
Image via Wikipedia
IN THE HIGH COURT OF KERALA AT ERNAKULAM
WP(C).No. 35180 of 2009(S)
1. DR.SURBAHMANIAM SWAMY, A-77,
... Petitioner
Vs
1. STATE OF KERALA, REPRESENTED BY
... Respondent
2. THE PRINCIPAL SECRETARY TO GOVERNMENT,
3. KERALA STATE INDUSTRIAL DEVELOPMENT
For Petitioner :DR.SUBRAHMANIAM SWAMY (PARTY IN PERSON)
For Respondent :SRI.M.PATHROSE MATTHAI (SR.)
The Hon'ble the Chief Justice MR.J.CHELAMESWAR
The Hon'ble MR. Justice P.R.RAMACHANDRA MENON
Dated :27/01/2011
O R D E R
J.Chelameswar, C.J. &
P.R.Ramachandra Menon, J.
-----------------------------------------------
W.P.(C) No. 35180 of 2009 &
W.P.(C) No.10662 of 2010
-----------------------------------------------
Dated this the 3rd day of February, 2011
JUDGMENT
J.Chelameswar, C.J.
These two writ petitions are filed in public interest. The
petitioner in W.P.(C).No.35180 of 2009 is a former Minister of the
Union of India.
2. W.P.(C).No.35180 of 2009 is filed with the prayers as
follows:
"a) call for the records leading to the case and issue a writ
of certiorari or any other appropriate writ, order or direction,
quashing Exhibit.P1.
b) issue such other appropriate writ, oder or direction which
this Hon'ble Court may deem fit in the circumstances of the case.
c) award costs to the Petitioner".
3. The impugned order-Exhibit P1 is an Order dated
14.10.2009 evidencing a decision taken by the Government of
Kerala. The relevant portion reads as follows:
"The Islamic Financial Services (IFS) Industry has grown
substantially over the years forming a significant segment within
global financial services and is generating lot of interest as an
WPs(C).35180/2009 & 10662/2010
- 2 -
alternative model of financial intermediation. Growing
awareness and demand for investment and financing in
compliance with Shariah principles as well as increasing level
of affluence have provided a fillip to Islamic Financial Services.
With the objective of promoting an interest-free financing entity
that follows Shariah principles, Government had entrusted
KSIDC with conducting studies and looking into various aspects
of formation of an Islamic Investment Company in Kerala for
attracting investments in a right manner as per the Shariah of
the Muslim Community to the development of the common
public at large. The professional studies conducted on this
project have concluded that there is a genuine commercial
potential for an Islamic Financial Institution based in Kerala that
has the potential to become a global payer.
2. The Minister for Industries convened a meeting of
investors at Thiruvananthapuram on 15.07.2009 to discuss the
formation of Islamic Financial Institution and decided to
incorporate a company with 11% equity contribution from
KSIDC and the remaining 89% from private investors.
3. The Board of KSIDC had approved a share
contribution of Rs.110 Lakhs (11% of the initial paid up Share
Capital) to the proposed Company and decided to proceed with
further steps for registration of the Company for promoting the
Islamic Financial Institution.
4. Govt. have examined the matter in detail and found
that the decision of the Board of Directors of KSIDC is within
the area of their competence and delegation of powers and
WPs(C).35180/2009 & 10662/2010
- 3 -
hence accord sanction for proceeding with further steps for
registration of the Company."
Parties are referred to hereinafter as they are arrayed in W.P.(C).
No.35180 of 2009.
4. K.S.I.D.C. (Kerala State Industrial Development
Corporation) the third respondent is a wholly owned company of the
first respondent that is the State of Kerala, engaged in promotion of
industrial development of the State. The objects of the third
respondent are "to promote, establish and execute industrial
projects and enterprises for the economic and industrial
development of the State of Kerala" and also "to aid, assist and
finance any infrastructure projects or enterprises or other projects
and to promote and establish companies and associations of private
or public character".
5. The 6th respondent is a company registered under the
Companies Act and the same is evidenced by the certificate of
incorporation dated 30th November, 2009. A copy of the
memorandum of association of the 6th respondent is available in the
record from which it appears that the share capital of the company is
1000 crores. It can be seen from the said memorandum of
association that 8 individuals subscribed to the memorandum of
WPs(C).35180/2009 & 10662/2010
- 4 -
association, the details of which are given in the memorandum. Of
the said 8 subscribers, 6 are Muslims and 2 are Hindus, a fact
which is relevant in the context of the dispute in the case. It is also
necessary to mention that of the above mentioned 8 persons 4
appear to be non-resident Indians as it is certified that they came to
India on various dates specified in the said memorandum and under
a passport. However, the third respondent stated in its counter that
they are Indian citizens. What is important is that the third
respondent is not a subscriber to the said memorandum though it is
stated in Ext.P1 that the Board of Directors of the third respondent
decided to proceed with further steps for registration of the company
for promoting the Islamic financial institution.
6. In the meanwhile an advertisement inviting
applications from eligible persons for filling up of the posts of Chief
Executive Officer, Company Secretary, etc. of an unnamed company
came to be issued on-line on a website of the third respondent
which reads as follows:
"WANTED
The following Executives for a Public Limited Company
with an Authorised Share Capital of Rs.1000 Crores and Head
Office at Kochi, promoted with the objective of providing
WPs(C).35180/2009 & 10662/2010
- 5 -
interest-Finance for projects & services. The company will
have Pan India presence to take up activities like PE &
Venture Capital Fund, Leasing, Investment in Equity, Mutual
Funds, etc.,initially, and will be operating in a fully Shariah
compliant manner.
1. CHIEF EXECUTIVE OFFICER
The candidate should have professional
qualification/Post-graduate degree with sound experience in
the relevant field. The CEO shall be responsible for building
up the organisation and co-ordinate the overall functioning.
He will report to the Board of Directors and the Shariah
Advisory Board.
2. COMPANY SECRETARY
ACS with minimum 5 years' post-qualification
experience. He will report to the CEO.
3. ASSISTANT MANAGER (FINANCE & ACCOUNTS)
ACA or ICWA with 1-2 year' post-qualification
experience. He will report to the CEO.
The age should not exceed 52 years for post-1, 35
years for post-2 and 28 years for post-3, as on 1.9.09. There
may be relaxation in age by 5 years in case of deserving
candidates. Emoluments will be at part with the best in the
industry. Interested persons may send their C.V. with copies
WPs(C).35180/2009 & 10662/2010
- 6 -
of certificates, recent passport size photograph, on or
before 30th September 2009, super scribing the envelope
"APPLICATION FOR THE POST OF CEO/COMPANY
SECRETARY/AM (F&A)" to:
The Managing Director,
Kerala State Industrial Development Corporation Ltd.,
Choice Towers, Manorama Junction,
KOCHI - 682 016.
Web Site : www.ksidc.org"
Though it is not very clear from the said document as to the date on
which it was issued it appears that it must have been issued
sometime before 30th of September, 2009 as that is the date
specified in the said advertisement to be the last date for submitting
the application in response to the advertisement. We may also state
that the third respondent in his counter affidavit did not choose to
rebut to the relevant averments made at paragraph 3 of the writ
petition.
7. One factor which requires to be noticed is that by the
date of the above mentioned advertisement the 6th respondent
company was not even incorporated, apart from the fact that the
decision of the State of Kerala to participate in the equity of a
company/Islamic financial institution evidenced by G.O.Rt.No.1336
WPs(C).35180/2009 & 10662/2010
- 7 -
itself dated 14.10.2009, that is much later than the above mentioned
advertisement. These facts may or may not have any bearing on
the main issue in the writ petition. We only mention them to indicate
the clumsy way in which the matter is handled by the 1st and 3rd
respondents. The relevance of the above mentioned advertisement
is that it also states that the company will be operating in a 'fully
Shariah compliant manner'.
8. In the background of the above mentioned facts the
instant writ petition came to be filed in the month of December,
2009. When the matter came up for admission by an order dated 5th
January, 2010 a Division Bench of this Court directed that 'the
respondents would ensure that the said company does not
commence any operation until further orders'. Subsequently the said
order came to be modified by another order dated 8th April, 2010 in
substance permitting the 6th respondent to carry on such activity as it
is permissible in accordance with law, however prohibiting the State
and its instrumentalities in any way participating in the business of
the 6th respondent company.
9. In the meanwhile another writ petition, that is W.P.(C)
No.10662 of 2010 also came to be filed in substance seeking the
WPs(C).35180/2009 & 10662/2010
- 8 -
same reliefs as the one sought in the other writ petition. It was
admitted on 29.3.2010. Both the writ petitions were heard together
as common questions of fact and in law arise in both the cases.
