JUDGMENT
Paripoornan, J.
1. In this batch of 19 cases, common questions arise for consideration. When the original petitions came up for arguments, O.P. No. 5674 of 1981 was treated as the main case. Mr. S. Narayanan Poti, Advocate argued the matter. Counsel appearing in the other cases adopted his arguments. Mr. R. Raya Shenoi, who appeared in O.P. Nos. 3, 3382, 3835 of 1981, 24 and 662 of 1982, adopted the arguments of Mr. Narayanan Poti. Mr. Raya Shenoi elaborated the arguments by stressing on more particulars. On behalf of the State, Senior Government Pleader Mr. N. Sankara Menon argued the matter. The third respondent — Malabar Market Committee –and the fourth respondent — the Secretary, Malabar Market Committee — were represented by Mr. K. P. Dandapani, Advocate.
2. As stated O. P. No. 5674 of 1981 was treated as the main or leading case. In this batch of cases, the challenge is against the validity of the Madras Commercial Crops Markets Act, Act 20 of 1933, as amended by the Kerala Acts 5 of 1964 and 2 of 1981. The petitioner pray that this Court may be pleased to declare that the provisions of the Madras Commercial Crops Markets Act, 1933, as amended from time to time, and the licence fees and other fees collected under the said Act and the Rules and Bye-laws framed thereunder are unconstitutional, illegal and void and to strike down the said provisions. The petitioners also pray for a writ or direction to command the respondents to forbear from enforcing the Madras Commercial Crops Markets Act, 1933 as amended from time to time. There is also a prayer to command respondents 2 to 4 to refund to each of the petitioners the fees collected by them under Section 11 of the Act from 15-11-1980 till date.
3. There are 12 petitioners in O.P. No. 5674 of 1981. Eleven of them are in Kozhikode and one in Palakkad. Some of them are dealers in coconut and copra and some are oil millers. The petitioners purchase coconut or copra, as the case may be, from local producers or dealers and sell them outside. Some of them purchase cocount or copra for crushing oil in their mills. It is common ground that coconut products and arecanuts were included within the ambit of “commercial crops’ for the purpose of Act 20 of 1933, by notification dated 27-6-1949 of the Government of Madras. The first respondent State directed the third respondent –Malabar Market Committee — to establish markets at Parambra, Kanhangad, Sanka-ramkulam, Thalakkalathur, Othukkungal and Vatanappally and it was so done.
4. The salient features of Act 20 of 1933, for the limited purpose of resolving the controversy in this batch of original petitions, are as follows ; The Preamble and title to the Act, Sections 2(ia), 2(iii), 2(iv), 2(v), 4A, 5, 11, 13 and 17 are some of the important provisions.
“An Act to provide for the better regulation of buying and selling of commercial cropes and the establishment of markets for commercial crops in the Presidency of Madras.
WHEREAS it is expedient to provide for the better regulation of the buying and selling of commercial crops in the Presidency of Madras and for that purpose to establish markets and make rules for their proper administration.
AND WHEREAS the previous sanction of the Governor General has been obtained to the passing of this Act; It is hereby enacted as follows :–
1. Short title and extent:– (1) This Act may be called The Madras Commercial Crops Markets Act, 1933.
(2) It extends to the whole of the Presidency of Madras.
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2(ia) ‘commercial crop’ means cotton, groundnut or tobacco (and includes any other crops or product, notified by the State Government in the Fort. St. George Gazette as a ‘commercial crop’ for the purposes of this Act.
2(iii) ‘market’ means a market established under Section 4A.
2(iv) ‘notified area’ means any area notified under Section 4; (as altered by the notification or notifications, if any, under Section 5A).
2(v) ‘prescribed’ means prescribed by rules or by-laws made under this Act.
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4A. Establishment of market committee :–
(1) The State Government shall establish a market committee for every notified area. It shall be the duty of the market committee to enforce the provisions of this Act and the rules and bye-laws made thereunder in such notified area.
(2) Every market committee shall establish in the notified area such number of markets providing for such facilities, as the State Government may from time to time direct, for the purchase and sale of the commercial crop or crops concerned.
5. Trading in commercial crops in notified area:– (1) No person shall within a notified area, set up, establish or use, or continue or allow to be continued, any place for the purchase or sale of a notified commercial crop except under and in accordance with the conditions of a licence granted to him by the Collector;
Provided that after the establishment in such area of a market for the purchase and sale of a notified commercial crop, no licence for the purchase or sale of such commercial crop shall be granted or renewed in respect of any place situated within such distance of the market as may from time to time be fixed by the State Government.
Provided further that the market committee may exempt from the provisions of this sub-section any person who carries on the business of purchasing or selling any commercial crop in quantities not exceeding those prescribed by rules made under this Act.
Provided also that a person selling a commercial crop which has been grown by him or a co-operative society registered or deemed to be registered under the Madras Co-operative Societies Act, 1932, selling a commercial crop which has been grown by any of its members shall be exempt from the provisions of this sub-section but the State Government may withdraw such exemption in respect of any such person or co-operative society or all of them.
(2) Nothing contained in Sub-section (1) shall apply to a person purchasing for his private use a commercial crop in quantities not exceeding those prescribed by rules made under this Act.
