State of Tamil Nadu & Anr. v. National South Indian River Interlinking Agriculturist Association
DR. DHANANJAYA Y CHANDRACHUD, J.
1. A Division Bench of the Madras High Court at the Madurai
Bench allowed the writ petition filed by the 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 arbi trary and
directed the appellant to grant the same benefit to all farmers irrespective
of the extent of landholding.
2. The Government of Tamil Nadu issued G.O Ms. No. 50 dated
13 May 2016 (“Scheme”) granting a waiver of outstanding crop loans,
medium term (agriculture) loans and long term (farm sector) loans issued
489
to small and marginal farmers. G.O Ms. No. 59 dated 28 June 2016 was
issued providing guidelines for the implementation of G.O Ms. No. 50.
The guidelines provide that for the classification of farmers as small and
marginal, the extent of landholding as mentioned in the landholding register
and loan register at the time of sanction of the agricultural loan shall be
taken into consideration. As for the definition of ‘small far mer’ and
‘marginal farmer’, it provides that ‘small farmer’ means a farmer who
holds land of 2.5 acres to 5 acres and ‘marginal farmer’ means a farmer
who holds land upto 2.5 acres. Subsequently, a circular was iss ued by
the Registrar of Cooperative Societies on 1 July 2016 providing further
guidelines for implementation of the scheme.
3. The respondent challenged the scheme as unconstitutional for
violation of Article 14 of the Constitution, and sought a direction to provide
loan waiver for all farmers irrespective of the extent of landholding. The
High Court allowed the writ petition holding that the exclusion of ‘other
farmers’ – those who hold land exceeding 5 acres – from the land waiver
scheme is discriminatory and violative of Article 14. It directed that the
scheme be extended to all farmers including farmers whose landholding
exceeds 5 acres. The High Court was aided by the following reasons to
arrive at this conclusion:
(i) Courts can exercise judicial review in the realm of poli cy to
determine if it conforms to the requirements of Article 14 of
the Constitution as held by the this Court in Union of India
v. Dinesh Engineering Corporation 1, Om Kumar v.
Union of India2);
(ii) The All India Anna Dravida Munnetra Kazhagam
(“AIADMK”) made an electoral promise to implement the
scheme if voted to power. In the counter filed by th e
respondents, it is stated that small and marginal farmers
constitute a class in themselves since they require more
assistance because of their meagre income and resources.
There is no indication of this reasoning in the file. The
AIADMK introduced the scheme after being voted to power
in pursuance of the election promise, without taking into
consideration relevant factors warranting such a
classification;
STATE OF TAMIL NADU & ANR. v. NATIONAL SOUTH INDIAN RIVER
INTERLINKING AGRICULTURIST ASSOCIATION
1 (2001) 8 SCC 491
2 (2002) 2 SCC 386
(iii) The contention of the State that the objective of the scheme
is to cover a maximum number of beneficiaries with a
minimum outlay of funds cannot be accepted. When the
overall objective of the Government is to obviate the suffering
of the farmers, classification based on the extent of holding
is not intelligible;
(iv) Farmers who apply for an agricultural loan are not required
to disclose all their landholdings. It would be sufficient for
securing a loan if a farmer only mentions the total extent of
land for which the loan is sought. Similarly, if a farmer has
land in more than one village, the loan application would
only mention the extent of land that falls within the specific
bank’s jurisdiction. Therefore, the reliance on the total
landholding mentioned in the ‘landholding register’ at the
time of sanction of the agricultural loan for classifying farmers
as ‘marginal farmers’ and ‘small farmers’ is irrational; and
(v) The irrational method of classification leads to over-
inclusiveness and under-inclusiveness.
4. Notice was issued by this Court on 3 July 2017 and the judgment
of the High Court was stayed. By an order dated 18 September 2019,
a two-judge Bench consisting of Justices R Banumathi and A.S Bopanna
observed that it is open to the Government of Tamil Nadu to grant any
other ‘limited benefits’ to other categories of farmers.
5. In pursuance of the above directions, the State of Tami Na du
has produced on record GO (MS) 15 and 16 dated 8 February 2021 by
which the Government has waived off crop loans of Rs. 12,110.74 crore
outstanding as on 31 January 2021 availed by 16,43,346 farmers from
cooperative banks.