One additional ground raised in the second writ petition is that the
decision of the State of Kerala and the K.S.I.D.C. to participate in
the capital structure of the 6th respondent company is an arbitrary
decision as such a decision was taken without following any fair and
transparent procedure. It is stated in Ground K of the said writ
petition as follows:
"K. It is submitted that the State Government or the 3rd respondent has
not followed any fair and transparent method known to law in choosing
the 4th respondent Company as the associate in the venture stipulated
in Ext.P1. Therefore the 4th respondent is chosen by the 3rd
respondent as their partner without resorting to any open notification or
public tender for that matter. The very selection of the 4th respondent
was done in a secret and clandestine manner without any element of
transparency whatsoever. The entire deals were done behind the back
and the offer and agreements etc were done secretly."
10. The main ground of the attack in both the writ
petitions is that the decision of the State of Kerala and the K.S.I.D.C.
which is an instrumentality of the State of Kerala to contribute to the
WPs(C).35180/2009 & 10662/2010
- 9 -
share capital of the 6th respondent is inconsistent with the
constitutional obligation of these two bodies to function on secular
principles. Though it is not clearly pleaded it was specifically argued
by Dr.Subramaniam Swamy that the impugned decision of the State
of Kerala would be directly contrary to the mandate contained under
Article 27 of the Constitution of India which reads as follows:
"27. Freedom as to payment of taxes for promotion of any
particular religion.- No person shall be compelled to pay any
taxes, the proceeds of which are specifically appropriated in
payment of expenses for the promotion or maintenance of any
particular religion or religious denomination."
11. On the other hand, the State and the K.S.I.D.C.
pleaded in their counter affidavits that the impugned decision was
taken in order to garner huge amounts of unutilised funds from the
Gulf countries available with the non-resident Indians working in
those countries with a view to utilise such funds for the investment in
the State of Kerala for the development of its people by promoting
and providing financial assistance to the industries in the State of
Kerala. In substance the respondents do not dispute the fact that a
decision was taken to participate in the business of the 6th
WPs(C).35180/2009 & 10662/2010
- 10 -
respondent company. They claim that notwithstanding the
references in the Government Order dated 14.10.2009 and the
advertisement issued by the 3rd respondent that the intention of the
6th respondent is to function in accordance with the requirements of
Shariah, the motive and object of the State of Kerala and the
K.S.I.D.C. is purely secular, i.e. to derive a commercial benefit from
the business to be carried on by the 6th respondent. Therefore they
cannot be accused of flouting the constitutional mandate of running
a secular State. It is also the case of all the respondents that
notwithstanding the fact that the 6th respondent company proposes
to run its business in compliance with the principles of Shariah the
6th respondent is bound to function strictly in accordance with the
law of this country. So long as the 6th respondent company so
functions the fact that in addition to compliance with the law of the
land the company also proposes to comply with a further
requirement of running the business in accordance with the
principles of Shariah does not make the activity of the company in
any way inconsistent with the requirement of the secularism
mandated under the Constitution. Therefore the State and its
instrumentalities are not prohibited by the Constitution to be
WPs(C).35180/2009 & 10662/2010
- 11 -
associated with such a business activity of the 6th respondent
company.
12. The State of Kerala in its counter affidavit had
enumerated the various projects meant for the welfare of the people
of Kerala which were planned but could not be implemented due to
the shortage of funds. The reasons which prompted the State of
Kerala to take the impugned decision and the procedure followed by
the State of Kerala in taking such a decision are narrated in
paragraph 9 of the counter affidavit.
13. At the outset we wish to deal with a preliminary
objection raised by Dr.Rajeev Dhavan, Senior Advocate appearing
for the 6th respondent. The substance of the submission is that the
petitioners are not bona fide public interest litigants and therefore
the writ petitions must be dismissed. In this connection Sri.Dhavan
relied upon the judgment of the Supreme Court reported in State of
Uttaranchal v. Balwant [(2010) 3 SCC 402]. At paragraph 181 of the
judgment the Supreme Court laid down the following directions:
"(3) The Courts should prima facie verify the credentials of
the petitioner before entertaining a PIL.
(4) The Courts should be prima facie satisfied regarding the
correctness of the contents of the petition before entertaining a PIL.
WPs(C).35180/2009 & 10662/2010
- 12 -
(5) The Courts should be fully satisfied that substantial public
interest is involved before entertaining the petition.
(6) The Courts should ensure that the petition which
involves larger public interest, gravity and urgency must be given
priority over other petitions.
(7) The Courts before entertaining the PIL should ensure that
the PIL is aimed at redressal of genuine public harm or public injury.
The Court should also ensure that there is no personal gain, private
motive or oblique motive behind filing the public interest litigation.
(8) The Courts should also ensure that the petitions filed by
busybodies for extraneous and ulterior motives must be
discouraged by imposing exemplary costs or by adopting similar
novel methods to curb frivolous petitions and the petitions filed for
extraneous considerations."
It is argued that: (written submission of Dr.Dhavan)
"In the present case, Subramaniam Swamy and R.Babu
have not disclosed any antecedents or their real interest in the case.
The fact that Subramaniam Swamy is well known does not obviate
giving details. In the case of R.Babu details are missing altogether.
In fact Swamy has filed PIL's which could be taken to be pro-
Hindu and Anti-Muslim cause including on Babri Masjid, Ram Setu
and now Islamic Banking. R.Babu has hidden the fact that he
belongs to a fundamentalist Hindu organization. A PIL cannot be a
vehicle for communal baiting or creating communal disharmony."
WPs(C).35180/2009 & 10662/2010
- 13 -
14. We are of the opinion that the submission is to be
rejected for more than one reason. The fact that Dr.Subramaniam
Swamy took a particular stand either in the case of Babri Masjid or
Ram Sethu, in our opinion, does not either make him 'pro-Hindu' or
'anti-Muslim' ipsofacto. Such a stereotyping would have the effect of
shutting out all discourse in public sphere. The views held or
professed by an individual may or may not be agreeable to others
but the cardinal principle on which all democratic systems are based
upon to borrow the words of Thomas Paine:
"I may not agree with a word of what you say but I shall
protect your right to say so".
The 6th respondent does not specify any harm or injury to the public
which is likely to result by the examination of the issues projected by
the petitioners. On the other hand, the petitioners are projecting far
reaching issues of Constitutional law. If the views of the petitioners
are eventually accepted the impugned action of the State of Kerala
would be Constitutionally impermissible. In our view, such
impermissible action would not only be a mere infraction of a
Constitutional obligation but would have the effect of disturbing the
very foundation of our Constitutional structure. Secondly, assuming
for the sake of argument that either or both of the petitioners are
WPs(C).35180/2009 & 10662/2010
- 14 -
'Hindu fundamentalists' an undefined expression but for the purpose
of the present case (we adopt the definition of the famous
contemporary author Karen Armstrong). It means a person of
'militant piety' we see no reason to reject audience. Our Constitution
not only assures in theory but also demonstrated in practice that the
due process of law would not be denied even to persons accused of
in most heinous crimes such as 'terrorism'. Therefore to non-suit
the petitioners on the ground that they are allegedly holding some
'militantly pious' views would neither be legally justified nor
politically correct.
15. It is not the case of the 6th respondent that the
petitioners have some private gain to be derived out of the present
litigation. The only submission is that they are resorting to
'communal baiting' or creating 'communal disharmony'. The
submission is to be rejected for three reasons. Firstly, the 6th
respondent asserts that it is not a company exclusively consisting of
shareholders of a particular religious denomination (be it Muslim or
other), but only inspired by certain principles of Sharia. Therefore
the objection of the petitioners if accepted eventually would affect all
the shareholders of the company. Secondly, a legal objection before
WPs(C).35180/2009 & 10662/2010
- 15 -
a Constitutional Court to a particular practice of the State on the
ground that it is inconsistent with the obligations of the State under
the provisions of the Constitution in our opinion could never be said
to promote communal disharmony. Such a view in our opinion would
be 'secular fundamentalism'. Third and the most important reason is
that the debate in the instant case may be centred around the
'Sharia' and therefore appear to be dealing with the rights of one
religious denomination. But the issue raised transcends all religion.
The concept of secularism and the fundamental rights under Articles
25 to 28 are guaranteed to followers of all religions.
16. Before we examine the various submissions in the
writ petitions we deem it appropriate to make a brief survey of the
letter of the Constitution in so far as it is relevant for the purpose of
the present case.
