as it did in Chiranjitlal Chowdhri v.
Union of India [1950 SCC 833 : (1950) SCR 869] State of
Bombay v. F.N. Balsara [1951 SCC 860 : (1951) SCR 682]
Kedar Nath Bajoria v. State of West Bengal [(1953) 2 SCC 142 :
(1954) SCR 30] , S.M. Syed Mohammad & Company v. State of
Andhra [(1954) SCR 1117] , and Budhan Choudhry v. State of
Bihar [(1955) 1 SCR 1045] .
(ii) A statute may direct its provisions against one individual
person or thing or to several individual persons or things but
no reasonable basis of classification may appear on the face of
it or be deducible from the surrounding circumstances, or
matters of common knowledge. In such a case the court will
2024:KER:70761
strike down the law as an instance of naked discrimination, as
it did in Ameerunnissa Begum v. Mahboob Begum [(1952) 2
SCC 697 : (1953) 1 SCC 274 : (1953) SCR 404] and Ramprasad
Narain Sahi v. State of Bihar [(1953) 1 SCC 274 : (1953) SCR
1129] .
(iii) A statute may not make any classification of the persons
or things for the purpose of applying its provisions but may
leave it to the discretion of the Government to select and
classify persons or things to whom its provisions are to apply.
In determining the question of the validity or otherwise of such
a statute the court will not strike down the law out of hand
only because no classification appears on its face or because a
discretion is given to the Government to make the selection or
classification but will go on to examine and ascertain if the
statute has laid down any principle or policy for the guidance
of the exercise of discretion by the Government in the matter of
the selection or classification. After such scrutiny the court will
strike down the statute if it does not lay down any principle or
policy for guiding the exercise of discretion by the Government
in the matter of selection or classification, on the ground that
the statute provides for the delegation of arbitrary and
uncontrolled power to the Government so as to enable it to
discriminate between persons or things similarly situate and
that, therefore, the discrimination is inherent in the statute
itself. In such a case the court will strike down both the law as
well as the executive action taken under such law, as it did in
State of West Bengal v. Anwar Ali Sarkar [(1952) 1 SCC 1 :
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(1952) SCR 284] Dwarka Prasad Laxmi Narain v. State of
Uttar Pradesh [(1954) SCR 803] and Dhirendra Krishna
Mandal v. Superintendent and Remembrancer of Legal Affairs
[(1955) 1 SCR 224] .
(iv) A statute may not make a classification of the persons or
things for the purpose of applying its provisions and may leave
it to the discretion of the Government to select and classify the
persons or things to whom its provisions are to apply but may
at the same time lay down a policy or principle for the
guidance of the exercise of discretion by the Government in the
matter of such selection or classification, the court will uphold
the law as constitutional, as it did in Kathi Raning Rawat v.
State of Saurashtra [(1952) 1 SCC 215 : (1952) SCR 435] .
(v) A statute may not make a classification of the persons or
things to whom their provisions are intended to apply and
leave it to the discretion of the Government to select or classify
the persons or things for applying those provisions according
to the policy or the principle laid down by the statute itself for
guidance of the exercise of discretion by the Government in the
matter of such selection or classification. If the Government in
making the selection or classification does not proceed on or
follow such policy or principle, it has been held by this Court
e.g. in Kathi Raning Rawat v. State of Saurashtra that in such
a case the executive action but not the statute should be
condemned as unconstitutional."
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In the facts of this case, it must be held that in the light of the finding of the
Supreme Court in the petitioner's own case in S.T. Sadiq (supra) that there
was no intelligible differentia between the factories entrusted to the Cashew
Development Corporation and the factories entrusted to the CAPEX, the
impugned provisions must be struck down as they make 'no reasonable basis
of classification', do not 'lay down any principle or policy for guiding the
exercise of discretion by the Government in the matter of selection or
classification' and since "the statute provides for the delegation of arbitrary
and uncontrolled power to the Government so as to enable it to discriminate
between persons or things similarly situate". In that view of the matter, the
judgments of the Supreme Court in K.T. Plantation Pvt. Ltd. & another
(supra), Jaya Thakur (supra), In Re The Kerala Education Bill
(supra) and A.A Padmanbhan (supra) do not support the case of the
State. For the same reasons, the provisions of Sections 3A & 6A also appear to
be manifestly arbitrary as the term is understood in Shayara Bano
(supra).
