ivil Appeal No 186 of 1976
Appeal by Certificate from the Judgment and Order dated 27101975 of the Kerala High Court in O P
No 3743 of 1973
Ajit Pudussery and B P
Singh for the Appellant
AS Nambiar KR Nambiar VJ Francis and NM Popli for the Respondents
The Judgment of the Court was delivered by RAY J
The appellant who is owner of land comprised in RS Nos 4411 and 4420 in village Thottapuzhasseri in Alleppey District assailed the validity of the declaration made under Section 6 of the Kerala Land Acquisition Act 1961 Act 21 of 1962 made by the 2nd Respondent Board of Revenue Kerala State on 2591973 and published in Kerala Gazette dated October 16 1973 stating that the lands de scribed therein are needed for a public purpose namely for a playground for MMA High School and directing the Revenue Divisional Officer Changannur to order for acquisition of the same
The grounds on which the challenge was made in the writ petition inter alia were that the property in question was mortgaged with the Maramon Marthomite Church as the Church refused to return the property on accepting the money the appellant filed a suit for redemption of the mortgage which was ultimately decreed and appellant got 537 possession of the property on October 8 1973
During the pendency of the suit the church authority moved the educa tional authorities as well as the Sub Collector for acquisi tion of the property for the school in order to wreak ven geance on the petitioner appellant
It has also been alleged that the purported proposal to acquire the said property was made mala fide
The land was situated about 3 furlongs away from the school and it was not convenient to be used as playground of the school that there were more suitable land available for purpose of playground that the land was required by the owner for purpose of constructing buildings for his sons
The appellant raised all those objections within the prescribed time on receiving notice under section 5 of the said Act
No notice was issued to the Education Department as required under Rule 5b  c of the Kerala Land Acquisition Rules and the objection made by the appel lant was decided by the respondents without hearing the Government Department or its representative
As such the impugned declaration is illegal and bad and the proceeding for acquisition is also illegal and unwarranted
The writ petition being OP No 3743 of 1973 was dismissed by the High Court holding that there was no violation of the provi sions of Rule 5b  c of said Rules nor there was in fringement of Rule 6
The instant appeal is on a certificate granted by the High Court under Section 1331 of the Constitution of India
The sole question that has been agitated before this Court by the learned counsel for the appellant is that provisions of Rule 5b  c of Kerala Land Acquisition Rules 1963 are mandatory and the notice of the date of hearing of objection filed by a person interested in the land has to be given to the Departmental Officer requiring the land and failure to serve such notice will invalidate the declaration made under Section 6 of the Kerala Land Acquisition Act 1961 in short the said Act
Several deci sions have been cited at the Bar in support of this conten tion
The provisions of Section 5 read with Rule 5b  c of the said Rule have not been complied with in hearing objections
The learned counsel for the respondent has on other hand submitted that the proposal for acquisition of the land in question for play ground of the said school was made at the instance of the Manager of the School the 3rd re spondent
The said proposal was considered by the Education Department which certified that the acquisition was for a public purpose viz for playground of the said school and also that the school agreed to place the necessary funds for payment of compensation for acquisition of the said land
538 The appellant on receiving the notice under Section 3 of the said Act filed an objection to the proposed acquisition of the said lands in accordance with the provision of Sec tion 5 of the said Act as well as under Rule 3 of the Land Acquisition Rules 1963
The 1st respondent did not issue any notice of the objection filed by the appellant peti tioner to the Education Department as required under Sec tion 5 of the Act and Rule 5b  c and 6 of the Rules framed under the said Act though notice was issued to Re spondent No 3 the Manager MMA High School Maramon
The 1st respondent Sub Collector Land Acquisition Officer after hearing the petitioner appellant and his lawyer as well as the representation of the 3rd respondent submitted a report to the respondent No 2 Board of Revenue Kerala State recommending for the acquisition of the said land for the purpose of playground for the said High School
The Board of Revenue the respondent No 2 after considering the report made a declaration under Section 6 of the said Act stating that the land specified in the notification under Section 3 of the Act is needed for a public purpose and the said declaration was published in the Kerala Gazette dated 16th October 1973 and directed the Revenue Divisional Officer Changannur to take order for acquisition of the lands
It is convenient to mention that the procedure for requisition for acquiring land has been laid down by the Government in the Land Acquisition Manual
