Pathumma & Ors Vs. State of Kerala & Ors [1978] INSC 7 (16 January 1978)
FAZALALI, SYED MURTAZA FAZALALI, SYED MURTAZA BEG, M. HAMEEDULLAH (CJ) BHAGWATI, P.N.
KRISHNAIYER, V.R.
SHINGAL, P.N.
SINGH, JASWANT TULZAPURKAR, V.D.
CITATION: 1978 AIR 771 1978 SCR (2) 537 1978 SCC (2) 1
CITATOR INFO:
RF 1980 SC 898 (66) RF 1980 SC1789 (117) MV 1982 SC1325 (32) E&D 1983 SC1155 (13,23,24,26,27,29) E 1985 SC 389 (22)
ACT:
Kerala Agriculturists' Debt Relief Act, 1970 s. 20-Scope of- Section 20 entitles debtors to recover properties sold to purchasers in execution of decree passed in liquidating the debt owed by the agriculturist-Restriction if reasonable-If deprives the creditors of their right to property-Sub s. 3- If purchaser of Property at auction is, stranger, property to be returned to agriculturist debtor if purchase money paid within six months-Sub-s. (6) a bona fide alienee purchasing from auction purchaser before the date of the Act exempt from operation of the Act-Sub-s.(3)-If violative of Art.
HEADNOTE:
The statement of objects and reasons to the Kerala Agriculturists' Debt Relief Act, 1970 states that the benefits conferred by Kerala Act 31 of 1958 were available only in respect of debts incurred by the agriculturists before the date of commencement of the Act, namely July 14, 1958. And since even after this date agricultural indebtedness among the poorer sections continued to be on the increase the legislature considered it necessary to give relief to the agriculturists against whom suits had been filed for recovery of debts accrued after the commencement of the 1958 Act.
Section 20(1) of the Act provides that where any immovable property in which the agriculturist had an interest has been sold in execution of any decree for recovery of a debt but possession has not actually passed from the judgment debtor to the purchaser and the decree-holder is the purchaser then such judgment-debtor may deposit one half of the purchase money and, apply to the Court to set aside the sale of the property and the Court shall order the sale to be set aside and further order payment of the balance of the purchase money in ten equal installments in accordance with the procedure set out therein. Subsection (2) provides that where any immovable property in which the agriculturist had an interest has been sold in execution of any decree for arrears of rent and the possession of the property has actually passed from the judgment debtorto the purchaser during the periods mentioned therein then such judgment debtormay deposit one half of the purchase money and apply to the Court to setaside the sale of the property and the court shall order the setting aside of the sale and for the payment of the balance of the purchase money according to the procedure set out in the section. Sub-section (3) provides that where property sold in the execution of any decree for the recovery of a debt and the decree holder is not the purchaser such judgment-debtor may deposit the purchase money and apply to the court to set aside the sale of the property and the Court shall order the sale to be set aside. Sub-section (5) provides that where improvements have been effected on the property sold after the date of sale the value of such improvement as determined by the Court shall be deposited by the applicant for payment to the auction purchaser. Sub-section (6) provides that an order under sub-sections (1) or (2) or (3) shall not be deemed to affect the rights of bona fide alienees of the auction purchaser deriving right before the date of publication of the Bill.
In the instant cases a creditor had obtained a mortgage decree against the judgment debtor, who was an agriculturist. Since the debtor was not able to pay the decretal amount in installments, a decree for sale of the property was passed by the Court. The debtor's property was auctioned and purchased by the appellant who was not the decree-holder. In some cases decrees were obtained by the creditors against the debtors and, on their failure to pay the 538 installments property was purchased at the auction by the decree-holders the-selves. After the purchase, improvements were made by them in the propertieswhen the debtors launched proceedings under the Act for restoration of possession of the property on payment of the decretal amount, the appellants challenged the constitutional validity of the Act. The High Court upheld the validity of s. 20 and dismissed the writ petitions.
In appeal to this Court, it was contended on behalf of the appellants that (1) the appellants having acquired valid title to the property after purchase at auction sale in execution of a decree, s. 20 which deprives them of their right to hold property was violative of Art. 19(1)(f), (2) though the obvious object of the Act was to give relief to debtors who filed suits for recovery of debts after the commencement of the 1958-Act it travels beyond the statement of objects and reasons, giving a blanket power to the Court to set aside the sale completed even before the passing of the Act and (3) s. 20(3) and (6) are violative of Art. 14 because the stranger decree-holder was selected for hostile discrimination whereas a bona fide alienee was exempted from the operation of the Act.
Dismissing the appeals, (per Beg, C. J., Krishna Iyer, S. Murtaza Fazal Ali and Jaswant Singh, J.)
HELD : There is no constitutional infirmity on the ground that the Act is violative of Art. 19(1)(f). The restrictions imposed are clearly reasonable within the meaning of cl. (6) of that Article. [559 A-B] 1(a) In interpreting the constitutional provisions for judging the impact of an enactment on the fundamental rights of the citizens the approach of the Courts is to interpret the constitutional provisions against the social setting of the country so as to show a complete consciousness and deep awareness of the growing requirements of the society, the increasing needs of the nation, the burning problems of the day and the complex issues facing the people which the legislature in its wisdom, through beneficial legislation, seeks to solve. The judicial approach should be dynamic rather than static, pragmatic rather than pedantic and elastic rather than rigid. It must take into consideration the changing trends of economic thought, the temper of the times and the living aspirations and feelings of the people.
This Court must strike a just balance betweenthe fundamental rights and the larger and broader interests of society.[534 A-C] (b) The legislature is in a better position to understand and appreciate the needs of the people and to bring about social reforms for the uptiftment of the backward and the weaker sections and for the improvement of the lot of the poor. The Court will interfere only when the statute is clearly violative of the fundamental right or when the Act is beyond the legislative competence. Courts have recognised that there is always a presumption in favour of the constitutionality of a statute and the onus to prove its invalidity lies on the party assailing the Act. [544 A-B] Jyoti Prashad v. The Administrator for the Union Territory of Delhi (1962) 2 SCR 125 and Mohd. Hanif Quareshi & Ors v. The State of Bihar (1959) SCR 629 referred to.