17. The preamble of the Constitution declares that the
aim of the Constitution is to constitute India into a sovereign socialist
secular democratic republic and also to secure all its citizens
justice, liberty, equality and fraternity. In Part III of the Constitution
various fundamental rights are guaranteed. Some of these
fundamental rights are guaranteed only to the citizens of India while
WPs(C).35180/2009 & 10662/2010
- 16 -
some are guaranteed to all persons who are subject to the
sovereignty of India. Articles 15 and 16 prohibit the State from
discriminating against any citizen on the ground only of religion in
the matters of access to various public facilities or public
employment. Articles 25 to 28 guarantee freedom of religion in its
various facets. Clause (1) of Article 25 declares that all persons are
equally entitled to freedom of conscience and the right to freely
profess, practise and propagate religion. Article 26 guarantees to
every religious denomination the rights to acquire and administer
property in accordance with law to manage its own affairs in matters
of religion and to establish and maintain institutions for religious and
charitable purposes. Article 27 prohibits the State not to subject any
person to any tax the proceeds of which are to be utilised for the
promotion or maintenance of any particular religion. Article 28 on
the one hand prohibits any kind of religious instruction in any
educational institution wholly maintained out of the State funds, but
recognises the right of a privately established institution to provide
religious instruction, etc. A minute examination of these various
provisions dealing with the freedom of religion is not necessary at
this stage. It is sufficient to notice that the Constitution guarantees
WPs(C).35180/2009 & 10662/2010
- 17 -
to all the Subjects the freedom of conscience and the right to freely
profess, propagate and practise religion while prohibiting the State in
any way subjecting any person to discrimination only on the basis of
his/her religion. The Constitution restricts the State's interaction with
the religion.
18. It must be noticed that Articles 25 to 28 deal with the
fundamental rights regarding the freedom of religion irrespective of
the fact whether the religion is the religion of the minority or majority
population of this country. In fact the rights guaranteed under the
above mentioned Articles are extended even to persons other than
citizens.
19. All the promoters of the 6th respondent company are
asserted to be citizens of this country. They assert that they are
entitled to the fundamental rights guaranteed under Article 19(1)(g)
of the Constitution of India to carry on any trade, occupation or
business. They admit that such a right is subject to the law of the
land. The 6th respondent claims that the business proposed to be
undertaken by it is the business of non-Banking Financial Service as
defined under Section 45-I(a) of The Reserve Bank of India Act. It is
admitted at the Bar that the 6th respondent's application to the
WPs(C).35180/2009 & 10662/2010
- 18 -
Reserve Bank of India (R) is returned on some preliminary
objection, i.e., the 6th respondent did not make a deposit of Rs.2.00
crores as required under Section 45-IA of the Act. The 6th
respondent is willing to comply with the said requirement and
resubmit the application.
20. Chapter IIIB of the Reserve Bank of India Act, 1934
was introduced by the amendment Act 55 of 1963. It deals with
various aspects of the regulation of the business of "non-banking
financial institutions".
21. Though an attempt is made by the petitioners to
argue that the business such as the one proposed by the 6th
respondent is impermissible under the provisions of Chapter III-B of
the RBI Act, we decline to examine the said question for two
reasons. Firstly, there is no pleading at all on the said aspect and,
therefore, it would be unjust to examine the said issue and secondly
it is primarily for the RBI to decide the said issue. Any examination
of the said issue by this Court would have the effect of pre-empting
the examination by the RBI. More particularly in the light of the
fundamental rights under Articles 19(1)(g) and 25 and 26, the claims
of the 6th respondent and its shareholders, the issue requires a more
WPs(C).35180/2009 & 10662/2010
- 19 -
critical examination on appraisal of the full facts. It is the duty of the
Reserve Bank of India as a body entrusted with the regulation of the
business proposed to be undertaken by the 6th respondent to
undertake such an examination.
22. Two submissions made by the petitioners are
required to be examined. The first is that the decision of the State to
associate itself with the business of the 6th respondent is contrary to
the Constitutional requirement that the State should be a secular
State. The 6th respondent Company, which professes to run the
business of non-banking financial institution in a manner which is
compliant with Shariah is in essence a Company mixing the
business with religion. Shariah is a body of law based on the
religious principles enunciated in Koran, the holy book followed and
venerated by "Umma", i.e., the Muslim brotherhood around the
world. Therefore, any association of the State with the 6th
respondent would amount to actively promoting or assisting the
religion. Such an activity would be inconsistent with the principles
of secularism, which is one of the goals sought to be achieved by
the Constitution.
WPs(C).35180/2009 & 10662/2010
- 20 -
23. On the other hand, it is the case of the respondents
that though the 6th respondent proposes to conduct the business
complying with the dictates of Shariah, the 6th respondent is bound
by the law of the land and is obliged to comply with all the
requirements of the laws made under the Constitution of India.
Therefore, such a business is purely a secular aspect of the Muslim
Canon law. Hence, the State is not prohibited from associating with
such a business.
24. To resolve the above issue, we are of the opinion
that a clear understanding of the expressions "secularism",
"religion", "secular activity associated with religious practice"
is necessary.
25. The ambit and meaning of the expression
"secularism" contained in the preamble of the Constitution fell for the
consideration of the Supreme Court in S.R.Bommai v. Union of
India [(1994) 3 SCC 1]. A Larger Bench of the Supreme Court, of
nine Judges, considered the issue. Six separate opinions were
delivered. Four Judges - Justice P.B.Sawant, Justice
K.Ramaswamy, Justice B.P.Jeevan Reddy who spoke for himself
and Justice S.C.Agrawal - made an elaborate enquiry into the
WPs(C).35180/2009 & 10662/2010
- 21 -
meaning of the expression "secularism". Justice Sawant, on an
analysis of Articles 25 to 30 and also Articles 14 to 16, the preamble
of the Constitution and Article 51A of the Constitution, opined at
para 146 as follows:
"These provisions by implication prohibit the establishment of a
theocratic State and prevent the State either identifying itself with
or favouring any particular religion or religious sect or
denomination. The State is enjoined to accord equal treatment to
all religions and religious sects and denominations.",
and again at para 148 the learned Judge held as follows:
"One thing which prominently emerges from the above
discussion on secularism under our Constitution is that whatever
the attitude of the State towards the religions, religious sects and
denominations, religion cannot be mixed with any secular activity of
the State. In fact, the encroachment of religion into secular
activities is strictly prohibited. This is evident from the provisions of
the Constitution to which we have made reference above. The
State's tolerance of religion or religions does not make it either a
religious or a theocratic State. When the State allows citizens to
practise and profess their religions, it does not either explicitly or
implicitly allow them to introduce religion into non-religious and
secular activities of the State. The freedom and tolerance of religion
is only to the extent of permitting pursuit of spiritual life which is
different from the secular life. The latter falls in the exclusive
domain of the affairs of the State".
WPs(C).35180/2009 & 10662/2010
- 22 -
Justice Ramaswamy in his judgment at para 178 held as follows:-
"Though the concept of "secularism" was not expressly engrafted
while making the Constitution, its sweep, operation and visibility
are apparent from fundamental rights and directive principles and
their related provisions. It was made explicit by amending the
preamble of the Constitution 42nd Amendment Act. The concept of
secularism of which religious freedom is the foremost appears to
visualise not only of the subject of God but also an understanding
between man and man. Secularism in the Constitution is not
anti-God and it is sometimes believed to be a stay in a free
society. Matters which are purely religious are left personal to the
individual and the secular part is taken charge by the State on
grounds of public interest, order and general welfare. The State
guarantee individual and corporate religious freedom and dealt
with an individual as citizen irrespective of his faith and religious
belief and does not promote any particular religion nor prefers
one against another".
The learned Judge after taking notice of the position obtaining in the
United States of America opined at para 180 as follows:
"Thereby this Court did not accept the wall of separation
between law and the religion with a wider camouflage to
impress control of what may be described exploitative
parading under the garb of religion".
WPs(C).35180/2009 & 10662/2010
- 23 -
Justice Jeevan Reddy, once again, on a consideration of the
relevant Articles of the Constitution, at para 304 opined as follows:
"While the citizens of this country are free to profess, practice
and propagate such religion, faith or belief as they choose, so far
as the State is concerned, i.e., from the point of view of the
State, the religion, faith or belief of a person is immaterial. To it,
all are equal and all are entitled to be treated equally. How is this
equal treatment possible, if the State were to prefer or promote a
particular religion, race or caste, which necessarily means a less
favourable treatment of all other religions, races and castes. How
are the constitutional promises of social justice liberty of belief,
faith or worship and equality of status and of opportunity to be
attained unless the State eschews the religion, faith or belief of a
person from its consideration altogether while dealing with him,
his rights, his duties and his entitlements? Secularism is thus
more than a passive attitude of religious tolerance. It is a
positive concept of equal treatment of all religions. This
attitude is described by some as one of neutrality towards
religion or as one of benevolent neutrality. This may be a
concept evolved by western liberal thought or it may be, as some
say, an abiding faith with the Indian people at all points of time.
That is not material. What is material is that it is a constitutional
goal and basic feature of the Constitution as affirmed in
Kesavananda Bharati [(1973) 4 SCC 225] and Indira N. Gandhi
v. Raj Narain [1975 Supp SCC1]. Any step inconsistent with this
constitutional policy is, in plain words, unconstitutional. This does
WPs(C).35180/2009 & 10662/2010
- 24 -
not mean that the State has no say whatsoever in matters of
religion. Laws can be made regulating the secular affairs of
temples, mosques and other places of worships and maths (See
S.P.Mittal v. Union of India [(1983) 1 SCC 51]".
