Reportable  

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

Civil Appeal Nos. 7699-7700 of 2019 (Arising out of SLP (C) Nos.7792-7793 of 2019)

K. H. NAZAR .... Appellant(s)

Versus

MATHEW K. JACOB & ORS.   

…. Respondent (s)

J U D G M E N T

L. NAGESWARA RAO, J.

Leave granted.  

1. The  width  and  amplitude  of  the  expression

‘commercial site’ in Section 2 (5) and Section 81 (1) (q) of

the Kerala Land Reforms Act, 1963 (for short, “the Act”),

falls for our consideration in these Appeals.  Commercial

sites  are  exempted  from  the  purview  of  the  Act.   The

question whether a rocky land which is used for quarrying

purposes  can  be  treated  as  a  ‘commercial  site’  and

thereby  excluded  from  the  applicability  of  the  Act  was

answered  by  a  learned  Single  Judge  of  the  Kerala  High

Court  by  holding  that  mere  blasting  of  rocks  and

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conversion  into  metals  does  not  render  the  area  a

‘commercial site’.1  Twenty years after the said judgment, a

Division Bench of the Kerala High Court  took a different

view.  Quarrying was held to be a commercial operation

involving the process of manufacture. Hence, it was held

that a quarry falls within the ambit of ‘commercial site’ and

is exempted from the applicability of the Act.2  

2. The Appellant requested environmental clearance for

his quarry which was recommended in his favour by the

District Expert Appraisal Committee (DEAC) on 25.04.2017.

Respondents No.1 and 2 filed a Writ Petition aggrieved by

the said recommendation to permit quarry on land which

was  a  plantation  site.  It  is  relevant  to  note  that  the

Appellant’s land was exempted from the realm of the Act

as it was a plantation.  The objection of Respondent No.1

and 2 was that the Appellant cannot be permitted to use

the land for a purpose other than plantation, especially for

quarrying operations.   After examining the judgments of

the High Court in  K. Krishnankutty v. State of Kerala

and  Others  (supra)  and State  of  Kerala  v.

Mohammedali Haji (supra), a learned Single Judge of the

High Court of Kerala doubted the correctness of the latter 1  K. Krishnankutty v. State of Kerala and Others. CRP No.1245/1975 2  State of Kerala v. Mohammedali Haji.  (1996) 1 KLT 584 (DB)

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judgment  in  State  of  Kerala  v.  Mohammedali  Haji

(supra) and referred the matter to a larger Bench.   

3. The Writ Petition filed by Respondent No.1 and 2 was

heard by a Full Bench of the Kerala High Court comprising

three  Judges.    The  majority  opinion  was  in  favour  of

Respondent No.1 and 2.  It was held by the majority that

the land which is used for quarrying is not covered by the

expression ‘commercial site’.  Therefore, there can be no

exemption of such land from the applicability of the Act.

The Appellant is aggrieved by the said judgment of the Full

Bench of the High Court.   

4. Mr.  K.  V.  Vishwanathan,  learned Senior  Counsel  for

the Appellant  took us  through the provisions  of  the  Act

including Sections 2(5), 81 and 83 to argue that a quarry is

a commercial site, which is exempted under Section 81 (1)

(q) of the Act.  He alluded to the statement of objects and

reasons to submit that the legislation was made to protect

the  interests  of  all  stake-holders.   He  referred  to  the

meaning  of  the  words  ‘commercial  activities’  and

‘business’ to submit that the activity of quarrying is done

for  profit.   Hence,  quarrying  is  a  commercial  activity.

According  to  him,  there  can  be  no  distinction  between

activities done above and below the surface of land for the

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purpose of deciding whether land is a commercial site or

not.    He  criticized  the  plurality  opinion  for  erroneously

invoking the mischief rule.   He commended the judgment

of  the  dissenting  Judge  for  our  acceptance.    He

emphasized that environmental issues are not germane for

interpretation of Sections 2 (5) and 81 (1) (q) of the Act.   

5. Mr.  Pallav  Shishodia,  learned  Senior  Counsel

appearing for the State of Kerala resisted the submissions

made on behalf  of  the Appellant by submitting that the

expression ‘commercial site’ is a term of art and has to be

interpreted on the basis of the context in which it is used.   

6. Mr. Romy Chacko, learned counsel for the Respondent

No.1 and 2 asserted that the Act is a beneficial legislation.