6. The appellant has made the following submissions:
(i) The court can interfere with the policy of the government
only when the action is unconstitutional or contrary to
statutory provisions;
(ii) The scheme was formulated after studying the finan cial
capacity of the State;
491
(iii) There is an intelligible differentia in providing loan wa iver
only to small and marginal farmers since they are the most
affected class; and
(iv) The underlying policy of the Government is to maximiz e
the beneficiaries with an efficient use of funds. Even if
farmers with larger landholdings suffered losses, it is a fiscal
policy decision of the State to only extend the scheme to
small and marginal farmers.
7. The respondents have made the following submissions:
(i) Farmers who hold more than five acres of land contribute
more to the GDP and food security of the country. The
small and marginal farmers do not contribute to the
betterment of food security as their scale of production is
minimal;
(ii) The court can interfere with a policy decision if the policy is
arbitrary; and
(iii) The State has failed to prove that small and marginal farmers
constitute a class in itself, particularly because the farmers
holding larger landholdings are better contributors and have
suffered greater losses.
8. Three issues fall for consideration. They are as follows:
(i) Whether the court can exercise its powers of judic ial review
since the scheme is a policy decision of the government;
(ii) Whether the extension of the scheme only to ‘small farmers’
and ‘marginal farmers’ is arbitrary and violative of Article
14 of the Indian Constitution; and
(iii) Whether the scheme is under-inclusive and over-inclusive.
9. The State of Tamil Nadu has raised a preliminary contention
that the Court cannot review the scheme since it is a fiscal policy decision
of the State. Before we proceed with the arguments on Article 14, it is
imperative that we discuss the law down by this Court re lating to the
ambit and extent of judicial review of policy. An examinati on of this
issue must begin with the primary question of the meaning of the phrase
‘policy’. A policy is the reasoning and object that guides the decision of
the authority, which in our case is the State of Tamil Na du. Statutes,
STATE OF TAMIL NADU & ANR. v. NATIONAL SOUTH INDIAN RIVER
INTERLINKING AGRICULTURIST ASSOCIATION [DR. DHANANJ AYA Y
CHANDRACHUD, J.]
notifications, ordinances, or Government orders are means for the
implementation of the policy of the State. Therefore, it is not possible to
completely appreciate the law without reference to the policy behind the
law. The judicially evolved two-pronged test to determine the validity of
the law vis-à-vis Article 14 of the Indian Constitution, ref ers to the
objective of the law because the ‘policy’ behind the law is never completely
insulated from judicial attention.
10. However, it is settled law that the Court cannot interfere with
the soundness and wisdom of a policy. A policy is subject to judicial
review on the limited grounds of compliance with the fundamental rights
and other provisions of the Constitution.3 It is also settled that the Courts
would show a higher degree of deference to matters concerning
economic policy, compared to other matters of civil and political rights.
In RK Garg v. Union of India4, this Court decided on the constitutional
validity of the Special Bearer Bonds (Immunities and Exemptions) Act
1981. The challenge to the statute was on the principal ground that it
was violative of Article 14 of the Indian Constitution. Rejec ting the
challenge, the Constitution Bench observed that laws relating to economic
activities must be viewed with greater latitude and defe rence when
compared to laws relating to civil rights such as freedom of speech:
“8. Another rule of equal importance is that laws relating to
economic activities should be viewed with greater latitude than
laws touching civil rights such as freedom of speech, religion etc.
It has been said by no less a person than Holmes, J., that the
legislature should be allowed some play in the joints, because it
has to deal with complex problems which do not admit of solution
through any doctrinaire or strait-jacket formula an d this is
particularly true in case of legislation dealing with economic
matters, where, having regard to the nature of the problems required
to be dealt with, greater play in the joints has to be allowed to the
legislature. The court should feel more inclined to give judicia l
deference to legislative judgment in the field of economic regulation
than in other areas where fundamental human rights are involved.
3 Asif Hammed v. State of Jammu & Kashmir, 1989 Supp (2) SCC 364 ; S itaram
Sugar Co Ltd. v. Union of India, (1990) 3 SCC 223; Khoday Distilleries Ltd. v.
