2011 (8) TMI 1275 - SC - Indian Laws

Whether the High Court was justified in holding that the appellants were not entitled to any compensation even when their forest land is acquired by the government, merely because the appellants had not derived any income from the said forest - HELD THAT - The present case is a case of payment of no compensation' at all. In the case at hand, the forest land which was vested on the State by operation of law cannot be said to be non-productive or unproductive by any stretch of imagination. The property in question was definitely a productive asset. That being so, the criteria to determine possible income on the date of vesting would be to ascertain such compensation paid to similarly situated owners of neighboring forests on the date of vesting. Even otherwise, revenue authority can always make an estimation of possible income on the date of vesting if the property in question had been exploited by the appellants and then calculate compensation on the basis thereof in terms of Sections 18(1) (cc) and 19(1) (b) of KUZALR Act. We therefore find sufficient force in the argument of the counsel for the appellants that awarding no compensation attracts the vice of illegal deprivation of property even in the light of the provisions of the Act and therefore amenable to writ jurisdiction. That being so, the omission of the Section 39(1) (e) (ii) of the UPZALR Act 1950 as amended in 1978 is of no consequence since the UPZALR Act leaves no choice to the State other than to pay compensation for the private forests acquired by it in accordance with the mandate of the law. In view of the above, the present appeal is partly allowed while upholding the validity of the Act and particularly Sections 4A, 18(1) (cc) and 19 (1) (b) of the KUZALR Act, we direct the second respondent, i.e. Assistant Collector to determine and award compensation to the appellants by following a reasonable and intelligible criterion evolved on the aforesaid guidelines provided and in light of the aforesaid law enunciated by this Court hereinabove. The appellants will also be entitled to interest @ six percent per annum on the compensation amount from the date of dispossession till the date of payment provided possession of the forest was handed and taken over formally by the Respondent physically and provided the appellant was totally deprived of physical possession of the forest. However, we would like to clarify that in case the physical/actual possession has not been handed over by the appellants to the State government or has been handed over at some subsequent date i.e. after the date of vesting, the interest on the compensation amount would be payable only from the date of actual handover/physical possession of the property in question and not from the date of vesting. In terms of the aforesaid findings, the present appeal stands disposed of. No costs.

Summary

Issues Involved:
1. Entitlement to compensation for forest land acquired by the government.
2. Constitutional validity of Sections 4A, 18(1)(cc), and 19(1)(b) of the KUZALR Act.
3. Repugnancy between the KUZALR Act and the Indian Forest Act, 1927.
4. Applicability of Article 300A of the Constitution regarding compensation.

Detailed Analysis:

1. Entitlement to Compensation for Forest Land Acquired by the Government:
The appellants' forest land was acquired by the State Government under the KUZALR Act. The Assistant Collector dismissed the appellants' objections, stating that the KUZALR Act does not provide a method to compute compensation for forests with no derived income. The High Court upheld this decision. The Supreme Court, however, found that the appellants were entitled to compensation even if no income was derived from the forest. It was held that the compensation should be determined based on a reasonable and intelligible criterion, considering the potential income from the forest if it had been exploited.

2. Constitutional Validity of Sections 4A, 18(1)(cc), and 19(1)(b) of the KUZALR Act:
The Supreme Court upheld the constitutional validity of Sections 4A, 18(1)(cc), and 19(1)(b) of the KUZALR Act. Section 4A provides for the vesting of forest land in the State Government, and Sections 18(1)(cc) and 19(1)(b) outline the compensation mechanism. The Court noted that the KUZALR Act is a statutory enactment dealing with agrarian reforms, and the provisions for compensation are consistent with the legislative intent to bring the Act in parity with the UP Zamindari Abolition and Land Reforms Act.

3. Repugnancy Between the KUZALR Act and the Indian Forest Act, 1927:
The appellants argued that the provisions of the KUZALR Act were repugnant to the Indian Forest Act, 1927, which provides for compensation under the Land Acquisition Act, 1894. The Supreme Court rejected this argument, stating that the KUZALR Act and the Indian Forest Act operate in different subject matters. The KUZALR Act pertains to agrarian reforms and land, while the Indian Forest Act deals with forest management and preservation. Therefore, there is no repugnancy between the two Acts.

4. Applicability of Article 300A of the Constitution Regarding Compensation:
Article 300A states that no person shall be deprived of property save by authority of law. The Supreme Court emphasized that any law depriving a person of property must be just, fair, and reasonable. The Court held that the KUZALR Act, which provides for nil compensation in cases where no income is derived from the forest, violates Article 300A. The Court directed that compensation should be determined based on potential income, ensuring that it is not illusory.

Conclusion:
The Supreme Court allowed the appeal partly, upholding the validity of the KUZALR Act but directing the Assistant Collector to determine and award compensation to the appellants based on a reasonable criterion. The appellants were also entitled to interest on the compensation amount from the date of dispossession till the date of payment, provided the forest was formally handed over to the State. The appeal was disposed of with no costs.