S. T. SADIQversusSTATE OF KERALA& ORS.

                    [2015] 3 S.C.R. 287



                        S. T. SADIQ                           A

                             v.

               STATE OF KERALA& ORS.

              (Civil Appeal No. 3962 of 2007)                 B

                   FEBRUARY 04, 2015

[RANJAN GOGOi AND ROHINTON FALi NARIMAN, JJ.]

        Kera/a Cashew Factories Acquisition (Amendment)
                                                              c
Act, 1995: s.6 - Constitutional validity of - Notices for
acquisition of 10 factories sent between 1984 and 1986 -
Similar notices sent to 36 other factories in 1988 by which
the said factories a/so acquired under the Act - In case of 36o
factories, Supreme Court passed directions to handover the
factories to the respective owners - In case of 10 factories,
directions passed to take them over by Amendment Act -
 The Amendment Act of 1995 was brought into force to cover
all 46 acquisitions that had been made under the Principal E
Act- Whether s. 6 was bad as it sought to directly nullify the
directions passed by Supreme Court in the two judgments
and whether s. 6 violated Article 14 inasmuch as it gave
discriminatory treatment to the 10 factories and 36 factories
- Held: The legislature cannot directly annul a judgment of F
a court - s. 6 directly sought to upset a final judgment inter-
parties and was bad on this count and is unconstitutional-A
bare reading of the Statement of Objects of the Amendment
Act shows that the Kera/a Legislature wished to interfere with G
two judgments of the Supreme Court making no distinction
between the 36 factories and the 10 factories - The handing
back of only 36 factories would be patently discriminatory as
                        \
a/146 factories were similarly situate and were treated as such
                                                              H
                            287
288       SUPREME COURT REPORTS                 [2015] 3 S.C.R.


A by the state by issuing common notices to all of them uls.3
  of the Act - The.se 36 factories are functioning under their
  respective owners for the last twenty years - In the
  circumstances, there is no intelligible differentia between the
  36 factories and the 10 factories taken over having any
B rational relation with the object sought to be achieved and
  on this ground also s.6 of the Amendment Act deserves to
  be striJck down as violating Article 14 of the Constitution -
  The cashew factories ~nd the land appurtenant thereto taken
C over by the State under the Amending Act must be handed
  back - Constitution oflndia, 1950 - Arts. 14, 245 - Kera/a
  Cashew Factories Acquisition Act; 1974.

          Allowing the appeals, the.Court

D           HELD: 1. The legislature.cannot directly annul a .·
    judgment of a court. The legislative function consists in
    "making" 18w [see: Article 245) and not in "declaring"
    what the law shall be [see: Article 141]. Our Constitution
    permits a legislature to make laws retrospectively which
E · 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 .
F Court to apply the law retrospectively so made which
  • would then change the verj basis of the earlier decision
    so that it would no longer hold good. However, if such is
    not the case then legislation whfoh trenches upon the .
    judicial power must necessarily be .declared to be
G . unconstitutional. [Para12] [306-8, E-F]                  ·

      StateofT.N. v. M. Rayappa Gounder(1971)3SCC1;.
      D. Cawasji and Co. Mysore v. The State of Mysore &
      Anr., 1985 (1) SCR.825; State of Haryana v. Kamal
H     Coop. Farrners'Society Ltd. (1993) 2 SCC 363: 1993
       S. T. SADIQ v. STATE OF KERALA & ORS.               289



    (2) SCR 193; Re Cauvery Water Disputes Tribunal,         A
    1993 Supp (1) SCC 96; S.R. Bhagwat v. State of
    Mysore, (1995) 6 SCC 16:1995 (3) Suppl. SCR 545;
    Delhi Cloth & Genera/ Mills Co. Ltd. v. State of
    Rajasthan (1996) 2 sec 449: 1996 (1) SCR 518 -
    relied on.                                               B

         2. 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 C
  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 sought to upset a final judgment inter-parties and D
  is bad on this count and is thus declared
  unconstitutional. A bare reading of the Statement of
  Objects of the Amendment Act shows that the Kerala
  Legislature wished to interfere with two judgments of E
  the Supreme Court making no distinction between
  factories that were .managed by the Cashew
  Development Corporation (CDC) (the .36 factories) and
  CAPEX (the 10 factories). Apart from the Government
  suffering financially (if the factories are to be handed F
  back), there will be large scale unemploymentamong
·workers in the cashew industry. It is clear thatthe 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. There. ··G
  is no difference between factories which post acquisition ·     -: ·'


 are run by the CDC or CAPEX regard being had to the
 object sought to be achieved - namely to .avoid.
 unemployment of cashew workers. Whether 36 factories . H
290      SUPREME COURT REPORTS               (2015] 3 S.C.R.