(e) The object of the Act being removal of agricultural indebtedness and reduction of one of the important causes of poverty, is undoubtedly in public interest and the restriction must be presumed to be reasonable. [545 B-C] (b) By a long line of decisions this Court has laid down seteral tests and guidelines for judging the reasonableness of restrictions. They are :
(i) Fundamental Rights and Directive Principles constitute the "conscience" of the Constitution. The purpose of the latter is to fix certain social and economic goals for immediate attainment by bringing about a non-violent social revolution. The Constitution aims at bringing about a synthesis between funda.mental rights and directive principles by giving to the former a place of pride and to the latter a place of permanence. [545 F-G] 5 3 9 Fatechand Himmatlal & Ors. v. State of Maharashtra etc.
(1977) 2 SCR 828, His Holiness Kesavananda Bharati Sripadagalavaru v. State of Kerala (1973) Supp. SCR 1, State of Kerala & Anr. v. N. M. Thomas & Ors. (1976) 2 SCC 310 and The State of Bombay v. R. M. D. Chamarbattgwala (1957) SCR 874 at 921 referred to.
In the instant case the object of the Act being to eradicate rural indebtedness and thereby secure the common good, of the people living in object poverty, clearly fulfils the directives in Arts. 38 and 39(b) of the Constitution. There is no conflict between the directives and the restrictions sought to be placed by the Act. [545 E-F, 547 A] (ii)The restrictions must not be arbitrary or excessive in nature so as to go beyond the requirement of the interest of the general public. What is required is that the legislature should take intelligent care in choosing I course which is dictated by reason and good conscience so as to strike a just balance between the freedom contained in Art. 19(1)(f) and the social control permitted by cll. (5) and (6) of that Article. [547 B-E] Chintamman Rao v. The State of Madhya Pradesh (1950) SCR 759 at 763 and Messrs. Dwarka Prasad Laxmi Narain v. The State of Uttar Pradesh & Ors. (1954) SCR 803 at 811-12 referred to.
(iii)No abstract or general pattern or a fixed principle can be laid down which can be of universal application and the same will have to vary from case to case and with regard to changing conditions, the values of human life, social philosophy of the Constitution, prevailing conditions and the surrounding circumstances, all of which must enter into the judicial verdict. [547 F] Messrs. Dwarka Prasad Laxmi Narain v. The State of Uttar Pradesh & Ors. (1954) SCR 803 at 811-12 State of Madras v. V. C. Row (1952) SCR 597. Mohd. Hanif Quareshi & Ors. v. The State of Bihar (1959) SCR 629 at 660 and The Lord Krishna Sugar Mills Ltd. & Anr. v. The Union of India & Anr.
(1960) 1 SCR 39 at 56 referred to.
(iv)The Court has to examine the nature and extent, the purport and content of the right, nature of the evil sought to be remedied by the statute, the harm caused to the citizen and the benefit to be conferred on the person or the community for whose benefit the legislation is passed, urgency of the evil and the necessity to rectify the same.
In so doing the Court has to strike a just balance between the restriction imposed and the social control envisaged by Art. 19(6). [549 A-B] Narendra Kumar & Ors. v. The Union of India & Ors. (1960) 2 SCR 375 and Bachan Singh & Ors. v. State of Punjab & Ors.
(1971) 1 SCC 713 at 718 referredto.
(v)There must be direct and proximate nexus or a reasonable connection between the restriction imposed and the object sought to be achieved. In other words, the Court has to see whether by virtue of the restriction imposed on the right of the citizen the object of the statute is really fulfilled or frustrated. If there is a direct nexus between the restriction and the object of the Act then a strong presumption in favour of the constitutionality of the Act will arise. [549 F-G] Kavalappara Kottarrathil Kochunni & Ors. v. The State o Madras & 0rs. (1960) 3 SCR 887 at 928 and O. K. Ghosh & Anr. v. N. K. Joseph (1963) Supp. 1 SCR 789 at 705 referred to.
(vi)Courts must see whether the social control envisaged in Art. 19(6) is being effectuated by the restriction imposed on the fundamental right. If they look at the restrictions only from the point of view of the citizen who is affected, it will not be a correct or safe approach inasmuch as the restriction is bound to be irksome and painful to the citizen even though it may be for the public good. However important the right of a citizen or an individual may be, it has to yield to the larger interests of the country or the community. [550 G-H, 551 A] Jyoti Prashad v. The Administrator for the Union Territory of Delhi (1962), 2 SCR 125 at 148 referred to.
540 (vii)The Court is fully entitled to take into consideration matters of common report, history of the times and matters of common knowledge and the circumstances existing at the time of legislation. [551 D] Mohd. Hanif Quareshi & Ors. v. The State of Bihar (1959) SCR 629 referred to.
In the instant case the object of the Act being to protect the agriculturistdebtors from the clutches of the greedy creditors, is undoubtedly a laudable object. The Act does not take away the property of the purchaser without compensation and, therefore, his right to hold property has not been destroyed. No exception can be taken to s. 20(2) (b) which provides for payment of the purchase money by installments because the debtor, on account of his poverty, cannot pay the debt in a lump-sum. Secondly having regard to the economic condition of the peasantry in the State, the object sought to be achieved being to remove agricultural indebtedness and amelioration of the lot of the agricui- turists, it cannot be said that the restrictions are in any way arbitrary or excessive or beyond the requirements of the situation. [558 B, D, F, H, 559 A]
2. The object of the Act mentioned in the first part of the statement of objects and reasons clearly shows that it is comprehensive in nature and is not confined to any particular situation. In view of the clear and unambiguous provisions of the Act, it is not necessary to delve into statement of objects and reasons. [559 G-H] Section 20 is not violative of Art. 14 of the Constitution.
[562 B] 3(a) What Article 14 forbids is hostile discrimination and not reasonable classification. Equality before law does not mean that the same set of laws should apply to all persons under every circumstance ignoring differences and disparities between men and things. It is for the State to make reasonable classification which must fulfil two conditions : (1) 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 (2) the differentia must have a reasonable nexus to the object sought to be achieved by tile statute. [560 C- E] Shri Ram Krishna Dalnua v. Shri Justice S. R. Tendolkar & Ors. (1959) SCR 279 it 296-97 and State, of Kerala & Anr. v. N. M. Thomas & Ors. (1976)2 SCC 310 referred to.
