2011 Supreme(Ker) 104
High Court of Kerala
J. CHELAMESWAR & P.R. RAMACHANDRA MENON
DR. Surbahmaniam Swamy
Versus
State Of Kerala & Others
W.P.(C) No. 35180 of 2009(S) & 10662 of 2010
Decided on : 27-01-2011
For the Petitioner:DR. Subrahmaniam Swamy (Party In Person), Advocate.
For the Respondents:M. Pathrose Matthai, Sr Advocate.
Headnote:
Writ petitions challenging the decision of the State of Kerala to participate in the equity of a company that proposes to operate in a Shariah-compliant manner. Petitioners argue that the decision violates constitutional principles of secularism and impermissibly promotes a religion. The court examines the meaning of secularism, the distinction between secular and religious activities, and the permissible limits of state association with religion.
Fact of the Case:
The State of Kerala decided to participate in the equity of a company that proposes to operate in a Shariah-compliant manner. Petitioners challenged this decision, arguing that it violates constitutional principles of secularism and impermissibly promotes a religion.
Finding of the Court:
The court found that the decision of the State of Kerala to participate in the equity of the company does not violate constitutional principles of secularism or impermissibly promote a religion. The court held that the company's proposed business activities are secular in nature, even though they will be conducted in a Shariah-compliant manner. The court also found that the State's participation in the company is not intended to promote or maintain any particular religion, but rather to secure a commercial benefit for the State.
Issues: 1. Whether the decision of the State of Kerala to participate in the equity of a company that proposes to operate in a Shariah-compliant manner violates constitutional principles of secularism? 2. Whether the decision impermissibly promotes a religion?
Ratio Decidendi: 1. The court held that the company's proposed business activities are secular in nature, even though they will be conducted in a Shariah-compliant manner. The court reasoned that the activities are not inherently religious in nature, and that the company is not required to engage in any religious activities in order to conduct its business. 2. The court also found that the State's participation in the company is not intended to promote or maintain any particular religion, but rather to secure a commercial benefit for the State. The court reasoned that the State's participation is not intended to favor one religion over another, and that the State is not providing any financial support to the company for religious purposes.
Final Decision: The court dismissed the writ petitions, holding that the decision of the State of Kerala to participate in the equity of the company does not violate constitutional principles of secularism or impermissibly promote a religion.
J. Chelameswar, C.J.
1. 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 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 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 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