PETITIONER:
OM PRAKASH SUD ETC. ETC.
Vs.
RESPONDENT:
STATE OF J & K & ORS. ETC. ETC.
DATE OF JUDGMENT16/02/1981
BENCH:
ISLAM, BAHARUL (J)
BENCH:
ISLAM, BAHARUL (J)
PATHAK, R.S.
REDDY, O. CHINNAPPA (J)
CITATION:
1981 AIR 1001 1981 SCR (2) 841
1981 SCC (2) 270 1981 SCALE (1)314
ACT:
Constitution of India 1950, Article 14-Allotment of
resin-Industrial policy decision of State-Object of-Balanced
economic and regional development of State-Selection of
quota seekers-Article 14 whether violated.
HEADNOTE:
The petitioners in their writ petitions to this Court
alleged that they were carrying on small scale industries
for the manufacture of resin and turpentine oil and that
they applied to the Government for allotment of resin for
their industries but the Government referring to their
policy decision of March 20, 1978 refused to make any
allotment, and that they purchased raw material from the
open market and managed to run their industries. They
further alleged that while they were refused allotment of
supply of raw-materials, the State, respondent No. I made
allotments to respondent nos. 4 to 16 n although most of
them were not even formally registered at the time of making
the impugned orders of allotment and that they were
consequently adversely discriminated against, while
respondent nos. 4 to 16 were favoured and as such the
impugned orders of allotment were liable to be struck down "
violative of Article 14 of the Constitution of India.
The State, respondent No. 1 contested the writ
petition, denied the material allegations of the petitioners
and alleged that the allocations were made in conformity
with the State Industrial Policy decision of securing the
balanced economic and regional development of the State that
there was a preponderance of industries in the Jammu Region,
and that the industries of the petitioners as well as
respondent nos. 4 to 16 were also functioning in that
region. Allotments of resin were made districtwise, 110
applications were received and considered and allotment was
made to respondents nos. 4 to 16.
On the question whether the orders of the 1st
respondent allotting quotas of resin to respondent nos. 4 to
16 were arbitrary and violative of Article 14 of The
Constitution.
^
HELD : 1(i) Respondent No. 1 has not explained as to
how and on what basis if any, the allotments were made by
the impugned orders in favour of the new allottees
respondent nos. 1 to 16 whose industries were located in the
Jammu region. [847 C]
(ii) Although the State Government has taken reliance
on the State Industrial Policy decision, it does not appear
to have followed it in practice, except in the cases of five
respondents. No reasonable basis had been adopted in making
the allotments in favour of the new allottees and denying
the allotments to the petitioners. [84913-F]
842
2. The rule of equality does not mean mathematical
equality. It permits of practical inequalities. What is
needed is that the selection of quota seekers as in the
instant case should have a rational relation lo the object
sought lo be achieved in the industrial policy decision of
the State. If the selection or differentiation is arbitrary
and lacks a rational basis it offends Article 14. [849 D]
3. "Equality before the Law" or "equal protection of
the laws`' within the meaning of Article 14 of the
Constitution of India means absence of any arbitrary
discrimination by the law or in their administration. No
undue favour to one or hostile discrimination to another
should be shown. A classification is reasonable when it is
not an arbitrary selection but rests on differences
pertinent to the subject in respect of which the
classification is made. The classification permissible must
be based on some real and substantial distinction, a just
and reasonable relation to the objects sought to be attained
and cannot be made arbitrary and without any substantial
basis. [848 H-849 A]
State of West Bengal v. Anwar Ali, [19521 SCR 284
referred to.
JUDGMENT:
ORIGINAL JURISDICTION: Writ Petition Nos. 3464-65, 5908
& 3231 of 1980.
(Under Article 32 of the Constitution)
S. N. Kacker, K. N. Bhatt and Surendara Raju for the
Petitioners in W. P. Nos 3464-65/80 and 5908/80.
Soli J. Sorabjee, E. C. Agarwala, R. Satish and V. K.
Pandita for the Petitioner in WP 3231,/80.