(b)Having regard to the allowed object of the Act, if by reason of their povertyand economic backwardness the agriculturist-debtors are treated as a separatecategory or class for preferential treatment in public interest, the classi-fication is not unreasonable. In making the classification, the legislature cannot be expected to provide an abstract symmetry. All that is necessary is that the classes have to be set apart accordions to the necessities and exige ies a, as dictated by experience and surrounding circumstances and the cl ton should not be arbitrary, artificial or illusory. [561 6-H, 562 A] State of West Bengal v. Anway Ali Sarkar (1952) SCR 284 at 321 referred to.
(c) It is well settled that before a person can claim to be discriminated against another he must show that all the other persons are similarly situate or equally circumstanced. Unless the appellant is able to establish that he is equated with a bona fide alienee in every respect, Art. 14 will have no application. In other words, discrimination violative of Art. 14 can only take effect if there is discrimination between equals and not where unequals are being differently treated. [562 C-D] State of J & K v. T. N. Khosa & Anr. (1974) 1 SCR 771 at 783, Chiranjit Lal Chowadhuri v. The Union o India & Ors.
(1950) SCR 860 It 911 and Southern Railways Co. v. Greene 216 U.S. 400, 412 referred to.
541 (d) A stranger auction purchaser and a bona fide alienee cannot be said to be similarly situate. [563 D] In the instant case the stranger auction purchaser who participates in the proceedings in execution of the decree against the debtor has a clear notice of the circumstances under which the decree was passed and of the fact that the property sold was the property of the debtor. If the legislature at a later stage passes a law to restore the property to the agriculturist-debtor the auction-purchaser cannot complain. Secondly, the stranger auction-purchaser knows that he had purchased the property at a distress sale.
Thirdly even if the property was restored to the stranger auction-purchaser, he is entitled to get the entire purchase money in lump-sum including the cost before parting with possession of the property. This distinguishes the case from that of a decreeholder-purchaser. A bona fide alienee on the other hand purchases, the property under negotiation;
he has no notice of the debt of the debtor or the circumstances under which the decree was passed. [563 E, H, 564 A] Per Bhagwati, Shinghal and Tulzapurkar, JJ concurring.
The subject-matter of the Act is clearly within the purview of Entry 30 (money lending and money lenders; relief of agricultural indebtedness) and the Act which provides for the " relief of indebted agriculturists in the State of Kerala" is within the competence of the State Legislature.
[568 G, 569 A] 1(a) There is no justification for the contention that Entry 30 is confined only to subsisting- indebtedness and Would not cover the necessity of providing relief of those agriculturists who had lost their immovable property by Court sales in execution of the decree against them and had been rendered destitute. Section 20 deals with a liability which had ceased and did not subsist on the date the Act came into force. But there is nothing in Entry 30 of List 11 to show that it will not be attracted and would not enable the State Legislature to make a law simply because the debt of the agriculturist had been paid off under a distress sale-. [569 C-E] (b) An agriculturist does not cease to be an agriculturist merely because he has lost his immovable property. It cannot be said that the State is not interested in providing him necessary relief merely because he has lost his immovable property. On the other 'hand his helpless condition calls for early solution and it is only natural that the State Legislature should think of rehabilitating him by providing the necessary relief under an Act of the nature under consideration. There is nothing in the working of Entry 30 to show that the relief contemplated by it must necessarily relate to any subsisting indebtedness and would not cover the question of relief to those who have lost the means of their livelihood because of the delay in providing them legislative relief.
[569- F-G] (c) It cannot be gainsaid that agriculturists. and even, indebted agriculturists, form the bulk or, at any rate a considerable part of the rural population in an essentially rural economy. and so if a restriction is reasonable in their interest. it world squarely fall within the purview of cl. (5) of Art. 19.
[570 F-G] Kavalappara Kottarathil Kochuni & Ors. v. The State of Madras and Ors. (1960) 3 SCR 887 and State of Andhra Pradesh v. Kannapalli Chinna Venkata Chalamayya Sastri (1963) 1 SCR 156 referred to.
(d) Thousands of suits were pending against indebted agriculturists in various Courts and immovable properties of a large number of agriculturists had been sold rendering them completely helpless. So if the State Legislature passed the Act in the interest of the general public to provide relief of the nature mentioned in s. 20 the restriction provided therein is clearly "reasonable". Even so, the section makes provision for repayment of the purchase money, the costs of execution and the improvements made by the purchaser Their restriction is, therefore, reasonable in every sense and the High Court rightly rejected the argument to the contrary. [571 A-C], Section 20 is not violative of Art. 14. [573 D] 54 2 2(a) A comparison of sub-s-(1) with sub-s. (3) would show that the treatment to a decree-holder-purchaser is different and is less advantageous than the treatment to a purchaser who is not a decree-holder. The former is treated as a different class. Decree-holders very often exploit their debtors in many ways and sales to them are generally viewed with suspicion and disfavor. Under O.XXI, r.72 CPC, it is not permissible for a decree-holder to bid for or purchase the property without the express permission of the Court.
The decree holder purchaser has rightly been treated as a class by himself and that classification obviously has the object of benefiting the agriculturist debtor by permitting him to deposit only half the purchase money and paying the balance in installments.[572 A-B] (b) There is also justification for treating an auction purchaser at a Court sale differently from a bona-fide alienee of the auction purchaser who derived his rights before the date of publication of the 1968 Bill. Such an alienee of the auction-purchaser could not possibly have been aware of the hazards of Purchasing the property of an indebted agriculturist at the time of purchase.
[572 C-D] (c) It is futile to contend that if the legislature has protected the interests of an alienee by enacting sub-s.
(6) it has made a hostile discrimination against the auction purchaser as a class. [573 D]
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 420 of 1973.
From the Judgment and Order dated 17-8-1972 of the Kerala High Court in Original Petition No. 5576 of 1970.
T. S. Krishnamoorthy Iyer, S. B. Saharya, K. Ram Kumar and V. B. Saharya for the Appellants in C. As. 420 and 442- 445/73.
V. A. Sayed Muhamed (In CA 420/73) and K. M. K. Nair for R. I in all appeals and R. 2 in C. As. 442, 443 and 445 of 1973.
Miss Lilly Thomas RR. 3-10 and CA 445/73.
