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1964 (10) TMI 94 - SUPREME COURT

1964 (10) TMI 94 - SUPREME COURT - 1965 AIR 1017, 1965 SCR 614, - Writ Petitions Nos. 144, 227 and 228 of 1963. - Dated:- 5-10-1964 - SUBBARAO, K. WANCHOO, K.N. HIDAYATULLAH, M. DAYAL, RAGHUBAR SIKRI, S.M. JUDGMENT: A. V. Viswanatha Sastri, C. S. Prakasa Rao and R. Gopala- krishnan, for the petitioner (in W. P. No. 144/63). A. V. Viswanatha Sastri, G. A. Pias, T. N. Sambasivan and N. S. Mani, for the petitioners (in W. Ps. Nos. 227 and 228 of 1963). A. Ranganadham Chetty, R. Viswanathan and A. V .....

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H. Dhebar and B. R. G. K. Achar, for the Advocate-General, Maharashtra, (in W. P. No. 144/63). R. N. Sachthey and B. R. G. K. Achar, for the Advocate- General, Rajasthan (in W. P. No. 144/63). I. N Shroff, for the Advocate-General, Madhya Pradesh (in W. P. No. 144/64). Subba Rao. J. These three petitions filed under Art. 32 of the Constitution raise the question of the constitutional validity of the Land Acquisition (Madras Amendment) Act, 1961 (Madras Act 23 of 1961), hereinafter called the Ame .....

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reinafter called the Principal Act, notifying that, among other lands, the said lands of the petitioner were needed for a public purpose, to wit, for the development of the area as "neighborhood" in the Madras City in accordance with the Land Acquisition and Development Scheme of the Government. On November 23, 1960, the Special Deputy Collector for Land Acquisition issued a notification under s. 4(1), read with s. 17(4), of the Principal Act, and under the said notification the first .....

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1963, Most Rev. Dr. L. Mathias, Archbishop of Madras, owns lands bearing survey Nos. 17-2-B-1 and 127/2B of extent 50.53 acres and 0.62 acre respectively in Urur, near Madras City. By notification dated November 13, 1961, and published in the Fort St. George Gazette, the Government of Madras issued a notification under s. 4(1) of the Principal Act notifying, among other lands, that the said lands of the petitioner were needed for a public purpose, to wit, for the development of the area as the .....

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ring survey Nos. 153/1 and 154/2 at Thiruvanmiyar Village, Chingleput District, of the extent 21.56 and 10.50 acres respectively totalling about 32 acres. The said lands were also notified for acquisition and the petitioner was told that he would be paid compensation under the Amending Act. The said petitioner in these two petitions questions the constitutional validity of the said Amending Act on the ground, inter alia, that it offends Arts. 14, 19 and 31(2) of the Constitution. To the three pe .....

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three provisions. In these petitions.some interveners are represented by their counsel and this Court had also given notices to the Advocates-General of various States. We have heard the arguments advanced on behalf of the petitioners, interveners, and the State of Madras and the counsel on behalf of the Advocates-General of some of the States who supported the State of Madras. Mr. A. V. Viswanatha Sastri, learned counsel for the peti- tioners, raised before us the following points : (i) As the .....

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a housing scheme, is really intended for selling the lands acquired and raising revenue for the State and it is, therefore, a colourable exercise of the State's power. (iii) The Amending Act offends Arts. 14 and 19 of the Constitution. And (iv) the Amending Act is also bad, because it does not provide for payment of compensation within the meaning of Art. 31(2) of the Constitution. Mr. A. Ranganadham Chetty, learned counsel for the State of Madras contends that, (i) the Government in its di .....

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f the Constitution; and (iv) after the Constitution (Fourth Amendment) Act 1955, the expression "compensation" carries a meaning different from that given to it in Mrs. Bela Banerjee's case([1954] S.C.R. 558. ), and thereafter the adequacy of the amount given for acquisition of land ceased to be justiciable. Mr. Palkhivala, appearing for some of the interveners elabo- rated the contention of Mr. A. V. Viswanatha Sastri based upon the meaning of the expression "compensation&quo .....

