.,..

-·..._

.... • #

PATHUMMA AND OTHERS A v.

STATE OF KERALA AND OTHERS

January 16, 1978

[M. H. BEG, C.J., P. N. BHAGWATI, v. R. KRISHNA lYER; s. MURTAZA

FAZAL Au, P. N. SHINGHAL, J.-\SWANT SINGH AND 8

V. D. TULZAPU.RKAR, JJ.]

_Kerala A.r:rlculwri.fts Dl'bt Relief Act. 1970 .~. 20-Scop,· of-Section 20 clllllles .cleror~ t~ reco••er proputil's .old to rmrcllasers i11 t'.Tt'L'Iitio11 of dcrt?e passed m llqtrclatiiiJ: the tbr owed by the ogriculturist-Rt•J•tricrion if reasonab/~-1! dt?pmes rh_e crf(/1/ors of rlu!!'r ri.ffllt to property--Sub s. 3-/f purchaser C f!l proprty at auct1o!l lS _strmg; r, properry to be retumed to o!fricult11rist dhtor '!purchase mou:y patd wulmt .su momlt.s--Sub-.'- (6) a bona jitle alienee purchasm;: from aucllOil purcha'ier before the date of tile Act e.tempt jrom opl!ration of the Act-Sub-s. (3 )-If \•iolar/l•t> of Art. 14 .

The statement of objects ; nd reasons to the Kcrala Al!riculturists• Debt Relief Act. 1970 states that the bnefit~ conferred by Kern\~ Acr 31 of I 951S were nvnilable only in r~ct of dbts incurred by the agriculturists before the date of commencement of the Act. namdy Jui}' 14. 1958.

And since even after D this date agricultural indebtedness among the poorer sections continued to be on the: increne the legislature consider(d it necessary to ghe relief to the a_;!ncultunst~ agam-; t whom suit!! had been filcLI for recovery of debtll accrued atter the commencement of the 1958 AcL

Se.:tion 20 (I) of the Act provides tht where MY immo\ablc property in which the agriculturist had nn interest has been '>old in cxeC111ion of any decree for

recovery of a debt but possession has not actually passed from the judgmc:nt debtor to the purchuser and the decree-holder is the purchaser then such E judgment-debtor may deposit one haJf of the purchase money a.nd apply to the Court to set aside the sale of the property and the Court shall order the sate to be set aside and further order payment of the balance of the purchase '?toney m

kn equal insmlments in accordance with the procedure !'et out thern. Sub section (2) provide<l that where any immo\'able property in which tbe agriculluri.st had an interet hu been sold in e.'\ecution of nny decree for orre::u'll of

rent and the pMses.qion of the property ha!! nctually passed from the. judgment debtor to the purchaser during the periods mentioned therein then such JUdgment F debtor may dposit one half of the purchae money nnd apply to th~ Court to !et a.-.ide the sale of the properly and the court !!hall order the setttng ns1de of the sale and for the payment of the bllance of the rurch:1~ mony according to the proceduro t out in the sl!ction.

S\lbscction (3) prOVIdes that where property sold in the execution of any deere~ for the reco\cry of a debt

tnd the decree holder is not the purchaser su-.:h JUdmnt-debtor may depo.<at the purchne monev and apply to the court to set aside the sale of the prorty und the: Court shall order the snle to be set nside.

Sub-section

(.S) prov~; e G that where imprmement~ have been ellectd on le property sold after the be of snl~ the value of tuch improvement u~ dctermrned by . the Courts !!bimll 1. n • • t h tion ., urchtser u -o; ec to de~11ed by the a pphcant for payment l e nu~.: ,. • 3 shall not be

(6) provides that nn ordr under sul?sl!ctro_n~ II) or (2) or eli~ urch.:scr deemed to llffccl the rihl!i of bona fule ohenee!l of . the auc n r deriving rights bdore the daltl of publication of the llJII.

I tl I . cJ mort,:rce decree n8ain!lt the In the in., lnnt cnscs a cn:d•tor 1:1 ~>tame. u d. btor wa!l not able to judmenl debtor, who \\a~ nn a~ ricultu nt. Smce th~al~ of th~ ' property wn• H pay the dccret!ll <mount in inslnlents, 0, decree: fo{.ciioned and purchased by

pas'ICd by the Court.

The debtors prOp\:rly ~:.s omc cosei decrc\!s were the l_lPPdl!lnl who w~ not th~ dccree0h?.!fer. 1J on their failure to ray the ohlatned by the crrottors tlatnst the u 0~ an

. S'IJPREME COURT REPORTS [1978] 2 s.c.R .

in!>tnlments property was purchased at the auction by the dcree-holdcrs themselws. After the purchase, improvmcnts were rnnde by them in the propert1es.

When the debtors launched proceedings under the Act for restoration o f possession of the property on pnyment of the decretal amount, the appellants chalcn

!!~:d the constitutional validity of the Act.

T he H igh Court upheld the val1dtty or s. 20 and d ismissed the wril pc!titions . .

In appeal to this Court, it wac; contended on behnlf of th~ appellants that ( l) the appclhm ts having acquired valid title to the property ••ftcr p urcase nt uuction sale in execution of a dec[\!e, s. 20 which deprives them of thc1r nght to hold property was violative of Art. 19(1 )(f), (2) though the ob\ ious obJeCt of the Act was to give relief to debtors who filed suils for recovery of debts after the commencement of the 1958-Act it travel~ beyond the statement ot obJects nnd reasons, giving a blimkct power to the Court to set aside the: .s;.lc completed even before the pasing of the Act nntl ( 3) s- 20(3} and ( 6) arc viol:uive of Art. I 4 because the stmnccr dccrcc-holtlcr was selected for hosltl:! discrimination whercns a bona ficlc alienee was exempted from the opcmtion ut the Act.

Dismissing the <ppcals,

(per Ueg, C. J., _Krishna Iycr, S. Murtnza Faz..'ll Ali anJ Jaswant Singh. JJ.)

HELD : There is no constitutional infirmity on the ground that the 1\ct ~~ violative of Art, 19Cl)(f). The rc!itrictions imposed arc ckarly rcasooablt: within the meaning of cL (6) of that Article.

[559 A-D]

l(n) In intapreting the constitutional provisions for judging the impact ot

~10 cnactmnt on the fund<tmcntal rights of the citizens the approach of the Courts is to interpret the constitutional provisions ngai n'\t the social sl!tting ol the country so as to show a compl\!te conc; ciuusncss nnu uep a ware ness ot the growing requirements of the society, the incrcn-; ins m.-eds of the nation. the

burning problems of the day nnu lhc complex issues facing the people htcb the lcgislnturl! in its wil, dotn, through bl!ncfici; tl Jc gilat io n, seeks to solve_ The judiciul npproach should be d ynamic rath o.!r thiln :llntic. p mgm;~ ti c r<thcr than pedantic und elastic rather th; m rigid. h m ust ta c into con,.idcmtion the changing I rends of economic thought, the temper of the times and the Ji\ins aspira tions und feelings of the people.

This Court must stric a just bnlnnce

t-w-e c:n the fundamc:nta! rights and th~ larger :.1nd broader interests of ~; ocu: cy .

[534 ACl

(b) The lcgb.lature i~ in a bttcr position to Ulllkrstuml :nd npprcciate the Ol!c.dS or tht: people and tO brinl! <tbout SOCial rdornto; for the unliftmcnt of the backward and the Wt:..ako:r M:Ctions and for the improvement o( the lot of U\~ poor.

T he Court will interfere only \"hen the statute is clarly violutive: of the fuooamcnt;1l. riJ:ht or when the Act is beyond th~ Jcgislacivc competence. Courts have .ro:COAnJf>ed th.at there i!l alw&IYS u pn:o; umption tn fl\vour of the conslltUttonallty of a statute :tnd the onus to prove its invulii.lity lies o n the party aailing the Act.

[54-1 A -UJ

1 . .'.t

h oti l'rc.u-htJd "· The Atlmilli.\trctlor for r/e! Unimt Tnritorv of Delhi (J9n2) 2 SCR 125 anti Muhd. f/anif Quare:,/Ji & Ors. v. 1"/u Statr (J/ Bilwr (195~) SCR 629 rdc:rred to.

(c) The object of thc Act bdng removal or agriultuml imlchtedncss nml reduction of on~ of the important cuus of po-..-erty is unc.loubt.::dly in publiC

intcrct and the rc)triction must be prcumcJ to rd; Jsonahle.

(545 BCJ

C b) By a lonl[ line o{ dcdion.; this Court has laiJ d~1wn sevc~•l teo; ts nnd guiJclinc.s for judging the rc;1sorwblcness of restrictions.

They nrc ;

(i) Fum.I:mcnta\ RiJ:ht:; anJ D irective Prim:ipk""\ c.:un .. titute the "con.-.dem:cf' of lhc Comtitution.. The purpose or the latter i~ ro fix ccrtnin social nni.l c'onomic go;.t l~ for immc:diatc attainment by bringing ubout 11 non-violnt social revolution.

The Constitution aims :tt bringin~; ubou t a !'lynthsis bct\\~n fundamental right\ ond uircclive principles by ).!i"llll-! to the former a place of pride and to lhe IaUer a place of permanence. [545 F-Gl

' . ' ' . ' . r

. . ,

'--·

' . .,

PATHUMMA Y.· KBRALA . 539 '

Ftttchan1 Himmatlal & Or.~. v. State of Maltaraslura etc. (1917) 2 SCR

828. ts 'Holmess Kesawranda Blmrali Sripadagolavaru v. Stare of Kern/a (1973)

Supr. SCR 1. State of Rcrala & A.nr. v. N. M. Thoma.t & Ors. (1976) 2 SCC 310 and The State of Bombay v. R. M. D. Chamarbougwala (1957) SCR 874 nt ~21 referred to.

ln the instant case the object of th.: Act being to eradicate tral indebtedness nml thereby sere _the ommon sood of the people !ivins in object poverty •

lcnrly fulls the . drrecttvcs n rts. 38 and 39(b) of the Con.titutioo. There IS no conflict between the d1recttves nnd the restrictions sought to be placed by the Act, [545 E-F, 547 A] ·

(ii) The rcstricti<_?ns must not be arbitrnry or ex, cssi'-'e in nature o to so yo n_tl the requueent of th~ interest of the S!!nernl ptlbuc. Wbnt is

req!-urc~ IS. that tht: legiSlaturt.: should tnkc intdligent cure in choosing a cour~ whrch IS dact:ttcd by rc:lSon t\00 good onscience SO (l~ to strike a just balance between the freedom contnincd in Art. J9(1)(f) and the socinl control pcnnitted by ell. (5) ; md (6) of tbnt Article.

[547 B-E] .

CM11tt11mm Roo v. The State of Madhya Prad~:.lt (1950) SCR 759 nt 763 C and M<•s.rr.v. Dwarka PTtiSll(/ l.Axmi Naraitt v. Th~ Sratl' of llllflr rradesil & Or.f.

(1954) SCR 803 :tt 811-12 referred to.

(iii) No abstrnct or gencrnt pattern or a tu~ principle can be laid down which can be of universal application und the s., me "'ill have to vary from case

to Cilsc and with rcgurd to ~; hanging conditions, tbe values of human life. social ·

philosoph}' of the Constitution, prevailing conditions and the surrounding circumst:mccs, all of which must enter into the judicial verdict. [547 F]

Messrs. Dwarka Prasad Laxmi Naraifl v. The State of Uuur Pradesh & Ors.

(1954) SCR 803 nt 811-12 Statt' of Madra.~ v. V. C. ow (1952) SCR 597 • .\fnlrd. Hanif Quarc.rlii & Ors. '' Tltc Suue of Biltar (1959) SCR 629 !lt 660 a nd The Lord Krishna Sugar Millr Ltd. & Anr. v. Th~ Union of India & Anr.

(i9tl0) 1 SCR 39 at 56 fcrred to.

Civ) The Court has ro examine the n; llurc: and extent, the purport and .content of the right. n ature of the evil sought to be remedied by the statu~. the

harm caused to the citizen .and the benefit 10 be conferred on the pen; on or the community for whose nefit the legislation is passed. urgency of the evil and

E the necessity to rectify the s.1me. ln so doing the Cowl ha.o; to strike a JUSt balance: between the restriction imposed nnd the social control eo, isaged by_ Art. l 91G).