Sub Clauses a  b of Clause i of Section 1 of Chapter 6 of the Manual is in these terms ia Application in all cases in which land is required by a department of Government other than the Revenue Depart ment should be sent by the Departmental Officer authorised in this behalf in the prescribed form Form 2Appendix II to the District Collector or to the Special Land Acquisition Officer if any appointed for the purpose
In the applica tion it should be specifically stated whether the sanction of the competent authority exists for the work for which the land is required and for the acquisition of the land and whether necessary funds have been provided in the budget for meeting the cost of acquisition
b Application from associations or private institutions other than educational institutions should be sent in the prescribed form to the District Collector
When land is required by a private educational institution the Manager of the institution should send an application in the pre scribed form to the District Educational Officer concerned 539 who will forward it to the District Collector with a certif icate from the departmental officer authorised in this be half to the effect that the acquisition is necessary as the land is required for a public purpose and that the private educational agency has agreed to meet the expenditure It is evident from this procedure that in case of land being required by the private educational institution
the Manager of the institution shall send the application for acquisition of the land The Education Department has to consider the application and to give a certificate to the effect that there was a public purpose for which the pro posed acquisition is asked for and the private educational institution is agreeable to meet the entire expenditure for acquisition of the said property
In the instant case Educa tion Department after considering the requisition made by the Manager of the said school certified about the public purpose for which the land in question is required to be acquired and also that the school authority is ready and willing to meet the entire costs of the acquisition
As has been stated hereinbefore that the appellant the owner of the said plots of land submitted his objection to the appli cation for acquisition mainly on four grounds inter alia that the proposal for acquisition of the land has been made by the Manager of the said school malafide in as much as the said land was mortgaged previously with the Church authori ties and subsequently the mortgage was redeemed on the basis of a decree passed by the court in a suit and the said land was taken possession of by the applicant in execution of the said decree
Secondly this land is situated about 3 furlongs away from the said school and so it is not conven ient to use the land for a play ground of the school third ly there are other lands available in the locality which can be conveniently used for this purpose fourthly it has been stated in the objection petition that the land in question remains submerged during certain part of the year and so the same is not convenient for the purpose of play ground of the school
The 3rd respondent on receiving notice of the objections appeared before the Sub Collector
Re spondent No 1 and reiterated that the objections are all without any basis and the land was needed for the playground of  the school and the said land is being used for this purpose for a period of about10 years
The respondent No 1 after inspecting the site and after considering the objec tions and hearing the appellant and his lawyer submitted a report recommending for acquisition of the said land
It will be evident from the inquiry report made under Section 3 of the said Act that the lands is in possession of the School and it is being used as its playground for the last 10 years
The Management of the said School has no other alternative but to request 540 for acquisition of the said land for the above purpose
it is also staled in the report that the proposed land is at a distance of 3 furlongs and there is no other convenient and suitable land more nearer to the school
On considering this report the respondent No 2 Board of Revenue made a declaration which has been notified in the Kerala Gazette on October 16 1973 and directed proceeding for acquisition of the said land
It is therefore clear that the Manager of the school submitted a requisition to the Education Department for a certificate as to the public purpose for acquisition of the said land for play ground o the school and also to the effect that the school has agreed to meet the entire expend iture in due compliance with the procedure laid down in the Kerala Land Acquisition Manual
The Education Department made the necessary recommendations
The proposal tot the acquisition of the plot was made at the instance of the Manager of the said private educational institution the respondent No 3 and not by the Education Department
Sec tion 5 enjoins that any person interested in any land which has been notified under sub clause 1 of Section 3 as being needed or likely to be needed for a public purpose may within 30 days after publication of the notification object to the acquisition of the land
