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PETITIONER: HINDUSTAN PAPER CORPORATION LTD.

       Vs.

RESPONDENT: GOVERNMENT OF KERALA & OTHERS

DATE OF JUDGMENT16/04/1986

BENCH: VENKATARAMIAH, E.S. (J) BENCH: VENKATARAMIAH, E.S. (J) THAKKAR, M.P. (J)

CITATION:  1986 AIR 1541            1986 SCR  (2) 581  1986 SCC  (3) 398        1986 SCALE  (1)870  CITATOR INFO :  R          1989 SC 903  (20)

ACT:      Constitution  of   India,  1950   -  Article  19(6)(ii) Government  owned   industry  -   Necessity  for   grant  OF concessions.      Kerala Forest  Produce (Fixation of Selling Price) Act, 1978 -  Section 6  - Constitutional  validity of - Action of State  Government   exempting  Government   companies   from operation of section 5 of the Act - Whether valid and legal.

HEADNOTE:      The Kerala  Forest Produce  (Fixation of Selling Price) Act, 1978  was enacted  with the object of providing for the procedure to  be followed  in fixing  the selling  prices of certain important forest produce, for the prohibition of the sale of such forest produce at less than the prices so fixed and for  matters incidental  or ancillary  thereto. The  Act governs only those forests which are considered as "reserved forests" within  the meaning of Kerala Forests Act, 1961 and forests vested  in the  Government under  s. 3 of the Kerala Private Forests (Vesting and Assignment) Act 1971.      Section 6  provides that  the Government  may in 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,  and  (b)  not exceeding 10  cubic  meters,  to  any  co-operative  society registered or  deemed to  be registered under the Kerala Co- operative Societies  Act, 1969  from the  provisions of s. 5 subject to  such  conditions  and  restrictions  as  may  be specified in the Notification.      On  March  9,  1979,  the  respondent-State  Government published a  Notification exempting  the  appellant-company, the Kerala  State Bamboo Corporation Ltd. and the Travancore Private Industries Ltd. from the provisions of s.5 and fixed the price  below which  forest produce  covered by  the  Act could not be sold. 582      Two private sector companies filed writ petitions under Art. 226  questioning the constitutional validity of s.6 and the  Notification   granting  exemption  in  favour  of  the appellant-company and  two Government  owned companies.  The

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petitions were  opposed alleging  that s.6  of the  Act  was constitutionally valid. At the hearing of the petitions, the Additional Advocate-General  appearing for  the  respondent- State  Government   conceded  that  s.  6  of  the  Act  was unconstitutional. The  High Court, therefore, held that s. 6 of the Act was violative of Art. 14 and struck down the same as well as the Notification.       The appellant-company filed appeals to this Court. Though no  appeal was  filed by the State Government, at the hearing the  counsel for  respondent-State Government stated that the concession made by the counsel for the State before the High  Court, was incorrect and supported the validity of s.6 of the Act and the Notification granting exemption.      Allowing the appeals, ^      HELD: 1.  The decision  of the  High Court that s. 6 of the Kerala  Forest Produce  (Fixation of Selling Price) Act, 1978 was  violative of Art. 14 of the Constitution is liable to be set aside. [595 C]      2. Section  6 of the Act confers the power on the State Government to grant exemption from the provisions of s. 5 of the Act.  The power  conferred under s. 6 is not unfettered. The Government  can grant  the exemption  only in the public interest. Such  exemption can  be granted  only to a company owned by the Central Government or the Government of Kerala. [590 D-E]      3. Under  cl. (b) of s.6 any sale of forest produce not exceeding 10  cubic meters  effected in  favour of  any  co- operative society  registered or  deemed  to  be  registered under the  Kerala Co-operative  Societies Act  1969  may  be exempted from  s. 5 of the Act by the State Government. [590 E]      4. While issuing the notification granting exemption it is open  to  the  State  Government  to  impose  appropriate conditions and  restrictions. The  State Government  has  to bear in  mind the  entire policy  and the  object of the Act before exercising its power under s. 6. [590 F-G] 583      5. So  far as consumers of forest produce who are not A granted any  exemption under  s.6 are  concerned any sale of forest produce in their favour cannot be effected at a price less than  the price  notified under  s. 3  of the  Act. The notified  price  has  to  be  fixed  on  the  basis  of  the recommendation of the Expert Committee constituted under s.4 and  the   Expert  Committee   is  required   to  take  into consideration the  market price  of the  forest produce, the cost of  regenerating and  maintaining the forest produce in cases where  regeneration is  necessary  after  selling  the forest  produce   and  such   other  materials   as  may  be prescribed. Section  5  provides  that  the  forest  produce covered by  the Act  shall not  be sold at a price less than the price  which is  determined  on  the  basis  of  various factors, therefore, the consumers cannot have any grievance. They cannot claim that they must be shown any concession and that the  forest produce should be made available to them at a price  which would  be lower  than the market prices. Even when it  is stated  that any  company owned  by the  Central Government or  the Government  of Kerala  or a  co-operative society  may   be  supplied   forest  produce   without  the constraint contained  in s.5,  it does  not  mean  that  the forest produce would be made available to them at throw-away prices. It  is reasonable  to expect  that the price payable for  the  forest  produce  in  question  by  the  Government companies or  co-operative  societies  would  be  determined after negotiations  having regard  to the  public  interest.

