Om Prakash Sud Vs. State of J & K
& Ors  INSC 34 (16 February 1981)
ISLAM, BAHARUL (J) ISLAM, BAHARUL (J) PATHAK,
REDDY, O. CHINNAPPA (J)
CITATION: 1981 AIR 1001 1981 SCR (2) 841 1981
SCC (2) 270 1981 SCALE (1)314
Constitution of India 1950, Article
14-Allotment of resin-Industrial policy decision of State-Object of-Balanced
economic and regional development of State-Selection of quota seekers-Article
14 whether violated.
The petitioners in their writ petitions to
this Court alleged that they were carrying on small scale industries for the
manufacture of resin and turpentine oil and that they applied to the Government
for allotment of resin for their industries but the Government referring to
their policy decision of March 20, 1978 refused to make any allotment, and that
they purchased raw material from the open market and managed to run their
industries. They further alleged that while they were refused allotment of
supply of raw-materials, the State, respondent No. I made allotments to
respondent nos. 4 to 16 n although most of them were not even formally
registered at the time of making the impugned orders of allotment and that they
were consequently adversely discriminated against, while respondent nos. 4 to
16 were favoured and as such the impugned orders of allotment were liable to be
struck down " violative of Article 14 of the Constitution of India.
The State, respondent No. 1 contested the
writ petition, denied the material allegations of the petitioners and alleged
that the allocations were made in conformity with the State Industrial Policy
decision of securing the balanced economic and regional development of the
State that there was a preponderance of industries in the Jammu Region, and
that the industries of the petitioners as well as respondent nos. 4 to 16 were
also functioning in that region. Allotments of resin were made districtwise,
110 applications were received and considered and allotment was made to
respondents nos. 4 to 16.
On the question whether the orders of the 1st
respondent allotting quotas of resin to respondent nos. 4 to 16 were arbitrary
and violative of Article 14 of The Constitution.
HELD : 1(i) Respondent No. 1 has not
explained as to how and on what basis if any, the allotments were made by the
impugned orders in favour of the new allottees respondent nos. 1 to 16 whose
industries were located in the Jammu region. [847 C] (ii) Although the State
Government has taken reliance on the State Industrial Policy decision, it does
not appear to have followed it in practice, except in the cases of five
respondents. No reasonable basis had been adopted in making the allotments in
favour of the new allottees and denying the allotments to the petitioners.
2. The rule of equality does not mean
mathematical equality. It permits of practical inequalities. What is needed is
that the selection of quota seekers as in the instant case should have a
rational relation lo the object sought lo be achieved in the industrial policy
decision of the State. If the selection or differentiation is arbitrary and
lacks a rational basis it offends Article 14. [849 D]
3. "Equality before the Law" or
"equal protection of the laws`' within the meaning of Article 14 of the
Constitution of India means absence of any arbitrary discrimination by the law
or in their administration. No undue favour to one or hostile discrimination to
another should be shown. A classification is reasonable when it is not an
arbitrary selection but rests on differences pertinent to the subject in
respect of which the classification is made. The classification permissible
must be based on some real and substantial distinction, a just and reasonable
relation to the objects sought to be attained and cannot be made arbitrary and
without any substantial basis. [848 H-849 A] State of West Bengal v. Anwar Ali,
[19521 SCR 284 referred to.
ORIGINAL JURISDICTION: Writ Petition Nos.
3464-65, 5908 & 3231 of 1980.
(Under Article 32 of the Constitution) S. N.
Kacker, K. N. Bhatt and Surendara Raju for the Petitioners in W. P. Nos
3464-65/80 and 5908/80.
Soli J. Sorabjee, E. C. Agarwala, R. Satish
and V. K. Pandita for the Petitioner in WP 3231,/80.
L. N. Sinha, Att. Genl. and Altaf Ahmed for
R. 1. in WPs 3464 65/80.
Y. S. Chitaley and Vineet Kumar for R. 14 in
WP 3231/80 and for R. 2 in WPs 3464-65/80.