A run by the CDC 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 CDC
  and CAPEX, along with the Government, will suffer
B 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
C Section 3 of the Act. These 36 factories are functioning
  under their respective owners for the last twenty years.
  In the circumstances there is no intelligible differentia
  b~tween the 36 factories and the 10 factories taken over
  having any rational relation with the object sought to be
o achieved and on this ground also Section 6 of the
  Amendment Act deserves to b~ struck down as violating
  Article 14 of the Constitution. The cashew factories and
  the land appurtenant thereto that have been taken over
  by the State under the Amending Act must be handed
E back. [Paras 12, 13 and 14] [317-D-F; 319-D-H; 320-A-E]
                                  '
                     Case Law Reference

      (1971) 3 sec 1            relied on.       Para 12
F     1985 (1) SCR 825          relied on.       Para 12

      1993 (2) SCR 193          relied on.       Para 12

      1993 supp (1) sec 96      relied on.       Para 12
G
      1995 (3) Suppl. SCR 545 relied on.         Para 12

      1996 (1) SCR 518          relied on.       Para 12

          CIVILAPPELLATE JURISDICTION: Civil Appeal No.
H
        S. T. SADIQ v. STATE OF KERALA& ORS.                       291



3962 of 2007.                                                       A

       From the Judgment and Order dated 11.08.2005 of
the High Court of Kerala at Ernakulam in O.P. No. 14084 of
1997(B).
                                                                    B
                             \MTH

C.A. No. 3963 of 2007

      Krishnan Venugopal, Deepak Prakash, Biju P. Raman,
Subash Chandran K. R., Usha Nandini V., Yogamaya M. G, B.           C
V. Deepak (ForT. T. K. Deepak & Co.) for the Appellant.

      V. Giri, Bina Madhavan, Somiram Sharma, Vishnu
Sharma, K. R. Sasipratihu, M. Vijaya Bhaskar, G Prakash for
the Respondents.                                            D

       The Judgment of the Court was delivered by

       R. F. NARI MAN, J. 1. These petitions raise questions
as to the constitutional validity of the Kerala Cashew Factories    E
(Acquisition) Act, 1974 (hereinafter referred to as "the said
Act"), which has been placed in the 9th Schedule to the
Constitution of India, being entry 148 thereof. This Act came
into force on 19th November, 1974 and Section 3 thereof
enabled the State Government to acquire in public interest          F
cashew factories under certain circumstances. Section 3 is
set out hereunder:

  "3. Order of Acquisition:-
                                                                   G
         (1) The Government may, if they are satisfied-

  (a) that the occupier of a cashew factory does not conform
  to the provisions of law relating to safety, conditions of
  service or fixation and payment of wages to the workers
                                                                   H
292      SUPREME COURT REPORTS                   [2015) 3 S.C.R.


A     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
B     made or that such nuts are being transferred to any other
      cashew factory; or

      (c) thatthere has been large scale unemployment, other
      than by way of lay off or retrenchment, of the workers of
c     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
o     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 unde.r this sub-
      section and the grounds therefore and consider the
E     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
F     meanings respectively assigned to them in the Industrial
      Disputes Act, 1947 (Central Act 14of1947).

      (2) The notice referred to in the proviso to sub-section
      (1) shall also be published in two newspapers published
G     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.

H     (3) On the. making of a declaration under sub-section
                                                                   ;/




         S. T. SADIQ v. STATE OF KERALA& ORS.                     293
                    [R. F. NARIMAN, J.]

    (1 ), the cashew factory to which the declaration relates,     A
    together with all machinery, other accessories and other
    movable properties as were immediately before the
    appointed day in the ownership, possession power or
    control of the occupier in relation to the factory and all
    books of accounts, registers and other documents               B
    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, C
  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
                                                                    0
  notice is set out hereinbelow.