L. N. Sinha, Att. Genl. and Altaf Ahmed for R. 1. in
WPs 3464 65/80.
Y. S. Chitaley and Vineet Kumar for R. 14 in WP 3231/80
and for R. 2 in WPs 3464-65/80.
R. P. Bhatt and N. R. Chaudhary for R. 4 in WP 3464/80.
P. R. Mridul and Naunit Lal for R. 7 in WP 3231/80 and
for R. 2 in WP 3464-65/80.
Anil Dev Singh and Ashok Grover for R. 15 in WP 3231/80
and R. 3 in WPs 3464-65/80.
S. K. Bhattacharya and Suresh Sethi for R R. 6 and 12
in WP 3464 65/80.
Satish Vij for R. 15 in WP 3464-3465/80.
S. Balakrishnan and S. K. Bhattacharya for R. 16 in WP
No. 3231/80.
The Judgment of the Court was delivered by
BAHARUL ISLAM, J.-BY these writ petitions under Article
32 of the Constitution the petitioners have challenged the
orders of the
843
first respondent (the State of Jammu and Kashmir) allotting
quotas of resin to respondents. According to the petitioners
these orders denying similar treatment to them are arbitrary
and violative of Article 14 of the Constitution of India.
2. The material facts in the four petitions are
similar. The industries of which the petitioners are
partners are admittedly small scale industries for the
manufacture of resin and turpentine oil. The industries of
the petitioners’ in Writ Petitions Nos. 3465 of 1980 and
3231 of 1980 were provisionally registered but revalidated
for short periods. The industry of the petitioner in Writ
Petition No. 3464 of 1980 was provisionally registered,
revalidation was applied for but was not granted. The
industry of the petitioner in Writ Petition No. 5908 of 1980
was formally registered. It appears that the petitioners
were applying to the Government for allotment of resin as
well as raw material for their industries but the Government
referring to their policy decision of March 20, 1978 refused
to make any allotment of Oleo resin to them. The petitioners
in Writ Petition Nos. 3464 and 5908 of 1980 have alleged
that they purchased raw-material from the open market and
somehow managed their industries to run for a certain
period.
3. Resin is admittedly a forest product extracted from
“Chir trees”. It has been alleged that only three States of
India, namely, Himachal Pradesh, Uttar Pradesh and Jammu and
Kashmir have Chir forests. The petitioners have alleged that
the State of Himachal Pradesh and Uttar Pradesh stopped
selling resin for the last several years in view of
establishment of factories in public and joint sectors and
that the State of Jammu and Kashmir was selling resin by
public auction. Sometime after October 1978 the State of
Jammu and Kashmir, it has been further alleged, virtually
created monopoly in favour of three existing industrial
units and committed to supply them about 17,000 M. T. of
resin for long time to come. There is a Public sector unit
in Jammu which consumes about 3,000 tons of resin per year.
Several small scale industries, according to petitioners,
were assured supply of resin even as late as 1979
notwithstanding the Government’s aforesaid industrial
policy. In such a situation, being unable to procure raw-
materials for their industries, the petitioners approached
the relevant authorities including the Deputy Minister of
Industry and the Chief Minister of Jammu and Kashmir for
allotment of raw-materials but to no avail. (For the sake of
convenience we shall hereinafter refer only to the
respondents and Annexures in W. P. No. 3231 of 1980). The
petitioners further allege that while they were refused
allotment of supply of raw- materials, respondent No. 1 made
allotments to respondents No. 4 to 16 (hereinafter called
“allottee respondents”) although most of them
844
were not even formally registered at the time of making the
impugned orders of allotment.
The petitioners contend that in the circumstances they
were adversely discriminated against while respondents Nos.
4 to 16 were favour ed and as such the impugned orders are
liable to be struck down as , violative of Article 14 of the
Constitution of India.
4. The impugned orders have been annexed as Annexures N
to Z-1. The letter of allotment (Annexure ‘X’) in favour of
M/s. Sud Pine Industries (respondent No. 27) is in the
following terms:-
“Sub: Supply of resin to M/s. Sud Pine Industries
Kunwani for their factory at Talab Jammu.
