ition Civil No 305 of 1988
Under Article 32 of the Constitution of India
Soli J Sorabjee Harish N Salve Vasant Mehta Atul Tewari and Miss Bina Gupta for the Petitioners
Satish Chandra Anil B Divan Dr YS Chitale PV Kapur Anil Kumar Sharma PP Malhotra Naresh Sharma Solicitor General TVSN
Chari Badri Nath Ms V Grover Attorney General A Subba Rao Miss A Subhashini KJ John section Swarup and Miss Naina Kapur for the Respondents
The Judgment of the Court was delivered by SABYASACHI MUKHARJI J
By the order passed by us on 741 29th March 1988 we had dismissed this petition under Article 32 of the Constitution
We had further observed that we will indicate our reasons by a separate judgment
We do so herein
This petition under Article 32 of the Constitution challenges the constitutional validity of the Swadeshi Cotton Mills Limited Acquisition and Transfer of Undertakings Act 1986 hereinafter called the Act 
It appears that there was an order made by the Central Government under Section 18AA1a of the Industries Development  Regulation Act 1951 hereinafter called the IDR Act  for taking over the management of the six undertakings of Swadeshi Cotton Mills namely i Swadeshi Cotton Mills Kanpur ii Swadeshi Cotton Mills Pondicherry iii Swadeshi Cotton Mills Naini iv Swadeshi Cotton Mills Maunath Bhanjan v Udaipur Cotton Mills Udaipur and vi Rae Bareli Textile Mills Rae Bareli for a period of five years
There were several proceedings in the High Court of Delhi and in other High Courts
It is not necessary in view of the judgment of this Court in SLP Civil Nos
4826  7045 of 1987 Ms Doypack Systems Pvt Ltd vs Union of India and others dated 12th February 1988 to set out in extenso all these facts
By the aforesaid judgment it was held that the 1000000 shares in Swadeshi Polytex Limited and 1718344 shares in Swadeshi Mining and Manufacturing Company Limited held by the Swadeshi Cotton Mills vested in the Central Government and National Textile Corporation hereinafter called NTC  under sections 3 and 4 of the Act
It was further held that in view of the amplitude of the language used the immovable properties namely the Bungalow No 1 and the Administrative Block Civil Lines Kanpur had also vested in NTC Directions were given by this Court in the said judgment to enter the name of the NTC in its register of members of the said Companies and to treat the NTC as their shareholder instead of other erstwhile shareholders
This petition under Article 32 of the Constitution has been filed by the petitioners who claim to be shareholders of respondent No 4 Swadeshi Cotton Mills Company Limited as they have an interest in the business affairs and properties of the Swadeshi Cotton Mills Company Limited and Swadeshi Mining and Manufacturing Company Limited
It was contended that the effect of the aforesaid decision was to take away valuable assets of respondent No 4 namely Swadeshi Cotton Mills Limited without paying any compensation whatsoever therefore and further it imposed upon respondent No 4 liabilities without any corresponding assets available to discharge the liabilities
It was the contention in this writ petition that the said acquisition 742 virtually amounted to confiscation of the shares of respondent No 5 and respondent No 6 held by respondent No 4 and substantially damaged the rights of the shareholders of respondent No 4
In the premises it was submitted that they have the locus to challenge the vires and constitutional validity of sections 3 and 4 of the said Act in so far as these seek to divest respondent No 4 of the shares in respondent No 5 and respondent No 6 and certain other excluded assets
It was submitted that so far as the said Act provided for the vesting of shares held by respondent No 4 in respect of respondent Nos 5 and 6 it constituted a fraud on legislative power
It was submitted that there was no public purpose in such acquisition
It is taxation and appropriation and not nationalisation
It was further urged that it was contrary to the preamble to the Act because according to the preamble it was to ensure continuance of the manufacture production and distribution of different varieties of cloth and yarn which were vital to the needs of the country
The industrial undertaking of respondent No 5 produces sugar
The industrial undertaking of respondent No 6 produces synthetic fibre
Therefore both these companies or undertakings are producing neither cloth nor yarn
Therefore it was submitted that in any event the stated public purpose has no nexus with the acquisition of shares of respondent No 5 and respondent No 6 and as such the acquisition of the shares of respondent Nos 5 and 6 is without there being any public purpose
It was submitted that if the Act was so read then it was violative of Article 14 and Article 191g of the Constitution
It was submitted that the acquisition must be for a public purpose and there must be some compensation paid for that acquisition
It was submitted that implicit in the concept of acquisition which is akin to the power of eminent domain is the concept of payment of compensation
