S.T. SADIQ vs. STATE OF KERALA .

REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.3962 OF 2007 S.T. SADIQ … APPELLANT VERSUS STATE OF KERALA & ORS. … RESPONDENTS WITH CIVIL APPEAL NO.3963 OF 2007 J U D G M E N T R.F. NARIMAN, J. 1. These petitions raise questions as to the constitutional validity of the Kerala Cashew Factories (Acquisition) Act, 1974 (hereinafter referred to as “the said Act”), which has been placed th in the 9 Schedule to the Constitution of India, being entry 148 JUDGMENT th thereof. This Act came into force on 19 November, 1974 and Section 3 thereof enabled the State Government to acquire in public interest cashew factories under certain circumstances. Section 3 is set out hereunder: “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, 1 Page 1 conditions of service or fixation and payment of wages to the workers of the factory; or (b) that raw cashewnuts allotted to a cashew factory by the Cashew Corporation of India are not being processed in the 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 lay off or retrenchment, of the workers of a cashew factory by order published in the Gazette declare that the 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 therefore 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). JUDGMENT (2) The notice referred to in the proviso 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 2 Page 2 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.” 2. Identical notices were sent between 1984 and 1986 to 10 cashew factories under Section 3 of the Acquisition Act, and the said factories were acquired under the Act pursuant to those notices. Similar notices stating identical grounds were sent to 36 other cashew factories in 1988 by which the said factories were also acquired under the said Act. A specimen notice is set out hereinbelow. “No.31033/K3/84/Id 19.9.1985 NOTICE Notice under rule 3 of the Kerala Cashew Factories (Acquisition) Rules, 1974. WHEREAS it has been brought to the notice of the Government that in respect of Cashew Factory No.AP.11 located in Eruva, Kayamkulam, in Karthikappally Taluk, Alapuzha District of which Smt. T. Suhara Beevi C/o Masaliar Industries, Kilikolloor, Kollam is the owner and M/s. Janso Exports (Private) Ltd., N.N.C., Estates Vadakkevila P.O., Kollam is the occupier (proposed) there exist grounds as detailed below warranting action under section 3(1) of the Kerala Cashew Factories (Acquisition) Act, 1974 notice is hereby given to all concerned of the intention of the Government to take action under the above said section of the Act. Interested persons are hereby directed to file their objections, if any, before the Government of Kerala against the proposed action within seven days of the receipt of this notice or the publication of this notice in the newspapers, whichever is earlier or if they no desire, appear before Shri N. Gopalan Nair, Additional Director of Industries and JUDGMENT 3 Page 3 Commerce and special office for cashew societies at the District Industries Centre, Kollam at 11 a.m. on 23.9.1985 and state their objections. If no objections are received within the said period or no persons appears on the said date it will be presumed that there are no objections against the proposed action and further steps will be taken. All concerned are further informed that Shri N. Gopalan Nair, Additional Director of Industries and Commerce and Special Officer for Cashew Societies, Vikas Bhavan, Thiruvananthapuram has been authorized to prepare an inventory of all properties of the cashew factories mentioned above under section 5(1) of the Act. They are also informed that commissions of any act by any person which will diminish the value of the properties and assets of the cashew factory or the removal of any property or assets from the premises of the factory is punishable under section 13 of the Act. GROUNDS It has been reported by the Authorized officer that your factory is lying closed and that there is no possibility of its starting functioning within a period of ten days or in the immediate future. The Government are therefore, of opinion that the said situation will lead to large scale unemployment of the workers of the Cashew Factory. JUDGMENT By Order of the Governor Place: Thiruvananthapuram M. Vijayanunni Dated: 16.9.1985 Special Secretary to Governor Industries Department To, Smt. T. Suhara Beevi, C/o Musaliar Industries Kilikolloor, Kollam 4. Copy to: 1. Shri N. Gopalan Nair, Addl. Director of Industries and Commerce and Spl. Officer for 4 Page 4 Cashew Societies, Vikas Bhavan, Thiruvananthapuram. 2. Special Officer for cashew industry, Kollam for necessary action. 3. The Director of Public Relations for immediate publication in any two leading dailies having wide circulation. Forwarded/ By order Sd/- Section Officer.” 