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TMI Blog1986 (4) TMI 341X X X X Extracts X X X X X X X X Extracts X X X X ..... agreed to grant to the appellant the right of free use of water from the Muvattupuzha river for the purpose of manufacturing newsprint and also to make available annually to the appellant 1,50,000 tonnes of eucalyptus wood. The Government of Kerala further agreed to keep reserved from the date of agreement the State plantations of eucalyptus grandis in Pamba, Kottayam, Punalur, Thenmalai and Trivandrum Forest Divisions as constituted then for the appellant and not to permit harvesting of eucalyptus wood and reeds by other parties and for the regeneration of the forest in the areas, the Chief Conservator of Forests, Kerala State was required in consultation with the appellant to prepare and implement a scientific management plan which would include fireprotection and epidemic control programmes. The appellant agreed to pay to the Government of Kerala royalty for the raw materials supplied to the appellant at the rate of ₹ 11 per tonne of green wood of eucalyptus grandis and eucalyptus tereticornis (both with 50 per cent moisture) and at the rate of ₹ 12 per tonne of green reeds with 50 per cent moisture. There were several other conditions in the agreement with which we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce which is less than the selling price of that forest produce. (2) The sale of any forest produce in contravention of sub-section (1) shall be null and void and shall not he enforceable in a court of law." There is no prohibition of sale of forest produce at prices higher than the prices mentioned in the notification. Section 7 of the Act provides that 10 per cent of the amount obtained by the sale of forest produce after the commencement of the Act, subject to such rules as may be made under the Act, should be set apart for being utilised for the development of forests. Section 8 enables the Government to make rules for the purpose of carrying into effect the provisions of the Art. We are concerned in these cases with the validity of section 6 of the Act which reads thus : "6. Exemption - The Government may, in the public interest, by notification in the Gazette, exempt the sale of any forest produce - (a) to any company owned by the Central Government or the Government of Kerala; (b) not exceeding ten cubic meters, to any cooperative society registered or deemed to be registered under the Kerala Co-operative Societies Act, 1969 (21 of 1969) from the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n favour of the appellant Hindustan Paper Corporation Ltd. and two other companies owned by the Government of Kerala. The writ petitions were opposed by the Government of Kerala, the appellant Hindustan Paper Corporation Ltd., the Kerala State Bamboo Corporation Ltd. and the Tranvancore Plywood Industries Ltd. In the counter-affidavit filed on behalf of the Government of Kerala the contentions urged by the petitioners in the writ petitions were refuted and the State Government took the stand that section 6 of the Act was constitutionally valid. At the hearing of the writ petitions before the High Court, the Additional Advocate General who appeared for the State Government conceded that in his opinion section 6 of the Act was unconstitutional. Perhaps what he meant was that he was not able to offer any good answer to the contentions urged by the other side in support of the challenge to the constitutionality of the concerned provision. A reference to this concession which was neither here nor there is found at the end of paragraph 22 of the judgment of the High Court. The High Court held that sec. 6 of the Act was violative of Art. 14 of the Constitution and struck it down along wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for quashing section 6 of the Act are these : (1) if the Government is given a power to sell the produce at a lower price than the notified rate to the Government companies it will enable the Government to cripple or in slow degrees to eliminate the other consumers in the field. This conferment of power on the state Government is discriminatory and unreasonable, (2) a Government company is as such a legal entity as any other entity. It is a commercial corporation acting on its own behalf and all consumers of the forest produce should have an equal opportunity to get the goods. The Government company could not, therefore, be given any favour, (3) there is no nexus between the object to be achieved by the Act and the exemption to be granted in favour of the Government companies, and (4) the submission made by the Additional Advocate General to the effect that he could not support the validity of section 6 of the Act. We find it difficult to accept the grounds on which the High Court has held section 6 of the Act to be unconstitutional. So far as consumers of forest produce who are not granted any exemption under section 6 of the Act are concerned, any sale of forest produce in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary course it would be subject to the scrutiny by the Legislature. The power can be exercised only in the public interest as provided by the section itself. The validity of provisions conferring the power of exemption has been consistently upheld by this Court in a number of decisions commencing with the State of Bombay and Anr. v. F.N. Balsara, [1951] S.C.R. 682. The next question is whether section 6 of the Act which restricts the power of the Government to grant exemption to companies owned by the Central Government or the Government of Kerala and to co-operative societies only is valid. As far as Government undertakings and companies are concerned, it has to be held that they form a class by themselves since any profit that they may make would in the end result in the benefit to the members of the general public. The profit, if any, enriches the public coffer and not the private coffer. The role of industries in the public sector is very sensitive and critical from the point of view of national economy. Their survival very often depends upon the budgetary provision and not upon private resources which are available to the industries in the private sector. They are often establi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduled bank from the operation of section 2(e) of the Jagirdar's Debt Reduction Act, 1937 was held to be in conformity with the object of the Act and so violative of Article 14 of the Constitution. That case depended on the facts and circumstances surrounding the statute in question. We may refer here to the decision of this Court in Fatehchand Himmatlal & Ors. v. State of Maharashtra etc., [1977] 2 S.C.R. 828 where it is observed at page 849 thus : "There is no merit in the plea. Liabilities due to government to local authorities are not tained with exploitation of the debtor. Likewise, debts due to banking companies do not ordinarily suffer from the overreaching, unscrupulousness or harsh treatment. Moreover, financial institutions have, until recently, treated the villages and urban worker and petty farmer as untouchables and so do not figure in the picture. To exempt the categories above referred to is reasonable." Hence preference shown to Government companies under section 6 of the Act cannot be considered discriminatory as they stand in a different class altogether and the classification made between Government companies and others for the purposes of the Act is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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