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[591 F-H; 592 A-C] E      6. In  almost all  the statutes  by which the fiscal or economic interests  of the State are regulated provision for granting  exemption   in  appropriate   cases   would   have necessarily to  be there and the power to grant exemption is invariably conferred on the Government concerned. [592 C-D]      7.  It   has   now   become   a   well-recognised   and constitutionally   accepted    legislative    practice    to incorporate provisions conferring the powers of exemption on the Government  in such  statutes.  Such  exemptions  cannot ordinarily be granted secretly. A Notification would have to be issued  and published  in the  Gazette and  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. [592 E-F] 584      State of  Bombay and  Another v.  F.N.  Balsara  [1951] S.C.R. 682, relied upon.      8. The  Government undertakings  and companies  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 established  to  break  the power of  strangulation on  economy which  the industries in private sector  may have developed and may be using to choke the industrial  growth of  the country.  An exemption  or  a concession  might   provide  them  some  breathing  time  or settling down  time. It  may be  treated as a subsidy at the worst.  This   appears  to  be  the  policy  behind  Article 19(6)(ii) of the Constitution. In appropriate cases in order to place  an industry owned by the Government on an enduring basis in  the national interest, some concession may have to be shown to it. [592 H; 593 A-D]      9. The  action of the State Government in exempting the Government Companies  from the  operation of 8.5 does not in the instant  case amount  to the exclusion of the industries in the  private sector  from their business nor does it deny the usual  supplies of  forest produce used as raw-materials by these  industries. The  Government is  not  shown  to  be taking any  undue advantage of the monopoly it enjoys as the owner of  the forests  and the position it holds as the sole supplier in  forest produce  in fixing the minimum prices in order to  preserve the  national wealth  from  being  wasted away. There  fore, it  cannot be  said that the provision is either arbitrary  or unreasonable even though the Government industries may  be rivals  in trade to the industries in the private sector. [593 E-G]      Sher Singh v. Union of India & Ors., [1984] 1 S.C.R. 464; Viklad  Coal Merchant, Patiala & Ors. v. Union of India Ors., [1984] 1 S.C.R. 657 and Fatehchand Himmatlal & Ors. v. State of Maharashtra etc., [1977] 2 S.C.R. 828, relied upon.      State of  Rajasthan v.  Mukanchand  &  Ors.,  [1964]  6 S.C.R. 903, referred to. 585      10. Preference shown to Government companies under 8. 6 A of  the Act  cannot be  considered to be discriminatory as they  stand   in  a   different  class  altogether  and  the classification made  between the  Government  companies  and

