ition Nos
3464 65 5908  3231 of 1980
Under Article 32 of the Constitution section N Kacker K N Bhatt and Surendara Raju for the Petitioners in W P Nos 3464 6580 and 590880
Soli J Sorabjee E C Agarwala R Satish and V K Pandita for the Petitioner in WP 323180
L N Sinha Att
and Altaf Ahmed for R 1
in WPs 3464 6580
Y section Chitaley and Vineet Kumar for R 14 in WP 323180 and for R 2 in WPs 3464 6580
R P Bhatt and N R Chaudhary for R 4 in WP 346480
P R Mridul and Naunit Lal for R 7 in WP 323180 and for R 2 in WP 3464 6580
Anil Dev Singh and Ashok Grover for R 15 in WP 323180 and R 3 in WPs 3464 6580
section K Bhattacharya and Suresh Sethi for R R 6 and 12 in WP 3464 6580
Satish Vij for R 15 in WP 3464 346580
section Balakrishnan and section K Bhattacharya for R 16 in WP No 323180
The Judgment of the Court was delivered by BAHARUL ISLAM J
BY these writ petitions under Article 32 of the Constitution the petitioners have challenged the orders of the 843 first respondent the State of Jammu and Kashmir allotting quotas of resin to respondents
According to the petitioners these orders denying similar treatment to them are arbitrary and violative of Article 14 of the Constitution of India
The material facts in the four petitions are similar
The industries of which the petitioners are partners are admittedly small scale industries for the manufacture of resin and turpentine oil
The industries of the petitioners  in Writ Petitions Nos
3465 of 1980 and 3231 of 1980 were provisionally registered but revalidated for short periods
The industry of the petitioner in Writ Petition No 3464 of 1980 was provisionally registered revalidation was applied for but was not granted
The industry of the petitioner in Writ Petition No 5908 of 1980 was formally registered
It appears that the petitioners were applying to the Government for allotment of resin as well as raw material for their industries but the Government referring to their policy decision of March 20 1978 refused to make any allotment of Oleo resin to them
The petitioners in Writ Petition Nos
3464 and 5908 of 1980 have alleged that they purchased raw material from the open market and somehow managed their industries to run for a certain period
Resin is admittedly a forest product extracted from Chir trees
It has been alleged that only three States of India namely Himachal Pradesh Uttar Pradesh and Jammu and Kashmir have Chir forests
The petitioners have alleged that the State of Himachal Pradesh and Uttar Pradesh stopped selling resin for the last several years in view of establishment of factories in public and joint sectors and that the State of Jammu and Kashmir was selling resin by public auction
Sometime after October 1978 the State of Jammu and Kashmir it has been further alleged virtually created monopoly in favour of three existing industrial units and committed to supply them about 17000 M T of resin for long time to come
There is a Public sector unit in Jammu which consumes about 3000 tons of resin per year
Several small scale industries according to petitioners were assured supply of resin even as late as 1979 notwithstanding the Government s aforesaid industrial policy
In such a situation being unable to procure raw materials for their industries the petitioners approached the relevant authorities including the Deputy Minister of Industry and the Chief Minister of Jammu and Kashmir for allotment of raw materials but to no avail
For the sake of convenience we shall hereinafter refer only to the respondents and Annexures in W P No 3231 of 1980
The petitioners further allege that while they were refused allotment of supply of raw materials respondent No 1 made allotments to respondents No 4 to 16 hereinafter called allottee respondents although most of them 844 were not even formally registered at the time of making the impugned orders of allotment
The petitioners contend that in the circumstances they were adversely discriminated against while respondents Nos 4 to 16 were favour ed and as such the impugned orders are liable to be struck down as  violative of Article 14 of the Constitution of India
The impugned orders have been annexed as Annexures N to Z 1
The letter of allotment Annexure X  in favour of Ms Sud Pine Industries respondent No 27 is in the following terms Sub Supply of resin to Ms Sud Pine Industries Kunwani for their factory at Talab Jammu
Government Order No 175 DIC1980 dated 30 5 1980
In partial modification of Government order No 2
DIC of 1979 dated 20 1 1979 sanction is accorded to the supply of crude oleo resin 700 tonnes per annum by the Forest Deptt
to Ms Sud Pine Industries for their factory at Kunjwani Talab Jammu on the terms and conditions specified in the above said order
The supply of resin shall be subject to its being reviewed by the Government with due regards to its availability from year to year
By order of the Govt
of J  K Sd Sheikh Ghulam Rasool Secretary to Government
 The orders as per annexures L to W in favour of respondents 17 to 26 are identical in material parts
It will be sufficient if the material portion of Annexure N is quoted
It runs thus