[549 A-B}

Narendra Kumar & Ors. v. Tbt! Unio11 of lndin & Or.r. ( 1960) 2 SCR 375 :111d BIJ(.:/wn Singh&: Ors. v. Stur~ of Punjab & Ors. (1971) 1 SCC 713 at-718

referred to. ·

(v) Thre mu.)l be direct :md proximate nexus or a reasonable connection F between the rlriclion imposed <Jnd the object sought to be nchiev-ed. In other

words. tllc Court has to see wherher by virtue of the re1triction imposed on the rii:ht of the citizen the object of the statute is rc:tll}' fulfilled or frustrntcd. )( there is a <lircct ncXtL" bct\lccn the rtriction nn<.l the objo-ct of the Act then a strong presumrtion in fnvour of the comtitutionality of the Act '";11 nrise. [549 F-Gl 1\amfappMo Koflarratltil Kodwui & Ors. v. Tl1e State o/ Madrar & Or.-.. ( 1960) 3 SCR RR7 111 92K und 0 . 1\. Gllmh & A11r. v. N. 1\. Jo.tcp/1. (1963l Supp. 1 SCH. 789 ut 705 refcm:d to. .

G ·

(vi) Courts rTIIIJtt see whclhcr tl1e social control envisaged In (\rt. 19(6} t~

t-c in~; ciTccluntell by the restriction imposed on the fundamc~~:tl nght. .If te) look: nl the restricttOm only from the point of view of the Ctttzoen wh~ nfh:c

IC'd. it will not be n correct or safe tppronch ina...; nwch ns _tbe rcstnctron IS bound to be irksome nnd p; tinful to the _citizen even_ hough 11 m?Y for the

oublic ood. However important the nght of a cltrzcn or an tndl\ rllal may be, it hu~ to yield to the lorgcr inter<:sts of the country or the commuortv •

 {550 G-H, SSt AJ H Jwri 1>r<L)/ra1l v. Tilt< Admilli.ttnuor /or tht• l.'niun Trritory of Ddlli ( 1962> -.. 2 SCR 125 ttt 148 referred lo.

t)-ll-l ~SC'f .'77

r t !

! f

(vii) The Court is fuJly entitled to take into consideration matters ot common report. history of the times and mutters of common knowledge and the circumstances existtag at the time of legislation.

[551 D)

Mohd. Halli/ Quaresld & Ors. v. Tile Srote of Bihar (1959)

SCR 629 referred to.

In the instant case the object of the Act being to protect the agricultunstdebtors from the clutches of the greedy creditors, is undoubtedly a laudable

object. The Act does not take away the property of the purchaser without compensation and, therefore, his right to hold property has not been destroyed.

No exception can be taken to s. 20(2)(b) which provides for payment of the purchase money by instalments because the debtor, on account of his poverty, cannot p;1y the debt in a lump-sum. Secondly having regard to the cconom1c condition of the peasantry in the State, the object sought to be achieved bemg to remove agricultural indebtedness and amelioration of the lot of the agrtcul

turists, it cannot be said tbat the restrictions are in any way arbitrary .or excessive or beyond the requirements of the situation.

[558 B, D, F, H, 559 AI

2. The object of the Act mentioned in the first part of the statement ot objects and reasons clearly shows that it is comprehensive in nature nnd is not confined to any particular situation. In view of the clear and unambiguous provisions of the Act, it is not neces'.iary to delve into statement of objects and reasons. [559 GH]

Section 20 is not violathe of Art. 14 of the Constitution. [562 D]

3(a) Wbat Article 14 forbids is hostile discrimination and not rea.:.onable classification.

Equality before law d~ not mean that the same set of laws should apply to ull pcr:; ons under every circumstance ignoring differences and

disparitic.~S between men and thing~ . lt .Jg for the State to make reasonable classification which mut. fulftl two conditions : ( 1) the clnssification must be

founded on an intelligible differentia whkh distinguishes pcrsono; or things that are grouped together from others left out of the group; und (2) the ditlercntta mu.o; t have a rea.c; onnble ne,.us to the object sought to be Hchicved by the statute. [560 CEl

 ~

Sl1ri Rmn Kri.lma D(liiiJ ia v. Shri l u.ttic:e S. R. Tendolkar & Or.r. (1959) SCR 279 at. 296-97 uml Slart' o.f 1\nula & Anr. v. N. M. Tltomn.o.; & Ort. ( tn6)2 ,_ sec 310 refcm=d to. ~

(b) Having regard tu Ou: avov-.w objct of the Act, if by ra.-; oa of tltclr poverty and economic backwardness the agriculturist--dcblor.s on: trea ted as a !>Cpa:aw _category or class for preferential treatment in public inteflt, the classi

ficatlotJ IS not unn::c.onblc.

In ntal.; ing the: classiliction, the !:.tgislnturc can not be: cxpectcLI to prov1ue an n.bstraq symmetry. All thut is necessary is that e cltJ>scs ha\'e o b:: set apart ru.; rdt'nj; to the ncces:)llie~ and c:\igncics a.o; thctatcd by expcnencc aoo surroundmg ctrcumo; tanccs nnd tht= clnssilication should not be arbitrary, artificial or iJiusory.

[561 G-H, 562 AJ

State of W"!s/ Bengal v. Anwar A f{ S(lrkar (1952) SCR 284 at 321 referred to.

_(c) It is wdl settled that be! ore 1.1 person can claim to b: discriminah..'\1 agam.st ilnotl.u:r he mw.t llhow that all the other pcr:o.ons are similurly suuatc or equully. cuurmlanced. l.!nls. tho nppcllant is able to establish that he i.-.

eqott.-d "1th u bona fidt.' _:•ht:n~ ·~ ecry respect. Art. 14 " ill huvc no appl1~ atwn. l.n ut.her. wrJ,. dlcnmmallon violative of Art. 14 can only t.nko cfi.C1.:t

'~ t}Jerc: h dcnmJnatron bet\\"n equals nnd not when~ unequuls nrc llcing dJfTcrntly trentcd. [S62 CDl

Swte u! J & K v. T. N . Kl1osa & A 11r. (1974) l SCR 771 nt 783 Chiranjir La/ Chowdll!trl v. Thr Unior1 of India & Or.Y. ( 1950) SCR 860 nt 91 t and .So11111un f<, uf•rtt)' Co. v. Green~ 216 U.S. 400, 4 12 referred to.

~ -1

' f

.....

~---------------

PATHt, JMMA v. KERALA 541

 (ci) A stranger auction purchaser and a bona fide nlienee cannot b: satd A _, ..;:.,... to be similarly situate. [563 DJ

-1f

- '

.. -.

ln t_be itlmt ce the stranger auction purchaser who panicipatcs in the pcoceedmgs 111 execuuon of the decree against the debto.- bns a clear notice ot

the circumstacc1.'S under which the decree was pas'.>cd and of the fact that lhe property ::; old was the property of the debtor, If the legislature nt a 'later stage passes a law to restore the property to the asricutturist-dcbtor. the auction purchaser cannot complain. Secondly, the strnngcr auction-purchaser knows that be bad purchased the property at a distr(!Ss sale. Thirdly even if the pro- B p.:rty w~ n:'otoro:l tQ the stranger auction-purchaser, he is entitled to get the entire purchat.e money in lump-sum includinl; the cost before partjn~ wtth ~CSSIOR of the Jlroperty. This distinguishes the case from that of n dccrceholdcr-purchasl!r.

A hom1 fit/~ alienee on the other hand purchases, the pro- rty under negotiation; he has no notice of the d!bt of the debtor or the c•rcumstances under which the decree was passed. [563 E. H. 564 A} "

Per Bhagwa.ti, Shinghal and Tulzapurkar, JJ concurring.

The subjc.:t-maJtcr of the Act is dearly within the purview l.lf Entry 30 (money lending and money lenders; relief of agricultural indebtednc~.<l) m!d the

Act which providL~ for the .. relief o( ind<.!htcd a!,!ricullurio; Is 'in lhc Slate ot Kcmla .. is within the competence of the .State Legislature. [568 G. 569 Al

J (a) Thc-rc i~ no justification for the contention tlwt Entry 30 i~ o:onfiO<!d

only to .subsc.tmg indebledne.'i.'> nnd would not cover the nccc!lity o( provitlmt=

relief of t11~ nriculturisl'l nho had ,,,, t Utcir immovable prop.:rty bv Conr! .1) sales in execution of the decree n~; tin'>t th!!m und hnd been rendered destllutc.

Section 20 dh with n liability owhkh h:tJ ceased nne! diJ not subsist on lh~ date the Act cam~ into force.

Hut there is nothing in Entry 30 of List II II" show tllltl i.t will not be nttractc:.d and would not ennble the State Lcgl!.latun: to make a law simply because the debt .of the agriculturist h:d been paid off under a distres~ s.a.lc. [569 C-El

(b) An <ll(ricullurist doc.'i not ce~ to be <10 agriculturist merely because be hns lt bis immov:-blo property. It cannot be ~; aid thnt the State i.'l not interested in providing him nece<~<~;; r~· relid merely because he: h:t" l(l!; t his immovable property.

On the othc:r h<nd bis hr.:lplcss condition call~ for early solution aml it i,... only nJttun•l that ttu: State l.cgislature should think of rch:1tn

titating him h}' prm•idint;: the nccess; try relief under nn J\et of the! naltlr~ untter consideration. There is nothing in th..: working of Entry 30 lo show that the

relief contcmpbtcd by il mul ne~L-s'\.:lrily rclalc: to nny subsi!itiMg im.lcbtedn~ ar1d would not cover the quc!ltiDn of rdid' to those who haw }().l lhe means of their livelihood becnuse of the dd:Jv in providing them lcgislntive relict

 [569- F-Cil

(c) It cannot be g:.Jin.~; aid thnt :1griculluri't'. and even. ind\!btcJ a!lricul- !urists, form tho bulk or, :1t an)' mto a COt;~-idcr:lble. prt of the rur.tl puulallon 10 nn e-; senilidly r!.lr<il economy. nnd o rf n retr1chon 1~ rca.., onnf:-le m thciY interest. it wouiJ qu:Hdy f<ll within the purview of cl. (5) of Arl 19.

(570 FGJ

KawsltJ{>para Ko/laratllil Koclmnl .t Ors. v. The Stat~ of Mrulras and .Ors. !1960) 3 SCR 8B7 nnd Star,. of Antllrra Pradt•.Yh v. Kamwpalli Cllintta J'c-11/.:ata Chafamuyya Sturrl { J 963) t SCR 156 rd~:rrcd lo.

(d) Thou.saruh of suits were pending OJ!ain!it indebted nriculh!ri'ls . in \larious Court~ ond immovable~ propertie-. of n lnrge nuber of . ngnct!!!~,::~;~

had been wtc.l rndrin~ them comph:tely hdpless.

So tf the _Sl.lte 1'f:-Ct r lh, pa.sl; Cd tho A~.:t in the intcre-t of to .l!cncrl ,.rm~Hc 1 to •. Prct:•le;~; c ''ra:<>on: nature mention\!.(} in s, 20 tho rf'fllnctton. ptoflic tJcr~~~ 1( of the pun:h.,.; e hie". Even 100, tbe section make:-, proyll<lon or rcrr~~ 0 c:l . the purch:scr money, the cots of xcculion nnd lhe tmprovemen~~ ~~adr.:n 1h)the Hih Court Th t · a thcr-forc • rc.-asonblc tn ewry snsc 11 < - rightl~ ~;~::td,.c rgur:eot t~ the contrary. (571 A-Cl

Section 20 ii not violative of Art. 14. [573 Dl

-- '

i }

A 2(a) A comparison of sub-s-(1) with sub-s. (3) would show that the treatment to a decree-holder-purchaser is different and is less advantageous than the treatment to a purchaser who is not a decree-holder. The former is treated as a different class. Decree-holders very often exploit their debtors in many ways and sales to them are generally viewed with suspicion and disfavour.