When there is a doubt about the meaning of expressions

used  in  such  a  statute,  literal  interpretation  should  be

avoided  and  Courts  should  adopt  the  principles  of

purposive construction.  He submitted that the exemption

provision should be narrowly construed.     

7. Before  we  consider  the  submissions  made  by  the

learned counsel, it is necessary to examine the provisions

of the Act.  Section 83 of the Act provides that no person

shall  be  entitled  to  own  or  hold  or  possess  under  a

mortgage, lands in the aggregate in excess of the ceiling

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area with effect from the date notified by the Government

of  Kerala  in  the  Gazette.    The  ceiling  area  of  land  is

specified in Section 82 of the Act.  Lands exempted under

Section  81  shall  be  excluded  from  computation  of  the

ceiling area as per Section 82 (6) of the Act.  Section 81 of

the Act is as follows:

81.  Exemptions: - (1) the provisions of this Chapter

shall not apply to-

a) Lands owned or held by the Government of Kerala or

the Government  of  any other  State in India  or  the

Government  of  India  or  a  local  authority  [or  the

Cochin Port  Trust]  or  any other authority which the

Government  may,  in  public  interest,  exempt,  by

notification in the Gazette, from the provisions of this

Chapter.

[Provided that the exemption under this clause shall

not  apply  to  lands  owned  by  the  Government  of

Kerala and held by any person under lease whether

current or time expired or otherwise.]

Explanation I. – “Lands owned by the Government

of Kerala” shall, for the purposes of this clause, have

the same meaning as “Government lands” under sub-

section  (1)  of  Section  2  of  the  Kerala  Government

land Assignment Act, 1960 [but lands escheated to

the Government and held by tenants entitled to fixity

of tenure under Section 13 shall not be deemed to be

lands owned by the Government of Kerala;]

Explanation II – Lands, the right, title and interest in

respect  of  which  have  vested  in  the  Government

under  sub-section  (9)  of  Section  66  or  Section  72,

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shall  not  be  deemed  to  be  “lands  owned  by  the

Government  of  Kerala”  for  the  purposes  of  this

clause;]

Explanation  III -  For  the  purposes  of  this  clause,

“other authority” shall include a corporation owned or

controlled  by  the  Government  of  Kerala  or  the

Government  of  any  other  State  in  India  or  the

Government of India;]  

b) Lands taken under the management of the Court of

Wards;

Provided that the exemption under this clause shall

cease to apply at  the end of  three years  from the

commencement of this Act;

c) Lands comprised of mills, factories or workshops and

which  are  necessary  for  the  use  of  such  mills,

factories or workshops;

d) Private forests;

e) Plantations;

f) x   x   x   x

g) x   x   x   x

h) lands  mortgaged  to  the  Government,  or  to  a  co-

operative  society  (including  a  co-operative  land

mortgage  bank)  registered  or  deemed  to  be

registered  under  the  Co-operative  Societies  Act  for

the  time  being  in  force,  or  to  the  Kerala  Financial

Corporation, or to the Kerala Industrial Development

Corporation,  or  to  the  State  Small  Industries

Corporation, as security for any loan advanced by the

Government  or  by  such  society  or  Corporation,  so

long as the mortgage subsists:

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provided that the exemption under this clause shall

cease to apply at  the end of  three years  from the

commencement of this Act;

i)  lands purchased by the Kerala Co-operative Central

Land  Mortgage  Bank  or  a  Primary  Mortgage  Bank

under  Section  18 of  the Kerala Co-operative  Land

Mortgage Banks Act, 1960 [or by the Kerala State Co-

operative  Bank  Ltd.,  or  by  a  primary  agricultural

credit co-operative society or by a scheduled bank as

defined in the Reserve Bank of  India Act,  1934] so

long as such lands continue in the possession of the

bank;

j) Lands purchased by the Kerala Financial Corporation

or lands the management of which has been taken

over  by  that  Corporation,  under  Section  32  of  the

State  Financial  Corporations  Act,  1951,  so  long  as

such  lands  remain  in  the  ownership,  or  continue

under the management, as the case may be, of the

said Corporation:

[provided that the exemption under this clause shall

not  apply in the case of  lands the management of

which has been taken over by the Corporation on or

after the 1st day of April, 1964;]  

k) lands  belonging  to  or  held  by  an  industrial  or

commercial undertaking at the commencement of

this Act, and set apart for use for the industrial or

commercial purpose of the undertaking:

Provided that the exemption under this clause shall

cease to apply if such land is not actually used for

the purpose for which it has been set apart, within

such time as the District Collector may, by notice to

the undertaking, specify, in that behalf;

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l) x  x  x  x

m) house  sites,  that  is  to  say,  sites  occupied  by

dwelling houses and lands, wells, tanks and other

structures  necessary  for  the  convenient

employment of the dwelling houses.