    "No.31033/K3/84/ld                        19.9.1985

                            NOTICE
                                                                   E
    Notice under rule 3 of the Kerala Cashew Factories
    (Ac~uisition) Rules, 1974.

     WHEREAS it has been brought to the notice of the
     Government that in respect of Cashew. Factory                 F
   · No.AP.11 located in Eruva, Kayamkulam, in
     Ka1rthikappallyTaluk,Alapuzha District of which Smt. T.
  ·· Su hara Beevi Clo Masaliar Industries, Kilikolloor,
     Kallam is the owner andM/s. Janso Exports (Private)
     ltd., N.N.C., Estates Vadakkevila P.J., Kallam is the         G
     occupier (proposed) there exist grounds as detailed
     below warranting action under section 3(1) of the Kera la
     Cashew Factories (Acquisition) Act, 1974 notice is
     hereby given fo all concerned of the intention of the
                                                                   H
294      SUPREME COURT REPORTS                     [2015] 3 S.C.R.


A      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 againstthe proposed action within seven days
       of the receipt of this notice or the publication of this
B      notice in the newspapers, whichever is earlier or if they
       no desire, appear before Shri N. Gopalan Nair,
       Additional Director of Industries and Commerce and
      ·special office for cashew societies at the District
       Industries Centre, Kollam at 11 a.m. on 23.9.1985 and
c      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
D      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,
E     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
F     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.

G     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
H      ten days or in the immediate future. The Government
           S. T. SADIQ v. STATE OF KERALA& ORS.                     295
                      [R. F. NARIMAN, J.]

      are therefore, of opinion that the said situation will lead     A
      to large scale unemployment of the workers of the
      Cashew Factory.
                                 By Order of the Governor
Place: Thiruvananthapuram M. Vijayanunni                              B
Dated: 16.9.1985             Special Secretary to Governor
                            Industries Department
To,
Smt. T. Suhara Beevi, Clo Musaliar Industries                         c
Kilikolloor, Kollam 4.


Copy to:
      1.   Shri N. Gopalan Nair, Addi. Director of Industries         D
           and Commerce and Spl. Officer fer Cashew
           Societies, Vikas Bhavan, Thiruvananthapuram.
   2.      Special Officer for cashew industry, Kollam for
           necessary action.
                                                                      E
      3.   The Director of Public Relations for immediate
           publication in any two leading dailies having wide
           circulation.
                                        Forwarded/ By order
                                        Sd/- Section Officer."        F
        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 G
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 sec 269 in the following terms:-
                                                                       H
    ~-.




    296'      SUPREME COURT REPORTS                      [2015] 3 S.C.R.
,

    A      "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 axistence ·
           of any of the situations under clause (a). (b) or (c) thereof.
            No details have been mentioned in the said notice.
    B      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
    c
           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
    D      Government only when the 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
    E      scale unemployment. The grounds simply state that the
           factory was lying closed and there was no possibility of
           its starting functioning within a period often days or in
           the immediate future, which will lead to large scale
           unemp!oyment. No details have been mentioned in the
    F      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.
    G
           The learned counse.1, 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
    H      conditions pertaining to their factories.
      S. T. SADIQ v. STATE OF KERALA & ORS.                       297
                 [R. F. NARIMAN, J.]

                                                                   A

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        B
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            c
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
                                                                  D
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,              E
according to us, the notice does not comply with and
conform to the requirement of the proviso to sub-section
(1) of Section 3.

 10. It is well-settled that if a statute requires an authority   F
to exercise power, when such authority is satisfied that
conditions exist for exer·.:ise 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 reievant material. If the existence       G
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
                                                                  H
298      SUPREME COURT REPORTS                   [2015] 3 S.C.R


A     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.

B     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
c     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
      thatthere has been any unemployment much less large
      scale unemployment. The ground simply says that the
D
      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
E     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
F     quashed.

      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
G     the basis of the relevant material, that any of the three
      conditions mentioned therein exists in individual
      factories, by following the procedure prescribed !herein.

      13. In order to work out the equities and the rights and
H     liabilities which have arisen between the date of the
     S. T. SADIQ v. STATE OF KERALA & ORS.                   299
                [R. F. NARIMAN, J.)

transfer of the factories and passing of this order, we       A
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            B
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       c
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-      D
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           E
Government.

