Appeals Nos
6 to 12 of 1963
Appeals from the judgment and decree dated February 2 1959 of the Madras High Court in Writ Petition Nos
1 2 202 203 204 309 and 373 of 1958
A Ranganadham Chetty and A V Rangam for the appellants in all the appeals
R Gopalakrishnan for the respondent in CA No 1163
section V Gupte Additional Solicitor General and R H Dhebar for interveners Nos 1 and 2
M C Setalvad N section Bindra and R H Dhebar for intervener No 3
G C Kasliwal Advocate General Rajasthan R H Dhebar and B R G K Achar for intervener No 4
938 March 3 1964
The Judgment of the Court was delivered by SHAH J
Whether sections 2 and 3 of the Madras Lignite Acquisition of Land Act XI of 1953 which seek to amend the Land Acquisition Act 1 of 1894 in their application to acquisition of lignite bearing lands are invalid because they infringe the fundamental right under article 31 of the Constitution of owners of lands whose property is to be compulsorily acquired is the only question which falls to be determined in this group of appeals
Investigations conducted by the Geological Survey of India in 1947 revealed deposits of lignite in the South Arcot District of the State of Madras and exploratory mining operations were commenced by the Government of Madras
Discovery of deposits of lignite led to speculation in lands
On October 6 1948 the Government of Madras issued a Press Note announcing that the Government proposed to undertake legislation reserving power to compel any person who had purchased land on or after a date to be prescribed in 1947 in the lignite bearing areas to sell such lands to the Government at the rate at which it was purchased
The Government also advised the owners of the lignite bearing lands in the Vriddhachalam and Cuddalore taluks not to sell their lands to speculators
On January 7 1953 the Government of Madras published a Bill to amend the Land Acquisition Act 1 of 1894 in certain respects
The Bill was duly passed by the State Legislature on June 2 1953 and received the assent of the President
It was published as an Act on June 10 1953 and came into force on August 20 1953
By this Act substantially three provisions are made 1 that compensation for acquisition of lignitebearing lands under the Land Acquisition Act as amended is to be assessed on the market value of the land prevailing on April 28 1947 and not on the date on which the notification is issued under section 41 of the Land Acquisition Act 939 2 power is reserved under section 17 of the Land Acquisition Act to take possession in cases of urgency of lands for the purpose of working lignite mines in the areas in which the Madras Lignite Acquisition of Land Act XI of 1953 extends and 3 in assessing the market value of the land on April 28 1947 value of any non agricultural improvements on the land commenced made or effected after that date are not to be taken into account even if such improvements were made before the date of publication of the notification under section 41 of the Land Acquisition Act
Pursuant to this Act notifications under section 41 of the Land Acquisition Act were issued between the months of January and May 1957 notifying for acquisition certain lands in Vriddachalam taluk of the South Arcot District
These notifications were followed by notifications under section 6 of the Land Acquisition Act
Between the months of May and November 1957 the Land Acquisition Officer made his awards under section 11 of the Land Acquisition Act assessing compensation on the basis of market value of the lads on April 28 1947 and ignoring in the computation of compensation the value of houses built or other non agricultural improvements made on the land since that date
The owners of the lands affected by these awards submitted petitions under article 226 of the Constitution to the High Court of Judicature at Madras challenging the validity of the awards on the ground that the provisions of Madras Act XI of 1953 violated the fundamental right of the owners of the lands under article 312 of the Constitution
They claimed that the Land Acquisition Officer was bound to award compensation for acquisition of their lands and buildings at the market value prevailing on the respective dates of the notifications under section 41 and that awards valuing the lands at the market rate prevailing on April 28 1947 and excluding the value of buildings constructed after that date and trees thereon were without jurisdiction
The petitioners accordingly claimed that writs of mandamus be 940 issued directing the State of Madras and the Land Acquisi tion Officers to refrain from taking possession of the land and buildings from the petitioners without payment of adequate compensation and for other appropriate relief
The High Court upheld the contention of the petitioners and declared that the awards made on the basis of the provisions of Madras Act XI of 1953 could not be sustained
Against the order passed by the High Court these appeals have been preferred by the State of Madras with certificate of fitness granted by the High Court under article 132 of the Constitution
The Madras Act XI of 1953 makes an important departure from the scheme of the Land Acquisition Act 1 of 1894
Under the Land Acquisition Act 1 of 1894 a person interested in any land
compulsorily acquired is entitled to the market value of his interest in the land at the date of the publication of the notification under section 41 and this compensation includes the value of all improvements agricultural and non agricultural made in the land upto the date of the notification