State of Karnataka,(1996) 10 SCC 304; Balco Employees Union v. Union of India,
(2002) 2 SCC 333; State of Orissa v. Gopinath Dash, (2005) 13 SCC 495
4 (1981) 4 SCC 675
493
Now here has this admonition been more felicitously expresse d
than in Morey v. Doud [351 US 457 : 1 L Ed 2d 1485 (1957)]
where Frankfurter, J., said in his inimitable style: “In the utilities,
tax and economic regulation cases, there are good reasons fo r
judicial self-restraint if not judicial deference to legislative judgment.
The legislature after all has the affirmative responsibi lity. The
courts have only the power to destroy, not to reconstruct. When
these are added to the complexity of economic regulation, t he
uncertainty, the liability to error, the bewildering conflict of the
experts, and the number of times the judges have been overruled
by events — self-limitation can be seen to be the path to judicial
wisdom and institutional prestige and stability.”
11. The respondent has placed reliance on BALCO Employees
Union v. Union of India5. A Constitution Bench considered a challenge
to the decision of the Union of India to disinvest and transfer 51% shares
of Bharat Aluminum Company Limited. Rejecting the challenge, it was
observed that that the wisdom of economic policies is not subj ect to
judicial review:
“92. In a democracy it is the prerogative of each e lected
Government to follow its own policy. Often a change in Government
may result in the shift in focus or change in economic poli cies.
Any vested interests. Unless any illegality is committe d in the
execution of the policy or the same is contrary to law or m ala
fide, a decision bringing about change cannot per se interfered
with by the Court.
93. Wisdom and advisability of economic policies are ordinarily
not amenable to judicial review unless it can be demonstrated that
the policy is contrary to any statutory provision or the Constitution.
In other words, it is not for the courts to consider relative merits of
different economic policies and consider whether a wiser or better
one can be evolved. For testing the correctness of a po licy, the
appropriate forum is Parliament and not the courts. Here the policy
was tested and the motion defeated in the Lok Sabha on 1-3-
2001.”
12. Economic policies broadly comprise of policies on taxation,
expenditure, and allocation. The State and its agencies often endeavor
5 (2002) 2 SCC 333
STATE OF TAMIL NADU & ANR. v. NATIONAL SOUTH INDIAN RIVER
INTERLINKING AGRICULTURIST ASSOCIATION [DR. DHANANJ AYA Y
CHANDRACHUD, J.]
to make economically feasible decisions. The implementation of every
policy of the State involves expenditure. Merely because the policy
involves the expenditure of funds, it cannot be termed as an ec onomic
policy. The core feature of the policy and the targeted area needs to be
determined to identify the nature of the policy. The impugned loan waiver
scheme is, in essence, a social policy in pursuance of th e Directive
Principles of State Policy, introduced with an object to eliminate inequality
in status, income, and facilities.
13. In Subramaniam Balaji v. State of TN6, the scheme of gifts
in the State of Tamil Nadu was under challenge. One of the arguments
was that the distribution of color television sets, laptops and mixer-grinders
violates Article 14 of the Constitution as unequals are tre ated equally
since the gifts were distributed irrespective of the inc ome level. The
contention was rejected on the ground that the distribution of the gi fts
relates to the implementation of the Directive Principles of State Policy.
It was held that the Article 14 principle would only be applicable when
state action imposes a burden on the citizens:
“78. With regard to the contention that distribution of State largesse
in the form of colour TVs, laptops, mixer-grinders, etc. violates
Article 14 of the Constitution as the unequals are treated equally.
Before we venture to answer this question, we must recal l
that these measures relate to implementation of the
Directive Principles of State Policy. Therefore, the principle
of not to treat unequals as equal has no applicability as far
as State largesse is concerned. This principle appli es only
where the law or the State action imposes some burden on
the citizen either financial or otherwis e. Besides, while
implementing the directive principles, it is for the Government
concerned to take into account its financial resources and the need
of the people. There cannot be a straitjacket formula. If
certain benefits are restricted to a particular class that can
obviously be on account of the limited resources of the State.
All welfare measures cannot at one go be made available to all
the citizens. The State can gradually extend the benefit an d this
principle has been recognised by this Court in several judgments.”