 (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     F
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 Kera la State Cashew Development Corporation Ltd.,       G
shall be determined by the District Judge, Quilon, on
proper application being filed before it.

(v) The Kerala State Cashew Development Corporation
                                                             H
300         SUPREME COURT REPORTS                     [2015) 3 S.C.R.



A        ltd., shall be entitled to remove any machinery or
         materials installed by it within one week of preparation
         of the inventory; and

         (vi) Any disciplinary enquiry pending against any of the
B        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,
c     this Court followed the judgment in the Indian Nut Products
      case in the following terms:
                 "IN THE SUPREME COURT OF INDIA
                   CIVILAPPELLATE JURISDICTION
                 CIVIL APPEAL NO.
D                                      - - - OF 1995
                (Arising out of the S.L.P.(C) No.8219/94)


             S.T.Sadiq                              ... Appellant
E                                    Vs.
             State of Kerala & Ors.                 ... Respondents
                                  ORDER
                     It is clear to us that this case is fully covered
F       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
G       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
H
        S. T. SADIQ v. STATE OF KERALA & ORS.                       301
                   [R. F. NARIMAN, J.]

  accordingly. No costs.                                             A


                                      Sd/-
                              (M.M. Punch hi. .. J)
                                                                     8
                                      Sd/-
                              (K. Jayachandra Reddy.. J)
  New Delhi,
  March 10, 1995."                                                  c
        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 0
factories are concerned, which then filed coritempt 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                    E
   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          F
  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           G
  in the affidavits filed in response.

      The contempt proceedings are, thus, terminated."

      6. The promised Ordinance was then brought in which           H
302      SUPREME COURT REPORTS                    (2015] 3 S.C.R.


A 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
B with Section 3A and Section 6 which are set out hereinbelow:

      "3A.Power to acquire any cashew factory in public
      interest.

c     (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
D     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
E     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."
F
      "6. Declaration as to acquisition of certain cashew
      factories.

      (1) It is hereby declared that it is expedient in the public
G     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
H
        S. T. SADIQ v. STATE OF KERALA& ORS.                     303
                   [R. F. NARIMAN, J.)

  for the time being in force, stand transferred to, and vest     A
  in, the Government with effect from the date noted against
  each.

   (2) The provisions of Section 4, Section 7 to 16 (both
   inclusive) of the principal Act shall, as far as may be,       B
   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.
                                                                 c
   (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.
                                                                 D
   (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 ypSchedule including
   all the orders issued under sub-section (1) of Section 8,
   during the periods commencing on and from the dates           E
   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   F
   times."

        7. The schedule to the Act contains only the 10 cashew
factories that had been acquired between 1984 and 1986.
                                                                 G
       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
                                                                 H
304        SUPREME COURT REPORTS                   (2015] 3 S.C.R.


A   judgments of this Hon'ble 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 ofT.N.
    v. M. Rayappa Gounder (1971) 3 SCC 1, Madan Mohan
    Pathak & Anr. v. Union of India & Ors. 1978 (2) SCC 50,
B 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 considering that all the notices served were in identical
    terms, and considering that the objects and reasons of the
C · 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
o   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 Act was not in
    the 9th Schedule and since it referred inter alia to Section 9 of
E 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
    co~pensation for land that is acquired along with the cashew
F factories is on a 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
G 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
H building was only on 97 cents and 1.86 acres was sought to
         S. T. SADIQ v. STATE OF KERALA & ORS.                       305
                    [R. F. NARIMAN, J.]

be taken over despite the fact that this land was neither used A
nor was necessary for the working of the factory.

        10. Mr. Giri appearing forthe 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         B
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        C
 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 public interest apart          D
from being acquired under Section 3 or Section 3AoftheAct
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       E
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
CAPEX, which is an apex body consisting of cooperative
societies of workmen. So far as point 3 is concerned, he             F
replied by saying that Article 31 B 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.
                                                                     G
        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
                                                                     H
306         SUPREME COURT REPORTS                   (2015] 3 S.C.R.


A     us have to be allowed on points 1 and 2.