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ollowing two decisions of this Court : Patna Improvement Trust v. Smt. Lakshmi Devi([1963] Supp. 2 S.C.R. 812.), and Nandeshwar Prasad v. U. P. Government(A.I.R. 1964 S.C. 1217.). Therefore, nothing more need be said about this. Mr. A. Ranganadham Chetty relied upon the Constitution (Seventeenth Amendment) Act, 1964, and contended that Art. 31-A, as amended, precluded the petitioners from questioning the validity of the Amending Act on the ground that it infringed Art. 14, Art. 19 or Art. 31 of .....

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held under ryotwari settlement." From the material on record we cannot definitely hold whether the lands in question are held under ryotwari settlement. But assuming for the purpose of these petitions that the said lands are held under ryotwari settlement, the question arises whether the impugned law provides for acquisition by the State of any "estate" or any rights therein or the extinguishment or modification of any such rights. The scope of this provision fell to be considere .....

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t of "objects and reasons" and that the omitted part thereof supported a wider construction of the provisions so as to include acquisition of a land for slum clearance or other such social purposes. The omitted part of the statement reads thus : "(ii) The proper planning of urban and rural areas require the beneficial utilisation of vacant and waste lands and the clearance of slum areas." It is true that in the said decision the statement of objects and reasons relevant to th .....

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decision is found at p. 900 and it is : "The definition of "estate" refers to an existing law relating to land tenures in a particular area indicating thereby that the Article is concerned only with the land tenure described as an "estate". The inclusive definition of the rights of such an estate also enumerates the rights vested in the proprietor and his subordinate tenure holders. The last clause in that definition, viz., that those rights also include the rights or pr .....

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r without reference to any agrarian reform." his judgment, therefore, in effect, held that Art. 31-A (i) (a) should be confined to an agrarian reform and not for acquiring property for the purpose of giving it to another. This Court in Ranjit Singh v. The State of Punjab([1965] 1 S.C.R. 82.) considered the scope of the said decision. The question that arose in that was whether the East Punjab Holdings (Conservation and Prevention of Fragmentation) Act, 1948 (Act 50 of 1948), as amended by t .....

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Court, observed : "But that was a special case and we cannot apply it to cases where the general scheme of legislation is definitely agrarian reform and under its provisions something ancillary thereto in the interests of rural economy has to be undertaken to give full effect to the reforms." Apropos the Act before it, this Court observed; "The scheme of rural development today envisages not only equitable distribution of land so that there is no undue imbalance in society resulti .....

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Constitution a State is Prohibited from making a law for acquiring land unless it is for a public purpose and unless it fixes the amount of compensation or specifies the principles for determining the amount of compensation. But Art. 31-A lifts the ban to enable the State to implement the pressing agrarian reforms. The said object of the Constitution is implicit in Art. 31-A. If the argument of the respondents be accepted, it would enable the State to acquired the lands of citizens without refer .....

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A would apply only to a law made for acquisition by the State of any "estate" or any rights therein or for extinguishment or modification of such rights if such acquisition, extinguishment or modification is connected with agrarian reform. Mr. Ranganadham Chetty contended that acquisition for housing under the Amending Act is for slum clearance and for relieving congestion of housing accommodation and that acquisition for such a purpose would be in connection with agrarian reform in th .....

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em suburbs or for any other public purpose. The provisions of the Amending Act are not confined to any agrarian reform and, therefore, do not attract Art. 31-A of the Constitution. If Art. 31 -A of the Constitution is out of the way, Mr. Viswanatha Sastri, learned counsel for the petitioners contended that the Act is bad as it does not provide for compensation i.e., a "just equivalent" for the land acquired under the Amending Act and, therefore, it offends Art. 31(2) of the Constitutio .....