3. The 10 cashew factories that were acquired filed writ petitions in the High Court in the year 1985-1986, which were dismissed by a common judgment dated 20.1.1994. Meanwhile, the 36 factories approached the Supreme Court directly in writ petitions filed under Article 32 of the Constitution. These writ petitions were disposed of by a judgment dated 12.5.1994 reported in Indian Nut Products v. Union of India (1994) 4 SCC 269 in the following terms:- “8. It appears that in the notice, there is only reference to Section 3(1) of the Act, without disclosing whether the Government was satisfied in respect of the existence of any of the situations under clause (a), (b) or (c) thereof. No details have been mentioned in the said notice. Towards the end of the said notice, under the heading “Grounds” it has been stated that the factory was lying closed and that there was no possibility of it to start functioning within a period of ten days or in the immediate future and, therefore the Government was of the opinion that the said situation “will lead to a large scale unemployment …”. It need not be impressed that an order under Section 3(1) on the ground specified in clause (c) of sub-section (1) can be issued by the State Government only when the JUDGMENT 5 Page 5 State Government is satisfied that “there has been large scale unemployment, other than by way of lay off or retrenchment, of the workers of a cashew nut factory”. The grounds do not even state that there has been any unemployment much less large scale unemployment. The grounds simply state that the factory was lying closed and there was no possibility of its starting functioning within a period of ten days or in the immediate future, which will lead to large scale unemployment. No details have been mentioned in the said notice as to from what date each of the factories was lying closed. We are not able to appreciate as to how by a common notice all the 36 cashew factories could be summoned to show cause without giving particulars of conditions existing in different factories. The learned counsel, who appeared on behalf of the State, could not point out, as to how different occupiers or the owners of the factories could have filed objections to such common notice which did not refer to any conditions pertaining to their factories. 9. There is no dispute that the cashew nut factories do not work throughout the year but work for varying periods depending upon the supply of raw nuts etc. As such the particulars of the alleged closure of each of the factories were required to be furnished to the individual owner to meet the case against him. The object of the Act is to safeguard the interests of the workers in the cashew factories and it is to safeguard their interests that the power has been vested in the State Government to issue orders for the transfer of the factories. The transfer or vesting of the factories has to be in accordance with the procedure prescribed in the Act. As already pointed out above, the proviso to sub-section (1) not only requires a notice to be given to the occupier or the owner of the factory in respect of the intention of the Government to take action under the said sub-section, but also requires to furnish the grounds on which such action is considered necessary. In the present case, according to us, the notice does not comply with and conform to the requirement of the proviso to sub-section (1) of JUDGMENT 6 Page 6 Section 3. 10. It is well-settled that if a statute requires an authority to exercise power, when such authority is satisfied that conditions exist for exercise of that power, the satisfaction has to be based on the existence of grounds mentioned in the statute. The grounds must be made out on the basis of the relevant material. If the existence of the conditions required for the exercise of the power is challenged, the courts are entitled to examine whether those conditions existed when the order was made. A person aggrieved by such action can question the satisfaction by showing that it was wholly based on irrelevant grounds and hence amounted to no satisfaction at all. In other words, the existence of the circumstances in question is open to judicial review. 11. It cannot be disputed that serious consequences follow on the basis of the order passed by the Government on grounds mentioned in clauses (a), (b) and (c). Hence it is all the more necessary that the Government furnishes the full particulars on the basis of which the Government claims to be satisfied that there is a case for taking over the factory. As already pointed out above, there is not even an assertion in the notice that there has been any unemployment much less large scale unemployment. The ground simply says that the Government was of the opinion that the closure of the factory “will lead to a large scale unemployment”. We are of the view, that in the facts and circumstances of the present case, the notice issued to the petitioners with the so-called grounds was not in accordance with the requirement of the provisions of sub-section (1) of Section 3 of the Act. The notices issued to different petitioners are, therefore, declared to be null and void. Consequent thereto, the order dated 6-7-1988 is also quashed. JUDGMENT 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 7 Page 7 three conditions mentioned therein exists in individual factories, by following the procedure prescribed therein. 