It was urged that after the legislative change made by the Constitution Seventh Amendment Act 1956 the power of the State as well as of the Union to enact any law governing acquisition of property must necessarily be governed by the provisions of Entry 42 in List III of the Seventh Schedule to the Constitution
After the amendment there was no specific Entry in List III which empowered the Union or the States to enact law for payment of compensation so it is now implicit in the concept of acquisition and requisition of property
It was further urged that under Article 300 A of the Constitution no person could be deprived of his property save by the authority of law
It was further submitted that the law contemplated by this Article was obviously a law providing for acquisition of property and therefore it was inter linked with Entry 42 of List III of the Seventh Schedule to the Constitution
All these contentions in our opinion are not tenable because all these contentions were directly or indirectly dealt with in 743 the aforesaid judgment
The preamble to the Act provides as follows An Act to provide for the acquisition and transfer of certain textile undertakings of the Swadeshi Cotton Mills Co Ltd with a view to securing the proper management of such undertakings so as to sub serve the interests of the general public by ensuring the continued manufacture production and distribution of different varieties of cloth and yarn and thereby to give effect to the policy of the State towards securing the principles specified in clauses b and c of Article 39 of the Constitution and for matters connected therewith or incidental thereto
WHEREAS the Swadeshi Cotton Mills Co Ltd has through its six textile undertakings been engaged in the manufacture and production of different varieties of cloth and yarn AND WHEREAS the management of the said textile undertakings was taken over by the Central Government under section 18AA of the Industries Development and Regulation Act 1951 AND WHEREAS large sums of money have been invested with a view to making the said textile undertakings viable AND WHEREAS further investment of very large sums of money is necessary for the purpose of securing the optimum utilisation of the available facilities for the manufacture production and distribution of cloth and yarn by the said textile undertakings of the Company AND WHEREAS such investment is also necessary for securing the continued employment of the workmen employed in the said textile undertakings AND WHEREAS it is necessary in the public interest to acquire the said textile undertakings of the Swadeshi Cotton Mills Company Ltd to ensure that the interests of the general public are served by the continuance by the said undertakings of the Company of the manufacture production and distribution of different varieties of cloth and yarn which are vital to the needs of the country 744 AND WHEREAS such acquisition is for giving effect to the policy of the State towards securing the principles specified in clauses b and c of Article 39 of the Constitution
It is not correct that no public purpose was served by acquisition
The reason for the taking over had been canvassed and discussed in the aforesaid judgment
It was observed in the aforesaid judgment as follows It appears to us that sections 3 and 4 of the Act evolve a legislative policy and set out the parameters within which it has to be implemented
We cannot find that there was any special intention to exclude the shares in this case as seen from the existence of at least four other Acquisition Acts which used identical phraseology in sections 3 and 4 and in other sections as well
Reference was made to the Aluminium Corporation of India Limited Acquisition and Transfer of Aluminium Undertakings Act 1984 the Amritsar Oil Works Acquisition and Transfer of Undertakings Act 1982 the Britannia Engineering Company Limited Mohameh Unit and the Arthur Butler and Company Muzaffarpore Limited Acquisition and Transfer of Undertakings Act 1978 and the Ganesh Flour Mills Company Limited Acquisition and Transfer of Under takings Act 1984
In the present case we are satisfied that the shares in question were held and utilised for the benefit of the undertakings for the reasons that a the shares in Swadeshi Polytex Limited were acquired from the income of the Kanpur Unit
Reference may be made to page 23 of Compilation D III b the shares held in Swadeshi Mining and Manufacturing Company were acquired in 1955
Originally there were four companies and their acquisition has been explained fully in the Compilation D III with index c the shares held in SPL were pledged or attached for running the Kanpur undertakings for payment of ESI and Provident Fund dues for the workers of the Kanpur undertaking for wages and payment of electricity dues of the Kanpur undertaking d the shares held in SMMC were pledged for raising monies and loans of Rs150 lakhs from the Punjab National Bank for running the Kanpur undertaking
745 These loans fall in category II of Part I of the Schedule which liabilities have been taken over by the Government e the shares held in SPL were offered for sale by SCM from time to time and to utilise the sale proceeds thereof by ploughing them back into the textile business for reviving the textile undertakings acquired under the Act