By Madras Act XI of 1953 compensation made payable for compulsory acquisition of land is the value of the land on April 28 1947 together with the value of any agricultural improvements made thereon after that date and before publication of the notification under section 41
The result of the Madras Act is therefore to freeze for the purpose of acquisition the prices of land in the area to which it applies and the owners are deprived of the benefit of appreciation of land values since April 28 1947 whenever the notification under section 41 may be issued and also of non agricultural improvements made in the land after April 28 1947
Departure from the provisions of the Land Acquisition Act is challenged as illegal on the ground that it deprives the owner of the land of just compensation for compulsory acquisition of his property
Madras Act XI of 1953 was passed before the Constitution Fourth Amendment Act 1955 was enacted and we have to deal with the question of the validity of the Act in the light of the constitutional provisions contained in article 31 before the constitutional amendment
We may 941 make it clear that for the purpose of this judgment we express no opinion on the question whether it is possible by enacting legislation after the amendment of article 312 by the Constitution Fourth Amendment Act 1955 which is not given any retrospective operation to provide that compensation for compulsory acquisition of land may be fixed on the basis of market value prevailing on a date Anterior to the date of the issue of the notification under section 41
Article 31 before it was amended by the Constitution Fourth Amendment Act 1955 by its cls
1 and 2 provided 1 No person shall be deprived of his property save by authority of law
2 No property movable or immovable including any interest in or in any company owning any commercial or industrial undertaking shall be taken possession of or acquired for public purposes under any law authorising the taking of such possession or such acquisition unless the law provides for 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
 It was held by this Court in Chiranjit Lal Chowdhuri vs Union of India and others1 and The State of West Benga vs Subhodh Gopal Bose and others2 that cls
1 and 2 of article 31 relate to the same subject of eminent domain By article 31 therefore every person was protected agains deprivation of his property save by authority of law an the law authorising taking possession or acquisition of property for public purposes had to fix the quantum o compensation or to specify principles on which compensa tion was to be determined for the property
taken possession of or acquired
Power to legislate in respect of compensa tion for acquisition and requisitioning of property was 1  2  942 contained in Entry 42 List III of the Seventh Schedule and read as follows  Principles on which compensation for property acquired or requisitioned for the purpose 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
 The Constitution therefore conferred by article 312 fundamental right upon every person protecting his property against compulsory acquisition otherwise than by authority of law and without just indemnification for loss suffered by him
In The State of West Bengal vs Mrs Bela Banerjee and others1 this Court observed that when under Entry 42 List III the Legislature was given discretionary power to lay down the principles which should govern determination of the amount to be given to the owner of the property appropriated such principles must ensure that what is determined as payable must be a just equivalent of what the owner has been deprived of and that subject to this basic limitation the Constitution allowed free play to the legislative judgment as to what principles should guide the determination of the amount payable
The Court therefore held that the West Bengal Land Development and Planning Act 1948 which was enacted primarily for the settlement of immigrants who had migrated into West Bengal due to communal disturbances in East Bengal and which by section 8 provided that the compensation to be awarded for compulsory acquisition to the owner of the land was not to exceed the market value on December 31 1946 was ultravires the Constitution and void under article 312 of the Constitution
It was observed at p 564  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 1  943 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 into force the fixing of the market value on December 31 1946 as the ceiling on compensation without reference to the value of the land at the time of the acquisition is arbitrary and cannot be regarded as due com pensation in letter and spirit with the requirement of article 312
 That principle must apply in adjudging the validity of Madras Act XI of 1953
It may be assumed that April 28 1947 was the date on which lignite deposits were discovered in the areas to which the Act is extended
But there is no true relation between the acquisition of the lands in these cases and fixation of compensation based on their value on the market rate prevailing on April 28 1947
Fixation of compensation for compulsory acquisition of lands notified many years after that date on the market value prevailing on the date on which lignite was discovered is wholly arbitrary and inconsistent with the letter and spirit of article 312 as it stood before it was amended by the Constitution Fourth Amendment Act 1955
If the owner is by a constitutional guarantee protected against expropriation of  his property otherwise than for a just monetary equivalent a law which authorises acquisition of land not for its true