(emphasis supplied)
6 (2016) 9 SCC 659
495
The loan waiver scheme is also in pursuance of the Directive
Principles of State Policy. In view of the observations in Subramaniam
Balaji (supra), the scheme cannot be held to breach Article 14 since it
does not impose a burden but affords a benefit. We, however, deem it
imperative to determine if the scheme violates the fundamental rights, in
particular Article 14 of the Indian Constitution.
14. The equality code in Article 14 of the Indian Constitution
prescribes substantive and not formal equality. It is now a settled position
that classification per se is not discriminatory and violative of Article 14.
Article 14 only forbids class legislation and not reasonable classification.
A classification is reasonable, when the twin tests as laid down by Justice
SR Das in State of W.B v. Anwar Ali Sarkar7 are fulfilled:
(i) The classification must be based on an intelligible differentia
which distinguishes persons or things that are grouped, from
others left out of the group; and
(ii) The differentia must have a rational relationship to the object
sought to be achieved by the statute.
15. Justice Das in Anwar Ali Sarkar (supra) held that there must
be some yardstick to differentiate the class included and the others
excluded from the group. The differentia used for the classif ication in
the scheme is the total extent of landholding by every individual. Therefore,
there is a yardstick used for constituting the class for the purpose of the
scheme.
16. The appellant contended that the objectives of the scheme are
thus:
(i) Small and Medium farmers are the main producers of food,
inspite of their limited access to technology, credit, and
capital;
(ii) Small and marginal farmers constitute 85% of the crop loan
beneficiaries. The objective of the State is to cover maximum
beneficiaries with minimum funds. The scheme has been
framed after considering vital parameters such as budgetary
allocation, revenue mobilization and the position of the
farmers vis-à-vis their landholding; and
7 1952 SCR 284
STATE OF TAMIL NADU & ANR. v. NATIONAL SOUTH INDIAN RIVER
INTERLINKING AGRICULTURIST ASSOCIATION [DR. DHANANJ AYA Y
CHANDRACHUD, J.]
(iii) The small and marginal farmers constitute the poor and
downtrodden class of farmers. Therefore, they have
suffered greater harm due to floods and the impact of climate
change.
17. Therefore, the reasons that seem to have guided the State of
Tamil Nadu for the formulation of this scheme are two- f old: (i) The
small and marginal farmers have faced greater harm due to the erratic
climate conditions in view of the limited technology and capital that they
possess; and (ii) The state seeks to provide maximum benefits with the
minimum fund.
18. In the counter affidavit before the High Court, the state averred
that by waiving Rs. 5780 Crore worth of crop loans, the number of small
and marginal farmers who would be benefitted would be 16,94,145. On
the other hand, waiving the crop loan of Rs 1980 Crore that the other
farmers held would only benefit 3,01,926 of them. These figures buttress
the argument of the State that providing the benefit of the scheme only
to marginal and small farmers leads to maximum utility for minimum
investment. However, this cannot be the objective of a scheme introduced
by the State. Every scheme which involves monetary or ma terial
disbursement aims at providing maximum benefit with minimum
expenditure. Classification cannot thus be tested on the fiscal objective
that guides every scheme.
19. The purpose of providing a waiver of agricultural loans for
farmers is to uplift the distressed farmers, who have been f acing the
brunt of the erratic weather conditions, low produce, and fall in the prices
because of the market conditions. The objective of promoting the welfare
of the farmers as a class to secure economic and social jus tice is well
recognized by Article 38. It needs to be determined if the classification
based on the extent of landholding has a rational nexus to the obj ect
sought to be achieved.
20. One of us (Dr DY Chandrachud) in Navtej Singh Johar v.
Union of India8 accentuated the inadequacies of the two-pronged test
which seeks to elevate form over substance. The over-emphasis on the
‘objective’ of the law, instead of its ‘effect’ – partic ularly when the
objective is ostensible – was observed not to further the true meaning of
the equality clauses under the Indian Constitution. The traditional two-
8 (2018) 10 SCC 1
497
pronged classification test needs to be expanded for t he Courts to
undertake a substantive review of Article 14 violations, away from the
formalistic tendency that the twin test leans towards. Within the broad
parameters of the two-pronged test, we find it imperative to undertake a
much more substantive review by focusing on the multi axle operation
of equality and non- discrimination.