Government Order No. 175 DIC/1980 dated 30-5-1980.
In partial modification of Government order No. 2. DIC
of 1979 dated 20-1-1979 sanction is accorded to the supply
of crude (oleo) resin 700 tonnes per annum by the Forest
Deptt. to M/s. Sud Pine Industries for their factory at
Kunjwani Talab Jammu on the terms and conditions specified
in the above said order. The supply of resin shall be
subject to its being reviewed by the Government with due
regards to its availability from year to year.
By order of the Govt. of J & K.
Sd/-
(Sheikh Ghulam Rasool)
Secretary to Government.”
The orders as per annexures L to W in favour of respondents
17 to 26 are identical in material parts. It will be
sufficient if the material portion of Annexure N is quoted.
It runs thus.
“Sanction is accorded to the supply of crude
(oleo) resin by the Forest Department to M/s. Kashmir R
& T Works, Srinagar, for their factory at Srinagar,
subject to the terms and conditions of the agreement to
be entered into between the Forest Department and the
party and on the following specific conditions:-
1. The Forest Department will supply Crude
(oleo) resin @ 700 TPA to the firm from the
date the Unit is formally registered subject
to its being reviewed with due regard to its
availability from year to year;
845
2. The resin will be supplied @ Rs. 320/- per
quintal, unless otherwise reviewed on year to
year basis.
3. The cost of empty tin will be charged @ Rs.
5/- per tin in addition to the above rate;
4. By order of the Government at Jammu and
Kashmir.
Sd/- Sheikh Ghulam Rasool
Secretary to Government.”
(emphasis added)
5. It is obvious that the industries of these
respondents were not formally registered at the time of the
impugned orders of allotment.
6. The State of Jammu and Kashmir (Respondent No. 1)
have filed a counter affidavit. They have not denied the
material allegations of the petitioners but they say that
the allocations have been made in order to implement the
industrial policy of the State Government as enunciated in a
“Report of the Development Review Committee, Jammu and
Kashmir” a committee headed by Shri L. K. Jha, the Governor
of the State. Respondent No. 1 has quoted from the report
the ‘Goals’ of the industrial policy which read:
“The balanced economic development of the State
will obviously, be one of the foremost concerns of the
Government. They would like to emphasis maximum self-
sufficiency and self-reliance consistently with the
need to promote the requisite and desirable degree of
inter-dependence with other parts of the country. ‘The
objective will be to secure the most prudent and
beneficial utilization of the natural resources and
skills peculiar to this State; to achieve the maximum
possible F rate of economic growth, consistently with
the need to secure a degree of balanced regional
development as well as balance between the rural areas
and the urban, to maximise State per capita income, and
to generate the maximum employment potential.
Many areas of the State are as cut off, isolated
and poor as they were at the dawn of independence. We
have to improve the living standards in these specially
backward areas for whom in terms of the quickest mode
of transportation, Srinagar is more distant than the
State is from Kerala.
Many sections of the community similarly, like
Scheduled Castes; Gujarat and Bakarwalas and other
backward class need to be assisted in their speedy
uplift.
846
Ladakh needs a visible acceleration of the tempo
of its development so that our people in this far flung
and difficult frontier area can realise the full fruits
of development in the shortest possible time.”
Respondent No. 1 has given the district wise break-up
of the applications received from different regions. It is
as follows:
Jammu - 63
Udaypur - 10
Rajouri - 1
Poonch - 1
Doda - 1
Kathua - 9
Anantnag - 2
Srinagar - 11
Outsiders - 12
----------
GRAND TOTAL 110
Applications
-----------
They have also shown the allotments of resin
districtwise. The industries of the respondents No. 4 to 16
are also small scale industries. The break-up of the small
scale industries as given in Annexure R.II (in W.P. No.