Sanction is accorded to the supply of crude oleo resin by the Forest Department to Ms Kashmir R  T Works Srinagar for their factory at Srinagar subject to the terms and conditions of the agreement to be entered into between the Forest Department and the party and on the following specific conditions 1
The Forest Department will supply Crude oleo resin  700 TPA to the firm from the date the Unit is formally registered subject to its being reviewed with due regard to its availability from year to year 845 2
The resin will be supplied  Rs 320 per quintal unless otherwise reviewed on year to year basis
The cost of empty tin will be charged  Rs 5 per tin in addition to the above rate 4
By order of the Government at Jammu and Kashmir
Sd Sheikh Ghulam Rasool Secretary to Government emphasis added 5
It is obvious that the industries of these respondents were not formally registered at the time of the impugned orders of allotment
The State of Jammu and Kashmir Respondent No 1 have filed a counter affidavit
They have not denied the material allegations of the petitioners but they say that the allocations have been made in order to implement the industrial policy of the State Government as enunciated in a Report of the Development Review Committee Jammu and Kashmir a committee headed by Shri L K Jha the Governor of the State
Respondent No 1 has quoted from the report the Goals  of the industrial policy which read The balanced economic development of the State will obviously be one of the foremost concerns of the Government
They would like to emphasis maximum self sufficiency and self reliance consistently with the need to promote the requisite and desirable degree of inter dependence with other parts of the country The objective will be to secure the most prudent and beneficial utilization of the natural resources and skills peculiar to this State to achieve the maximum possible F rate of economic growth consistently with the need to secure a degree of balanced regional development as well as balance between the rural areas and the urban to maximise State per capita income and to generate the maximum employment potential
Many areas of the State are as cut off isolated and poor as they were at the dawn of independence
We have to improve the living standards in these specially backward areas for whom in terms of the quickest mode of transportation Srinagar is more distant than the State is from Kerala
Many sections of the community similarly like Scheduled Castes Gujarat and Bakarwalas and other backward class need to be assisted in their speedy uplift
846 Ladakh needs a visible acceleration of the tempo of its development so that our people in this far flung and difficult frontier area can realise the full fruits of development in the shortest possible time
 Respondent No 1 has given the district wise break up of the applications received from different regions
It is as follows Jammu 63 Udaypur 10 Rajouri 1 Poonch 1 Doda 1 Kathua 9 Anantnag 2 Srinagar 11 Outsiders 12 GRAND TOTAL 110 Applications They have also shown the allotments of resin districtwise
The industries of the respondents No 4 to 16 are also small scale industries
The break up of the small scale industries as given in Annexure RII in WP No 3464 shows that Jammu has the largest number of units namely 10 Second comes Srinagar with 4 then come Udampur with 3 Kathua in Jammu Division Anantnag and Baramulla in Kashmir Division with one each
Rajouri in Jammu Division has none
It appears that the industries of the present applicants are also in the Jammu region and those of respondents No 4 to 16 also appear to have been located in the Jammu region
In their affidavit at para 3 respondent No 1 has stated that all the applications for allocation of resin were considered from time to time at various levels by the State Government and it was decided on May 30 1980 as follows a The allotment of resin to the existing unit should be rationalised b Applications received from various districts be considered for allotment of resin
The State Government have submitted that they made no promise of supply of raw material in favour of any of the petitioners
The petitioners have submitted in our opinion correctly that as there were already 10 units functioning in small scale sector in the Jammu region and inasmuch as the allottee respondents  industries were also located in the Jammu region allocations in their favour would be inconsistent with the Government s industrial policy
847 7
In the instant case respondent No 1 as well as the other parties has taken reliance on their industrial policy statement as stated above
We have already quoted the relevant portions of the State Industrial policy statement
The Government have stated that they have considered all the 110 applications including those of the petitioners coming from industrialists of different parts of the country
They have stated and their statement is corroborated by the documents that there is preponderance of industries in the Jammu region and industries of the petitioners as well as respondents No 4 to 16 were also functioning in the same region
Respondent No 1 has not explained as to how and on what basis if any the allotments were made by the impugned orders in favour of the new allottees whose industries were located in the Jammu region
