TMI Blog1978 (2) TMI 209X X X X Extracts X X X X X X X X Extracts X X X X ..... eatment free of cost would be provided. On 26-6-1959, an order was passed by the Central Government under s. 11(2) of the Act, amending para 9 of the 1957 Order inasmuch as it was provided that bonus other than profit sharing bonus would be paid to the employees drawing the salary not exceeding ₹ 5001- per month. On 2nd of July 1959, there was. a settlement between the L.I.C. and the employees providing for payment of cash bonus at the rate of one-and-a-half month s basic salary which was to be effective from 1-9-1956 and valid upto 31-12-1961. In July 1960, regulations were framed under section 49 to regulate the conditions of service of classes of employees and regulation 58 provided for payment of non-profit sharing bonus to the employees. Orders were again passed on 14-4- 1962 and 3rd August 1963, the effect of which was to remove the restriction of ₹ 5001- for eligibility for payment of bonus. On 29th January 1963, another settlement was arrived at between the L.I.C. and its employees for payment of cash bonus at the rate of one-and-a-half month s basic salary. This was to continue in operation until 31st March 1969. On 20th June 1970, a third settlement was reache ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the scales of remuneration and the other terms and conditions. of service applicable to employees of insurers whose controlled business has been transferred to, and vested in, the Corporation, it is necessary so to do, or that, in the interests of the Corporation and its policy-holders,, a reduction in the remuneration payable, or a revision of the other terms and conditions of service applicable, to employees or any class of them is called for, the Central Government may, notwithstanding anything contained in subsection (1), or in the Industrial Disputes Act, 1947, or in any other law for the time being in force, or in any award, settlement or agreement for the time being in force, alter (whether by way of reduction or otherwise) the remuneration and the other terms and conditions. of service to such extent, and in such manner-as it thinks fit; and if the alteration is not acceptable to any employee, the Corporation may terminate his employment by giving him compensation equivalent to three months remuneration unless the contract of service with such employee provides for a shorter notice of termination. Explanation :-The compensation payable to an employee under this sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts which had been arrived at between the Corporation and Class III and Class IV employees on January 24 and February 6, 1974, and actually recognised by the order of the Calcutta High Court. The question could well arise whether this was really the exercise of a legislative power or of a power comparable to that of an appellate authority considering the merits of what had passed into a right to property recognised by the This Court has decided in Shrimati Indira Gandhi Vs. Rai Narain([1976](2)S.C.R.347) that even a constitutional amendment cannot authorise the assumption of a judicial power by Parliament. One of the tests laid down there was whether the decision is of a kind which requires hearing to be given to the parties, or, in other words, involves at least a quasi-judicial procedure, which the Parliament does not, in exercise of its legislative power, follow. A decision reached by the Central Government, under s. 11(2) of the Act, is the result of a satisfaction on matters stated there and would imply quasi-judicial procedure where the terms of a settlement had to be reviewed or revised. But, the legislative procedure, followed here, does not require that to be done. It would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of each of the settlements, in so far as they relate to the payment of an annual cash bonus to every Class, III and Class IV employees of the Corporation at the rate of fifteen per cent of his annual salary, shall not have any force or effect and shall not be deemed to have any force or effect on and from 1st day of April, 1975. The object of the Act was, in effect, to take away the force of the judgment of the Calcutta High Court recognising the settlements in favour of Class III and Class IV employees of the Corporation. Rights under that judgment could be said to arise independently of Article 19 of the Constitution. I find my self in complete agreement with my learned brother Bhagwati that to give effect to the judgment of the Calcutta High Court is not the same thing as enforcing a right under Article 19 of the Constitution. It may be that a right under Article 19 of the Constitution becomes linked up with the enforceability of the judgment. Nevertheless, the two could be viewed as separable sets of rights. If the right conferred by the judgment independently is sought to be set aside, section 3 of the Act, would, in my opinion, be invalid for trenching upon the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciples of State policy, including the very important general ones contained in Article 38 and 39 of the Constitution, give the direction in which the fundamental policies of the State must be oriented yet, we cannot direct either the Central Government or Parliament to proceed in that direction. Article 37 says that they shall not be enforceable by any court, but the principles therein laid down are nevertheless fundamental in the governance of the country and it shall be the duty of the State to apply these principles in making laws. Thus, even if they are not directly