It appears to us that the expression forming part of appearing in section 27 cannot be so read with section 41 as would have the effect of restricting or cutting down the scope and ambit of the vesting provisions in section 31
The expression pertaining to does not mean forming part of
Even assuming that the expression pertaining to appearing in the first limb of section 41 means forming part of it would mean only such assets which have a direct nexus with the textile mills as would fall under the first limb of section 41
The shares in question would still vest in the Central Government under the second limb of section 41 of the Act since the shares were bought out of the income of the textile mills and were held by the company in relation to such mills
The shares would also fall in the second limb of section 31 being right and title of the company in relation to the textile mills
On the construction of sections 3 and 4 we have come to the conclusion that the shares vest in the Central Government even if we read sections 3 and 4 in conjunction with sections 7 and 8 of the Act on the well settled principles which we have reiterated before
The expression in relation to  has been interpreted to be the words of widest amplitude
See National Textile Corporation Ltd and others vs Sitaram Mills Ltd supra
Section 4 appears to us to be an expanding section
It introduces a deeming provision
Deeming provision is intended to enlarge the meaning of a particular word or to include matters which otherwise may or may not fall within the main provisions
It is well settled that the word includes  is an inclusive definition and expands the meaning
See The Corporation of the City of Nagpur vs Its Employees  and Vasudev Ramchandra Shelat vs Pranlal Jayanand Thakar and others 1975 1 SCR 534
The words all other rights and interests  are words of widest amplitude
Section 4 also uses the words ownership possession 746 power or control of the Company in relation to the said undertakings
The words pertaining to  are not restrictive as mentioned hereinbefore
 It was further held that section 8 provides for payment of compensation in lumpsum and the transfer and vesting of whatever is comprised in section 3
The compensation provided in section 8 is not calculated as a total of the value of various individual assets
It is a lumpsum compensation
It was observed in the said judgment as follows Section 8 provides for payment of compensation is lumpsum and the transfer and vesting of whatever is comprised in section 3
As section 4 expands the scope of section 3 the compensation mentioned in section 8 is for the property mentioned in section 3 read with section 4
The compensation provided in section 8 is not calculated as a total of the value of various individual assets in the Act
It is a lumpsum compensation
See in the connection the principles enunciated by this Court in Khajamian Wakf Estates etc
vs State of Madras and another supra
There it was held that even if it was assumed that no compensation was provided for particular item the acquisition of the inam  is valid
In the instant case section 8 provides for compensation to be paid to the undertakings as a whole and not separately for each of the interests of the company
Therefore it cannot be said that no compensation was provided for the acquisition of the undertaking as a whole
 Therefore it is incorrect to state that there was no compensation for taking over of the shares and the reasons for providing no separate compensation have been explained in the aforesaid judgment as follows Section 7 of the Act in our opinion neither controls sections 3 and 4 of the Act nor creates any ambiguity
It was highlighted before us and in our opinion rightly that this sum of Rs2432 crores paid by way of compensation comes out of the public exchequer
The paid up shares in its equity capital can necessarily have a face value only of the amounts so paid irrespective of whatever may be contended to be the value of the assets and irrespective of whether any asset or property in relation to the undertak 747 ings was taken into account
After providing for compensation of Rs2432 crores to be paid to the Commissioner for payment to discharge Part I liabilities Government has to undertake an additional 15 crores at least for discharging these liabilities
To leave a company the net wealth of which is negative at the time of take over of the management with the shares held by it as investment in other company in our opinion is not only to defeat the principles of Article 39b and c of the Constitution but it will permit the company to reap the fruits of its mismanagement
That would be an absurd situation
It has to be borne in mind that the net wealth of the company at the time of take over was negative hence sections 3 and 4 can be meaningfully read if all the assets including the shares are considered to be taken over by the acquisition
