1989 (4) TMI 332 - SC - Companies Law

Summary

Issues Involved:
1. Whether the hereditary right to receive Rs. 3,500/- per annum under the 1914 agreement ended due to the Gujarat Surviving Alienations Abolition Act, 1963.
2. Whether the right to receive the annual sum falls under the definition of "alienation" in Section 2(3)(d) of the Act.
3. Whether the abolition of this right is constitutionally valid under Article 31-A of the Constitution of India.
4. Whether the High Court's interpretation of Section 2(3)(d) of the Act as excluding the payment of the annual sum was correct.

Issue-wise Detailed Analysis:

1. Whether the hereditary right to receive Rs. 3,500/- per annum under the 1914 agreement ended due to the Gujarat Surviving Alienations Abolition Act, 1963:
The respondents had a hereditary right to receive Rs. 3,500/- per annum under an agreement dated 10th August 1914, in lieu of the right to collect grass, fire-wood, and timber from the Gir Forest. This right was being exercised by the respondents' predecessors and continued until 1964. The Gujarat Surviving Alienations Abolition Act, 1963, which came into force on 1st October 1963, aimed to abolish certain alienations. The Mamlatdar of Visavadar issued a notice in January 1965 stating that this right had come to an end due to the Act. The respondents filed a suit for a declaration that they continued to enjoy this right and for an injunction against the State of Gujarat and the Collector of Junagadh. The Trial Court dismissed the suit, but the District Judge allowed the appeal, and the High Court of Gujarat confirmed this decision. The Supreme Court had to determine if the right to receive Rs. 3,500/- per annum ended with the Act's enforcement.

2. Whether the right to receive the annual sum falls under the definition of "alienation" in Section 2(3)(d) of the Act:
Section 2(3) of the Act defines "alienation" to include various rights, including any right to any cash allowance or allowance in kind payable by the State Government and enjoyed by any person immediately before the appointed day. The right to receive Rs. 3,500/- per annum did not fall under Sub-clauses (a), (b), and (c) of Section 2(3) of the Act. However, it was argued that it fell under Sub-clause (d). The High Court held that Section 2(3)(d) should be read down to exclude the payment of cash allowance of the type in question, as otherwise, it would violate Articles 14, 19, and 31 of the Constitution of India.

3. Whether the abolition of this right is constitutionally valid under Article 31-A of the Constitution of India:
Article 31-A protects laws providing for the acquisition of any estate or rights therein or the extinguishment or modification of such rights from being deemed void for being inconsistent with Articles 14, 19, or 31. The Supreme Court examined whether the abolition of the right to receive Rs. 3,500/- per annum could be considered part of agrarian reform, which would attract the protection of Article 31-A. The right to collect forest produce was originally annexed to land, which falls within the definition of "estate" in Article 31-A(2)(a). The Court concluded that the legislation aimed to extinguish the right in an estate for better forest management, thus forming part of agrarian reform.

4. Whether the High Court's interpretation of Section 2(3)(d) of the Act as excluding the payment of the annual sum was correct:
The Supreme Court disagreed with the High Court's interpretation that Section 2(3)(d) should exclude the payment of the annual sum. The Court held that the legislation validly extinguished the right to receive Rs. 3,500/- per annum on a hereditary basis as part of agrarian reform. The respondents were entitled to compensation under the Act, notwithstanding the provisions of Articles 14, 19, and 31 of the Constitution of India.

Conclusion:
The Supreme Court set aside the judgment of the High Court and dismissed the respondents' suit. It clarified that the respondents are entitled to compensation under the Act, which should be computed and disbursed within three months. The appeal was allowed with no costs.