Under O.XXI, r.72 CPC, it is not permissible for a decree-holder to bid for or purchase the property without the express permission of the Court. The decree holder purchaser has rightly been treated as a class by himself and that classification B obviously has the object of benefiting the agriculturist debtor by permitting him to deposit only half the purchase money and paying the balance in instalments.

[572 A-B]

(b) There is also justification for treating an auction purchaser at a Court sale differently from a bona-fide alienee of the auction purchaser who derived his rights before the date of publication of the 1968 Bill.

Such an alienee ot the auction-purchaser could not possibly have been aware of the hazards ot purchasing the property of an indebted agriculturist at the time of purchase. c ~~

(c) It is futile to contend that if the legislature has protected the iaterests of an alienee by enacting sub-s. (6) it has made a hostile discrimination against the auction purchaser as a class.

[573 D] ·

CrviL APPELLATE JuRISIDICTION : CiviL Appeal No. 420 of 1973.

From the Judgment and Order dated 17-8-1972 of the Kerala D High Court in Original Petition No. 5576 of 1970.

T. S. Krishnamoorthy lyer, S. B. Saharya, K. Ram Kumar and V. B. Salwrya for the Appellants in C. As. 420 and 442-445/73.

V. A. Sayed Muhamed Un CA 420/73) and K. M. K. Nair for R. 1 in all appeals and R. 2 in C. As. 442, 443 and 445 of 1973.

E Miss Lilly Thomas RR. 3-10 and CA 445/73.

The following Judgments of the Court were delivered by

F AZAL Au, I.-These appeals by certificate granted by the High Court of Kerala involve a common question of law containing a challenge to the constitutionality of the Kerala Agriculturists' Debt Relief Act, 1970 (Act II of 1970) {hereinafter referred to in short as the Act).

The appeaUants have a-ssailed particularly section 20 of the Act which entitles the debtors to recover the properties sold to purchasers in execution of a decree passed in liquidating the debt owed by the agriculturists.

As the five appeals involve common questions of law we propose to decide them by one common judgment. Section 20 of the Act was assailed before the High Court oo three grounds, namely.

1. That the Act was beyond the legisl3; tive competence of the State legislature and did not fall within entry 30 of the State List.

2. That the provisions of section 20 and the sub-sections thereof were violative of Article 19 ( 1) (f) of the Constitution of India inasmuch as they sought to deprive the appellants of their right to hold property; ,.

PATHUMMA v. KERALA (Fazal Ali, J.) 543

3. That sub-sections 3 anp 6 of section 20 of the Act were A violative of Article 14 of the Constitution of India inasmuch as the stranger decree-holder was selected for hostile discrimination whereas a bona fide alienee who stood on the same footing as the stranger decreeholder was exempted from the operation of the Act.

Mr. Krishnamoorty Iyer, learned counsel for the appellants has B not pressed point No. 1 relating to the legislative competence of the legislature and ha:s fairly conceded that in view of the dccsion of this Court in the case of Fatehchand Himmatlal & Ors. v. State of lv1aharashtra etc. (1) the constitutionality of the Maharashtra Debt Relief Act, 1976 which contained similar or rather harsher prwis:ons as the Act was uphclrf by this Court. . In' these circumstances, it will not be necessary for us to examine this question any further.

Bfore however taking up the other two points raised by counsel for the appellants which were pressed before us in this Court it may be necessary to set out the approach which a Court has to make and the principles by which it has to be guided in such mat!ers. fCourts Interpret the; constitutional provisions against the social setting of the country so as to show a complete consciousness and deep awareness D of the growing requirements of the society, the increasing needs of the l)ation, the burning problems of the day and the complex issues facing the people which the legislature in it~ wisdom, through beneficia,} legislation, seeks to solve.

The judicial approach should be dynamic rather than static, pragmatic and not pedantic and elastic rather than rigid.

It must take into consideration the changing trends of economic thought, the temper of the times and the living aspirations and feelings E of the people. This Court while acting as a sentinel on the quivive to

protect fundamental rights guaranteed to the citizens of the country must try to strike a just balance between the fundamental rihts and the larger and broader interests of society, so that when such right clashes with the larger interest of the countrv it must yield to the latter.

Emphasising the role of Courts in such matters this Court in the case of lyoti Prashad v. The Administrator for the Union Territory of F Delhi(2) observed as follows :-

"where the legislature fulfils its purpose and enacts Jaws, which in its wisdom, is considered necessary for the solution of what after all is a very human problem the tests of "reasonableness" have to be viewed in the context of the issues which faced the legislature.

In the construction of such laws and G particularly in judging of their validity the Courts have

necess£lrilv to approach it from the point of view of furthering the social interest which it is the purpose of the leo:ilation to promote, for the Courts are not, in these matters. functi01ling as it were in vacuo. but as parts of a society which is trying, by enacted law. to solve its problems and achieve social concord and peaceful adiustment and thus furtherino: the H moral and material progress of the community as q whole." -(i )[1o71jT(C.R. 828.

(2) /1962] 2 S.C.'R. 125 at 14~.

A It is ob11ious that the legislature is in the best position w understand and appredalt lhc needs of the people as enjoim:d by the Conlltution

to bring abou! social reforms for the upliftment of the backward and the weaker se<:t!ons of the society and for the improvement of the lot of poor people. The Court will, therefore, interfere in this process ._ only when the statute is clearly violative of the right conferred on the citizen under Part III of the Constitution or when the Act is beyond the B legislative competence of the legislature or mch other grounds. It is for this reason that the Courts have recognised tha~ ther::- s ;1lways a /-

presumption in favOu:( of the constitutionality of a statute :md the onus to prove its invalidity lies on the party which assails the same. In the case of Mohd. Hanif Quareshi & Ors. v. The State of Bihar(l) while

adveninl! to tl1is w; peci Das, C.J. as he then was, speaking for 1he Court

uherved as follow~ :-

"The pronouncement of this Court further establish, amongst other things, that there is 'always a presumption in favour of the constitutionality of an enactment and that the burden is upon him, who attacks it, to show that there has been a clear violation of the constitutional principles. The Courts, it is accepted, must presume that the legislature understands and correctly appreciates the need's of its own people. that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds".

It is in tk lightof these principles that we have to appru~_.,:, n the impact of the Act on the fundamental rights of the citizen conferred on him by Part Til of the Constitution.

1 he first lJianl of argument by learned Cl)unsel for the appellants is that the 1\ct was violative of Article 19 (1 ) (f) ~Jf the Constitution inasmuch as it takes away the right to hold property as guaranteed by Article 1 ~1(1 )(f). Article 19(1) (f) may be extncted thus :-

"All citizens shaH have the rit

(f) to acquire, hold and dispose of property".

It was contended that in the present case the appellants had acquired valid title to the property after having purchased it at tho auction sale

in execution of a decree against the debtors.

After the sale the propert1s vested in the appellants and the law which invaded their right to hold the property was clearly violative of ~rticle 19(1) (f) of the Constitution. There can be no doubt that Article 19 guarantees ail the seven freedoms to the citizen of the country including the right to hold, acquire and dispose of property. It must, however, be remembered that :Article 1 <) confers an absolute and unconditional right which 1s sub.iec't oniy 1o reasonable restrictions to be placed by Parliament or the legislature in pub1ic interest. Oause (5) of Article 19 runs thus:

H "Notll, ing in sub-clauses (d), (e) and (f) of the said clause shall effect the: operation of any existing Jaw in so far as

(I) rJ959] S.C. R. 629.

PATHUMMA V. KERALA (Fazal Ali, J.) 545

it imposes, or prevent the state from making any law imposing, A reasonable restrictions on the exercise of any of the rights conferred by the said sub-c1auses either in the interests of the general public or for the protection of the interests of any Schd-uled Tribe".

A perusal of this clause manifestly reveals that the right conferred by Article 19(1) (f) is conditioned by the various factors mentioned in dause ( 5). The Constitution permits reasonable restrictions. to be

placed on the right in the interest of the general public or for th~ protection of the interest of any Scheduled Tribe. The State in the instant case daims protection under clause (5) by submitting that th~ provisions contained in the Act amount to. reasonable restrictions for the general good of rm important part of the community, namely, the poor agriculturist debtors. The object of the Act, according to the State, is

to remove agricultural indebtedness and thereby to eradicate one of the important causes of poverty in this country. Such an object is undoubtedly in public interest, and, therefore, the restriction contained in the Act must be presumed to be a reasonable restriction. This Court has considered this question on several occasions during the last 2! decades and has laid down several tests guidelines to indicate what in a particular circumstance can be regarded as a reasonable restriction. One of the tests laid down by this Court is that, in judging the reasonableness of the restrictions imposed by dause (5) of Article 19, the Ccnrt has to bear in mind the Directive Principles of State Policy.

It will be seen that Article 38 contains a clear directive to the State to promote the welfare of the people by securing and protecting as effectively as possible a social order in which justice, social, economic and political shall inform aU the institutions of national life. Article 39 (b) contains a direction to secure that the ownership and control of the material resources of the community are so distributed as best to subserve the common good.

Indisputably; the object of the Act is to eradicate rural indebtedness and thereby to secure tl1e common ood of people Jiving in abject poverty. The object, therefore, clearly'-fulfils the directive laid down in Articles 38 and 39(b) of the Constitution as referred to above.

In fact in the case of His Holiness Kesavananda Bharati Sripadagalavaru v. State of Kerala(l 1 ) all the Judges constituting the Bench have with one voice given the Directive Principles contained -in the Constitution a place of honour.

Hegde and Mukherjea. JJ. as they then were have said that the fundamental rights and the Directive Principles constitute the "conscience" of our Constitution. The purpose of the Directive Principles is to fix certain socio and economic goals for immediate attainment by bringing about a non-violent social revolution.

Chandracbud, J. observed that our Constitution aims at bringing about a synthesis between 'Funda!mental Rights' and the. 'Directive Prjnci-· pJe& of State Policy' by giving tD the fanner a place of pride. and to the latter a place of permanence. .

In a latter case State of Kerala & Anr. v. N. M. Thomas & Ors.(::)

(1976) 2 S.C.C. 310 one of us (Fazal Ali, l) after analysing the

(1) [1973] Supp. S.C.R. I.

(2) [1979] 2 s.c.c. 310.

A Judgment delivered by all the Judges in the Kesvananda Bharati's case (supra) on the importance of the Directive Principles observed as follows :

"In view of the principles adumbrated by this Court it is clear that the Directive Principles form the fundamental feature and the social conscience of the Constitution and the Constitution enjoins upon the State to implement these directive principles.

The directives thus provide the policy. the guidelines and the end of socio-ec; onomic freedom of

Artcles 14 and 16 are the means to implement the policy to achieve the ends sought to be promoted by the directive principles.

So .far as the courts are concerned where there is no apparent inconsistency between the directive principles contained in Part III, which in fact supplement each other, there is no difficulty in putting a hannonious construction, which advances the object of the Constitution.

Once this basic fact is kept in mind, the interpretation of Articles 14 and 16 and their scope and ambit become as dear as day".

In the case of The State of Bombay v. R.M.D. ChamarbaugwoW.(l) this Court while stressing the importance of directive principles contained in the Constitution observed as follows :

"The avowed purpose of our constitution is to create a welfare State. The directive principles of State policy set forth in Part IV of our Constitution enjoin upon the State

the duty to strive to promote the welfare of the. people by securing and protecting, as effectively as it may, a social order i:11which justice, social, economic and political, 8hall

inform all the institutions of the national ltfe".

In the case of Fa, tehchand Himmatlal & Ors. v. State of l\-1aharashtra etc. (supra) the Constitution Bench of this Court observed as fo1lows :

"lncorporation of Directive Principles of State Policy casting the high duty upon the State to strive to promote the welfare of the people by securing and protecting as effectively as it may, a social order in which justice--social, ceo~ nomic and political-shaJ! inform all the institution!; of the national life:, is not idle print but ommand to action.

We can never forget, except at our peril, that the Constitution obligatrs the State to ensure an adequate means of live'lih0od

to its citizens and to see that the health and strengrh of workers, men and women, are not abused, that exploitation, moral and material, shall be extradited. Jn short, State action defending the weaker sections from social injustice

and all forms of exploitation and raising the standard of living of the people, nece5sarily imply that economic activities~ attired as trade or business or commerce, can be de-recognised as trade or business."