enforceable by a court they cannot be declared ineffective. They have the life and force of fundamentals. The best way in which they can be, without being directly enforced, given vitality and effect in Courts of laws is to use them as criteria of reasonableness, and, therefore, of validity, as we have been doing. Thus, if progress towards goals found in Articles 38 and 39 and 43 are desired, there should not be any, curtailment of wage rates arbitrarily without disclosing any valid reason for it as is. the case here. It is quite reasonable, in my opinion, to submit that the measure which seeks to deprive workers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t think that these contentions are devoid of force. I am sorry that due to the very short interval left for me to dictate my opinion in this case I have not been able to fully set out the reasoning or to cite all the authorities I would have liked to have done. The pressure of work on hand is too great. I have several judgments to pronounce tomorrow, the last day on which I shall have the authority to participate as a Judge in the decisions of this Court. I have, however, thought it to be my duty to indicate my line of thinking briefly as I have my doubts whether Article 31(2A) is not an effective answer to complete reliance upon Article 31(2) of the Constitution. It is true that the right to receive bonus which had been recognised by the Central Government both by its orders and conduct under a settlement is a right to property. Nevertheless, since acquisition is defined by Article 31(2A) of the Constitution, I seriously doubt whether that definition of acquisition really satisfied by the facts in the case before us. The provision reads as follows : 31(2A) Where a law does not provide for the transfer of the ownership or right to possession of any property to the Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d during the emergency would become payable even for the period of emergency for which payment was suspended. Otherwise the enactment will have effect even after the emergency had ceased. This would clearly be contrary to the express provisions of Article 358 and 359(1A). In other words, valid claims cannot be washed off by the emergency per se. They can only be suspended by a law passed during the operation of Article 358 and 359(1A) of the Constitution. For the reasons given above, I reach the same conclusion as my learned brother Bhagwati although perhaps by a difference route. concur in the final order made by my learned Brother Bhagwati. BHAGWATI, J.-These writ petitions are filed by employees of the Life Insurance Corporation challenging the constitutional validity of the Life Insurance Corporation (Modification of Settlement) Act, 1976. This unusual piece of legislation was enacted by Parliament during the emergency at a time when there could hardly be any effective debate or discussion and it sought to render ineffective a solemn and deliberate Settlement arrived at between the Life Insurance Corporation and four different associations of its employees for payment of cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant non-profit sharing bonus to its employees and the payment thereof, including conditions of eligibility for the bonus, shall be regulated by instructions issued by the Chairman from time to time. We have set out Regulation 58 in its present form as that is the form in which it stood throughout the relevant period. It will be a matter for consideration as to what is the effect of this Regulation on the Settlement arrived at between the Life Insurance Corporation and its employees in regard to bonus. It appears that right from 1959 Settlement were arrived at between the Life Insurance Corporation and its employees from time to time in regard to various matters relating to the terms and conditions of service of Class III and Class IV employees including bonus payable to them. The last of such Settlement dated 20th June, 1970, as modified by the Settlement dated 26th June, 1972, expired on 31st March, 1973. Thereupon four different associations of employees of the Life Insurance Corporation submitted their charter of demands for revision of scales of pay, allowances and other terms and conditions of service on behalf of Class III and Class IV employees. The Life Insurance Cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kmen shall continue to be governed by all the terms and conditions of service as set forth and regulated by the Life Insurance Corporation of India (Staff) Regulations, 1960 as also the administrative instructions issued from time to time and they shall, subject to the provisions thereof including any period of operation specified therein be entitled to, the benefits thereunder. It was common ground between the parties that the Settlement was approved by the Board of the Life Insurance Corporation as also by the Central Government and the Chief of Personnel by his Circular dated 12th March, 1974 intimated to the Zonal and Divisional Managers that the approval of the Central Government to the Settlement having been received the Life Insurance Corporation should proceed to implement the terms of the Settlement. The Executive Director also issued a circular dated 29th March, 1974 containing administrative instructions in regard to, payment of cash bonus under clause 8 (ii) of the Settlement. These administrative instructions set out directions in regard to Various matters relating to payment of cash bonus and of these, two are material. One was that in case of retirement or death, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eviewed