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others for  the purposes  of the Act is a valid one. Same is the case  with the  class which gives power under 8.6 of the Act to  the Government  to exempt sales of forest produce in favour of  co-operative societies  upto the  limit mentioned therein. [594 E-F]      P.V. Sivarajan  v. The  Union of India and Anr., [1959] Suppl. 1 S.C.R. 779 and Orient Weaving Mills (P) Ltd. v. The Union of India, [1962] Suppl. 3 S.C.R. 481, relied upon.      11. In  the instant  case, the writ petitioners on whom the burden  lay have not given any valid reason as to why it should be  held that  impugned notification  was not  in the public interest.  In the  absence of  material it  cannot be held that  the impugned  notification was  not in the public interest. [595 C-D]

JUDGMENT:      CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1871-76 of 1981.      From the  Judgment and  Order dated  15.4.1981  of  the Kerala High  Court in  O.P. Nos.  6, 7,  l005 1153, 1154 and 1345 of 1981. E      Dr.  Y.S.   Chitale,  M.   Ramchandran,   Mrs.   Shanta Vasudevan,  P.   Parameswaran  and   A.S.  Nambiar  for  the Appellant.      T.S.  Krishnamurthy   Iyer  and  P.K.  Pillai  for  the Respondents. F      The Judgment of the Court was delivered by      VENKATARAMIAH J.  In these  appeals by special leave we are concerned  with the  question of constitutional validity of section  6 of  the Kerala  Forest  Produce  (Fixation  of Selling Price)  Act, 1978  (Act  29  of  1978)  (hereinafter referred to as ’the Act’)      The appellant  Hindustan Paper  Corporation Ltd.  is  a company owned by the Central Government carrying on the 586 business of  manufacturing newsprint  at its  factory in the State of  Kerala. Before  its  factory  was  established  an agreement was  entered into  between the appellant Hindustan Paper Corporation  Ltd. and  the  Government  of  Kerala  on October 7,  1974 under which the Government of Kerala 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 Rs.11  per tonne  of green wood of eucalyptus grandis and eucalyptus tereticornis (both with 50 per cent moisture) and at the  rate of  Rs.12 per  tonne of green reeds with 50 per cent moisture.  There were  several other  conditions in the agreement with which we are not concerned in these cases. After the  above agreement  was entered  into the  appellant established its  factory. The  Punalur Paper  Mills Ltd. and

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the Gwalior  Rayon Silk  Manufacturing (Wvg.) Co. Ltd. which were companies  in the  private sector  had also established their factories in the State of Kerala which consumed forest produce as raw-material. The Kerala State Bamboo Corporation Limited and  the Travancore Plywood Industries Limited which were owned by the Government of Kerala were also carrying on business in the State of Kerala.      In the  year 1978  the Act  was passed  by  the  Kerala Legislature with  the object  of providing for the procedure to be  followed in  fixing the  selling  prices  of  certain important forest produce, for the prohibition of the sale of such forest produce at less than the prices so fixed and for matters incidental  or ancillary  thereto. The  Act was also intended  to   provide  for   the  proper  regeneration  and maintenance of  the forests  in the  State. The  Act governs only those forests which 587 are considered  as reserved  forests within the meaning of A Rerala Forest Act, 1961 and forests vested in the Government under section  3 of  the Kerala Private Forests (Vesting and Assignment) Act,  1971. It provides for the determination of the selling  price of  certain forest  produce specified  in clause (c)  of section  2 of  the Act.  Section 3 of the Act requires the  Government to notify in the Gazette before the end of each financial year the selling price of every forest produce for the following financial year. The notified price has  to  be  fixed  by  the  Government  after  taking  into consideration the  recommendations of  the Expert  Committee consisting of  the officers mentioned in section 4(2) of the Act. Sub-section  (3) of  section 4  of the Act requires the Expert Committee  to make  its recommendation  having regard inter alia  to the  market price  of the forest produce, the cost of,  regenerating and maintaining the forest produce in cases where  regeneration is  necessary  after  selling  the forest produce; and such other matters as may be prescribed. Section 5  is the  crucial section  in the  Act. It reads as follows :           "5. Forest  produce to  be sold  at price not less           than the selling price -           (1) After  the date  of  the  publication  of  the           notification under  sub-section (2)  of section 3,           no forest  produce shall be sold by the Government           or any  forest officer  at a  price 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 : 588           "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;