(1) [1957] S.C.R. 874 at 921.

PATHUMMA v. KERALA (Fazal Ali} J.)

In the instant case, therefore, we are not able to see any conflict bet- A ween the directive princples contained in Article 38 and 39(b) and the rcstr; ctions placed by the Act.

In the case of The State of Bombay & Anr. v. P. N. Bulsara( 1) this Court observed as follows ~-

''In judging the reasonableness of the restrictions imposed by the Act, one has to bear in mind the directive principles of State policy set forth in Article 47 of the Constitution." B

Another test which has been laid down by this Court is that restrictions must not be arbitrary or of an excessive nature so as to go beyond the requirement of the interest of the general public. In the case of Chintaman Rao v. The State of Madhya Pradesh(2) this Court observed as follows :-

"The phrase 'reasonable restriction' connotes that the limitation imposed on a person in enjoyment of the right should not be arbitrary or of an excessive nature, beyond what is required in the interests of the public.

The word 'reasonable' implies intelligent care and deliberation, that is, the choice of a course which reason dictates.

Legislation which arbitrarily or excessively invades the right cannot be said to contain the quality of reasonableness and unless it strikes a proper balance between the freedom guaranteed in Article 19(1) (g) and the social control permitted by clause (6) of ArticJe 19, it must be held to be wanting in that quality."

What is required is that the legislature takes intelligent care and deliberation in choosing a course which is dictated by reason and good conscience so as to strike a just balance between the freedom contained in Article 19 (1) and the social control permitted by clauses (5) and

(6) of Article 19. This view, was reiterated in the case of Messrs.

Dwarka Prasad Laxmi Narain. v. The State of Uttar Pradesh & Ors.(3)

It has also been pointed out by this Court that in order to judge the quality of the reasonable-ness no abstract or general pattern or a fixed principle can be bid down so as to be of universal application and the same will have to vary from case to case and with regard to changing conditions, the value of human life, social philosophy of the Consti~

t\Jtion, prevailing conditions and the surrounding circumstances all of which must enter into the judicial verdict.

In other words, the position is that the Court has to make not a rigid or dogmatic but an elastic and pregmatic approach to the facts of the case and to take an over-all view of aU the circumstances, factors and issues facing the situation. In the case of State of Madras v. V. G. Row(4) the Court observed as follows :-

"It is important in this context to bear in mind that the test of reasonableness, wherever prescribed, should be applied to --·-· each individual statute impugned, and no abstract standard,

(l) [1951] S.C.R 682.

(2) [1956] S.C.R. 759 at 763.

(3) [1954} S.C.R. 803 at 811-12.

(4) [1952] S.C.R. 597.

A or. general pattern, of reasonableness can be laid down as applicabJe t? all cases.

The nature of the right alleged to have been mfnnged, the underlying purpose of the restrictions impos<:d, the extent . and urgency of the evil sought to be reme<!ted thereby, the disproportion of the jmposition, the prevahlmg conditions at the time, should all enter into th2 judici-

B al verdict.

In evaluating such elusive factors and forming their own conception of what is reasonable, in all the circum- stances of a given case, it is inevitable that the special philosophy and the scale of values of the judges participating in \ the decision should play an important part.>t '1

This view was endorsed in the case of Mohd. Hanif Quareshi & Ors. c

v. The State of Bihar(l) 1959 S.C.R. 629 at 660 where this Court observed as follows :

"Quite obviously it is left to the court, in case of disput~, to determine the reasonableness of the restrictions imposed by the law.

In determining that question the court, we con ceive, cannot proceed on a genera~ notion of what in reason- • D able in the abstract or even on a consideration of what is reasonable from the point of view of the -person or persons on whom the restrictions are imposed."

Similarly in the case of The Lord Krishna Sugar Mills Ltd. & Anr.

v. The Union of India & Anr. (1) the Court observed that the Court m judging the reasonableness of a law, will necessarily see, not only the 1 E surrounding circumstances but all contemporaneous legislat1on passed

) as part of a single scheme.,

To the same effect is another decision of this Court in the case of Kavalappara Kottarrathil Kochuni & Ors. v. The State of Madrss & Ors.(2) where this Court observ~ as follows :

F "There must, therefore, be harmonious balancing between the fundamental rights declared by Ar:ticle 19 ( 1) and the social control permitted by Article 19 ( 5).

It is implicit in the nature of restrictions that no inflexible standard can be

laid down : each case must be decided on its facts."

In the case of Jyoti Pershad v. The Administrator for the Union

G Territory of Delhi (supra) at 147 Ayyangar, J. speaking for the Court observed as follows :

"The criteria for dtermining the degree of restriction on the right to hold property which would be considered reasonable, are by no means fixed or static, but must obviously j vary from age to age and be related to the adjustments neces- ,

H sary to solve the problems which comumnities face from time to time."

(l) [1952] S.C.R. 597.

(2) [1960J 3 S.C.R. 887 at 928.

I ~

PATHUMMA V. KERALA (Fazal Ali, J.) 549

The fourth test which has been laid down by this Court to judge the reasonablenesss of a restriction is to examine the nature and extent, the purport and content of the right, nature of the evil sought to be remedied by the statute, the ratio of harm caused to the citizen and the benefit to be conferred on the person or the community for whose benefit the legislation is passed, urgency of the evil and necessity to rectify the same. In short, a just balance has to be struck between the restriction imposed and tJte social control envisaged by clause ( 6) of Article 19. In the case of Narendra Ku11Ulr & Ors. v. The Union

of India & Ors. (1) this Court observed as follows;

"In applying the test of reasonableness, the Court has to consider the question in the background of the facts and circumstances under which order was made, taking into account the nature of the evil that was sought to be remedied by such aw, the ratio ot the hann caused to individual citizens by the proposed remedy, to the beneficial effect reasonably expected to result to the general public.

It will also be necessary to consider in that connection whether the restraint caused by the law is more than was necessary in the interests of tl1e general public."

J.n the case of Eachan Singh & Ors. v. State of Punjab & On. c:~) this Court observed as follows :

"The Court has in no uncertain terms laid down the test for ascertaining reasonableness of the restriction on the right~

guaranteed under Article 19 to be determined by a reference to the nature of the right said to have been infringed, the purpose of the restrictions sought to be imposed, the urgency of the evil and the necessity to rectify or remedy it all of which has to be balanced with the Social Welfare or Social purpose sought to be achieved.

The right of the individual has therefore to be sublimated to the larger interest of thegeneral public."

The fifth test formulated by this Court is that there must be a direct and proximate nexus or a ressonable connection between the restriction imposed and the object which is sought to be achieved.

In ?ther wotds, the Court has to see whether by virtue of the restriction 1mp0Sed on the right of the citl.zen the object of the statute is really fulfilled or frustrated.

If there is a direct nexus between the restriction and he. objet of the Act the!l a strong presumption in favour of the constitutionality of the Act wtll naturally arise.

In the case of K. K; Kochuni & Ors. v. State of Madras & Ors. (supra) this Court observed as follows :

. . ..",'But the restrictions sought to be imposed shall not be .arbitrary, but m'; lst have reasonable. relation to the object sought to be acheved and shall be m the interests of the general public".

(1) [1960] 2 S.CR. 375.

(2) [1971) 1 s.c.c. 713 at 718.

SUPREME COURTREPORTS

[1978) 2 S.C.R.

Same view was taken by this Court in the case of 0. K. Ghosh & Anr. v. E. X. Joseph(l) where Gajendragadkar, J. speaking for the Court observed as follows :

"A restriction can be said to be in the interests ot public order only if the connection between the restriction and the public order is proximate and direct. Indirect or farfetched or unreal connecion between the restriction and public order would not fall within the purview of the ex- . pression 'in the interests of public order'."

Another test of reasonableness of restrictions is the prevailing social values whose needs are satisfied by restrictions meant to protect social welfare. In the case of The State of Uttar Pradesh v. Kaushaliya & Ors. (2) this Court while relying on one of its earlier decisions in the case of State of Madras v. V. G. Row (supra) observed as follows :-

"The reasonableness of a restriction depends upon the values of life in a society, the circumstances obtaining at a particular point of time when the restriction is imposed, the decree and the urgency of the evil sought to be controlled and similar others".

We have deliberately not referred to the American cases because the conditions in our country are quite different and this Court need not rely on the. American Constitution for the purpose of examinlng the seven freedoms contained in Article 19 because the social conditions and the habits of our people are different. In this connection, in the case of Jagmohan Singh v. The State of U.P. (3 ) this Court observed as follows :

"So far as we are concerned in this country, we do not have, in our constitution any provision like the Ninth Amendment nor are we at liberty to apply the test of reasonableness with the freedom with which the Judges of the Supreme Court of America are accustomed' to apply 'the due process' clause".

Another important test which has been enunciated by this Court is that so fur as the nature. of reasonableness is concerned it has to be viewed not only from the point of view of the citizen but the problem before the legislature and the object which is sought to be achieved by the statute. In other words the Courts must see whether the social control envisaged in clause ( 6) of Article 19 is being effectuated by the restrictions imposed on the fundamental right. It is obvious that _if 'the Courts look at the restrictions only from the pointl of view of the citizen who is affected it wi1l not be a correct or safe approach in as much as the restriction is bound to be irksome and painful to the citizen even though it may be for the public good. Therefore, a just balance must be struck in relation to the restriction and the public good that is

(I) [1963] Supp. 1 S.C.R. 789 at 705.

(2) [1964J 4 S.C.R. 1002 at lOD.

(3) [1973] 1 S.C.C. 20 at 27.

PATHUMMA V. KERALA (Fazal Ali, J.) 551

done -to the people at large. It is obvious that, howeer important the right of a citizen or an individual may be, it has to yteld to the larger interests of the country or the community. In the case of Jyoti Per shad v. The Administrator for the Union Territory of Delhi (supra) this Court observed as follows :

"Where the legislature fulfils its purpose and enacts laws, which in its wisdom, is considered necessary for the solution of what after all is a very human problem and tests of 'reasonableness' have to be viewed in the context of the issues which faced the legislature.

Jn the construction of such laws and particularly in judging of their validity the Courts have necessarily to approach it from the point of view of fl, lfthering the social interest which it is the purpose of the legisration to promote, for the Courts are not, in these matters, functioning as it were in vacuo, but as parts of a society which is trying, by 'enacted Jaw, to solve its problems 'and achieve social concord and peaceful adjustment and thus furthering the moral and material progress of the community as a whole''.

It has also been held by this Court that in judging reasonableness of restrictions the. Court is fully entitled to take into consideration matters of common report, history of the times and matters of common knowledge and the circumstances existing at the time of legislation. In this connection. in the case of Mohd. Hanif Quareshi & Ors.

v. The Stcrte of Bihar (supra) the Court observed as follows :

"It must be borne in mind that the legislature is free to recognise degrees of harm and may confine its restrictions to those cases where the need is deemed to be the clearest and finally that in order to sustain the presumption of constitutionality the Court may take into consideration matters of common knowledge, matters of commn report, the history of the times and rna~ assume every state o.f facts which can be conceived existing at the time of legislation".

We do not mean to suggest that the tests laid down above are com-

, pletely exhaustive but they undoubtedly provide sufficient guidelines

~ to the Court to determine the question of re'asonableness of a restriction whenever it arises. ·

We would now like to examine the facts and circumstances of the G present case in the light of tlie principles enunciated above in order to find whether or not restrictions imposed by the Act on the rights of the appellants are unreasonable. Before however going into this question, it may be necessary to give a brief survey of the facts of the present case and the history of the period preceding the Act as also the economic position of the debtors prevailing at the time when the Act was passed. It appears that in Civil Appeal No. 420 of 1973 the H appei!ant was a stranger auction purchaser at a Court sale. The creditor had obtained a mortgage decree against the debtor which was

to be paid by instalments but as the debtor was not able to pay the instalment, a decree for sale of the property was passed by the Court and the property was auctioned and purchased by the appellant who was not the decree-holder. The rest of the facts are not disputed and need not be mentioned in the judgment. In the other appeals also

decrees were obtained by the credit9rs against the debtors and on failure of the debtors to pay the instalments the property was sold and purchased at the auction by the decree-holders themselves.

