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TMI Blog1964 (8) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Requisitioning and Acquistion of Immovable property Act 1952, (XXX of 1952). That Act had been enacted by the parliament on the 14th March 1952, and by virtue of S. 24 thereof, it replaced several enactment under which were passed after the operation of Defense of India Rules expired. The notification under S. 7 of the Act said that area at one time was which had been requisitioned and 2nd May 1942, was now being acquired by the government of India from the date of the notifications of under S. 7 and the notifications itself so declared the land to have vested in the central Government. (3) Consequent upon this notifications the only right which the owner of the land had, was to claim compensation, and accordingly, compensation was offered by the collector of Bombay the second respondents to the petition, by his latter dated 20th February 1961 at the rate of ₹ 11 per sq. Vd. According to this valuation, the petitioner would have got ₹ 3080 for the land. The petitioner however wanted compensation for the land at a much higher rate. She claimed by it at the ate of Rs, 100 per sq. Yd., which would give her an amount of Rs,........... plus the usual 15 per cent solar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In order to do that it has to publish a notice in the Official Gazette, which he have stated was done in the instant case on we 2nd April 1963. There is proviso to S. 7(1) which provides that the usual safeguard of hearings the person interested before issuing the notifications the person interested before issuing the notification and considering the cause shown by this him if any, against Acquisition. Sub - section (2) S. 7 declares that upon the notification being issued under sub -section (1), the property vests in the central Government absolutely and free from all encumbrances and form the date of vesting the period of the requisition of such property shall end. There are certain conditions to the acquisitions of property under S. 7 and these are indicated in sub -section (3) thereof. Sub - section (4) enacts that the decision or regard to whether the property should be acquired or not is final. (7) Next follow the provisions as to the award of compensation of and it is with the those provisions of that we are principally concerned in the present petition. It will be convenient entirety in order to appreciate the points argued. "8 (1) Where any property is requisitioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmal wear and tear)) caused to the property the during the that period of requisition including the expenses that may have to be incurred for restoring the property to the condition in which it was at time of requisition. (3) The compensation payable for the acquisitions of any property under S. 7 shall be (a) The price which the requisitioned property would have fetched in the open market, if it had remained by the same condition as it was at the time of requisitioning and been sold on the date of Acquisition or (b) twice the price which the requisitioned property would have fetched in the open market if is have fetched in the open market if the had been sold on the date or requisition. Which ever is less" Sections 10 and 11 make the usual provisions regarding right of appeal. No right of appeal is prescribed against an order of is prescribed in S. 10 form an order of requisitioning. (8) Now, it will be noticed that S. 8(10) in its opening, clauses, enacts that compensation shall be paid of an amount which is so be determined (a) in the manner which and (b) in accordance with the principles here in after set out. The section, after therefore, in express terms, deals wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at is the prime importance's in considering the constitutionality of the these provisions are the concluding words of sub - section (3) "Whichever is less" The total effect, therefore, of sub =section (3) of S. 8 is that substantially the valuation of has to he made for the purposes of compensations of upon one of two alternative principles - (a) either he was value on the date of acquisitions of (b) twice the market valve on the date of the being requisitions of but the persons whose property is being acquired is to be paid that amount "which ever is less":- (11) It is clause (b) of sub =section (3), which is attacked as being ultra vires of the provisions of Article 31 of the constitution. We may add that originally in the petition the attack was against the both the clauses (a) and (b) of sub =section (3) but Mr. Sorabjee on behalf of the petitioner has with such discretion limited the argument to clause (b) of the sub =section (3) only. For the purposes of he decision of the constitutional questions, which has been raised, it may be stated here that it is contend by counsel for both the parties before us that the constitutionality of the provisions affe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that the state may actually acquire the property that the state later the compensation payable would not be a full fair money equivalent of the property to betaken. It was argued on behalf of the state in that case that compensation it could not mean the full cash equivalent but that it would mean such compensation, as was determined in principles laid down by the power enacted in exercise of the legislative power conferred by Entry 42 of List III (the concurrent List) The learned chief justice who delivered