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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.

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 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.

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