It is also not disputed that after the purchase of the properties some of the appellants had built houses, planted trees and made other improvements in the property.

When however the debtors launche9 proceedings under the Act for restoration of the possession of the property on payment of the decretal amount the appellants had challenged the Act on the ground that it was unconsitutional as indicated above. The High Court has pointed out in its judgment that though the Act was preceded by Act 31 of 195 8 under which benefits were conferred on the debtors for debts incurred by the agriculturists before 14th July, 1958 but as this date was considered to be inadequate by an amendment in 1961 the date was ex ended to 14th July, 19 59. In spite of this concession all the debtors were not able to, pay off their debts as a result of which they lo_st their property which was sold in execution

of the decrees brought by the creditors against them. It was also found by the High Court that as many as 102867 suits were filed in various Courts in the St'ate after 14-7-1958 and in most of them no relief could be given to the debtors because of the expiry of the date.

The very fact that most of the debtors were not able to pay debts and save valuable propert!cs which were in their possesion. shows the pitiable condition and the object poverty in which they live. The High Court ha~ also given the facts, figures and statistics to pro\·.,: the economic condition of the agriculturist debtors.

In this connection. the High Court has pointed out that the All-India Rural Credit Committee's Report, 1954 shews that 51. 77c of the Rural famll.:.'i in Kerala arc indebted and out of this, the proportion between cultiv~:lnr-.. and non-cultivators is- 58.6 and 38.6 respectively.

The All India average borrowing per rural family was Rs. 160. The corresponding average for the cultivator and non-cultivator was Rs. 210 and R "· 66 respectively.

Of the average borrowing per family of Rs. 309 for rural households. that of the cultivators was Rs. 358 per family as against Rs. 171 for non-cultivators i.e. almost double of that of the cultivators.

Family expenditure accounted for 49.8% in the case of medium cultivators. 49.2% for large cultivator!\ and 37.2% for big cultivators.

The rura-l credit survey of 1961-62 shows that 64% of the cultivators in Kerala are indebted, which is said to be the second biggest in India.

The aYerage of lmin borrowed by the cultivators in Kerala was Rs. 318/- per l10usehold as against Rs. 127 for the noncultivator household.

The main purpose for the borrowing was for household expenditure and the capital expenditure on cultivation was only 8.6lJ(_.

The report also shows that aggregate of the bormwinl!s of the alculturist households in India have 1ncrease<l from R". 750 crores in-1951-52 to 1034 crores in 1961-62.

In other word~. there has been an increase of 38% in one decade.

Although the le.vcl of debt per household, is comparatively low in Kerala and so is the cost

,. '

PATHUMMA v. KERALA (Faza{ Ali, J.) 553

of cultivation and yet the cultivator is living from hand to mouth and is not able to make both ends meet.

Consumer's needs and distressed circumstances assume an important role in adding to total debt. The

High Court has then referred to the report of Dr. C. B. Memoria and has quoted therefrom.

Apart from these facts of history the entire matter was considered exhaustively by a Constitution Bench of this Court in the case of Fatehchand Himmatlal & Ors. v. State of Maharashtra etc. (supra) where this Court referred to several reports and Krishna Iyer, J. speaking for the Court and quoting exhaustively from the various reports made the following observations :

''Quite recently the report published by the AH India Rurc.1l Debt and Investment Survey relating to 1971-7_2 also

depicts an increasing trend in rural indeqtedness.

It has been estimated that the aggregate borrowings of all rural households on June 30, 1971 was Rs. 3921 crores, while the average per rural household being Rs. 503/-. Fortythree per cent of the rural families had reported borrowings."

Quoting Professor Panikar, this Court observed as follows :-

"Perhaps, it may be that the need for borrowing is taken for granted.

But the undisguised fear that the oppressive burden of debt on Indian fanners is the main hindrance to

progrss is unanimous.

There are many writers who depict indebtedness of Indian farmers as an unmixed evil.

Thus.

Alai Ghosh quotes with approbation the French proverb that credit supports the farmer as the hangman's rope the

hanged."

"The economic literature. official and other, on agricu1tura1

and working class indebtedness is escalati.ng and disturbing.

Indcd. the 'money-lender' is an oppressive component of the scheme."

"Tl1~ condition of loan repayment are as designed that the debtor is forced to sell his produce to the mahajan at low \. prices and purchase goods for consumption and production 1 at high prices.

In many other ways take advantage of the poverty and the helplessness of fanners and exploit them. . . . . . Unable to pay high interest and the principal, the farmers even lose their land or live from generation to generation under heayy debt."

"The harmful consequences or indebtedness are economic an.d effect efficient farming, social in that the 'relations between tl1e loan given and loan receivers take on the form of relations of hatred. poisoning the social life."

Dr. C. B. Memoria in his book 'Agricultural Problems of India' has stressed that rural indebtedness has long been one of the most pressing problems of India and observed as follows :

"Rural people have been under heavy indebtedness of the average money-lenders and Sahukars, The burden of this debt has been passed on from generation to generation inasmuch as the principal and interest went on increasing for most of them.

According to Wold, 'The country has been in the grip of Mahajans. It is the bond of debt that has shackled agriculture."

Quoting the reasonableness of the restrictions this Court observed as follows :

"There was much argument about the reasonableness of the restriction on moneylenders, not the general category as such but the cruel species the Legi&lature had to confront and we have at great length gone into the gruesome background of economic inequities, since the test of reasonableness is not to be applied in Vacuo but in the context of 1ife's realities." "Money-lending and trade-financing are indubitably 'trade' in the broad rubric, but our concern here is blinkered by a specific pattern of tragic operations with no heroes but only

antiheroes and victims."

"Eminent economists and their studies have been adverted to by Jhe High Court and reliance has been placed on a report of a Committee which went into the question of relief from rural and urban indebtness which shows the dismal economic situation of the rural and farmer and the labourers.

It is not merely the problem of agricultural and kindred indebtedness, but the menacing proportions of the moneylenders~ activities that have attracted the attention of the Committee.

Giving facts and iigt)res, which are alanning, bearing on the indebtedness amongst indu, strial workers and small holders, the Committee has highlighted the exploitative role of money-lenders and the high proportion of non-institutional borrowing."

"The subject matter of the impugned legislation is indebtedness, the beneficiaries are petty farmers, manual workers and allied categories steeped in debt and bonded to the moneylending tribe.

So, in passing on its constitutionality, the principles of Developmental Juris prudence must come into

play."

"A meaningful, yet minimal analysis of the Debt Act, read in the light of the times and circumstances which compolled its enactment, will bring out the human setting of the statute.

The bulk of the beneficiaries are rural indigents and the rest urban workers.

These are weaker sections for whom constitutional concern is shown because institutional credit instrumentalities have ignored them.

Money-lending may be ancilliary to commercial activity and benignant in its effects, but money-lending may also be ghastly when it facilitates no

J )

. !

:' I

I 1 0 .. • o ' .. • }~ "' ...,• ; :~ .,

r ·· .. ~· i .

,. •' l I . . .

PATHUMMA V. KERAL.~ (Fazal Ali~ J.) 555 -··

flow of trade, n~ mvment of C?mmerce, no promotion of inter-course, . no servcng of . busmess, ?ut merely stagnates

rural economy, trngulates th~ borrowLog community . and turns lignnt ·~ .Its repercus_stons.n. ·

.. Every cause ctims is m; utyr and if the law, necessitated bY practical constderattons, makes generalisations which hurt a few, it cannot be helped y the Co_u.rt.

Otherwise, tbe' enforcement of the Debt Relief Act wdl. turn into an enquiry into scrupulous d oscrupous crediors, frustrating, through endless litJgatJOn, t.he mstant rehef to the indebted which is the promise of the legislature."

Having regard to be hls.tory of econmic lelation in Keraln, the sad plight of .the agncultunsts. qcbtors tn the State and the fact that

the agricultunst debtors. ar~ .livmg from hand to mouth and below sabsistance level, the observations made by this Court as quoted above apply to the facts of the present case with full force because similar conditions bad prevailed in l\1aharashtra which led to the passing of

the Maharashtra Debt Rclic;_f Act

We would now examine the particular provisions of the Act which D have been assailed before us to find out whether the legislature seeks to strike a just balance between the nature of the restrictions sought to ' be imposed on the appellants and social purpose sought to be achieved by the Act.

The relevant portions of section 20 of the Act may be extracted thus :

"20. Sales or immovable property to be set asiJe i~ certain

ca~s : (1) where any imri10vablc. propcrt~ in wh1c.h an agnculturist had an interest has been sold m executto~. of any decree for recovery of a debt or sold under the provJslons of the Revenue Recovery Act for the time being i~ crete for the recovery of a debt due to a banking company m hqUldation.

(a) on or after the 1st day of November, 1956; or

(.b) before the 1st day of November, 1956, but the posses Ston of the said property has not actualJy passed before the ?.Oth day of November 1957 from tbe judgment debtor to the purhaser, and the d~rce-.holdcr is . th~ P.urcb~~~·

then, notwithstanding anythmg tn the Llmtta.tton

R : 1963 or in the Code of Civil Procedure, 1908 or tn tltc .1~ venue Reco\'cry Act for the time being in !\Jrcc, and. "3t Wl ( filan<.ling that the sale has been confinncd, .such JU t~b~~ debtor or the lcJ!a) rcprcscntive of such JUdrcn th the may deposit one-half of t11e purchase money to.gc\

1ed\n the ~<>stsh of execution where such costs weretnothl~ ix months frurc nse money, and npply to the cour WlAt to set aside thom the date of the commencement of hl if sntlsficd that tr>- c snle of the property, and the court .s a , . . . tt 41S SCI/77

., :·

" '

t I• I

~ i t

; J

J ..

the applicant is an agriculturist, order the sale to be set aside and the court shall further order that the balance of the purchase money shall be paid in ten equal half-yearly instalments together with the interest accrued due on such balance oustanding, till the date of payment of each instalment, at six per cent per annum, the first instalment being payable within a period of six months from the date of the order of the Court.

(2) Where any immovable property in which an agriculturist had an interest has been sold in execution of any decree for arrears of rent or m.ichavaram-

(a) during the period commencing on the 1st day of November, 1956 and ending with the 30th day of January, 1961 and the possession of the said property has actually passed on or before the 1st day of Apri1, 1964, from the judgmentdebtor to the purchaser; or

(b) before the 1st day of November, 1956 and the possession of the said property has actually passed during the period commencing on the 20th day of November, 1957 and ending with the 1st day of April, 1964 from the judgment-debtor to the purchaser, then, notwithstanding anything contained in the Limitation Act, 1963 or in the Code of Civil Procedure, 1908and notwithstanding that the saie has been confirmed, such judgment-debtor or the legal representative of such judgment-aebtor may deposit one-half of the purchase money together ith the costs of execution, where such costs were not included in the purchase money and apply to the Court within six months from the date of the commencement of this Act to set aside the sale of the property, and the Court shall, if satisfied that the applicant is an agriculturist, order the sale to be set aside, and the Court shall further order that the balance of the purchase money shall be paid in ten equal half-yearly instalments together with the interest accrued due on such balance outstanding till the date of payment of each instalment, at six per cent per annum, the first instalment being payable within a period of six months from the date of the order of the Court.

(3) Where any immovable property in which an agriculturist had no interest has been sold in execution of any decree for the recovery of a debt or sold under the proyisions of the Revenue E.ecovey ..Act for the time being in force for the recovery of a debt due to a banking company in liquidation on or after the 14th day of July, 1958 and the decree-holder is not the purchaser, then, notwithstanding anything in the Limitation Act, 1963 or in the Code of Civil Procedure, 1908 or in the Revenue Recovery Act for the time being in force, and notwithstanding that the sale has been confirmed, such judgment-debtor or the legal representative of such judgment~ debtor may, deposit the purchase money and apply to the

\ -~

PATHUMMA V, KERALA. (Fazal Ali, 1.) 5 57

Court within six months from the date of the commencement of this Act to set aside the sale of the property, and the court shall, if satisfied that the applicant is an agriculturist, order the sale to be set aside.

( 4) No order under sub--section ( 1) or sub-section (2) or

subsection (3) shall be passed without notice to the decree holder, the transferee of the decree, if any, the auction-purchaser and any other person, who in the opinion of the court would be affected by such order and without affording them an opportunity to be heard.