Explanation.-  For   the  avoidance  of  doubt,  it  is

hereby declared that a compound wall shall not be

deemed  to  be  a  structure  necessary  for  the

convenient  enjoyment of a dwelling house,  if  the

land on which the dwelling house is situated and

enclosed by the compound wall is more than the

land necessary for the convenient enjoyment of the

dwelling house.

n) x  x  x  x  

o) sites  of  temples,  churches,  mosques  and

cemeteries and burial and burning grounds:

p) sites of buildings and including warehouses;

q) commercial sites;

r) land occupied by educational institutions including

land  necessary  for  the  convenient  use  of  the

institutions  and  playgrounds  attached  to  such

institutions;

s) lands vested in the Bhoodan Yagna Committee;  

t) lands owned or held by-

i. a University establishment by law; or

ii. a  religious,  charitable  or  educational

institutions of a public nature; or  

iii. a public trust which expression shall include a

wakf; Provided that-

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(i) the entire income of such lands is appropriated for

the University, institution or trust concerned, and  

(ii) where the University,  institution or trust  come to

hold the said lands after the commencement of this

Act, the Government have certified previously that

such lands are bona fide required for the purposes

of the University,  institution or trust,  as the case

may be; and  

u)  lands granted to defence personnel for gallantry.

(2) [xxx]

(3) The Government may if they are satisfied that it is

necessary to do so in the public interest-

(a) on account of any special use to which any land is

put; or  

(b) on account of any land being bona fide required for

the purpose of conversion into plantation or for the

extension or preservation of an existing plantation

or  for  any  commercial,  industrial,  educational  or

charitable purpose, by notification in the Gazette,

exempt  such  land  from  the  provisions  of  this

Chapter, subject to such restrictions and conditions

as they may deem fit to impose:

Provided that the land referred to in clause (b)

shall  be  used  for  the  purpose  for  which  it  is

intended within such time as the Government may

specify in that behalf; and, where the land is not so

used within the time specified, the exemption shall

cease to be in force.]

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8. In  the  present  case,  the  Appellant  is  claiming

exemption on the ground that a quarry would fall  within

the sweep of ‘commercial site’ as stated in Section 81 (1)

(q).  Commercial site is defined in Section 2 (5) as follows:

‘‘2(5) “commercial site” means any land (not being a

kudiyiruppu  or  a  kudikidappu  or  karaima)  which  is

used  principally  for  the  purposes  of  any  trade,

commerce, industry, manufacture or business;’’     

9. The  Appellant  contended  that  the  definition  of

‘commercial  site’  is  very  wide  and  any  land  which  is

principally  used  for  the  purpose  of  trade,  commerce,

industry,  manufacture  or  business  is  a  commercial  site.

According  to  the  Appellant,  breaking  of  rock  is  a

manufacturing  activity.   Quarrying  operations  involve

digging land and breaking of rocks into metal pieces.  It

was submitted that digging of land and breaking of rock is

for a commercial activity and the sale of stones is for the

purpose of  trade and business.    We are afraid that we

cannot agree.   

10. The  dominant  legislative  intent  of  the  Act  is  the

imposition of ceiling on land holdings and distribution of

excess  land among landless people.3   Large number of

3 State of Kerala v. K. A. Gangadharan (1977) 1 SCC 208

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people  have  no  place  of  abode  in  the  State  of  Kerala,

which is known as God’s own country.  To provide land to

such landless people by taking it from those who possess

in excess is the major objective of the Act.4    

11.  Provisions  of  a  beneficial  legislation  have  to  be

construed  with  a  purpose-oriented  approach.5  The  Act

should  receive  a  liberal  construction  to  promote  its

objects.6  Also,  literal  construction of the provisions of a

beneficial legislation has to be avoided.  It is the Court’s

duty to discern the intention of the legislature in making

the  law.    Once  such  an  intention  is  ascertained,  the

statute  should  receive  a  purposeful  or  functional

interpretation7.    