Pawan Kumar Sharma the petitioner in WP No 3231 of 1980 states that his industry was provisionally registered under the Provisional Registration Certificate dated 29 1 1976
It was further extended for further short periods
He says that as there was assurance from the authorities that raw materials will be allotted to him after he completed the installation of requisite machinery
The J K Resin and Turpentine Industries of petitioner Om Prakash Sud was provisionally registered in the year 1975
He was also approaching the Government from time to time to get allotment of the raw materials but got no favourable reaction from the Government
He states that he had already established his factory and got it insured for a sum of Rs 680 lakhs
He obtained raw material from the open market and was running his industry
Petitioner Ravindra Dutt of Ms Dinesh Resin and Turpentines in WP No 3465 of 1980 alleges that his industry was provisionally registered on 25 10 1975 which was extended upto April 1979
Letter of 31st May 1979 shows that his industry was later on formally registered as a small unit
This factory was producing resin and turpentine out of the resin which he purchased from open auction He was approaching the Government from time to time to get requisite quantity of raw materials but failed to get it
Petitioner Shamlal Kapoor Director of Jammu Resin Enterprises Private Limited alleges that his industry was formally registered with the Government of J  K
He alleges that his industry was functioning for a long time and trying to get necessary quota of raw materials from respondent No 1
He was approaching the Government to get requisite quota
Sud Pine Industries was provisionally registered on 10 3 1978 and formally registered on 10 10 1978
It appears from Annexure N in respect of respondent Ms Kashmir R  T Works 848 respondent No 17 Annexure O in respect of Ms Sun Shine R  T Industries respondent No 18 Annexure P in respect of Ms Woolan Paints and Chemicals Scopore respondent No 19 Annexure Q in respect of Ms Pine Wood Products Company respondent No 20 Annexure R in respect of Ms Haji Mast Ali Slaria respondent No 21 Annexure S in respect of Ms Phyto Chemicals respondent No n 22 Annexure T in respect of Ms New Himalayan Paints and Chemicals respondent No 23 Annexure U in respect of Ms section K Chemical respondent No 24 Annexure V in respect of Ms Rajindra R  T respondent No 25 and Annexure W in respect of Ms Bharat Paints and Chemicals respondent No 26 that the allotments were made in their favour from the date the unit is formally registered which shows that industries were not even registered at the time of the impugned orders of this allotment
Respondent Ms Rajindra R  T Industries Udhampur appears to stand on a different footing
He appears to have fulfilled all the conditions required for allocation of resin in accordance with the policy of the State of J  K The industry is an experienced one and the factory started production of resin and turpentine at Hoshiarpur since 1948
It is a firm registered under the Indian Partnership Act and has long experience in the business including resin and turpentine since 1948
The industry set up a factory in 1970 in the rural industrial estate near Udhampur which is a backward area
The industry was provisionally registered in 1970 and formal registration was granted on 29 2 1974
It applied for adequate quantities of raw materials and was allotted only 200 tons although it had been sanctioned 1500 per ton per annum since 1975
Respondent Ms Sud Pine Industries Ms Kashmir R  T Works Bakshi Resin  Turpentine and Ms K C Soni Bakshi also appear to be on different footings
It appears from Annexures X  and Y  that the first two industries have already been formally registered
They are existing units having already started production
So far as respondent Ms Bakshi Resin and Turpentine is concerned it had already set up factory and started production
It was provisionally registered as early as 1976 and the unit is located in a backward area
So far as respondent K C Soni Resin  Turpentine is concerned it was formally registered on 19 4 79
This unit is located in a remote backward area of the State
Equality before the Law or equal protection of the laws within the meaning of Article 14 of the Constitution of India means absence of any arbitrary discrimination by the law or in their administration
No undue favour to one or hostile discrimination to another should be shown
A classification is reasonable when it is not an arbitrary selection but rests on differences pertinent to the subject 849 in respect of which the classification is made
The classification permissible must be based on some real and substantial distinction a just and reasonable relation to the objects sought to be attained and cannot be made arbitrarily and without any substantial basis  See State of West Bengal vs Anwar Ali
The classification must not be arbitrary but be rational that is to say it must not only be based on some qualities or characteristics which are to be found in all the persons grouped together and not in others who are left out
Those qualities or characteristics must have a reasonable relation to the object of the law