in the light of the Bonus Ordinance dated 25th September,, 1975, no bonus should be paid to the employees under the existing provisions until further instructions . The All-India Insurance Employees Association protested against this stand taken by the Life Insurance Corporation and pointed out that the Life Insurance Corporation was bound to pay bonus in accordance with the terms of the Settlement and the direction not to pay bonus was clearly illegal and unjustified. The Life Insurance Corporation conceded that payment of bonus was covered by the settlement but contended that it was subject to such directions as the Central Government might issue from time to time and since the Central Government had advised the Life Insurance Corporation not to make any payment of bonus without their specific approval, the Life Insurance Corporation was justified in not making payment to the employees. This stand was taken by the Life Insurance Corporation in its letter dated 7th February, 1976 addressed to, the All India Insurance Employees Association and this was followed by a Circular dated 22nd March, 1976 instructing all the offices of the Life Insurance Corporation not to make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n at the rate of fifteen per cent, of his annual salary, shall not have any force or effect and shall not be deemed to have had any force or effect on and from the 1st day of April, 1975. Since the impugned Act did not set at naught the entire settlement dated 24th January, 1974 but merely rendered without force and effect the provisions of the Settlement in so far as they related to payment of annual cash bonus to Class III and Class IV employees and that too not from the date when the Settlement became operative but from 1st April, 1975, it was said to be a statute modifying the provisions of the Settlement. The plain and undoubted effect of the impugned Act was to deprive Class III and Class IV employees of the annual cash bonus to which they were entitled under clause 8(ii) of the Settlement for the years 1st April, 1975 to 31st March, 1976 and 1st April, 1976 to 3 1 St March, 1977 and therefore, two of the associations along with their office bearers field the present writ petitions challenging the constitutional validity of the impugned Act. There were two grounds on which the constitutionality of the impugned Act was assailed on behalf of the petitioners and they were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordance with the terms of clause 8(ii) of the Settlement. It is, no doubt, true, said the petitioners, that the impugned Act, if valid, struck at clause 8(ii) of the Settlement and rendered it ineffective and without force with effect from 1st April, 1975 but it did not have the effect of absolving the Life Insurance Corporation from its obligation to carry out the writ of Mandwnus. There was, according to the petitioners, nothing in the impugned Act which set at naught the effect of the judgment of the Calcutta High Court or the binding character of the writ of Mandamus issued against the Life Insurance Corporation. This contention of the petitioners requires serious consideration and we are inclined to accept it. It is significant to note that there was no reference to the judgment of the Calcutta High Court in the Statement of Objects and Reasons, nor any non-obstante clause referring to a judgment of a court in section 3 of the impugned Act. The attention of Parliament does not appear to have been drawn to the fact that the Calcutta High Court had already issued a writ of Mandamus commanding the Life Insurance Corporation to pay the amount of bonus for the year 1st April, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich is difficult to appreciate, the Life Insurance Corporation did not press the Letters Patent Appeal and the result was that the judgment of the learned Single Judge granting writ of Mandamus became final and binding on the parties. It is difficult to see how in these circumstances the Life Insurance Corporation could claim to be absolved from the obligation imposed by the judgment to carry out the Writ of Mandamus by relying on the impugned Act. The Life Insurance Corporation leaned heavily on the decision of this Court in Shri Prithvi Cotton Mills Ltd. v. Broach Borough Municipality([1970]1 S.C.R. 388) in support of its contention that when the settlement in so far as it provided for payment of annual cash bonus was set at naught by the impugned Act with effect from 1st April, 1975, the basis on which the judgment proceeded was fundamentally altered and that rendered the judgment ineffective and not binding on the parties. We do not think this decision lays down any such wide proposition as is contended for and on behalf of the Life Insurance Corporation. It does not say that whenever any actual or legal situation is altered by retrospective legislation, a judicial decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levied and collected on that basis, made the imposition levy, collection and recovery of the tax valid, notwithstanding the declaration by the Court that as rate, the levy was incompetent. This was clearly permissible to the Legislature because in doing so, the Legislature did not seek to reverse the decision of this Court on the interpretation of the word rate,, but retrospectively amended the law by providing for imposition of tax on land or building on the basis of capital value and validated the imposition, levy, collection and recovery of tax on that basis. The decision of this Court holding the levy of tax