Again at para 307, the learned Judge observed as follows:
"In short, in the affairs of the State (in its widest connotation)
religion is irrelevant; it is strictly a personal affair. In this sense
and in this behalf, our Constitution is broadly in agreement with
the U.S. Constitution, the First Amendment whereof declares that
"Congress shall make no laws respecting an establishment
of religion or prohibiting the free exercise thereof..."
(generally referred to as the "establishment clause"). Perhaps,
this is an echo of doctrine of the separation of Church and State;
may be it is the modern political thought which seeks to separate
religion from the State - it matters very little".
The substance of Bommai's judgment, as can be culled out from
the above extracted portions of the judgment in so far as it deals
with the meaning of the expression "secularism" obtaining in the
preamble of the Constitution and the secular nature of the State
emerging from the scheme of various provisions of the Constitution,
is that there is no wall of separation between the State and the
religion as understood in the context of the American Constitution.
WPs(C).35180/2009 & 10662/2010
- 25 -
The expression "wall of separation" originally employed by
Thomas Jafferson in the context of the 1st amendment to the
American Constitution, which declares:
"Congress shall make no laws respecting an establishment of
religion or prohibiting the free exercise thereof............"
The question whether the framers of the Indian Constitution
imported the theory of "wall of separation" into Indian Constitution
initially fell for consideration of the Madras High Court Kidangazhi
Manakkal Narayanan Nambudiripad v. State of Madras [AIR 1954
Madras 385]. Justice Venkatarama Aiyar, speaking for the Bench,
on an elaborate examination of the scheme of the American
Constitution as expounded by the various decisions of the American
Supreme Court and the scheme of the Indian Constitution, opined:
"Apart from making provisions in respect of particular subjects, the
Constitution does not enact a general prohibition of legislation in respect of
"establishment of religion". In this respect our Constitution makes a
substantial departure from the American Constitution".
He further held:
"On the other hand, there are provisions in our Constitution which are
inconsistent with the theory that there should be a wall of separation
between Church and State".
WPs(C).35180/2009 & 10662/2010
- 26 -
The Bench concluded that:
"It is difficult in the face of these provisions to accede to the
contention that our Constitution has adopted the American view
that the State should have nothing to do with religious institutions
and endowments. It would, therefore, not be safe to build any
argument based on the "establishment of religion" clause in
the first Amendment and the decisions interpreting the same.",
a conclusion which found acceptance by the apex Court in
Bommai's case, as already noticed earlier.
26. Our Constitution does not create an absolute
embargo on the State's association with every and any religious
activity; nor does the Constitution permit the establishment of a
theocratic State. As observed in Bommai's case (supra), the State's
attitude is one of the benevolent neutrality towards religion. While
the Constitution grants a great degree of freedom of conscience and
guarantees a fundamental right to freely profess, practice and
propagate any religion, such a right is made subject to the
requirements of public order, morality and health. Our Constitution
also recognise a distinction between practices which are essentially
religious and activities which are secular, but associated with
religious practice. Such activities include the economic, financial,
WPs(C).35180/2009 & 10662/2010
- 27 -
political activities associated with religious practices. They are
expressly made amenable to regulation by law. The distinction is
recognised by the Supreme Court in The Commissioner, Hindu
Religious Endowments, Madras v. Sri.Lakshmindra Thirtha
Swamiar of Sri Shirur Mutt [1954 S.C.R.1005=AIR 1954 S.C.282].
27. To understand the distinction, it is necessary to
understand the meaning of the expression "religion". The Supreme
Court in Shirur Mutt's case (supra) at pages 1023 and 1023 held
as follows:
"What then are matters of religion? The word "religion" has not been
defined in the Constitution and it is a term which is hardly susceptible of
any rigid definition. In an American case [Davis v. Benson, 133 U.S.333 at
342], it has been said "that the term 'religion' has reference to one's views
of his relation to his Creator and to the obligations they impose of
reverence for His Being and character and of obedience to His will. It is
often confounded with cultus of form or worship of a particular sect, but is
distinguishable from the latter." We do not think that the above definition
can be regarded as either precise or adequate. Articles 25 and 26 of our
Constitution are based for the most part upon article 44(2) of the
Constitution of Eire and we have great doubt whether a definition of
"religion" as given above could have been in the minds of our
Constitution-makers when they framed the Constitution. Religion is
certainly a matter of faith with individuals or communities and it is not
necessarily theistic. There are well known religions in India like Buddhism
WPs(C).35180/2009 & 10662/2010
- 28 -
and Jainism which do not believe in God or in any Intelligent First Cause.
A religion undoubtedly has its basis in a system of beliefs or doctrines
which are regarded by those who profess that religion as conducive to
their spiritual well being, but it would not be correct to say that religion is
nothing else but a doctrine or belief. A religion may not only lay down a
code of ethical rules for its followers to accept, it might prescribe rituals
and observances, ceremonies and modes of worship which are regarded
as integral parts of religion, and these forms and observances might
extend even to matters of food and dress.
The guarantee under our Constitution not only protects the
freedom of religious opinion but it protects also acts done in pursuance of
a religion and this is made clear by the use of the expression "practice of
religion" in article 25".
It was argued by the Attorney General that the right of freedom of
religion guaranteed under the Constitution is limited only to the
religious activities proper and does not extend to the secular
activities associated with religious practice which are not essential
part of the religion. Such authority of the State to restrict the
fundamental rights guaranteed under Articles 25 and 26 flows from
the opening clauses of both the Articles which state that the rights
guaranteed therein are subject to "public order, morality and health",
Dealing with the submission, the Supreme Court held at page 1025
as follows:
WPs(C).35180/2009 & 10662/2010
- 29 -
"In the first place, what constitutes the essential part of a religion is
primarily to be ascertained with reference to the doctrines of that religion
itself. If the tenets of any religious sect of the Hindus prescribe that
offerings of food should be given to the idol at particular hours of the day,
that periodical ceremonies should be performed in a certain way at certain
periods of the year or that there should be daily recital of sacred texts or
oblations to the sacred fire, all these would be regarded as parts of religion
and the mere fact that they involve expenditure of money or employment
of priests and servants or the use of marketable commodities would not
make them secular activities partaking of a commercial or economic
character; all of them are religious practices and should be regarded as
matters of religion within the meaning of article 26(b). What article 25(2)(a)
contemplates is not regulation by the State of religious practices as such,
the freedom of which is guaranteed by the Constitution except when they
run counter to public order, health and morality, but regulation of activities
which are economic, commercial or political in their character though they
are associated with religious practices".
28. Thus it can be seen that the Constitution guarantees
the fundamental right to freely profess, practice and propagate any
religion. However, every activity undertaken by the followers of a
religion or religious denomination is not protected or free from the
interference of the State on the ground that it forms part of a
fundamental right guaranteed under the Constitution. The
Constitution expressly recognises that there can be secular activities
associated with a religious practice, such as economic, financial and
WPs(C).35180/2009 & 10662/2010
- 30 -
political activities associated with a religious practice. Further the
Constitution recognises the authority of the State to regulate such
secular activities associated with a religious practice. Even with
reference to the non-secular aspects of the religious practices the
Constitution declares that the fundamental rights guaranteed under
Articles 25 and 26 are subject to the demands of public order,
morality and health. In other words, by necessary implication even
those activities which can be called "purely religious" are also
amenable to regulation by the State's law making authority if the
State rationally comes to a conclusion that such practices are not
conducive to the public order or requirements of morality of the
society or harmful to the health of the society.
29. The resolution in the preamble to constitute a
SECULAR REPUBLIC thus has two facets, i.e., that the State shall
not unduly (i) interfere with the fundamental rights of the subjects to
freely profess, practice and propagate any religion; (ii) unduly
associate itself with any religious activity or favour in any way one
religion over the other.
30. The complaint in the instant case is that the
impugned action of the State of Kerala is objectionable on the
WPs(C).35180/2009 & 10662/2010
- 31 -
ground that it amounts to undue association with a religious activity
amounting to favouring or promoting a religion.
31. We have already examined the scheme of the
Constitution in the context of the authority of the State to regulate
the fundamental right to religious freedom. However the permissible
limits of the State's association/entanglement with the religious
activity is required to be examined.
32. The Constitution does not totally prohibit the
association of the State with all the religious activity. Article 28*
------------------------------------------------------------------------------
* Art.28. Freedom as to attendance at religious instruction or
religious worship in certain educational institutions.- (1) No religious
instruction shall be provided in any educational institution wholly
maintained out of State funds.