The following Judgments of the Court were delivered by FAZAL ALI, J.-These appeals by certificate granted by the High Court of Kerala involve a common question of law containing a challenge to the constitutionality of the Kerala Agriculturists' Debt Relief Act, 1970 (Act 11 of 1970) (hereinafter referred to in short as the Act). The appeallants have assailed particularly section 20 of the Act which entitles the debtors to recover the properties sold to purchasers in execution of a decree passed in liquidating the debt owed by the agriculturists.
As the five appeals involve common questions of law we propose to decide them by one common judgment.
Section 20 of the Act was assailed before the High Court on three grounds, namely.
1. That the Act was beyond the legislative competence of the State legislature and did not fall within entry 30 of the State List.
2. That the provisions of section 20 and the sub-sections thereof were violative of Article 19 (1 ) (f) of the Constitution of India inasmuch as they sought to deprive the appellants of their right to hold property;
3. That sub-sections 3 and 6 of section 20 of the Act were violative of Article 14 of the, Constitution of India inasmuch as the stranger decree-holder was selected for hostile discrimination whereas a bona fide alienee who stood on the same footing as the stranger decree holder was exempted from the operation of the Act.
Mr. Krishnamoorty Iyer, learned counsel for the appellants has not pressed point No. 1 relating to the legislative competence of the legislature and has fairly conceded that in view of the decision of this Court in the case of Fatehchand Himmatlal & Ors' v. State of Maharashtra etc.(1) the constitutionality of the Maharashtra Debt Relief Act, 1976 which contained similar or rather harsher provisions is the Act was upheld by this Court. In these circumstances, it will not be necessary for us to examine this question any further.
Before however taking up the other two points raised by counsel for the appellants which were pressed before us in this Court it may be necessary to set out the approach which a Court has to make and the principles by which it has to be guided in such matters. Courts Interpret the constitutional provisions against the social setting of the country so as to show a complete consciousness and deep awareness of the growing requirements of the society, the increasing needs of the nation the burning problems of the, day and the complex issues facing the people which the legislature in its wisdom, through beneficial legislation, seeks to solve. The judicial approach should be dynamic rather than static, pragmatic and not pedantic and elastic rather than rigid.
It must take into consideration the changing trends of economic thought, the temper of the times and the living aspirations and feelings of the people. This Court while acting as a sentinel on the quivive to protect fundamental rights guaranteed to the citizens of the country must try to strike a just balance between the fundamental rights and the larger and broader interests of society, so that when such right clashes with the larger interest of the country it must yield to the latter. Emphasising the role of Courts in such matters this Court in the case of Jyoti Prashad v. The Administrator for the Union Territory of Delhi(2) observed as follows :- " where the legislature fulfils its purpose and enacts laws, which in its wisdom, is considered necessary for the solution of what after all is a very human problem the tests of "reasonableness" have to be viewed in the context of the issues which faced the legislature. In the construction of such laws and particularly in judging of their validity the Courts have necessarily to approach it from the point of view of furthering the social interest which it is the purpose of the legislation to promote, for the Courts are not, in these matters. functioning as it were in vacuo, but as parts of a society which is trying, by enacted law, to solve its problems and achieve social concord and peaceful adjustment and thus furthering the moral and material progress of the community as a whole." (1) [1962] 2 S.C.R. 125 at 148.
544 It is obvious that the legislature is in the best position to understand and appreciate the needs of the people as enjoined by the Constitution to bring about social reforms for the upliftment of the backward and the weak-or sections of the society and for the improvement of the lot of poor people. The Court will therefore, interfere in this process only when the statute is clearly violative of the right conferred on the citizen under Part III of the Constitution or when the Act is beyond the legislative competence of the legislature or such other grounds. It is for this reason that the Courts have recognised that there is always a presumption in favour of the constitutionality of a statute and the onus to prove its invalidity lies on the party which assails the same. In the case of Mohd. Hanif Quareshi & Ors. v. The State of Bihar(1) while adverting to this aspect Das, C.J. as he) then was, speaking for the Court observed as follows :- "The pronouncement of this Court further establish, amongst other things, that there is always a presumption in favour of the constitutionality of an enactment and that the burden is upon him, who, attacks it, to show that there has been a clear violation of the constitutional principles. The Courts, it is accepted, must presume that the legislature understands and correctly appreciates the needs of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds".
It is in the light of these principles that we have to approach the impact of the Act on the fundamental rights of the citizen conferred on him by Part III of the Constitution.
The first plant of argument by learned counsel for the, appellants is that the Act was violative of Article 19(1) (f) of the Constitution inasmuch as it takes away the right to hold property as guaranteed by Article 19 (1) (f).
Article 19 (1) (f) may be extracted thus "All citizens shall have the right (f) to acquire, hold and dispose of property".
It was contended that in the present case the appellants had acquired valid title to the property after having purchased it at the auction sale in execution of a decree against the debtors. After the sale the properties vested. in the appellants and the law which invaded their right to the property was clearly violative of Article 19(1) (f) of the Constitution. There can be no doubt that Article 19 guarantees all the seven freedoms to the citizen of the country including the right to hold, acquire and dispose of property. It must, however, be remembered that Article 19 confers an absolute and unconditional right which is subject only to reasonable restrictions to be placed by Parliament or the legislature in public interest. Clause (5) of Article 19 runs thus:
"Nothing in sub-clauses (d), (e) and (f) of the said clause shall effect the: operation of any existing law in so far as (1) [1959] S.C.R. 629.
545 it imposes, or prevent the state from making any law imposing, reasonable restrictions on the exercise of any of the rights conferred by the said sub-clauses either in the interests of the general public or for the protection of the interests of any Schduled Tribe".
A perusal of this clause manifestly reveals that the right conferred, by Article 19(1) (f) is conditioned by the various factors mentioned in clause (5). The Constitution permits reasonable restrictions to be placed on the right in the interest of the general public or for the protection of the interest of any Scheduled Tribe. The State in the, instant case claims protection under clause (5) by submitting that the provisions contained in the Act amount to reasonable restrictions for the general good of an important part of the community, namely, the poor agriculturist debtors. The object of the Act, according to the State, is to remove agricultural indebtedness and thereby to eradicate one of the important causes of poverty in this country. Such an object is undoubtedly in public interest, and, therefore, the restriction contained in the Act must be presumed to be a reasonable restriction. This Court has considered this question on several occasions during the last 21 decades, and has laid down several tests guidelines to indicate what in a particular circumstance can be regarded as a reasonable restriction. One of the tests laid down by this Court is that, in judging the reasonableness of the restrictions imposed by clause (5) of Article 19, the Court has to bear in mind the Directive Principles of State Policy. It will be seen that Article 38 contains a clear directive to the State to promote the welfare of the people by securing and protecting as effectively as possible a 'social order in which justice, social, economic and political ,hall inform all the institutions of national life. Article 39(b) contains a direction to secure that the ownership and control of the material resources of the community are so distributed as best to sub-serve the common good. Indisputably, the object of the Act is to eradicate rural indebtedness and thereby to secure the common good of people living in abject poverty. The object, therefore, clearly fulfils the directive laid down in Articles 38 and 39(b) of the Constitution as referred to above.