value but for value frozen on some date anterior to the acquisition on the assumption that all appreciation in its value since that date is attributable to purposes for which the State may use the land at some time in future must be regarded as infringing the fundamental right
Counsel for the State of Madras relying upon the following observation of Patanjali Sastri CJ in Mrs Bela Banerjee s case1 at p 564 The fixing of an anterior date for the ascertainment of Value may not in certain circumstances be 1  944 lm15 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 submitted that a law which merely fixes the market value on a date anterior to the date on which the owner is expro priated of his land as determinative of the market value on which the compensation is to be based cannot without further enquiry be regarded as infringing article 3 1 2 of the Constitution
In our view this observation cannot assist the State of Madras in saving the provisions of Madras Act XI of 1953 from the vice of infringing the constitutional guarantee under article 31 2 of the Constitution
The right which is guaranteed is undoubtedly the right to just indemnification for loss and appreciation in the market value of the land because of the proposed acquisition may in assessing compensation be ignored
Even the Land Acquisition Act provides for assessment of compensation on the basis of market value of the land not on the date on which interest of the owner of land is extinguished under section 16 but on the basis of market value prevailing oil the date on which the notification under section 41 is issued
Whether this rule in all cases irrespective of subsequent developments ensures just indemnification of the expropriated owner so as to be immune from attack does not call for comment in this case
But any principle for determination of compensation denying to the owner all increments in value between a fixed date and the date of issue of the notification under section 41  must prima facie be regarded as denying to him the true equivalent of the land which is expropriated and it is for the State to show that fixation of compensation on the market value on an anterior date does not amount to a violation of the constitutional guarantee
No materials have been placed by the State before this Court which would support any such case
945 it is true that the Province of Madras had issued a Press Note in 1948 announcing that the Government proposed to undertake legislation reserving the power to compel any person who had purchased land in the lignite bearing areas to sell such land to them at the rate at which it was purchased
The only intimation given thereby to the owners of lands was that the Government may undertake legislation for the purpose of purchasing lands at the price at which the speculators in land may have purchased them
There is no evidence that any scheme for acquisition of land for mining of lignite was prepared in 1947 by the Government of Madras
The mining operations in 1947 must in the very nature of things have been exploratory
The statement of objects and reasons for the Act clearly discloses that initially mining operations were started by the Government on a small area
Assuming that in appropriate cases fixation of a date anterior to the publication of the notification under section 41 for ascertainment of market value of the land to be acquired may not always be regarded as a violation of the constitutional guarantee in the absence of evidence that compensation assessed on the basis of market value on such anterior date awards to the expropriated owner a just monetary value of his property at the date on which his interest is extinguished the provisions of the Act arbitrarily fixing compensation based on the market value at a date many years before the notification under section 41 was issued cannot be regarded as valid
It is a matter of common knowledge that since the termination of hostilities in the last World War there has been an upward tendency in land values resulting in appreciation In some areas many times the original value of lands
No attempt has been made by the State to prove that appreciation in the market value of lands in the area since April 1947 was solely attributable to a scheme of land acquisition of lignite bearing lands
To deny to the owner of the land compensation at rates which justly indemnify him for his loss by awarding him compensation at rates prevailing ten years before the date on which the notification under section 41 was issued amounts in the circumstances to a flagrant infringement of the fundamental right of the owner of the land under article 31 2 as it stood when the Act was enacted
134 159 SC 60 946 The validity of the provision relating to fixation of compensation had to be adjudged in the light of the constitutional protection guaranteed at the date when the Act was brought into operation and any restriction of the constitutional protection by subsequent amendment of article 312 which has not been given retrospective effect must be entirely ignored
The provision which denies to the owner of land compensation for non agricultural improvements made by him since April 28 1947 also infringes the protection of article 312
Under section 3a of the Land Acquisition Act land is defined as including benefits to arise out of land and things attached to the earth or permanently fastened to anything attached to the earth and when tinder section 41 land is notified for acquisition the acquisition is of the entirety of the interest of the owner in the land including underground rights if any crops trees and superstructures