12. In the words of O. Chinnappa Reddy, J.8, the principles

of  statutory  construction  of  beneficial  legislation  are  as

follows:

4.  The  principles  of  statutory  construction  are  well

settled. Words occurring in statutes of liberal import

such as social welfare legislation and human rights'

legislation are not to be put in Procrustean beds or

shrunk to Liliputian dimensions. In construing these

4 One Earth One Life & Ors. v. State of Kerala, WP (C) No.28496 of 2016 5 Regional Executive, Kerala Fishermen’ Welfare Fund Board v. Fancy Food, (1995) 4  SCC 34 6 Bombay Anand Bhavan Restaurant v. ESI Corporation, (2009) 9 SCC 61 and Union of  India v. Prabhakaran Vijay Kumar, (2008) 9 SCC 527 7 Bharat Singh v. Management of New Delhi Tuberculosis Centre, (1986) 2 SCC 614. 8 Workmen v. American Express International Banking Corpn. (1985) 4 SCC 71

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legislations the imposture of literal construction must

be avoided and the prodigality of its misapplication

must be recognised and reduced. Judges ought to be

more concerned with the “colour”, the “content” and

the “context” of such statutes (we have borrowed the

words  from  Lord  Wilberforce's  opinion  in Prenn  v.

Simmonds  [(1971)  3  All  ER  237]  ).  In  the  same

opinion Lord Wilberforce pointed out that law is not to

be left behind in some island of literal interpretation

but  is  to  enquire  beyond  the  language,  unisolated

from the matrix of facts in which they are set; the law

is not to be interpreted purely on internal linguistic

considerations.  In one of the cases cited before us,

that is, Surendra Kumar Verma v. Central Government

Industrial  Tribunal-cum-Labour  Court  [(1980)  4  SCC

443], we had occasion to say,

“Semantic  luxuries  are  misplaced  in  the

interpretation  of  ‘bread  and  butter’  statutes.

Welfare  statutes  must,  of  necessity,  receive  a

broad  interpretation.  Where  legislation  is

designed to give relief  against certain kinds of

mischief,  the  Court  is  not  to  make  inroads  by

making etymological excursions.”

13. While interpreting a statute, the problem or mischief

that the statute was designed to remedy should first be

identified  and  then  a  construction  that  suppresses  the

problem and advances the remedy should be adopted.9  It

is settled law that exemption clauses in beneficial or social

9 Indian Performing Rights Society v. Sanjay Dalia, (2015) 10 SCC 161

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welfare legislations should be given strict construction10.  It

was  observed  in  Shivram  A.  Shiroor  v.  Radhabai

Shantram  Kowshik  (supra) that  the  exclusionary

provisions in a beneficial  legislation should be construed

strictly  so  as  to  give  a  wide  amplitude  to  the  principal

object  of  the  legislation  and  to  prevent  its  evasion  on

deceptive grounds.   Similarly, in Minister Administering

the  Crown  Lands  Act  v.  NSW  Aboriginal  Land

Council11,  Kirby,  J.  held  that  the  principle  of  providing

purposive construction to beneficial legislations mandates

that exceptions in  such legislations should be construed

narrowly.      

14. There  is  no  dispute  that  the  Act  is  a  beneficial

legislation.  The extent of land that can be held is fixed and

any  land  in  excess  has  to  be  surrendered  to  the

Government, which is distributed in favour of the landless

people in the State.  The interpretation of the provisions of

the Act  should be in  a  manner  which promote the said

object.    

15. Section 81 exempts among others, lands comprised

of  mills,  factories  or  workshops,  lands  occupied  by

10 Shivram A. Shiroor v. Radhabai Shantram Kowshik, (1984) 1 SCC 588 11 [2008] HCA 48

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educational  institutions,  and  lands  owned  by

Universities, religious and charitable institutions.  House

sites, sites of temples, churches and mosques, sites of

buildings including warehouses and commercial sites are

also exempted.   There is a definite distinction between

the expressions ‘lands’ and ‘sites’ in the context in which

they have been used.  Commercial sites read along with

the other clauses dealing with sites clearly indicate that

land  occupied  by  structures  is  described  as  ‘site’.  As

stated above,  the other  clauses in  Section 81 dealing

with  sites  are  house  sites,  temples,  churches  and

mosques  and  buildings.    As  such,  the  expression

‘commercial site’ cannot take into its fold vacant lands,

including lands used for the purpose of quarrying.  It has

a  restrictive  meaning  in  comparison  to  the  other

categories  of  ‘land’  in  Section  81.   Therefore,  quarry

cannot fit into the terms ‘commercial  site’.   Mr. Bechu

Kurian, leaned Senior Counsel argued on behalf of the

Appellant that digging the land for extracting stones is

for  a  commercial  purpose of  making profit  and hence

quarry  is  a commercial  site.   We  do  not  agree.    A

commercial site is a land on which there is a structure

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being utilized for  an industrial  or  commercial  purpose.

