2021 Supreme(SC) 705

SUPREME COURT OF INDIA
(For the High Court of Judicature At Madras at Madurai)
DHANANJAYA Y. CHANDRACHUD, A.S. BOPANNA, JJ.
State of Tamil Nadu & Anr. – Appellants
Versus
National South Indian River Interlinking Agriculturist Association – Respondent
Civil Appeal No. 6764 of 2021
Decided on : 23-11-2021

IMPORTANT POINTS
(1) Court cannot interfere with soundness and wisdom of a policy – A policy is subject to judicial review on limited grounds of compliance with fundamental rights and other provisions of Constitution.
(2) Classification per se is not discriminatory and violative of Article 14 – Article 14 only forbids class legislation and not reasonable classification.
(3) Loan Waiver Schemes – Purpose of providing a waiver of agricultural loans for farmers is to uplift distressed farmers--Law or scheme of Government cannot be tested on anvil of majoritarian morality but only on constitutional morality – Classification based on extent of landholding is not arbitrary.

Headnote:

(A) Constitution of India – Articles 14 and 32/226 – Government Policy – Scope of Judicial Review – Court cannot interfere with soundness and wisdom of a policy – A policy is subject to judicial review on limited grounds of compliance with fundamental rights and other provisions of Constitution – Courts would show a higher degree of deference to matters concerning economic policy, compared to other matters of civil and political rights. (Para 10)

(B) Constitution of India – Article 14 – Classification – Constitutional muster – Equality code in Article 14 of Indian Constitution prescribes substantive and not formal equality – Classification per se is not discriminatory and violative of Article 14 – Article 14 only forbids class legislation and not reasonable classification – Classification must be based on an intelligible differentia which distinguishes persons or things that are grouped, from others left out of group and differentia must have a rational relationship to object sought to be achieved by statute – Determination of whether classification is under-inclusive is closely related to test that is undertaken by Court while determining relationship of means to end. (Paras 14 and 28)

(C) Agriculture – Loan Waiver Scheme – Classification – Economic policies broadly comprise of policies on taxation, expenditure, and allocation – State and its agencies often endeavour to make economically feasible decisions – Implementation of every policy of State involves expenditure – Merely because policy involves expenditure of funds, it cannot be termed as an economic policy – Core feature of policy and targeted area needs to be determined to identify nature of policy – Impugned loan waiver scheme is, in essence, a social policy in pursuance of Directive Principles of State Policy, introduced with an object to eliminate inequality in status, income, and facilities – Scheme cannot be held to breach Article 14 since it does not impose a burden but affords a benefit – Differentia used for classification in the scheme is total extent of landholding by every individual – There is a yardstick used for constituting class for the purpose of scheme – Purpose of providing a waiver of agricultural loans for farmers is to uplift distressed farmers, who have been facing brunt of erratic weather conditions, low produce, and fall in prices because of market conditions – Objective of promoting welfare of farmers as a class to secure economic and social justice is well recognized by Article 38 – Law or scheme of Government cannot be tested on anvil of majoritarian morality but only on constitutional morality – Classification based on extent of landholding is not arbitrary since owing to inherent disadvantaged status of small and marginal farmers, impact of climate change or other external forces is unequal – Since classification in impugned scheme is based neither on the grounds in Article 15 nor on ‘innate and core trait’ of an individual, it cannot be struck down on alleged grounds of under-inclusiveness and over-inclusiveness – Scheme propounded by State of Tamil Nadu passes muster against constitutional challenge – High Court has erred in holding otherwise – During pendency of proceedings the State has granted a broader coverage, based on its assessment of situation – Judgment of High Court set aside. [Constitution of India – Articles 14] (Paras 12, 13, 15, 19, 21, 25, 32, 33 and 34)

Facts of the case:

A Division Bench of the Madras High Court at the Madurai Bench allowed writ petition filed by Respondent under Article 226 of the Constitution for quashing G.O Ms. No. 50 which granted loan waiver to small and marginal farmers. The High Court held the grant of loan waivers only to small and marginal farmers to be arbitrary and directed the appellant to grant the same benefit to all farmers irrespective of the extent of landholding.

Findings of Court:

The Scheme in issue was introduced in pursuance of an electoral promise made by the then party in power in Tamil Nadu. The High Court seems to have been of the view that because the scheme was in pursuance of an electoral promise, it is constitutionally suspect. This view was made on an assumption that no study must have been conducted before the electoral promise was made.

Result : Appeal allowed.