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ed to the property or to the time of acquisition or to both; (iv) where the compensation fixed is illusory; and contended that in the first situation compensation is paid, that in the second it is a moot question whether the question of adequacy of compensation is justiciable or not, and that in the third and fourth situations, the said question is clearly justiciable. Mr. Ranganadham Chetty, appearing for the State, on the other hand, argued that the question of adequacy of consideration, howev .....

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all be taken possession Of or acquired for public purposes.......... unless the law provides for compensation for the property taken possession of or either fixes the amount of compensation or specifies the principles on which and the manner in which the compensation is to be determined and given." In Mrs. Bela Banerjee's([1954] S.C.R. 558.) case this Court was called upon to consider the question whether compensation provided for under the West Bengal Land Development and Planning Act, .....

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e legislature is given the discretionary power of laying down the principles which should govern the determination of the amount to be given to the owner for the property appropriated, such principles must ensure that what is determined as payable must be compensation, that is, a just equivalent of what the owner has been deprived of. Within the limits of this basic requirement of full indemnification of the expropriated owner, the Constitution allows free play to the legislative judgment as to .....

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pliance with, in law and spirit, the requirement of Art. 31(2) of the Constitution. This decision lays down three points, namely, (i) the compensation under Art. 31(2) shall be a "just equivalent" of what the owner has been deprived of; (ii) the principles which the Legislature can prescribe are only principles for ascertaining a "just equivalent" of what the owner has been deprived of; and (iii) if the compensation fixed was not a "just equivalent" of what the owne .....

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(Acquisition of Land) Act XI of 1953 which sought to amend the Land Acquisition Act 1 of 1894 were invalid because they infringed the fundamental rights under Art. 31 of the Constitution of owners of lands whose property was to be compulsorily acquired. Under that Act, compensation made ,Payable for compulsory acquisition of land was the value of the land on April 28, 1947, together with the value of any agricultural improvements made thereon after that date and before Publication of the notifi .....

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considered on the Article as it existed before the amendment. After noticing the relevant provisions and the case-law on the subject, Shah J., speaking for the Court, said : "Fixation of compensation for compulsory acquisition of lands notified many years after that date, on the market value prevailing on the date on which lignite was discovered is wholly arbitrary and inconsistent with the letter and spirit of Art. 31 (2) as it stood before it was amended by the Constitution (Fourth Amend .....

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uot; It may, therefore, be taken as settled law that under Art. 31(2) of the Constitution before the Constitution (Fourth Amendment) Act, 1955, a person whose land was acquired was entitled to compensation i.e., a "just equivalent" of the land of which he was deprived. The Constitution (Fourth Amendment) Act, 1955 amended Art. 31(2) and the amended Article reads; "No property shall be compulsorily acquired or requisitioned save for a public purpose and save by authority of law whi .....

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les as, defined by this Court in Mrs. Bela Banerjee's case([1954] S.C.R. 558.). It may be recalled that this Court in the said case defined the scope of the said expressions and then stated whether the principles laid down take into account all the elements which make up the true value of the property appropriated and exclude matters which are to be neglected, is a justiciable issue to be adjudicated by the court. Under the amended Article, the law fixing the amount of compensation or laying .....

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, -if it intends to make a law for compulsory acquisition or requisition, must provide for compensation or specify the principles for ascertaining the compensation. The fact that Parliament used the same expressions, namely, "compensation" and "principles" as were found in Art. 31 before the Amendment is a clear indication that it accepted the meaning given by this Court to those expressions in Mrs. Bela Banerjee's case([1954] S.C.R. 558.). It follows that a Legislature i .....

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7, the relevant principle of construction is stated thus : "There is a well-known principle of construction, that where the legislature used in an Act a legal term which has received judicial interpretation, it must be assumed that the term is used in the sense in which it has been judicially interpreted unless a contrary intention appears." The said two expressions in Art. 31 (2), before the Constitution (Fourth Amendment) Act, have received an authoritative interpretation by the high .....

