http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 22

PETITIONER:

THE STATE OF TAMIL NADU

Vs.

RESPONDENT:

M/S. AROORAN SUGARS LTD.

DATE OF JUDGMENT: 31/10/1996

BENCH:

KULDIP SINGH, M.M. PUNCHHI, N.P. SINGH, M.K. MUKHERJEE, S.SAGHIR AHMAD

ACT:

HEADNOTE:

JUDGMENT:

(With C.A. Nos. 352-354 of 1980)

J U D G M E N T

N.P. SINGH, J.

The State of Tamil Nadu is the appellant in these

appeals. Civil Appeal No. 134 of 1980 has been filed against

the judgment of the High Court of madras in Writ Petition

1464 of 1974, whereas Civil Appeal Nos. 352-352-354 of 1980

have been filed against the judgment of the same High Court

in Writ Petition 2341-2343 of 1978. All the writ Petitions

had been filed on behalf of the respondent which were

allowed by the High Court.

The respondent, a public limited company which owned

and possessed 3421.14 acres of land, was engaged in

composite and integrated activity of raising sugarcane on

the aforesaid land and crushing it in its sugar factory. The

Tamil Nadu Reforms (Fixation of ceiling on Land) Act, 1961

(Act 58 Of 1961), (hereinafter referred to as the principal

Act) was published in the Tamil Nadu government Gazette on

2.5.1962. According to the said Act, a ceiling of 30

standard acres of agricultural land was fixed as the

maximum holding. Under Section 18(1) of the principal Act,

the surplus land has to be notified as required for public

purposes and on such publication in view of Section 18(3) of

the Act land specified in the notification shall deemed to

have been acquired for a public purpose and shall vest in

the Government free from all encumbrances with effect from

the date of such publication and all right, title and

interest of all persons in such land shall be deemed to have

been extinguished. The relevant part of Section 18 of the

Act is as follows:-

18. Acquisition of surplus

land.-(1) After the publication of

the final statement under section

12 or 14, the Government shall,

subject to the provisions of

sections 16 and 17, publish a

notification to the effect that the

surplus land is required for a

public purpose.

(2)..............................

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 22

(3) On the publication of the

notification under sub-section (1),

the land specified in the

notification together with the

trees standing on such land and

buildings, machinery plant or

apparatus, constructed, erected or

fixed on such land and used for

agricultural purpose shall, subject

to the provisions of this Act, be

deemed to have been acquired for a

public purpose and vested in the

Government free from all

encumbrances with effect from the

date of such publication and right,

title and interest of all persons

in such land shall, with effect

from the said date, be deemed to

have been extinguished:

Provided that where there is

any crop standing on such land on

the date of such publication, the

authorized officer may, subject to

such conditions as may be

prescribed, permit the harvest of

such crop by the person who had

raised such crop.

Section 50(1) of the Act provides for payment of amount

at the rates specified in Schedule III thereto, to person

whose right, title or interest in any land is acquired by

the Government.

Tamil Nadu land Reforms (Reduction of Ceiling on Land )

Act 17 of 1970, Under the Principal Act there was provision

for grant of Exemption to the lands held by sugar factories

in excess of the ceiling area. This provision was deleted by

Tamil Nadu Amendment Act 41 of 1971, which came into force

from 15.1.1972. Because of such amendment even the sugar

factories in general could not hold land in excess of 15

standard acres. The respondent filed its return under

Section 8 of the Principal Act on 6.4.1972. The Additional

Authorised officer (Land Reforms), Tiruvarur, published the

draft statement under section 10(1) of the principal Act on

19.4.1972. The minimum compensation payable for excess Lands

vesting in the Government was 9 times of the net annual

income. As such when the respondent filed its return on

6.4.1972, it was entitled to compensation at the rare of 9

times of the net annual income. However, the Tamil Nadu land

Reforms (Fixation off Ceiling of land) Fourth Amendment Act,

1972(Act 39 of 1972) which came in force with effect from

21.12.1972 amended Schedule III of principal Act reducing

the minimum multiples from 9 times to 2 times. The said

Amending Act 39 of 1972 purported to reduce the multiple of

compensation which was payable in respect of lands which

vested in the Government after 21.12.1972. A notification

under Section 18(1) of the principal Act was published on

4.4.1973 declaring as surplus an extent of 3414.87 acres of

land held by the respondent. Possession over such excess

land were taken over by the state Government between

6.4.1973 and 26.4.1973. The Draft Compensation Assessment

Roll was published by the state Government on 5.12.1973

determining the amount payable to the respondent in respect

of the surplus lands applying the rate of 2 times the net

annual income.

On 15.2.1974, The Tamil Nadu Land Reforms (Fixation of

Ceiling on Land ) Sixth Amendment Act 1972 (Act 7 of 1974)

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 22

was published in the Tamil Nadu Government Gazette. Sub-

section(2) of Section 3 of Act 7 of 1974 amended sub-

section (3) of section 18 of the principal Act on and from

1.3.1972. The relevant part thereof is as follows:-

"3(2) in section 18 of the

principal Act,-

(a) in sub-section (3), for the

words "with effect from the date of

such publication," The words "with

effect from the date of the

commandment of this Act," had been

substituted:

(b)................................

..

(c)................................

....

The effect of substitution of sub-section (3) of

section 18 of the principal Act shall be that whereas under

the original sub-section (3) of section 18 of the principal

Act only on publication of the notification under sub-

section(1) of section 18, the land specified in the

notification together with the trees standing on such land

and buildings, machinery plant etc., was deemed to have been

acquired for a public purpose and vested in the Government

free from all encumbrances `with effect from the date of

such publication'; because of the substitution of sub-

section (3) of section 18 of the principal Act by Act 7 of

1974 the lands in question shall deemed to have vested in

Government' with effect from the date of the commencement'

of Act 7 of 1974, i.e. with effect from 1.3.1972. It can be

said that as sub-section (3) of section 18 stood prior to

amendment by Act 7 of 1974 on publication of the

notification under Section 18(1), the vesting of the

respondent's sugarcane land in the state Government had

taken place with effect from 4.4.1973, but in view of

substituted sub-section (3) of section 18 by Act 7 of 1974,

it shall be deemed that the vesting of the excess lands took

place with effect from 1.3.1972. In Section 3 of the

principal Act by Act 7 of 1974 a new sub-section (3-A) was

also introduced which is as follows:

"(3-A) (a) Every person

who, after the date of the

commencement of this Act, was in

possession of, or deriving any

benefit from the property vested in

the Government under Sub-section

(3) shall be liable to pay to the

Government, for the period, after

such commencement, for which he was

in such possession or deriving such

benefit, an amount as compensation

for the use, occupation or

enjoyment of that property as the

authorised officer may fix in the

prescribed manner. Such officer

shall take into consideration such

facts as may be prescribed.