to be incompetent on the basis of the unamended law, therefore, became irrelevant and could not stand in the way of the tax being assessed, collected and recovered on the, basis of capital value under the law as retrospectively amended. That is why this Court held that the Validation Act was effective to validate imposition, levy, collection and recovery of tax on land or building on the basis of capital value. It is difficult to see bow this decision given in the context of a validating statute can be of any help to the life Insurance Corporation. Here, the judgment giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a, law does not provide for the transfer of the ownership or right to, possession of any property to the State or to a corporation owned or controlled by the State, it shall not be deemed to provide for the compulsory acquisition or requisitioning of Property, notwithstanding that it does any person of his property. (2B) Nothing in sub-clause (f) of clause (1) of Article 19 shall effect any such law as is referred to in clause (2) The argument of the petitioners was that the right of Class III and Class IV employees to annual cash bonus for the, years 1st April, 1975 to 31st March, 1976 and 1st April, 1976 to 31st March, 1977 under Act provided for Insurance, Corporation 12, it was a law providing for compulsory acquisition of property as contemplated under clause (2A) of Article 31 and it was, therefore, required to meet the challenge of Article 31, clause (2). The compulsory acquisition of the right to annual cash bonus sought to be effectuated by the impugned Act, said the petitioners, was not supported by public purpose nor did the impugned Act. provide for payment of any compensation for the same and hence the impugned Act was void as contravening clause (2) of Art ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is, not possible to accept it. Regulation 58 undoubtedly says that non-profit sharing bonus may be granted by the Settlement was property and since the impugned transfer of the ownership of this right to the Life which was State within the meaning of Article the Life Insurance Corporation to its employees, subject to such directions as the Central Government may issue and, therefore, if the Central Government issues a direction to the contrary, nonprofit sharing bonus cannot be granted by the Life Insurance Corporation to any class of employees. But here, in the present case, grant of annual cash bonus by the Life Insurance Corporation to Class III and Class IV employees under clause 8(ii) of the Settlement was approved by the Central Government as provided it clause 12 and the direction contemplated by Regulation 58 was given by the Central Government that annual cash bonus may be granted as provided in clause 8(ii) of the Settlement. It was not competent to the Central Government thereafter to issue another contrary direction which would have the effect of compelling the Life Insurance Corporation to commit a breach of its obligation under section 18, sub-section (1) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etiring- or resigning employee and the heirs; of the deceased employee. The annual cash bonus payable under clause 8(ii) of the Settlement, therefore, accrued from day to-day, though payable in case of retirement resignation or death, on the happening of that contingency and otherwise, on the expiration of the year to which the bonus related. There was thus plainly and unquestionably a debt in respect of annual cash bonus accruing to each Class III or Class IV employees from day-to-day and consequently, on the expiration of the year 1st April, 1975 to 31st March. 1976, the annual cash bonus payable under clause 8(ii) of the Settlement was a debt due and owing from the Life Insurance Corporation to each Class III or Class IV employee and so also at the date when the impugned Act came into force, each Class III or Class IV employee was entitled to a debt due and owing to him from the Life Insurance Corporation in respect of the annual cash bonus from 1st April, 1976 upto that date. The question is whether these debts due and owing from the Life Insurance Corporation were property of Class III and Class IV employees within the meaning of Article 31(2). So also, was the right of each C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be excluded from the protection of the constitutional guarantee. Hidayatullah, C.J., had occasion to consider the true nature of debt in H. H. Maharajadhiraja Madhav Rao Jiwaji Rao Scindia Bahadur Ors. v. Union of India where the question was whether the Privy Purse payable to the Ruler was property of which he could be said to be deprived by the Order of the President withdrawing his recognition as Ruler. The learned Chief Justice, making a very penetrating analysis of the jural relationship involved, in a debt, pointed out that a debt or a liability to pay money passes through four stages. First there is a debt not yet due. The debt has not yet become a part of the obliger s things because. no net liability has yet arisen. The Second stage is when the liability may have arisen but is not either ascertained or admitted. Here again the amount due has not become a part of the obligor s things, The third stage is reached when the liability is both ascertained and admitted. Then it is property proper of the debtor in the creditor s hands. The law begins to recognise such property in insolvency, in ,dealing with it in fraud of creditors, fraudulent preference of one creditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporation in respect of annual