In order to pass the test two conditions must be fulfilled namely 1 that the classification must be founded on an intelligible differentia which distinguishes those that are grouped together from others and 2 that differentia must have a rational relation to the object sought to be achieved by the Act
The differentia which is the basis of the classification and the object of the Act are distinct things and what is necessary is that there must be a nexus between them
We are not unaware that the rule of equality does not mean mathematical equality and that it permits of practical inequalities
But what is needed is that the selection of quota seekers as in the case in hand should have a rational relation to the object sought to be achieved in the industrial policy decision of the State
If the selection or differentiation is arbitrary and lacks a rational basis it offends Article 14 9
In the instant case although the State Government has taken reliance on the State Industrial Policy decision referred to above they do not appear to have followed it in practice except in the cases of the five respondents referred to above
In fact no reasonable basis has been adopted in making the allotments in favour of the new allottees and denying allotments to the petitioners
In the circumstances the petitions are partly allowed the impugned orders of allotments except in favour of respondents Ms Rajindra Resin and Turpentine Industries Ms Sud Pine Industries Ms Kashmir R  T Works Ms Bakshi Resin  Turpentine and Ms K C Soni Resin  Turpentine are quashed
The petitions are partly allowed
The Rules are made absolute except as against these five respondents
The respondent
No 1 the State of Jammu and Kashmir is directed to make the other allotments of the raw materials to the applicants in the light of the observations made above
Respondent No 1 shall pay costs of Rs 10000 to each of the petitioners
NVK Petition partly allowed


Summary:
The petitioners in their writ petitions to this Court alleged that they were carrying on small scale industries for the manufacture of resin and turpentine oil and that they applied to the Government for allotment of resin for their industries but the Government referring to their policy decision of March 20 1978 refused to make any allotment and that they purchased raw material from the open market and managed to run their industries
They further alleged that while they were refused allotment of supply of raw materials the State respondent No I made allotments to respondent nos
4 to 16 n although most of them were not even formally registered at the time of making the impugned orders of allotment and that they were consequently adversely discriminated against while respondent nos
4 to 16 were favoured and as such the impugned orders of allotment were liable to be struck down  violative of Article 14 of the Constitution of India
The State respondent No 1 contested the writ petition denied the material allegations of the petitioners and alleged that the allocations were made in conformity with the State Industrial Policy decision of securing the balanced economic and regional development of the State that there was a preponderance of industries in the Jammu Region and that the industries of the petitioners as well as respondent nos
4 to 16 were also functioning in that region
Allotments of resin were made districtwise 110 applications were received and considered and allotment was made to respondents nos
4 to 16
On the question whether the orders of the 1st respondent allotting quotas of resin to respondent nos
4 to 16 were arbitrary and violative of Article 14 of The Constitution
 HELD  1i Respondent No 1 has not explained as to how and on what basis if any the allotments were made by the impugned orders in favour of the new allottees respondent nos
1 to 16 whose industries were located in the Jammu region
847 C ii Although the State Government has taken reliance on the State Industrial Policy decision it does not appear to have followed it in practice except in the cases of five respondents
No reasonable basis had been adopted in making the allotments in favour of the new allottees and denying the allotments to the petitioners
84913 F 842 2
The rule of equality does not mean mathematical equality
It permits of practical inequalities
What is needed is that the selection of quota seekers as in the instant case should have a rational relation lo the object sought lo be achieved in the industrial policy decision of the State
If the selection or differentiation is arbitrary and lacks a rational basis it offends Article 14
849 D 3
Equality before the Law or equal protection of the laws  within the meaning of Article 14 of the Constitution of India means absence of any arbitrary discrimination by the law or in their administration
No undue favour to one or hostile discrimination to another should be shown
A classification is reasonable when it is not an arbitrary selection but rests on differences pertinent to the subject in respect of which the classification is made
The classification permissible must be based on some real and substantial distinction a just and reasonable relation to the objects sought to be attained and cannot be made arbitrary and without any substantial basis
848 H 849 A State of West Bengal vs Anwar Ali 19521 SCR 284 referred to