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PETITIONER:

THE STATE OF WEST BENGAL

Vs.

RESPONDENT:

MRS. BELA BANERJEE AND OTHERS

DATE OF JUDGMENT:

11/12/1953

BENCH:

SASTRI, M. PATANJALI (CJ)

BENCH:

SASTRI, M. PATANJALI (CJ)

MAHAJAN, MEHR CHAND

DAS, SUDHI RANJAN

HASAN, GHULAM

JAGANNADHADAS, B.

CITATION:

1954 AIR 170 1954 SCR 558

CITATOR INFO :

R 1955 SC 504 (82)

E 1959 SC 648 (39)

R 1962 SC1753 (20)

RF 1965 SC 190 (4,5)

E&D 1965 SC1017 (7,14)

R 1965 SC1096 (8)

F 1967 SC 637 (8)

RF 1967 SC1643 (179,227)

RF 1968 SC 377 (8,13,16)

RF 1968 SC 394 (17)

R 1968 SC1138 (9,30,31,58)

R 1968 SC1425 (8)

D 1969 SC 453 (5,7)

RF 1969 SC 634 (18,33,35,36,38,40,43,47,49)

RF 1970 SC 564 (96,98,196,200)

RF 1973 SC1461 (601,706,707,1059,1175,1754,19

R 1978 SC 215 (15)

RF 1979 SC 248 (10,11)

RF 1980 SC1789 (97)

ACT:

The West Bengal Land Development and Planning Act, 1948

(West Bengal Act XX-T of 1948)-Provisions of s. 8-(i) Decla-

ration under s. 6-Conclusive evidence-Land-Subject matter

,of declaration needed for a public purpose-(ii)

Compensation of land acquired under the Act not to exceed

market value of land as on December 31, 1946-ultra vires the

Constitution and void-Constitution of India, art. 31(2).

HEADNOTE:

The West Bengal Land Development and Planning Act, 1948,

passed primarily for the settlement of immigrants who had

migrated into West Bengal due to communal disturbances in

East Bengal provides for the acquisition and development of

land for public purposes including the purpose aforesaid:

Held, that the provisions of s. 8 of the West Bengal Act XXI

of 1948 making the declaration of the Government. conclusive

as to the public nature of the purpose of the acquisition

and the limitation of the amount of compensation so as not

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to exceed the market value of the land on December 31, 1946,

are ultra vires the Constitution and void

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(i)inasmuch as art. 31(2) of the Constitution made the

existence of a public purpose a necessary condition of

acquisition, the existence of such a purpose as a fact must

be established objectively ;

(ii)that in view of the fact that the impugned Act is a

permanent enactment and lands may be acquired under it many

years after it came into force, the fixing of the market

value on December 31, 1946, as the coiling on compensation

without reference to the value of the land at the time of

acquisition, is arbitrary and cannot be regarded as due

compliance in letter and spirit with the

requirements of art. 31(2)

(iii)the Act is not saved by art. 31(5) from the operation

of art. 31(2) as it was not certified by the President as

provided

for by art. 31(6).

Held, further, that while entry No. 42 of List III of the

Seventh Schedule confers on the legislature the

discretionary power of laying down the principles which

should govern the determination of the amount to be given to

the owner of the property appropriated, art. 31(2) requires

that 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. 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.

JUDGMENT:

CiviL APPELLATE JURISDICTION: Civil Appeal No. 123 of 1952.

Appeal against the Judgment and Order, dated the 22nd March,

1951, of the High Court of Judicature at Calcutta (Harries

C.J. and Banerjee J.) , in Reference No. 2 of 1951 in Civil

Rules Nos. 20 and 21 of 1950.

1953. December 11. The Judgment of the Court was delivered

by

PATANJALI SASTRI C.J.--This is an appeal from a judgment, of

the High Court of Judicature at Calcutta declaring certain

provisions of the West Bengal Land Development and Planning

Act, 1948, (hereinafter referred to as the "impugned Act ")

unconstitutional and void.