R. P. Bhatt and N. R. Chaudhary for R. 4 in
P. R. Mridul and Naunit Lal for R. 7 in WP
3231/80 and for R. 2 in WP 3464-65/80.
Anil Dev Singh and Ashok Grover for R. 15 in
WP 3231/80 and R. 3 in WPs 3464-65/80.
S. K. Bhattacharya and Suresh Sethi for R R.
6 and 12 in WP 3464 65/80.
Satish Vij for R. 15 in WP 3464-3465/80.
S. Balakrishnan and S. K. Bhattacharya for R.
16 in WP No. 3231/80.
The Judgment of the Court was delivered by
BAHARUL ISLAM, J.-BY these writ petitions under Article 32 of the Constitution
the petitioners have challenged the orders of the 843 first respondent (the
State of Jammu and Kashmir) allotting quotas of resin to respondents. According
to the petitioners these orders denying similar treatment to them are arbitrary
and violative of Article 14 of the Constitution of India.
2. The material facts in the four petitions
are similar. The industries of which the petitioners are partners are
admittedly small scale industries for the manufacture of resin and turpentine
oil. The industries of the petitioners' in Writ Petitions Nos. 3465 of 1980 and
3231 of 1980 were provisionally registered but revalidated for short periods.
The industry of the petitioner in Writ Petition No. 3464 of 1980 was
provisionally registered, revalidation was applied for but was not granted. The
industry of the petitioner in Writ Petition No. 5908 of 1980 was formally
registered. It appears that the petitioners were applying to the Government for
allotment of resin as well as raw material for their industries but the
Government referring to their policy decision of March 20, 1978 refused to make
any allotment of Oleo resin to them. The petitioners in Writ Petition Nos. 3464
and 5908 of 1980 have alleged that they purchased raw-material from the open
market and somehow managed their industries to run for a certain period.
3. Resin is admittedly a forest product
extracted from "Chir trees". It has been alleged that only three
States of India, namely, Himachal Pradesh, Uttar Pradesh and Jammu and Kashmir
have Chir forests. The petitioners have alleged that the State of Himachal
Pradesh and Uttar Pradesh stopped selling resin for the last several years in
view of establishment of factories in public and joint sectors and that the
State of Jammu and Kashmir was selling resin by public auction. Sometime after
October 1978 the State of Jammu and Kashmir, it has been further alleged,
virtually created monopoly in favour of three existing industrial units and committed
to supply them about 17,000 M. T. of resin for long time to come. There is a
Public sector unit in Jammu which consumes about 3,000 tons of resin per year.
Several small scale industries, according to
petitioners, were assured supply of resin even as late as 1979 notwithstanding
the Government's aforesaid industrial policy. In such a situation, being unable
to procure raw- materials for their industries, the petitioners approached the
relevant authorities including the Deputy Minister of Industry and the Chief
Minister of Jammu and Kashmir for allotment of raw-materials but to no avail.
(For the sake of convenience we shall hereinafter refer only to the respondents
and Annexures in W. P. No. 3231 of 1980). The petitioners further allege that
while they were refused allotment of supply of raw- materials, respondent No. 1
made allotments to respondents No. 4 to 16 (hereinafter called "allottee
respondents") although most of them 844 were not even formally registered
at the time of making the impugned orders of allotment.
The petitioners contend that in the
circumstances they were adversely discriminated against while respondents Nos.
4 to 16 were favour ed and as such the
impugned orders are liable to be struck down as , violative of Article 14 of the
Constitution of India.
4. The impugned orders have been annexed as
Annexures N to Z-1. The letter of allotment (Annexure 'X') in favour of M/s.