(3) No person shall within a notified area, set up, establish or use, continue or allow to be continued, any place for the storage,
weighment, pressing or processing of any notified commercial crop except under and in accordance with the conditions of a licence granted to him by the Collector.
Provided that nothing contained in this sub-section shall apply to a person in respect of any notified commercial crop grown by him.
(4) A licence may be refused to a person –(i) whose licence was cancelled and three years have not elapsed since the date of the cancellation;
(ii) who has been convicted of an offence or been guilty of misconduct, which in the opinion of the Collector, affects the said person’s integrity as a man of business;
(iii) in regard to whom the Collector is satisfied, after such enquiry as he considers. adequate, that such person is a benamidar or a partner with, any other person to whom a licence may be refused under Clause (i) or (ii):
Provided that in all cases of refusal the applicant shall be entitled to appeal to the Revenue Board and the Government in the prescribed manner.
(5) Every person to whom a licence is granted under this section shall comply with the provisions of this Act, the rules and bye-laws made thereunder and the conditions specified in the licence.
11. Levy of Fees by Market Committee:–(1) The Market Committee shall levy fees on the notified commercial crops mentioned in Column(1) of the table below bought and sold in the notified area at the rates specified against them in Column (2) of that table :
TABLE
Name of commercial crop
(1)
Rates
(2)
I. Arecanut
One rupee and fifty paise for every quintal of cured arecanuts or part thereof.
Ten paise for every 1000 ripe or soaked arecanuts or part thereof.
2. Coconut and its products
One rupee and fifty paise for every 1000 coconuts or part thereof.
One rupee and fifty paise for every quintal of by-products (copra or desiccated coconuts) or part thereof.
Explanation : For the purposes of this Section, all notified commercial crops leaving a notified area shall, unless the contrary is proved, be presumed to be bought and sold within such area.
(2) The fees referred to in Sub-section (1) shall be paid by the purchaser of the commercial crops concerned :
Provided that where the purchaser of a commercial crop cannot be identified, the fee shall be paid by seller.
(3) Out of the fees levied under Sub-section (1) on the commercial crop or crops bought and sold in any part of the notified area which constitutes a village as defined in the law for the constitution of Panchayats, such proportion as may be prescribed shall be paid by the Market Committee to the Panchayat concerned.
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13. Purposes for which the fund may be expended :– Subject to the provisions of Section 12 the market committee fund shall be expended for the following purposes only–(i) the acquisition of a site or sites for the market, (ii) the maintenance and improvement of the market; (iii) the construction and repair of buildings which are necessary for the purposes of such market and for the health, convenience and safety of the persons using it; (iv) the provision and maintenance of standard weights and measures, (v) the pay, pensions, leave allowances, gratuities, compassionate allowances and contributions towards leave allowances, pensions or provident fund of the officers and servants employed by the market committee; (vi) the expenses of and incidential to elections; (vii) payment of interest on loans that may be raised for purposes of the market and the provision of a sinking fund in respect of such loans; (viii) the collection and dissemination of information regarding all matters relating to crop statistics and marketing in respect of commercial crop or crops concerned; (ix) scheme for the extension or cultural improvement of the commercial crop or crops concerned within the notified area, including the grant, subject to the approval of the State Government, of financial aid to scheme for such extension or improvement within such area, undertaken by the other bodies or individuals; (x) propanganda in favour of agricultural improvement and thrift; (xi) such other purposes as may be authorised by the State Government in this behalf by general or special order.
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17. Penalties:– (1) Whoever contravenes the provisions of Section (5) shall be punishable with fine which may extend to 500 rupees, and in the case of a continuing contravention with further fine which may extend to one hundred rupees for every day during which the contravention is continued after conviction therefor.
(2) Any person removing or attempting to remove any commercial crop from any notified area before the fee payable under Sub-section (1) of Section 11 has been paid therefor and a receipt obtained in respect of such payment, or practising any device in order to facilitate the evasion of the payment of the said fee, or evading the payment of the said fee shall be punishable with fine which may extend to two hundred rupees.”
5. The Act was originally enacted by the Madras Legislature and was in force in the erstwhile Malabar district of the Kerala State. By virtue of the provisions of the States Reorganisation Act, 1956, it is in force even now in that area only. There are no provisions of law similar to those contained in the said Act in force in the other territories of the State of Kerala (erstwhile Travancore-Cochin). This is an important aspect of the matter which has to be borne in mind to appreciate the only plea taken up by the petitioners in the original petitions to assail the provisions of the Act as illegal, ultra vires and unconstitutional. Stated briefly, the Madras Commercial Crops Markets Act was enacted for the better regulation buying and selling of commercial crops. Commercial crops included coconuts, copra, coconut products and arecanuts, as per the notification of the Government of Madras dated 27-6-1949. The territory comprised in the erstwhile Malabar district has been a notified area under Section 4 of the Act since 15-11-1949 in respect of coconuts, coconut products and arecanuts. In May, 1950, the third respondent was constituted under Section 4A of the Act. ‘A market’ means, one established under S.4A. Under Section 5, no person shall, within a notified area, set up, establish or use, or continue or allow to be continued, any place for the purchase or sale of a notified commercial crop except in accordance with the conditions of a licence granted to him. Section 11 is the charging section. A fee is levied by the Market Committee on commercial crops bought and sold in the notified area at specified rates. The fee shall be paid by the purchaser of commercial crops. The Market Committee was recovering the fees under Section 11 in respect of the commodities from the last purchaser in the area which has been a notified area. Contravention of the provisions of the Act is an offence punishable under Section 17 of the Act. There is no proyision in the Act to pass on the fees levied on the last buyer in respect of the sale of the commercial crops mentioned in Section 11.
