Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

Civil Appeal Nos. 7699-7700 of 2019

(Arising out of SLP (C) Nos.7792-7793 of 2019)

K. H. NAZAR

.... Appellant(s)

Versus

MATHEW K. JACOB & ORS.

…. Respondent (s)

J U D G M E N T

L. NAGESWARA RAO, J.

Leave granted.

1.The width and amplitude of the expression

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

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

falls for our consideration in these Appeals. Commercial

sites are exempted from the purview of the Act. The

question whether a rocky land which is used for quarrying

purposes can be treated as a ‘commercial site’ and

thereby excluded from the applicability of the Act was

answered by a learned Single Judge of the Kerala High

Court by holding that mere blasting of rocks and

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conversion into metals does not render the area a

‘commercial site’.

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Twenty years after the said judgment, a

Division Bench of the Kerala High Court took a different

view. Quarrying was held to be a commercial operation

involving the process of manufacture. Hence, it was held

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

is exempted from the applicability of the Act.

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2.The Appellant requested environmental clearance for

his quarry which was recommended in his favour by the

District Expert Appraisal Committee (DEAC) on 25.04.2017.

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

the said recommendation to permit quarry on land which

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

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

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

and 2 was that the Appellant cannot be permitted to use

the land for a purpose other than plantation, especially for

quarrying operations. After examining the judgments of

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

and Others (supra) and State of Kerala v.

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

High Court of Kerala doubted the correctness of the latter

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K. Krishnankutty v. State of Kerala and Others. CRP No.1245/1975

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State of Kerala v. Mohammedali Haji. (1996) 1 KLT 584 (DB)

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judgment in State of Kerala v. Mohammedali Haji

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

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

heard by a Full Bench of the Kerala High Court comprising

three Judges. The majority opinion was in favour of

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

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

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

exemption of such land from the applicability of the Act.

The Appellant is aggrieved by the said judgment of the Full

Bench of the High Court.

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

the Appellant took us through the provisions of the Act

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

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

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

reasons to submit that the legislation was made to protect

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

meaning of the words ‘commercial activities’ and

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

for profit. Hence, quarrying is a commercial activity.

According to him, there can be no distinction between

activities done above and below the surface of land for the

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purpose of deciding whether land is a commercial site or

not. He criticized the plurality opinion for erroneously

invoking the mischief rule. He commended the judgment

of the dissenting Judge for our acceptance. He

emphasized that environmental issues are not germane for

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

5.Mr. Pallav Shishodia, learned Senior Counsel

appearing for the State of Kerala resisted the submissions

made on behalf of the Appellant by submitting that the

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

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

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

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

When there is a doubt about the meaning of expressions

used in such a statute, literal interpretation should be

avoided and Courts should adopt the principles of

purposive construction. He submitted that the exemption

provision should be narrowly construed.

7.Before we consider the submissions made by the

learned counsel, it is necessary to examine the provisions

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

shall be entitled to own or hold or possess under a

mortgage, lands in the aggregate in excess of the ceiling

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area with effect from the date notified by the Government

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

specified in Section 82 of the Act. Lands exempted under

Section 81 shall be excluded from computation of the

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

the Act is as follows:

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

shall not apply to-

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

the Government of any other State in India or the

Government of India or a local authority [or the

Cochin Port Trust] or any other authority which the

Government may, in public interest, exempt, by

notification in the Gazette, from the provisions of this

Chapter.

[Provided that the exemption under this clause shall

not apply to lands owned by the Government of

Kerala and held by any person under lease whether

current or time expired or otherwise.]

Explanation I. – “Lands owned by the Government

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

the same meaning as “Government lands” under sub-

section (1) of Section 2 of the Kerala Government

land Assignment Act, 1960 [but lands escheated to

the Government and held by tenants entitled to fixity

of tenure under Section 13 shall not be deemed to be

lands owned by the Government of Kerala;]

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

respect of which have vested in the Government

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

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shall not be deemed to be “lands owned by the

Government of Kerala” for the purposes of this

clause;]

Explanation III - For the purposes of this clause,

“other authority” shall include a corporation owned or

controlled by the Government of Kerala or the

Government of any other State in India or the

Government of India;]

b)Lands taken under the management of the Court of

Wards;

Provided that the exemption under this clause shall

cease to apply at the end of three years from the

commencement of this Act;

c)Lands comprised of mills, factories or workshops and

which are necessary for the use of such mills,

factories or workshops;

d)Private forests;

e)Plantations;

f)x x x x

g)x x x x

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

operative society (including a co-operative land

mortgage bank) registered or deemed to be

registered under the Co-operative Societies Act for

the time being in force, or to the Kerala Financial

Corporation, or to the Kerala Industrial Development

Corporation, or to the State Small Industries

Corporation, as security for any loan advanced by the

Government or by such society or Corporation, so

long as the mortgage subsists:

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provided that the exemption under this clause shall

cease to apply at the end of three years from the

commencement of this Act;

i) lands purchased by the Kerala Co-operative Central

Land Mortgage Bank or a Primary Mortgage Bank

under Section 18 of the Kerala Co-operative Land

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

operative Bank Ltd., or by a primary agricultural

credit co-operative society or by a scheduled bank as

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

long as such lands continue in the possession of the

bank;

j)Lands purchased by the Kerala Financial Corporation

or lands the management of which has been taken

over by that Corporation, under Section 32 of the

State Financial Corporations Act, 1951, so long as

such lands remain in the ownership, or continue

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

said Corporation:

[provided that the exemption under this clause shall

not apply in the case of lands the management of

which has been taken over by the Corporation on or

after the 1

st

day of April, 1964;]

k)lands belonging to or held by an industrial or

commercial undertaking at the commencement of

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

commercial purpose of the undertaking:

Provided that the exemption under this clause shall

cease to apply if such land is not actually used for

the purpose for which it has been set apart, within

such time as the District Collector may, by notice to

the undertaking, specify, in that behalf;

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l)x x x x

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

dwelling houses and lands, wells, tanks and other

structures necessary for the convenient

employment of the dwelling houses.

Explanation.- For the avoidance of doubt, it is

hereby declared that a compound wall shall not be

deemed to be a structure necessary for the

convenient enjoyment of a dwelling house, if the

land on which the dwelling house is situated and

enclosed by the compound wall is more than the

land necessary for the convenient enjoyment of the

dwelling house.

n)x x x x

o)sites of temples, churches, mosques and

cemeteries and burial and burning grounds:

p)sites of buildings and including warehouses;

q)commercial sites;

r)land occupied by educational institutions including

land necessary for the convenient use of the

institutions and playgrounds attached to such

institutions;

s)lands vested in the Bhoodan Yagna Committee;

t)lands owned or held by-

i.a University establishment by law; or

ii.a religious, charitable or educational

institutions of a public nature; or

iii.a public trust which expression shall include a

wakf; Provided that-

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

the University, institution or trust concerned, and

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

hold the said lands after the commencement of this

Act, the Government have certified previously that

such lands are bona fide required for the purposes

of the University, institution or trust, as the case

may be; and

u) lands granted to defence personnel for gallantry.

(2)[xxx]

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

necessary to do so in the public interest-

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

put; or

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

the purpose of conversion into plantation or for the

extension or preservation of an existing plantation

or for any commercial, industrial, educational or

charitable purpose, by notification in the Gazette,

exempt such land from the provisions of this

Chapter, subject to such restrictions and conditions

as they may deem fit to impose:

Provided that the land referred to in clause (b)

shall be used for the purpose for which it is

intended within such time as the Government may

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

used within the time specified, the exemption shall

cease to be in force.]

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8.In the present case, the Appellant is claiming

exemption on the ground that a quarry would fall within

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

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

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

kudiyiruppu or a kudikidappu or karaima) which is

used principally for the purposes of any trade,

commerce, industry, manufacture or business;’’

9.The Appellant contended that the definition of

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

principally used for the purpose of trade, commerce,

industry, manufacture or business is a commercial site.

According to the Appellant, breaking of rock is a

manufacturing activity. Quarrying operations involve

digging land and breaking of rocks into metal pieces. It

was submitted that digging of land and breaking of rock is

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

purpose of trade and business. We are afraid that we

cannot agree.

10.The dominant legislative intent of the Act is the

imposition of ceiling on land holdings and distribution of

excess land among landless people.

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Large number of

3

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

10

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

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

such landless people by taking it from those who possess

in excess is the major objective of the Act.

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11. Provisions of a beneficial legislation have to be

construed with a purpose-oriented approach.

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The Act

should receive a liberal construction to promote its

objects.

6

Also, literal construction of the provisions of a

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

duty to discern the intention of the legislature in making

the law. Once such an intention is ascertained, the

statute should receive a purposeful or functional

interpretation

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.

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

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, the principles

of statutory construction of beneficial legislation are as

follows:

4. The principles of statutory construction are well

settled. Words occurring in statutes of liberal import

such as social welfare legislation and human rights'

legislation are not to be put in Procrustean beds or

shrunk to Liliputian dimensions. In construing these

4

One Earth One Life & Ors. v. State of Kerala, WP (C) No.28496 of 2016

5

Regional Executive, Kerala Fishermen’ Welfare Fund Board v. Fancy Food, (1995) 4

SCC 34

6

Bombay Anand Bhavan Restaurant v. ESI Corporation, (2009) 9 SCC 61 and Union of

India v. Prabhakaran Vijay Kumar, (2008) 9 SCC 527

7

Bharat Singh v. Management of New Delhi Tuberculosis Centre, (1986) 2 SCC 614.

8

Workmen v. American Express International Banking Corpn. (1985) 4 SCC 71

11

legislations the imposture of literal construction must

be avoided and the prodigality of its misapplication

must be recognised and reduced. Judges ought to be

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

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

words from Lord Wilberforce's opinion in Prenn v.