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         (b) not  exceeding ten  cubic meters,  to any  co-           operative  society  registered  or  deemed  to  be           registered under the Kerala Co-operative Societies           Act, 1969 (21 of 1969)           from the  provisions of section 5, subject to such           conditions and restrictions as may be specified in           the notification."      The Act  came into  force on  its publication, i.e., on September 26,  1978. On  March 9,  1979  the  Government  of Kerala published  a notification  exempting  the  appellant, i.e., Hindustan  Paper Corporation  Ltd., the  Kerala  State Bamboo  Corporation   Limited  and  the  Travancore  Plywood Industries Limited  from the  provisions of section 5 of the Act.  The   relevant  part   of  the  Notification  and  the Explanatory Note attached to it are given below:           "No. G.O. (MS) lOO/79/AD Dated, Trivandrum                                           9th March, 1979        S.R.O.   No.  313/79:-  In  exercise  of  the  powers conferred  by   section  6  of  the  Kerala  Forest  Produce (Fixation of  Selling Price)  Act, 1978  (29 of  1978),  the Government of  Kerala, being  satisfied that it is necessary so to  do in  the public interest, hereby exempt the sale of any forest produce to the Kerala Newsprint Project under the Hindustan  Paper   Corporation,  the   Kerala  State  Bamboo Corporation and  the Travancore  Plywood Industries, Punalur from the provisions of section 5 of the said Act.                                     By order of the Governor                                            K.V. Vidhyadharan                                Additional Secretary to Govt. 589                       EXPLANATORY NOTE           After Government  have notified  selling price  of           Forest Produce  under section 3 of Act 29 of 1978,           Forest Produce  cannot be sold at prices less than           the selling  price. Under  section 6  of the  Act,           Government  can  exempt  in  public  interest,  by           Notification, the  sale of  any Forest  Produce to           companies owned  by  the  Central  Government,  by           Government of Kerala. As Kerala Newsprint Project,           Bamboo Corporation  and  the  Tranvancore  Plywood           Industries,  Punalur   are  undertakings   of  the           Central Government  and the  Government of  Kerala           respectively, it is considered expedient to exempt           these from the provisions of section 5 of the Act.           The Notification  is intended to achieve the above           purpose."      The State  Government  issued  the  Notification  under section 3  of the  Act fixing  the price  below which forest produce covered  by the  Act could not be sold. Aggrieved by the  Notification   granting  exemption  to  the  Government companies, the  two companies in the private sector, namely, Punalur Paper  Mills Limited  and  the  Gwalior  Rayon  Silk Manufacturing (Wvg.)  Co. Ltd.  filed writ  petitions in the High  Court   questioning  the  constitutional  validity  of section 6 and the Notification granting exemption thereunder in 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