21. The State of Tamil Nadu in the counter filed before the High
Court states that the classification was required sin ce the small and
marginal farmers suffer a greater degree of harm because of their
limited capacity and aid. It is judicially recognized that the legislature is
free to recognize degrees of harm and may confine its restri ctions or
benefits to those cases where the need is the clearest. 9 In State of
Maharashtra v. Indian Hotel and Restaurants Association10, Section
33-A(1) of the Bombay Police Act which prohibited dance performances
in eating houses, permit rooms, or beer bars, and Section 33-B w hich
allowed such dances in establishments with restricted entr y or three
starred or above hotels was under challenge. The State contended th at
the degree of harm in the class which is covered by Section 33 A(1) is
greater. It was held by the two- Judge Bench that the State must have
sufficient material to reach the conclusion or a general consensus is to
be shared by the majority of the population to base its decisions on
classification based on the degrees of harm. We are unable to accept
that degrees of harm could be recognized based on the general consensus
of the majority of the population. As held in Navtej Singh Johar (supra),
the law or the scheme of the Government cannot be tested on the anvil
of majoritarian morality but only on constitutional morality. However, the
claims made by the State cannot be accepted without putting it to the
test of reason through the submission of cogent material. A lesser degree
of burden would substantially weaken the rights protection.11
22. It has been submitted that the consumption expenditure of
marginal and small farmers exceeds their estimated income by a
substantial margin, and the deficits are covered by borrow ings. The
fact that 16,94,145 small and marginal farmers have availed of agricultural
9 Ram Krishna Dalmia v. SR Tendolkar, AIR 1958 SC 53 8; Mohd. Hanif Quareshi v.
State of Bihar, AIR 1958 SC 731; Binoy Viswam v. Union of India, (2017) 7 SCC 59.
10 (2013) 8 SCC 519
11 Aparna Chandra, ‘Proportionality in India: A Bridg e to Nowhere’ (2020) Oxford
Human Rights Journal
STATE OF TAMIL NADU & ANR. v. NATIONAL SOUTH INDIAN RIVER
INTERLINKING AGRICULTURIST ASSOCIATION [DR. DHANANJ AYA Y
CHANDRACHUD, J.]
loans as compared to 3,01,926 farmers belonging to the ‘other category’
testifies that the small and marginal farmers have a sig nificant capital
deficit when compared to the rest of the farmers. A huge capital deficit,
combined with a reduction in the agricultural income due to water scarcity
and crop inundation due to floods has led to financial distress. Small and
marginal farmers are resource deficient; they do not have borewells to
overcome the drought. These farmers are usually dependent on large
farms to access land, water, inputs, credit, technology, and mark ets. It
was found that almost 40% of the irrigated land of large farme rs was
from canals, while less than 25% of the land of small and marginal farmers
was irrigated by canals or borewells and they often resort to renting
water from larger landholdings. The output of produce in a small and
marginal farm, for instance, paddy would not be sufficient even to feed
the small farmer’s family. Thus, a majority of them purchase grains at a
subsidized rate from the Public Distribution System (since these farmers
fall below the poverty line) so they can sell their produce.12
23. The Situation Assessment of Agricultural Households and Land
and Holdings of Households in Rural India, 201913 undertakes an extensive
discussion on the Average Monthly Income per Agricultural Household.
The report depicts that India’s small and marginal farmers have essentially
become wage earners. For instance, the average monthly income of an
agricultural household possessing less than 0.01 hectares of land (0.02
acres) from crop production is Rs. 1,435 and from wages is Rs. 6,435.