13. In order to work out the equities and the rights and liabilities which have arisen between the date of the transfer of the factories and passing of this order, we direct: (i) The possession of the factories shall be handed over to the respective owners within two weeks from the date of this order. As and when possession is given, an inventory of all the materials shall be made. (ii) The daily workers other than the members of the staff engaged by the Kerala State Cashew Development Corporation Ltd., or the State Government, as the case may be, shall be retained by the factory owners and shall not be retrenched except in accordance with law. So far as the members of the staff are concerned, it shall not be the obligation of the factory owners to retain them, in view of the interim order passed by this Court on 19-7-1988. (iii) The petitioners shall pay the same salary and emoluments which were being paid by the State Government while the factories were with the State Government. JUDGMENT (iv) Any claim for compensation in respect of any damage or loss caused to the machinery, equipments, building etc. during the period of occupation by the Kerala State Cashew Development Corporation Ltd., shall be assessed by the District Judge, Quilon. Similarly, any claim in respect of any amount for an additional construction made or additional machinery installed by the Kerala State Cashew Development Corporation Ltd., shall be determined by the District Judge, Quilon, on proper application being filed before it. (v) The Kerala State Cashew Development Corporation Ltd., shall be entitled to remove any 8 Page 8 machinery or materials installed by it within one week of preparation of the inventory; and (vi) Any disciplinary enquiry pending against any of the workmen may be continued by the owner of the factory concerned, if he chooses to do so.” 4. Based on the fact that the notice was identical also in the case of the 10 factories, by a judgment dated 10.3.1995, this Court followed the judgment in the Indian Nut Products case in the following terms: “IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO._______ OF 1995 (Arising out of the S.L.P.(C) No.8219/94) S.T. Sadiq … Appellant Vs. State of Kerala & Ors. …Respondents ORDER It is clear to us that this case is fully covered by a decision of this court in Indian Nut Products & Ors. Etc. Vs. Union of India & Ors. 1994 (4) SCC 269 and the rights of the Government to exercise power conferred on it by sub-section (1) of Section 3 of the Kerala Cashew Factories (Acquisition) Act 1974 stand preserved. In terms of the Judgment in that case, this petition too is disposed of on identical terms and the direction given by the Court in paragraph 13 of the said report shall be operative in so far as this petition is concerned. To formalize it, leave is granted and the appeal allowed accordingly. No costs. JUDGMENT Sd/- (M.M. Punchhi…J) Sd/- (K. Jayachandra Reddy..J) New Delhi, March 10, 1995.” 9 Page 9 5. It appears that so far as the 36 cashew factories are concerned, the mandamus of this Court was followed by handing them back to their respective owners by 20.5.1994. However, the same was not done so far as the 10 cashew factories are concerned, which then filed contempt petitions which were disposed of on 12.7.1996 stating: “The orders of this court passed in C.A. No.343/95 were required to be obeyed by 24.3.1995 by the respondents. Specific attention was drawn by the petitioner on 1.4.1995 for compliance with the order but, apparently, compliance was kept delayed because change of law was contemplated which ultimately fructified by an Ordinance on 16.8.1995. Though it would have been desirable for the respondents to carry out the order of this court, their taking shelter in the contemplated Ordinance is not totally out of place. They are guilty, though, of contempt for non-compliance for a small period. Holding so, we accept their apology as tendered in the affidavits filed in response. The contempt proceedings are, thus, terminated.” JUDGMENT 6. The promised Ordinance was then brought in which became the Kerala Cashew Factories Acquisition (Amendment) Act of 16.8.1995. This Act was brought into force with effect from 1.5.1984 so as to cover all 46 acquisitions that had been made under the Principal Act. This Act is a short Act of six Sections and a Schedule. We are concerned with Section 3A and Section 6 10 Page 10 which are set out hereinbelow: “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 vent 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.” “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. JUDGMENT (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. 