The impugned Act was passed on October 1, 1948, primarily

for the settlement of immigrants who had migrated into the

Province of West Bengal due to communal disturbances in East

Bengal,and it

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provides for the acquisition and development of land for

public purposes' including the purpose aforesaid. A

registered Society called the West Bengal Settlement

Kanungoe Co-operative Credit Society Ltd., respondent No. 4

herein, was authorised to undertake a development scheme,

and the Government of the State of West Bengal, the

appellant herein, acquired and made over certain lands to

the society for purposes of the development scheme on

payment of the estimated- cost of the acquisition. On July

28, 1950, the respondents I to 3, the owners of the lands

thus acquired, instituted a suit in the Court of the

Subordinate Judge, 11 Court at Alipore, District 24-

Parganas, against the society for a declaration that the

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impugned Act was void as contravening the Constitution and

that all the proceedings taken thereunder for the

acquisition aforesaid were also void, and of no effect and

for other consequential reliefs. The State of West Bengal

was subsequently impleaded as a defendant. As the suit

involved questions of interpretation of the Constitution

respondents 1 to 3 also moved the High Court under article

228 of the Constitution to withdraw the suit and determine

the constitutional question. The suit was accordingly

transferred to the High Court and the matter was heard by a

Division Bench (Trevor Harries C.J. and Banerjee J.) who, by

their final judgment, held that the impugned Act as a whole

was not .unconstitutional or void save as regards two of the

provisions contained in section 8 which, so far as it is

material here, runs as follows:-

"A declaration under section 6 shall be conclusive evidence

that the land in respect of which the declaration is made is

needed for a public purpose and, -after making, such

declaration, the Provincial Government may acquire the land

and thereupon the provisions of the Land Acquisition Act,

1894, (hereinafter in this section referred to as%, the said

Act), shall, so far as may be, apply:

Provided that-

(b) in determining the amount of compensation to be awarded

for land acquired in pursuance of this

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Act the market value referred to in clause first of sub-

section (1) of section 23 of the said Act shall be deemed to

be the market value of the land on the date of publication

of the notification under sub-section (1) of section 4 for

the notified area in which the land is included subject to

the following condition, that is to say-

if such market value exceeds by any amount the market value

of the land on the 3 1 st day of December, 1946, on the

assumption that the land had been at that date in the state

in which it in fact was on the date of publication of the

said notification, the amount of such excess shall not be

taken into consideration. "

The provision making the declaration of the Government

conclusive as to the public nature of the purpose of the

acquisition and the limitation of the amount of compensation

so as not to exceed the market value of the land on December

31, 1946, were declared ultra vires the Constitution and

void.

The Attorney-General, appearing for the appellant, rightly

conceded that inasmuch as article 31(2) made the existence

of a public purpose a necessary condition of acquisition the

existence of such a purpose as a fact must be established

objectively and the provision in section 8 relating to the

conclusiveness of the declaration of Government as to the

nature of the purpose of the acquisition must be held

unconstitutional but he contended that the provision was

saved by article 31(5)of the Constitution which provides:

"Nothing in clause (2) shall affect-(a) the provisions of

any existing _ law other than a law to which the provisions

of clause (6) apply, or.................. " Clause (6) reads

thus:

"Any law of the State enacted not more than eighteen months

before the commencement of this Constitution may within

three months from such commencement be submitted to the

President for his certification; and, thereupon, if the

President public notification so certifies, it shall not be

called question in any court on the ground that it contract

the provisions of clause (2) of this article,

562.

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contravened the provisions of sub-section (2) of section 299

of the Government of India Act, 1935."

It was argued that the impugned Act having been passed

within 18 months before the commencement of the Constitution

and not having been submitted to the President for his

certification, it was a law to which the provisions of

clause (6) did not apply and, therefore, as an existing law,

the impugned Act was not affected by clause (2) of that

article. The argument is manifestly unsound. Article 31(6)

is intended to save a State law enacted within 18 months

before the commencement of the Constitution provided the

same was certified by the President while, article 31(5)

saves all existing laws passed more than 18 months before

the commencement of the Constitution. Reading the two

clauses together, the intention is clear that an existing

law passed within 18 months before January 26, 1950, is not

to be saved unless it was submitted to the President within

three months from such date for his certification and was

certified by him. The argument, if accepted, would reduce

article 31(6) to ameaningless redundancy.