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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 590 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 with the Notification. No appeal was filed by the State Govt. The above appeals  are filed  by the Hindustan Paper Corporation Ltd. the  appellant herein which is one of the beneficiaries of the  Notification granting exemption. But, at the hearing of these  appeals in  this Court the learned counsel for the Government of  Kerala stated that the concession made by the learned counsel  for the  State before  the High  Court  was incorrect, and  supported the  validity of  section 6 of the Act  and   the  Notification   granting   exemption   issued thereunder.      These appeals  are filed  against the  judgment of  the High Court  after obtaining  the leave  of this  Court under Article 136  of the  Constitution. Section  6 of the Act has already been  set out  above. It  confers the  power on  the State Government  to grant  exemption from the provisions of section 5 of the Act. The power conferred under section 6 of the Act  is not  unfettered. The  Government can  grant  the exemption only in the public interest. Such exemption can be granted only to a company owned by the Central Government or the  Government   of  Kerala.  There  is  also,  however,  a provision in  clause (b)  of section  6 of  the  Act,  which ununderstandably has  also been  struck  down  by  the  High Court, even  though its  validity  has  not  been  expressly challenged. Under  this provision any sale of forest produce not exceeding ten cubic meters effected in favour of any co- operative society  registered or  deemed  to  be  registered under the  Kerala Co-operative  Societies Act,  1969 may  be exempted from  section 5 of the Act by the State Government. While issuing the notification granting exemption it is open to the State Government to impose appropriate conditions and restrictions. The  State Government,  of course, has to bear in mind  the entire  policy and  object of  the  Act  before exercising its  power under  section 6  of the  Act. At  the outset it  should be  observed that the decision of the High Court to  the extent  it has quashed clause (b) of section 6 of the  Act which  gave power  to the  State  Government  to exempt the  sale of  any forest  produce in small quantities not exceeding 10 cubic meters to any co-operative society is liable to be set aside straightaway without anything more as there was  no challenge  to that  part of the section at all and the High Court has not 591 at all  scrutinized  the  constitutional  validity  of  this provision.      The reasons  given  by  the  High  Court  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,

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         (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 their favour cannot be effected  at a  price less  than the price notified under section 3  of the Act. The notified price has to be fixed on the basis  of the  recommendation to  be made  by the Expert Committee constituted  under section  4 of  the Act  and the Expert Committee  is required to take into consideration the market price of the forest produce, the cost of regenerating and  maintaining   the  forest   produce  in   cases   where regeneration is  necessary after  selling the forest produce and such other matters as may be prescribed. If section 5 of the Act provides 592 that the forest produce covered by the Act shall not be sold at a  price less  than the  price which is determined on the basis of  the factors  referred to  above  which  appear  to bequite relevant they cannot have any grievance. They cannot claim that  they must  be shown  any concession and that the forest produce  should be  made available to them at a price which would  be lower than the market price. Even when it is stated that  any company  owned by the Central Government or the Government  of Kerala or a co-operative society (subject to the limit as regards the quantity of forest produce to be supplied)  may   be  supplied  forest  produce  without  the constraint contained  in section  5 of  the Act, it does not mean that the forest produce would be made available to them at throw-away  prices. It  is reasonable  to expect that the price payable  for the  forest produce  in question  by  the Government companies  or  co-operative  societies  would  be determined after  negotiations having  regard to  the public interest. In  almost all the statutes by which the fiscal or economic interests of the State are regulated, provision for granting  exemption   in  appropriate   cases   would   have necessarily to  be there and the power to grant exemption is invariably  conferred   on  the  Government  concerned.  The Legislature which  is burdened  with heavy  legislative  and other types  of work is not able to find time to consider in detail the  hardships and  difficulties that  are likely  to result by  the enforcement of the statute concerned. It has, therefore, now become a well-recognised and constitutionally accepted  legislative  practice  to  incorporate  provisions conferring the powers of exemption on the Government in such statutes.  Such  exemptions  cannot  ordinarily  be  granted secretly.  A  notification  would  have  to  be  issued  and published in the Gazette and in the ordinary 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

