TMI Blog1978 (1) TMI 170X X X X Extracts X X X X X X X X Extracts X X X X ..... mmon questions of law we propose to decide them by one common judgment. Section 20 of the Act was assailed before the High Court on three grounds, namely. 1. That the Act was beyond the legislative 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; 3. That sub-sections 3 and 6 of section 20 of the Act were 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 decree holder was exempted from the operation of the Act. Mr. Krishnamoorty Iyer, learned counsel for the appellants has not pressed point No. 1 relating to the legislative competence of the legislature and has fairly conceded that in view of the decision of this Court in the case of Fatehchand Himmatlal Ors' v. State of Maharashtra etc.( [1962] 2 S.C.R. 125 at 148.) the constitutionality of the Maharashtra Deb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the community as a whole. It is obvious that the legislature is in the best position to understand and appreciate the needs of the people as enjoined by the Constitution to bring about social reforms for the upliftment of the backward and the weak-or sections 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 legislative competence of the legislature or such other grounds. It is for this reason that the Courts have recognised that there is always a presumption in favour of the constitutionality of a statute and 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( [1959] S.C.R. 629. ) while adverting to this aspect Das, C.J. as he) then was, speaking for the Court observed as follows :- 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, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the, instant case claims protection under clause (5) by submitting that the provisions contained in the Act amount to reasonable restrictions for the general good of an 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 21 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 clause (5) of Article 19, the Court 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 effec- tively as possible a 'social order in which justice, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 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 clear as day . In the case of The State of Bombay v. R.M.D. Chamarbaugwala([1957] S.C.R. 874 at 921.) 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 in which justice, social, economic and political, Shall inform all the institutions of the national life . In the case of Fatehchand Himmatlal Ors. v. State of Maha- rashtra etc. (supra) the Constitution Bench of this Court observed as follows : Incorporation 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, economic and political shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 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.( [1954] S.C.R. 803 at 811-12.) It has also been pointed out by this Court that in order to judge the quality of the reasonableness no abstract or general pattern or a fixed principle can be laid 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 Constitution, 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 all the circumstances, factors and issues facing the situation. In the case of State of Madras v. V. G. Row([1952] S.C.R. 597.) 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, or general pattern, of re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he adjustments necessary to solve the problems which communities face from time to time. The fourth test which has been laid down by this Court to judge the reasonableness 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 the social control envisaged by clause (6) of Article 19. In the case of Narendra Kumar Ors. v. The Union ,of India Ors.( [1960] 2 S.C.R. 375.) 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 ac- count the nature of the evil that was sought to be remedied by such law, the ratio of the harm caused to individual citizens by the proposed remedy, to the beneficial effect reasonably expected to result to the general public. It will a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 examining 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.( [1973] 1 S.C.C. 20 at 27.) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gnise 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 common report, the history of the times and may, assume every state of facts which can be conceived existing at the time of legislation . We do not mean to suggest that the tests laid down above are completely exhaustive but they undoubtedly provide sufficient guidelines to the Court to determine, the question of reasonableness of a restriction whenever it arises. We would now like to examine the facts and circumstances of the present case in the light of the 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 appellant w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8.6 and 38.6 respectively. The All India average borrowing per rural family was ₹ 160. The corresponding average for the cultivator and non-cultivator was ₹ 21 0 and ₹ 66 respectively. Of the average borrowing per family of ₹ 309for rural households, that of the cultivators was ₹ 358 per family as against ₹ 171 for non-cultivators i.e. almost double of that of the cultivators. Family expenditure accounted for 49.8% in the caseof medium cultivators, 49.2% for large cultivators and 37.2% 'or big cultivators. The rural credit survey of 1961-62 shows that 64% of the cultivatorsin Kerala are indebted, which is said to be the second biggest in India. The average of loan borrowed by the cultivators in Kerala was ₹ 318/- per household as against ₹ 127 for the non-cultivatorhousehold. The main purpose for the borrowing was for householdexpenditure and the capital expenditure on cultivation was of the agriculturist households in India have increased from ₹ 750 crores in 1951-52 to 1034 crores in 1961-62.In other words, there has been an increase of 38% in one decade.Although the level of debt per household, is comparatively low inKera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm 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 : 5 54 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 inas- much 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 suck but the cruel species the Legislature 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 life's realities. Money-lending and trade-financing are indubitably 'trade' in the broad rubric, but our concern here is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e agriculturists debtors in the State and the fact that the agriculturist debtors are, living from hand to mouth and below subsistance level, the observations made by this Court as quoted above apply to the facts of the present case with full force because similar conditions had prevailed