In fact in the case of His Holiness Kesavananda Bharati Sripadagalavaru v. State of Kerala(,) all the Judges constituting the Bench have with one voice given the Directive Principles contained in the Constitution a place of honour. Hegde and Mukherjea. JJ. as they then were have said that the fundamental rights and the Directive Principles constitute the "conscience" of our Constitution.
The purpose of the Directive Principles is to fix certain socio and economic goals for immediate attainment by bringing about a non-violent social revolution.
Chandrachud, J. observed that our Constitution aims at bringing about a synthesis between 'Fundamental Rights and the 'Directive Principles of State Policy' by giving to the former a place of pride and to the latter a place of permanence.
In a latter case State of Kerala & Anr. v. N. M. Thomas & Ors.(2) (1976) 2 S.C.C. 310 one of us (Fazal Ali, J.) after analysing the (1) [1973] Supp. S.C.R. 1.
(2) [1976] 2 S.C.C. 310.
546 Judgment delivered by all the Judges in the Kesvananda Bharati's case (supra) on the importance of the Directive Principles observed as follows :
"In view of the principles adumbrated by this Court it is clear that the Directive Principles form the fundamental feature and the social conscience of the Constitution and the Constitution enjoins upon the State to implement these directive principles. The, directives thus provide the policy, the guidelines and the end of socio-economic freedom of Articles 14 and 16 are the means to implement the policy to achieve the ends sought to be promoted by the directive principles. 'So far as the courts are concerned where there is no apparent inconsistency between the directive principles contained in Part III, which in fact supplement each other, there is no difficulty in putting a harmonious construction which advances the object of the Constitution. Once this basic fact is kept in mind, the interpretation of Articles 14 and 16 and their scope and ambit become as clear as day".
In the case of The State of Bombay v. R.M.D. Chamarbaugwala(1) this Court while stressing the importance of directive principles contained in the Constitution observed as follows :
"The avowed purpose of our constitution is to create a welfare State. The directive principles of State policy set forth in Part IV of our Constitution enjoin upon the, State the duty to strive to promote the welfare of the people by securing and protecting, as effectively as it may, a social order in which justice, social, economic and political, Shall inform all the institutions of the national life".
In the case of Fatehchand Himmatlal & Ors. v. State of Maha- rashtra etc. (supra) the Constitution Bench of this Court observed as follows :
"Incorporation of Directive Principles 'of State Policy casting the high duty upon the State to strive to promote the welfare of the people by securing and protecting as effec- tively as it may, a Social order in which justice-social, economic and political shall inform all the institutions of the national life., is not idle print but command to action. We can never forget, except at our peril, that the Constitution obligates the State to ensure an adequate means of livelihood to its citizens and to see that the health and strength of workers, men and women, are not abused, that exploitation, moral and material, shall be extradited. In short, State action defending the weaker sections from social injustice and all forms of exploitation and raising the standard of living of the people, necessarily imply that economic activities, attired as trade or business or commerce, can be de-recognised as trade or business." (1) [1957] S.C.R. 874 at 921.
547 In the instant case, therefore, we are not able to see any conflict between the directive principles contained in Article 38 and 39(b) and the restrictions placed by the Act. In the case of The State of Bombay & Anr. v. P. N. Bulsara(l) this Court observed as follows "In judging the reasonableness of the restrictions imposed by the Act, one has to bear in mind the directive principles of State policy set forth in Article 47 of the Constitution." Another test which has been laid down by this Court is that restrictions must not be arbitrary or of an excessive nature so as to go beyond the requirement of the interest of the general public. In the case of Chintaman Rao v. The State of Madhya Pradesh(2) this Court observed as follows :- "The phrase 'reasonable restriction' connotes that the limitation imposed on a person in enjoyment of the right should not be arbitrary or of an excessive nature, beyond what is required in the interests of the public. The word 'reasonable' implies intelligent care and deliberation, that is, the choice of a course which reason dictates. Legislation which arbitrarily or excessively invades the right cannot be said to contain the quality of reasonableness and unless it strikes a proper balance between the, freedom guaranteed in Article 19 ( 1 ) (g) and the social control permitted by clause (6) of Article 19, it must be held to be wanting in that quality." What is required is that the legislature takes intelligent care and deliberation in choosing a course which is dictated by reason and good conscience so as to strike a just balance between the freedom contained in Article 19 (1) and the social control permitted by clauses (5) and (6) of Article
19. This view, was reiterated in the case of Messrs. Dwarka Prasad Laxmi Narain v. The State of Uttar Pradesh & Ors.(3) It has also been pointed out by this Court that in order to judge the quality of the reasonableness no abstract or general pattern or a fixed principle can be laid down so as to be of universal application and the same will have to vary from case to case and with regard to changing conditions, the value of human life, social philosophy of the Constitution, prevailing conditions and the surrounding circumstances all of which must enter into the judicial verdict. In other words, the position is that the Court has to make not a rigid or dogmatic but an elastic and pregmatic approach to the facts of the case and to take an over-all view of all the circumstances, factors and issues facing the situation. In the case of State of Madras v. V. G. Row(4) the Court observed as follows It is important in this context to bear in mind that the test of reasonableness, wherever prescribed, should be applied to each individual statute impugned, and no abstract standard, (1) [1951] S.C.R 682.
(2) [1956] S.C.R. 759 at 763.
(3) [1954] S.C.R. 803 at 811-12.
(4) [1952] S.C.R. 597.