6. The petitioners state that the first respondent directed the third respondent to establish markets at Perambra, Kanhangad, Sankaramkulam, Thalakkadathur, Othukku-ngal and Vatanappally. The third respondent opened markets only at Perambra, Kanhangad, Sankaramkulam and Thalakkadathur. It is stated that a market was opened at Vallamkulam. The markets are situate at far away places from towns. Some of them are functioning only during specified months. The frontal attack is that the provisions of the Act and the Rules and bye-laws are discriminatory and violative of Article 14 of the Constitution, in that, the merchants or purchasers in Malabar area of the erstwhile Madras State, in the Kerala State are alone subject to the levy and placed in a disadvantageous position and this differential treatment to persons in that part of the State alone is a hostile discrimination, which has no nexus or rational connection, for the object to be achieved by the Act. The pleadings in this regard are contained in Paragraphs 12 and 13 of the original petition, which reads as follows:
“12. The provisions of the Act, the Rules and bye-laws framed thereunder including those providing for the aforesaid levies are also discriminatory and are also violative of Art, 14 of the Constitution. As already stated, the Madras Commercial Crops Markets Act is in force only in the area of the erstwhile Malabar district. There is no law similar or corresponding to the provisions of this Act in force in the other areas of the State of Kerala. The conditions and capacities of the produ-cers and merchants, traders and manufacturers in this latter area of Kerala State are in no way different from those of the producers and merchants, traders and manufacturers in the area of the erstwhile Malabar district. There is no difference between the character, business habits or acumen, business methods, equipment and activities, etc. of the producers in the area of the erstwhile Malabar district and those of the producers in the other areas of the Kerala State. Similarly there is no difference between character, business habits or acumen, business methods and equipment and activities of the merchants, traders and manufacturers including middlemen in the other parts of the Kerala State. While the purchasers in the erstwhile Malabar area are subjected to levies and restrictions mentioned above in respect of their business in the concerned commercial crops, the purchasers in the other areas of Kerala do their business free of these levies and restrictions. It is nearly 25 years since the State of Kerala was formed. The merchants in the erstwhile Malabar area have been subjected to a hostile discrimination and differential treatment without any justification during this long period. The provisions of the Act in question are discriminatory and violative of the protection enshrined in Article 14 of the Constitution vis-a-vis the merchants, traders and manufacturers including middlemen functioning in the area of the erstwhile Malabar district. The differential treatment accorded to the merchants in the area of the erstwhile Malabar district is arbitrary and irrational and is not based upon a valid classification grounded on an intelligible differentia having a reasonable nexus to the objects of the Act. Even among the businessmen in the area of erstwhile Malabar district, the buyers have been accorded a hostile and discriminatory treatment in so far as the levy under Section 11 of the Act is concerned as the fee is levied on them while the sellers are free from such levy. This differential treatment is also not based upon a valid classification bottomed on an intelligible differentia having a reasonable nexus to the objects of the Act and is also irrational and arbitrary. Even among buyers also, a discrimination has been made between the last buyer and other buyers. ….
13. The levy under Section 11 as amended by Kerala Act 5/64 is itself illegal and heavy and there has not been any justification to enhance the levy by the aforesaid proclamation 7/80 or the aforesaid Act 2/81. The proclamation had been issued without due care and attention and is an abuse of the powers of the Governor under Article 213 of the Constitution of India. Amendment Act 2/81 has also been passed without due care and attention and in abuse and excess of the legislative power of the State legislature. The petitioners are advised that by virtue of the provisions of Article 14 of the Constitution of India, the first respondent is under an affirmative public duty to ensure that the discriminatory treatment accorded to the merchants and traders in the area of the erstwhile Malabar district by the provisions of the Madras Commercial Crops Markets Act, 1933 is not continued and not aggravated by an enhancement of the impost under the provisions of the Act. The merchants, traders and manufacturers in commercial crops in the area of the erstwhile Malabar district have been denied by the respondents equality before law and the equal protection of the laws enshired in Article 14 of the Constitution of India…..”
The above averments contained in the original petition are met in the counter-affidavit filed by the State dated 23-3-82 in Paras 9, 13 and 14 and in Para 27 of the counter filed by the third respondent dated 22-3-1983. They are extracted herein below:
(By the State)
“9. The enforcement of the legislation is one part of the State and not making it applicable to all dealers in the State does not amount to discrimination. The objects of the Act is primarily to protect the interests of the producers of commercial crops and the Government could validly apply it to selected areas. It cannot be said that there is infringement of Article 14 of the Constitution. Marketing legislation of this type is for the welfare of the general public. Again enforcement of the Act in one part of the State alone is not discriminatory or violative of Article 14 of the Constitution. The State Government is not bound to implement the Act and Rules in all parts at the same time. It may establish markets regulating the sale and purchase of the commercial crops gradually and from time to time.