When compared to an agricultural household that possesses 2-4 hectares
of land (4.94- 9.88 acres), the income from crop production is Rs. 7,945
and the income from wages is 3,548. A comparative graph of the figures
is as under. The x-axis indicates the percentage of income from farm
produce, wages, and other sources. The y-axis indicates the l and held
by the farmers (in hectares):
12 Parijat Gosh, Farmers Protest: Why are small and marginal farmers protesting against
the farm acts?, (December 11, 2020) https://en.gaonconnection.com/farmers-protests-
why-are-small-and-marginal-farmers- protesting-against-the-farm-acts/
1 3h t t p s : / / w w w. mo sp i . g o v. i n / d o c u m e n t s / 2 1 3 9 0 4 / 3 0 1 5 6 3 / /
Report_587m1631267040957.pdf/3793650e-8cf1-7872- ae90-51470c8d211c
499
Income distribution
10.00+
4.0110.00
2.014.00
1.012.00
0.401.00
0.010.40
<0.01
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Income from farm Income from wages Others
24. The report also tabulates the total amount of outstanding loans
held by each category of farmers. The computation s hows that
households that have lands less than 0.01 hectare, use 93.1% of the
agricultural loans for a non- agricultural purpose. In sharp c ontrast, a
household that owns 10 hectares of land only uses 17.1 percentage of
the agricultural loan for non-agricultural purposes. This depicts the poverty
that envelops the class of small and marginal farmers. The pe rcentage
distribution of the indebted agricultural households depicts that 27% of
the households that hold between 0.01- .040 hectares of land; 34% of
those who hold between 0.40-1 hectares and 20% of those who hold
between 1-2 acres, are indebted. On the other hand, only 4.5% of those
who hold 4-10 hectares and 0.6% of those who hold 10 plus hectares
are indebted. Extracted below is the graph for percentage distribution of
indebted agricultural households:
Percentage Distribution of Indebted Agricultural
Households
< 0.01 0.40 1.00 1.01 2.00 2.01 4.00 4.01 10.00 10.00 +
STATE OF TAMIL NADU & ANR. v. NATIONAL SOUTH INDIAN RIVER
INTERLINKING AGRICULTURIST ASSOCIATION [DR. DHANANJ AYA Y
CHANDRACHUD, J.]
25. In view of the discussion above, the application of the impugned
scheme to only the small and the marginal farmers is just ified for two
reasons: (i) A climate crisis such as drought and flood causes large scale
damages to small holdings as compared to the large holdings due to the
absence of capital and technology; and (ii) The small and marginal farmers
belong to the economically weaker section of society. Theref ore, the
loan waiver scheme in effect targets the economically weaker section
of the rural population. The scheme is introduced with an ende avor to
bring substantive equality in society by using affirmative action to uplift
the socially and economically weaker sections. Due to the distinct degree
of harm suffered by the small and marginal farmers as com pared to
other farmers, it is justifiable that the benefit of the scheme is only provided
to a specified class as small and marginal farmers constitute a class in
themselves. Therefore, the classification based on the extent of
landholding is not arbitrary since owing to the inherent disa dvantaged
status of the small and marginal farmers, the impact of climate change or
other external forces is unequal.
26. The High Court in the impugned judgment has observed that
the scheme is both under-inclusive and over-inclusive since the total
extent of land held by a person is calculated based on the information in
the landholding register which permits discrepancies. It al so held the
scheme to be under-inclusive for not extending the benefit to ‘other
farmers’ or the ‘large farmers’. The meaning and amb it of under-
inclusiveness and over-inclusiveness has been discussed in an e rudite
exposition by Justice K K Mathew, writing for a Constitution Bench in
State of Gujarat v. Ambica Mills14 :
“55. A classification is under-inclusive when all who are included
in the class are tainted with the mischief but there are others also
tainted whom the classification does not include. In other words, a
classification is bad as under- inclusive when a State benefits or
burdens persons in a manner that furthers a legitimate pur pose
but does not confer the same benefit or place the same burden on
others who are similarly situated. A classification is over-inclusive
when it includes not only those who are similarly situated wit h
respect to the purpose but others who are not so situated as well.
In other words, this type of classification imposes a burden upon
14 (1974) 4 SCC 656
501
a wider range of individuals than are included in the class of those
attended with mischief at which the law aims. Herod ordering the
death of all male children born on a particular day because o ne
of them would some day bring about his downfall employed such
a classification.