The only serious controversy in the appeal centred round the

constitutionality of the " condition " in proviso (b) to

section 8 limiting the compensation payable so as not to

exceed the market value of the land on December 31, 1946.

The Attorney-General, while conceding that the word "

compensation " taken by itself must mean a full and fair

money equivalent, urged that, in the context of article

31(2) read with entry No. 42 of List III of the Seventh

Schedule, the term was not used in any rigid sense importing

equivalence in value but had reference to what the legisla-

ture might think was a proper indemnity for the loss

sustained by the owner. Article 31(2) provides:

No property, movable or immovable, including any interest

in, or in any company owning, any commercial or industrial

undertaking, shall be taken sesion of or acquired for public

purposes under law authorising the taking of such possession

acquisition, unless the law provides for

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compensation for the property taken possession of or

acquired and either fixes the amount of the compensation, or

specifies the principles on which, and the manner in which,

the compensation is to be determined and given.

and entry 42 of List III reads thus

Principles on which compensation for property acquired or

requisitioned for the purposes of the Union or of a State or

for any other public purpose is to be determined, and the

form and the manner in which such compensation is to be

given.

It is argued that the term " compensation " in entry 42

could not mean full cash equivalent, for then, the power

conferred on the legislature to lay down the principles on

which compensation is to be determined and the form and the

manner in which such compensation is to be given would be

rendered nugatory. On the other hand, the entry showed that

the compensation to be "given " was only " such compensation

" as was determined on the principles. laid down by the law

enacted in exercise of the power, and, as the concluding

words used in article 31(2) are substantially the same as in

the entry, the Constitution, it was claimed, left scope for

legislative discretion in determining the measure of the

indemnity.

We are unable to agree with this view. While it is true

that the, legislature 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

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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

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564

to be neglected, is a justiciable issue to be adjudicated by

the court. This, indeed, was not disputed.

Reference was made to certain Australian cases where the

opinion was expressed that the terms of compulsory

acquisition of property were matters of legislative policy

and judgment. The decisions largely turned on the absence

of any constitutional prohibition in regard to deprivation

of private property without compensation as in the Fifth

Amendment of the American Constitution and on the use of the

words " just terms " instead of " compensation " in section

51 (xxxi) of the Commonwealth Constitution which conferred

power on the Parliament to make laws with respect to " the

acquisition of property on just terms from any State or

person.......... " (cf. Grace Brothers Pty. Ltd. v. The

Commonwealth(1). Those decisions, therefore, are of no

assistance to the appellant here.

Turning now to the provisions relating to compensation under

the impugned Act, it will be seen that the latter part of

the proviso to section 8 limits the amount of compensation

so as not to exceed the market value of the land on December

31, 1946, no matter when the land is acquired. Considering

that the impugned Act is a permanent enactment and lands may

be acquired under it many years after it came in. to force,

the fixing of the market value on December 31,1946, as the

ceiling on compensat I ion, without reference to the value

of the land at the time of the acquisition is arbitrary and

cannot be regarded as due compliance in letter and spirit

with the requirement of article 31 (2). The fixing of an

anterior date for the ascertainment of value may not, in

certain circumstances, be a violation of the constitutional

requirement as, for instance, when the proposed scheme of

acquisition becomes known before it is launched and prices

rise sharply in anticipation of the benefits to be derived

under it, but the fixing of an anterior date, which might

have no relation to the value of the land when it is

acquired, may be, many years later, cannot but be regarded

as arbitrary. The learned Judges

(1) 72 C.L.R. 269.

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below observe that it is common knowledge that since the end

of the war land, particularly around Calcutta, has increased

enormously in value and might still further increase very

considerably in value when the pace of industrialisation

increases. Any principle for determining compensation which

denies to the owner this increment in value cannot result in

the ascertainment of the true equivalent of the land

appropriated.

We accordingly hold that the latter part of proviso (b) to

section 8 of the impugned Act which fixes the market value

on December 31, 1946, as the maximum compensation for lands

acquired under it offends against the provisions of article

31 (2) and is unconstitutional and void. The appeal is

dismissed with costs.

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Appeal dismissed.

Agent for the appellant: P. K. Bose.

Agent for respondents Nos. 1, 2 and 3: S. C. Banerjee.

Agent for the intervener: G. H. Rajadhyaksha.