It has been further provided therein that objections shall be made to the Collector in writing and the Collector on receiving the objections shall give the objector an opportunity of being heard either in person or by counsel and shall after hearing all such objec tions and after making such further enquiry if any as he thinks necessary either made a report in respect of the land which has been notified under Sub Section 1 of Section 3 or make different reports in respect of different parcels of such land to the Board of Revenue where the notification under Sub clause 1 of Section 3 has been made and published by the Collector
Rule 3 of the Kerala Land Acquisition Rules clearly states that after publication of the notifica tion under Section 3 the Collector shall issue a notice stating that the land is needed or is likely to be needed as the case may be for a public purpose and requiring all persons interested in the land to lodge before the Collector within 30 days after the issue of the notification a state ment in writing of their objections if any to the proposed acquisition Rule 5b enjoins that after receiving the objections from a person interested in the land within prescribed time the Collector shall fix a date for hearing the objections and give notice thereof to the objector as well as to the departmental officer or company or the local 541 authority requiring the land where such department is not the Revenue Department
On a perusal of this provision it is clear that notice of the date of hearing of the objections has to be served not only on the objector but also to the Departmental Offi cer or Company or the local authority requiring the land that is where the requisition for acquisition of the land is made by the Departmental Officer the Departmental Offi cer who requires the land for acquisition has to be served with a notice of the date of hearing of objections
In the instant case the requisition was made not by the Education Department but by the Manager of MMA High School Mara mon
The Education Department merely certified about the requirement of the land in question for a public purpose ie for playground of the school and that the entire cost of the requisition is agreed to be borne by the school
The sole question agitated in regard to the validity of the declaration is that no notice of the date of hearing of objection has been served on the Education Department and as such the Education Department has no opportunity to consider the objections raised by the appellant and also to say whether the land in question was suitable for acquisition or whether other lands are available for this purpose for which the proposed acquisition is required to be made and non service of such a notice invalidates the declaration made under Section 6 of the Act by respondent No 2
It is only the private school as well as the owner of the land who are required to be informed as to the date when the objections will be heard under Section 5 of the said Act and only they are to be heard
The High Court has rightly held that in the instant case there has been no violation of Rule 5b  c of the Rules
The High Court has further held that there has not been any infringement of Rule 6
It has also been held that it is inappropriate to issue notice to the Education Officer or Departmental Officer who certified about the public purpose as well as readiness of the School authority to pay the entire money for acquisition and failure to issue such a notice to the Departmental Officer would not amount to violation of the principles of natural justice and in fringement of the said Rule 5b  c of the said Rules
We have mentioned hereinbefore that the proposal for acquisi tion of the land was made by the Manager of the school for the purpose of playground of the school and the requisition was thus made at the instance of the school
The Education Department merely certified about the public purpose and also about the willingness on the part of the school author ity to bear the entire cost of acquisition
The land is not sought to be acquired at the instance of the Depart 542 mental Officer and as such it has been rightly found by the High Court that non service of notice of hearing of the date of objection on the Education Department does not per se infringe the provisions of Rule 5b  c of the Kerala Land Acquisition Rule 1963
We do not find any flew in the judgment rendered by the High Court
Several decisions have been cited at the Bar to impress upon us the point that Rule 5 b  c read with Section 5 of the said Act are mandatory and non compliance therewith will render the declaration invalid and the entire acquisi tion proceedings on the basis of the said declaration will be illegal and unwarranted
In the case of Lonappan vs Sub Collector Palghat AIR 1959 Kerala 343 one Appu moved the authorities of the Education Department to acquire 112 acres of land in RS No 1257 for the construction of a building and for a play ground and a garden for his school
On the recommendation of the Education Department the Gov ernment issued a notification under Section 41 of the Land Acquisition Act proposing to acquire an area 112 acres in the said survey for this school