13. Marketing legislation of this type is for the benefit of the general public and does not violate Article 14 of the Constitution of India. It is not correct to say that the Act and Rules are discriminatory, arbitrary and irrational. The State Government is not bound to implement the Act and Rules in all parts of the State at the same time. It may establish markets regulating the sale and purchase of commercial crops gradually and from time to time. This question has already been considered by the Supreme Court and held reasonable.
14. The merchants and traders dealing in commercial crops in the area of the erstwhile Malabar district are not subjeted to any differential and discriminatory treatment as alleged. The State Government can validly enforce the provisions of the Act in certain parts of the State and enforce it gradually and from time to time through the State. The provisions of the Act, Rules and Bye-laws do not impose unreasonable and oppressive restrictions upon the merchants as contended. The provisions of the Act and Rules impose only reasonable restrictions on a citizen’s right to do business and hence it does not infringe Article 19(1)(g) of the Constitution.
(By the Marketing Committee)
27. It is wrong to state that the Acts or any of their provisions violate Arts. 14 or 19(1)(g) of the Constitution. The Madras Act was in force in the Malabar area prior to the States Reorganisation Act. There is, therefore, georgraphical and historical basis for implementing this Act is this area even after the formation of the Kerala State. It is understood and believed that the Government have a comprehensive scheme to extend this Act and apply those principle to the entire Kerala State. The fact that the Act is not in force in some parts of Kerala does not attract Article 14. The Act is a regulatory measure. It has been held so by all the courts. There is no violation of Arts. 301 and 304 of the Constitution. The levy is not on the movement of goods to attract Arts. 301 and 304. It is not correct to state that the original or enhanced levy is oppressive or exorbitant. Considering the present market of these crops, the levy is only an insignificant percentage as already stated.”
7. The gravamen of the charge is that the State or the Market Committee has no case that there is any difference between the persons, the trade or commodity dealt with, between Malabar, which is a part of Kerala State, and other territories in the Kerala State, comprising erstwhile Tranvancore-Cochin State, and the specific averments in that behalf have not been even contradicted in the counter and additional counter filed by the State or in the counter filed by the Marketing Committee and in the light of the uncontradicted, specific allegations in that behalf made by the petitioners, the fact that the trade, person, commodity and other relevant factors throughout the State are the same stands proved. In the additional counter-affidavit filed by the State in O.P. No. 3382 of 1987 dated 17-10-92 (Para 13), the attack against discrimination and violation of Article 14 is met thus :
“13. As regards the enactment of a unified marketing legislation applicable to the whole State of Kerala, the Government have drafted a comprehensive bill for introduction of regulated marketing system to the entire State of Kerala and the same is pending the approval of the Government of India. Even in case the Act is enforced only in one part of the State without extending to other parts will not amount to discrimination and will not offend Article 14 of the Constitution. The object of the Act is to give protection to the producers of commercial crops and the Government could validly apply that Act to selected areas. Marketing legislation of this type is for the welfare of the general public.
Further, the Government is not bound to implement the Act and Rules in all parts of the State at the same time. Now Government desires to introduce a Marketing Act binding all parts of the State and the Act is under consideration.”
Based on this, counsel for the petitioners would argue that there is an implied admission in Para 13 of the additional counter-affidavit that all persons in the State dealing with the commodity concerned, are of the same pattern or type, they are similarly situate, and that there is a proposal to levy cess throughout the State and the matter is under consideration. Counsel for the petitioners, Mr. Poti, further argued that though it is nearly 36 years since the State of Kerala has come into being, cess is continued to be levied only in the erstwhile Malabar district. Thus the purchasers of the particular commodities specified in the Act in that area of the State alone are subject to hostile discrimination. This is per se discriminatory, in that like persons are treated unlike — and so, the Act violates Article 14 of the Constitution. This plea is met by the State and the Committee only by stating that the measure is intended to protect the producers of commercial crops, and that it could be applied to ‘selected ones’ and enforcement of the law in one part of the State alone, per se, is not discriminatory and violative of Article 14 of the Constitution. It is stated that the entire Act need not be implemented throughout the State at the same time. It is due to historical and geographical reasons, that in Malabar, which formed part of erstwhile Madras State, the Act was already in force and was continued to be enforced after the States Reorganisation Act by the new (Kerala) State.
8. To sum up, on the basis of the pleadings, the broad facts admitted or proved are as follows:
(1) The conditions and capacities of the producers, merchants, traders and manufacturers in the entire Kerala State (erstwhile Malabar area and Travancore-Cochin area) are same. The character, business habits or acumen, business methods, equipment and activities of the producers, merchants, traders and manufacturers, including middlemen in the entire Kerala State are the same;
(2) Even so, the purchasers of specified commercial crops in the erstwhile Malabar area, a part of the Kerala State, alone are subjected to the levies and restrictions under the Malabar Commercial Crops Markets Act, which continues to be in force there;
(3) Though 36 years have elapsed after the reorganisation of the States, the Malabar Commercial Crops Markets Act is not made applicable to the other parts of the State (other than erestwhile Malabar district);
(4) The purpose or object of the Act is to be ascertained from an examination of its ‘title, preamble and provisions’ (See Kedar Nath v. State of W.B., AIR 1953 SC 404, Para 6, Per Patanjali Sastri, J. The Act intends to provide for the better regulation of buying and selling of commercial crops and the establishment of markets for commercial crops in the State. It is primarily to protect the interest of the producer of commercial crops. There is no distinction or dissimilarity in the nature or character of the crop notified, the persons who deal with it, the trade channels, the consumers and other aspects relating thereto throughout the entire State;
(5) The enforcement of the Act in one part of the State is defended by the respondents on the ground of historical and geographical reasons. The Act was in force in the Malabar area prior to the reorganisation of the States and so still continues in those parts; and
(6) The Government desires to introduce a Marketing Act binding on all parts of the State and the Act is under consideration. A comprehensive bill has been drafted and is engaging the attention of the Government.