That is the only irresistible conclusion that follows from the construction of the documents and the history of this Act
We have to bear in mind the Preamble of the Act which expressly recites that it was to ensure the principles enunciated in clauses b and c of Article 39 of the Constitution
The Act must be so read that it further ensures such meaning and secures the ownership and control of the material resources to the community to subserve the common good to see that the operation of the economic system does not result in injustice
We therefore reiterate that the shares vested in the Central Government
Accordingly the shares in question are vested in NTC and it has right over the said 34 per cent of the shareholdings
 It was found by the said judgment that the net wealth of the company was negative and therefore sections 3 and 4 could be meaningfully read if all the assets including the shares were considered to be taken over by the acquisition
That was the only irresistible conclusion that followed from the construction of the documents and the history of the Act
The Act in question was passed to ensure the principles enunciated in clauses b and c of Article 39 of the Constitution
In that context it was held that to leave a company the net wealth of which was negative at the time of take over of the management with the shares hold by it as investment in other company was not only to defeat the principles of Article 39b and c of the Constitution but it would permit the company to reap the fruits of its mismanagement
748 That would be an absurd situation
In this context in our opinion the contentions now sought to be urged are no longer open to the petitioners
Shri Sorabjee drew our attention to the observations of this Court in The State of Bihar vs Maharajadhiraja Sir Kameshwar Singh of Darbhanga and others He relied on the observations of Mahajan J as the learned Chief Justice then was at page 929 of the report
He said Shorn of all its incidents the simple definition of the power to acquire compulsorily or of the term eminent domain  is the power of the sovereign to take property for public use without the owner s consent
The meaning of the power in its irreducible terms is a power to take b without the owner s consent c for the public use
The concept of the public use has been inextricably related to an appropriate exercise of the power and is considered essential in any statement of its meaning
Payment of compensation though not an essential ingredient of the connotation of the term is an essential element of the valid exercise of such power
Courts have defined eminent domain  so as to include this universal limitation as an essential constituent of its meaning
Authority is universal in support of the amplified definition of eminent domain  as the power of the sovereign to take property for public use without the owner s consent upon making just compensation
It is clear therefore that the obligation for payment of just compensation is a necessary incident of the power of compulsory acquisition of property both under the doctrine of the English Common Law as well as under the continental doctrine of eminent domain subsequently adopted in America He also drew our attention to the observations of Mahajan J at pages 934 and 935 to the effect that the existence of a public purpose is undoubtedly an implied condition of the exercise of compulsory power of acquisition by the State but the language of Article 312 of the Constitution does not expressly make it a condition precedent to acquisition
It assumes that compulsory acquisition can be for a public purpose only which is thus inherent in such acquisition
It 749 was further observed at page 935 of the report that public purpose is an essential ingredient in the very definition of the expression eminent domain as given by Nichers and other constitutional writers even though obligation to pay compensation is not a content of the definition but has been added to it by judicial interpretation
The exercise of the power to acquire compulsorily is conditional on the existence of a public purpose and that being so this condition is not an express provision of Article 312 but exists aliunde in the content of the power itself and that in fact is the assumption upon which this clause of the Article proceeds
Our attention was drawn by Shri Sorabjee to the observations of Chandrasekhara Aiyar J at pages 1008 and 1009 of the aforesaid report where the learned Judge observed as follows The payment of compensation is an essential element of the valid exercise of the power to take
In the leading case of Attorney General vs De Keyser s Royal Hotel Ltd  Lord Dunedin spoke of the payment of compensation as a necessary concomitant to the taking of property
Bowen LJ said in London and North Western Ry
Co vs Evans  18 The Legislature cannot fairly be supposed to intend in the absence of clear words showing such intention that one man s property shall be confiscated for the benefit of others or of the public without any compensation being provided for him in respect of what is taken compulsorily from him