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that the said law cannot be questioned on the ground that the compensation provided by that law is not adequate. It will further be noticed that the clause excluding the jurisdiction of the court also used the word "compensation" indicating thereby that what is excluded from the court's jurisdiction is the adequacy of the compensation fixed by the Legislature. The argument that the word "compensation" means a just equivalent for the property acquired and, therefore, the c .....

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lue at the time of acquisition has to be fixed; there are many modes of valuation, namely, estimate by an engineer, value reflected by comparable sales, capitalisation of rent and similar others. The application of different principles may lead to different results. The adoption of one principle may give a higher value and the adoption of another principle may give a lesser value. But nonetheless they are principles on which and the manner in which compensation is determined. The court cannot ob .....

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it shall be valued as an agricultural land or that though it is acquired in 1950 its value in 1930 should be given, or though 100 acres are acquired compensation shall be given only for 50 acres, the principles do not pertain to the domain of adequacy but are principles unconnected to the value of the property acquired. In such cases the validity of the princilples can be scrutinized. The law may also prescribe a compensation which is illusory; it may provide for the acquisition of a property wo .....

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a fraud on power and, therefore, the law is bad. It is a use of the protection of Art. 31 in a manner which the Article hardly intended. This leads us to the consideration of the question of the ,scope of the doctrine of fraud on power. In Gajapati Narayan Deo v. The State of Orissa([1954] S.C.R. 1, 10-11.), Mukhejee J., as he then was, .explained the doctrine thus : "It may be made clear at the outset that the doctrine of colourable legislation does not involve any question of bona fides o .....

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d how the Legislature may transgress the limits of its constitutional power thus : "Such transgression may be patent, manifest or direct, but it may also be disguised, covert or indirect and it is to this latter class of cases that the expression "colourable legislation" has been applied in certain judicial pronouncements." Court again explained the said doctrine in Gullapalli Nageswara Rao v. Andhra Pradesh State Road Transport Corporation ([1959] Supp. 1 S.C.R. 319,329.) th .....

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it. If, in fact, it has power to make the law, its motives in making the law are irrelevant." When a Court says that a particular legislation is a colourable one, it means that the Legislature has transgressed its legislative, powers in a covert or indirect manner; it adopts a device to outstep the limits of its power. Applying the doctrine to the instant case, the Legislature cannot make a law in derogation of Art. 31(2) of the Constitution. It can, therefore, only make a law of acquisiti .....

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the principles for ascertaining the compensation which do not relate to the property acquired or to the value of such property at or within a reasonable proximity of the date of acquisition or the principles are so designed and so arbitrary that they do not provide for compensation at all, one can easily hold that the Legislature made the law in fraud of its powers. Briefly stated the legal position is as follows : If the question pertains to the adequacy of compensation, it is not justiciable; .....

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he purpose of enabling the State to acquire lands for housing schemes. "Housing Scheme" is defined to mean "any State Government scheme the purpose of which is increasing house accommodation" and under s. 3 of the Amending Act, s. 23 of the Principal Act is made applicable to such acquisition with certain modifications. In s. 23 of the Principal Act, in sub-s. (1) for clause first, the following clause is substituted : "first, the market value of the land at the date of .....

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solatium, "fifteen per centum" by the words "five per centum". In s. 24 of the Principal Act after the clause seventhly the following clause was added : "eighthly, any increase to the value of the land acquired by reason of its suitability or adaptability for any use other than the use to which the land was put at the date of the publication of the notification under section 4, sub-section (1)." Under S. 4 of the Amending Act, the provisions of s. 3 thereof shall a .....

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tium of only 5 per centum of such value instead of 15 per centum under the Principal Act. He will not get any compensation by reason of the suitability of the land for any use other than the use for which it was put on the date of publication of the notification. The second principle is only for a solatium and it is certainly within the powers of the Legislature to fix the quantum of solatium in acquiring the land. Nor can we say that the first principle amounts to fraud on power. In the context .....