(b) Any amount payable to the

Government under clause (a) shall

be recoverable as arrears of land

revenue."

According to the respondent, in view of the amendment

introduced by Act 7 of 1974, antedating the date of vesting

from 4.4.1973 to 1.3.1972 the respondent was entitled to the

payment applying the multiple of 9 times of the net annual

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 22

income instead of multiple of 2 times which was introduced

by aforesaid Act 39 of 1972 with effect from 21.12.1972.

Writ petition No. 1464 of 1974 was filed on behalf of the

respondent challenging the Draft Compensation Assessment

Roll aforesaid, before the High Court which was admitted by

the High Court.

It may be pointed out that the learned counsel

appearing for the appellant-state, could not explain as to

what was the purpose of enacting Act 7 of 1974 aforesaid and

what object it purported to achieve. He simply stated that

later the legislature itself restored the original position

by enacting Tamil Nadu Land Reforms (Fixation of ceiling on

Land) Amendment Act 78 (Act 25 of 1978). Section 4 of that

Act is as follows:

"4. Tamil Nadu Act 58 of 1961, as

subsequently modified, to have

effect subject to modifications-The

Principal Act, shall, on and from

the 1st day of march 1972, have

effect as if, -

(1) in section 18 of the principal

Act,-

(a) in sub-section (3), for the

words "with effect from the date of

the commencement of this Act," the

words "with effect from the date of

such publication" had been

substituted:

(b)................................

.......

(c) sub-section (3-A) had been

omitted.

.................................."

In view of section 4 aforesaid, in sub-section (3) of

section 18 of the principal Act the words "with effect from

the date of such publication" was again substituted for the

words " with effect from the date of commencement of this

Act" which had been introduced by Act 7 of 1974. Sub-

section(3-A) which had been introduced by Act 7 of 1974 was

also omitted. Sections 5 and 6 of Act 25 of 1978 which are

relevant provided:

"5. Certain provisions of Tamil

Nadu Act 7 of 1974 not to have

effect-

(1) Notwithstanding anything

contained in the Tamil Nadu land

Reforms (Fixation of Ceiling on

Land) Sixth Amendment Act, 1972

(Tamil Nadu Act 7 of 1974)

(hereinafter in this section

referred to as the 1972 Act), or in

any judgment, decree or order of

any court or other authority, sub-

section(2) of section 3 of the 1972

Act shall be omitted and shall be

deemed always to have been omitted

and accordingly the modifications

made to section 18 of the principal

Act by the said sub-section (2),-

(a) shall be deemed never to

have been made and the provisions

of the said section 18 of the

principal Act as they stood prior

to the said modifications shall

continue in force and shall be

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 22

deemed always to have continued in

force; and

(b) shall be deemed never to

have had the effect of vesting in

the State Government the surplus

lands specified in any notification

published under sub-section (1) of

the said section 18 of the

principal Act on or after the 2nd

may 1962 and before the date of

publication of this Act in the

Tamil Nadu Government Gazette, from

a date earlier to the date of the

publication of the notification

under the said sub-section (1) and

shall be deemed always to have had

the effect of vesting in the state

Government such surplus lands, only

with effect from the date of the

publication of such notification.

(2) Anything done or any action

taken under the principal Act in

pursuance of the provisions of sub-

section (2) of section 3 of the

1972 Act, shall be re-opened and

determined in accordance with

provisions of the principal Act, as

modified by this Act.

6. Vesting of certain surplus lands

and validation - Notwithstanding

anything contained in any judgment,

decree, or order of any court or

other authority,-

(a) where before the date of

publication of this Act in the

Tamil Nadu Government (1) of

section 18 of the principal Act has

been published, the surplus land

specified in such notification

shall be deemed to have vested in

the state Government, with effect

from the date of such publication

only, and accordingly the

provisions of the principal Act, as

modified by section 4 of this Act,

shall for all purposes apply and be

deemed always to have been applied

in respect of such surplus lands so

vested; and

(b) all acts done and

proceedings taken by any officer or

authority under the principal Act,

on the basis that compensation in

respect of surplus lands referred

to in clause (a) shall be payable

only according to the rates

specified in schedule III of the

principal Act, as in force on the

date of publication of the said

notification, shall, for all

purposes be deemed to be and to

have always been validly Section 4

of this Act had been in force at

all material times when such acts

or proceedings were done or taken."

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 22

As already mentioned the respondent filed Writ Petition

No. 1464 of 1974 claiming compensation applying the multiple

of 9 times instead of 2 times and for a direction to the

authorised officer to prepare the Draft Compensation

Assessment Roll in respect of the lands which had vested

taking into account the provisions of aforesaid Act 7 of

1974. This stand was taken on behalf of the respondent

because the effect of Act 7 of 1974 was that vesting was to

take effect with effect from 1.3.1972 as provided in section

3 of Act 7 of 1974. On 1.3.1974, admittedly aforesaid

Amendment Act 39 of 1972 by which the compensation amount

payable for the surplus lands was reduced from 9 times to 2

times of the net annual income had not come into force, it

came into force with effect from 21.12.1972. As such if by

virtue of Act 7 of 1974 if the vesting had taken place with

effect from 1.3.1972 the date of commencement of Act 7 of

1974, it shall be deemed that vesting had taken place prior

to 21.12.1972 when admittedly schedule III provided for

payment by applying the multiple of 9 times. The High Court

by; its order dated 8.10.1976 quashed the Draft Compensation

Assessment Roll published, treating the vesting of the

surplus lands with effect from 1.3.1972 because of Act 7 of

1974. Civil Appeal No. 134/80 is directed against aforesaid

order of the High Court dated 8.10.1976. The respondent also

filed Writ petition No. 624 of 1978 for issuance of mandamus

to the authorised officer on basis of the aforesaid judgment

and order of the High Court dated 8.10.1976 in writ petition

No. 1464/74 to prepare the Draft Assessment Roll as per

that a judgment. The High Court by its order dated 3.3.1978

directed the authorised officer to prepare the Assessment

Roll accordingly.