Parliament in its omnipotence can of course override or disregard this ordinary principle  if it sees fit to do so but it is not likely that it will be found disregarding it without plain expressions of such a purpose
 The learned Judge further observed that this principle is embodied in Article 312 of the Constitution
Our attention was also drawn by Shri Sorabjee to the observations of Chandrasekhara Aiyar J at pages 1018 and 1019 of the report
Reliance was also placed on the observations of this Court in State of West Bengal vs Union of India 1964 1 SCR 371 where Sinha CJ at pages 433 and 434 of the report observed as follows In Kavalappara Kottarathil Kochuni vs State of Madras 750 it was held that cls
1 and 2 of Article 31 as amended grant a limited protection against the exercise of different powers
By cl
2 of Article 31 property is protected against compulsory acquisition or requisition
The clause grants protection in terms of widest amplitude against compulsory acquisition or requisition of property and there is nothing in the Article which indicates that the property protected is to be of individuals or corporations
Even the expression person  which is used in cl
1 is not used in cls
2 and 2A and the context does not warrant the interpretation that the protection is not to be available against acquisition of State property
Any other construction would mean that properties of municipalities or other local authorities which would admittedly fall within the definition of State in Part III either cannot be acquired at all or if acquired may be taken without payment of compensation
Entry 42 in List III and cl
2 of Article 31 operate in the same field of legislation the former enunciates the content of legislative power and the latter restraints upon the exercise of that power
For ascertaining whether an impugned piece of legislation in relation to acquisition or requisition of property is within legislative competence the two provisions must be read together
The two provisions being parts of a single legislative pattern relating to the exercise of the right which may for the sake of convenience be called of eminent domain the expression property  in the two provisions must have the same import in defining the extent of the power and delineating restraints thereon
In other words Article 312 imposes restrictions on the exercise of legislative power under Entry 42 of List III
Property vested in the State may not therefore be acquired under a statute enacted in exercise of legislative power under Entry 42 unless the Statute complies with the requirements of the relevant clauses of Article 31
 As mentioned hereinbefore these contentions are not open to the petitioners in the instant case
It was held by the judgment of this Court in Ms Doypack Systems Pvt
Ltd supra that there was a public purpose
The public purpose was analysed and spelled out from the different provisions of the Act
Secondly there was compensation for the acquisition of the property
Reference may be made to the observations of the said judgment to the following effect 751 Shri Nariman referred us to the Statement of Objects and Reasons appended to the Bill and urged that it was not intended that the shares were included in the undertaking
He submitted that the Statement of Objects and Reasons showed that the acquisition of the undertaking had to be resorted to since the order of taking over the management of the company issued under section 18AA of the IDR Act could not be continued any further
The preamble to the Act however reiterated that the Act provided for the acquisition and transfer of textile undertakings and reiterated only the historical facts that the management of the textile undertakings had been taken over by the Central Government under section 18AA of the IDR Act and further that large sums of money had been invested with a view to making the textile undertakings viable and it was necessary to make further investments and also to acquire the said undertakings in order to ensure that interests of general public are served by the continuance of the undertakings
The Act was passed to give effect to the principles specified in clauses b and c of Article 39 of the Constitution
In our opinion this was indicative of the fact that shares were intended to be taken over
 The contention of Shri Nariman that there was no public purpose for acquiring these shares had been noted in the judgment at pages 85 and 86 of the paper book
It read as follows Shri Nariman further submitted that Swadeshi Polytex Limited and Swadeshi Mining and Manufacturing Company Limited were two separate undertakings distinct from the six textile undertakings belonging to Swadeshi Cotton Mills Company Limited
Acquisition of these shares having controlling interests in the said two companies was never intended and could never be said to be within the scope of the Act
The expression in relation to the six textile undertakings appearing in sections 3 and 4 of the Act was an expression of limitation according to him indicative of the intention of acquiring of only the textile undertakings and no other
There existed no public purpose according to Shri Nariman for acquiring these shares