( 5) Where improvements have been effected on the property sold after the date of the sale and before the notice under sub-section ( 4), the value of such improvement as determined by the court shall be deposited by the applicant for payment to the aucti9n-purchaser.

(6) An order under sub--section (1) or sub-section (2) or oob-section ( 3) shall not be deemed to affect the rights of bonafide alienees of the auction-purchaser deriving rights before the date of publication of the Kerala Agriculturists' Debt Relief Bill, 1963, in the Gazette."

An analysis of this section shows that the statute seeks to create three different categories of creditors who were liable to restore property to the debtors under circumstances mentioned in the section.

In the first place, where the decreeholder has purchased the property at an auction sale but has not been able to get possession of the same, the court has been given power to set asiqe the sale ( 1) if the applicant is an agriculturist and is prepared to deposit half of the decretal amount immediately and pay the balance in 10 equal half yearly instalments; (2) where the purchaser who purchases the property at the auction saJe is a stranger and not decree-holder the sale can be set aside only on the judgment-debtor de.positing the entire purchase money within six months from the date of _the commencement of the Act.

Sub-section (5) further provides that if any improvements have been made by the purchaser, the debtor will have to reimburse the purchaser for the same, (3) A bonafide alienee who has purchased the property from the auction-purchaser before the date of the publication of the Act is completely exempted from the operation of the provisions of the Act. The Act lays down a self-contained procedure for the mode in which the sale is to be set aside and the conditions on which this is to be done. Section 21 of the Act provides for an appeal to the Appellate Court against any order passed under section 20 and where an order is passed by the Revenue Court an appeal lies to the District Court.

Thus the important features of the Act may be summarised as follows ·

1. That even if the auction-purchaser was a stranger and may have purchased the property from a debtor at an auction sale, he is liable to restore property on payment of the decretal amount;

SUPREME COURT REPORTS [1978J 2 S.C.lt.

2. That if the purchaser has made any improvement in the property the debtor has to deposit the cost of the improvements in court before the sale is set aside.

3. That the debtor has to exercise his option of setting aside the sale within six months from the date of the Act.

The avowed object of the Act seems to give substantial relief to the agriculturist debtors in order to get back their property and earn their livelihood.

This is undoubtedly a laudable object and the Act is a piece of social legishition.

As the decree-holder who bad purchased the property is fully compensated by being paid the amount for which he had purchased the property, it cannot be said that his right to hold the property has been completely destroyed.

The purchaser gets the property at a distress sale and is fully aware of the pitiable conditions under which the debtor was unable to pay the debt. In a Constittion which is wedded to a social pattern of society the purchaser must be presumed to have the knowledge that any soci<!J legislation for the good of a particular community or the people in general can be brought forward by Parliament at any time.

The Act, however, does not take away the property of the purchaser without paying him due compensation.

It is true that section 20 ( 2) (b) provides for payment of the purchase money by instalments, bu~ no exception can be taken to this fact as in view of the poverty of the debtor it is not possible for him to pay the debt in a lump-sum and as the legislation is for a particular community the provision for payment by instalments cannot be said to work serious injustice to the decree-holder purchaser, A stranger auction purchaser has been treated differently because he had nothing to do with the decree and is enjoined to return the property to the agri_culturist debtor on payment of entire amount in lumpsum without insisting on instalments.

Thus, in short, the position is that the object of the Act is to protect the poor distressed agriculturist debtors from the clutches of greedy creditors who have grabbed the properties of debtors and deprived the debtors of their main source of sustenance.

Another object which is said to be fulfilled by the statute is to eradi-. cate and remove agricultural indebtedness in the State by amelioration and improvement of the lot of debtors by bringing them to the subsistence level and reducing their borrowings.

The Act does not provide for any drastic or arbitrary procedure as the property is restored to the debtor only on payment of the purchase money.

The Maharashtra Debt Relief Act of 1970 contained such more drastic provisions and in spite of that it was upheld by this Court as the restrictions were held by us to be reasonable restrictions in the interest of the general public.

To remove poverty by eradicating rural indebtedness is one of the very important social purposes sought to be achieved by our Constitution and it cannot be said that the invasion of the right of the appellants is so excessive as to be branded by the quality of unreasonableness.

Having regard to the economic conditions prevailing in Kcrala before the passing of the Act, it cannot be said that the

PATHUMMA v. KERALA (Fazal Ali, 1.) 559

restrictions are in any way arbitrary or excessive or beyond the requirements of the situation.

Thus, all the tests laid down by this Court for determining reasonableness of a restriction have been amply fulfilled in this case and we are unable to find any constitutional infirmity in this case on the ground that the Act is violative of Article 19(l)(f). We are clearly of the opinion that the provisions of the Act are reasonable restrictions within the meaning of clause ( 6) of Article 19.

It is true that Article 31 confers a guarantee on a citizen against deprivation of his property except by authority of law.

In other words, under Article 31 the property of the citizen cannot be taken away without there being a valid law for that purpose.

The law must not only be valid but it also must not contravene any of the provisions of Article 19 ( 1) (f). In the instent case, in view of our findings that the Act is a valid piece of legislation and amounts to a reasonable restriction within the meaning of sub-clauses (5) and (6) of Article 19 the law passes the test of constHutionality.

In these circumstances, therefore, Article 31 is not infringed or violated by the Act.

Before closing this part of 1 the case we might mention an argument faintly submitted by learned counsel for the appellants, that having regard to the statement of objects and reasons of the Act, the provi~ sions ofi the Act appear to be in direct conflict with the same. The statement of objects and reasons as published in the Kerala Gazette dated 13th December, 1968 may be extracted thus:

"The Kerala Agriculturists Debt Relief Act, 1958 (31 of

1958) provides for some relief to the indebted agriculturists in the State.

But the benefits conferred by that Act are available only in respect of debts incurred by the agriculturists before the 14th July, 1958, on which date the Act cam~ into force. Even after this date the agricultural indebtedness in the state, especially among the poor sections of the people continued to be on the increase due to various factors. Several suits have been filed in courts for the recovery of debts accrued after 14-7-1958 from poor indebted agriculturists.

It is considered necessary to give some relief to such agriculturists also. It is also considered necessary to limit e benefit to any indebted agriculturist whose total amount of debts does not exceed tv,:enty thousand rupees. It is, therefore, proposed to bring in a more comprehensive legislation on the subject repealing the existing enactment".

1t was contended that the main object of the Act appears to give relief only to those debtors who had filed suits for • recovery of debts after 14th July, 1958. But the Act travels beyond the domain of the statement ot objects and reasons by giving a blanket power to the Court to set aside the sales which have been completed even before tire passing of the Act.

We are, however, unable to agree with this argument because in view of the clear and unambiguous provisions of the Act, it is not necessary for us. to delve into the statement of objects and reasons of the Act.

Moreover, though the main purrose may have been to give relief to the agriculturist debtors

after 14-7-1958 the object was to bring forward a comprehensive legislation on various aspects of the matter in order to give relief to the indebted agriculturists. This object iSI mentioned in the very first part of the statement of objects and reasons. The words clearly show that the Act was comprehensive in nature and was not confined to any particular situation.

In these circumstances, therefore, the contention oe learned counsel for the appellants on this score is over-ruled ..

This brings us. to the second branch or the argument relating to the applicability of Article 14of the Constitution of India. In this connection, Mr. Krishnamoorthy Iyer submitted in the first place that the special treatment afforded to the debtors un.der section 20 of the Act is wholly discriminatory and is violative of Article 14. Secondly, it was argued on behalf of the appellants in Civil Appeal No. 420 of 1973 that they being stranger auction purchasers were selected for hostile discrimination as against a bonafide alienee who has been given complete exemption from the. operation of the provisions of the Act.

It is now well settled that what Article 14 forbids is hostile discrimination and not reasonable classification.

Equality before law does not mean that the same set of law should apply to all persons under every circumstance ignoring differences and disparties between men

ad things. A reasonable, classification is inherent in the very concept of equality, because all persons living on this eoarth are not alike and have different problems. Some may be wealthy; some may be poor; some may be educated; some may be uneducated some may be highly advanced and others may be economically backward. It is for the State to make a reasonable classification which must fulfi1: E . two conditions: ( 1) The classification must he founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of-the group. (2) The differentia must have a reasonable nexus to the object sought to be achieved by the statute. In the case of Shri Ram Krishna Dalmia v. Shri .Justice S. R. Tendolkar & Ors. (1). The Court after considering a large number of its previous decisions observed as follows : F

"It is now well established that while Article 14 forbids class legislation, it does not forbid reasonable classification for the purposes of legislation. In order, however, to pass the test of permissible classification two conditions must be fulfilled, namely, (i) that the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group; and (ii) that that differentia must have a rational relation to the object sought to be achieved by the statute in question.

The classification may be founded on different basis, namely, geographical, or according to objects or occupations or the like, what is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration".

(1) [1959] S.C.R. 279 at 296-97,

•••

~·-

PATHUMMA v. KERALA (Fazal Ali, !.) 561

This case has been relied upon in a large number of cases right from 1959 upto this date. In the case of State of Kerala & Anr. v. N. M.

Thomas & Ors. (supra) one of us (Fazal Ali, J.) while delivering the concurring judgment observed as follows regarding the various aspects of the concept of equality :

"It is also equally well-settled by several authorities of this Court that Article 16 is merely an incident of Article

14. Article 14 being the genus is of universal application whereas Article 16 is the species and seeks to obtain equality of opportunity in the services under the State. The theory of reasonable classification is implicit and inherent in the concept of equality for tere can hardly be any country where all the citizens would be equal in all respects. 'Equality of opportunity would naturally mean a fair opportunity not only to one section or the other but to all sections by removing the handioaps if a particular section of the society suffers from the same. It has never been disputed in judicial pronouncements by this Court as also of the various High Courts that Article 14 permits reasonable classification. But what Article 14 or Article 16 forbid is hostile discrimination and not reasonable classification. In other words, the idea of classification is implicit in the concept of equality because equality means equality to all and not merely to the advanced and educated sections of the society. It follows, therefore, that in order to provide equality of opportunity to WI citizens of our country, every class of citizens must have a sense of equal participation in_ building up an egalitarian society, where there is peace and plenty, where there is complete economic freedom and there is no pestilence or poverty, no discrimination and oppression, where there is equal opportunity to education, to work, to earn their livelihood so that the goal of social justice is ach[evedu.

In view of these authorities let us see whether the selection of the agricultUrists debtors by the State for the purpose of improving and ameliorating their ot can be said to be a permissible classification. While dealing with ther first argument we have already pointed out the eco, nomic conditions. prevailing in the State and the abject poverty in which the agriculturist debtors were living.

We have also referred to the Directive Principles of Sl'ate Policy as contained in the Constitution and have held that it is the duty of the legislature to implement these directives.

Having regard, tl1erefore, to the poverty and economic backwardness of the agriculturist debtors and their miserable conditions in which they live, it cannot be said that if they are treated as a separate category or class for preferential treatment in public interest then the said classificaion is unreoasonable. It is also clear that in making the class, ification the Iegisla ture cannot be expected to provide an abstract symmetry but the classes have to be set apart according to the necessities and exigencies of the society as dictated by experience and surrounding circumstances. AU that is necessary is that the classifi

cation should not be arbitrary, artificial or illusory.

Having regard to the circumstances mentioned above, we are unable to hold that the classification does not rest upon any real and substantial distinction bearing a reasonable and just relation to the thing in respect of which the same is made. This view was taken in the case of State of West Ben gal v. Anwar Ali Sarkar. ('1) In our opinion, both the conditions of reasonable classification indicated above are fully satisfied in this case. For these reasons, we hold that section 20 of the Act is not violative of Article 14 of the Constitution and reject the first branch of the argument on this point.

It was lastly contended that the appellant in Civil Appeal No. 42() of 1973 (who originally was the appellant and after his heirs have been brought on record appellants No. 1-8) had been selected for hostile dscrimination as against a bonafide alienee who also being in the same position has been exempted from the provisions of the Act.