The aforesaid Act 25 of 1978 was published in the Tamil

Nadu Government Gazette on 18.5.1978 and took effect on and

from 1.3.1972. It restored parts of sub-section (3) of

section 18 as it stood prior to the amendment in that sub-

section by Act 7 of 1974. it reiterated that the date of

vesting of the surplus lands shall be date of the

publication of the notification under sub-section (1) of

section 18 of the Act. so far the respondent is concerned,

such notification under sub-section (1) of section 18 had

been published on 4.4.1973, i.e. after 21.12.1972 from which

date because Amendment Act 39 of 1972 the compensation

amount payable for the surplus lands had been reduced from 9

times to 2 times of the net annual income. Section 5 of Act

25 of 1978 also contained non-obstante clause with deeming

fiction saying that notwithstanding anything contained in

the Tamil Nadu land Reforms (Fixation of Ceiling on Land)

Sixth Amendment Act 1972 (Act 7 of 1974) or any judgment,

decree or order of any court, sub-section (2) of section 3

of the aforesaid 1972 Act shall be omitted and shall be

deemed always to have been omitted. Section 6 thereof said

that notwithstanding anything contained in any judgement,

decree or order of any court where before the date of the

publication of the said Act in Tamil Nadu Government

Gazette a notification under sub-section (1) of section 18

of the principal Act had been published the surplus lands

specified in such notification ' shall be deemed to have

vested in the state Government with effect from the date of

such publication only.........' and the provisions of the

principal Act as modified by section 4 of Act 25 of 1978

shall for all purposes apply and be deemed always to have

applied in respect of such surplus lands so vested and

compensation in respect of surplus land shall be paid only

according to the rates specified in Schedule III of the

principal Act as in force on the date of the publication

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 22

such notification. In other words, sections 5 and 6 of Act

25 of 1978 purported to efface and obliterate the amendment

which had been introduced in sub-section (3) of section 18

by Act 7 of 1974 and purported to validate the notification

which had been issued on 4.4.1973 under sub-section (1) of

section 18 of the principle Act declaring 3414.78 acres of

the land belonging to the respondent as surplus. It need not

be pointed out that this was done because the multiple of 9

times was reduced to 2 times by Act 39 of 1972 with effect

from 21.12.1972. If the vesting had taken place by effect of

amended sub-section (3) of section 18 by Act 7 of 1974 with

effect from 1.3.1972, the date of the commencement of the

said Act, then the respondent was entitled for compensation

applying the multiple of 9 times.

Writ petition Nos. 2341-2343 of 1978 were filed on

behalf of the respondent questioning the validity of the

aforesaid provisions of Act 25 of 1978 and for a direction

that such provisions which were introduced by the said Act

had no effect on the right of the respondent to receive

compensation applying the minimum multiple of 9 times of the

net annual income. Those writ petitions were allowed by a

Division Bench of the High Court on 20.7.1979. Civil Appeal

Nos. 352-354/80 have been filed against the said Judgment.

Mr. Venugopal, the learned counsel appearing for the

appellant-state, took a stand that civil Appeal No. 134/80

has been filed on behalf of the state challenging the

validity of the judgment and order of the High Court dated

8.10.1976 in Writ petition No. 1464/74 directing payment of

compensation to the respondent applying the provisions of

Act 7 of 1974, after coming into force of the Act 25 of 1978

it shall be deemed that the basis of the judgment in writ

petition No. 1464/74 has been taken away as such the

respondent cannot claim compensation by applying the

multiple of 9 times. It was also submitted on behalf of the

appellant-State that the provisions of Act 25 of 1978 being

constitutional and valid, High court should have dismissed

the writ petition Nos. 2341-2343 of 1978 filed on behalf of

the respondent questioning the validity of Act 25 of 1978.

It may be mentioned at the outset that none of the two

judgments of the High Court dated 88.10.1976 and 20.7.1979

in writ petition No. 1464/74 and writ petition Nos. 2341-

2343/78 have became final. Civil Appeal No. 134 of 1980 and

civil appeal Nos. 352-354 of 1980 are directed against the

aforesaid judgments dated 8.10.1976 and 20.7.1979. In this

background, it has to be examined whether sections 4, 5 and

6 of Act 25 of 1978 with non-obstante clause and deeming

provisions have taken away the effect of the aforesaid

judgment of the High Court dated 8.10.1976 directing the

appellant-state to apply 9 times multiple in view of the

amendments introduced by Act 7 of 1974. The other aspect is

as to whether in view of the provisions aforesaid of Act 25

of 1978, this Court while considering the appeal against

aforesaid judgment dated 8.10.1976 in writ petition No.

1464/74 has now to proceed as if the amendments in the

principal Act by Act 7 of 1974 had never been introduced.

There is no dispute in respect of legislative competence of

legislature to enact Act 25 of 1978. The only dispute is

whether provisions of that Act has achieved the achieved the

desired result.

Sections 5 and 6 of Act 25 of 1978 contain deeming

fiction in its different clauses while purporting to omit

and remove the amendments which had been introduced by Act 7

of 1974 in the principal Act. The role of a provision in a

statute creating legal fiction is by now well settled. When

a statute creates legal fiction saying that something shall

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 22

be deemed to have been done which in fact and truth has not

been done, the court has to examine and ascertain as to for

what purpose and between what persons such a statutory

fiction is to be resorted to. Thereafter courts have to give

full effect to such a statutory fiction and it has to be

carried to its logical conclusion. In the well-known case of

East End Dwellings Co. Ltd. V. Finsbury Borough Council,

1952 AC 109 Lord Asquith while dealing with the provisions

of the Town and Country Planning Act, 1947 observed:

"If you are bidden to treat an

imaginary state of affairs as real,

you must surely, unless prohibited

from doing so, also imagine as real

the consequences and incidents

which, if the putative, state of

affairs had in fact existed, must

inevitably have flowed from or

accompanied it....The statute says

that you must imagine a certain

having done so, you must cause or

permit your imagination to boggle

when it comes to the inevitable

corollaries of that state of

affairs."

That statement of law aforesaid in respect of a

statutory fiction is being consistently followed by this

court. Reference in this connection may be made to the cases

of state of Bombay V. Pandurang Vinayak, 1953 SCR 773; Chief

Inspector of Mines V. Karam Chand Thapar, 1962(1) SCR 9;

J.K. Cotton Spinning and Weaving Mills Ltd. V. Union of

India,(1988) 1 SCR 700; M. Venugopal V. Divisional Manager,

Life Insurance Corporation of India, (1964) 2 SCC 323; and

Harish Tandon V. Additional District Magistrate. Allahabad,

(1995)1 SCC 537.

Section 5 of Act 25 of 1978 provides that

notwithstanding anything contained in Act 7 of 1974, or in

any judgment, decree or order of any court , or other

authority, sub-section (2) of section 3 of the aforesaid

Act' shall be omitted and shall be deemed always to have

been omitted and the modifications made to section 18 of the

principal Act by the said sub-section (2)-

(a) 'shall be deemed never to

have been made and the provisions

of the said section 18 of the

principal Act as they stood prior

to the said modifications shall

continue in force and shall be

deemed always to have continued in

force; and

(b) 'shall be deemed never to

have had the effect of vesting in

the state Government the surplus

lands specified in any notification

published under sub-section (1) of

the said section 18 of the

principal Act on or after the 2nd

May 1962 and before the date of

publication of this Act in the

Tamil Nadu Government Gazette, from

a date earlier to the date of the

publication of the notification

under the said sub-section (1) and

shall be deemed always to have had

the effect of Vesting in the state

Government such surplus lands, only

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 22

with effect from the date of the

publication of such notification.'