             12. Point1.

          It is settled law by a catena of decisions of this Court
  that the legislature cannot directly annul a judgment of a court.
8
  The legislative function consists in "making" law (see: Article
  245 of the Constitution] and not in "declaring" what the law
  shall be [see: Article 141 of the Constitution]. If the legislature
  were at liberty to annul judgments of courts, the ghost of bills of
c 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 US Constitution expressly
D 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
E 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
F 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
G 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, 1939 was struck down. The Court held:

        "3. The question as to the power of the assessing
H
     S. T. SADIQ v. STATE OF KERALA& ORS.                   307
                [R. F. NARIMAN, J.)

authority to reassess the receipts that had escaped          A
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        B
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 collection of certain
                                                            c
taxes. That section reads:

"Notwithstanding anything contained in this Act or in the
principal Act ot in any judgment, decree or order of any
Court no assessment or reassessment or collection of
                                                            D
any tax due on any payment for admission to any
entertainment or any cinematograph exhibition which has
escaped assessment to tax, or which has been assessed
at a rate lower than the rate at which it is assessable,
under Section 4 or 4-A of the principal Act, made at any    E
time after the date of the commencement of the principal
Act and before the date of the publication of this Act in
the Fort St. George Gazette shall be deemed to be invalid
or ever to have been invalid on the ground only that such
assessment or reassessment or collection was not in         F
accordance with law and such tax assessed or
reassessed or collected or purporting to have been
assessed or reassessed or collected, shall, for all
purposes, be deemed to be and to have been always
validly assessed or reassessed or collected and             G
accordingly-

(a) all acts, proceedings or things done or taken by the
State Government or by any officer of the State
                                                            H
308         SUPREME COURT REPORTS                    (2015) 3 S.C.R.



A       Government or by any other authority in connection with
        the assessment or reassessment or collection of such
        tax, shall, for all purposes, be deemed to be and to have
        always been done or taken in accordance with law;

B       (b) no suit or other proceeding shall be maintained or
        continued in any court against the State Government or
        any person or authority whatsoever for the refund of any
        tax so paid; and

c       (c) no Court shall enforce any decree or orde·r directing
        the refund of any tax so paid."

          4. The reassessments with which we are concerned in
          these cases were made prior to the coming into force of
D        the Act. Therefore all that we have to see is whether those
        . reassessments are validly protected by Section 7. The
          High Court of Madras allowed the writ petitions and
          quashed the reassessments on the ground that the
          power to reassess under Section 7(B) introduced by the
E        Act is 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
F         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
G     Mysore Sales Tax (Amendment) Act, 1969 were struck down
      in the following terms:

        "In the instant case, the State instead of remedying the
        defect or removing the lacuna has by the impugned
H
      S. T. SADIQ v. STATE OF KERALA & ORS.                      309
                 [R. F. NARIMAN, J.)

 amendment sought to raise the rate of tax from 6.1/2%            A
 to 45% with retrospective effect from the 1st April 1966
 to avoid the liability of refunding the excess amount
 collected and has further purported to nullify the judgment
 and order passed by the High Court directing the refund
 of the excess amount illegally collected by providing that       B
 the levy at the higher rate of 45% will have retrospective
 effect from 1st of April, 1966, The judgment of the High
 Court declaring the levy of sales tax on excise duty,
 education cess and health cess to be bad become
 conclusive and is binding on the parties. It may or may
                                                                 c
 not have been competent for the State Legislature to
 validly remove the lacuna and remedy the defect in the
 earlier levy by seeking to impose sales tax through any
 amendment on excise duty, education cess and health             D
 cess; but, in any event, the State Government has not
 purported to do so through the Amending Act. As a result
 of the judgment of the High Court declaring such levy
 illegal, the State became obliged to refund the excess
 amount wrongfully and illegally collected by virtue of the      E
 specific direction to that effect in the earlier judgment. It
 appears that the only object of enacting the amended
 provision is to nullify the effect of the judgment which
 became conclusive and binding on the parties to enable
the State Government to retain the amount wrongfully and         F
illegally collected as sales tax and this object has been
sought to be achieved by the impugned amendment ·
which does not even purport or seek to remedy or remove
the defect and lacuna but merely raises the rate of duty
                                                                 G
from 6.1/2% to 45% and further proceeds to nullify the
judgment and order of the High Court. In our opinion, the
enhancement of the rate of duty from 6.1 /2% to 45% with
retrospective effect is in the facts and circumstances of
the case clearly arbitrary and unreasonable. The defect          H
310       SUPREME COURT REPORTS                     (2015] 3 S.C.R.