(2) Nothing in clause (1) shall apply to an educational institution
which is administered by the State but has been established under any
endowment or trust which requires that religious instruction shall be
imparted in such institution.
(3) No person attending any educational institution recognised by
the State or receiving aid out of State funds shall be required to take part
in any religious instruction that may be imparted in such institution or to
attend any religious worship that may be conducted in such institution or
in any premises attached thereto unless such person or, if such person is
a minor, his guardian has given his consent thereto.
WPs(C).35180/2009 & 10662/2010
- 32 -
categorically prohibits any kind of religious instruction in any
educational institution wholly maintained out of State funds.
However, sub-Articles (2) and (3) thereof carve out exception to the
above rule. Sub-Article (2) recognises the possibility of the existence
of educational institutions established under any endowment or trust
but under the administration of the State which are obliged by virtue
of the mandates of the endowment or trust to impart religious
instruction. Sub-Article (3) recognises the possibility of the
experience of educational institutions which are established and
administered by private parties which are recognised by the State
and receive aid from the State, where religious instruction is
imparted or religious worship is conducted. Article 28 does not
prohibit the association of State with such institutions, either by way
of administering such institutions or granting aid to such institutions
or recognising such institutions, provided the student or his
guardian, wherever the student is a minor, consents to attend such a
religious instruction or worship. In our opinion, sub-Articles (2) and
(3) clearly establish the fact that our Constitution does not adopt the
American doctrine of "wall of separation". The kind of association of
the State contemplated under sub-Articles (2) and (3) of Article 28
WPs(C).35180/2009 & 10662/2010
- 33 -
perhaps would be wholly impermissible under the scheme of
American Constitution.
33. Even on the face of an express prohibition of the
establishment of a religion by the State some interface between the
State and religion is inevitable. Various activities of the State are
challenged on the ground that they are inconsistent with the
prohibition under the establishment clause. The US Supreme Court
over a period of time recognised that there is a "zone of required
accommodation". The Supreme Court formulated various tests to
determine whether a particular State action is within the zone of
required accommodation or not; such as the test of 'political
neutrality', 'secular purpose', 'secular effect' and 'excessive
entanglement'.
34. Another major difference between the Constitution of
India and U.S. is that Article 30 guarantees a fundamental right in
favour of the minorities, whether based on religion or language, to
establish and administer educational institutions of their choice.
Such express provision is absent in U.S. Constitution. The ambit of
the said right has been the subject matter of debate before the
Supreme Court in the case of St.Stephen's College v. University
WPs(C).35180/2009 & 10662/2010
- 34 -
of Delhi [AIR 1992 SC 1630]. The majority of the Supreme
Court, speaking through Justice K.Jagannatha Shetty, held* that
"minorities cannot be treated in a religious neutral way".The
State is prohibited from discriminating against such educational
institutions established and administered by a religious minority in
the matter of granting aid to them. A Constitutional guarantee of the
minority religious denomination's right to establish and administer
educational institutions of their choice coupled with the guarantee of
non-discrimination in the matter of granting aid is unknown to
American constitutional system. Similarly, Article 290A mandates
-----------------------------------------------------------------------------
* The minorities cannot be treated in a religious neutral way in the
educational institutions established and administered by them. Clearly
that was not the aim of Article 30(1). Article 30(1) was incorporated to
secure to the minorities a fair deal in the name of religion only. It was
guaranteed to them as a fundamental right after a great deal of
deliberation of the Framers. It should not be nullified by narrow judicial
interpretation or crabbed pendantry. There must be a broad approach
and the Satesman-like vision. The catholic approach that led to the
drafting of the provisions dealing with the minority rights, as discussed
earlier, should not be set at naught. It must be ensured that nothing is
done to deprive the minorities of a sense of belonging and of a feeling
of security.
WPs(C).35180/2009 & 10662/2010
- 35 -
the payment of certain amounts from out of the Consolidated Funds
of the States of Kerala and Tamil Nadu for the maintenance of
certain Hindu temples and shrines, a Constitutional obligation
necessitated by some historical compulsion. These Articles, in our
opinion, clearly indicate that the State is not totally prohibited from
having any association with religion or a religious denomination.
35. The question is, whether these provisions of the
Constitution are to be understood as exhaustive of the permissible
limits of the State's association with religion or a religious
denomination or only indicative of the permissible limits of the
State's association. In view of the Constitution Bench decision of the
Supreme Court in Bommai's case (supra) declaring that the State's
attitude is one of the benevolent neutrality in the matter of religion,
we find it difficult to come to the conclusion that the abovementioned
provisions are exhaustive of the permissible limits of the State's
association with religion.
36. Then the question would be, whether the kind of
association which the State of Kerala proposes to pursue and the
impugned action is Constitutionally permissible? To answer the
question, we also deem it appropriate to advert to another aspect of
WPs(C).35180/2009 & 10662/2010
- 36 -
the Constitution. Under Article 298, it is declared that the executive
power of the Union and of each State extends to carrying on of any
trade or business and also to acquire, hold and dispose of property
and making of contracts for any purpose. If the State has the
freedom or the authority to carry on any trade or business or
acquire, hold or dispose of property by entering into any contract for
any purpose, to believe that the State is prohibited from carrying on
any trade or business either with a religious organisation or
denomination or an organisation though not religious but proposes
to carry on its business in a manner compliant with a set of beliefs
based on a religion, in our opinion, would be inconsistent with the
established rules of interpretation of Constitutional documents. It is
well settled that a broad and liberal spirit should inspire those who
are entrusted with the duty of interpreting the Constitution. The
complexity of administration of a modern State demands a great
deal of 'play in the joints' of the State to secure the goal of
maintaining benevolent neutrality with regard to religion. To disable
the State by imposing fetters on the power of the State would neither
be in accordance with the settled principles of Constitutional
interpretation or economic health of the State. Therefore, to restrict
WPs(C).35180/2009 & 10662/2010
- 37 -
the commercial interaction of the State even with a religious
denomination, on the ground that it is inconsistent with the
declaration that the State should be a 'Secular Republic' would be
illogical having regard to the scheme of the Constitution. In our
opinion, such interpretation of the Constitution is not warranted.
37. Whether the impugned decision of the State has the
effect of promoting a religion: To find a constitutionally viable
answer to the said question the principle that even religious
associations are required to be treated with political equality and
accorded equal civil opportunities for their development on par with
other voluntary associations must be kept in mind. Such a
principle emerges from the fundamental rights guaranteed under
Articles 14 to 16, 19 and 25 to 30.
38. The grievance of the petitioners is that since the 6th
respondent Company is proposed to be run in a Shariah compliant
manner, association of the State with such a Company would have
the effect of either promoting or aiding a religion. It is not very clear
from the record nor the respondents, either the State of Kerala or
the 6th respondent Company or its promoters, offer any explanation
as to what exactly is meant by them when they proclaimed that the
WPs(C).35180/2009 & 10662/2010
- 38 -
6th respondent would carry on its business in a Shariah compliant
manner.
39. Sharia, we understand, is the legal system based on
the Koran and teachings of the Prophet Mohammed.
"Law in the eyes of the Muslim scholars was not in fact an
independent or empirical study. It was the practical aspect of the
religious and social doctrine preached by Mohammed. For the early
Muslims there was little or no distinction between 'legal' and
'religious'. In the Koran the two aspects are found side by side, or
rather interwoven one with the other, and so likewise in the Hadith.
The study and interpretation of the Koran involved sometimes the
one and sometimes the other, and nearly a century elapsed before
scholars began to specialize in one or the other aspect. Ultimately
they were distinguished by relative terms: 'ilm - `positive
knowledge', denoting theology (though not excluding law), and fiqh,
`understanding', denoting law (based on theology). Only at a much
later date was Greek word `canon' (qanun) adopted to denote
administrative rule as distinct from revealed law. (Thus `canon law'
in Arabic should mean the exact opposite of canon in European
usage.)
The connexion between law and religion thus established by
Mohammed and adopted by his followers persisted throughout all
later centuries. Characteristically, all expositions of Muslim law
begin with the `religious duties' or `acts of worship', such as ablution,
prayer, and pilgrimage. As in other Semitic religions, law is thought
WPs(C).35180/2009 & 10662/2010
- 39 -
of, not as a product of human intelligence and adaptation to
changing social needs and ideals, but of divine inspiration hence
immutable. For Muslims its proof-texts were to be found in the
Koran and Prophetic Tradition; and on this assumption the jurists
and theologians of the second century elaborated a structure of law
that is, from the point of view of logical perfection, one of the most
brilliant essays of human reasoning.
Before examining the product of this activity, it is of some
importance to look a little more closely into the methods followed by
the jurists in their endeavour to systematize their material, for the
insight which it affords into the character of Muslim epistemology
and reasoning.