56. Since the classification does not include all who are similarly
situated with respect to the purpose of the law, the classification
might appear, at first blush, to be unreasonable. But the Court has
recognised the very real difficulties under which legislatur es
operate — difficulties arising out of both the natur e of the
legislative process and of the society which legislation attempts
perennially to re-shape — and it has refused to strike down
indiscriminately all legislation embodying classificatory inequality
here under consideration. Mr Justice Holmes, in urging tolerance
of under-inclusive classifications, stated that such legislation should
not be disturbed by the Court unless it can clearly see that there
is no fair reason for the law which would not require with equal
force its extension to those whom it leaves untouched. [Missouri,
K&T Rly v. May, 194 US 267, 269] What, then, are the fair reasons
for non-extension? What should a court do when it is faced with a
law making an under-inclusive classification in areas relating to
economic and tax matters? Should it, by its judgment, force the
legislature to choose between inaction or perfection?”
27. Ambica Mills (supra) justified under-inclusiveness on the
grounds of recognition of degrees of harm, administrative convenience,
and legislative experimentation. Reference was made to Justice Oliver
Wendell Holmes’s observation in Missouri, K& T Rly v. May15, that
“legislation should not be disturbed by the Court unless it can clearly see
that there is no fair reason for the law which would not require with
equal force its extension to those whom it leaves untouched”, to state
that the judiciary must exercise self-restraint in such cases. In NP
Basheer v. State of Kerala 16, a two judge Bench of this Court held
that if the extent of over-inclusiveness and under-inclusiveness is marginal,
then it could not be held to be violative of Article 14 of the Constitution.
STATE OF TAMIL NADU & ANR. v. NATIONAL SOUTH INDIAN RIVER
INTERLINKING AGRICULTURIST ASSOCIATION [DR. DHANANJ AYA Y
CHANDRACHUD, J.]
15 194 US 267, 269
16 2004 (2) SCR 224
28. The determination of whether the classification is unde r-
inclusive is closely related to the test that is undertak en by the Court
while determining the relationship of the means to the end. This Court
follows the two-pronged test to determine if there has been a violation
of Article 14. The test requires the court to determine if there is a rational
nexus with the object sought to be achieved. Justice P N Bhagwati (as
the learned Chief Justice then was) in EP Royappa v. State of Tamil
Nadu17 held that arbitrariness of State action is sufficient to constitute a
violation of Article 14. Thus, it came to be recognized that the equality
doctrine as envisaged in the Constitution not only guarantees against
comparative unreasonableness but also non-comparati ve
unreasonableness. 18 This Court in Modern Dental College and
Research Centre v. State of MP 19, invoked the proportionality test
while testing the validity of the statute and rules that sought to regulate
admission, fees and provided reservations for postgraduat e courses in
private educational institutions. In Subramanian Swamy v. Union of
India20, the Court used the proportionality test to determine if the offence
of criminal defamation prescribed under Sections 499 and 500 of the
IPC violates the freedom of speech and expression under Section 19(1)(a).
In Justice Puttaswamy (9J) v. Union of India 21, a nine judge Bench
of this Court held that the right to privacy is a fundamental r ight. The
proportionality standard was used in the context of determining the limits
that could be imposed on the right to privacy. The Constitution Bench
then dealt with the proportionality test in Justice Puttaswamy (Retd.)
v. Union of India 22, to determine if the Aadhar scheme violated the
right to privacy of an individual. Our Courts have used the proportionality
standard to determine non-classificatory arbitrariness, and have used
the twin test to determine if the classification is arbitrary.
17 (1974) 4 SCC 3
18 See Tarunabh Khaitan, ‘Equality: Legislative Revie w under Article 14’ in Sujit
Choudhry, Madhav Khosla, Pratap Bhanu Mehta (eds), The Oxford Handbook of the
Indian Constitution (Oxford University Press 2016)
19 (2016) 7 SCC 353
20 (2016) 7 SCC 221
21 (2017) 10 SCC 1
22 (2019) 1 SCC 1
503
29. In Anuj Garg v. Hotel Association of India 23, the Court
decided the constitutional validity of Section 30 of the Punjab Excise Act
1914 prohibiting employment of “any man under the age of twenty-five
years” or “any women” in the premises where liquor or int oxicating
drugs are consumed. This classificatory provision was chal lenged for
violation of Articles 19(1)(g), 14, and 15 of the Indian Constitution. It
was held that the law in effect perpetuates the oppression of women. In
determining the validity of the provision, the Cour t applied the
proportionality standard:
“50. The test to review such a protective discrimination s tatute
would entail a two-pronged scrutiny:
(a) the legislative interference (induced by sex discriminato ry
legalisation in the instant case) should be justified in principle,
(b) the same should be proportionate in measure.”