A     or lacuna is not even sought to be remedied and the
      only justification for the steep rise in the rate of duty by
      the amended provision is to nullify the effect of the binding
      judgment. The vice of illegal collection in the absence of
      the removal of the illegality which led to the invalidation
B     of the earlier assessments on the basis of illegal levy,
      continues to taint the earlier levy. In our opinion, this is
      not a proper ground for imposing the levy at the higher
      rate with retrospective effect. It may be open to the

c     Legislature  io  impose the levy at the higher rate with
      prospective operation but levy of taxation at higher rate
      which really amounts to imposition of tax with
      retrospective operation .has to be justified on proper and
      cogent grounds. This aspect of the matter does not
D     appear to have been properly considered by the High
      Court and the High Court in our view was not right in
      holding that "by the enactment of Section 2 of the
      impugned Act the very basis of the complaint made by
      the petitioner before this Court in the earlier writ petition
E     as also the basis of the decision of this Court in
      Cawasji's case that the State is collecting amounts by
      way of tax in excess of what was authorised under the
      Act has been removed." We, accordingly, set aside the
      judgment and order of the High Court to the extent it
F     upholds the validity of the impugned amendment with
      retrospective effect from 1st of April, 1966 and to the
      extent it seeks to nullify the earlier judgment of the High
      Court. We declare that Section 2 of the impugned
      amendment to the extent that it imposes the higher levy
G
      of 45% with retrospective effect from the 1st day of April,
       1966 and Section 3 of the impugned Act seeking to nullify
      the judgment and order of the High Court are invalid and
      unconstitutional." (at page 841-842)
H
        S. T. SADIQ v. STATE OF KERALA& ORS.                      311
                   [R. F. NARIMAN, J.]

         Similarly, in State of Haryana v. Karnal Coop. A
Farmers' Society Ltd., (1993) 2 SCC 363, Section 7 of a
Haryana statute was struck down. The court referred to several
earlier judgments and then held:

  "37. Thus, it becomes clear that a legislature while has         B
  the legislative power to render ineffective the earlier
  judicial decision·s, by removing or altering or neutralising
  the legal basis in the unamended law on which such
  decisions were founded, even retrospectively, it does
  not have the power to render ineffective the earlier judicial   c
  decisions by making a law which simply declares the
  earlier judicial decisions as invalid or not binding for such
  power if exercised would not be a legislative power but
  a judicial power which cannot be encroached upon by a
                                                                  D
  legislature under our Constitution.

  38. In the instant case, the Haryana State Legislature,
   by the Amendment Act of 1981, has not made any
   provision to include the lands and immovable properties
   -the subject of the civil court's decrees, in 'shamilatdeh'    E
   so as to bring them within the purview of the principal
   Act. But, the provision made therein merely directs the
   Assistant Collector of first grade, in effect, to disregard
   or disobey the earlier civil courts' decrees and judicial
                                                                  F
   orders by which it had been held that certain lands and
   immovable properties fell outside 'shamilatdeh'
   regulated by the principal Act. Such provisions inserted
  by theAmendmentAct of 1981 in the principal Act by a
   legislature are clearly unconstitutional for they are to be    G
  regarded as provisions made by encroaching upon the
  judicial power. Hence, the view of the High Court that
  the provisions of the Amendment Act of 1981 which
  merely authorise the Assistant Collector of first grade to
                                                                  H
312         SUPREME COURT REPORTS                     [2015] 3 S.C.R.


A       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
B       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
c
        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
D       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
E 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
F       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
G       functioning as an appellate court or tribunal."