in Maharashtra which led to the passing of the Maharashtra Debt Relief Act. We would now examine the particular provisions of the Act which 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 of immovable property to be set aside in certain cases : (1) where any immovable property in which an agriculturist had an interest has 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 after the 1st day of November, 1956; or (b) before the 1st day of November, 1956, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty, 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 instahnents 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 provisions of the Revenue Recovey 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 judgmentdebtor may, deposit the purchase money and apply to the Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditions 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; 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 legislation. As the decree-holder who had 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditions prevailing in Kerala before the passing of the Act, it cannot be said that the 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(1) (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 instant 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 constitutionality. In these circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in nature and was not confined to any particular situation. In these circumstances, therefore, the contention of learned counsel for the appellants on this score is over-ruled. This brings us to the second branch of the argument relating to the applicability of Article 14 of the Constitution of India. In this connection, Mr. Krishnamoorthy Iyer submitted in the first place, that the special treatment afforded to the debtors under 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 and things. A reasonable classification is inherent in the very concept of equality, because all persons living on this ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uality of opportunity would naturally mean a fair opportunity not only to one section or the other but to all sections by removing the handicaps 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 all 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 achieved . In view of these authorities let us see whether the select ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... larly 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. In other words, discrimination violative of Article 14 can only take effect if there is discrimination between equals and not where unequals are being differently treated vide State of J K v. T. N. Khosa Anr. ([1974] 1 S.C.R. 771 at 783.). In the case of Chiranjit Lal Chowdhuri v. The Union of India Ors([1950] S.C.R. 869 at 911.)this Court observed as follows:- It 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 applying like to all in the same situation . Southe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty 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 decree- holder. Second, the stranger auction purchaser knows that be 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 decree-holder the purchaser is entitled to get the entire purchase money in lump-sum including the cost before parting with the possession of the property. This clearly distinguishes the case from that of the decree-holder purchaser and shows that he is not seriously prejudiced. On the other hand, a bonafide alienee does not purchase the property under a distress sale but under sale which is negotiated with the vendor on the terms acceptable to the purchaser. Secondly a bonafide alienee has absolutely no notice of the debt or the debtor or the circumstance under which the decree was passed and the property was purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 73. 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 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 period 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 Kerala Agriculturists' Debt Relief Act, 1970, hereinafter referred to as the Act, came into force, and the judgment-debtors filed a petition for setting aside the sale and redelivery of properties under section 20(7). Pathumma therefore chal- leng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay of November, 1957, from the judgment-debtor to the purchaser, and the decree holder 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 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, 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 hal fyearly instalments together with the interest accrued due on such balance outstanding tiff 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 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 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 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 bona fide alienees of the auction-purchaser deriving rights before the date of publication of the Kerala Agriculturists' Debt Relief Bill, 1963, in the Gazette. (7)Where a sale is set aside under sub-section (1) or sub- section (2) or sub-section (3), in case the applicant is out of possession of the property, the court 'shall order re- deli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at 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 Explana- tions to section 20 define the expressions court , and judgment-debtor and give an extended meaning to the expression agriculturist so as to include a person who would have been an agriculturist but for the sale of his immovable property. The other sections provide for 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 connection may be made to this Court's decision in Fatehchand Himmatlal and others v. State of Maharashtra etc.( [1977] 2 S.C.R. 828.) It has however been argued that the entry would not permit the making of a law relating to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been decided by this Court in Navinchandra Mafatlal v. The Commissioner of Income-tax Bombay City,( (1955) 1 S.C.R. 829.) that in construing words in a constitutional enactment conferring legislative power the most liberal construction should be put upon the words 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. It 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 to the indebted agriculturistsbecause of the sale of their immovable proper-ties by court auctions.Such agriculturists were rendered completely helpless and it was onlyproper 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 the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as 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 the 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-sect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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