11 Page 11 (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 principal Act by this Act had been in force at all material times.” 7. The schedule to the Act contains only the 10 cashew factories that had been acquired between 1984 and 1986. 8. Mr. Krishnan Venugopal, learned counsel appearing on behalf of the some of the petitioners raised three points before us. He argued that first and foremost Section 6 of the Amendment Act is bad as it seeks to directly nullify the judgments of this Hon’ble JUDGMENT Court dated 12.5.1994 and 10.3.1995 without changing the basis of the law. For this proposition he cited several judgments including State of T.N. v. M. Rayappa Gounder (1971) 3 SCC 1, Madan Mohan Pathak & Anr. v. Union of India & Ors. 1978 (2) SCC 50, Virender Singh Hooda & Ors. v. State of Haryana & Anr. 2004 (12) SCC 588 and State of Tamil Nadu v. State of Kerala & Anr. 2014 (6) SCALE 380. His second point was that 12 Page 12 considering that all the notices served were in identical terms, and considering that the objects and reasons of the 1995 Amendment Act placed all 46 factories at par, Section 6 of the Act violated Article 14 inasmuch as it discriminated between the 10 factories which were sought to be taken over and the 36 factories which were not sought to be taken over by the Amendment Act. The third point he argued before us was that in any case Section 6 of the Amendment Act read with Section 9 of the original Act was an independent stand alone provision. Section 6 of the Amendment th Act was not in the 9 Schedule and since it referred inter alia to Section 9 of the original Act, it was legislation by incorporation and, therefore, Section 9 being part of the Amendment Act would be open to attack on the ground that it violated Article 300 A of the Constitution of India, in that the basis for awarding compensation for land that is acquired along with the cashew factories is on a JUDGMENT completely irrelevant and arbitrary date, namely, the market value of the land on the date of setting up of the cashew factory. He pointed out to us on facts that some factories were granted as little as Rs.58 as compensation for acres of land taken over merely because the cashew factory that was set up on the land may have been set up many many years ago. 9. In fact, he pointed out on his facts that his factory building 13 Page 13 was only on 97 cents and 1.86 acres was sought to be taken over despite the fact that this land was neither used nor was necessary for the working of the factory. 10. Mr. Giri appearing for the State of Kerala replied to each one of these three contentions. In his view, so far as the first contention is concerned, he pointed out the judgment of this Court in the Indian Nut Products case and said that only a notice had been struck down and the Court had left it open to the State to take over in future on the basis of relevant material any cashew factory if the conditions stated in Section 3(1) of the principal Act were satisfied. According to him, there was no question of retrospectively amending the Act so as to remove the basis of any earlier decision as the Act had not been touched by the Supreme Court. He, therefore, argued that Section 6 could be viewed as a provision under which cashew factories could be acquired in JUDGMENT public interest apart from being acquired under Section 3 or Section 3A of the Act by merely putting such cashew factories into the Schedule contained in the Amendment Act. So far as point 2 is concerned, he argued that the High Court was correct in saying that there is an intelligible differentia between cashew factories taken over by the Cashew Development Corporation on the one hand (the 36 factories) and the 10 factories taken over by 14 Page 14 CAPEX, which is an apex body consisting of cooperative societies of workmen. So far as point 3 is concerned, he replied by saying that Article 31B would bar any challenge to the compensation provision that is Section 9 of the main Act. Section 6 merely refers to Section 9 and, therefore, legislation is not by incorporation but by reference. 11. Having heard learned counsel for both parties, we think Mr. Venugopal is on firm ground on both points 1 and 2 argued by him. We do not feel it necessary to enter upon a discussion on point 3 inasmuch as the Civil Appeals before us have to be allowed on points 1 and 2. 12. Point 1 . 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 JUDGMENT 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 of attainder will revisit us to enable legislatures to pass legislative judgments on matters which are inter-parties. Interestingly, in England, the last such bill of attainder passing a legislative judgment against a man called Fenwick was passed as far back as in 1696. A century later, the 15 Page 15 US Constitution expressly outlawed bills of attainder [see: Article 1 Section 9]. 