The legislature by different deeming clauses and

through statutory fiction requires the Court to treat that

amendments so introduced by Act 7 of 1974 had never been

introduced in the principal Act. The power of the

legislature to amend, delete or obliterate a statute or to

enact a statute prospectively or retrospectively cannot be

questioned and challenged unless the court is of the view

that such exercise is in in violation of Article 14 of the

constitution. It need not be impressed that whenever any Act

or amendment is brought in force retrospectively or any

provision of the Act is deleted retrospectively, or any

provision of the Act is deleted retrospectively, in this

process rights of some are bound to be effected one way or

the other. In every case, it cannot be urged that the

exercise by the legislature while introducing a new

provision or deleting an existing provision with

retrospective effect per se shall be violative of Article 14

of the constitution. If that stand is accepted, then the

necessary corollary shall be that legislature has no power

to legislate retrospectively, because in that event a vested

right is effected; of course, in special situation this

court has held that such exercise was violative of Article

14 of the constitution. Reference in this connection may be

made to the cases of state of Gujarat & Another V. Raman Lal

Keshav Lal Soni & others,(1983) 2 SCR 287; T. R. Kapur V.

State of Haryana, 1986 (Supp) SCC 584; and Union of India V.

Tushar Ranjan Mohanty, 1994(5) SCC 450. In the case of state

of Gujarat V. Raman Lal (Supra) a Constitution Bench on the

facts and circumstances of that case observed:

"The legislation is pure and

simple, self-deceptive, if we may

use such an expression with

reference to a legislature-made

law. The legislature is undoubtedly

competent to legislate with

retrospective effect to take away

or impair any vested right acquired

under existing laws but since the

laws are made under a written

Constitution, and have to conform

to the do's and don'ts of the

constitution neither prospective

nor retrospective laws can be made

so as to contravene Fundamental

Rights. The law must satisfy the

requirements of the Constitution

today taking into account the

accrued or acquired rights of the

parties today. The law cannot say,

twenty years ago the parties had no

rights, therefore, the requirements

of the Constitution will be

satisfied if the law is dated back

by twenty years. We are concerned

with today's rights and not

yesterday's. A legislature cannot

legislate today with reference to a

situation that obtained twenty

years ago and ignore the march of

events and the constitutional

rights accrued in the course of the

twenty years. That would be most

arbitrary, unreasonable and a

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 22

negation of history."

In same terms this Court expressed the opinion in the

cases of T.R. Kapur V. State of Haryana (supra) and Union of

India V. Tushar Ranjan Mohanty (supra) in respect of

alterations in rules framed under Article 309 of the

constitution retrospectively regarding conditions of

service.

So far the facts of the present case are concerned, the

provisions of Act 25 of 1978 do not purport to effect any

vested or acquired right. It only restores the position

which existed when the principal Act was in force. By

notification dated 4.4.1973 issued under section 18(1) of

the Act as it stood prior to amendment introduced by Act 7

of 1974, 3414.87 acres of land had been declared as surplus

which vested in the state Government under section 18(3) of

the principal Act as it stood on that date. It can be said

that Act 25 of 1978 simply nullifies Act 7 of 1974 which had

made amendments in the principal Act after notification gad

been issued under section 18(1) and vesting had taken place

under section 18(3) of the principal Act as it stood prior

to enactment Act 7 of 1974. By Act 7 of 1974 futile attempt

had been made by introducing different amendments. in this

process not only it created anomaly in the principal Act,

but nothing purposeful was achieved. It is true that because

of the amendments introduced by that Act 7 of 1974, the

respondent could urge before the High Court that as the

vesting had taken place on 1.3.1972, in spite of amendment

Act 39 of 1972 which had reduced the multiple from 9 times

to 2 times of the net annual income with effect from

21.12.1972 the respondent was entitled to compensation to be

worked out on basis of 9 times of the net annual income. But

on this ground the provisions of Act 25 to 1978 cannot be

held to be violative of Article 14 of the constitution and

as such ultra vires. Once the provisions are held to be

legal and valid, then as pointed out above the wish and

desire of the legislature has to be given full effect and to

its logical end. The courts have to proceed on the

assumption the Act 7 of 1974 had never been enacted and no

amendment whatsoever had been introduced in the principal

Act directing the vesting to take place with effect from

1.3.1972. This court shall be fully justified in examining

the judgment of the High Court dated 8.10.1976 on Writ

Petition No. 1464/74 filed by the respondent, treating that

Act 7 of 1974 was never enacted or was in existence. As the

aforesaid judgment dated 8.10.1976 is solely based on

amendments introduced by Act 7 of 1974, once such amendments

have been effected retrospectively, there is no escape from

the conclusion that the substratum and basis of the judgment

of the High court dated 8. 10.1976 is solely based on

amendments introduced by Act 7 of 1974, one such amendments

have been effaced retrospectively, there is no escape from

the conclusion that the substratum and basis of the

judgement of the High Court dated 8.10.1976 has been taken

away. The High Court had proceeded on the assumption that

because of amendment introduced by Act 7 of 1974 the vesting

shall be deemed to have taken place with effect from

1.3.1972 and on that assumption direction was given to

calculate the compensation applying 9 times multiples which

had been reduced to 2 timed with effect from 21.12.1972 by

amendment Act 39 of 1972. But if the provision which

directed Vesting with effect from 1.3.1972 does not exist in

eyes of law, then there is no question of holding that

vesting shall be deemed to have taken place with effect

1.3.1972 when compensation was to be worked out by applying

the 9 times to 2 times of the net annual income with effect

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 22

from 21.12.1972. Thereafter on 4.4.1973 notification under

Section 18(1) of the principal Act was issued declaring

3414.87 acres of land of the respondent as surplus which

vested in the State Government under Section 18(3) of the

principal Act as it stood on that date. As such the

compensation has to be worked out on basis of the amendment

which had been introduced in schedule III of the Act by

amendment Act 39 of 1972. This Court can modify the

judgement of the High Court dated 8.10.1976 taking into

account No.134 of 1980 is against aforesaid judgment of the

High Court dated 8.10.1976.

There is yet another aspect of the matter. Section 6 of

the Act 25 of 1978 provides that notwithstanding anything

contained in any judgment, decree, or order of any court or

other authority where before the date of publication of this

Act in the Tamil Nadu Government Gazette, a notification

under sub-section (1) of section 18 of the principal Act had

been published, the surplus lands specified in such

notification shall be deemed to have vested in the state

Government, with effect from the date of such publication

only, and accordingly the provisions of the principal Act,

as modified by section 4 of this Act, shall for all purposes

apply and be deemed always to have been applied in respect

of such surplus lands so vested.