The Koran and the Tradition are not, as it is often said, the basis of
Islamic legal speculation, but only its sources. The real foundation is
to be sought in the attitude of mind which determined the methods
of utilizing these sources. The first question, then, is not `What is
laid down in the Koran and the Hadith?', but `Why are the Koran and
the Hadith accepted as sources of law?', and the second is `How
are their prescriptions to be understood and applied?'
To answer the first question by saying that Koran and the Hadith
are accepted as infallible sources because they are the foundations
and title-deeds of the religion of Islam is to argue in a circle. The
ultimate reason is metaphysical and a priori. It is a conviction of the
imperfection of human reason and its inability to apprehend by its
sole powers the real nature of the Good or indeed any reality
whatsoever. Absolute good and evil can therefore be known to men
WPs(C).35180/2009 & 10662/2010
- 40 -
only through a divine revelation mediated through Prophets. By
Divine Providence there has been a succession of such Prophets
ever since, by the creation of Adam (who was the first of them),
mankind has existed on this earth. The revelations accorded to
these Prophets were all identical in principle, but formed a gradually
developing series adapted to the stages of man's development.
Each in turn expanded, modified, and abrogated the preceding
revelations. The Koran is the final revelation and therefore contains
the final and most perfect solutions for all questions of belief and
conduct.
(Quoted from HAR Gibb............)
It is claimed to be the municipal law followed by some countries in
the Middle East. The principle of the private international law
followed by all the countries which follow the Anglo-Saxon
jurisprudence is that foreign law is always a question of fact in so far
as municipal Courts are concerned. Therefore the question as to
what are those principles of the law of Shariah which regulate the
business such as the one proposed to be carried on by the 6th
respondent Company is required to be clearly pleaded and proved.
40. In the absence of any clear pleading much less the
proof of those principles of Shariah which the respondents propose
to comply with while carrying on the business, we can only proceed
on the view that the respondents proposed to carry on the business
WPs(C).35180/2009 & 10662/2010
- 41 -
in accordance with some principles based on certain teachings of
the Prophet. We must also make it clear that the respondents made
an emphatic statement at the Bar that they are bound to follow each
and every prescription of law of this country. In addition, they also
intend to observe certain principles of Shariah.
41. In response to a specific query of the Court as to
what are those principles of the law of Shariah which are
inconsistent with the mandate of secular State contemplated by the
Constitution of India or the laws of India, the petitioner rightly
answered that unless the respondents plead clearly as to what are
the principles of Sharia they propose to follow, it is not possible to
answer the question.
42. In the circumstances we are only left with a situation
that the respondents propose to carry on the business of a
'non-banking financial institution' in accordance with the laws of
the land and in addition follow some principles of Shariah in carrying
on such business.
43. Every legal system has some basis in some religion
or religious beliefs. For example, all legal systems known to a
civilized world disapprove activities such as theft, causing harm to
WPs(C).35180/2009 & 10662/2010
- 42 -
fellow human beings,licentiousness, etc. It is also equally true that
no major religion known to humanity approves any one of the above
activities. Therefore, to categorize laws which disapprove or prohibit
such activities as non-secular merely because the prescription of
such laws also coincides with certain religious beliefs and avoid
such State action that it should be non-secular would not be
conducive to the promotion of an orderly society either secular or
non-secular. If the purposes of the State are to be classified as
"non-secular" simply because the mandate of the law made by the
State coincided with the beliefs of a religion or originated in a
religion, virtually no law can be made. In our opinion it is for the
above mentioned reason both Articles 25 and 26 open with the
clause:
"subject to public order, morality and health......"
The makers of the Constitution realised that there can always be
claims that either a belief or conduct based on a belief is a part of
the fundamental right to practice and profess a religion. If such a
right were to be absolute most of the modern law would be offending
the fundamental right to practice some religion or the other. The
same principle in our opinion should apply in deciding the question
WPs(C).35180/2009 & 10662/2010
- 43 -
whether the association of the State with any activity is to be
classified as aimed at a non-secular purpose or promoting a religion.
44. It is not in dispute that whatever the basis of Shariah,
the principles of Shariah are meant to regulate the conduct of
human beings adhering to the said system of law. Such an
adherence may be with a view to either secure the establishment of
an orderly society and maintain the same or to secure the devine
approval for the human conduct or both. Whatever be the motive of
the adherent, so long as the belief results in regulating the
interaction between human beings, in our opinion, it is required to be
treated as a secular aspect of a religious belief.
45. Looked at from the above angle, when the
respondents propose to carry on the business of the 6th respondent
Company in a Shariah compliant manner in addition to complying
with the law of this country, that cannot be condemned as either
promoting a religion or aiding a religion.
46. The other submission made by the petitioners is that
the action of the State to participate in equity of the 6th respondent
Company would necessarily involve expenditure of money from the
exchequer, which in turn is money collected, by way of tax, from
WPs(C).35180/2009 & 10662/2010
- 44 -
the people and therefore is violative of Article 27* of the Constitution.
47. In Shirur Mutt's case (supra), the Supreme Court
held:
"What is forbidden by the article is the specific appropriation of the
proceeds of any tax in payment of expenses for the promotion or
maintenance of any particular religion or religious denomination. The
reason underlying this provision is obvious. Ours being a secular
State and there being freedom of religion guaranteed by the
Constitution, both to individuals and to groups, it is against the policy
of the Constitution to pay out of public funds any money for the
promotion or maintenance of any particular religion or religious
denomination".
48. In T.M.A.Pai Foundation and others v. State of
Karnataka and others [(2002) 8 SCC 481] dealing with Article 27 of
the Constitution, per Kirpal, C.J. observed at paragraph 85 as
follows:
"Secularism being one of the important basic features of our
Constitution, Article 27 provides that no person shall be compelled to
pay any taxes, the proceeds of which are specifically appropriated for
--------------------------------------------------------------------------------------------------------
*Art.27. Freedom as to payment of taxes for promotion of any
particular religion.- No person shall be compelled to pay any taxes,
the proceeds of which are specifically appropriated in payment of
expenses for the promotion or maintenance of any particular religion
or religious denomination.
WPs(C).35180/2009 & 10662/2010
- 45 -
the payment of expenses for the promotion and maintenance of any
particular religion or religious denomination. The manner in which the
article has been framed does not prohibit the State from enacting a
law to incur expenses for the promotion or maintenance of any
particular religion or religious denomination, but specifies that by that
law, no person can be compelled to pay any tax, the proceeds of
which are to be so utilized. In other words, if there is a tax for the
promotion or maintenance of any particular religion or religious
denomination, no person can be compelled to pay any such tax."
Such an observation came to be made in the context of the question
whether a minority educational institution which received financial
aid from the State can prefer candidates of their own community in
the matter of admission to the various courses and whether State's
financial aid to such an institution which insists upon the
maintenance for preference is violative of Article 27 of the
Constitution of India.
49. The scope of Article 27 vis-a-vis the utilization of
State's funds fell for consideration of the various courts in the
following cases. In Surksh Chandra Chiman Lal Shah v. Union of
India and others (ILR 1975 Delhi 32) a Division Bench of the Delhi
High Court considered the legality of a programme of the Union of
India involving an expenditure of about Rupees fifty lakhs in
WPs(C).35180/2009 & 10662/2010
- 46 -
connection with the celebration of the 2500th Anniversary of
Bhagwan Mahavir's Nirvan. Under the programme various activities
including arrangement for imparting of knowledge about the life and
teachings of Bhagwan Mahavir to the children were undertaken.
Such an expenditure came to be challenged as violative of Article 27
of the Constitution on various grounds. A Division Bench of the
Delhi High Court came to the conclusion that the various activities
undertaken in the above programme do not constitute promotion or
maintenance of the Jain religion.
50. In Mahanagar Gaziabad Chetna Munch v. State of
U.P. (2007 (2) AWC 1113) a Division Bench of the Allahabad High
Court had occasion to consider the legality of the decision of the
State of U.P. to lease out a piece of land to the Haj Samithy of U.P.
for a period of 30 years and also the payment of an amount of
Rupees two crores from out of the State fund for construction of the
Haj House. The challenge was repelled by the High Court. At
paragraph 41 of the judgment the Court held as follows:
"From the aforesaid discussion it is crystal clear that
promotion or maintenance of any particular religion or religious
denomination by a State and administrative exigency to protect the
interest of the citizen belonging to one religion of the secular State
WPs(C).35180/2009 & 10662/2010
- 47 -
are two distinct and different features. No public fund can be
misutilized for the purpose of promotion or maintenance of any
particular religion or religious denomination. But there is no bar to
the administration to protect the interest of the pilgrims of one
religion because such pilgrims are the citizens of the secular State."
The Court on an elaborate consideration of the matter concluded as
follows:
".............we do not find that any sum from the State exchequer
is proposed to be utilized for the promotion or maintenance of
any particular religion or religious denomination but to facilitate
pilgrims for going Haj. Facilitating the pilgrims is an
administrative action, which can not be held to be religious
action for its promotion or maintenance."