30. Article 15(1) of the Indian Constitution specifically sta tes
that the State shall not discriminate on the grounds of ‘rel igion, race,
caste, sex, place of birth or any of them’. Since t he ‘protective
discrimination’ in Anuj Garg (supra) was based on one of the grounds in
Article 15, the Court thought it fit to test its constitutionality on a higher
degree of scrutiny. A similar line of reasoning was taken up by Justice
Indu Malhotra in Navtej Singh Johar (supra) where she held that
Section 377 IPC does not fulfil the rational nexus test becaus e the
“legislation discriminates on the basis of an intrinsic and core trait of an
individual, it cannot form a reasonable classification based on an intelligible
differentia”.
31. While non-classification arbitrariness is tested bas ed on the
proportionality test, where the means are required to be proportional to
the object, classification arbitrariness is tested on the rational nexus test,
where it is sufficient if the means share a ‘nexus’ with the o bject. The
degree of proof under the test would impact the judgment of this Court
on whether the law is under-inclusive or over-inclusive. A stat ute is
‘under-inclusive’ if it fails to regulate all actors who are part of the
problem. It is ‘over-inclusive’ if it regulates actors who are not a part of
the problem that the statute seeks to address. The determination of under-
STATE OF TAMIL NADU & ANR. v. NATIONAL SOUTH INDIAN RIVER
INTERLINKING AGRICULTURIST ASSOCIATION [DR. DHANANJ AYA Y
CHANDRACHUD, J.]
23 (2008) 3 SCC 1
inclusiveness and over-inclusiveness, and degree of deference t o it is
dependent on the relationship prong (‘rational nexus’ or ‘proportional’)
of the test.
32. The nexus test, unlike the proportionality test, is not tailored
to narrow down the means or to find the best means to achi eve the
object. It is sufficient if the means have a ‘rational nexus’ to the object.
Therefore, the courts show a greater degree of deference to cases where
the rational nexus test is applied. A greater degree of deference is shown
to classification because the legislature can classify based on the degrees
of harm to further the principle of substantive equa lity, and such
classification does not require mathematical precision. The Indian Courts
do not apply the proportionality standard to classificatory provisions.
Though the two-judge Bench in Anuj Garg (supra) articulated the
proportionality standard for protective discrimination on the grounds in
Article 15; and Justice Malhotra in Navtej Singh Johar (supra) held
that less deference must be allowed when the classification is based on
the ‘innate and core trait’ of an individual, this is not the case to delve
into it. Since the classification in the impugned scheme is based neither
on the grounds in Article 15 nor on the ‘innate and core t rait’ of an
individual, it cannot be struck down on the alleged grounds of under-
inclusiveness and over-inclusiveness.
33. The Scheme in issue was introduced in pursuance of a n
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 sc heme
was in pursuance of an electoral promise, it is constitutionally suspect.
This view was made on an assumption that no study must have be en
conducted before the electoral promise was made. It is settled law that
a scheme cannot be held to be constitutionally suspect merely because it
was based on an electoral promise. 24 A scheme can be held suspect
only within the contours of the Constitution, irrespective of the i ntent
with which the scheme was introduced. The scheme propounded by the
State of Tamil Nadu passes muster against the constitutional challenge.
The High Court has erred in holding otherwise. During the pendency of
the proceedings the State has granted a broader coverage, based on its
assessment of the situation.
24Subramaniam Balaji (n 6)
505STATE OF TAMIL NADU & ANR. v. NATIONAL SOUTH INDIAN RIVER
INTERLINKING AGRICULTURIST ASSOCIATION [DR. DHANANJ AYA Y
CHANDRACHUD, J.]
34. For the reasons indicated above, the appeal is allow ed and
the judgment of the Madras High Court at the Madurai Bench dat ed 4
April 2017 is set aside.
35. All pending application(s) are disposed of.
Nidhi Jain Appeal allowed.