One factory. Three legislative attempts. Two Supreme Court judgments. Still not taken.

One factory. Two Supreme Court judgments. Three legislative attempts. The Kerala High Court finally said: enough.

When S.T. Sadiq bought 2.77 acres of land in Kerala with a cashew factory on it, he could not have known he was buying a legal war that would last nearly four decades. The Kerala Government took over his factory in 1986 under the Kerala Cashew Factories (Acquisition) Act, 1974. The Supreme Court set that acquisition aside in 1994. The State passed an amendment in 1995 to re-acquire it. The Supreme Court struck that amendment down in 2015. The State passed another amendment in 2015 — with near-identical provisions — and took the factory again. On 13 September 2024, Justice Gopinath P. of the High Court of Kerala at Ernakulam struck down Sections 3A, 6A and 9 of the 1974 Act as amended by the 2015 Amending Act, quashed the order dated 6.8.2015 taking over the factory, and directed restoration. The stakes: a man's property, the limits of legislative power, and the finality of Supreme Court judgments.

The factory that wouldn't stay taken

The story begins in 1985. S.T. Sadiq owned 2.77 acres of land with a cashew factory in Kerala. In 1986, the Kerala Government took over the factory under Section 3 of the Kerala Cashew Factories (Acquisition) Act, 1974. Sadiq challenged the acquisition notification and the validity of the 1974 Act before the High Court of Kerala in O.P.No.9499/1985. The High Court dismissed it on 20.01.1994.

He appealed to the Supreme Court of India. On 10.03.1994, the Supreme Court allowed the appeal. The matter was declared covered by Indian Nut Products & Ors. v. Union of India (1994) 4 SCC 269. The acquisition was set aside. The Court directed restoration of the factory. The reasoning: the notices under Section 3(1) of the 1974 Act were not in accordance with statutory requirements.

But here is where the story gets strange. Of the 46 cashew factories similarly acquired under the 1974 Act, 36 were returned. The petitioner's factory was not. It was entrusted to CAPEX — the Kerala State Cashew Development Corporation. The State did not comply with the Supreme Court's direction.

The 1995 Amendment: a legislative end-run

In 1995, the Kerala Legislature passed the Kerala Cashew Factories (Acquisition) Amendment Act, 1995. It inserted Section 6 into the 1974 Act. Section 6 declared that the acquisition of certain cashew factories — including the petitioner's — was valid and effective, notwithstanding any judgment of any court. It was a direct legislative override of the Supreme Court's 1994 judgment.

Sadiq challenged the 1995 Amendment Act before the High Court of Kerala in W.P.(C)No.14084/1997. The High Court dismissed it on 11.08.2005. The reasoning: the 10 factories entrusted to CAPEX formed a separate class, and the classification was valid under Article 14.

Sadiq appealed to the Supreme Court again. On 04.02.2015, the Supreme Court allowed the appeal in S.T. Sadiq v. State of Kerala & Ors. (2015) 4 SCC 400. The Court held that Section 6 of the 1995 Amendment Act was unconstitutional. The legislature cannot directly annul an inter partes judgment of a court. The Court directed restoration of the factory.

A review petition was filed. The Supreme Court partly allowed it, confining the directions to two factories — including the petitioner's.

The 2015 Amendment: same play, different provision

One would think the matter was settled. It was not. The State of Kerala passed the Kerala Cashew Factories (Acquisition) Amendment Act, 2015. It inserted Section 6A into the 1974 Act. Section 6A provided for deemed transfer of cashew factories. It amended Section 3A to empower acquisition of any cashew factory in public interest. It amended Section 9(8) to provide for deemed conveyance. The provisions were substantially identical to Section 6 of the 1995 Amendment Act — the very provision the Supreme Court had declared unconstitutional.

The 2015 Amending Act was given retrospective effect from 1984. On 6.8.2015, the State passed an order taking over the petitioner's factory again.

Sadiq filed the present writ petition — W.P.(C) No. 18663 of 2016 — before the High Court of Kerala at Ernakulam, challenging Sections 3A, 6A and 9 of the 1974 Act as amended by the 2015 Amending Act, and the order dated 6.8.2015.