We have given our anxious consideration to this argument and we find that it is not tenable. It is well settled that before a person can claim to be discriminated against another he must show that all the other persons are similarly situate or equally circumstanced.

The pleading of the appellant does not at all contain any facts to show how the two are similarly situate. Unless the appellant is able to establish that he is equated with the bonafide alienee in all and every respect, Article 14 will have no application. Ia other words, discrimination violative of Article 14 can only take effect if there is discrimination between equals and not where unequals are being differently tre-ated vide State of 1 & K v. T. N. Khosa ·& Anr.('2).

In the case of Chiranjit Lal Chowdhuri v. The Union of India & Ors(3)this Court observed as follows:-

"lt must be admitted that the guarantee against the denial of equal protection of the laws does not mean that identically the same rules of law should be made applicable to all persons within the territory of India in spite of differences of circumstances and conditions. As has been said by the Supreme Court of America, equal protection of laws is a pledge of the protecting of equal laws".

Yick Co. v. Hopkins (23) 118 U.S. at 369 and this means ··subjection to equal laws applyint like to all in the same situation".

Southern Railway Co. v. Greene (~4) 216 U.S. 400, 412. In other words, there should be no discrimination between one person and another it as regards the subject-matter of the legislation their position is the same".

A similar view was taken in the case of Southern Railway Co. v. Greene

(supra) where the Supreme Court observed as follows:- "The legislature undoubtedly has a wide field of choice in determining and classifying the subject of its Jaws, and if the

(1) {1952] S.C.R. 284 at 321.

(2) [1974] 1 S.C.R. 771 at 783.

(3) 11950] S.C.R. 869 at 911.

....

PATHUMMA v. KERALA (Fazal Ali, J.)

law deals alike with all of a certain class, it is normally not

obnoxious to the charge of denial of equal protection; but the classification should never be arbitrary. It must always rest upon some real and substantial distinction pearing . a reasonable and just relation to the things in respect of whtch the classification is made, and classification made without any substantial basis should be regarded as invalid".

To the same effect is another decision of this Court in the case of The State of West Bengal v. Anwar Ali Sarkar (supra) where this Court observed as follows :

"It can be taken to be well settled that the principle underlying the guarantee in rticle 14 is not that t?e . same rules of law should be. applicable to all persons wtthm tbc Indian territory or that the same remedies sho;, tld be made available to them irrespectivE!! of differences of cucumstances.

It only means that all persons. similarly circumstancd .s?!ill

be treated alike both in privileges conferred and habthtles imposed. Equal laws would have to be applied to all in the same situation, and there should be no discrimination between one person and another if as regards the subjectmatter of the legislation their position is substaritia11y the same."

Having regard to the nature; of the rights acquired by the stranger auction purchaser and the bonafide alienee it cannot -be said that they

are similarly situate or happen to be in exactly the same position. So far as the stranger auction purchaser like the appellant is -concerned three facts stare in the face. First, the stranger auction purchaser participates in: the proceedings in execution of the decree passed against the debtor and which culminate in the auction sale which is knocked down in favour of the purchaser. Thus, such a purchaser has a clear notice of the circumstances under which the decree was passed as also the fact that the property sold was the property of the debtor. If, therefore, the legislature at a later stage for the amelioration of the lot of the debtors passes a law to restore the property to the debtor the stranger auction purchaser cannot be heard to complain.

In fact, his position is more or less the same as that of the decreeholder.

Se.cond, the stranger auction purchaser knows that he has purchased the property at a distress sale and the element of innocence is completely eliminated. Third, under the provisions of the Act even if the property is restored to the stranger auction purchaser unlike the

ecree-holder he P'-:rchaser is entitled to get the entire purchase money In lump-sum mcludmg the cost before parting with the possession of the property.

This dearly distinguishes the case from that of the

decreeholder purchaser and shows that he is not seriously prejudiced .

On the oher hand, a bonafide alienee does not purchase the property under a d!s:tress. sale but under sale which is negotiated with the vendor on the terms accepta~Ie to the purchaser. Secondly a bonafide alienee has absolutely no notJce of the debt or the debtor or the circumstance

under which the decree was passed and the property was purchased by the vendor.

A bonafide alienee acquires a new title under a negotiated and completed sale and in case the sale is allowed to be re-opened by the Act it will lead to complicated questions which may cloud the real B issues, and frustrate the object of the Act. That apart even our common law as a matter of public policy protects the interests of a bonafide transferee for value without notice against voidable transac:- tions. For instance, transfers which could be set aside under section 53 of the Transfer of Property Act or under section 2 7 (b) of the Specific Relief Act, cannot be set aside or enforced as against such transferees. The Act follows more or less the same policy nnd pro- C tects the bonafide alienee because his purchase is absolutely innocent.

While it is true that the provisions of the Act operate rather harshly on the stranger auction purchaser but the rigours of the law have been softened by the fact that under the provisions 'of the Act the auction purchaser gets his full purchase money with costs for any improvement that he may have made, At any rate, any discomfort that he might have suffered as an individual has to be sublimated to the public good D of the community at large, in the instant case, the poor agricul:urist debtors. Indeed if the bonafide alienee was also brought within the fold of the Act then the classification might have been arbHr:uy end unreasonable so as to smack of a draconian measure and might have exceeded the permissible limits of discrimination contemplated by Article 14.

For the reasOns given above we are unable to accept the arg1ment of Mr. Krishnamoorty Iyer that: the appeliant has been selected for hostile discrimination under the provisions of section 20 of the Ac:t.

The argument is over-ruled. The result is that the judgment of the High Court is upheld in all the cases and the appeals are dismissed.

In the peculiar circumstances of these cases, we leave the parties to bear their own costs in this Court.

SHINGHAL, J. These appeals against the judgment of the Kerala High Court dated August 17, 1972 are by certificate under -article

133 (1) .(c) of the Constitution as it stood before the Constitution (Thirtieth Amendment) Act, 1972. Appeais Nos. 442-445 (N) of 1973 arise out of the dismissal of some petitions on the basis of the judgment in the o:her petitions which is the subject-matter of appcill No. 420(N) of 1973. It will therefore be enough to refer to the facts which have given rise to that appeal.

Civil Appeal No. 420(N) of 1973 relates to the dismissal of O.Ps.

No. 5576 and 6466 of 1970 and C.R.P. No. 124 of 1971. O.P. No. 5576 of 1970 was filed by Pathumma who had obtained a decree in 1953, on the basis of a registered deed of mortgage, and had brought

about the sale of some immovable properties of the judgment-debtors who were agriculturists, as they were not able to pay the instalments

..,.

~ ·

PATHUMMA V. KERALA (Shinghal, J.) 565

which were payable under the debt-relief legislation which was then in force. The properties were purchased by Pathumma 'benami', in the name of his son.

Possession of the properties was taken from the judgment-debtors during the petiod May 16, 1961 to March 15, 1967.

Pathumma's son executed a deed of surrender in his father's favour on April 18, 1969 who built a house and effected valuable improvements on the lands. In the meantime, the Keraia Agriculturists' Debt Relief Act) 1970, hereinafter referred to as the Act, carne into force, and the judgment-debtors filed a petition for setting aside the sale and redelivery of properties under section 20 (7) . Pathumma therefore challenged the constitutiqnal validity of section 20 of the Act by O.P. No. 5576 of 1970.

In 0. P. No. 6466 of 1970 the judgment debtors, who were agriculturists, committed defaults in the payment of the instalments for the discharge of the debt under the debt relief law which was then in force.

The creditor purchased the properties under a Court sale on October 18, 1964, Which was duly confirmed, and took delivery of the lands.

The judgment-debtors applied for setting the sale aside and for redelivery of the lands, when the Act came into force. The auction purchaser, .. i-fto his turn, filed the aforesaid writ petition to challenge the constitutional validity of section 20 of the Act.

In C. R. P. No. 124 of 1971 the decree-holder purchased the land of the judgment-debtor, who was an agriculturist. The sale was confinned on July 5, 1968. The delivery of the land was taken on August 19, 1968 and the decree-holder made substantial improvements. The judgment-debtor applied for re-delivery of the land under the provisions of the Act; and his petition was allowed. On appeal, the District Judge remanded the case for evaluating the cost of the improvements.

While the matter was pending at that stage, the aforesaid petition ( 124 of 1971) was filed to challenge the constitutional validity of the rele-- vant provisions of the Act.

s the High Court upheld the validity of section 20 of the Act by the judgment dated August 17, 1972, and also dismissed the petitions which are the subject of the other appeals Nos. 442-445, the appellants have come up to this Court as .aforesaid.

The controversy in these. pppeals thus relates to the constitutional validity of section 20 of the Act which provides, inter alia, for the setting aside of the sale of immovable property in execution of any decree for the recovery of a debt.

The section reads as follows,-

20-Sales of property to be set aside in ce:r; tin cases.-

(1) Where any immovable property in which an agricu1turist had an interest bas been sold in execution of any decree for recovery of a debt or sold under the provisions of the Revenue Recovery Act for the time being in force for the recovery of a debt due to a banking company in liquidation-

( a) on or aEter the 1st day of November, 1956; or

(b) before the 1st day of November, 1956, but the possession of the said property has not actually passed before the 20th day of November, 1957: from the judgment-debtor to the purchaser, and the decreeholder is the purchaser, then notwithstanding anything in the Limitation Act, 1963, or in the Code of Civil Procedure, 1908, or in the Revenue Recovery Act for the time being in force, and notwithstanding that the sale has been confirmed, such judgmentdebtor or the lega1 representative of such judgmentdebtor may deposit one-half of the purchase money together with the costs of execution where such costs were not included in the purchase money, and apply to the court within six months from the date of the commencement of this Act to set aside the sale of the property, and the court shall, if satisfied that the applicant is an agriculturist, order the sale to be set asde, and the court shall further order that the balance, of the purchase money shall be paid in ten equal halfyearly instalments together with the interest accrued due on such baJarice outstanding till the date of payment of each instalment, at six per cent per annum, the first instalment being payable within a period of six months from the date of the order of the court.

(2) Where any immovable property in which an agriculturist had an interest has been sold in execution of any E decree for arrears of rent or michavaram_:_

(a) during the period commencing on the 1st day of November, 1956 and ending with the 30th day of January, 1961 and the possession of the said property has actually passed O!l or before the 1st day of April, 1964, from the judgment-debtor to the purchaser; or

(b) before the 1st day of November, and the possession of the said property has actually passed during the period commencing on the 20th day of November, 1957 and ending with the 1st day of April. from tl1e judgment-debtor to the purchaser;

then, notwithstanding anything contained in the limitation Act, 1963 or in the Code of Civil Procedure, 1908, and notwithstanding that the sale has been confirmed, such judgment-debtor or the legal representative of such judgment-debtor may deposit one-half of the purchase money together with the costs of execution, where such costs were not included in the purchase money and apply to the court within six months from the date of the commencement of this Act to set aside the sale of the property, and the court shall, if satisfied that the applicant is an agriculturist,

PATHUMMA V. KERALA (Shinghal, J.) 567

order the sale to be set aside, and the court shall further order that the balance of the purchase money shall be paid in ten equallmlf-yearly instalments together with the interet accrued due on such balance outstanding till the date of payment of each jnstalment, as six per cent per annum, the first instalment being payable within a period of six months from the date of the order of the court

( 3) Where any immovable property in which an agriculturist had an interest has been sold in execution of any decree for the recovery of a debt, or sold under the provisions of the Revenue Recovery Act for the time being inforce for the recovery of a debt due to a banking company in liquidation, on or after the 16th day of July, 1958 and the decree-holder is not the purchaser, then, notwithstanding anything in the Limitation Act, 1963 or in the Code of Civil Procedure, 1908 or in the Revenue Recovery Act for the time being in force, and notwithstanding that the sale has been confirmed, such judgment-debtor or the legal representative of such judgn:tent-debter may, deposit the purchase money and apply to the cou_rt within six months from the date of the commencement of this Act to set aside the sale of the property, and the court shall, if satisfied that the applicant is an agriculturist, order the sale to be set aside,

(4) 1'io order under sub-section (1) or sub-section (2) or sub-section ( 3) shall be passed without notice to the decree-holder, the transferee of the decree, if any, the auctionpurchaser and any other person who in the opiniob of the court would be affected oy such order and without affording them an opportunity to be heard.