Sud Pine Industries (respondent No. 27) is in the following terms:- "Sub:
Supply of resin to M/s. Sud Pine Industries Kunwani for their factory at Talab
Government Order No. 175 DIC/1980 dated
In partial modification of Government order
No. 2. DIC of 1979 dated 20-1-1979 sanction is accorded to the supply of crude
(oleo) resin 700 tonnes per annum by the Forest Deptt. to M/s. Sud Pine
Industries for their factory at Kunjwani Talab Jammu on the terms and
conditions specified in the above said order. The supply of resin shall be
subject to its being reviewed by the Government with due regards to its
availability from year to year.
By order of the Govt. of J & K. Sd/-
(Sheikh Ghulam Rasool) Secretary to Government." The orders as per
annexures L to W in favour of respondents 17 to 26 are identical in material
parts. It will be sufficient if the material portion of Annexure N is quoted.
It runs thus.
"Sanction is accorded to the supply of
crude (oleo) resin by the Forest Department to M/s. Kashmir R & T Works,
Srinagar, for their factory at Srinagar, subject to the terms and conditions of
the agreement to be entered into between the Forest Department and the party
and on the following specific conditions:-
1. The Forest Department will supply Crude
(oleo) resin @ 700 TPA to the firm from the date the Unit is formally
registered subject to its being reviewed with due regard to its availability
from year to year;
2. The resin will be supplied @ Rs. 320/- per
quintal, unless otherwise reviewed on year to year basis.
3. The cost of empty tin will be charged @
Rs. 5/- per ton in addition to the above rate;
4. By order of the Government at Jammu and
Sd/- Sheikh Ghulam Rasool Secretary to
Government." (emphasis added)
5. It is obvious that the industries of these
respondents were not formally registered at the time of the impugned orders of
6. The State of Jammu and Kashmir (Respondent
No. 1) have filed a counter affidavit. They have not denied the material
allegations of the petitioners but they say that the allocations have been made
in order to implement the industrial policy of the State Government as
enunciated in a "Report of the Development Review Committee, Jammu and
Kashmir" a committee headed by Shri L. K. Jha, the Governor of the State.
Respondent No. 1 has quoted from the report the 'Goals' of the industrial policy
"The balanced economic development of
the State will obviously, be one of the foremost concerns of the Government.
They would like to emphasis maximum self- sufficiency and self-reliance
consistently with the need to promote the requisite and desirable degree of
inter-dependence with other parts of the country. 'The objective will be to
secure the most prudent and beneficial utilization of the natural resources and
skills peculiar to this State; to achieve the maximum possible F rate of economic
growth, consistently with the need to secure a degree of balanced regional
development as well as balance between the rural areas and the urban, to
maximise State per capita income, and to generate the maximum employment
Many areas of the State are as cut off,
isolated and poor as they were at the dawn of independence. We have to improve
the living standards in these specially backward areas for whom in terms of the
quickest mode of transportation, Srinagar is more distant than the State is
Many sections of the community similarly,
like Scheduled Castes; Gujarat and Bakarwalas and other backward class need to
be assisted in their speedy uplift.
846 Ladakh needs a visible acceleration of
the tempo of its development so that our people in this far flung and difficult
frontier area can realise the full fruits of development in the shortest
possible time." Respondent No. 1 has given the district wise break-up of
the applications received from different regions. It is as follows:
Jammu - 63 Udaypur - 10 Rajouri - 1 Poonch -
1 Doda - 1 Kathua - 9 Anantnag - 2 Srinagar - 11 Outsiders - 12 ----------
GRAND TOTAL 110 Applications ----------- They have also shown the allotments of
resin districtwise. The industries of the respondents No. 4 to 16 are also
small scale industries. The break-up of the small scale industries as given in
Annexure R.II (in W.P. No. 3464) shows that Jammu has the largest number of
units namely, 10, Second comes Srinagar with 4, then come Udampur with 3,
Kathua (in Jammu Division), Anantnag and Baramulla (in Kashmir Division), with
one each. Rajouri in Jammu Division has none. It appears that the industries of
the present applicants are also in the Jammu region and those of respondents
No. 4 to 16 also appear to have been located in the Jammu region. In their
affidavit at para 3 respondent No. 1 has stated that all the applications for
allocation of resin were considered from time to time at various levels by the
State Government and it was decided on May 30, 1980 as follows:
(a) The allotment of resin to the existing
unit should be rationalised;
(b) Applications received from various
districts be considered for allotment of resin.
