INDIAN NUT PRODUCTS AND OTHERS versus UNION OF INDIA

Citation: [1994] 3 S.C.R. 1023 · Decided: 12-05-1994 · Supreme Court of India · Bench: KULDIP SINGH, P.B. SAWANT, N.P. SINGH

Judgment (excerpt)

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INDIAN NUT PRODUCTS AND OTHERS 
v. 
UNION OF INDIA 
MAY 12, 1994 
[KULDIP SINGH, P.B. SAWANT AND N.P. SINGH, JJ.] 
Kera/a Cashew Fact01ies (Acquisition) Act, 1974-Section 3(1) proviso 
-Notice for acquisition merely repeating statutory language without giving 
particulars quashed. 
Administrative Law-Grounds for exercise of statutory power, held, 
must be made out on the basis of relevant materials-Existence of circumstan-
ces, required for exercise of such powers, held, open for judicial review. 
A 
B 
c 
The Kerala Government, in order to prevent large scale unemploy. D 
ment of workers in the cashew industry and to provide employment to such 
workers, passed the Kerala Cashew Factories (Acquisition) Act, 1974. 
Section 3 of the Act vests power in the Government, to declare that the 
cashew factory in question shall stand transferred to and vest in the 
Government, if the Government is satisfied that any of the three conditions 
mentioned in sub-section (1) of Section 3 exists. The proviso to sub-section E 
(1) of Section 3 requires the giving of a notice issuing a declaration to 
follow a procedure which is imperative and mandatory in nature. 
In a common notice to 36 cashew factories, the Kerala Government 
stated that since the factory was lying closed, the Government was of the 
opinion that the said situation would lead to large scale unemployment of 
the workers of the cashew factory. Subsequently, after objections were filed 
to the said notice by the petitioners, the Kerala Government by its order 
dated 6-7- 1988, declared that the 36 factories stood transferred to and 
vested in the Government with effect from 6-7-1988. 
The petitioners who are owners and occupiers of cashew factories 
challenged by way of a writ petition under Article 32 of the Constitution 
the validity of the order dated 6-7-1988, contending that the notice of 
closure contained no particulars for the alleged closure of each of the 
F 
G 
factories, so that individual owners could meet the case against them. 
H 
1023 
A 
B 
c 
1024 
SUPREME COURT REPORTS 
fl994]3 S.C.R. 
Allowing the writ petition, this Court 
HELD : 1. In the notice there is only reference to Section 3(1) of the 
Ker;ila Cashew Factories (Acquisition) Act, 1974 without disclosing 
whether the Government was satisfied in respect of the existence of any of 
the situations under clauses (a), (b) or (c) thereof. No details have been 
mentioned. It need not be impressed that an order under Section 3(1) on the 
ground specified in clause (c) of sub-section (1) can be issued by the State 
Government only when the State Government is satisfied that there has 
been large scale unemployment, other than by way of lay off or retrench-
ment, of the workers of a cashew factory. The grounds do not even state 
there has been any unemployment, much less large scale unemployment. 
The grounds simply state that the factory was lying closed and there was no 
possibility of its starting functioning within a period of ten days or in the 
immediate future, which will lead to large scale unemployment. No details 
have been mentioned in the said notice as to from what date each of the 
D factories was lying closed. It cannot be appreciated as to how by a common 
notice all the 36 cashew factories could be summoned to show cause without 
E 
F 
giving particulars of conditions existing in different factories. (1030-A-E) 
2. It is not disputed that the cashew-nut factories do not work 
throughout the year but work for periods depending upon the supply of 
raw nuts etc. As such the particulars of the alleged closure of each of the 
factories were required to be furnished to the individual owner to meet 
the case against him. The transfer or vesting of the factories has to be in 
accordance with the procedure prescribed in the Act. In view of the 
proviso to sub section (1) it is incumbent on the part of the Government 
to disclose the ground or the grounds specifically, in .the notice .on the 
basis of which, the Government is satisfied that one of the three situations 
mentioned in sub-section (1) of Section 3 exists necessitating an action 
under that sub-section. The person to whom such notice along with the 
ground or grounds is served, is entitled to file objections and to 
demonstrate and satisfy that in fact no such ground exists for issuance of 
G an order for the transfer of the factory in question. In the present case, 
the notice does not comply with and conform to the requirement o

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