(5) Where improvements ~!_ave been effected on the property sold after the date of the sale and before the notice under sub-section ( 4), the value of such improvement as determined by the court shall be deposited by the applicant for payment to the auction-purchaser.

( 6) An order under sub-section (1) or sub-section (2) or sub-section ( 3) shall not be deemed to affect the rights of bonafide alienees of the auction-purchaser deriving rights

before the date. of publication of the Kerala Agricuturists' Debt Relief Bill, 1963, in the Gazette.

(7) Where a sale is set aside under sub-section (I) or sub-section (2) or sub-section ( 3) , in case the applicant is out of possession of the property, the court shall order redelivery of the property to him. .

(8) In respect of any sale of immovable property which has not been onfirmed, the judgment-debtor if he is an agri culturist shall be entitled to pay the decree debt in accordance

A with the provisions of sections 4 and 5 and on the deposit of the first instalment thereof, the sale shall be set aside.

(9) Where the judgment-debtor fails to deposit any of the subsequent instalme1)ts, the decree-holder shall be entitled to execute the decree and recover the defaulted instalment or instalments in accordance with the provisions of this Act.

Explanation I~For the purposes of this section,~

(a) the expression "court" shall include a revenue court or authority exercising powers under the Revenue Recovery Act for the time being in force; and C

(b) the expression "judgment-debtor" shall include-

(i) a debtor from whom money was due to a banking company in liquidation; and

(ii) a person from whom the entire amount due under a decree has been realised by sale of his immovable property.

Explanation II.~For the purposes of this section, an applicant shall be deemed to be an agriculturist if he would have been such an agriculturist but for the sale of the immovable property in respect of which he has made the application."

It has been argued by counsel for the appellants that section 20 is. invalid as the Legislature of the Kerala State was not competent to make the Act It has been urged that section 20 can not be said to fall within the purview of Entry 30 of List II of the Seventh Schedule to the Constitution inasmuch as it deals with a debt which had been paid off by sale of the property in execution of the decree against the agriculturist and was no longer in extstence.

It is article 246 of the Constitution which deals with the subjectmatter of the laws to be made by the Parliament and the Legislatures of the States. Clause (3) of the Article provides that subject to clauses (1) and (2) of the Article (with which we are not concerned) the Legislature of a State has "exclusive power to make laws,--- with respect to any of the matters enumerated in List II.'' Entry 30 of the List specificlly states the following matters as being within the competence of the State Legislature,-

"30-Money-lending d money-lenders; relief of agricultural indebtedness."

It is therefore quite clear, and is beyond controversy, that the Act which provides for "the relief of indebted agriculturists in the State of Kerala" is within the competence of the State Legislature. Clause ( 1) of section 2 of the Act defines an "agriculturist", clause ( 4) defines a "debt", clause (5) defines a "debtor" and the two Explanations to section 20 define the expressions "court", and ".iudgmentdebtor" and give an extended meaning to the expression "agriculturist"

PATHUMMA v. KERALA (Shinghal ].) 569

so as to include a person who would have been an agriculturist but for A the sale of his immovable property.

The other stions provide or the settlement of the liabilities and payment of the debt (along With the interest) of an agriculturist, including the setting aside of the sale in execution of a decree, and the bar of suits.

The subject-matter of the Act is therefore clearly within the purview of Entry 30 and counsel for the appellants have not been able to advance any argument which could justify a different view.

Reference in this connec- B tion may be made to this Court's decision in Fatehchand Himmatlal and others v. State of Maharashtra etc.(l) It has however been argued that the entry would not permit the making of a law relating to the debt of an agriculturist which has already been paid by sale of his property in execution of a decree and is not a subsisting debt.

It is true that section 20 of the Act provides for the setting aside C of any sale of immovable property in which an agriculturist had an interest, if the property had been sold, inter alia, in exution of any decree for the recovery of a debt (a) on or after November 1, 1956, or (b) before November 1, 1956, but posses'Sion whereof has not actually passed before November 20, 1957, from the judgment-debtor to the purchaser, and the decree-holder is the purchaser, on depositing onehalf of the purchase money together with the cost of the execution D etc.

The section therefore deals with a liability which had ceased and did not subsist on the date when the Act came into force.

But there is n_othing in Entry 30 of List II to show that it wiH not be attracted and would not enable the State Legislature to make a law simply because the debi of ilie agriculturist had been paid off under a distress sale.

The subject-matter of the entry is "relief of agricultural indebtedness" and there is no justification for the contention that it is confined only to subsisting indebtedness ari~ would not cover the necessity of providing relief to those agriculturists who had lost their immovable property by court sales in execution of the decrees against them and had been rendered destitute. Their problem was in fact more acute and serious, for they had lost the wherewithal of their livelihood

and reduced to a state of penury. An agriculturist does not cease to be an agriculturist merely because he bas lost his immovable pro- F perty, and it cannot be said that the State is not interested in providing him necessary relief merely because he has lost his immovable property.

On the other hand llis helpless condition calls for early solution and it is only natural that the State Legislature shouM think of rehabilitating him by providing the necessary relief under an Act-of the nature under consideration in th?se cases.

There is in fact nothing G in the wordings of Entry 30 to show that the relief contemplated by it must necessarily relate to any subsisting indebtedness and would not cover the question of relief to those who have lost the means of their livelihood because of the delay in providing them legislative relief. It is well-settled, having been decided by this Court in NavincJzandra Mafatlal v. The Commissioner of Income-tax Bombay City, (2) that "in construing words in a constitutional enactment conferring legisla- H tive power the most liberal construction should be put upon the words

(1) [1977) 2 S.C.R. 828.

(2) [1955} 1 S.C.R. 829.

so that the same may have effect in their widest amplitude".

This has to be so lest a legislative measure may be lost for a mere technicality.

The High Court has made a mention of the earlier legislation in the same field. lt has also made a reference to Act 31 of 1958 which was quite similar to the Act and has pointed out how the Amending Act of 1961 became infructuous because of the unintended delay in amending it suitably.

Great distress was therefore caused tc the indebted agriculturists because of the sale of their immovable properties by court auctions.

Such agriculturists were rendered completely helpless and it was only proper that the State Legislature should have thought of coming to their rescue by enacting a law with the avowed intention of providing them some relief from the difficulties in which they were enmeshed as a result of their indebtedness, by devising the necessary means for the restoration of their immovable properties.

The plight of those agriculturists was in fact worse than that of an agriculturist who, while he was groaning under tlw burden of his debt, had the satisfaction of having his immovable property with him as a possible means of redeeming the future some day. If the Legislature could provide relief to agriculturists against their _subsisting debts by legislation under Entry 30, there is no reason why it should find itself disabled from doing so in the case of these agriculturists who had lost their immovable properties in the process of the liquidaticn of their debts by court sales even though their case called for greater sympathy and speedier relief.

It has next been argued that section 20 of the Act is unconstitutional as it impinges on the fundamental right of the decree-holder, or other auction-purchaser, under article 19(1){f) of the Constitution to "hold" the property acquired by him at a Court sale and of which he had become t}le owner by the express provision of section 65 of the Code of Civil Procedure.

It has thus been argued that by vinue of article 13 of the Constitution, section 20 is void as it is inconsistent with, or is in derogation of, a fundamental right.

As has been urged on behalf of the State, an answer to this argument is to be found in clause ( 5) of Article 19 which specifically pro- vides, inter alia, that nothing in sub-clause (f) of clause (1) of article 19 shaH "prevent the State from making any law imposing reasonable restrictions on the exercise of ariy of the rights" conferrd by the said sub-clause in the interest of the general public. It cannot be gainsaid that agriculturists, and even indebted agriculturists, from the bulk or, at any rate, a considerable part of the rural population, in an essentially rural economy like ours, and so if a restriction is reasonable in their interest, it would squarely fall within the purview of clause (5).

Reference in this connection may be made to this Court's decision in Kavalappara Kattarathil Kochuni and Others v. The State of ,\1adras and others(!) and State of Andhra Pradesh v. Khapperelli Chinna Venkata Chalamayya Sastri( 2) where it has been held that the redress


(2) [1963]1 S.C.R. 155.

~·

-~-

PATHUMMA V. KERALA (Shinghal }.) 571

-of a real and genuine grievance of a section of the community is a measure in the interest of the general public.

As has been stated, the High Court has made a reference to the history of the debt relief legislation and the facts and circumstances which led to the passing of the Act.

Thousands of suits were pending against indebted agriculturists in various courts and immovable properties of a large number of agriculturists had been sold rendering them completely helpless.

So if the State Legislature passed the Act, in the interest of ihe general public, to provide relief of the nature mentioned in section 20 in view of the rampant agricultural indebtedness in the State, and the urgency of the malady, it does not require much .argument to hold that the restriction provided by that section was clearly "reasonable".

Even so, the section makes provision for the repayment of the purchase money, the costs of the execution and the improvements made by the purchaser.

The restriction provided under section 20 is therefore reasonable in every sense and the High Court rightly rejected the argument to the contrary.

It has lastly been argued .that section 20 of the Act is violative of article 14 of the Constitution as 'it discriminates without reason between-

(a) a decree-holder, auction-purchaser and a stranger auction-purchaser (sub-section ( 1) (b) and subsection (3)), and

(b) an auction-purchaser at a court sale and a bona fide alienee of an auction-purchaser [sub-section ( 6) ].

What Article 14 guarantees is the right to equality in directing that the State shall not deny to any person equality before the law or the equal protection of the laws within the country.

The prohibition is however not absolute in as much as this Court has taken the view that it incorporates th~ doctrine of "classification)' (See Makhan Lal Malhotra and others v. The Union of India(1). It is therefore equally wellsettled that Article 14 will not prevent the making of a law which gives rise to a classification based on an intelligible differentia 'having a rational relation with the object to be achleved thereby:

Now sub-section (1) of !Section 20 provides that if a decree-holder is the purhaser at a cou!t sale, the judgment-debtor (or his legal Te_Presentatlve) may deostt one-half of the purchase money together wtth the costs of executiOn (where the costs were not included in the purchase money) and apply to the court within six months from the -date of commencement of the Act to set aside the sale and the court shall.set aside the sale and make an order for the paymen't of the balance

o~ the purchse money in ten equal half-yearly instalments together :"'Ith accrued nterest on the balance till the date of payme!lt of each

mstalm.en~ at SlX er cent per annum.

As against this, sub-section { 3) provides that the deer&? holder. is not the purchaser, the judgment-debtor (or his legal representattve) may deposit the purchase

(1) [1961J 2 S.C.R. 120. il-1146SCI/77

A money and make an application for setting aside the sale and the court shall set aside the sale.

The treatme-nt to a decree-holder purchaser ~· is therefore different and is less advantageous than the treatment to a. purchaser who is not a decree-holder.

The decree-holder purchaser is treated as a diffrent class (for it is welHmown that) decree-holders very often exp!oit their debtors in many ways and sales to them are

B genera11y viewed with suspicion and disfavour so much so that, as has been expressly provided in Order XXI rule 72 of the Code of Civil Procedure, it is not even permissible for a decree-holder to bid for or ~ purchase the property without the express permission of the Court. The decree-holder purchaser has thus rightly been treated as a class by himself and that classification obviously has the object of benefiting the

'~>' agriculturist judgment-debtor by permitting him to deposit only half c the purchase money ap.(, i paying the balance in instalments. It can~ not therefore be said that the impugned provision violates article 14of the Constitution on that account.

There is also justification for I treating an auction-purchaser at a court sale differently from a bona ,.

fide alienee of the auction purchaser who derived his rights before the date of publication of the Kerala Agriculturists' Debt Relief Bill, 1968, in the State Gazette.

Such an alienee of the auction-purchaser could ...

D not possibly have been aware of the hazards of purchasing the property

J..... of an indebted agriculturist at the time of the purchase, and it is futile to contend that if the Legislaturehas protected his interest by an express provision in sub-.section ( 6) of section 20, it has thereby made a hostile discrimination against the auction-purchasers as a class.

There is thus no force in the arguments which have been advanced on behalf of the appeHants and the appeals are dismissed with costs. ). r \-·

P. B. R.

Appeals dismissd~