The public purposes mentioned in the Act with 752 reference to Article 39b and c related to the acquisition of only the textile undertakings of Swadeshi Cotton Mills and not acquisition of the synthetic fibre undertakings of Swadeshi Polytex or sugar undertakings of Swadeshi Mining and Manufacturing Company Limited
 These contentions were dealt with and repelled as mentioned in the passages set out hereibefore
We reiterate the said reasons
It has further to be borne in mind that the shares held in the Swadeshi Polytex Limited themselves were the subject matter of both pledge and attachment to secure loans from the UP State Government of about Rs66 lakhs for payment of wages to workers of the Kanpur undertaking and Rs95 lakhs being electricity dues of the Kanpur undertaking owing to the UP State Electricity Board
From all these it would appear that the acceptance of the petitioners  case would mean that the State would pump in Rs15 crores of public money to release the shares from its liabilities and thereafter hand over the shares free from such liability back to the company when the net worth of the company at the time of take over of management was negative and in the teeth of the present financial liabilities built up by the company the shares would inevitably have been sold in discharge of its liabilities and in any event the shares stood charged with the very liabilities which related to the undertakings of the company which were taken over by the Government
Therefore it is incorrect to say that there was no public purpose for taking over these shares
It would be absurd to say that there was no compensation paid for the said acquisition
The relevant observations in the judgment dealing with this contention have been set out hereinbefore
Learned Attorney General drew our attention to the observations of this Court in Smt
Somavanti and others vs The State of Punjab and others where at page 792 of the report this Court analysed the submissions based on the observations of this Court in State of Bihar vs Maharajadhiraja Sir Kameswarsingh of Darbhanga supra that the exercise of power to acquire compulsorily is conditional on the existence of public purpose and that being so this condition is not an express provision of Article 312 but exists aliunde in the content of the power itself
That however was not the view of the other learned Judges who constituted the Bench
According to Mukherjea J as the learned Chief Justice then was the condition of the existenc of a public purpose is implied in Article 312
See the observations in Maharajadhiraja Sir Kameswarsingh s case at pages 957 and 958
Das J as the learned Chief Justice then was was 753 also of the same view
See the observations in the aforesaid decision at pages 986 and 988
Similarly Patanjali Sastri CJ had also taken the view that the existence of public purpose is an express condition of clause 2 of Article 31
This Court reiterated in Somavanti s case supra at page 792 of the report that the Constitution permitted acquisition by the State of private property only if it is required for a public purpose
Furthermore we are of the opinion that the law as declared by this Court in Doypack Systems Pvt
Ltd is binding on the petitioners and this question is no longer res integra in view of Article 141 of the Constitution
See the observations of this Court in Ms Shenoy and Co represented by its partner Bele Srinivasa Rao Street Bangalore and others vs The Commercial Tax Officer Circle II Bangalore and others  where this Court observed that the judgment of this Court in Hansa Corporations  case reported in  is binding on all concerned whether they were parties to the judgment or not
This Court further observed that to contend that the conclusion therein applied only to the parties before this Court was to destroy the efficacy and integrity of the judgment and to make the mandate to Article 141 illusory
In that view of the matter this question is no longer open for agitation by the petitioners
It is also no longer open to the petitioners to contend that certain points had not been urged and the effect of the judgment cannot be collaterally challenged
See in this connection the observations of this Court in T Govindaraja Mudaliar etc
vs The State of Tamil Nadu and others 1973 3 SCR 222 where this Court at pages 229 and 230 of the report observed as follows The argument of the appellants is that prior to the decision in Rustom Cavasjee Cooper s case it was not possible to challenge Chapter IV A of the Act owing to the decision of this Court that article 191f could not be invoked when a case fell within article 31 and that was the reason why this Court in all the previous decisions relating to the validity of Chapter IV A proceeded on an examination of the argument whether there was infringement of article 191g and clause f of that Article could not possibly be invoked
We are unable to hold that there is much substance in this argument
Bhanji Munji and other decisions which followed it were based mainly on an examination of the inter relationship between Article 191g and Article 754 312