By the Madras Act the owner is deprived of the value of all non agricultural improvements including the value of non agricultural buildings erected on the land after April 28 1947
It is not clear whether the non agricultural build ings constructed after the specified date are forfeited to the State on acquisition or the owner is entitled to remove them
In either case the owner is deprived of just value of his land including the superstructure of which he is expro priated
Denial to the owner of the land of the value of the structures constructed by him even of those put up after April 28 1947 with the knowledge that the Government may undertake legislation for the purpose of compulsory acquisition of the land would still be denying to him just compensation for the loss suffered by him on account of compulsory acquisition of his holding and would amount to infringement of article 312 of the Constitution
We are therefore of the view that the provisions which require the Land Acquisition Officer and the Court to assess compensation of the land compulsorily acquired only on the market value of the land on April 28 1947 together with the value of agricultural improvements on the land commenced made or effected after that date and before the date of the publication of the notification under section 41 947 without taking into consideration the value of non agricul tural improvements made after that date must be regarded as invalid
We are not called upon to express any opinion on the question whether the power reserved under section 17 of the Land Acquisition Act as amended by section 2 of Madras Act XI of 1953 to take possession of lands under the emergency clause for the purpose of working lignite mines in the areas to which the Madras Lignite Acquisition of Land Act 1953 extends is invalid
No argument has been advanced by either side before us on this question
Nor was the High Court called upon to consider the validity of that provision
The appeals therefore fail and are dismissed
The respondents in this group of appeals except in appeal No 11 of 1963 have not appeared in this Court
Therefore in appeal No 11 of 1963 alone the State of Madras will pay the costs of the respondent
There will be no order as to costs in other appeals
Appeals dismissed


Summary:
The respondents in the above appeals are owners of certain lands which are to be compulsorily acquired udder Madras Lignite Acquion of Land Act 1953
This Act came into force on August 20 53 before article 31 of the Constitution was amended by the Constituion Fourth Amendment Act 1955
By the said Act substantially o provisions which are material to the present appeals were made
e first was that compensation for acquisition of lignite bearing lands der the Land Acquisition Act is to be assessed on the market value the land prevailing on August 28 1947 and not on the date on which notification is issued under section 41 of the Land Acquisition Act
condly it was provided that in awarding compensation the value of non agricultural improvements commenced since April 28 1947 win not taken into consideration
In accordance with the above provisions after issuing the notices as acquired under sections 41 and 6 of the Land Acquisition Act the Land acquisition Officer made awards regarding the lands of the respondents
he respondents thereupon filed petitions under article 226 of the Constition before the High Court of Madras challenging the validity of the ward on the ground that the provisions of the Act relating to the ward of compensation violate article 312 of the Constitution as it food before the Constitution Fourth Amendment Act 955
The High Court upheld the contention
In appeal Held i The validity of the Act impugned in the present appeal is to be examined in the light of the provisions of article 31 of the constitution as they stood before the Constitution Fourth Amendment Act 1955
Chiranjit Lai Chowdhuri V Union of India 1950 SCR 869 State of West Bengal vs Subodh Gopal Bose   and State of lest Bengal vs Mrs Bela Banerjee   relied
937 ii The principle laid down in Bela Banerjee s case that the ceiling on the compensation without reference to the value of the land at the time of the acquisition is arbitrary and cannot be regarded as due compensation in letter and spirit within the requirement of article 312 would apply to the impugned Act
Fixation of compensation for compulsory acquisition of land notified many years after that date on the market value prevailing on the date on which lignite was discovered is wholly arbitrary and inconsistent with the letter and spirit of article 312 as it stood before the Constitution Fourth Amendment Act 1955
iii Any principle for determination of compensation denying to the owner all increments in value between a fixed date and the date of issue of the notice under section 41 of the Land Acquisition Act must prima facie be regarded as denying him the true equivalent of the land which is ex propriated and it is for the State to show that fixation of compensation on the market value on an anterior date does not amount to a violation of the Constitutional guarantee
In the present appeals no materials have been placed by the State which would support any such case
iv Denial of compensation for the value of non agricultural improvements would be denying to him just compensation for the loss suffered by him on account of compulsory acquisition of his holding and would amount to infringement of article 312 of the Constitution