3464) shows that Jammu has the largest number of units
namely, 10, Second comes Srinagar with 4, then come Udampur
with 3, Kathua (in Jammu Division), Anantnag and Baramulla
(in Kashmir Division), with one each. Rajouri in Jammu
Division has none. It appears that the industries of the
present applicants are also in the Jammu region and those of
respondents No. 4 to 16 also appear to have been located in
the Jammu region. In their affidavit at para 3 respondent
No. 1 has stated that all the applications for allocation of
resin were considered from time to time at various levels by
the State Government and it was decided on May 30, 1980 as
follows:
(a) The allotment of resin to the existing unit
should be rationalised;
(b) Applications received from various districts
be considered for allotment of resin.
The State Government have submitted that they made no
promise of supply of raw-material in favour of any of the
petitioners. The petitioners have submitted, in our opinion,
correctly, that as there were already 10 units functioning
in small scale sector in the Jammu region and inasmuch as
the allottee respondents’ industries were also located in
the Jammu region, allocations in their favour would be
inconsistent with the Government’s industrial policy.
847
7. In the instant case, respondent No. 1 as well as the
other parties has taken reliance on their industrial policy
statement as stated above. We have already quoted the
relevant portions of the State Industrial policy statement.
The Government have stated that they have considered all the
110 applications including those of the petitioners coming
from industrialists of different parts of the country. They
have stated, and their statement is corroborated by the
documents, that there is preponderance of industries in the
Jammu region and industries of the petitioners as well as
respondents No. 4 to 16 were also functioning in the same
region. Respondent No. 1 has not explained as to how and on
what basis, if any, the allotments were made by the impugned
orders in favour of the new allottees whose industries were
located in the Jammu region.
Pawan Kumar Sharma, the petitioner in W.P. No. 3231 of
1980 states that his industry was provisionally registered
under the Provisional Registration Certificate dated 29-1-
1976. It was further extended for further short periods. He
says that as there was assurance from the authorities that
raw-materials will be allotted to him after he completed the
installation of requisite machinery.
The J. K. Resin and Turpentine Industries of petitioner
Om Prakash Sud, was provisionally registered in the year
1975. He was also approaching the Government from time to
time to get allotment of the raw-materials but got no
favourable reaction from the Government. He states that he
had already established his factory and got it insured for a
sum of Rs. 6.80 lakhs. He obtained raw-material from the
open market and was running his industry.
Petitioner, Ravindra Dutt of M/s. Dinesh Resin and
Turpentines in W.P. No. 3465 of 1980 alleges that his
industry was provisionally registered on 25-10-1975 which
was extended upto April, 1979. Letter of 31st May, 1979
shows that his industry was later on formally registered as
a small unit. This factory was producing resin and
turpentine out of the resin which he purchased from open
auction He was approaching the Government from time to time
to get requisite quantity of raw-materials but failed to get
it.
Petitioner, Shamlal Kapoor, Director of Jammu Resin
Enterprises Private Limited, alleges that his industry was
formally registered with the Government of J & K. He alleges
that his industry was functioning for a long time and trying
to get necessary quota of raw-materials from respondent No.
1. He was approaching the Government to get requisite quota.
Sud Pine Industries, was provisionally registered on 10-3-
1978 and formally registered on 10-10-1978. It appears from
Annexure N, in respect of respondent M/s Kashmir R & T Works
848
(respondent No. 17), Annexure O in respect of M/s. Sun Shine
R & T Industries (respondent No. 18), Annexure P in respect
of M/s. Woolan Paints and Chemicals Scopore (respondent No.
19) Annexure Q in respect of M/s. Pine Wood Products Company
(respondent No. 20), Annexure R in respect of M/s. Haji Mast
Ali Slaria (respondent No. 21), Annexure S in respect of
M/s. Phyto Chemicals (respondent No. n 22), Annexure T in
respect of M/s. New Himalayan Paints and Chemicals
(respondent No. 23), Annexure U in respect of M/s. S. K.
Chemical (respondent No. 24), Annexure V in respect of M/s.