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

opinion Lord Wilberforce pointed out that law is not to

be left behind in some island of literal interpretation

but is to enquire beyond the language, unisolated

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

is not to be interpreted purely on internal linguistic

considerations. In one of the cases cited before us,

that is, Surendra Kumar Verma v. Central Government

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

443], we had occasion to say,

“Semantic luxuries are misplaced in the

interpretation of ‘bread and butter’ statutes.

Welfare statutes must, of necessity, receive a

broad interpretation. Where legislation is

designed to give relief against certain kinds of

mischief, the Court is not to make inroads by

making etymological excursions.”

13.While interpreting a statute, the problem or mischief

that the statute was designed to remedy should first be

identified and then a construction that suppresses the

problem and advances the remedy should be adopted.

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It

is settled law that exemption clauses in beneficial or social

9

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

12

welfare legislations should be given strict construction

10

. It

was observed in Shivram A. Shiroor v. Radhabai

Shantram Kowshik (supra) that the exclusionary

provisions in a beneficial legislation should be construed

strictly so as to give a wide amplitude to the principal

object of the legislation and to prevent its evasion on

deceptive grounds. Similarly, in Minister Administering

the Crown Lands Act v. NSW Aboriginal Land

Council

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, Kirby, J. held that the principle of providing

purposive construction to beneficial legislations mandates

that exceptions in such legislations should be construed

narrowly.

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

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

any land in excess has to be surrendered to the

Government, which is distributed in favour of the landless

people in the State. The interpretation of the provisions of

the Act should be in a manner which promote the said

object.

15.Section 81 exempts among others, lands comprised

of mills, factories or workshops, lands occupied by

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Shivram A. Shiroor v. Radhabai Shantram Kowshik, (1984) 1 SCC 588

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[2008] HCA 48

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educational institutions, and lands owned by

Universities, religious and charitable institutions. House

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

buildings including warehouses and commercial sites are

also exempted. There is a definite distinction between

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

they have been used. Commercial sites read along with

the other clauses dealing with sites clearly indicate that

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

stated above, the other clauses in Section 81 dealing

with sites are house sites, temples, churches and

mosques and buildings. As such, the expression

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

including lands used for the purpose of quarrying. It has

a restrictive meaning in comparison to the other

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

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

Kurian, leaned Senior Counsel argued on behalf of the

Appellant that digging the land for extracting stones is

for a commercial purpose of making profit and hence

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

commercial site is a land on which there is a structure

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being utilized for an industrial or commercial purpose.

Extension of the words ‘commercial site’ to quarries

would result in defeating the purpose of the Act.

16.We disagree with the opinion of the dissenting

Judge that the expression ‘commercial site’ should be

attributed its natural and original meaning. On the basis

of the statement made by the learned Additional

Advocate General, the dissenting Judge held that if lands

used for quarrying operations prior to the Act coming

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

quarry should be considered as commercial site.

Further, it was observed that if a quarry can be

exempted under Section 81 (3) by the Government in

public interest, then quarrying is a commercial activity

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

17.We uphold the view of the majority that exemption

of quarries by the Government under Section 81 (3)

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

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

sites, the need for their exemption in public interest does

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

Government to exempt lands for commercial purposes in

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public interest. The overriding power conferred on the

Government to exempt lands from the applicability of

the Act cannot be utilized for the purpose of

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

commercial sites from the purview of the Act. Section

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

commercial undertakings at the time of commencement

of the Act. The provision presupposes that an industrial

or commercial undertaking was existing on the date of

the commencement of the Act and there was some land

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

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

industrial or commercial purposes of the undertaking

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

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

exemption ceases to operate. It is clear from the above

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

type of land belonging to an industrial or commercial

undertaking set apart for use of the said undertaking.

Therefore, we are not in agreement with the support

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

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interpret the expression ‘commercial site’ in Section 81

(1) (q).

18.Another submission of the Appellant that quarrying

includes a manufacturing activity does not appeal to us.

Breaking of rock into small pieces of stone, according to

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

seek support from a judgment of this Court in

Rajasthan SEB v. Associated Stone Industries

12

. It

was held in the said judgment that cutting and polishing

stones into slabs is not a process of manufacture for the

obvious and simple reason that no new and distinct

commercial product came into existence as the end

product still remained stone and thus its original identity

continued.

19.The findings recorded in the majority opinion on the

issue pertaining to the environment is not relevant for

the decision of the dispute. The concern of the Court

should have been restricted to the gamut of the

expression ‘commercial site’. The interpretation of

Section 81 which exempts certain lands and sites should

be interpreted in a manner, which promotes the object of

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(2006) 6 SCC 141

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the Act and restricts concentration of large swathes of

land in favour of a few individuals. Wider construction of

the words ‘commercial site’ would defeat the laudable

object of the Act.

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

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

impugned judgment which requires to be upheld.

21.The Appeals are dismissed, accordingly.

................................J.

[L. NAGESWARA RAO]

…............................J.

[HEMANT GUPTA]

New Delhi,

September 30, 2019

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