548 or general pattern, of reasonableness can be laid down as applicable to all cases. The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the pre- vailing conditions at the time, should all enter into the judicial- verdict. In evaluating such elusive factors and forming their own conception of what is reasonable, in an the circumstances of a given case, it is inevitable that the special philosophy and the scale of values of the judges participating in,the decision should play an important part." This view was endorsed in the case of Mohd. Hanif Quareshi & Ors. v. The State of Bihar(1) 1959 S.C.R. 629 at 660 where this Court observed as follows :
"Quite obviously it is left to the court, in case of dispute, to determine the reasonableness of the restrictions imposed by the law. In determining that question the court, we conceive, cannot proceed on a general notion of what in reasonable in the abstract or even on a consideration of what is reasonable from the point of view of the person or pe rsons on whom the restrictions are imposed." Similarly in the case of The Lord Krishna Sugar Mills Ltd. & Anr. v. The Union of India & Anr. (1) the Court observed that the Court in judging the reasonableness of a law, will necessarily see, not only the surrounding circumstances but all contemporaneous legislation passed as part of a single scheme." To the same effect is another decision of this Court in the case of Kavalappara Kottarrathil Kochuni & Ors. v. The State of Madras & Ors. (2) where this Court observed as follows :
"There must, therefore, be harmonious balancing between the fundamental rights declared by Article 19(1) and the social control permitted by Article 19(5). It is implicit in the nature of restrictions that no inflexible standard can be laid down : each case must be decided on its facts." In the case of Jyoti Pershad v. The Administrator for the Union Territory of Delhi (supra) at 147 Ayyangar, J.
speaking for the Court observed as follows :
"The criteria for determining the degree of restriction on the right to hold property which would be considered reasonable, are by no means fixed or static, but must obviously vary from age to age and be related to the adjustments necessary to solve the problems which communities face from time to time." (1) [1952] S.C.R. 597.
(2) [1960] 3 S.C.R. 887 at 928.
549 The fourth test which has been laid down by this Court to judge the reasonableness of a restriction is to examine the nature and extent, the purport and content of the right, nature of the evil sought to be remedied by the, statute, the ratio of harm caused to the citizen and the benefit to be conferred on the person or the community for whose benefit the legislation is passed, urgency of the evil and necessity to rectify the same. In short, a just balance has to be struck between the restriction imposed and the social control envisaged by clause (6) of Article 19. In the case of Narendra Kumar & Ors. v. The Union ,of India & Ors.(1) this Court observed as follows;
"In applying the test of reasonableness, the Court has to consider the question in the background of the facts and circumstances under which order was made, taking into ac- count the nature of the evil that was sought to be remedied by such law, the ratio of the harm caused to individual citizens by the proposed remedy, to the beneficial effect reasonably expected to result to the general public. It will also be necessary to consider in that connection whether the restraint caused by the law is more than was necessary in the interests of the general public." In the case of Bachan Singh & Ors. v. State of Punjab & Ors. (2) this Court observed as follows "The Court has in no uncertain terms laid down the test for ascertaining reasonableness of the restriction on the rights guaranteed under Article 19 to be, determined by a reference to the nature of the right said to have been infringed, the purpose of the restrictions sought to be imposed, the urgency of the evil and the necessity to rectify or remedy it all of which has to be balanced with the Social Welfare or Social purpose sought to be achieved. The right of the individual has therefore to be sublimated to the larger interest of the general public." The fifth test formulated by this Court is that there must be a ,direct and proximate nexus or a reasonable connection between the other words, the Court has to see whether by virtue of the restriction imposed on the right of the citizen the object of the statute is really fulfilled or frustrated. If there is a direct nexus between the restriction and the object of the Act then a strong presumption in favour of the constitutionality of the Act will naturally arise. In the case of K. K. Kochuni & Ors. v. State of Madras & Ors. (supra) this Court ,observed as follows :
"But the restrictions sought to be imposed shall not be arbitrary, but must have reasonable relation to the object sought to be achieved and shall be in the interests of the general public".
(1) [1960] 2 S.C.R. 375.
(2) [1971] 1 S.C.C. 713 at 718.
550 Same view was taken by this Court in the case of O. K. Ghosh & Anr. v. E. X. Joseph(1) where Gajendragadkar, J. speaking for the Court observed as follows "A restriction can be said to be in the interests of public order only if the connection between the restriction and the public order is proximate and direct.
Indirect or farfetched or unreal connection between the restriction and public order would not fall within the purview of the expression 'in the interests of public order'." Another test of reasonableness of restrictions is the prevailing social values whose needs are satisfied by restrictions meant to protect social welfare. In the case of The State of Uttar Pradesh v. Kaushaliya & Ors.(2) this Court while relying on one of its earlier decisions in the case of State of Madras v. V. G. Row (supra) observed as follows :- "The reasonableness of a restriction depends upon the values of life in a society, the circumstances; obtaining at a particular point of time when the restriction is imposed, the, decree and the urgency of the evil sought to be controlled and similar others".
We have deliberately not referred to the American cases because the conditions in our country are quite different and this Court need not rely on the American Constitution for the purpose of examining the seven freedoms contained in Article 19 because the social conditions and the habits of our people are different. In this connection, in the case of Jagmohan Singh v. The State of U.P.(3) this Court observed as follows :
"So far as we are concerned in this country, we do not have, in our constitution any provision like the Ninth Amendment nor are we at liberty to apply the test of reasonableness with the freedom with which the Judges of the Supreme Court of America are accustomed, to apply 'the due process' clause".
Another important test which has been enunciated by this Court is that so, far as the nature of reasonableness is concerned it has to be viewed not only from the point of view of the citizen but the problem before the legislature and the object which is sought to be achieved by the statute. In other words the Courts must see whether the social control envisaged in clause (6) of Article 19 is being effectuated by the restrictions imposed on the fundamental right. It is obvious that if the Courts look at the restrictions only from the point of view of the citizen who is affected it will not be a correct or safe approach in as much as the restriction is bound to be irksome and painful to the citizen even though it may be for the public good. Therefore a just Wince must be struck in relation to the restriction and the public good that is (1) [1963] Supp. 1 S.C.R. 789 at 705.
(2) [1964] 4 S.C.R. 1002 at 1013.
(3) [1973] 1 S.C.C. 20 at 27.