judgment on behalf the court, repelled the latter arguments as follows: "We are unable to agree with this view. While it is that the legislature is given the discretionary power of laying down the principle 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 in just equivalent of what the owner has been deprived of within the limits of this basic requirements of full the limits of this indemnification's allows of the expropriated owners, the constitution allows free play to the legislative judgment as to what principles s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t; We have quoted not merely the principles laid down the but also the illustration given by the learned chief justice in extensor, because as we shall presently show giving of the illustration to indicate a possible exception has resulted in giving rise to large volume of discussion in subsequent authorities. The true principles however is as indicated by the learned chief justice in the first sentence of the passing we have quoted, that "the fixing of the market we have quoted, that valve on December 31, 1946 (an arbitrary date) as the ceiling on compensation, without reference the value of the land at the time of Acquistion is arbitrary and cannot be regarded as due complain in letter and spirit with the requirement of Art. 31(2)". The Statement of the principle of in Bela Banerjees case, declared the fixing of an arbitrary date as not in compliance with the latter and spirit of Art 31(2), but in subsequent decisions, it is made clear that the effect of mentioning an arbitrary date of this kind as the date on which compensation it is be assessed gives rise so to say to a presumption that just equivalent is not being paid unless the state establish aliened that what it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment on behalf of the Division Bench. "In our view, once the interpretation put upon the words "compensation" by the supreme court is accepted, it would not be possible to sustain this contention. It may not be the exact equivalent but it must in fairness amount to compensation before it can be declared valid. There should therefore be no difference in the approach to the case merely because in this case the principles have been fixed. If any thing that is called a principle of valuation is arbitrary then it ceases to be a principle and must be declared to be invalid." (15) it was contended in that case also that the fixation of the value of the property acquired by reference to the date of much anterior to the date, or Acquistion is a recognized mode of doing it at least in national emergencies, but after considering several foreign and other authorities, the learned judges stated the principles thus: "It seems that the Article 31 with the amendment embodies these principles only and is the to intended to permit expropriation of property by providing the payments of nominal compensation...... such compensation as cannot reasonably be called compensa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) at 20 time the average net annual profit of the undertaking during a period of five consecutive account years immediately preceding the vesting date (B) the aggregate value of the shares constituting the share capital of the undertaking reckoned in certain manner and (C) the aggregate value of the amount of the book value of all plants and equipment's the book value of all intangible assists, and the amount due from consumers subjects to certain limitations prescribed. The overriding provision, however was that it was for the licensees i.e. the party was property has been taken to avail of the option give to choose any one or more of the three bases. These provisions that were attacked as unconstitutional on the ground that they did not afford a just equivalent of the property to be taken or in other words the market value. (19) Now, it has to be noticed that here again the supreme court was dealing with a pre - amendment statute. The Madras Electricity supply Undertakings (Acquistion) Act was Act 29 of 1954 of was therefore passed prior to the constitution (fourth Amendment) Act 1955, and the case as their lordships in terms pointed out fell to be determined upon the point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... though entry 42 of List III conferred on the legislature the discretionary power of laying down the principles of which should govern the determination of the amount to be given to the owner of the property acquired Art 31(2) required that such principles must ensure the what is determined as payable must be "compensation" that is, just equivalent of the what owner has been deprived of. That is why in considering the validity of any statute in the light of Art. 31(2) it would be open to the court to esquire whether all the elements which make up the true value of the property acquired have been taken in to account in laying down the principles for determining compensation" In this particular case upon the facts we have shown that the supreme court held that in the case the impugned statute had made impossible for a citizen to receive the just and true equivalent of the property to the taken from him. As to whether that was so or not in fact, the supreme court said that there was no material placed before it. Therefore, the west Ramnad case. in our opinion, did not alter the principles in Bela Banerjee's case On the other hand, it affirmed it. Of course in that c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of the value of the land on 28-4-1947. The provisions