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ing purchaser. The Judicial Committee in Sri Raja Vyricherla Narayana Gajapatraju Bahdur Garu v. The Revenue Divisional Officer, Vizianagaram(I.L.R. [1939] Mad. 532. Sup. CI/65-) held in clear terms that in the case of compulsory acquisition, "the land is not to be valued merely by reference to the use to which it is being put at the time at which its value has to be determined........ but also by reference to the uses to which it is reasonably capable of being put in the future." In a .....

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r. We, therefore, hold that the Amending Act does not offend Art. 31(2) of the Constitution. Mr. Viswanatha Sastri then contended that though the lands were being acquired for the ostensible purpose of housing schemes; the real purpose was to provide revenue for the State. it is stated that the acquisition is made for and on behalf of the State Housing Board at ₹ 50 or ₹ 60 per ground, that the said Board sells the lands so acquired to private individuals, including the original owne .....

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d the proposed acquisition. Madras is a growing, city. By letter dated, October 20, 1959, the Government of India suggested to the States for taking on hand development schemes. The Government of Madras had considered the question of development of the "neighborhoods" of the Madras city for relieving the growing- congestion and overcrowding in the city; and after making the necessary enquiries and investigations, by order dated,. February 13, 1960, it directed the State Housing Board t .....

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osite layouts and acquisition. pursuant to the direction schemes were framed and acquisition proceedings were initiated. It is stated in the counter-affidavit. "The lands are being acquired with a view to develop them into composite housing colonies making provision therein to persons in various strata of society, from slum dwellers upwards, and eventually providing for high schools, elementary schools, dispensaries, shopping centres, police stations, and playgrounds and all other community .....

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lding up of a housing colony on modern lines providing for the rich and the poor alike have not been denied. It is not necessary to pursue the matter further. The petitioners have failed to establish that their lands are being acquired as a device to improve the revenue of the State. Indeed, we are satisfied that the lands are being acquired bona fide for developing a housing colony. The last contention of Mr. Viswanatha Sastri is that the Amending Act is hit by Art. 14 of the Constitution. The .....

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persons and things left out of the group; and (ii) the differential must have a rational relation to the object sought to be achieved by the statute in question. To ascertain whether the impugned Act satisfies the said two tests, three questions have to be posed, namely, (i) what is the object of the Act ? (ii) what are the differences between persons whose lands are acquired for the housing schemes and these whose lands are acquired for purposes other than housing schemes or between the lands .....

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are acquired for housing schemes and persons whose lands are acquired for other public purposes has reasonable relation to the object sought to be achieved. The object of the Amending Act is to acquire lands for housing schemes. It may be, as the learned counsel contends, the Amending Act was passed to meet an urgent demand and to find a way out to clear up slums, a problem which has been baffling the city authorities for a long number of years, because of want of funds. But the Act as finally e .....

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laudable the objects underlying the Amending Act may be, it was so framed that under the provisions thereof any land, big or small, waste or fertile, owned by rich or poor, can be acquired on the ground that it is required for a housing scheme. The housing scheme need not be confined to slum clearance; the wide phraseology used in the Amending Act permits acquisition of land for housing the prosperous section of the community. It need not necessarily cater to a larger part of the population in t .....

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ect. It is suggested that the differences between people owning lands rested on the extent, quality and the suitability of the lands acquired for the said object. The differences based upon the said criteria have no relevance to the object of the Amending Act. To illustrate : the extent of the land depends upon the magnitude of the scheme undertaken by the State. A large extent of land may be acquired for a university or for a network of hospitals under the provisions of the Principal Act and al .....

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r poor, from one individual or from a number of persons. Out of adjacent lands of the same quality and value, one may be acquired for a housing scheme under the Amending Act and the other for a hospital under the Principal Act; out of two adjacent plots belonging to the same individual and of the same quality and value, one may be acquired under the Principal Act and the other under the Amending Act. From whatever aspect the matter is looked at, the alleged differences have no reasonable relatio .....

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