9. The short question that arises for consideration is, whether, on the basis of the above admitted or proved facts, the provisions of the Madras Commercial Crops Markets Act and the enforcement thereof in the erstwhile Malabar area of the Madras State — a part of the Kerala State — alone is unconstitutional, discriminatary and viola-tive of Article 14 of the Constitution of India?
10. The principle of equality enshrined in Article 14 of the Constitution and the limitation of the doctrine are well settled by the decisions of the Supreme Court. The principle of equality does not mean that every law must have universal application for all in all circumstances. Persons, situations and circumstances may vary by nature, attainment or other factors and the different needs of different classes of persons may require differential treatment. The equality guaranteed under Article 14 is not absolute in terms. It does not forbid reasonable or legitimate classification. It is open to the State to reasonably classify persons for legislative purposes and deal equally with all persons belonging to a well defined class. The twin requirements in that connection are — (i) the classification must be founded on intelligible differentia which distinguishes persons or things that are grouped together from others left out of that group; and (ii) the differentia must have a rational relation to the object sought to be achieved by the Statute in question. The classification need not be mathematically accurate or scientifically perfect or exactly logical. The classification cannot be made in a whimsical manner or arbitrarily or without any basis. The principles regarding the applicability of Article 14 and the guidelines to be borne-in-mind in testing a particular legislation or order, as to whether it violates Article 14 of the Constitution of India, have been stated in a series of decisions of the Supreme Court. One of the earliest decisions on the subject by the Constitution Bench is Ram Krishna Dalmia v. Jusice Tendolkar, AIR 1958 SC 538. The principles have been laid down in Paras 11 and 12 of the said judgment. It is evident from the said judgment that in determining the validity or otherwise of a Statute, the Court has to examine whether there is any classification and the classification is or can be reasonably regarded as based on some differentia which distinguishes such persons or things grouped together from those left out of the group and whether such differentia has a reasonable relation to the object sought to be achieved by the Statute. No matter whether the provisions of the Statute are intended to apply to a particular person or thing or only to a certain class of persons or things. Keeping in mind the above guidelines, we have to examine whether the purposes or objects sought to be achieved by the Madras Commercial Crops Markets Act, viz. to provide for the better regulation or buying and selling of commercial crops and the establishment of markets for commercial crops in the State and thereby to protect the interest of the producers of commercial crops notified under the Act, are subserved or effectuated in the totality of the circumstances and whether there is any basis or nexus in applying the said provisions to Malabar area alone? Do circumstances warrant the application of the Act to a portion of the Kerala State alone? Is there any distinguishing feature in that part of the State, not present in other parts? Is the said distinction or difference in treatment meted out to the purchasers, traders and manufacturers of the Malabar area of the erstwhile Madras State based on any rational or valid or intelligent classification and whether such classification or difference in treatment warranted and justified in law? Has such classification or difference any reasonable nexus or relation to the objects sought to be achieved by the Statute? These are some of the important aspects that arise for consideration in this batch of cases.
11. Counsel for the petitioners fairly conceded that due to geographical or historical reasons, different laws may apply in different parts of the State. This is a permissible basis for classification and not hit by Article 14 of the Constitution. This position is clear from the following decisions ; Bhaiyalal v. State of M.P., AIR 1962 SC 981 at 988 para 18 – geographical classification based on historical reason State of Nagaland v. Ratan Singh, AIR 1967 SC 212 at page 224, K. Gopaul v. Union of India, AIR 1967 SC 1864 georgra-phical classification Lachman v. State of Punjab, AIR 1963 SC 222 at page 233, State of M.P. v. Bhopal Sugar Industries, AIR 1964 SC 1179, Anant Prasad Lakshminivas Gane-riwal v. State of A. P., AIR 1963 SC 853 at page 860 para 15 (difference due to historical reasons). So, on the date when the State Reorganisation Act came into force on 1-11-1956, the Madras Commercial Crops Act was in force in the erstwhile Malabar district of the Madras State and it continued to be in force even after the said territory became part of the Kerala State on 1-11-1956. There was no similar law in force in the Travancore Cochin State, then which formed the remaining part of the Kerala State. The existence of the Madras Commercial Crops Markets Act in the erstwhile Malabar district of the Madras State, forming part of Kerala, and its absence in other parts of the Kerala State on the day when the reorganisation came into existence was based purely on historical and geographical considerations. This is permissible in law. H. M. Seervai, in his treatise ‘Constitutional law of India’, Fourth Edition, Vol. I (1991), has stated the law thus :
“…..Decided cases show that the weight of authority is in favour of the view that laws which were in force in a State, or part of a State, which had a distinct and separate existence, did not become void on the merger or the reorganisation of a State on the ground that in other parts of the merged, or reorganised State, similar laws were not in force. A classification based on historical reasons has been held, it is submitted right, to justify the existence of such laws. Thus, in Bhaiyalal Shukia v. State M.P., AIR 1962 SC 981 the C.P. and Berar Sales Tax Act, 1947, as extended to Vindhya Pradesh was held not to violate Article 14 because the sales tax law in Vindhya Pradesh was different from that in other parts of Madhya Pradesh, of which it became a part. These different laws were upheld because the differentiation arose from historical and geographical classification based on historical reasons. In Anant Prasad Lakshminivas Generiwal v. State of A. P., AIR 1963 SC 853, the above decision was applied; and the Hyderabad Endowment Regulation, 1940, and the rules framed thereunder, were upheld, though two different laws were in force in respect to religious endowments in the two areas of the State of Andhra Pradesh one of which came to that State from the State of Madras in 1953 and the other from the former State of Hyderabad in 1956. For the same reasons, the Bhopal State Agricultural Income-tax Act, 1957, which imposed an agricultural income tax in Bhopal, which was not imposed upon agricultural income earned for the rest of Madhya Pradesh was upheld. The following laws were also upheld : the Patiala Recovery of vStates Dues Act, notwithstanding that after the State Reorganisation Act, 1956, it applied only in the territories of the erstwhile Pepsu Union and not in other parts of the State of Punjab….”