The State Government have submitted that they
made no promise of supply of raw-material in favour of any of the petitioners.
The petitioners have submitted, in our opinion, correctly, that as there were
already 10 units functioning in small scale sector in the Jammu region and
inasmuch as the allottee respondents' industries were also located in the Jammu
region, allocations in their favour would be inconsistent with the Government's
7. In the instant case, respondent No. 1 as
well as the other parties has taken reliance on their industrial policy
statement as stated above. We have already quoted the relevant portions of the
State Industrial policy statement.
The Government has stated that they have
considered all the 110 applications including those of the petitioners coming
from industrialists of different parts of the country. They have stated, and
their statement is corroborated by the documents, that there is preponderance
of industries in the Jammu region and industries of the petitioners as well as
respondents No. 4 to 16 were also functioning in the same region. Respondent
No. 1 has not explained as to how and on what basis, if any, the allotments
were made by the impugned orders in favour of the new allottees whose
industries were located in the Jammu region.
Pawan Kumar Sharma, the petitioner in W.P. No.
3231 of 1980 states that his industry was provisionally registered under the
Provisional Registration Certificate dated 29-1- 1976. It was further extended
for further short periods. He says that as there was assurance from the
authorities that raw-materials will be allotted to him after he completed the
installation of requisite machinery.
The J. K. Resin and Turpentine Industries of
petitioner Om Prakash Sud, was provisionally registered in the year 1975. He
was also approaching the Government from time to time to get allotment of the
raw-materials but got no favourable reaction from the Government. He states
that he had already established his factory and got it insured for a sum of Rs.
6.80 lakhs. He obtained raw-material from the open market and was running his
Petitioner, Ravindra Dutt of M/s. Dinesh
Resin and Turpentines in W.P. No. 3465 of 1980 alleges that his industry was
provisionally registered on 25-10-1975 which was extended upto April, 1979.
Letter of 31st May, 1979 shows that his industry was later on formally
registered as a small unit. This factory was producing resin and turpentine out
of the resin which he purchased from open auction He was approaching the
Government from time to time to get requisite quantity of raw-materials but
failed to get it.
Petitioner, Shamlal Kapoor, Director of Jammu
Resin Enterprises Private Limited, alleges that his industry was formally
registered with the Government of J & K. He alleges that his industry was
functioning for a long time and trying to get necessary quota of raw-materials
from respondent No. 1. He was approaching the Government to get requisite
Sud Pine Industries, was provisionally
registered on 10-3- 1978 and formally registered on 10-10-1978. It appears from
Annexure N, in respect of respondent M/s Kashmir R & T Works 848
(respondent No. 17), Annexure O in respect of M/s. Sun Shine R & T
Industries (respondent No. 18), Annexure P in respect of M/s. Woolan Paints and
Chemicals Scopore (respondent No.
19) Annexure Q in respect of M/s. Pine Wood
Products Company (respondent No. 20), Annexure R in respect of M/s. Haji Mast
Ali Slaria (respondent No. 21), Annexure S in respect of M/s. Phyto Chemicals
(respondent No. n 22), Annexure T in respect of M/s. New Himalayan Paints and Chemicals
(respondent No. 23), Annexure U in respect of M/s. S. K. Chemical (respondent
No. 24), Annexure V in respect of M/s. Rajindra R & T (respondent No. 25)
and Annexure W in respect of M/s. Bharat Paints and Chemicals (respondent No.