The scope of a non-obstante clause and of validating

Act has been examined by this Court from time to time .

Reference in this connection be made to the judgment in the

case of Prithvi Cotton Mills Ltd. V. Broach Borough

Municipality, (1969) 2 SCC 283 where Hidayatullah, C.J.

speaking for the Constitution bench said:

"When a legislature sets out

to validate a tax declared by a

court to be illegally collected

under and ineffectiveness or

invalidity must be removed before

validation can be said to take

place effectively. The most

important condition, of course, is

that the legislature must possess

the power to impose the tax, for if

it does not, the action must ever

remain ineffective and illegal.

Granted legislative competence, it

is not sufficient to declare merely

that the decision of the court

shall not bind for that is

tantamount to reversing the

decision in exercise of judicial

power which the legislature does

not possess or exercise. A Court's

decision must always bind unless

the conditions on which it is

based are so fundamentally altered

that the decision could not have

been given in the altered

circumstances. Ordinarily, a court

holds a tax to be invalidly imposed

because the power to tax is wanting

or the statute or the rules or both

area invalid or do not sufficiently

create the jurisdiction .

Validation of a tax so declared

illegal may be known only if the

grounds of illegality or invalidity

are capable of being removed and

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 22

are in fact removed and the tax

thus made legal. Sometimes this is

done by providing for jurisdiction

where jurisdiction had not been

properly invested before. Sometimes

this is done by re-enacting

retrospectively a valid and legal

taxing provision and then by

fiction making the tax already

collected to stand under the re-

enacted law. Sometimes the

legislature gives its own meaning

and interpretation of the law under

which the tax was collected and by

legislative fiat makes the new

meaning binding upon courts. The

legislature may follow any one

method or all of them and while it

does so it may neutralise the

effect of the earlier decision of

the court which becomes ineffective

after the change of the law."

The same view was reiterated in the cases of west

Ramnad Electric Distribution Co. Ltd. V. State of Madras,

(1963) 2 SCR 747; Udai Ram Sharma v. Union of India,(1968) 3

SCR 41; Tirath Ram Rajindra Nath V. State of U.P,(1973) 3

SCC 585; Krishna Chandra Gangopadhyay v. Union of India,

(1975) 2 SCC 302; Hindustan Gum & Chemicals Ltd. V. State of

Haryana, (1985), 4 SCC 124; Utkal Contractors and Joinery

(P) Ltd. V. State of Orissa, 1987 Supp SCC 751; D. Cawasji &

Co. v. state of Mysore, 1984 Supp SCC 490 and Bhubaneshwar

Singh V. Union of India, (1994) 6 SCC 77. It is open to the

legislature to remove the defect pointed out by the court or

to amend the definition or any other provision of the Act in

question retrospectively. In this process it cannot be said

that there has been an encroachment by the legislature over

the power of the judiciary. A court's directive must always

bind unless the conditions on which it is based are so

fundamentally altered that under altered circumstances such

decisions could not have been given. This will include

removal of the defect in a statute pointed put in the

judgment in question, as well as alteration or substitution

of provisions of the enactment on which such judgment is

based, with retrospective effect. This is what has happened

in the present case. The judgment of the High Court in writ

petition No. 1464/74, dated 8.10.1976 was solely based on

the amendments which had been introduced by Act 7 of 1974 .

If those amendments so introduced have been effaced by Act

25 of 1978 with retrospective effect saying that it shall be

deemed that no such amendments had ever been introduced in

the principal Act, then full effect has to be given to the

provisions of later Act unless they are held to be ultra

vires or unconstitutional .

On behalf of the respondent, it was pointed out that

the High Court in its judgment dated 8.10.1976 in writ

petition No. 1464/74 has not declared any provision to be

invalid because of which a validating Act was required. The

said judgment had also no pointed out any defect in any Act

which had to be rectified by a validating Act. It had simply

proceeded on the provisions of Act 7 of 1974 and had issued

direction to the state Government to proceed in accordance

with those provisions. This Court has examined the power of

the legislature to amend the provisions of the Act in

question after a court verdict. Reference in this connection

may be made to the case of Government of Andhra Pradesh &

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 22

Anr. v. Hindustan Machine Tools Ltd. (1975) 2 SCC 274 where

it was observed:

"We see no substance in the

respondent's contention that by re-

defining the term `house' with

retrospective effect and by

validating the levies imposed under

the unamended Act as if

notwithstanding anything contained

in any judgment, decree or order of

any court, that Act as amended was

in force on the date when the tax

was levied, the Legislature has

encroached upon a judicial

function. The power of the

legislature to pass a law

postulates the power to pass it

prospectively as well as

retrospectively the one no less

than the other. Within the scope of

its legislative competence and

subject to other constitutional

limitations, the power of the

legislature to enact laws is

plenary. In United provinces V.

Atiga Begum, Gwyer, C.J. while

repelling the argument that Indian

Legislatures had no power to alter

the existing laws retrospectively

observed that within the limits of

their powers the Indian

legislatures were as supreme and

sovereign as the British parliament

itself and that those powers were

not subject to the "strange and

unusual prohibition against

retrospective legislation". The

power to validate a law

retrospectively is, subject to the

limitations aforesaid, an ancillary

power to legislate on the

particular subject.

The state legislature, it is

significant, has not overruled or

set aside the judgment of the High

Court. It has amended the

definition of `house' by the

substitution of a new section 2(15)

for the old section and it has

provided that the new definition

shall have retrospective effect,

notwithstanding anything contained

in any judgment, decree or order of

any court or other authority. In

other words, it has removed the

basis of the decision rendered by

the High Court so that the decision

could not have been given to the

altered circumstances. If the old

Section 2(15) were to define

`house' in the manner that the

amended section 2(15) does, there

is no doubt that the decision of

the High Court would have been

otherwise. In fact, it was not

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 14 of 22

disputed before us that the

buildings constructed by the

respondent meet fully the

requirements of Section 2(15) as

amended by the Act of 1974.

In Tirath Ram Rajindra Nath v.

State of U.P, the Legislature

amended the law retrospectively and

thereby removed the basis of the

decision rendered by the High Court

of Allahabad. It was held by this

Court that this was within the

permissible limits and validation

of the old Act by constitute an

encroachment on the functions of

the judiciary."

Again in the case of Sunder Dass V.

Ram Prakash, (1977) 3 SCR 60 it was

said:

"The appellant, however, urged

that the introduction of the

proviso in section 3 should not be

given greater retrospective

operation than necessary and it

should not be so construed as to

affect decrees for eviction which

had already become final between

the parties. Now, it is true, and

that is a settled principle of

construction, that the court ought

not to give a larger retrospective

operation to a statutory provision

than what can plainly be seen to

have been meant by the legislature.