Notice was issued to the appellant calling for appellant Lonappan the owner of the land for filing objections if any under Section 5 A of the Land Acquisition Act to the proposed acquisition and in that notice it was stated that the enquiry under Section 5 A would be held on 239
The Sub Collector after hearing the appellant and his objections overruled his objections and recommended acquisition
The appellant thereafter made application under Article 226 of the Constitution for a writ of certiorari and for other directions for quashing the proceedings and for granting other reliefs on the ground that under Section 5 A the Sub Collector was bound by Rule 3 to give notice of those objections to the Education Depart ment at whose instance step for acquisition has been taken
It was held that the object of Rule 3b of the Rules made by the Madras Government under Section 551 of the Act for giving notice to the concerned department before hearing of objections filed under Section 5 A is not merely to give the department an opportunity to maintain or support its origi nal requisition but also to provide an opportunity for the original requisition being reviewed or reconsidered by the department in the light of the objections raised by the owner of the land and other persons interested in it
In State of Madras and Ors
vs Periakkal and Ors AIR 1974 Madras 383 the land acquisition proceedings were start ed at the instance of the Harijan Welfare Department for the purpose of constructing houses for the Harijans
Notice of the date of hearing of the objections filed by the respond ent owner of the land was not given to 543 the Harijans Welfare Department at whose instance the pro ceedings for acquisition were initiated under Rule 3b of the Rules made under Section 55i of the Land Acquisition Act
It was held that under Rule 3b it is incumbent on the Collector to give notice of objection to the department requiring the land and copies of the objections had to be given to such other departments
This is for enabling the department to file on or before the date fixed by the Col lector a statement by way of answer to the objections and also depute a representative to attend the enquiry
This has to be done in order to give an opportunity to the department requiring the land to traverse the objections if any filed by the person interested in the land so that in the light of the reply of the department a decision may be arrived at for the purpose of making the declaration under Section 6
It has been held that the Rule being not mandatory its effect is that in the absence of service of such notice acquisition proceedings are not invalidated
In State of Mysore  Ors
vs VK Kangan  Ors  at 371
The land was sought to be acquired for an Engineering College at the instance of the Education Depart ment of the State of Mysore Section 4 notification was issued in the year 1960
After an enquiry into the objec tions filed under Section 5 A the Land Acquisition Officer sent his report to the Government
Government overruled the objections and issued a notification under Section 6
The Education Department at whose instance the land was sought to be acquired was not given notice as required by Rule 3b of Madras Land Acquisition Rules
The respondents filed a Writ Petition in the High Court challenging the validity of both the notifications on the ground that the Education Department was not consulted
The High Court upheld the contention of the respondents and quashed the notifications issued under Sections 4 and 6 of the Act on the ground that if the Department concerned filed any reply pursuant to the notice issued the objector would know what the Department has stated by way of reply and at the stage of hearing of objections the objector might adduce evidence or address arguments to meet what is stated in such reply
The objector could further urge before the Government that the reasons given by the department in reply to the objections should not be accepted
It was held that Section 5 A requires the Collector to make a report after hearing the objections
It does not mean that a rule cannot be framed which would enable the department concerned to place its view point before the Collector when considering the objection under Section 5A
The proceedings of the Collector are quasi judicial and it is only proper that he should be apprised of the attitude of the department requiring the land in the light of the objections filed
It would be 544 helpful to the Government in making the decision to have before it the answer to the objection by the department in order to appreciate the rival view points
Rule 3b is not ultra vires Section 5A
It has been held that Rule 3b was enacted for the purpose of enabling the Collector to have all the relevant materials before him for coming to a conclusion to be incor porated in the report to be sent to the Government in order to enable the Government to make proper decision
Rule 3b is mandatory and non service of the notice on the Government Department at whose instance the requisition for acquisition was initiated the notification under Sec tion 6 becomes bad and as such the same was quashed