51. In Vijay Harishchandra Patel v. Union of India [(2009)
3 GLR 2153] a Division Bench of the Gujarat High Court had
occasion to deal with the question whether certain steps taken by
the Union of India and the Planning Commission to utilize the
national resources in favour of a particular minority community was
legal. The challenge was on various grounds. One of the grounds is
whether such an expenditure is violative of Article 27 of the
Constitution. At paragraph 12 of the judgment the Court held as
follows:
WPs(C).35180/2009 & 10662/2010
- 48 -
"Petitioner has raised the contention that national resources
are being utilised for betterment of a particular religion which is
impermissible in law. Law is well settled that a State is prohibited to
patronage any particular religion. Ours is a Secular nation and it has
no religion of its own and no particular religion can receive any
special patronage from the State. State's endeavour to improve
health, family welfare, safety recreation and general well-being of the
citizens of the minority community may indirectly impose burden on
the State exchequer, but it cannot be said that those actions of the
State would amount to patronizing any particular religion. Article 27
of the Constitution states that no person shall be compelled to pay
any taxes, the proceeds of which are specifically appropriated in
payment of expenses for the promotion or maintenance of any
particular religion or religious denomination. Funds utilised by the
States for improving the basic amenities, providing infrastructure
facilities to minority concentrated areas, improvement of their
health, family welfare, safety, general well-being, spreading literacy,
providing education, etc. would not violate Article 27 of the
Constitution. Funds are not utilised for inculcating any religion or
advancement of any particular religion affecting the constitutional
requirement of neutrality."
52. The decisions demonstrate that the courts examined
the dominant purpose behind the State action in deciding whether
the State action is in violation of Article 27. The principle that
emerges from the above decisions is that the spending of money by
WPs(C).35180/2009 & 10662/2010
- 49 -
the State on an activity which has a basis in some religion does not
by itself attract the prohibition contained in Article 27. If that were to
be so, all the policies of the State which provide subsidization of the
food to poor people would also attract the prohibition contained in
Article 27 as such a practice not only coincides but also is rooted in
religious belief common to all major religions that feeding the poor is
a meritorious activity. In our opinion to attract the prohibition of
Article 27 the State action must have the effect of intentionally and
directly promoting or maintaining any particular religion. To
ascertain the same the purpose behind the expenditure and the
primary result of such an activity are required to be examined.
53. In the instant case, the State has clearly explained in
its affidavit the reasons which prompted the State to take the
impugned decision. In paragraphs 7, 8 and 9 of the affidavit filed on
behalf of the State of Kerala, the purpose behind the decision of the
State is explained as follows:
"7. At present there is considerable dearth of Industrial and
Infrastructural projects in the State of Kerala which without the
availability of sufficient finance will remain an insurmountable problem,
hindering to a great extend, the overall progress of the State in general,
and its advancement in the industrial and infrastructural sectors, in
particular. To add to this adverse situation, the refinancing scheme of
WPs(C).35180/2009 & 10662/2010
- 50 -
the Industrial Development Bank of India, which was the main source of
finance for the 3rd respondent, has also been discontinued with the
conversion of the Industrial Development Bank into a Commercial Bank
resulting in the 3rd respondent ceasing to have its principal source of
finance for Industrial financing.
8. In the meantime, it was in the scheme of the 1st
respondent-State to have a few of the major infrastructure projects to be
implemented which would have resulted in an unprecedented
advancement in the industrial and infrastructural sectors of the State
leading the State and its people a long way to well-being and prosperity.
This could not be achieved only for the reason of want of sufficient
funds. To name a few of such projects, a Rail Corridor Project from
Kasargode to Thiruvananthapuram and from Cochin to Coimbatore
which for its implementation requires approximately Rs.50000 Crores in
capital investment and an ultra Mega Power Project of 2400 MVA at
Cheemeni in Kasargode involving Rs.13000 Crores investment, could
not either be implemented or remain delayed for want of funds. Apart
from the above, the 3rd respondent is also promoting Industrial Growth
Centers at various locations, Life Science Park at Thiruvananthapuram,
Electronic Hub, City Gas Distribution Projects, Trade and Convention
Centre at Kochi, Petrochemical Project at Kochi etc. all of which require
for their establishment and implementation, substantial funds.
9. On a consideration of the matter, and studying the situation in
detail, it came to the notice of the Government that there were huge
unutilized funds in Gulf countries as also with non-resident Indians and if
only such funds could be availed of, the situation confronted by them
which operates to the great detriment in progress and advancement of
WPs(C).35180/2009 & 10662/2010
- 51 -
the State and its people could be tied over. But such sources were
averse to collecting or receiving interest on deposits or loans of any kind
in accordance with the Shariah Principles followed by them. In such a
state of affairs, the Government entrusted KSIDC with conducting
studies and looking into various aspects of formation of a Company in
Kerala for attracting investments for the development of the common
public at large. The 3rd respondent with a view to explore the possibility
of securing fresh source of finance arranged to get a feasibility report
prepared by M/s.Ernst & Young (P) Ltd., Mumbai, a reputed
International Financial and Professional Consultant. The said consultant
conducted an elaborate study of the matter and submitted a detailed
project report to the 3rd respondent wherein they have recommended the
incorporation of a company for carrying on the business of leasing and
hire purchase, investment in shares and to act as financiers, portfolio
managers, finance brokers and guarantors. The business activities thus
proposed which were of a wide range required huge financial
investments. One of the recommendations in the project report was that
the business activities of the company shall not embark or undertake
any interest based financing. It was pursuant to the said project report
that a company with the name Al Barakh Financial Services Ltd. was
registered under the companies Act, the Memorandum and Articles of
Association together with the certificate of Incorporation of which have
been produced and marked as Ext.R3(a) along with the counter-affidavit
filed by the 3rd respondent. It is submitted that the said company has
been promoted and incorporated as a joint initiative of KSIDC and
private promoters. The private promoters include Industrialists and
business belonging to different religions, who have big and substantial
WPs(C).35180/2009 & 10662/2010
- 52 -
industrial and business enterprises in Gulf Countries as well as in India.
The 3rd respondent is only a minority share holder in the said company
with 11% share capital contribution".
It can be seen from the above that the purpose and intention of the
State in taking the impugned decision is to secure a commercial
benefit from the activity proposed to be carried on by the 6th
respondent Company by generating adequate funds for the
development of the State.
54. Coming to the question whether the impugned action
has the direct and primary effect of promoting or maintaining the
religion, it is not demonstrated before us as to how such a result is
achieved by the impugned action. The money from the exchequer
would not be paid to any institution whose primary purpose is to
carry on religious activity like preaching of or propagating a religion.
The payment of money from the exchequer is proposed to be made
with a view to achieve a commercial benefit. Such payment would be
made to a corporate body which proposes to carry on the business
in compliance with certain principles based on the religious text of a
particular religion, but not to propagate religion. In our view such a
payment would not have the primary and direct effect of supporting
or maintaining the religion. The main and primary purpose of the 6th
WPs(C).35180/2009 & 10662/2010
- 53 -
respondent is commerce but not propagation of religion. On the
other hand, the denial of the State to participate only on the ground
that the 6th respondent proposes to carry on the business in
compliance with Shariah may amount to discrimination on the basis
of religion. Our conclusion is further fortified by the order of the
Supreme Court in Writ Petition (Civil) No.1 of 2007 dated
28.01.2011 (Prafull Goradia v. Union of India). The Supreme Court
was considering the Constitutionality of the Government of India's
granting subsidy in the air fare of the Haj pilgrims, specifically in the
context of Article 27 of the Constitution of India. The Supreme Court
rejected the challenge and observed as follows:-
"In our opinion Article 27 would be violated if a substantial part of the
entire income tax collected in India, or a substantial part of the entire central
excise or the customs duties or sales tax, or a substantial part of any other
tax collected in India, were to be utilized for promotion or maintenance of any
particular religion or religious denomination. In other words, suppose 25 per
cent of the entire income tax collected in India was utilized for promoting or
maintaining any particular religion or religious denomination, that, in our
opinion, would be violative of Article 27 of the Constitution".
55. One more submission of the petitioners which is
required to be examined is the submission made on the basis of
paragraph 4 of the counter affidavit filed on 07.09.2010 by the Union
WPs(C).35180/2009 & 10662/2010
- 54 -
of India. Paragraph 4 of the counter affidavit reads as follows:
"Government of India have always maintained that in the current
statutory and regulatory frame work, it is not legally feasible for banks in
India to undertake Islamic Banking activities in India or for branches of
Indian Banks abroad to undertake Islamic Banking outside India. This has
been the stance of the Government of India even while giving reply to
Questions in the Parliament as well as in response to various VIP
correspondences on the subject. The said stance of the Government of
India is applicable mutatis mutandis to the activities of NBFCs also."