This rule of interpretation is

hallowed by time and sanctified by

decisions, though we are not at all

sure whether it should have

validity in the context of changed

social norms and values. But even

so, we do not see how the

retrospective introduction of the

proviso in section 3 can be

construed so as to leave unimpaired

a decree for eviction already

passed, then the question arises in

execution whether it is a nullity.

The logical and inevitable

consequence of the introduction of

the proviso in section 3 with

retrospective effect would be to

read the proviso as if it were part

or the section at the date when the

Delhi Rent Control Act, 1958 was

enacted and the legal fiction

created by the retrospective

operation must be carried to its

logical extent and all the

consequences and incidents must be

worked out as if the proviso formed

part of the section right from the

beginning. This would clearly

render the decree for eviction a

nullity and since in execution

proceeding, an objection as to

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 15 of 22

nullity of a decree is a nullity,

the principle of finality of the

decree cannot be invoked by the

appellant to avoid the consequences

and incidents flowing from the

retrospective introduction of the

proviso in section 3. Moreover ,

the words "notwithstanding any

judgment, decree or order of any

court or other authority" in the

proviso make it clear and leave no

doubt that the legislature intended

that the finality of "judgment,

decree or order of any court or

other authority" should not stand

in the way of giving full effect to

the retrospective introduction of

the proviso in section 3 and

applying the provisions of the

Delhi Rent Control Act, 1958 in

cases falling within the proviso."

Same was the situation in the case of Bhubaneshwar

Singh V. Union of India (supra) where taking note of the

subsequent amendments in the concerned Act the Court came to

the conclusion:-

"In the present case as

already pointed out above, if sub-

section (2) as introduced by the

Coal Mines Nationalisation Laws

(Amendment) Act 1986 in section 10

had existed since the very

inception, there was no occasion

for the High Court or this Court to

issue a direction for taking into

account the price which was payable

for the stock of code lying on the

date before the appointed day. The

authority to introduce sub-section

(2) in section 10 of the aforesaid

Act with retrospective effect

cannot be questioned. Once the

amendment has been introduced

retrospectively, courts have to act

on the basis that such provision

was there since the beginning. The

role of the deeming provision need

not be emphasised in view of

series of judgments of this court

...................................

...................................

...................................

.............

In the present case, the

lacuna or defect has been removed

by the introduction of sub-section

(2) in section 10 of the Act with

retrospective effect. Sub-section

(2) of section 10 as well as

section 19, both have specified

that the amount which is to be paid

as compensation mentioned in the

schedule shall be deemed to include

and deemed always to have included,

the amount required to be paid to

such owner in respect of all coal

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 16 of 22

in stock on the date immediately

before the appointed day. As such

the earlier judgment of this court

is of no help to the petitioner."

On behalf of the respondent reference was made to the

well-known judgment of this court in the case of Madan Mohan

Pathak V. Union - of India, (1978) 2 SC 50 and it was

pointed out from the judgment of Chief justice Bag who

observed:

"I may, however, observe that

even though the real object of the

Act may be to set aside the result

of the Mandamus issued by the

Calcutta High Court, Yet, the

section does not mention this

object at all. Probably this was so

because the jurisdiction of a High

Court and the effectiveness of its

orders derived their force from

Article 226 of the Constitution

Itself. These could not be touched

by an ordinary act of parliament.

Even if section 3 of the Act Seeks

to take away the basis of the

judgment of the Calcutta High

Court, without mentioning it, by

enacting what may appear to be a

law, yet, i think that, where the

rights of the citizen against the

State are concerned, we should

adopt an interpretation which

upholds those rights. Therefore,

according to the interpretation I

prefer to adopt the rights which

had passed into those embodied in a

judgment and became the basis of a

mandamus from the High Court could

not be taken away in this indirect

fashion."

The facts of that case were entirely different. In the

Act which was being challenged, there was no non-obstante

clause purporting to take away the effect of the judgment of

the Calcutta High Court. Letters patent Appeal filed against

the judgment whose effect was being taken away by the

provisions in question had been withdrawn. Bhagwati, J (as

he then was) made a special mention of the aforesaid facts

for purpose of holding that the effect of the Calcutta High

Court had not be nullified by the provisions in question:-

"It is significant to note

that there was no reference to the

judgment of the Calcutta High Court

in the Statement of objects and

Reasons , nor any non-obstante

clause referring to a judgment of a

court in section 3 of the impugned

Act. The attention of parliament

does not appear to have been drawn

to the fact that the Calcutta High

Court has already issued a writ of

Mandamus commanding the Life

Insurance Corporation to pay the

amount of Bonus for the year April

1, 1975 to March 31,1976. It

appears that unfortunately the

judgment of the Calcutta High Court

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 17 of 22

remained almost unnoticed and the

impugned Act was passed in

ignorance of that judgment. Section

3 of the impugned Act or issued

that the provisions of the

settlement in so far as they relate

to payment of annual cash bonus to

class III and class IV employees

shall not have any force or effect

and shall not to deemed to have had

any force or effect from April

1,1975 to March 31,1976 was

concerned, it became crystalised in

the judgment and thereafter they

became entitled to enforce the writ

of mandamus granted by the judgment

and not any right to annual cash

bonus under settlement. This right

under the judgment was not sought

to be taken away by the impugned

Act. The judgment continued to

subsist and the Life Insurance

Corporation was bound to pay annual

cash bonus to Class III and Class

IV employees for the year April 1,

1975 to Mandamus. The error

committed by the Life Insurance

Corporation was that it withdrew

the Letters patent Appeal and

allowed the judgment of the learned

single judge to become final. By

the time the Letters Patent Appeal

came up for hearing, the impugned

Act had already come into force and

the Life Insurance Corporation

could, therefore , have

successfully contended in that

letters Patent Appeal that, since

the settlement, in so far as it

provided for payment of annual cash

bonus, was annihilated by the

impugned Act with effect from April

1,1975 to March 31,1976 and hence

no writ of mandamus could issue

directing the life Insurance

Corporation to make payment of such

bonus . If such contention had been

raised, there is little doubt,

subject of course to any

constitutional challenge to the

validity of the impugned Act , that

the judgment of the learned single

judge would have been upturned and

the writ petition dismissed. But on

account of some inexplicable

reason, which is difficult to

appreciate, the Life Insurance

Corporation did not press the

letters patent Appeal and the

result was that the judgment of the

learned single judge granting writ

of mandamus became final and

binding on the parties. It is

difficult to see how in these

circumstances the Life Insurance

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 18 of 22

Corporation could claim to be

absolved from the obligation

imposed by the judgment to carry

out the writ of mandamus by relying

on the impugned Act."

