1986 (4) TMI 341 - SC - Indian Laws

Summary

Issues Involved:
1. Constitutional validity of Section 6 of the Kerala Forest Produce (Fixation of Selling Price) Act, 1978.
2. Validity of the Notification granting exemption to Government companies under Section 6 of the Act.

Summary:

Issue 1: Constitutional Validity of Section 6 of the Act
The Supreme Court examined the constitutional validity of Section 6 of the Kerala Forest Produce (Fixation of Selling Price) Act, 1978. The High Court had previously struck down Section 6, declaring it violative of Article 14 of the Constitution. The High Court's reasons included the potential for discriminatory pricing favoring government companies, the lack of equal opportunity for private companies, and the absence of a nexus between the Act's objectives and the exemptions granted.

The Supreme Court disagreed with the High Court's reasoning, emphasizing that the power to grant exemptions under Section 6 is not unfettered and must be exercised in the public interest. The Court noted that government companies form a distinct class as their profits benefit the public, and their survival often depends on budgetary provisions rather than private resources. The Court upheld the validity of Section 6, stating that the classification between government companies and private entities is reasonable and not discriminatory.

Issue 2: Validity of the Notification Granting Exemption
The Supreme Court also addressed the validity of the Notification issued by the Kerala Government, which exempted certain government companies from the provisions of Section 5 of the Act. The High Court had invalidated the Notification, but the Supreme Court found no valid reason to support this decision. The Court highlighted that the Notification was issued in the public interest, benefiting companies like Hindustan Paper Corporation Ltd., which had established its factory based on an agreement with the State Government for the supply of raw materials.

The Supreme Court concluded that the Notification was indeed in the public interest and set aside the High Court's finding on its invalidity.

Conclusion:
The Supreme Court allowed the appeals, set aside the High Court's judgment, and upheld the constitutional validity of Section 6 of the Kerala Forest Produce (Fixation of Selling Price) Act, 1978, along with the Notification granting exemption to government companies. The writ petitions filed in the High Court were dismissed, with no order as to costs.