cash bonus were, therefore, clearly property of Class III and Class IV employees within the meaning of Article 31, clause (2). And so also was their right to receive annual cash bonus for the period; from the date of commencement of the impugned. Act upto 31st March, 1977, for that was a legal right enforceable through a court of law by issue of a writ of Mandamus, Vide the observation of Hegde, J., at page 194 in the Privy Purse case. But a question was raised on behalf of the Respondents whether debts and choses in action, though undoubtedly property, could form the subject-matter of compulsory acquisition so as to attract the applicability of Article 31, clause (2). There is divergence of opinion amongst jurists in the United States of America on this question and though in the earlier decisions of the American courts, it was said that the power of eminent domain cannot be exercised in respect of money and choses in action, the modern trend, as pointed by Nicholas on Eminent Domain, Vol. 1, page 99, para 2, seems to be, that the right of eminent domain can be exercised on choses in action. But even if the preponderant view in the United State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned judge pointed out at pages 942- 944 of the Report : It is a well accepted proposition of law that property of individuals cannot be appropriated by the State under the power of compulsory acquisition for the, mere purposes of adding to the, revenues of the State-no instance is known in which it has been taken for the mere purpose of raising a revenue by sale, or otherwise Taking money under the right of eminent domain, when it must be compensated in money afterwards is nothing more or less than a forced loan Money or that which in ordinary use passes as such and which the Government may reach by taxation-and also rights in action which can only be available when made to produce money, cannot be taken under this power . for the taking would not be for a public purpose, and proceeded to and that the only purpose, to support the acquisition of the arrears of rent was to raise revenue to pay compensation to some of the zamindars whose estates are being taken and this purpose did not fall within any definition, however, wide, of the phrase public purpose and the law was, therefore, to this extent unconstitutional. Mukherjea, J., came to the same conclusion and observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cle 31, clause (2) since the section did not provide for payment of compensation. The decision in Bombay Dyeing Manufacturing Co. s case did not, therefore, lay down that money and choses in action could not be acquired under Article 31, clause (2). But in State of Madhya Pradesh v. Ranojirao Shinde (supra) this Court did hold that money and choses in action could not form the subject-matter of acquisition under Article 31, clause (2) and the reason it gave for taking this view was the same as that which prevailed with the majority judges in Kameshwar Singh s case. This Court held that the power of compulsory acquisition conferred under Article 31, clause (2) could not be utilised for enriching the coffers of the State; that power could be exercised only for a public purpose and augmenting the resources of the State could not be regarded as public purpose. Hegde, J., speaking on behalf of the Court, pointed out that if it were otherwise, it would be permissible for the legislatures to enact laws acquiring all public debts due from the State, annuity deposits returnable by it and provident fund payable by it by providing for the payment of some nominal compensation to the pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve process and the eventual uncertainty as to when and to what extent it may be possible to realise the chose in action. Even after the chose in action is acquired, the State may not be able to recover the amount due under it and there may even be cases where the chose in action may be released by the State. Where money is given as compensation for taking of money, the theory of forced loan may apply,. but it is difficult to see how it can be applicable where chose in action is taken and money representing its value, which in a large majority of cases would be less than the amount recoverable under it, is given as compensation. Moreover, the theory of forced loan stands considerably eroded after the amendment of Article 31, clause (2) by the Constitution (Twenty-fifth Amendment) Act, 1971, because under the amended clause, even if an amount less than the just equivalent is given as compensation for acquisition of property, it would not be violative of the constitutional guarantee. It is true, and this thought was also expressed by Krishna Iyer, J., and myself in our separate but concurring Judgment in the State of Kerala v. The Gwalior Rayon Silk Manufacturing (Wvg.) Co. Ltd.