(emphasis supplied)

Because of the aforesaid factual position of that case

the view expressed by the Constitution Bench in the Prithvi

Cotton Mills Ltd. V. Broach Borough Municipality (Supra) was

held to be of no help to the life insurance Corporation.

Reference was also made on behalf of the respondent to

the judgment of this court in the case of A.V. Nachane &

Another V. Union of India & Another,(1982) 2 SCR 246 where

it was observed in respect of the Amendment Act, which was

the subject matter of controversy in that case, that it

could not nullify the effect of the writ issued by this

Court in D.J. Bahadur's case, relying on aforesaid judgment

in the Madan Mohan Pathak (Supra). From a bare reference to

page 267 of the report, it appears that the learned judges

placed reliance on the defect pointed out in the case of

Madan Mohan Pathak by Bhagwati, J quoted above. In other

words, on peculiar facts and circumstances of the case it

was held that the effect of the judgment in the case of D.J.

Bahadur had not been taken away by the Amending Act. On

behalf of the respondent, reliance was also placed on the

cases of Janapada Sabha Chhindwara v. The Central Provinces

Syndicate Ltd. and Another, (1970) 1 SCC 509; The municipal

Corporation of the City of Ahmedabad and Another, etc. etc.

v. The New Shrock Spg. and Wvg. Co. Ltd. etc. etc.,(1970) 2

SCC 280. In the case of Government of Andhra Pradesh V.

Hindustan Machine Tools Ltd.,(1975) 2 SCC 274 the aforesaid

judgments in the cases of Janapada Sabha Chhindwara v. The

Central Provinces Syndicate Ltd. and Another (supra) and The

Municipal Corporation of the city of Ahmedabad and Another,

etc. etc. (supra) were distinguished by pointing out:

"The decisions on which the

respondent relies are clearly

distinguishable. In the Municipal

Corporation of the city of

Ahmedabad V. New Shrock Spg. & Wvg.

Co. Ltd., the impugned provision

commended the corporation to refuse

to refund the amount illegally

collected by it despite the orders

of the Supreme Court and the High

Court. As the basis of these

decisions remained unchanged even

after the amendment, it was held by

this Court the Legislature had made

a direct inroad into the judicial

powers. In Janapada Sabha,

Chhindwara V. Central provinces

Syndicate Ltd., the Madhya Pradesh

Legislature passed Validation Act

in order to rectify the defect

pointed out by this court in the

imposition of a cess. But the Act

did not set out the nature of the

amendment nor did it provide that

the notifications issued without

the sanction of the state

Government would be deemed to have

been issued validly. It was held by

this court that this was tantamount

to saying that the judgment of a

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 19 of 22

court rendered in the exercise of

its legitimate jurisdiction was to

be deemed to be ineffective. The

position in State of Tamil Nadu V.

M. Ravappa Gounder , was similar.

In that case the reassessments made

under an Act which did not provide

for reassessments were attempted to

be validated without changing the

law retrospectively. This was

considered to be an encroachment on

the judicial functions.

In the instant case, the

Amending Act of 1974 cures the old

definition contained in section

2(15) of the vice from which it

suffered. The amendment has been

given retrospective effect and as

stated earlier the Legislature has

the power to make the laws passed

by it retroactive. As the Amending

Act does not ask the

instrumentalities of the State to

disobey or disregard the decision

given by the High Court but removes

the basis of its decision, the

challenge made by the respondent to

the Amending Act must fail. The

levy of the house-tax must

therefore be upheld."

In view of sections 4,5 and 6 of Act 25 of 1978 which

cannot be held to be unconstitutional, there is no escape

from conclusion that the provisions which had been

introduced in the principal Act 7 of 1974 have been effaced

and courts have to proceed as if they had never been

introduced in the principal Act. If this is the effect of

sections 4,5 and 6 of Act 25 of 1978 then as a corollary it

has to be held that under the amendment Act 39 of 1972 the

compensation amount payable for the surplus land under

schedule III to the Act was reduced from 9 times to 2 times

of the net annual income w. e. f 21.12.1972. Notification

under section 18(1) of the Act declaring 3414.78 acres of

land of the respondent-Company as surplus was issued on

4.4.1973 after coming into force of amended Act 39 of 1972

aforesaid and because of the notification dated 4.4.1973 the

surplus lands vested in the State Government in view of

section 18(3) of the Act as it stood on that date.

Thereafter, the Draft Assessment Roll had to be published

applying the rate of 2 times of the net annual income.

On behalf of the respondent, a stand was taken that

sections 4, 5 and 6 Act 25 of 1978 shall not revive the

notification dated 4.4.1973 which stood exhausted and a

fresh notification had to be issued, even if the different

provisions of Act 7 of 1974 shall be deemed to have been

obliterated. In this connection, it may be pointed out that

section 5 (b) of Act 25 of 1978 provided in clear and

unambiguous terms that modification made to section 18 of

the principal Act by Act 7 of 1974 "Shall be deemed never to

have had the effect of vesting in the state Government the

surplus lands specified in any notification published under

sub-section (1) of the said section 18 of the principal Act

on the after the 2nd May 1962 and before the date of

publication of this Act in the Tamil Nadu Government

Gazette, from a date earlier to the date of the publication

of the notification under the said sub-section (1) and shall

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 20 of 22

be deemed always to have had the effect of vesting in the

State Government such surplus lands, only with effect from

the date of the publication of such notification." Again

section 6(a) provides that notwithstanding anything

contained in any judgment, decree or order of any Court

"where before the date of publication of this Act in Tamil

Nadu Government Gazette, a notification under sub-section

(1) of section 18 of the principal Act has been published,

the surplus land specified in such notification shall be

deemed to have vested in the state Government, with effect

from the date of such publication only, and accordingly the

provisions of the principal Act, as modified by section 4 of

this Act, shall for all purposes apply and be deemed always

to have been applied in respect of such surplus lands so

vested" . In view of the aforesaid deeming provisions, the

notification which was issued on 4.4.1973 under sub-section

(1) of section 18 of the principal Act shall be deemed to be

valid and shall have the effect of vesting the lands in

question in the state Government under sub-section (3) of

section 18 of the Principal Act w.e.f. 4.4.1973.

An objection was taken on behalf of the respondent that

on 3.3. 1978 the High Court had allowed the Writ petition

No. 624 of 1978 filed on behalf of the said respondent and

issued a writ of mandamus directing the State to comply

with the judgment dated 8.10.1976 of the High Court in writ

petition No.1464 of 1978 and as no appeal has been filed on

behalf of the state before this Court against the aforesaid

order dated 3.3.1978, the said order has attained finality

and if the appeals filed on behalf of State are allowed, it

small lead to an anomalous position. It appears that the

respondent had filed the aforesaid writ Petition No. 624 of

1978 for a direction by the High Court to comply with the

aforesaid order dated 8.10.1976 in writ Petition No. 1464 of

1974. In that writ petition a grievance had been made that

respondents of that writ petition were delaying preparation

of the Draft Compensation Roll on the plea that special

Leave Petition to Appeal to the supreme Court along with an

application for stay had been filed on behalf of the state.