551 done to the people at large. It is obvious that, however important the right of it citizen or an individual may be, it has to yield to the larger interests of the country or the community. In the case of Jyoti Pershad v. The Administrator for the Union Territory of Delhi (supra) this Court observed as follows :
"Where the legislature fulfils its purpose and enacts laws, which in its wisdom, is considered necessary for the solution of what after all is a very human problem and tests of ,reasonableness' have to be, viewed in the context of the issues which faced the legislature. In the construction of such laws and particularly in judging of their validity the Courts have necessarily to approach it from the point of view of furthering the social interest which it is the purpose of the legislation to promote, for the Courts are not, in these matters, functioning as it were in vacuo, but as parts of a society which is trying, by enacted law, to solve its problems and achieve social concord and peaceful adjustment and thus furthering the moral and material progress of the community as a whole".
It has also been held by this Court that in judging reasonableness of restrictions the Court is fully entitled to take into consideration matters of common report, history of the times and matters of common knowledge and the circumstances existing at the time of legislation. In this connection, in the case of Mohd. Hanif Quareshi & Ors. v. The State of Bihar (supra) the Court observed as follows :
"It must be borne in mind 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 and finally 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 conceived existing at the time of legislation".
We do not mean to suggest that the tests laid down above are completely exhaustive but they undoubtedly provide sufficient guidelines to the Court to determine, the question of reasonableness of a restriction whenever it arises.
We would now like to examine the facts and circumstances of the present case in the light of the principles enunciated above in order to find whether or not restrictions imposed by the Act on the rights of the appellants are unreasonable.
Before however going into this question, it may be necessary to give a brief survey of the facts of the present case and the history of the period preceding the Act as also the economic position of the debtors prevailing at the time when the Act was passed. It appears that in Civil Appeal No. 420 of 1973 the appellant was a stranger auction purchaser at a Court sale. The creditor had obtained a mortgage decree against the debtor which was 552 to be paid by installments but as the debtor was not able to pay the installment, a decree for sale of the property was passed by the Court and the property was auctioned and purchased by the appellant who was not the decree-holder.
The rest of the facts are not disputed and need not be mentioned in the judgment. In the other appeals also decrees were obtained by the creditors against the debtors and on failure of the debtors to pay the installments the property was sold and purchased at the auction by the decree-holders themselves. It is also not disputed that after the-purchase of the properties some of the appellants had built houses, wanted trees and made other improvements in the property. When however the debtors launched proceedings under the Act for restoration of the possession of the property on payment of the decretal amount the appellants had challenged the Act on the ground that it was unconsitutional as indicated above. The High Court has pointed out in its judgment that though the Act was preceded by Act 31 of 1958 under which benefits were conferred on the debtors for debts incurred by the agriculturists before 14th July, 1958 but as this date was considered to be inadequate by an amendment in 1961 the date was extended to 14th July, 1959. In spite of this concession all the debtors were not able to pay off their debts as a result of which they lost their property which was sold in execution of the decrees brought by the creditors against them. It was also found by the High Court that as many as 102867 suits were filed in various Courts in the St-ate after 14-7-1958 and in most of them no relief could, be given to the debtors because of the expiry of the date. The very fact that most of the debtors were not able to pay debts and save valuable properties which were in their possession shows the pitiable condition and the object poverty in which they live. The High Court has also given the facts, figures and statistics to prove the economic condition of the agriculturist debtors. In this connection, the High Court has pointed out that the All-India Rural Credit Committee's Report, 1954 shows that 51.7% of the Rural families ill Kerala are indebted and out of this, the proportion between cultivators and non- cultivators is 58.6 and 38.6 respectively. The All India average borrowing per rural family was Rs. 160. The corresponding average for the cultivator and non-cultivator was Rs. 21 0 and Rs.66 respectively. Of the average borrowing per family of Rs. 309for rural households, that of the cultivators was Rs. 358 per family as against Rs. 171 for non-cultivators i.e. almost double of that of the cultivators. Family expenditure accounted for 49.8% in the caseof medium cultivators, 49.2% for large cultivators and 37.2% 'or big cultivators. The rural credit survey of 1961-62 shows that 64% of the cultivatorsin Kerala are indebted, which is said to be the second biggest in India. The average of loan borrowed by the cultivators in Kerala was Rs. 318/- per household as against Rs. 127 for the non-cultivatorhousehold. The main purpose for the borrowing was for householdexpenditure and the capital expenditure on cultivation was of the agriculturist households in India have increased from Rs. 750 crores in 1951-52 to 1034 crores in 1961-62.In other words, there has been an increase of 38% in one decade.Although the level of debt per household, is comparatively low inKerala and so is the cost 553 of cultivation and yet the cultivator is living from hand to mouth and is not able to make both ends meet. Consumer's needs and distressed circumstances assume an important role in adding to total debt. The High Court has then referred to the report of Dr. C. B. Memoria and has quoted therefrom.
Apart from these facts of history the entire matter was considered exhaustively by a Constitution Bench of this Court in the case of Fatehchand Himmatlal & Ors. v. State of Maharashtra etc. (supra) where this Court referred to several reports and Krishna Iyer, J. speaking for the Court and quoting exhaustively from the various reports made the following observations :
"Quite recently the _report published by the All India Rural Debt and Investment Survey relating to 1971-72 also depicts an increasing trend in rural indebtedness. It has been estimated that the aggregate borrowings of all rural households on June 30, 1971 was Rs. 3921 crores, while the average per rural household being Rs. 503/-.