This decision is not applicable to the instant case for the simple reason that the requisition was not made at the instance of the Government Department but at the instance of the Manager private school and the Education Department merely has given a note certifying that the purpose of the requisition is a public purpose and that the school agreed to bear the entire costs
In these circumstances it cannot be contended that the requisition has been made by the Education Department or by its officer for acquisition of the land in question
There fore in our considered opinion the ruling cited above is not applicable to the instant case
In the premises aforesaid the only conclusion that follows is to dismiss the appeal
In the facts and circum stances of the case the parties will bear their own costs
Y Lal Appeal dismissed


Summary:
By Finance Act 1987 clause 10 C was inserted in section 10 of the Income Tax Act 1961
The effect of this clause was to grant tax exemption to employees of the public sector in respect of the amount received under the voluntary retirement scheme approved by the Central Government
The petitioners an employee of a private sector company and the trade union of the said private company flied a writ petition in this 442 court challenging the validity of clause 10 C contending i the denial of benefit of tax exemption to employees of private sector company being arbitrary and discriminatory the impugned clause was unconstitutional as violative of Article 14 ii the heading Welfare Measures  to the Memorandum explaining the provisions in the Finance Bill 1987 proposing insertion of clause 10 C in section 10 of the Income Tax Act 1961 was decisive of the object of its enactment the tax benefit being in the nature of welfare measure the impugned clause must be so construed as to apply to all employees equally whether of the public sector or private sector in order to uphold its validity
Dismissing the petition this Court HELD There is a distinction between the public and private sectors
The Government or the public sector under takings are as a distinct class separate from those in the private sector and the fact that the profit earned in the former is for public benefit instead of private benefit provides an intelligible differentia from the social point of view which is of prime importance for the national econo my
Thus there exists an intelligible differentia between the two categories which has a rational nexus with the main object of promoting the national economic policy or the public policy
This element also appears in the impugned enactment itself wherein economic viability of such compa ny  is specified as the most relevant circumstance for grant of approval of the scheme by the Central Government
This intrinsic element in the provision itself supports the view that the main object thereof is to promote and improve the health of the public sector companies even though its effect is a benefit of its employees
The economic status of em ployees of a public sector company who get the benefit of the provision is also lower as compared to their counterpart in the private sector
Viewed in this perspective the very foundation of the challenge to the impugned provision on the basis of economic equality of employees in both sectors is non existent
Once the stage is reached where the differen tiation is rightly made between a public sector company and a private sector company and that too essentially on the ground of economic viability of the public sector company and other relevant circumstances the argument based on equality does not survive
This is independent of the dis parity in the compensation package of employees in the private sector and the public sector
The argument of dis crimination is based on initial equality between the two classes alleging bifurcation thereafter between those who stood integrated earlier as one class
This basic assumption being fallacious the question of any hostile discrimination by granting the benefit only to a few in the same class denying the same to those left out does not arise
465D H 466A B 443 2
The purposes of the impugned legislation include reduction in the existing gap between the lower compensation package in public sector and the higher compensation package of the counterpart in private sector in addition to prevent ing misuse of the benefit in private sector which is not subject to the control of administration by Government like that in the public sector
One of the purposes is streamlin ing the public sector to cure it of one of its ailments of overstaffing
The provision is an incentive to the unwanted personnel to seek voluntary retirement thereby enabling the public sector to achieve the true object indicated
The personnel seeking voluntary retirement no doubt get a tax benefit but then that is an incentive for seeking voluntary retirement and at any rate that is the effect of the provi sion or its fallout and not its true object
The real dis tinction between the true object of an enactment and the effect thereof even though appearing to be blurred at times has to be borne in mind particularly in a situation like this