            Similarly, in S.R. Bhagwat v. State of Mysore, (1995)
      6 SCC 16, this Court held:

        "17. We may recapitulate at this stage that the petitioners
H
      S. T. SADIQ v. STATE OF KERALA& ORS.                       313
                 [R. F. NARIMAN, J.]

have mounted a limited attack on the impugned                     A
provisions of the Act insofar as they deprive them of the
monetary benefits flowing from the deemed promotion
to be given to them pursuant to the orders of the Division
Bench of the High Court which have become final
between the parties. We have extracted the aforesaid              B
section with its relevant sub-sections wherein the
impugned provisions of the clauses concerned have
been indicated by underlining them. Petitioners contend
that underlined portions of sub-sections (2), (3) and (8)
                                                                 c
of Section 4 clearly fall within the teeth of binding
decision of the Division Bench of the High Court and
they are in clear conflict with the said binding decision.
As we are not concerned with other provisions of the
Act except Section 11 (2) we may straightaway turn to            D
Section 11. The said provision deals with overriding
effect of the Act. It reads as under:

"Overriding effect.-(1) The provisions of this Act or of
any order made thereunder shall have effect                      E
notwithstanding anything inconsistent therewith
contained in any law or order having the force of law or
rules made under the proviso to Article 309 of the
Constitution of India for the time being in force or any
provision regulating the conditions of service of any
allottee or in any order made by virtue of any such law,
rules or provisions.

(2) Notwithstanding anything contained in any judgment,
decree or order of any court or other competent authority        G
the rights to which a civil servant is entitled to in respect.
of matters to which the provisions of this Act are
applicable, shall be determined in accordance with the
provisions of this Act, and accordingly, any judgment,
                                                                 H
314       SUPREME COURT REPORTS                     [2015] 3 S.C.R.



A     decree or order directing promotion or consideration for
      promotion of civil servants and payment of salaries and
      allowances.consequent upon such promotion shall be
      reviewed and orders made in accordance with the
      provisions of this Act."
B
      18. A mere look at sub-sectiqn (2) of Section 11 shows
      that the respondent State of Kamataka, whichwas a party
      to the decision of the Division Bench of the High Court
      against it had tried to get out of the binding effect of the
c     decision by resorting to its legislative power. The
      judgments, decrees and orders of any court or the
      competent authority which had become final against the
      State were sought to be done away with by enacting the
      impugned provisions of sub-section (2) of Section 11.
D
      Such an attempt cannot be said to be a permissible
      legislative exercise. Section 11 (2), therefore, must be
      held to be an attempt on the part of the State Legislature
      to legislatively overrule binding decisions of competent
E     courts against the State. It is no doubt true that if any
      decision was rendered against the State of Karnataka
      which was pending in appeal and had not become final
      it could rely upon the relevant provisions of the Act which
      were given retrospective effect by sub-section (2) of
F     Section 1 of the Act for whatever such reliance was worth.
      But when such a decision had become final as in the
      present case when the High Court clearly directed
      respondent-State to give to the petitioners concerned
      deemed dates of promotions if they were otherwise found
G     fit and in that eventuality to give all benefits consequential
      thereon including financial benefits, the State could not
      invoke its legislative power to displace such a judgment.
      Once this decision had become final and the State of
      Karnataka had not thought it fit to challenge it before this
H
        S. T. SADIQ v. STATE OF KERALA & ORS.                        315
                   [R. F. NARIMAN, J.)

   Court presumably because in other identical matters this          .A
   Court had upheld other decisions of the Karnataka High
   Court taking the same view, it passes one's
   comprehension how the legislative power can be pressed
   in service to undo the binding effects of such mandamus.
   It is also pertinent to note that not only sub-section (2) of      B
   Section 11 seeks to bypass and override the binding
   effect of the judgments but also seeks to empower the
   State to review such judgments and orders and pass fresh
   orders in accordance with provisions of the impugned
   Act. The respondent-State in the present case by enacting
                                                                     c
  .sub-section (2) of Section 11 of the impugned Act has
   clearly sought to nullify or abrogate the binding decision
   of the High Court and has encroached upon the judicial
   power entrusted to the various authorities functioning            D
   under the relevant statutes and the Constitution. Such an
   exercise of legislative power cannot be countenanced."