Fortythree per cent of the rural families bad reported borrowings." Quoting Professor Panikar, this Court observed as follows "Perhaps, it may be that the need for borrowing is taken for granted. But the undisguised fear that the oppressive burden of debt on Indian farmers is the main hindrance to progress is unanimous. There are many writers who depict indebtedness of Indian farmers as an unmixed evil. Thus, Alal Ghosh quotes with approbation the French proverb that 'Credit supports the farmer as th e hangman's rope the hanged." "The economic literature, official and other, on agricultural and working class indebtedness is escalating and disturbing. Indeed. the 'money-lender' is an oppressive component of the scheme." "The condition of loan repayment are as designed that the debtor is forced to sell his produce to the mahajan at low prices and purchase goods for consumption and production at high prices. In many other ways take advantage of the poverty and the helplessness of farmers and exploit them...... Unable to pay high interest and the principal, the farmers even lose their land or live from generation to generation under heavy debt." "The harmful consequences or indebtedness are economic and effect efficient farming, social in that the 'relations between the loan given and loan receivers take on the form of relations of hatred,, poisoning the social life." Dr. C. B. Memoria in his book 'Agricultural Problems of India' has stressed that rural indebtedness has long been one of the most pressing problems of India and observed as follows :
5 54 "Rural people have been under heavy indebtedness of the average money-lenders and Sahukars. The burden of this debt has been passed on from generation to generation inas- much as the principal and interest went on increasing for most of them. According to Wold, 'The country has been in the grip of Mahajans. It is the bond of debt that has shackled agriculture." Quoting the reasonableness of the restrictions this Court observed as follows :
"There was much argument about the reasonableness of the restriction on moneylenders, not the general category as suck but the cruel species the Legislature had to confront and we have at great length gone into the gruesome background of economic inequities, since the test of reasonableness is not to be applied in Vacuo but in the context of life's realities." "Money-lending and trade-financing are indubitably 'trade' in the broad rubric, but our concern here is blinkered by a specific pattern of tragic operations with no heroes but only anti-heroes and victims." "Eminent economists and their studies have been adverted to by the High Court and reliance has been placed on a report of a Committee which went into the question of relief from rural and urban indebtedness which shows the dismal economic situation of the rural and farmer and the labourers. It is not merely the problem of agricultural and kindred indebtedness, but the menacing proportions of the moneylenders' activities that have attracted the attention of the Committee.
Giving facts and figures, which are alarming.
bearing on the indebtedness amongst industrial workers and small holders, the Committee has highlighted the exploitative role of money- lenders and the high proportion of non- institutional borrowing." "The subject matter of the impugned legislation is indebtedness, the beneficiaries are petty farmers, manual workers and allied categories steeped in debt and bonded to the money lending tribe. So, in passing on its constitutionality. the principles of Developmental Juris prudence must come into play. " "A meaningful, yet minimal analysis of the Debt Act, read in the light of the times and circumstances which compelled its enactment, will bring out the human setting of the statute. The bulk of the beneficiaries are rural indigents and the rest urban workers.
These are weaker sections for whom consti- tutional concern is shown because institutional credit instrumentalities have ignored them. Money-lending may be ancilliary to commercial activity and benignant in its effects. but money-lending may also be ghastly when it facilitates no 55 5 flow of trade, no movement of commerce, no promotion of inter-course, no servicing of business, but merely stagnates rural economy, strangulates the borrowing community and turns malignant in its repercussions." "Every cause claims its martyr and if the law, necessitated by practical considerations, makes generalisations which hurt a few, it cannot be helped by the Court. Otherwise, the enforcement of the Debt Relief Act will turn into an enquiry into scrupulous and unscrupulous creditors, frustrating, through endless litigation, the instant relief to the indebted which is the promise of the legislature." Having regard to the history of economic legislation in Kerala, the sad plight of the agriculturists debtors in the State and the fact that the agriculturist debtors are, living from hand to mouth and below subsistance level, the observations made by this Court as quoted above apply to the facts of the present case with full force because similar conditions had prevailed in Maharashtra which led to the passing of the Maharashtra Debt Relief Act.
We would now examine the particular provisions of the Act which have been assailed before us to find out whether the legislature seeks to strike a just balance between the nature of the restrictions sought to be imposed on the appellants and social purpose sought to be achieved by the Act.
The relevant portions of section 20 of the Act may be extracted thus :
"20. Sales of immovable property to be set aside in certain cases : (1) where any immovable property in which an agriculturist had an interest has been sold in execution of any decree for recovery of a debt or sold under the provisions of the Revenue Recovery Act for the time being in force for the recovery of a debt due to a banking company in liquidation.
(a) on or after the 1st day of November, 1956; or (b) before the 1st day of November, 1956, but the possession of the said property has not actually passed before the 20th day of November, 1957, from the judgment debtor to the purchaser, and the decree-holder is the purchaser, then, notwithstanding anything in the Limitation Act, 1963 or in the Code of Civil Procedure , 1908 or in the Revenue Recovery Act for the time being in force, and not withstanding that the sale has been confirmed, such judgment debtor or the legal representive of such judgment-debtor may deposit one-half of the purchase money together with the costs of execution where such costs were not included in the purchase money, and apply to the court within six months from the date of the commencement of the Act to set aside the sale of the property, and the court shall, if satisfied that 10 - 1 146 SCI/77 556 the, applicant is an agriculturist, order the sale to be set aside and the court shall further order that the, balance of the pur- chase money shall be paid in ten equal half- yearly installments together with the interest accrued due on such balance outstanding, till the date of payment of each installment, at six per cent per annum, the first installment being payable within a period of six months from the date of the, order of the Court.
(2) Where any immovable property in which an agriculturisthad an interest has been sold in execution of any decree for arrears of rent or michavaram (a) during the period commencing on the 1st day of November- , 1956 and ending with the 30th day of January, 1961 and the possession of the said property has actually passed on or before the 1st day of April, 1964, from the judgment-debtor to the purchaser; or (b) before the 1st day of November, 1956 and the possession of the said property has actually passed during the period commencing on the 20th day of November, 1957 and ending with the 1st day of April, 1964 from the judg- ment-debtor to the purchaser, then, notwithstanding anything contained in the Limitation Act, 1963 or in the Code of Civil Procedure , 1908 and notwithstanding that the sale has been confirmed, such judgment-debtor or the legal representative of such judgment- debtor may deposit one-half of the purchase money together with the costs of execution, where such costs were not included in the purchase money and apply to the Court within six months from the date of the commencement of this Act to set aside the sale of the property, and the Court shall, if satisfied that the applicant is an agriculturist, order the sale to be set aside, and the Court shall further order that the balance of the purchase money shall be paid in ten equal half-yearly instahnents together with the interest accrued due on such balance outstanding till the date of payment of each installment, at six per cent per annum, the first installment being payable within a period of six months from the date of the order of the Court.
(3) Where any immovable property in which an agriculturist had no interest has been sold in execution of any decree for the recovery of a debt or sold under the provisions of the Revenue Recovey Act for the time being in force for the recovery of a debt due to a- banking company in liquidation on or after the 14th day of July, 1958 and the decree-holder is not the purchaser, then, notwithstanding anything in the Limitation Act, 1963 or in the Code of Civil Procedure