as to the payment of compensation offend fixation of that the date were challenged. It was explained that as soon as valuable lignite was discovered there was a great boom in he the value of the land and speculators were dealing in it, and therefore on 6-10-1948 government had issued a press note warning the speculators that the land would be taken over by Government, an advising the owners not to part with them. It was argued on behalf of the state that the date in the Act was fixed with reference to the date when lignite was first discovered in the area., and that therefore , it was not just an arbitrary fixation, of any date but the date was referable to an intelligible principles, None the less the Madras High Court struck down the fixation of the arbitrary date, observing. (See ) "This is a date which has no bearing on the value of the land at the time was acquired. It is a wholly irrelevant circumstances. Since that date the value of the land leaving out all speculative elements may have gone up the owing to quite legitimate causes. To deprive a person of the value that the accrued to his property owing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... materials have been placed by the state before this court which would support any such case." It will be noticed that the rule here stated in less wide terms than the rule here stated is in less wide terms that the rule stated in Bela Banerjee's case. There the supreme court did not advert otherwise if an arbitrary date was fixed by the legislature but in the Namasiva's case. the supreme court has stated that fixation of an arbitrary date like this is to be regarded prima face and denying to the citizen a true equivalent of the land which is expropriated. What is more, the last sentence in the passage quoted above indicates that the state could have shown that the fixation of compensation on the market value on an anterior date does not amount to a violin of the constitutional guarantee by a violation of the constitutional guarantee by reason of sufficient material before the court. In Bela Banerjee's case, no doubt the chief justice panatela shastri did give an illustration of a possible exception of the second sentence of the passage from his judgment, which we have already quoted, and presumably the principle as stated in Namasavayas case is based open the that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s prescribed in clauses (b) it is not a date with reference to acquisitions and there appears no particular reasons in fastening upon the date or requisitions as the date on which to freeze the compensation payable. (25) We have already referred to the provisions of Ss. 4 and 5 of the Act. The only effect of requisitioning is that the state or its officers can take possession of the property and use it for the public purpose for which it was acquired but the property actually vests in the state not by virtue of its that requisitioning but the virtue of its acquisitions., that is by the provisions of sub = section (2) of S. 7 Therefore although the requisitioning only goes to justify the taking possession of the property, its ownership still remains with the party from whom it is requisitioned until the notification is issued, stating that it is being acquired. It is from the date of that notification that the property vests in the state. If then the true property principle is that the citizen from whom the property issuing taken is entitled to compensation which is the just and fair equivalent of what issuing taken form him on the date of Acquistion, we can see no point in arbitra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the exact reverse. There is of three alternatives provided as the bases on which compensation was to be assessed, it was the citizens who was given the option to accept the basis which the preferred the whereas here the legislation has it self provided that as between the two standards of computation of compensation that standards is to be preferred which gives less to the citizen. It seems to us the nothing could be more eloquent than this that the just a fair equivalent is not being paid to the citizen when of two alternatives that alternative is to be preferred which gives less to the citizen. In that view it seems to us clear that the under article 31(2) read in the light of the authorities to which we have referred., clause (b) of sub =section (3) of S. 8 must be declared to be ultra of Art. 31 of the constitution. (29) Nothing moreover turns upon the fact that this Act is only put in to force for a limited period, that is to say unto 14th March 1970. In so far as the constitutional guarantee given by Art 31 is being infringed by the law, it is s immaterial that it results in may infringement only unto a limited time and not to ever ,and the offending clauses would all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e other provisions of S. 8 and the arbitrary would act upon that the principle he would accept the compensation of so determined. Mr .Advani on behalf of the state was hesitated that he was merely urging its legal argument on the basis of the statutes before the court and that he on is part would leave it to the court to determination what is its true construction in that view the matter, seems of us that we must consider the construction put forwards as a matter of argument by Mr. Advani. (31) An analysis of clause (e) Shows that the it refers to three things: - (1) firstly the amount of the compensation which appears to the arbitrator to be just (2) Secondly the circumstances of each case of and (3) Thirdly the provisions of sub - section (2) and (3). In the first sub - section of clauses (e) the arbitrator is directed to determine the amount of compensation which appears to him to be just but in the second sub - clauses he is not merely directed but enjoined that in making the award (1) "he shall have regard to the circumstances of each case" and (2) that he shall have regard to the provisions to sub = section (2) and (3)" We do not think shall the language to of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and how if the opening words of Clause (e): "determine the amount of compensation which appears to him to be just" are plenary and all pervasive, the Land Acquistion officer can award only such sum or sums of money as may be found necessary for the matters sum any e found stated. There is a vast difference between finding out a sum which is just and finding out a sum which necessary to compensate for four stated items only. Thus the provisions of such = section (2) Clearly show that the injection in clauses (e) of to find out the just compensation cannot possibly control sub = section (2). On the other hand sub - section (2) controls sub - section (1) (e) just as we have shown that sub section (3) controls sub - section (1) (e) We have referred to the provisions of sub = section (2) only in order to indicate a point of construction. We are not concerned with them as such here. It seems to us that clauses (e) of sub - section (1) cannot control the provisions of sub - section (3) of S. 8 also. No doubt, sub - section (3) is referred to in clauses (e) but Itis refereed in Claus (e) only in order indicate that in this duty toward to just compensation one of the matter which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... constitutional guarantee of a fundamental right. We have no doubt of here that the regard to" shows that the arbitrator cannot in any case disregard subsection (2) and (3). But even assuming that we are wrong and that the words "shall have regard to occurring in clause (e) sub - section (1) of S. 8 mean that "the arbitrator shall be guided by" still it is clear that he was to be guided by the circumstances of each case ad byte provisions of Sub -section (2) and (3) and much as by the principal of determining the amount of compensation which is to be just and this in itself in inequity in the award of compensation for it sub =section (3) (b) results in the award of compensation of which is not just being "guided by" it will have the same result. There is also another consideration which we may there also emphasizes, where the arbitrator is enjoined to fixed the amount of compensation of which appears to him to be just the whole clauses is also preceded by the word "shall" The composite expression used (shorn of inapplicable verbiage) is "shall ..... make an award append determining the amount of the compensation which appears to him to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ords, the counsel argues that there is no principles involved in sub section (1) at all. It only deal with the manner of determination of compensation and, therefore any provision of that sub = section can have no effect so far as the principles laid down in sub - section (3) are concerned. (37) Curiously enough the opening words of sub = section (1), upon which reliance has been placed give no indication of as to what subsequent portions of the section of each of its clauses refers to. It rather seems to us on as perusal of the sub - section as a whole that the Draftsman made several provisions both of procedure and principle and did not incorporate them distinctively or separately in different clauses of sub - section. It seems to the that he relegated the principles of payment of the compensation for requisitioning to sub = section (2) and the principles for payment of the sub = section (1) at all. On the other hand, the provision is clause (e) of sub = section (1) enjoining on the arbitrator to determine the amounts of compensation which appears to be just, could will be said to be principle and so too the direction of arbitrator that the shall have regard to the circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... make of the it dependent upon he determination of the amount of the compensation. It is clear that even if the amount was the same as the to be found under sub - clauses (a) the if it is given on the basis that it is twice the price on the date of requisition, it would all the same infringe. Article 31 of the constitution. We do not think the simply because on actual assessment of has been made by the arbitrator, a constitutional objection of this kind cannot be sustained in limine, when the aggrieved party approaches this court under Art. 226. (40) The other objections it as to the delay in approaching this court. It was urged that the petition is filed after inordinate delay. The original the Acquistion was made on 29 - 12 - 1952 when the notification under S. 7(2) and was promulgated. So far as the compensation is concerned, it was urged, that the arbitrator was appointed on 21-6-1961, and when pursuant to the provisions of S. 7 the arbitrator was appoint for the purpose of assessment of compensation whatever constitutional objection the petitioner had arose the therefore the file the present petition. This arguments is the very reverse of the arguments which we have just disp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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