26. The contention of the learned Senior Counsel for the
petitioner that provisions are also liable to be declared unconstitutional as
there is no provision providing for the payment of a compensation that is
'just'; thus making the provisions fall foul of Article 300A is prima facie
attractive. The decisions in Bimal Kumar Shah & Ors (supra) and
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Dharnidhar Mishra (supra) are recent authorities for the proposition
that fair, just and reasonable compensation is the sine qua non of any
acquisition process. Such right has been held to be part of the right under
Article 300A vide K.T. Plantation Pvt. Ltd. & another (supra). Even if
the provisions relating to the grant of compensation under the 1974 Act were
incorporated in the original enactment and were thus entitled to the
protection of Artice 31-B, it could be argued that, since the acquisition which
is the subject matter of challenge is on the basis of a newly incorporated
provision (Section 3A as amended by the Amending Act, 2015) which
admittedly is not entitled to the protection afforded by Article 31-B, a
challenge to the provisions relating to payment of compensation can be raised
on the ground that it does not provide for a just and fair compensation.
A further possibility is that, since Article 31-B only protects against challenge
upon grounds relatable to provisions contained in Part III of the Constitution,
a challenge could be made even to provisions entitled to the protection of
Article 31-B on the ground that they violate Article 300-A. However, in the
light of the view that I have already taken, it is not necessary to examine these
issues in this Writ Petition. Similarly, the question as to whether the
provisions of Section 3A as amended by the Amending Act, 2015 are bad for
the reason that they do not provide an opportunity for notice and hearing and
on the ground that those provisions could not have been incorporated with
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retrospective effect are also not required to be considered as I have already
found that the provisions of Section 3A are unconstitutional on other
grounds. The contention that the provisions of Section 3A qualify as a law
made so as to defeat the rights of one single individual (the petitioner herein)
in the peculiar facts of this case also need not be considered. These questions
are, therefore, left open.
27. In the light of the above discussions and findings, this Writ
Petition is allowed. The provisions of Section 3A (as amended by the
Amending Act, 2015) and Section 6A (inserted by the Amending Act, 2015) of
the Kerala Cashew Factories (Acquisition) Act, 1974 are declared
unconstitutional and are struck down. The provisions are arbitrary and
discriminatory and violative of Article 14 of the Constitution of India. It is
declared that there is no intelligible differentia between the 36 factories that
were returned to the respective owners following the judgment in Indian
Nut Products (supra) and the factory of the petitioner and that there was
hostile discrimination in retaining the ownership and possession of the
factory of the petitioner considering the fact that all these factories had been
originally taken over upon grounds relatable to Section 3(1)(c) of the 1974 Act.
Therefore, the executive order issued under the provisions of Section 3A (as
amended by the Amending Act, 2015) of the Kerala Cashew Factories
(Acquisition) Act, 1974, with respect to the factory of the petitioner will also
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stand quashed. The possession and ownership of the factory of the petitioner
together with the land appurtenant thereto shall be restored to him forthwith.
In the light of the undertaking given in this Court on behalf of the petitioner
as noticed in paragraph 18 of this judgment, it is directed that on such
restoration, the petitioner and the respondents shall be bound by and will
duly and faithfully abide by the directions issued by the Supreme Court in
sub-paragraphs (ii) to (vi) of Paragraph 13 of the judgment (SCC Report) in
Indian Nut Products (supra) subject to necessary modifications in as
much as the reference to the Cashew Development Corporation shall be read
as a reference to the Kerala State Cashew Workers Apex Industrial Co-
operative Society (CAPEX).
