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Issues: (i) Whether section 6 of the Kerala Forest Produce (Fixation of Selling Price) Act, 1978, which empowered the Government to exempt sales in favour of Government-owned companies and certain co-operative societies from section 5, was violative of Article 14 of the Constitution. (ii) Whether the exemption notification issued under section 6 in favour of the appellant and other Government undertakings was invalid.
Issue (i): Whether section 6 of the Kerala Forest Produce (Fixation of Selling Price) Act, 1978, which empowered the Government to exempt sales in favour of Government-owned companies and certain co-operative societies from section 5, was violative of Article 14 of the Constitution.
Analysis: The Act fixed a minimum selling price for forest produce on the basis of market price, regeneration cost and allied relevant factors. Section 6 did not confer an unfettered power: the exemption could be granted only in public interest and only to specified classes, namely companies owned by the Central Government or the Government of Kerala and, in limited quantities, co-operative societies. Government undertakings were treated as a distinct class because their profits ultimately inured to the public exchequer and because concessions to public sector industries could serve legitimate economic policy. The classification was held to bear a rational relation to the object of the Act and to be neither arbitrary nor unreasonable.
Conclusion: Section 6 was upheld and was not violative of Article 14; the finding of unconstitutionality was set aside.
Issue (ii): Whether the exemption notification issued under section 6 in favour of the appellant and other Government undertakings was invalid.
Analysis: The notification was issued in exercise of the statutory power and in public interest. The record disclosed no material showing that the exemption was outside the scope of section 6 or that it was contrary to the policy of the Act. The reasons adopted by the High Court for invalidating the notification were therefore unsustainable.
Conclusion: The notification was valid and the adverse finding of the High Court was set aside.
Final Conclusion: The appeals succeeded, the High Court judgment was reversed, and the writ petitions challenging the statutory exemption and the notification were dismissed.
Ratio Decidendi: A statutory exemption confined to Government-owned undertakings and limited co-operative societies, granted in public interest under a fiscal or economic regulatory scheme, is a valid classification under Article 14 where it has a rational nexus with the object of the legislation.
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