12. But Mr. Narayanan Poti, counsel for the petitioners, very Strongly urged that though there was no discrimination initially when the Kerala State came into existence, by the continued operation of the Madras Commercial Crops Markets Act in the erstwhile Malabar district of the Madras State alone for over 36 years, in course of time or by subsequent events, the garb of constitutionality possessed earlier has become worn out or has become obsolete or obliterated. In other words, the pica was that it was a non-discriminatory legislation at the inception of the Kerala State, by efflux of time, the Madras Commercial Crops Markets Act became a discriminatory legislation and exposed itself to a challenge under Article 14 of the Constitution of India. On the formation of the Kerala State, the exigence or continued application of the Madras Commercial Crops Markets Act in Maiabar area alone was permissible as it was based on reasonable classification, due to historical and geographical reasons, but, by lapse of time, the said law has lost the reason or relevance and stands self condemned.
13. The main thrust of the argument was
that what was valid at an earlier point of time, due to historical or geographical rea-sons, lost its reasons or logic by efflux of time or by subsequent events and became invalid or discriminatory, due to changed or altered circumstances. The following decisions of the Supreme Court were pressed into service to substantiate the above proposition of law; (1) State of Rajasthan v. Rao Manohar Singhji, AIR 1954 SC 297 at 298 para 5, (2) Jia Lal v. Delhi Administration, AIR 1962 SC 1781 at 1784 and 1785 para 5 to 7, 11, 12 and 13, (3) State of M. P. v. Bhopal Sugar Industries, AIR 1964 SC 1179 at p. 1181 para4 and 5 to 9, (4) Ratan Arya v. State of T. N., AIR 1986 SC 1444 and (5) Motor General Traders v. State of A.P., AIR 1984 SC 121 at p. 126 paras 6, 22 and 23. On the other hand, counsel for the State and the Committee argued that the fact that a particular piece of legislation is made applicable only to a particular place will not expose it to an attack based on Article 14 of the Constitution. It was further aruged that a legislation can be brought into force in various parts of the State piecemeal. As a temporary measure or purpose, it may be made applicable only in a few parts of the State. This is permissible. The respondents placed heavy reliance on the following decisions: Lakhan Lal v. State of Bihar, AIR 1968 SC 1408 at p. 1410 para 8, Shanmugha Oil Mill v. Varadappa Chettiar, AIR 1960 Madras 160 para 21, and Shri Swamiji of Shri Admar Mutt v. Commissioner, AIR 1980 SC l, para 13 and 20 to 31. The rival pleas put forward on this scope require close scrutiny.
14. Sri Durga Das Basu, in his book ‘Shorter Constitution of India’, Tenth Edition (1988) at p. 33, has summarised the law thus ;
“A law which was non-discriminatory at its inception may be rendered discriminatory by reason of external circumstances which take away the reasonable basis of classification. This happened after the merger of different territories with differential laws and a number of Indian State laws have been held to be discriminatory since the commencement of the Constitution, on the ground that those laws differed from the laws which governed the rest of the territory of the State with which the Indian State in question merged”.