Writ petition ordered accordingly.
Sd/-
GOPINATH.P.
JUDGE
acd
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APPENDIX OF WP(C) 18663/2016
PETITIONER EXHIBITS
P1 TRUE COPY OF THE LEASE DEED DATED 02-05-1995
BETWEEN THE PETITIONER AND M/S.JANSO EXPORTS
PRIVATE LIMITED.
P2 TRUE COPY OF NOTICE NO. 31033/K3/84/ID DATED
19-09-1985 ISSUED BY THE SECRETARY TO
GOVERNOR, GOVERNMENT OF KERALA.
P3 TRUE COPY OF ORDER NO. G.O.(P)NO. 161/86/ID
DATED 11-06-1986 PASSED BY THE GOVERNMENT OF
KERALA INDUSTRIES (K) DEPARTMENT.
P4 TRUE COPY OF THE JUDGMENT DATED 12-05-1994
PASSED BY THE HON'BLE SUPREME COURT IN WPC
NO. 415 OF 1998(1994) 4 SCC PAGE NO. 269.
P5 TRUE COPY OF THE ORDER DATED 10-03-1995
PASSED BY THE HON'BLE SUPREME COURT IN
SLP(C)NO. 8219/94.
P6 TRUE COPY OF LETTER NO. AD6/6/94 DATED 26-03-
1996 ISSUED BY THE CASHEW EXPORT PROMOTION
COUNCIL OF INDIA.
P7 TRUE COPY OF LETTER NO. M5.54254/84 DATED 31-
03-2002 ISSUED BY THE DISTRICT COLLECTOR,
KOLLAM.
P8 TRUE COPY OF THE JUDGMENT DATED 04-02-2015 IN
C.A.NO. 3962 OF 2007 PASSED BY THE HON'BLE
SUPREME COURT.
P9 TRUE COPY OF THE KERALA GAZETTE NOTIFICATION
NO. 4712/LEG.C3/2015/LAW DATED 03-08-2015,
THIRUVANANTHAPURAM.
P10 TRUE COPY OF ORDER G.O.(P)NO. 110/2015/ID
DATED 06-08-2015, THIRUVANANTHAPURAM
PUBLISHED IN KERALA GAZETTE.
P11 TRUE COPY OF THE ORDER DATED 13-01-2016
2024:KER:70761
PASSED BY THE HON'BLE SUPREME COURT IN
CONTEMPT PETITION (C)NO. 347/2015 IN C.A.NO.
3962/2007.
P12 TRUE COPY OF THE JUDGMENT DATED 1-04-2016
PASSED BY THE HON'BLE SUPREME COURT IN WRIT
PETITION (C)NO. 141 OF 2016.
RESPONDENT EXHIBITS
Exhibit R1(A) TRUE COPY OF G.O. (P) NO.110/2015/IND DATED
06.08.2015 PUBLISHED IN THE EXTRAORDINARY
GAZETTE AS S.R.O.NO.501/2015
Exhibit R1(B) TRUE COPY OF THE RESOLUTION UNANIMOUSLY
PASSED BY THE KERALA LEGISLATIVE ASSEMBLY ON
16.12.2015
Exhibit R3(1) A COPY OF THE TABLE OF THE DETAILS OF
FACTORIES, NUMBER OF WORKING DAYS, NUMBER OF
WORKERS, TURN OVER, LOSS ETC.
Exhibit R3(2) A COPY OF THE DETAILS OF THE ALLOCATION OF
FUNDS FOR LOANS.
Exhibit R3(3) A COPY OF THE DETAILS OF THE ALLOCATION OF
FUNDS FOR GRANTS.
Exhibit R3(4) A COPY OF THE LIST OF EXPENDITURE INCURRED IN
RESPECT OF THE PETITIONER'S FACTORY FROM THE
YEAR 2000-2001 UPTO 2010-2011.
