Judgment

SHAH, J.:- On May 9, 1958 Khillu and two others sold a plot of land in village Majesar, Tehsil Ballabhgarh, District Gurgaon to Surinder Kumar and Virender Kumar (who will hereinafter be referred to as "the defendants"). On January 9, 1959 Ramjilal and Khazan hereinafter called the "plaintiffs" filed a suit in the Civil Court to pre-empt the sale. On November 16, 1961 the Government of Punjab issued in exercise of the power conferred by sub-section (2) of Section 8 of the Punjab Pre-emption Act, 1913 a notification declaring "that no rights of pre-emption shall exist with respect to urban or village immovable property or agricultural land when purchased by any person for setting up or extension of any industry in the State with the permission of the Director of Industries, Punjab."

2. The plaintiffs contended that the notification issued by the Government did not prejudicially affect their claim to pre-empt the sale. By order dated February 16, 1962 the Civil Court passed a decree for pre-emption conditionally on payment of the amount for which the property was sold. The Civil Court found that the defendants had failed to establish that they intended to establish a factory on the land in question.

3. The defendants appealed to the Court of the Senior Subordinate Judge against the decree of the Trial Court. Thereafter the Government of Punjab issued another notification on September 3, 1962 that the Governor of Punjab was pleased to order that "no right of pre-emption shall exist with respect to the sale of land, described in the Schedule to this Notification made on the 9th May. 1958, in favour of Messrs. Surinder Kumar and Virender Kumar, opposite Railway Station Faridabad, for the establishment of a factory for manufacture of cork products" In the Schedule was described the property sold to the defendants by Khillu and two others.

4. The plaintiffs then moved a petition in the High Court of Punjab challenging the validity of the notification dated September 3, 1962, among others on the ground that in issuing the order the Government acted mala fide.A Division Bench of the High Court referred the case for hearing before a Full Bench of the Court.

5. The Full Bench held that in a suit for pre-emption the claimant must prove that his fight to pre-empt subsisted till the date of the decree of the first Court and that loss of the right after the date of the decree "by his own act or by an act beyond his control after the date of that decree" did not affect his claim in the suit. Accordingly the notification under Section 8 (2) of the Punjab Pre-emption Act, 1913 extinguishing the right of pre-emption in the property issued during the pendency of the anneal against the decree of the Trial Court did not disentitle the plaintiffs to maintain their claim of are-emotion already exercised, and in respect of which a decree was granted to them. The High Court also held that S. 8 (2) of Punjab Act I of 1913 did not offend Article 14 of the Constitution, but the notification dated September 3, 1962, was issued mala fide, and was on that account liable to be struck down as invalid. With special leave, the State of Punjab has appealed to this Court.

6. It was urged, that Section 8 (2) infringes the guarantee of equality under Article 14 of the Constitution. In terms, Section 8 (2) provides;

"The State Government may declare by notification that in any local area or with respect to any land or property or class of land or property or with respect to any sale or class of sales, no right of pre-emption or only such limited right as the State Government may specify shall exist." The High Court was of the view that Section 8 must be read in the light of the scheme of the Act and especially Section 9 which excludes from the operation of the Act sales made by or to Government or by or to any local authority, or to any company under the provisions of Part VII of the Land Acquisition Act. 1894, or in respect of any sale sanctioned by the Deputy Com