26) that the allotments were made in their favour "from the date the unit
is formally registered" which shows that industries were not even
registered at the time of the impugned orders of this allotment. Respondent
M/s. Rajindra R & T Industries, Udhampur, appears to stand on a different
footing. He appears to have fulfilled all the conditions required for
allocation of resin in accordance with the policy of the State of J & K.
The industry is an experienced one and the factory started production of resin
and turpentine at Hoshiarpur since 1948. It is a firm registered under the
Indian Partnership Act and has long experience in the business including resin
and turpentine since 1948. The industry set up a factory in 1970 in the rural
industrial estate near Udhampur which is a backward area. The industry was
provisionally registered in 1970 and formal registration was granted on
29-2-1974. It applied for adequate quantities of raw-materials and was allotted
only 200 tons although it had been sanctioned 1500 per ton per annum since
Respondent M/s. Sud Pine Industries, M/s.
Kashmir R & T Works, Bakshi Resin & Turpentine and M/s. K. C. Soni
Bakshi also appear to be on different footings. It appears from Annexures 'X'
and 'Y' that the first two industries have already been formally registered.
They are existing units having already started production. So far as respondent
M/s Bakshi Resin and Turpentine is concerned, it had already set up factory and
started production. It was provisionally registered as early as 1976 and the
unit is located in a backward area. So far as respondent K. C. Soni Resin &
Turpentine is concerned, it was formally registered on 19-4-79. This unit is
located in a remote backward area of the State.
8. "Equality before the Law" or
"equal protection of the laws" within the meaning of Article 14 of
the Constitution of India means absence of any arbitrary discrimination by the
law or in their administration. No undue favour to one or hostile
discrimination to another should be shown. A classification is reasonable when
it is not an arbitrary selection but rests on differences pertinent to the
subject 849 in respect of which the classification is made. The classification
permissible must be based on some real and substantial distinction, a just and
reasonable relation to the objects sought to be attained and cannot be made
arbitrarily and without any substantial basis.. ........
(See State of West Bengal v. Anwar Ali. The
classification must not be arbitrary but be rational, that is to say, it must
not only be based on some qualities or characteristics which are to be found in
all the persons grouped together and not in others who are left out. Those
qualities or characteristics must have a reasonable relation to the object of
the law. In order to pass the test, two conditions must be fulfilled, namely,
(1) that the classification must be founded on an intelligible differentia
which distinguishes those that are grouped together from others, and (2) that
differentia must have a rational relation to the object sought to be achieved
by the Act. The differentia which is the basis of the classification and the
object of the Act are distinct things and what is necessary is that there must
be a nexus between them.
We are not unaware that the rule of equality
does not mean mathematical equality and that it permits of practical
inequalities. But what is needed is that the selection of quota seekers as in
the case in hand should have a rational relation to the object sought to be
achieved in the industrial policy decision of the State. If the selection or
differentiation is arbitrary and lacks a rational basis it offends Article 14.
9. In the instant case, although the State
Government has taken reliance on the State Industrial Policy decision referred
to above, they do not appear to have followed it in practice, except in the
cases of the five respondents referred to above. In fact no reasonable basis
has been adopted in making the allotments in favour of the new allottees and
denying allotments to the petitioners. In the circumstances the petitions are
partly allowed, the impugned orders of allotments except in favour of
respondents, M/s Rajindra Resin and Turpentine Industries, M/s Sud Pine
Industries, M/s Kashmir R & T Works, M/s Bakshi Resin & Turpentine and
M/s K. C. Soni Resin & Turpentine are quashed. The petitions are partly
allowed. The Rules are made absolute except as against these five respondents.
The respondent. No. 1, the State of Jammu and Kashmir, is directed to make the
other allotments of the raw-materials to the applicants in the light of the
observations made above.
10. Respondent No. 1 shall pay costs of Rs.
100.00 to each of the petitioners.
N.V.K. Petition partly allowed.