There is no question of any acquisition or requisition in Chapter IV A of the Act
The relevant decision for the purpose of these cases was only the one given in Kochuni s case after which no doubt was left that the authority of law seeking to deprive a person of his property otherwise than by way of acquisition or requisition was open to challenge on the ground that it constituted infringement of the fundamental rights guaranteed by article 191f
It was therefore open to those affected by the provisions of Chapter IV A to have agitated before this Court the question which is being raised now based on the guarantee embodied in article 191f which was never done
It is apparently too late in the day now to pursue this line of argument in this connection we may refer to the observations of this Court in Mohd Ayub Khan vs Commissioner of Police Madras  Another according to which even if certain aspects of a question were not brought to the notice of the court it would decline to enter upon re examination of the question since the decision had been followed in other cases
In Smt
Somavanti  others vs The State of Punjab and others 1963 2 SCR774 a contention was raised that in none of the decisions the argument advanced in that case that a law may be protected from an attack under Article 312 but it would be still open to challenge under Article 191f had been examined or considered
Therefore the decision of the Court was invited in the light of that argument
This contention however was repelled by the following observations at page 794 The binding effect of a decision does not depend upon whether a particular argument was considered therein or not provided that the point with reference to which an argument was subsequently advanced was actually decided
 In view of the preamble to the Act which states and proclaims that the Act was passed to carry out the object of Article 39b and c of the Constitution and in view of the scheme of the Act as analysed before us and as also apparent from the aforesaid judgment it is clearly manifest that the Act in question was passed for a public purpose and for the acquisition of shares there was a public purpose
The acquisition subserved the object of the Act
The compensation in the manner indicated above and in the manner indicated in the 755 aforesaid judgment for such acquisition have been provided for
No separate compensation need be provided in the circumstances of the case for these shares
The factual basis for the legal challenge made in this writ petition was therefore incorrect in the facts of this case
It is apparently too late in the day to contend that there was no compensation for the shares or that the acquisition of the shares amounted to confiscation or there was no public purpose in the Act
The petition in our opinion is wholly devoid of any merit
For these reasons this writ petition fails and is accordingly dismissed
SL Petition dismissed


Summary:
A suit for redemption of two mortgages was filed in the Court of Subordinate Judge by the respondents the successors in interest of the original mortgages
A preliminary decree for redemption was passed with a declaration of the amount due from the mortgagors to the mortgagee
The mortgagors were directed to pay the amount within six months to get the property redeemed failing which the mortgagee could apply for a final decree for sale
On failure of the mortgagors to make the payment a final decree for sale was passed
Although the final decree for sale of the mortgaged property had been passed the mortgagee did not execute the decree which became time barred
The mortgagee and after him his heirs and legal representatives however continued to be in possession of the mortgaged property
The respondents filed a second suit for redemption of the mortgages in the Court of the Joint Civil Judge against the appellants the heirs and legal representatives of the original mortgagee
The Joint Civil Judge came to the findings that notwithstanding the preliminary decree or final decree passed in the previous suit the mortgagors  right of redemption was not extinguished and the respondents were entitled to redeem the mortgages
The plea of protected tenancy of the appellants was negatived by the Judge
The Joint Civil Judge held that the respondents were entitled to redeem the mortgages on payment to the appellants of a sum including interest calculated by application of the rule of Damdupat and a preliminary decree for redemption was passed under Order XXXIV rule 7 of the Code of Civil Procedure in respect of both the mortgages with directions regarding payment of the amount and delivery of actual possession of the mortgaged property etc to the respondents as also for a final decree for foreclosure in case of default of payment etc
690 Aggrieved by the judgment of the Joint Civil Judge the appellants preferred an appeal to the High Court
The High Court dismissed the appeal with a modification
Aggrieved by the decision of High Court appellants appealed to this Court for relief by Special leave