The learned author has made the above statement of the law, based on three out of the five decisions of the Supreme Court, cited before us by Mr. Narayanan Poti, viz. Rao Manohar Singhji’s case AIR 1954 SC 297, Rattan Aryans case, AIR 1986 SC 1444 and Motor General Traders’ case AIR 1984 SC 121. The circumstances in which a valid classification becomes invalid or is rendered invalid by passage of time have been adverted to and stated lucidly by Mr. H. M. Seervai, in his book ‘Constitutional Law of India’, Fourth Edition, Vol. I (1991) at p. 476 to 479. For the purpose of this case, it is not necessary for us to refer in detail to all the cases brought to our notice by counsel or dealt with by the learned author (Mr. Durga Das Basu and Mr. Seervai). The three decisions of the Supreme Court viz. State of M. P. v. Bhopal Sugar Industries Ltd., AIR 1964 SC 1179, Sri Vishwesha Tirta Swamiar v. State of Mysore, AIR 1971 SC 2377 and H. H. Shri Swamiji of Shri Adamar Mult v. Commissioner, AIR 1980 SC I are the specific cases which dealt with different laws which were applied to different parts of a State on the ground of historical or geographical classification. In Shri Adamar Mutt’s case AIR 1980 SC 1, the earlier decisions have been cited and the law has been laid down in detail. We perused through the said decision and are of the view that the ratio of the said decision is fully applicable herein. So, there is no necessity to refer to the other decisions. We will refer to the said decision in detail. Till 1-11-1956, when the State Reorganisation Act came into force (Act 36 of 1956), the district of South Kanara was a part of the former State of Madras. As a result of the State Reorganisation Act, that district became a part of the State of Mysore (State of Karnataka). The Madras Hindu Religious and Charitable Endowments Act (Act 19 of 1951) was in force in Madras. It applied to the district of South Kanara, which was a part of the State of Madras. The Hindu Religious and Charitable Endowments Act levied an annual contribution payable by every religious institution. Though the levy of contribution was challenged, it was upheld by courts. After the State Reorganisation Act, the Madras Hindu Religious and Charitable Endowments Act (Act 19 of 1951) continued to apply in the district of South Kanara, which was formerly a part of the former State of Madras, in view of Section 119 of the States Reorganisation Act. The said Act did not apply nor was made applicable to the similar institutions situated in other areas of Karnataka and such institutions were not obliged to pay the contribution. Shri Adamar Mutt was in South Kanara district which formed part of the former State of Madras and later became part of the State of Karnataka. The said Mutt challenged the application of the Madras Hindu Religious and Charitable Endowments Act (Act 19 of 1951) to one district only as affecting the guarantee of equality contained in Article 14 of the Constitution. After referring to the earlier decisions of the Supreme Court, Chandrachud, C.J. delivering the judgment of the Constitution Bench, in Shri Admar Mutt’s case AIR 1980 SC I, p. 9 para 25, stated the law thus :
“25. These decisions are authority for the validity of Section 76(1) of the Madras Act of 1951 in its application to the south Kanara District of the State of Mysore, now the State of Karnataka. This Court has said time and again that dissimilar treatment does not necessarily offend against the guarantee of equality contained in Article 14 of the Constitution. The rider is that there has to be a valid basis for classification and the cassifica-tion must bear nexus with the object of the impugned provision. In matters arising out of reorganisation of States, continued application of laws of a State to territories, which were within that State but which have become a part of another State, is not discriminatory since the classification rests on geographical consideration founded on historical reasons.”
In paragraph 27, the learned Chief Justice held thus:
“27. Bearing in mind these considerations, we are of the view that the Madras Act of 1951, in its application to the South Kanara District of Mysore, now Karnataka does not infringe Article 14 of the Constitution.”
Though the initial application of the Madras Act, 1951 to the South Kanara District was not violative of Article 14, whether its continued application offends against the guarantee of equality, was considered in paragraphs 29 to 31 of the judgment. The learned Chief Justice stated the law thus:
“29. The narrow question that remains for consideration now is whether though the initial application of the Madras Act of 1951 to the South Kanara District was not violative of Article 14, its continued application offends against the guarantee of equality. In this connection, a matter of primary importance to be borne in mind is that Section 119 of the States Reorganisation Act, 1956, was intended, as said in Bhaiyalal Shukla to serve a “temporary purpose”, viz., to enable the new units to consider the special circumstances of the diverse units, before launching upon a process of adaptation of laws so as to make them reasonably uniform, having regard to the special needs of the various regions and the requirements of administrative efficiency. Acts, Rules and Regulations whose constitutional validity is upheld and can be upheld only on the ground that no violation per se of Article 14 is involved in the application of different laws to different components of a State, if the area to which unequal laws are applied has become a part of the State, as a result of the States Reorganisation, cannot continue to apply to such area indefinitely. An indefinite extension and application of unequal laws for all time to come will militate against their true character as temporary measures taken in order to serve a temporary purpose. Thereby, the very foundation of their constitutionality shall have been destroyed, the foundation being that Section 119 of the States Reorganisation Act serves the significant purpose of giving reasonable time to the new units to consider the special circumstances obtaining in respect of diverse units. The decision to withdraw the application of unequal laws to equals cannot be delayed unreasonably because the relevance of historical reasons which justify the application of unequal laws is bound to wear out with the passage of time. In Broom’s Legal Maxims (1939 Edition, page 97) can be found a useful principle, “Cessantc Ratione Legis Cessat Ipsa Lex”, that is to say, “Reason is the soul of the law, and when the reason of any particular law ceases, so does the law itself.”
30. We do not however see anyjustification for holding that the continued application of the Madras Act of 1951 to South Kanara District became violative of Article 14 as immediately as during the period under consideration, which was just five or six years after the passing of the States Reorganisation Act. Nor indeed are we disposed to hold that the continued application of that Act until now ts shown fay adequate data to be violative of Article 14.