466F H 467A B 21 Keeping in view the true object of the impugned enactment there is no doubt that employees of the private sector who are left out of the ambit of the impugned provi sion do not fall in the same class as employees of the public sector and the benefit of the fall out of the provi sion being available only to the public sector employees cannot render the classification invalid or arbitrary
The other clauses in section of the Act further show that the scheme of section 10 contemplates a distinction between employees based on the category of their employer
This classification cannot therefore be faulted
67B C Hindustan Paper Corporation Ltd vs Government of Kerala vs Union of India  Ors
 Judgments Today  LK Jha Memorial Lecture delivered on the 6th December 1988 by Shri RN Malhotra Governor Reserve Bank of India on Growth and Current Fiscal Challenges re ferred to
Hindustan Antibiotics vs Workmen  and SK Dutta 1
TO vs Lawrence Singh Ingty  distinguished and held inapplicable
RD Shetty vs International Airport Authority of India   cited
22 In view of the simultaneous definition of public sector company  in the Income Tax Act there can be no occasion to construe this 444 expression differently without which a private sector compa ny cannot be included in it
It is therefore not possible to construe the impugned provision while upholding its validity in such a manner as to include a private sector company also within its ambit
468C D 3
The principles of valid classification are that those grouped together in one class must possess a common charac teristic which distinguishes them from those excluded from the group and this characteristic or intelligible differen tia must have a rational nexus with the object sought to be achieved by the enactment
449D Re The Special Courts Bill 1978  referred to
The latitude for classification in a taxing is much greater and in order to tax something it is not necessary to tax everything
These basic postulates have to be borne in mind while determining the constitutional validity of a taxing provision challenged on the ground of discrimination
1451C PH Ashwathanarayana vs State of Karnataka 1989 Supp 1 SCC 696 Federation of Hotel and Restaurant Association of India vs Union of India 1989 178 ITR 97 Kerala Hotel and Restaurant Association  Ors
vs State of Kerala  Ors
  and 1 TO vs N Takin Roy Rymbai SC referred to
East India Tobacco Co vs Andhra Pradesh   Vivian Joseph Ferriera vs Municipal Corporation of Greater Bombay  and Jaipur Hosiery Mills vs State of Rajasthan   cited
The Court should therefore look beyond the obsten sible classification and to the purpose of the law and apply the test of palpable arbitrariness  in the context of the felt needs of the times and societal exigencies informed by experience to determine reasonableness of the classifica tion
453B 51 It is necessary to discern the true purpose or object of the impugned enactment because it is only with reference to the true object of the enactment that the existence of a rational nexus of the differentia on which the classification is based with the object sought to be achieved by the enactment can be examined to test the validity of the classification
453E F 445 52 There is a clear distinction between the legislative intention and the purpose or object of the legislation
While the purpose or object of the legislation is to provide a remedy for the malady the legislative intention relates to the meaning or exposition of the remedy as enacted
While dealing with the validity of a classification the rational nexus of the differentia on which the classification is based has to exist with the purpose of object of the legis lation so determined
453H 454A Francis Bennion s Statutory Interpretation 1984 edi tion page 237 referred to
For determining the purpose or object of the legisla tion it is permissible to look into the circumstances which prevailed at the time when the law was passed and which necessitated the passing of that law
For the limited pur pose of appreciating the background and the antecedent factual matrix leading to the legislation it is permissible to look into the statement of Objects and Reasons of the Bill which actuated the step to provide a remedy for the then existing malady
454B C A
Thangal Kunju Musaliar vs M Venkitachalam Potti  Anr   State of West Bengal vs Union of India 1964 1 SCR 371 and Pannalal Binjraj vs Union of India   referred to
61 To sustain the presumption of constitutionality consideration may be had even to matters of common knowl edge the history of the times and very conceivable state of facts existing at the time of legislation which can be assumed
Even though for the purpose of construing the meaning of the enacted provision it is not permissible to use these aids yet it is permissible to look into the historical facts and surrounding circumstances for ascer taining the evil sought to be remedied
The distinction between the purpose or object of the legislation and the legislative intention is significant in this exercise to emphasise the availability of larger material to the Court for reliance when determining the purpose or object of the legislation as distinguished from the meaning of the enacted provision
454F H 7
An explanatory memorandum is usually not an accurate guide of the final Act 
455C Francis Bennion s Statutory Interpretation 1984 Edn
page 529referred to 446