The appellants challenged the findings of the High Court as to the maintainability of the second suit for redemption out of which this appeal arose and the applicability of the rule of Damdupat
Dismissing the appeal the Court  HELD Sec
60 of the Transfer of Property Act confers a right of redemption on the mortgagor
The right of redemption will be extinguished 1 by the act of the parties or 2 by the decree of a Court
The Court was concerned in this case with the question whether by the preliminary decree or final decree passed in the earlier suit the right of the respondents to redeem the mortgages had been extinguished
The decree referred to in the proviso to section 60 of the Transfer of Property Act is a final decree in a suit for foreclosure as provided in sub rule 2 of Rule 3 of Order XXXIV and a final decree in a redemption suit as provided in Order XXXIV Rule 83a of the Code of Civil Procedure
Sub rule 2 of rule 3 inter alia provides that where payment in accordance with Sub rule 1 has not been made the Court shall on an application made by the plaintiff in this behalf pass a final decree declaring that the defendant and all persons claiming through or under him are debarred from all right to redeem the mortgaged property and also if necessary ordering the defendant to put the plaintiff in possession of the property
Thus in a final decree in a suit for foreclosure on the failure of the defendant to pay all amounts due the extinguishment of the right of redemption has to be specifically declared
Again in a final decree in a suit for redemption of mortgage by conditional sale or for redemption of an anomalous mortgage the extinguishment of the right of redemption has to be specifically declared as provided in clause a of sub rule 3 of Rule 8 of Order XXXIV of the Code of Civil Procedure
These are the two circumstances 1 a final decree in a suit for foreclosure under Order XXXIV Rule 32 and 2 a final decree in a suit for redemption under Order XXXIV Rule 83a of the Code of Civil Procedure when the right of redemption is extinguished
696A G In this case the earlier suit was not a suit for foreclosure nor was either of the mortgages a mortgage by conditional sale or an anomalous mortgage and accordingly there was no declaration in the final decree 691 passed in the earlier suit for redemption that the respondents would be debarred from all right to redeem the mortgaged property
In a suit for redemption a mortgage other than a mortgage by conditional sale or an anomalous mortgage the mortgagor has a right of redemption even after the sale has taken place pursuant to the final decree but before the confirmation of such sale
In view of the provisions of Order XXXIV the question of merger of mortgage debt in the decretal debt does not arise at all
The decision of the Patna High Court in Sheo Narain Sah vs Mt Deolochan Kuer AIR 1948 Patna 208 relied upon by the appellants is erroneous in so far as it laid down the merger of the mortgage debt in the decreta debt and the consequent extinguishment of the right of redemption of the mortgagor after the passing of the final decree in a suit for redemption
The right of redemption will stand extinguished only under the circumstances mentioned in the proviso to section 60 of the Transfer of Property Act that is 1 by the Act of party of 2 by a decree of Court as aforementioned
The contention of the appellants that as a final decree was passed in the earlier redemption suit there was a merger of the mortgage debt in the decretal debt and as such the second suit for redemption was barred was without any substance
696G H697A D The appellants contended that the rule of Damdupat was applicable only to a simple loan transaction and not a transaction of mortgage
The Court could not appreciate this contention
698D It is an equitable rule debarring the creditor to recover at any given time the amount of interest which is in excess of the principal amount due at that time
In every mortgage there are two aspects namely 1 loan and 2 transfer of interest in immovable property
As mortgage is principally a loan transaction there is no reason why the rule of Damdupat which is an equitable rule should not apply also to a mortgage
On the application of the rule of Damdupat law was not correctly laid down in Madhwas Sidhanta Onahini Nidhi vs Venkataramanjulu Naidu ILR 26 Madras 662
The decisions in Kunja Lal Banerji vs Narsamba Debi ILR  Jeewan Bai vs Monordas Lachmondas ILR and Bapurao vs Anant Kashinath AIR 1946 Nagpur 210 rightly held that the rule of Damdupat is applicable to mortgages
698C E699F G The Judgment and decree of the High Court were affirmed
699G Raghunath Singh vs Mt Hansraj Kunwar AIR 1934 PC 205 referred to
692 Madhwa Sidhanta Onahini Nidhi vs Venkataramanjulu Naidu ILR 26 Madras 662 disapproved
Sheo Narain Sah vs Mt Deolochan Kuer AIR 1948 Patna 208 held erroneous on the question of merger of the mortgage debt in decretal debt and the consequent extinguishment of the right of redemption of mortgagor after the final decree
697D Kunja Lal Banerji vs Narsamba Debi ILR  Jeewanbai vs Monordas Lachmondas ILR and Baburao vs Anant Kashinath AIR 1946 Nagpur 210 approved