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TMI Blog2015 (8) TMI 1110X X X X Extracts X X X X X X X X Extracts X X X X ..... count and is thus declared unconstitutional. Kerala Legislature wished to interfere with two judgments of the Supreme Court making no distinction between factories that were managed by the Cashew Development Corporation (the 36 factories) and CAPEX (the 10 factories). It is interesting to note that apart from the Government suffering financially (if the factories are to be handed back), there will be large scale unemployment among workers in the cashew industry. - It is clear that the objects and reasons for the Amendment Act makes no differentiation between the 36 factories handed back and the 10 factories taken over by the Amendment Act. The High Court was in error in saying that there was an intelligible differentia between the two. Further, even otherwise, there is no difference between factories which post acquisition are run by the Cashew Development Corporation or CAPEX regard being had to the object sought to be achieved - namely to avoid unemployment of cashew workers. Both the Cashew Development Corporation and CAPEX, along with the Government, will suffer financially. In fact, the handing back of only 36 factories would be patently discriminatory as all 46 factor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctory, the Government shall give the occupier of the factory and the owner of the factory where he is not the occupier, a notice of their intention to take action under this sub-section and the grounds therefore and consider the objections that may be preferred in pursuance of such notice. Explanation.- For the purposes of this sub-section, the expressions lay off and retrenchment shall have the meanings respectively assigned to them in the Industrial Disputes Act, 1947 (Central Act 14 of 1947). (2) The notice referred to in the proviso to sub-section (1) shall also be published in two newspapers published in the State of Kerala, and such publication shall be deemed to be sufficient notice to the occupier, to the owner where he is not the occupier and to all other persons interested in the cashew factory. (3) On the making of a declaration under sub-section (1), the cashew factory to which the declaration relates, together with all machinery, other accessories and other movable properties as were immediately before the appointed day in the ownership, possession power or control of the occupier in relation to the factory and all books of accounts, registers and other do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shew factory or the removal of any property or assets from the premises of the factory is punishable under section 13 of the Act. GROUNDS It has been reported by the Authorized officer that your factory is lying closed and that there is no possibility of its starting functioning within a period of ten days or in the immediate future. The Government are therefore, of opinion that the said situation will lead to large scale unemployment of the workers of the Cashew Factory. By Order of the Governor Place: Thiruvananthapuram M. Vijayanunni Dated: 16.9.1985 Special Secretary to Governor Industries Department To, Smt. T. Suhara Beevi, C/o Musaliar Industries Kilikolloor, Kollam 4. Copy to: 1. Shri N. Gopalan Nair, Addl. Director of Industries and Commerce and Spl. Officer for Cashew Societies, Vikas Bhavan, Thiruvananthapuram. 2. Special Officer for cashew industry, Kollam for necessary action. 3. The Director of Public Relations for immediate publication in any two leading dailies having wide circulation. Forwarded/ By order Sd/- Section Officer. 3. The 10 cashew factories that were acquired filed writ petitions in the High Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... articulars of the alleged closure of each of the factories were required to be furnished to the individual owner to meet the case against him. The object of the Act is to safeguard the interests of the workers in the cashew factories and it is to safeguard their interests that the power has been vested in the State Government to issue orders for the transfer of the factories. The transfer or vesting of the factories has to be in accordance with the procedure prescribed in the Act. As already pointed out above, the proviso to sub-section (1) not only requires a notice to be given to the occupier or the owner of the factory in respect of the intention of the Government to take action under the said sub- section, but also requires to furnish the grounds on which such action is considered necessary. In the present case, according to us, the notice does not comply with and conform to the requirement of the proviso to sub- section (1) of Section 3. 10. It is well-settled that if a statute requires an authority to exercise power, when such authority is satisfied that conditions exist for exercise of that power, the satisfaction has to be based on the existence of grounds mentioned in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporation Ltd., or the State Government, as the case may be, shall be retained by the factory owners and shall not be retrenched except in accordance with law. So far as the members of the staff are concerned, it shall not be the obligation of the factory owners to retain them, in view of the interim order passed by this Court on 19-7- 1988. (iii) The petitioners shall pay the same salary and emoluments which were being paid by the State Government while the factories were with the State Government. (iv) Any claim for compensation in respect of any damage or loss caused to the machinery, equipments, building etc. during the period of occupation by the Kerala State Cashew Development Corporation Ltd., shall be assessed by the District Judge, Quilon. Similarly, any claim