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 CJ and Banerjee J  in Reference No 2 of 1951 in Civil Rules Nos 20 and 21 of 1950
December 11
The Judgment of the Court was delivered by PATANJALI SASTRI CJ
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 Bengaland it 560 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 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 CJ 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 561 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 312 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 315of 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
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 316 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 315 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 316 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 312 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 312 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 563 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 312 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 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 74 564 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 vs The Commonwealth1
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 311946 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  565 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
Appeal dismissed
Agent for respondents Nos 1 2 and 3 section C Banerjee
Agent for the intervener G H Rajadhyaksha


Summary:
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 section 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 to exceed the market value of the land on December 31 1946 are ultra vires the Constitution and void 559 iinasmuch as article 312 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  iithat 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 article 312 iiithe Act is not saved by article 315 from the operation of article 312 as it was not certified by the President as provided for by article 316
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 article 312 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