High Court Strikes Down Sections 3A & 6A Of Kerala Cashew Factories (Acquisition) Act As Unconstitutional And Arbitrary

The Kerala High Court has struck down Section 3A of the Kerala Cashew Factories (Acquisition) Act, 1974 amended by the Kerala Cashew Factories (Acquisition) Amendment Act, 2015 and Section 6A which was inserted by the 2015 Amendment as unconstitutional and arbitrary.Justice Gopinath P passed the order by relying upon the Apex Court decision in S.T. Sadiq v. State of Kerala and others (2015) which had struck down Section 6 of the Act as unconstitutional. “The provisions of Section 3A (as amended by the Amending Act, 2015) and Section 6A (inserted by the Amending Act, 2015) of the Kerala Cashew Factories (Acquisition) Act, 1974 are declared unconstitutional and are struck down. The provisions are arbitrary and discriminatory and violative of Article 14 of the Constitution of India.”Background FactsThe Petitioner, a cashew factory owner is before the High Court whose factory was proposed to be taken over by the government for the reason that his factory was lying closed for a long time and that there is no possibility of its reopening which would lead to large-scale unemployment. He thus challenged the constitutional validity of Sections 3A, 6A and also the order dated August 06, 2015, by which the Kerala Government took over his cashew factory under Section 3A of the 1974 Act. The petitioner seeks possession of his cashew factory and compensation for its illegal acquisition. Section 3 deals with the order of acquisition and Section 3A deals with the power to acquire the cashew factory in the public interest. The initial notification issued under Section 3 to acquire factories including that of the petitioner was struck down in Indian Nut Products & Others v. Union of India (1994). These factories which were taken over by the government and entrusted to Kerala State Cashew Workers Apex Industrial Co-operative Society (CAPEX) were directed to be handed over to their owners.In 1995, the Act was amended to introduce Section 3A states that the Government may by notification take over any Cashew Factory if it was closed for not less than three months and such closure had affected the majority of its workers. Section 6 introduced by way of amendment in 1995 enabled the State Government to acquire cashew factories in public interest under certain circumstances laid down in Section 3. In S T Sadiq (supra) filed by the petitioner itself, the Apex Court struck down Section 6 as unconstitutional. Subsequently, the Act was amended again in 2015 and Section 6A was inserted which is identical to Section 6 which enables the acquisition of factories inserted in Schedule III of the Act. Thus, the petitioner's factory was included in the Schedule under Section 6 and was not returned to him. Petitioners SubmissionsIt was argued that the Apex Court in Indian Nut Products & Others v. Union of India (1994) had set aside the acquisition of certain factories on the ground that notices were not issued as per law. It is alleged that the petitioner's factory is also covered under this judgment but was not returned to him. It was stated that once the Apex Court found that notifications under Section 3 were bad in law, the State could not have issues similar notifications under Section 3A.It was stated that the factory of the Petitioner and one more factory were only not returned and this is contrary to the observations in S T Sadiq (supra). It was also argued that law directing against one or two individuals when they are to be treated on the same footing as other factory owners is ultra vires to the Constitution. Further, it was submitted that the amendments brought in 2015 have not received presidential assent are not protected under Article 31 B of the Constitution and can be challenged for fundamental rights violations.It was also argued that the legislature cannot directly annul the judgment in S T Sadiq (supra) by introducing an identical provision as Section 6A. It was argued that this would amount to violation of Separation of powers which is part of the Doctrine of Basic Structure of the Constitution.Further, it was submitted that introducing provisions with retrospective effect to take away the rights of persons given by judgments of the Court is illegal. It was contended that there was rationale in making the 2015 Amending Act with retrospective effect. It was also stated that there is violation of Article 300A of the Constitution since the petitioner was deprived of his property without just compensation.Respondents SubmissionsIt was submitted that the Petitioner's factory closed in 1981 and large numbers of labourers became unemployed and affected the local economy of that area. It was thus stated that the rights of labourers outweigh the property rights of the petitioner.It was stated that the Petitioner's factory was taken over under Section 3A and not under Section 6A, hence the challenge against Section 6A was unsustainable. It was argued that the Apex Court in S T Sadiq (supra) did not strike down Section 3A and...

High Court Strikes Down Sections 3A & 6A Of Kerala Cashew Factories (Acquisition) Act As Unconstitutional And Arbitrary

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