Rajindra R & T (respondent No. 25) and Annexure W in respect
of M/s. Bharat Paints and Chemicals (respondent No. 26) that
the allotments were made in their favour “from the date the
unit is formally registered” which shows that industries
were not even registered at the time of the impugned orders
of this allotment. Respondent M/s. Rajindra R & T
Industries, Udhampur, appears to stand on a different
footing. He appears to have fulfilled all the conditions
required for allocation of resin in accordance with the
policy of the State of J & K. The industry is an experienced
one and the factory started production of resin and
turpentine at Hoshiarpur since 1948. It is a firm registered
under the Indian Partnership Act and has long experience in
the business including resin and turpentine since 1948. The
industry set up a factory in 1970 in the rural industrial
estate near Udhampur which is a backward area. The industry
was provisionally registered in 1970 and formal registration
was granted on 29-2-1974. It applied for adequate quantities
of raw-materials and was allotted only 200 tons although it
had been sanctioned 1500 per ton per annum since 1975.
Respondent M/s. Sud Pine Industries, M/s. Kashmir R & T
Works, Bakshi Resin & Turpentine and M/s. K. C. Soni Bakshi
also appear to be on different footings. It appears from
Annexures ‘X’ and ‘Y’ that the first two industries have
already been formally registered. They are existing units
having already started production. So far as respondent M/s
Bakshi Resin and Turpentine is concerned, it had already set
up factory and started production. It was provisionally
registered as early as 1976 and the unit is located in a
backward area. So far as respondent K. C. Soni Resin &
Turpentine is concerned, it was formally registered on 19-4-
79. This unit is located in a remote backward area of the
State.
8. “Equality before the Law” or “equal protection of
the laws” within the meaning of Article 14 of the
Constitution of India means absence of any arbitrary
discrimination by the law or in their administration. No
undue favour to one or hostile discrimination to another
should be shown. A classification is reasonable when it is
not an arbitrary selection but rests on differences
pertinent to the subject
849
in respect of which the classification is made. The
classification permissible must be based on some real and
substantial distinction, a just and reasonable relation to
the objects sought to be attained and cannot be made
arbitrarily and without any substantial basis.. ……..
(See State of West Bengal v. Anwar Ali. The classification
must not be arbitrary but be rational, that is to say, it
must not only be based on some qualities or characteristics
which are to be found in all the persons grouped together
and not in others who are left out. Those qualities or
characteristics must have a reasonable relation to the
object of the law. In order to pass the test, two conditions
must be fulfilled, namely, (1) that the classification must
be founded on an intelligible differentia which
distinguishes those that are grouped together from others,
and (2) that differentia must have a rational relation to
the object sought to be achieved by the Act. The differentia
which is the basis of the classification and the object of
the Act are distinct things and what is necessary is that
there must be a nexus between them.
We are not unaware that the rule of equality does not
mean mathematical equality and that it permits of practical
inequalities. But what is needed is that the selection of
quota seekers as in the case in hand should have a rational
relation to the object sought to be achieved in the
industrial policy decision of the State. If the selection or
differentiation is arbitrary and lacks a rational basis it
offends Article 14.
9. In the instant case, although the State Government
has taken reliance on the State Industrial Policy decision
referred to above, they do not appear to have followed it in
practice, except in the cases of the five respondents
referred to above. In fact no reasonable basis has been
adopted in making the allotments in favour of the new
allottees and denying allotments to the petitioners. In the
circumstances the petitions are partly allowed, the impugned
orders of allotments except in favour of respondents, M/s
Rajindra Resin and Turpentine Industries, M/s Sud Pine
Industries, M/s Kashmir R & T Works, M/s Bakshi Resin &
Turpentine and M/s K. C. Soni Resin & Turpentine are
quashed. The petitions are partly allowed. The Rules are
made absolute except as against these five respondents. The
respondent. No. 1, the State of Jammu and Kashmir, is
directed to make the other allotments of the raw-materials
to the applicants in the light of the observations made
above.
10. Respondent No. 1 shall pay costs of Rs. 100.00 to
each of the petitioners.
N.V.K. Petition partly allowed.
850