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. This Court has struck down such legislation in a number of judgments. Thus, in State of T.N. v. M. Rayappa Gounder 1971 (3) SCC page 1, Section 7 of the Madras Entertainment Tax Act, JUDGMENT 1939 was struck down. The Court held: “ 3. The question as to the power of the assessing authority to reassess the receipts that had escaped assessment under the Madras Entertainments Tax Act, 1939, had come up for consideration before the High Court of Madras in R. Sundararaja Naidu v. Entertainment Tax Officer [ WP No. 513 of 1963 (Madras)] . Therein the High Court of Madras held that there was no power to reassess under that Act. Thereafter the State Legislature enacted the Act. The Act among other provisions contains Section 7, a provision relating to validation of assessment and 16 Page 16 collection of certain taxes. That section reads:

17 Page 17 incomplete and not exercisable in the absence of prescription as to limitation contemplated by the section and hence Section 7 of the Act fails to validate the assessments in question. We do not propose to go into that question as in our opinion Section 7 of the Act is invalid insofar as it attempts to validate invalid assessments without removing the basis of its invalidity.” Similarly, in D. Cawasji and Co. Mysore v. The State of Mysore & Anr., 1985 (1) SCR 825, Section 2 and 3 of Mysore Sales Tax (Amendment) Act, 1969 were struck down in the following terms:

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20 Page 20 provisions of the Amendment Act of 1981 which merely authorise the Assistant Collector of first grade to decide the claims to be made before him claiming certain lands or immovable properties as ‘shamilatdeh’ vesting in Panchayats ignoring the judicial orders or decrees, by which any right, title or interest of private parties in such lands or immovable properties are recognised, are unconstitutional, requires to be upheld. Consequently, the provisions of the Amendment Act of 1981, insofar as they are intended to operate retrospectively for nullifying the adjudications made by civil courts prior to that Amendment Act, are invalid, inoperative and unconstitutional. However, the provisions in the Amendment Act of 1981, can undoubtedly operate prospectively for adjudicating upon claims to ‘shamilatdeh’ in proceedings initiated subsequent to the commencement of that Act, if they do not, in any way, disturb the finality of adjudications made earlier.” Equally, in Re Cauvery Water Disputes Tribunal, 1993 Supp (1) SCC 96, this Court after referring to two earlier judgments stated: “76. The principle which emerges from these authorities is that the legislature can change the basis on which a decision is given by the Court and thus change the law in general, which will affect a class of persons and events at large. It cannot, however, set aside an individual decision inter partes and affect their rights and liabilities alone. Such an act on the part of the legislature amounts to exercising the judicial power of the State and to functioning as an appellate court or tribunal.” JUDGMENT Similarly, in S.R. Bhagwat v. State of Mysore, (1995) 6 SCC 16, this Court held: 21 Page 21

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24 Page 24 facts from which this legal consequence would flow. A legal consequence cannot be deemed nor, therefrom, can the events that should have preceded it. Facts may be deemed and, therefrom, the legal consequences that follow. 17. Sections 4 to 7 remained on the statute book unamended when the Validating Act was passed. Their provisions were mandatory. They had admittedly not been followed. The defect of not following these mandatory provisions in the case of the villages of Raipura and Ummedganj was not cured by the Validating Act. The curing of the defect was an essential requirement for the passing of a valid validating statute, as held by the Constitution Bench in the case of Prithvi Cotton Mills Ltd. [(1969) 2 SCC 283 : (1970) 1 SCR 388] It must, therefore, be held that the Validating Act is bad in law and it must be struck down.” 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) JUDGMENT or 3A 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 5A of the Land Acquisition Act or any other safeguard such as a resolution of the legislative 25 Page 25 assembly supporting such acquisition as in Section 3A. 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. It is clear, therefore, that Section 6 directly seeks to upset a final judgment inter-parties and is bad on this count and is thus declared unconstitutional. 