in respect of any amount for an additional construction made or additional machinery installed by the Kerala State Cashew Development Corporation Ltd., shall be determined by the District Judge, Quilon, on proper application being filed before it. (v) The Kerala State Cashew Development Corporation Ltd., shall be entitled to remove any machinery or materials installed by it within one week of preparation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nance was then brought in which became the Kerala Cashew Factories Acquisition (Amendment) Act of 16.8.1995. This Act was brought into force with effect from 1.5.1984 so as to cover all 46 acquisitions that had been made under the Principal Act. This Act is a short Act of six Sections and a Schedule. We are concerned with Section 3A and Section 6 which are set out hereinbelow: 3A. Power to acquire any cashew factory in public interest. (1) Notwithstanding anything contained in section 3, if the Government are satisfied, in relation to a cashew factory, that it has been closed for a period of not less than three months and such closure has prejudicially affected the interest of the majority of the workers engaged in that factory and that immediate action is necessary to restart the cashew factory and such restarting is necessary in the public interest, they may, by order published in the Gazette, declare, that the cashew factory shall stand transferred to, and vent in, the Government. Provided that no order under this sub-section shall be published unless the proposal for such acquisition is supported by a resolution of the Legislative Assembly. 6. Declaration as to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that considering that all the notices served were in identical terms, and considering that the objects and reasons of the 1995 Amendment Act placed all 46 factories at par, Section 6 of the Act violated Article 14 inasmuch as it discriminated between the 10 factories which were sought to be taken over and the 36 factories which were not sought to be taken over by the Amendment Act. The third point he argued before us was that in any case Section 6 of the Amendment Act read with Section 9 of the original Act was an independent stand alone provision. Section 6 of the Amendment Act was not in the 9th Schedule and since it referred inter alia to Section 9 of the original Act, it was legislation by incorporation and, therefore, Section 9 being part of the Amendment Act would be open to attack on the ground that it violated Article 300 A of the Constitution of India, in that the basis for awarding compensation for land that is acquired along with the cashew factories is on a completely irrelevant and arbitrary date, namely, the market value of the land on the date of setting up of the cashew factory. He pointed out to us on facts that some factories were granted as little as ₹ 58 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... making law [see: Article 245 of the Constitution] and not in declaring what the law shall be [see: Article 141 of the Constitution]. If the legislature were at liberty to annul judgments of courts, the ghost of bills of attainder will revisit us to enable legislatures to pass legislative judgments on matters which are inter- parties. Interestingly, in England, the last such bill of attainder passing a legislative judgment against a man called Fenwick was passed as far back as in 1696. A century later, the US Constitution expressly outlawed bills of attainder [see: Article 1 Section 9]. It is for this reason that our Constitution permits a legislature to make laws retrospectively which may alter the law as it stood when a decision was arrived at. It is in this limited circumstance that a legislature may alter the very basis of a decision given by a court, and if an appeal or other proceeding be pending, enable the Court to apply the law retrospectively so made which would then change the very basis of the earlier decision so that it would no longer hold good. However, if such is not the case then legislation which trenches upon the judicial power must necessarily be declared t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recting the refund of any tax so paid. 4. The reassessments with which we are concerned in these cases were made prior to the coming into force of the Act. Therefore all that we have to see is whether those reassessments are validly protected by Section 7. The High Court of Madras allowed the writ petitions and quashed the reassessments on the ground that the power to reassess under Section 7(B) introduced by the Act is incomplete and not exercisable in the absence of prescription as to limitation contemplated by the section and hence Section 7 of the Act fails to validate the assessments in question. We do not propose to go into that question as in our opinion Section 7 of the Act is invalid insofar as it attempts to validate invalid assessments without removing the basis of its invalidity. Similarly, in D. Cawasji and Co. Mysore v. The State of Mysore Anr., 1985 (1) SCR 825, Section 2 and 3 of Mysore Sales Tax (Amendment) Act, 1969 were struck down in the following terms: In the instant case, the State instead of remedying the defect or removing the lacuna has by the impugned amendment sought to raise the rate of tax from 6.1/2% to 45% with retrospective effect from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on but levy of taxation at higher rate which really amounts to imposition of tax with retrospective operation has to be justified on proper and cogent grounds. This aspect of the matter does not appear to have been properly considered by the High Court and the High Court in our view was not right in holding that by the enactment of Section 2 of the impugned Act the very basis of the complaint made by