In that writ petition, a learned judge of the High Court

directed to consider the determination of the compensation

and the preparation of the Draft Compensation Assessment

Roll, under section 50(3) (a) of the Act 58 of 1961 in

respect of the excess lands of the respondent. A copy of the

writ of mandamus issued by the High Court in the said Writ

Petition is on the record and the operative part thereof is

as follows:-

"the Respondents herein, are

hereby directed to consider the

determination of the compensation

and the preparation of the Draft

Compensation Assessment Roll under

section 50{3}{a} of the Act 58 of

1961, in respect of the excess

lands of the petitioner, acquired

by you , in due compliance, fully

and properly of the judgment of

this court dated 8.10.76 and passed

in W.P.Nos. 346 and 1464 of 1974 on

or before 30.6.1976 and you, the

second respondent herein, are

hereby directed to call upon the

petitioner to furnish whatever

information is required on or

before 30.3.1978 (which information

will be supplied to you by the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 21 of 22

petitioner within 15 days from the

date of receipt of the said notice)

and thereupon to proceed forthwith

to comply with the aforesaid

directions of this Court dated

8.10.76 and passed in w.p.Nos. 346

and 1464 of 1974."

It cannot be disputed that by the aforesaid order dated

3.3.1978 the High Court had not determined any right or

liability inter se between the parties. It simply directed

the state Government to comply with the direction given by

order dated 8.10.1976 in writ Petition No. 1464 of 1974

against which civil Appeal No. 134 of 1980 has been filed.

If an order dated 8.10.1976 is set aside by this court, any

direction given on 3.31978 in writ petition No. 624 of 1978

shall be of no consequence. It can be said that the

direction which was given on 3.3. 1978 was in the nature of

execution order.

It was then pointed out on behalf of the respondent

that on 15.6.1978 writ Misc. Petition No. 3153 in Writ

Petition No. 624 of 1978 was filed on behalf of the state

for recall of the aforesaid order dated 3.3.1978 which was

dismissed on 23.6.1978. It was stated that in the said

petition on behalf of the state, attention of the learned

judge was drawn to the fact that in the meantime Act 25 of

1978 had come in force and as such there was no question of

payment of compensation to the respondent in terms of the

order dated 8.10.1976 as directed in writ Petition No. 1464

of 1974. It was urged that as no appeal has been filed

against the order dated 23.6.1978 on behalf of the state,

the said order shall be deemed to have become final in

respect of the scope and effect of Sections 4 ,5 and 6 of

Act 25 of 1978. The relevant part of order dated 23.6.1978

is as follows:-

"Even otherwise, the

respondent herein has challenged

the validity of Tamil Nadu Act 25

of 1978 and till the validity is

upheld, it is not open to the state

of Tamil Nadu to maintain an

application of this

character........

Whatever may be said about the

validity of the Act, which question

need not concern me at this stage,

I find great force in what Mr. M.R.

Narayanaswamy submits. In my

judgment rendered in W.P. 624 of

1978, I merely directed that state

of Tamil Nadu to give effect to the

judgment of the Division Bench of

this Court in W.P Nos. 346 and 1464

of 1974. I directed full compliance

of that judgment on or before 30th

of June , 1978."

From a bare reference to the aforesaid order it appears

that the learned judge having clearly said that he was not

considering the effect of provisions of Act 25 of 1978, he

dismissed the said writ Misc. Petition in view of the order

passed on 3.3.1978. When the learned judge refused to

consider the effect of the provisions of Act 25 of 1978,

there is no question of the order dated 23.6.1978 having any

effect, on the special Leave Petitions which had been filed

on behalf of the state giving rise to Civil Appeal No. 134

of 1980 and civil Appeal Nos. 352-354 of 1980 .

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 22 of 22

It may be mentioned that a plea was taken on behalf of

the appellant state that as Act 25 of 1978 provides for the

vesting of the land on a particular date, it shall be deemed

to be law relating to agrarian reform and as such protected

by Article 31-A of the Constitution. As such no challenge

based on Article 14 is available to the respondent. It was

stated that at the said Act had been reserved for the

consideration of the president and has received his assent

and as such it shall not be deemed to be void on the ground

that it is inconsistent with or takes away or abridges any

of the rights conferred by; Article 31-c which says that

notwithstanding anything contained in Article 13, no law

giving effect to the policy of the state towards securing

all or any of the principles laid down in part IV shall be

deemed to be void on the ground that it is inconsistent with

or takes away or abridges any of the rights conferred by

Article 14. In this connection, our attention was drawn to

the fact that in section 2 of Act 25 of 1978 it has been

specifically declared that the said Act was being enacted

for giving effect to the policy of the State towards

securing the principles laid down in particular clauses {b}

and {c} of Article 39 which is in chapter IV of the

constitution i.e. ownership and control of the material

resources of the community are so distributed as best to

subserve the common good and that the operation of the

economic system does not result in the concentration of

wealth and means of production to the common detriment. A

stand was also taken on behalf of the appellant-state that

Act 25 of 1978 has been included in the Ninth schedule of

the Constitution and as such it has the protection of

Article 31-B of the constitution and its validity cannot be

questioned on basis of Article 14 of the constitution. In

View of the findings recorded above that sections 4, 5 and

6 of 25 of 1978 are constitutionally valid and it has

effaced the amendments which had been introduced by Act 7 of

1974 in the principal Act because of which it shall be

deemed that notification issued under section 18{1} of the

principal Act on 4.4.1973 was legal and valid and because of

the said notification the lands declared as surplus vested

in the state under section 18{3} of the principal Act, there

is no necessity to decide as to whether Act 25 of 1978 has

the protection of Articles 31-A, 31-B and 31-C of the

constitution.

Once it is held that vesting of the surplus land had

taken place on 4.4.1973, then the respondent shall be

entitled to the compensation amount which is to be worked

out at 2 times of the net annual income because of Act 39 of

1972 which had reduced the multiple of the compensation from

9 times to 2 times of the net annual income w.e.f.

21.12.1972. Accordingly, civil Appeal No. 134 of 1980 are

allowed . The Judgement dated 8.10.1976 in writ Petition No.

1464 of 1974 and judgment dated 20.7.1979 in writ petition

No. 2341-2343 of 1978 of the High Court area set aside and

the writ petitions filed on behalf of the respondent are

dismissed. There shall be no order as to costs.