13. Point 2 . The Statement of Objects and Reasons for the 1995 JUDGMENT Amendment Act reads as follows:- “STATEMENT OF OBJECTS AND REASONS The Kerala Cashew Factories (Acquisition) Act, 1974 empowers the Government in the public interest to acquire certain cashew factories and to provide employment to the workers who have been rendered unemployed and to secure to them just conditions of service. 26 Page 26 2. The Government have acquired certain cashew factories by invoking section 3 of the Kerala Cashew Factories (Acquisition) Act, 1974. The above action of the Government was challenged by the original owners. In Indian Nut Product-Vs-Union of India reported in 1994 (2) KLT 598 the Supreme Court had upheld the validity of the Kerala Cashew Factories (Acquisition) Act, 1974 however the Court declared certain notifications issued by the Government under Section 5(1) of the aforesaid Act as null and void. Based on the above decision of the Supreme Court, the Kerala High Court disposed of certain petitions pending in the High Court against acquisition under the said Act and directed the Government to hand over the factories to the original owners. 3. The main ground for quashing the notifications was that the Government had not given proper notice as required under section 3 of the Act and that the parties were not given sufficient opportunity of being heard before final orders were passed by the Government. 4. These factories are now under the management of the Cashew Development Corporation and also CAPEX. In case the factories are to be handed over to the petitioners in the OP’s as stipulated by the Court, the above mentioned institutions and Government will suffer financially, amounting to crores of rupees. JUDGMENT 5. If the cashew factories are handed over to its previous owners based on the directions of the Court, owners may not be in a position to start work in the near future for the reason that they are not in Cashew trade for a long period and due to paucity of raw cashew in the world market. There will be large scale unemployment among the workers in Cashew Industry. There will also be scored economic disorders in the Southern Districts of the State. Where there is concentration of Cashew Factories. 6. Therefore to tide over the situation Government 27 Page 27 intends to arm with a new legislation to acquire certain factories from the date of original notification for acquisition. 7. The Bill seeks to amend the Kerala Cashew Factories (Acquisition) Act, 1974, to achieve the above objects.” A bare reading of the Statement of Objects of the Amendment Act shows that the Kerala Legislature wished to interfere with two judgments of the Supreme Court making no distinction between factories that were managed by the Cashew Development Corporation (the 36 factories) and CAPEX (the 10 factories). It is interesting to note that apart from the Government suffering financially (if the factories are to be handed back), there will be large scale unemployment among workers in the cashew industry. JUDGMENT 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 acquisition are run by the Cashew Development Corporation or CAPEX regard being had to 28 Page 28 the object sought to be achieved – namely to avoid unemployment of cashew workers. Whether 36 factories run by the Cashew Development Corporation 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 the Cashew Development Corporation 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 JUDGMENT 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. 14. The appeals are allowed. The judgment of the High Court is set aside and it is ordered that the cashew factories and the land 29 Page 29 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. …………………...J. (Ranjan Gogoi) …………………...J. (R.F. Nariman) New Delhi; February 04, 2015. JUDGMENT 30 Page 30 ITEM NO.1A COURT NO.7 SECTION XIA (for Judgment) S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS Civil Appeal No(s). 3962/2007 S.T. SADIQ Appellant(s) VERSUS STATE OF KERALA & ORS. Respondent(s) WITH C.A. No. 3963/2007 Date : 04/02/2015 These appeals were called on for pronouncement of judgment today. For Appellant(s) Mr. Krishnan Venugopal, Sr. Adv. Mr. Deepak Prakash, Adv. Mr. Biju P. Raman, Adv. Mr. Subhash Chandran K.R. Adv., Ms. Shruti Srivastava, Adv. Ms. Yogamaya M.G., Adv. For M/s. T. T. K. Deepak & Co., Advs. For Respondent(s) Mr. V. Giri, Sr. Adv. Ms. Bina Madhavan, Adv. Mr. Somiram Sharma,Adv. Mr. Vishnu Sharma,Adv. JUDGMENT Mr. G. Prakash, Adv. Mr. K. R. Sasiprabhu, Adv. Mr. M. Vijaya Bhaskar, Adv. Hon'ble Mr. Justice Rohinton Fali Nariman pronounced the reportable judgment of the Bench comprising Hon'ble Mr. Justice Ranjan Gogoi and His Lordship. The appeals are allowed. The judgment 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 31 Page 31 the Amending Act must be handed back within a period of eight weeks from the date on which this judgment is pronounced in terms of the signed reportable judgment. (R.NATARAJAN) (INDU BALA KAPUR) Court Master Court Master (Signed reportable judgment is placed on the file) JUDGMENT 32 Page 32