31. But that is how the matter stands today. Twenty-three years have gone by since the States Reorganisation Act was passed but unhappily, no serious effort has been made by the State Legislature to introduce any legislation apart from two abortive attempts in 1963 and 1977 to remove the inequality between the temples and Mutts situated in the South Kanara Dist. and those situated in other areas of Karnataka. Inequality is so clearly writ large on the face of the impugned statute in its application to the District of South Kanara only, that it is perilously near the periphery of unconstitutionality. We have restrained ourselves from declaring the law as inapplicable to the District of South Kanara from today but we would like to make it clear that if the Karnataka Legislature does not act promptly and remove the inequality arising out of the application of the Madras Act of 1951 to the District of South Kanara only, the Act will have to suffer a serious and successful challenge in the not distant future. We do hope that the Government of Karnataka will act promptly and move an appropriate legislation, say, within a year or so. A comprehensive legislation which will apply to all temples and Mutts in Karnataka, which are equally situated in the context of the levy of fee, may perhaps afford a satisfactory solution to the problem. This, however, is a tentative view point because we have not investigated whether the Madras Act of 1951, particularly Section 76( 1) thereof, is a piece of hostile legislation of the kind that would involve the violation of Article 14. Facts in regard thereto may have to be explored, if and when occasion arises.”
15. We should remember that the Madras Act of 1951 which was in force in the District of South Kanara continued to be the law even after the district became part of the State of Mysore (Karnataka) by the States Reorganisation Act, 1956. It was challenged as viola-tive of Article 14 of the Constitution in writ petitions filed in 1965 and 1966. The Supreme Court held that the continued application of the Madras Act (Act 19 of 1951) of the South Kanara district did not violate Article 14 of the Constitution at the time when the writ petitions were filed (1965 and 1966) or even when the matter was considered by the Supreme Court in August, 1979 (The Supreme Court decision in Shri Admar Mutt’s case AIR 1980 SC 1 was rendered in August, 1979). But then the Supreme Court noticed that 23 years have gone by since the States Reorganisation Act was passed and even then no serious effort was made by the State Legislature to remove the inequality between the temples and Mutts situated in the South Kanara District and those situated in other areas of Karnataka. The court felt that inequality is so writ large on the face of the impugned statute in its application to the District of South Kanara and it is perilously near the periphery of unconstitutionally.
16. We are of the view that if the Supreme Court felt so, in view of passage of 23 years in Admar Mutt’s case AIR 1980 SC I, the cases on hand arc on stronger foundation, 36 years have passed since the States Reorganisation Act. Thirteen years more than it was in Admar Mutt’s case AIR 1980 SC 1. There is only a general statement in paragraph 13 of the additional counter-affidavit, filed by the first respondent, dated 17-10-1992, that Government had drafted a comprehensive Bill for introduction of regulated marketing system to the entire State of Kerala and the same is pending the approval of the Government of India. The Government desires to introduce a marketing Act binding all parts of the State and the Act is under consideration. Even after 36 years, the matter is only under consideration. A file was produced before us by the learned senior Government Pleader Sri N. Sankara Menon. It contains a draft Bill entitled “Kerala Agricultural Produce Markets Bill, 1990” (1988 scored, altered to 1989 and finally inserted as 1990). What steps are taken and whether any effective step was taken to finalise it is not known. We are not in a position to say, that any serious effort was ever made by persons in authority to introduce a legislation to remove the inequality between the purchasers, merchants etc., in the Malabar District of erstwhile Madras State and those persons who are involved in similar activities in other parts of the Kerala State. The matter has been lying low not even minimal effort taken to process or finalise the Bill etc. In view of the observations of the Supreme Court in Shri Admar Mutt’s case AIR 1980 SC 1 at page 11 paragraph 31, we are of the view that inequality is clearly writ large on the face of the impugned statute (The Madras Commercial Crops Markets Act –Act XX of 1933) in its application to the District of Malabar of the erstwhile Madras State only, that it is perilously near the periphery of unconstitutionality.
17. While we are candidly of the said view, we adopt the same course as was adopted by the Supreme Court in Shri Admar Mutt’s case AIR 1980 SC 1, Judicial restraint based on public policy and larger public interest deters us from declaring the law as inapplicable to the Malabar District of the erstwhile Madras State, at this juncture considering the overall repercussions. But we would make it clear that if the Kerala Legislature does not act promptly and remove the inequality arising out of the application of the Madras Commercial Crops Act (Act XX of 1933) to the Malabar District of the erstwhile Madras State only, the Act shall suffer a serious and successful challenge in the not distant future. We do hope that the Govern-ment of Kerala will act promptly and with all speed and move an appropriate comprehensive legislation which will afford a statis-factory solution to the problem within one year from today. In the note to the draft Bill, available in the file produced before us, it is seen stated thus:
“It is considered necessary to provide for better regulation of purchase and sale of agricultural produce and establishment and proper administration of market for agricultural produce in the Stale. It is also found that introduction of regulated market in Kerala will ensure remunerative price to the producer to narrow down the price spread between producer and consumer and finally remove -non-functional margins of the traders, commission agents and all market functionaries.”
Let this not be a teasing illusion and a promise of unreality.
18. With these observations, we dismiss the Original Petitions. There shall be no order as to costs.