the petitioner before this Court in the earlier writ petition as also the basis of the decision of this Court in Cawasji's case that the State is collecting amounts by way of tax in excess of what was authorised under the Act has been removed. We, accordingly, set aside the judgment and order of the High Court to the extent it upholds the validity of the impugned amendment with retrospective effect from 1st of April, 1966 and to the extent it seeks to nullify the earlier judgment of the High Court. We declare that Section 2 of the impugned amendment to the extent that it imposes the higher levy of 45% with retrospective effect from the 1st day of April, 1966 and Section 3 of the impugned Act seeking to nullify the judgment and order of the High Court are invalid and unconstitutio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Amendment Act of 1981, can undoubtedly operate prospectively for adjudicating upon claims to 'shamilatdeh' in proceedings initiated subsequent to the commencement of that Act, if they do not, in any way, disturb the finality of adjudications made earlier. Equally, in Re Cauvery Water Disputes Tribunal, 1993 Supp (1) SCC 96, this Court after referring to two earlier judgments stated: 76. The principle which emerges from these authorities is that the legislature can change the basis on which a decision is given by the Court and thus change the law in general, which will affect a class of persons and events at large. It cannot, however, set aside an individual decision inter partes and affect their rights and liabilities alone. Such an act on the part of the legislature amounts to exercising the judicial power of the State and to functioning as an appellate court or tribunal. Similarly, in S.R. Bhagwat v. State of Mysore, (1995) 6 SCC 16, this Court held: 17. We may recapitulate at this stage that the petitioners have mounted a limited attack on the impugned provisions of the Act insofar as they deprive them of the monetary benefits flowing from the deemed prom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the part of the State Legislature to legislatively overrule binding decisions of competent courts against the State. It is no doubt true that if any decision was rendered against the State of Karnataka which was pending in appeal and had not become final it could rely upon the relevant provisions of the Act which were given retrospective effect by sub- section (2) of Section 1 of the Act for whatever such reliance was worth. But when such a decision had become final as in the present case when the High Court clearly directed respondent-State to give to the petitioners concerned deemed dates of promotions if they were otherwise found fit and in that eventuality to give all benefits consequential thereon including financial benefits, the State could not invoke its legislative power to displace such a judgment. Once this decision had become final and the State of Karnataka had not thought it fit to challenge it before this Court presumably because in other identical matters this Court had upheld other decisions of the Karnataka High Court taking the same view, it passes one's comprehension how the legislative power can be pressed in service to undo the binding effects of such ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be deemed nor, therefrom, can the events that should have preceded it. Facts may be deemed and, therefrom, the legal consequences that follow. 17. Sections 4 to 7 remained on the statute book unamended when the Validating Act was passed. Their provisions were mandatory. They had admittedly not been followed. The defect of not following these mandatory provisions in the case of the villages of Raipura and Ummedganj was not cured by the Validating Act. The curing of the defect was an essential requirement for the passing of a valid validating statute, as held by the Constitution Bench in the case of Prithvi Cotton Mills Ltd. [(1969) 2 SCC 283 : (1970) 1 SCR 388] It must, therefore, be held that the Validating Act is bad in law and it must be struck down. Mr. Giri, learned counsel appearing for the State is correct in saying that no Section of the principal Act had been struck down and hence Section 6 of the Amendment Act did not need to remove the basis of any earlier decision striking down an Act. We repeatedly asked him if action had been taken under Section 3(1) or 3A of the Amendment Act to acquire any of the cashew factories before us. His candid answer was no . The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of being heard before final orders were passed by the Government. 4. These factories are now under the management of the Cashew Development Corporation and also CAPEX. In case the factories are to be handed over to the petitioners in the OP's as stipulated by the Court, the above mentioned institutions and Government will suffer financially, amounting to crores of rupees. 5. If the cashew factories are handed over to its previous owners based on the directions of the Court, owners may not be in a position to start work in the near future for the reason that they are not in Cashew trade for a long period and due to paucity of raw cashew in the world market. There will be large scale unemployment among the workers in Cashew Industry. There will also be scored economic disorders in the Southern Districts of the State. Where there is concentration of Cashew Factories. 6. Therefore to tide over the situation Government intends to arm with a new legislation to acquire certain factories from the date of original notification for acquisition. 7. The Bill seeks to amend the Kerala Cashew Factories (Acquisition) Act, 1974, to achieve the above objects. A bare reading of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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