What each side argued

The petitioner, represented by learned Counsel, advanced several arguments. First, the 2015 Amending Act provisions were substantially identical to Section 6 of the 1995 Amendment Act, which the Supreme Court had already declared unconstitutional in S.T. Sadiq (2015) 4 SCC 400. The legislature cannot re-enact a struck-down provision to achieve the same result. Second, the 2015 Amending Act was a law directed against only one or two individuals without special distinguishing features, relying on P. Venugopal v. Union of India (2008) 5 SCC 1. Third, the retrospective operation from 1984 was arbitrary and violated Article 14, citing Shayara Bano v. Union of India & Ors. (2017) 9 SCC 1 on manifest arbitrariness. Fourth, the acquisition without adequate compensation violated Article 300A, relying on Kolkata Municipal Corporation v. Bimal Kumar Shah (2024) SCC OnLine SC 968. Fifth, the legislature cannot make an inter partes binding judgment ineffective through legislative power, citing Medical Council of India v. State of Kerala (2019) 13 SCC 185 and G.C. Kanungo v. State of Orissa (1995) 5 SCC 96. Sixth, retrospective legislation tinkering with accrued rights under existing rules and judgments is impermissible, relying on State of Gujarat v. Raman Lal Keshav Lal Soni (1983) 2 SCC 33.

The State of Kerala defended the 2015 Amending Act. The learned Counsel for the State argued that the 1974 Act was included in the IXth Schedule to the Constitution, and therefore amendments to it enjoyed protection under Article 31-B. The State also argued that the classification of factories entrusted to CAPEX was valid, and the 2015 provisions were a valid exercise of legislative power.

The IXth Schedule argument that failed

Justice Gopinath P. dealt with the IXth Schedule argument first. The 1974 Act was included in the IXth Schedule. But the 2015 Amending Act was not. The Court held that amendments to an Act included in the IXth Schedule do not enjoy Article 31-B protection unless they independently secure presidential assent and IXth Schedule inclusion. The 2015 Amending Act had not been included in the IXth Schedule. Therefore, the provisions of the 2015 Amending Act were open to constitutional challenge.

This is a critical point for practitioners. Inclusion of a parent Act in the IXth Schedule does not automatically immunize subsequent amendments. Each amendment must independently satisfy the requirements of Article 31-B.

The core question: can the legislature re-enact a struck-down provision?

The heart of the judgment is at paragraphs 20-21. The Supreme Court in S.T. Sadiq (2015) 4 SCC 400 had declared Section 6 of the 1995 Amendment Act unconstitutional. The reasoning: the legislature cannot directly annul an inter partes judgment of a court. Section 6 had sought to declare that the acquisition of certain factories was valid, notwithstanding the Supreme Court's 1994 judgment setting aside that acquisition.

The 2015 Amending Act inserted Section 6A. The Court examined Section 6A. It found that Section 6A was substantially identical to Section 6. Both provisions sought to achieve the same result: validating the acquisition of the petitioner's factory despite the Supreme Court's judgment. The only difference was the provision number.

Justice Gopinath P. held that where the Supreme Court has declared an acquisition invalid through a final inter partes judgment, the legislature cannot re-enact a substantially identical provision to achieve the same acquisition. This constitutes impermissible legislative annulment of a judicial decision. Section 6A of the 2015 Amending Act was therefore unconstitutional.

The Court also struck down Section 3A as amended by the 2015 Amending Act, and Section 9 as amended. The order dated 6.8.2015 taking over the petitioner's factory was quashed.

THE PLAY: When the Supreme Court strikes down a provision as unconstitutional for directly annulling an inter partes judgment, the legislature cannot re-enact a substantially identical provision under a different section number. The second provision falls with the first.

Why this matters in practice

For advocates, this judgment is a powerful tool when the State refuses to comply with a court order and instead passes legislation to circumvent it. The ratio is clear: the legislature cannot do indirectly what it cannot do directly. If a provision is struck down for impermissible legislative annulment of a judicial decision, a substantially identical provision will also be struck down.

For CFOs and founders, this judgment is a reminder that property rights under Article 300A are enforceable even against the State. If the State takes your property through an invalid acquisition, and the Supreme Court sets it aside, the State cannot simply pass a new law to take it again. The finality of Supreme Court judgments matters.

The obiter dicta are also significant. The Court observed that a law confined to targeting only one or two individuals without special distinguishing features raises serious constitutional concerns under Article 14. The retrospective operation from 1984 for a 2015 enactment was without rationale where accrued rights under a Supreme Court judgment exist. These observations may be invoked in future cases where legislative action is tailored to circumvent specific court orders affecting identified parties.

The bottom line

When the Supreme Court says your property must be returned, the State cannot pass a new law to take it again — even if the new law has a different section number.