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TMI Blog1964 (10) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... l, 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 Amending Act. We shall briefly state the facts relevant to the question raised. The petitioner in Writ Petition No. 144 of 1963, P. Vajravelu Mudaliar, is the owner of lands bearing survey Nos. 4-2, 40-7 and 43-1 of Peruakudal Village and of extents 1.82, 1.39 and 3.72 acres respectively. By a notification dated November 7, 1960, and ,published in the Fort. St. George Gazette, dated November 16, 1960, the Government issued a notification under s. 4(1) of the Land Acquisition Act (Act 1 of 1894), hereinafter 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndents pleaded, among others, that the said Act was saved under Art. 31-A of the Constitution and, therefore, its validity could not be questioned on the ground that it infringes either Art. 14, Art. 19 or Art. 31(2) of the Constitution; and that even if Art. 31-A was not attracted, the provisions of the Amending Act would not infringe any of the said 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 Madras State Housing Board Act, 1961, and the Madras Town- Planning Act, 1920, are special statutes providing for the execution of housing and improvement schemes and town- planning schemes respectively, property for the said schemes can be acquired only after following the procedure prescribed thereunder and the Government has no power to acq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adham 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 the Constitution. By the said amendment, in the definition of the expression "estate" sub-cl. (a) of cl. (2) was substituted by a new sub-clause defining the said expression. The material part of the amended sub-cl. (a) of cl. (2) reads : "the expression "estate" shall, in relation to any local area, have the same meaning as that expression or its local equivalent has in the existing law relating to Land tenures in force in that area and shall also include-- (ii) any land 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nure-holders in respect of their rights in relation to the estate. The contrary view would enable the State to divest a proprietor of his estate and vest it in another 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 the East Punjab Holdings (Consolidation and Prevention of Fragmentation) (2nd Amendment and Validation) Act, 1960 Act 27 of. 1960), was protected by Art. 31-A against an attack in the ground that the said Act infringed the fundamental rights under Arts. 13, 14, 19 and 31 of the Constitution. This Court considered the earlier decisions of this Court, including the decision in K..K. Kochuni v. State of Madras([1960] 3 S.C.R. 887.). Adverting to Kochuni's case, Hidayatullah J., speaking for the Court, observed : "But tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sition for such a purpose would be in connection with agrarian reform in the enlarged sense of that expression accepted by this Court. Even accepting the argument of the learned counsel that the Act was conceived and enacted only for the purpose of slum clearance which became an urgent problem for the city of Madras, we cannot hold that such a slum clearance relates to an agrarian reform in its limited or wider sense. That apart. the Amending Act in its comprehensive phraseology takes in acquisition for any housing scheme, whether for slum clearance or for creating modem 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 Constitution. This aspect is elaborated by Mr. Palkhivala, who appeared for one of the interveners in the petitions. He narrated the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 what principles should guide the determination of the amount payable. Whether such principles 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." By applying the said principles this Court held that the provisions of the said Act fixing a ceiling on compensation without reference to the value of the land was arbitrary and, therefore, was not in compliance 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 wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otherwise than for a just monetary equivalent, a law which authorises acquisition of land not for its true value, but for value frozen on some date anterior to the acquisition, on the assumption that all appreciation in its value since that date is attributable to purposes for which the State may use the land at sometime in future, must be regarded as infringing the fundamental right." 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 which provides for compensation for the property so acquired or requisitioned and 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; and no such law shall be called in question in any court on the ground that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation, 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 highest court in the land and it must be presume that Parliament did not intend to depart from the meaning given by this Court to the said expressions. The real difficulty is, what is the effect of ouster of jurisdiction of the court to question the law on the ground that the. " compensation provided by the law is not adequate? It will be noticed that the law of acquisition or requisition is not wholly immune from scrutiny by the court. But what is excluded from the court's jurisdiction is 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 wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear. If the compensation is illusory or if the principles prescribed are irrelevant to the value of the property at or about the time of its acquisition, it can be said that the Legislature committed 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 or mala fides on the part of the legislature. The whole doctrine resolves itself into the question of competency of a particular legislature to enact a particular law. If the legislature is competent to pass a particular law, the motives which impelled it to act are really irrelevant. On the other hand, if the legislature lacks competency, the question of I motive does not arise at all. Whether a statute is constitutional or not is thus always a question of power." The learned Judge descr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al position is as follows : If the question pertains to the adequacy of compensation, it is not justiciable; if the compensation fixed or the principles evolved for fixing it disclose that the legislature made the law in fraud of powers in the sense we have explained, the question is within the jurisdiction of the Court. The next question is whether the Amending Act was made in contravention of Art. 31(2) of the Constitution. The Amending Act prescribes the principles for ascertaining the value of the property acquired. It was passed to amend the Land Acquisition Act, 1894, in the State of Madras for the 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 the publication of the notification under section 4, subsection (1) or an amount equal to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tain from a willing 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 awarding compensation if the potential value of the land is excluded, it cannot be said that the compensation awarded is the just equivalent of what the owner has been deprived of. But such an exclusion only pertains to the method of ascertaining the compensation. One of the elements that should properly be taken into account in fixing the compensation is omitted : it results in the inadequacy of the compensation, but that in itself does, not constitute fraud on power, as we have explained earlier. 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 os ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustments of civil demands of the rich and the poor. Whatever profit is made in the sales of land will be pumped back for improving the colony and for providing amenities for the poorer classes of the society. Except the bare statement by the petitioners in their affidavits that the lands cheaply acquired are being sold at higher prices, the averments of the State that the acquisition is part of a larger scheme of building 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 law on the subject is well-settled. Under Art. 14 the State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India. But this does not preclude the Legislature from making a reasonable classification for the purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the city it can be confined to a chosen few. The land could have been acquired for all the said purposes under the Principal Act after paying the market value of the land. 'Me Amending Act empowers the State to acquire land for housing schemes at a price lower than that the State has to pay if the same was acquired under the Principal Act. Now what are the differences between persons owning lands in the Madras city or between the lands acquired which have a reasonable relation to the said object. 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 e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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