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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 593 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 established to break  the power  of strangulation  on economy  which the industries in  private sector  may have developed and may be using to  choke the  industrial growth  of the  country.  An exemption or  a concession might provide them some breathing time or  settling down  time. It may be treated as a subsidy at the  worst. This  appears to be the policy behind Article 19(6)(ii) of the Constitution. In appropriate cases in order to place  an industry owned by the Government on an enduring basis in  the national interest, some concession may have to be shown  to it.  It is neither alleged nor established that if the  exemption is annulled the petitioners will be richer by a  single paise  or if it is retained they will be poorer by a single paise. The only purpose hinted at is that if the public sector  is made  to pay  more, it  may use  less raw- material which  in turn  might be  available to  the private sector. Not  a very laudable purpose to say the least of it. The  action   of  the  State  Government  in  exempting  the Government companies  from the operation of section 5 of the Act does  not in the instant case amount to the exclusion of the industries in the private sector from their business nor does it  deny the  usual supplies  of forest produce used as raw-material by  these industries  as alleged  by them.  The Government is  not shown to be taking any undue advantage of the monopoly  it enjoys  as the owner of the forests and the position it  holds as the sole supplier of forest produce in fixing the  minimum prices in order to preserve the national wealth from  being wasted away. In the circumstances of this case  it  cannot  be  said  that  the  provision  is  either arbitrary  or   unreasonable  even   though  the  Government industries may  be rivals  in trade to the industries in the private sector.  In Sher  Singh v.  Union of  India &  Ors., [1984] 1  S.C.R. 464 this Court has upheld section 47 (H) of the  Motor  Vehicles  Act,  1939  under  which  a  statutory preference is  shown to  a State  Transport Undertaking.  In Viklad Coal  Merchant, Patiala  & Ors.  v. Union  of India & Ors., [1984]  1 S.C.R.  657, the  preference  shown  to  the Government in 594 allotment of  railway wagons  for transporting coal has been upheld. Learned counsel for the respondents however depended upon the  decision of  this Court  in State  of Rajasthan v. Mukanchand & Ors., [1964] 6 S.C.R. 903 by which an exemption granted in  respect of debts due to the State or a scheduled 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

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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 a valid one. Same is the case with the clause which gives power under section 6 of the Act to the  Government to  exempt sales  of  forest  produce  in favour of  co-operative societies  upto the  limit mentioned therein. In P.V. Sivarajan, v. Union of India & Anr., [1959] Suppl. 1  S.C.R. 779  the exemption  granted  in  favour  of traders carrying  on export  business in  a small  scale who formed co-operative  societies was upheld. In Orient Weaving Mills (P) Ltd. v. Union of India, [1962] Suppl. 3 S.C.R. 481 this Court  upheld the exemption granted in favour of power- loom weavers  in a  cooperative society  from  the  levy  of central excise  duties. We  do not find any substance in the contention that  the provision  granting exemption in favour of Government  companies and  the co-operative  societies as stated above is 595 unconstitutional. We must, however, express our dis-approval of one  of the  reasons given by the High Court for striking down section 6 of the Act, namely, "private sector consumers generally show  more concern  in the  speedy  production  of goods, in  the finished  products and  in the  sale of  them which is  in public interest as well." The above observation is not  warranted and  is presumably  based on  the personal opinion of  the learned  judges. It is misleading and cannot in the  circumstances of the case serve as a prop to support the contention of the respondents.      Therefore, the  decision of the High Court that section 6 of the Act was violative of Article 14 of the Constitution is liable  to be  set aside.  We do  not also approve of the finding of  the High  Court  that  even  assuming  that  the section was  valid, the  notification issued  thereunder was invalid. It  may be stated here that the writ petitioners on whom the  burden lay  have not  given any valid reason as to why we should hold that the impugned notification was not in the public  interest. As  mentioned earlier  the  appellant, Hindustan Paper  Corporation Ltd.  established  its  factory after entering  into an  agreement with the State Government as regards  the regular  supply  of  raw-material  from  the forests in  the State  of Kerala for production of newsprint and that  the said  factory was  employing  a  large  labour force. The  other two concerns in whose favour the exemption is granted  by the impugned notification are the concerns of Kerala Government  itself. We  have no material in this case to hold that the impugned notification was not in the public interest. We  accordingly set  aside the finding recorded by the High Court on the validity of the notification also.      In the  result, we  allow the  appeals, set  aside  the judgment of  the High  Court and  dismiss the writ petitions

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filed in  the High  Court. There shall, however, be no order as to costs. A.P.J.                                      Appeals allowed. 596