Extension  of  the  words  ‘commercial  site’  to  quarries

would result in defeating the purpose of the Act.        

16. We  disagree  with  the  opinion  of  the  dissenting

Judge that  the expression  ‘commercial  site’  should  be

attributed its natural and original meaning.  On the basis

of  the  statement  made  by  the  learned  Additional

Advocate General, the dissenting Judge held that if lands

used for  quarrying operations  prior  to  the  Act  coming

into force stood exempted under Section 81 (1) (k),  a

quarry  should  be  considered  as  commercial  site.

Further,  it  was  observed  that  if  a  quarry  can  be

exempted under Section 81 (3)  by the Government in

public interest, then quarrying is a commercial  activity

falling within the sweep of Section 81 (1) (q) of the Act.

17. We uphold the view of the majority that exemption

of  quarries  by  the  Government  under  Section  81  (3)

would not arise if quarries are covered by Section 81 (1)

(q) of the Act.  In other words, if quarries are commercial

sites, the need for their exemption in public interest does

not  arise.    Section  81(3)  of  the  Act  empowers  the

Government to exempt lands for commercial purposes in

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public interest.   The overriding power conferred on the

Government  to  exempt  lands  from the  applicability  of

the  Act  cannot  be  utilized  for  the  purpose  of

interpretation  of  Section  81  (1)  (q)  which  exempts

commercial sites from the purview of the Act.  Section

81  (1)  (k)  exempts  unused  lands  of  industrial  or

commercial undertakings at the time of commencement

of the Act.  The provision presupposes that an industrial

or commercial undertaking was existing on the date of

the commencement of the Act and there was some land

set apart for the use of the undertaking in future.  The

said land is  exempted only if  the land is  used for  the

industrial  or  commercial  purposes  of  the  undertaking

within the time to be fixed by the authority.  If the land is

not used for the purpose for which it was set apart, the

exemption ceases to operate. It is clear from the above

that Section 81(1) (k) deals with a completely different

type  of  land belonging  to  an  industrial  or  commercial

undertaking set apart for  use of the said undertaking.

Therefore,  we  are  not  in  agreement  with  the  support

sought by the dissenting Judge from Section 81 (1) (k) to

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interpret the expression ‘commercial site’ in Section 81

(1) (q).       

18. Another submission of the Appellant that quarrying

includes a manufacturing activity does not appeal to us.

Breaking of rock into small pieces of stone, according to

us,  is  not  a manufacturing activity.   For this  view,  we

seek  support  from  a  judgment  of  this  Court  in

Rajasthan SEB v. Associated Stone Industries12.  It

was held in the said judgment that cutting and polishing

stones into slabs is not a process of manufacture for the

obvious  and  simple  reason  that  no  new  and  distinct

commercial  product  came  into  existence  as  the  end

product still remained stone and thus its original identity

continued.     

19. The findings recorded in the majority opinion on the

issue pertaining to the environment is not relevant for

the decision of the dispute.  The concern of the Court

should  have  been  restricted  to  the  gamut  of  the

expression  ‘commercial  site’.   The  interpretation  of

Section 81 which exempts certain lands and sites should

be interpreted in a manner, which promotes the object of

12 (2006) 6 SCC 141

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the Act and restricts concentration of large swathes of

land in favour of a few individuals.  Wider construction of

the words ‘commercial  site’  would defeat the laudable

object of the Act.   

20. The upshot of the above discussion is that there is

no error in the majority opinion of the Full Bench in the

impugned judgment which requires to be upheld.   

21. The Appeals are dismissed, accordingly.   

                       ................................J.                                                   [L. NAGESWARA RAO]

                                                           …............................J.

                                                    [HEMANT GUPTA] New Delhi, September  30,  2019  

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