      In Delhi Cloth & General Mills Co. Ltd. v. State of
Rajasthan, (1996) 2 SCC 449, this Court struck down The E
Kota Municipal Limits (Continued Existence) Validating Act,
in the following terms:

  "15. In the case of the village of Raipura there was a
  preliminary notification calling for objections to the              F
  extension of the limits of the Kota Municipality to include
  it, but it was not followed by a final notification. In the case
   of the village of Ummedganj there was a notification
  extending the limits of the Kota Municipality to include it,
  but it had not been preceded by a notification inviting the        G
  objections of the public thereto. Later, another notification
  was published whereby the village of Ummedganj was
  irxcluded from the limits of the Kota Municipality. The
  provisions of Sections 4 to 7 of the 1959 Act and the
                                                                     H
316      SUPREME COURT REPORTS                      (2015) 3 S.C.R.


A     earlier provisions of the 1951 Act in the same behalf were,
      therefore, not met in the case of either the village of
      Raipura or the village of Ummedganj. The Full Bench of
      the Rajasthan High Court has held that these provisions
      were mandatory and that judgment has become final.
B
      16. The Validating Act provides that, notwithstanding
      anything contained in Sections 4 to 7 of the 1959 Act or
      in any judgment, decree, order or direction of any court,
      the villages of Raipura and Ummedganj should be
c     deemed always to have continued to exist and they
      continue to exist within the limits of the Kota Municipality,
      to all intents and for all purposes. This provision requires
      the deeming of the legal position that the villages of
      Raipura and Ummedganj fall within the limits of the Kota
D
      Municipality, not the deeming of 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,
E     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
F
      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
G     Constitution Bench in the case of Prithvi Cotton Mills
      Ltd. ((1969) 2 sec 283: (1970) 1 SCR 388] It must,
      therefore, be held that the Validating Act is bad in law
      and it must be struck down."

H         Mr. Giri, learned counsel appearing for the State is
        S. T. SADIQ v. STATE OF KERALA& ORS.                  317
                   [R. F. NARIMAN, J.)

porrect in saying that no Section of the principal Act had been A
struck down and hence Section 6 of the Amendment Act did
not need to remove the basis of any earlier decision striking
down an Act. We repeatedly asked him if action had been
taken under Section 3(1) or 3A of the Amendment Act to
acquire any of the cashew factories before us. His candid B
answer was "no". The argumentthat 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 C
3 or Section 5A of the Land Acquisition Act or any other
safeguard such as a resolution of the legislative 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 D
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 E
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.
                                                                F
13. Point2.

     The Statement of Objects and Reasons for the 1995
AmendmentAct reads as follows:-
                                                                G
       "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
                                                                H
318      SUPREME COURT REPORTS                   [2015] 3 S.C.R.



A     employment to the workers who have been rendered •
      unemployed and to secure to them just conditions of
      service.
      2. The Government have acquired certain cashew
B     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
c     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
D
      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.
E     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
F     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
G
      above mentioned institutions and Government will suffer
      financially, amounting to crores of rupees.

      5. If the cashew factories are handed over to its previous
      owners based on the directions of the Court, owners may
H
         S. T. SADIQ v. STATE OF KERALA& ORS.                       319
                    [R. F. NARIMAN, J.]

    not be in a position to start work in the near future for the    A
    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.       B
    Where there is concentration of Cashew Factories.

    6. Therefore to tide over the situation Government intends
    to arm with a new legislation to acquire certain factories
    from the date of original notification for acquisition.          C

    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 D
 AmendmentAct 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
 CAP EX (the 10 factories). It is interesting to note that apart E
·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.

          It is clear that the objects and reasons for the F
  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 G
  post acquisition are run by the Cashew Development
  Corporation or CAP EX regard being had to the object sought
  to be achieved - namely to avoid unemployment of cashew
  workers. Whether 36 factories run by the Cashew Development H
320          SUPREME COURT REPORTS                (2015] 3 S.C.R.


A Corporation are to be acquired or 1Ofactories run by CAP EX
  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.
B 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
C informed that these 36 factories are functioning under their
  respective owners for the last twenty years. In the
  circumstances we hold that there is no intelligible differentia
  between the 36 factories and the 10 factories taken over having
  any rational relation with the object sought to be achieved and
o on this ground also Section 6 of theAmendmentAct 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
E and the land appurtenant thereto that have been taken over by
  the State under the Amending Act must be handed back within
  a period of eight weeks from the date on which this judgment
  is pronounced.

F     Devika Gujral                                 Appeals allowed.




G




H