([1974 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pose of augmenting the revenues of the State or reducing State expenditure and that would clearly not be a public purpose and the legislation would plainly be violative of the constitutional guarantee embodied in Article 31, clause (2). We would, therefore, prefer the minority view of Das, J., in Kameshwar singh s case (supra) as against the majority view of Mahajan, J., Mukherjea, J. and Chandrasekhara Aiyer, J. So much on principle. Turning now to the authorities, we find that, apart from the view of the majority judges in Kameshwar Singh s case and the decision in the State of Madhya Pradesh v. Ranojirao Shinde (supra), there is no other decision of this Court which has taken the view that choses in action cannot be compulsorily acquired under Article 31, clause (2). There are in fact subsequent decisions which clearly seem to suggest the, contrary. We have already referred to R. C. Cooper s case. The majority judgment case gives the widest meaning to property which of Shah, J., in that can be, compulsorily acquired and includes within it rights in personam capable of transfer or transmission, such as debts. The majority view in Kameshwar Singh s case (supra) and the decision i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sation. The learned Attorney- General on behalf of the Life Insurance Corporation, however, strenuously contended that there was no compulsory acquisition of the debts due and owing to, Class III and Class IV employees under the impugned Act, but all that the impugned Act did was to extinguish those debts by annihilating the provisions of the Settlement in regard to payment of annual cash bonus with effect from 1st April, 1975. The debts due and owing from the Life Insurance Corporation to Class III and Class IV employees, said the learned Attorney-General, were extinguished and not compulsorily acquired and hence there was no contravention of Article 31, clause (2). Now, prior to the Constitution (Fourth Amendment) Act, 1955, which introduced clauses (2A) and (2B) in Article 3 1, there was considerable controversy as to the inter-relation between clauses (1) and. (2) and that coloured the interpretation of the words taken possession of or acquired in clause (2) as it stood prior to the amendment. The majority view in The State of West Bengal v. Subodh Gopal Bose Ors.( [1954] S.C.R. 587) and Dwarkadas Shrinivas of Bombay v. The Sholapur Spinning Weaving Co. Ltd. Ors:( [195 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tracted, but not otherwise. That depends on the true interpretation of Article 31, clause (2A). Now, whilst interpreting Article 31, clause (2A), it must be remembered that the interpretation we place upon it will determine the scope and ambit of the constitutional guarantee under clause (2) of Article 31. We must not, therefore, construe clause (2A) in a narrow pedantic manner nor adopt a doctrinaire or legalistic approach. Our interpretation must be guided by the substance of the matter and not by lex scripts. When clause (2A) says that in order to attract the applicability of clause (2) the law must provide for the transfer of ownership of property to the State or to a corporation owned or controlled by the State, it is not necessary that the law should in so many words provide for such transfer. No particular verbal formula need be adopted. It is not a ritualistic mantra which is required to be repeated in the law. What has to be considered is the substance of the law and not its form. The question that is to be asked is : does the law in substance provide for transfer of ownership- of property, whatever be the linguistic formula employed ? What is the effect of the law : do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the lessor terminates the lease granted by him to the lessee by exercising his right of forfeiture or the lessee surrenders the lease in favour of the lessor. The lease would in such a case come to an end and the interest of the lessee would be extinguished and correspondingly, the reversion of the lessor would be enlarged into full ownership by the return of the leasehold interest. There would clearly be transfer of the lease-hold interest from the lessee to the lessor as a result of the determination of the lease and the extinguishment of the interest of the lessee. The same would be the position where A law provides for cancellation, of the lease and in such a case, if the lessor is the State or a corporation owned or controlled by the State, it would amount to compulsory acquisition of the leasehold interest of the lessees within meaning of clause (2A) of Article 31. It was in fact to held by this Court and in our opinion rightly in Ajit Singh v. State of Punjab(1) where sikri, J., speaking on behalf of the majority, pointed out at page 149 that if the State is the landlord of an estate and there is a lease of that property and a law provides for the extinguishment of leas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oration ? The extinguishment of the debt of the creditor with corresponding benefit to the State or State owned/controlled corporation would plainly and indubitably involve transfer of ownership of the amount representing the debt from the former to the latter. This is the real effect of extinguishment of the debt and by garbing it in the form of extinguishment, the State or State owned/controlled corporation cannot obtain benefit at the cost of the creditor and yet avoid the applicability of Article 31, clause (2). The verbal veil constructed by employing the device of extinguishment of debt cannot be permitted to conceal or hide the real nature of the transaction. It is necessary to remember that we are dealing here with a case where a constitutionally guaranteed right is sought to be enforced and the protection of such right should not be allowed to be defeated or rendered illusory by legislative stratagems. The courts should be ready to rip open such stratagems and devices and find out whether in effect and substance the legislation trenches upon any fundamental rights. The encroachments on fundamental rights are often subtle and sophisticated and they are disguised in language ..... X X X X Extracts X X X X X X X X Extracts X X X X
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