The petitioners argued that in view of the stand taken by the
Government of India, the State of Kerala cannot be a shareholder in
a company which proposes to carry on the business in Sharia
compliant manner.
56. On the other hand, it is argued by Dr.Dhavan that the
opinion such as the one contained in the affidavit filed by the Under
Secretary of the Government of India in the Ministry of Finance is
not determinative of the Constitutional interpretation. Secondly,
even on the examination of the language of the statement of
Mr.M.M.Dawla (Under Secretary), it is his opinion that the activities
of the Islamic Banking are not legally feasible "in the current
statutory and regulatory frame work". Dr.Dhavan submitted that the
issue before this Court is the Constitutionality of the action of the
WPs(C).35180/2009 & 10662/2010
- 55 -
State of Kerala, but not whether the existing statutory framework
permits the carrying on of "Islamic Banking" activity. He further
submitted that except making such an omnibus statement no
specific prohibition contained in any statute which makes it
impermissible to carry on the Islamic Banking is brought to our
notice.
57. We see substantial force in the submission made by
Dr.Dhavan. The Supreme Court in Sanjeev Coke Manufacturing Co.
v. M/s.Bharat Coking Coal Limited [(1983) 1 SCC 147] at paragraph
25 held as follows:
"But, in the ultimate analysis, we are not really to concern ourselves with the
hollowness or the self-condemnatory nature of the statements made in the
affidavits filed by the respondents to justify and sustain the legislation. The
deponents of the affidavits filed into court may speak for the parties on
whose behalf they swear to the statements. They do not speak for the
Parliament. No one may speak for the Parliament and Parliament is never
before the court. After Parliament has said what it intends to say, only the
court may say what the Parliament meant to say. None else. Once a
statute leaves Parliament House, the Court is the only authentic voice which
may echo (interpret) the Parliament. This the court will do with reference to
the language of the statute and other permissible aids. The executive
Government may place before the court their understanding of what
Parliament has said or intended to say or what they think was Parliament's
WPs(C).35180/2009 & 10662/2010
- 56 -
object and all the facts and circumstances which in their view led to the
legislation. When they do so, they do not speak for Parliament. No Act of
Parliament may be struck down because of the understanding or
misunderstanding of parliamentary intention by the executive Government or
because their (the Government's) spokesmen do not bring out relevant
circumstances but indulge in empty and self-defeating affidavits. They do
not and they cannot bind Parliament. Validity of legislation is not to be
judged merely by affidavits filed on behalf of the State, but by all the relevant
circumstances which the court may ultimately find and more especially by
what may be gathered from what the legislature has itself said."
In other words, the Supreme Court held that while interpreting the
Constitution or determining the constitutional validity of the statutes
the court cannot be guided by the views expressed by individual
officers of the State as the court has to ascertain the true meaning
of the statutes made by the legislature. In our opinion, the principle
applies with a greater vigour in determining the constitutionality of
the State action.
58. We do not propose to deal with this question any
further for the reason that whether the 6th respondent company can
carry on the business such as the one proposed by the Union of
India or whether such a business is prohibited by any statute are
questions which in our opinion are primarily to be dealt with by the
Reserve Bank of India. The Reserve Bank of India is yet to examine
WPs(C).35180/2009 & 10662/2010
- 57 -
this question and we do not propose to preempt such an
examination. We are also conscious of the fact, assuming for any
reason, that there is some provision in law which either seek to
regulate or prohibit such an activity of the 6th respondent, the right
of the 6th respondent or its shareholders to question the
constitutionality of such a regulation or prohibition cannot be ignored
or jeopardised.
59. Lastly, we come to the submission made by
Sri.Kaleeswaram Raj appearing for the petitioner in W.P.(C)
No.10662 of 2010 that the impugned decision of the State of Kerala
is violative of Article 14 of the Constitution as the said decision was
taken in an arbitrary manner without following any transparent
procedure. The learned counsel for the petitioner heavily relied
upon paragraphs 10 and 11 of the decision of the Supreme Court in
M/s.Kasturi Lal Lakshmi Reddy,etc. v. the State of Jammu &
Kashmir and another (AIR 1980 SC 1992) which reads as follows:
"10. It was pointed out by this Court in "Ramana Dayaram Shetty
v. The International Airport Authority of India (1979) 3 SCC 489: (AIR 1979
SC 1628)" that with the growth of the welfare State, new forms of property
in the shape of Govt. largess are developing, since the Government is
increasingly assuming the rule of regulator and dispenser of social
WPs(C).35180/2009 & 10662/2010
- 58 -
services and provider of a large number of benefits including jobs,
contracts, licences, quotas, mineral rights etc. There is increasing
expansion of the magnitude and range of governmental functions, as we
move closer to the welfare State, and the result is that more and more of
our wealth consists of these new forms of property. Some of these forms
of wealth may be in the nature of legal rights but the large majority of them
are in the nature of privileges. The law has however not been slow to
recognise the importance of this new kind of wealth and the need to
protect individual interest in it and with that end in view, it has developed
new forms of protection. Some interests in Government largess, formerly
regarded as privileges, have been recognised as rights, while others have
been given legal protection not only by forging procedural safeguards but
also by confining, structuring and checking Government discretion in the
matter of grant of such largess. The discretion of the Government has
been held to be not unlimited in that the Government cannot give largess
in its arbitrary discretion or at its sweet will or on such terms as it chooses
in its absolute discretion. There are two limitations imposed by law which
structure and control the discretion of the Government in this behalf. The
first is in regard to the terms on which largess may be granted and the
other, in regard to the persons who may be recipients of such largess.
11. So far as the first limitation is concerned, it flows directly from
the thesis that, unlike private individual, the State cannot act as it pleases
in the matter of giving largess. Though ordinarily a private individual
would be guided by economic considerations of self-gain in any action
taken by him, it is always open to him under the law to act contrary to his
self-interest or to oblige another in entering into a contract or dealing with
his property. But the Government is not free to act as it likes in granting
largess such as awarding a contract or selling or leasing out its property.
WPs(C).35180/2009 & 10662/2010
- 59 -
Whatever be its activity, the Government is still the Government and is,
subject to restraints inherent in its position in a democratic society. The
constitutional power conferred on the Government cannot be exercised by
it arbitrarily or capriciously or in an unprincipled manner, it has to be
exercised for the public good. Every activity of the Government has a
public element in it and it must, therefore, be informed with reason and
guided by public interest. Every action taken by the Government must be
in public interest; the Government cannot act arbitrarily and without reason
and if it does, its action would be liable to be invalidated. If the
Government awards a contract or leases out or otherwise deals with its
property or grants any other largess, it would be liable to be tested for its
validity on the touchstone of reasonableness and public interest and if it
fails to satisfy either test, it would be unconstitutional and invalid."
60. On the other hand, Dr.Dhavan, learned counsel
appearing for the 6th respondent relied upon a decision reported in
Sachidanand Pandey v. West Bengal [(1987) 2 SCC 324]. At
paragraph 40 of the said judgment the Supreme Court held as
follows:-
"Public auction is the ordinary rule, it is not an invariable rule.
There may be situations where there are compelling reasons
necessitating departure from the rule but then the reasons for the
departure must be rational and should not be suggestive of
discrimination. Appearance of public justice is as important as doing
justice. Nothing should be done which gives the appearance of bias,
jobbery or nepotism."
WPs(C).35180/2009 & 10662/2010
- 60 -
61. In our opinion, calling of tenders is not the only
procedure which answers the requirement of non-arbitrariness on
the part of the State. When the State is intending to purchase or sell
property or goods or seeking to have certain work like construction
of a building or a project, etc. to be done by private parties inviting
competitive bids from persons interested is generally a rational and
transparent process, but even in such cases courts have recognised
exceptions to the rule. However, in a case like the one on hand
where the State is proposing to carry on some business by
participating in a venture jointly with others, the decision cannot in
any way be called distribution of largess. It is not the case of either
of the petitioners that they are also interested in carrying on the
same business that is to be carried on by the 6th respondent, nor
some other persons would be interested in such business and if only
the State of Kerala advertised its intention to participate in such
business venture there would have been more competition enabling
the State of Kerala to take a decision which would be economically
more beneficial to the State. We are of the opinion that by the very
nature of the impugned decision it is incompatible with the process
of inviting tenders. We therefore reject this submission.
WPs(C).35180/2009 & 10662/2010
- 61 -
For all the above mentioned reasons we do not see any
merit in these writ petitions. Therefore, the writ petitions are
dismissed.
Sd/-
J.Chelameswar,
Chief Justice
Sd/-
P.R.Ramachandra Menon,
Judge
vns/vku.
Like this:
Like Loading...
Related
Discussion
Comments are closed.