Case: UNION OF INDIA Vs. TARSEM SINGH


Decision:
0[ds]6. Having heard the learned counsel on both sides, it is necessary to first mention that the National Highways Act, 1956, as originally enacted, did not provide for acquisition of land. Thus, till the National Highways Laws (Amendment) Act, 1997, all acquisitions for the purpose of National Highways were made under the Land Acquisition Act, and the owners were given, in addition to market value, solatium as well as interest under the provisions of thatthe solatium that is paid to a landowner is on account of the fact that a landowner, who may not be willing to part with his land, has now to do so, and that too at a value fixed legislatively and not through negotiation, by which, arguably, such land owner would get the best price for the property to be sold. Once this is understood in its correct perspective, it is clear that ?solatium? is part and parcel of compensation that is payable for compulsory acquisition of land.As has been stated by us hereinabove, solatium and interest were awarded to landowners for compulsory acquisition of their lands for the purpose of National Highways until the 1997 Amendment Act. Interestingly, after the Land Acquisition Act has been repealed and The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 has come intoThe First Schedule to the said Act provides that solatium equivalent to 100% of the market value multiplied by various factors, depending on whether the land is situated in a rural or urban area, constitutes minimum compensation package to be given to those whose land is acquired. The Fourth Schedule to this Act, to be read along with Section 105, expressly includes under Item 7, the National Highways Act, 1956. In Item 9, this Schedule also includes The Requisitioning and Acquisition of Immovable Property Act, 1952. By a notification dated 28 th August, 2015 issued under Section 105 read with Section 113 of the 2013 Act, it is provided that the 2013 Act compensation provisions will apply to acquisitions that take place under the National Highways Act. The result is that both before the 1997 Amendment Act and after the coming into force of the 2013 Act, solatium and interest is payable to landowners whose property is compulsorily acquired for purposes of National Highways. This is one other very important circumstance to be borne in mind when judging the constitutional validity of the 1997 Amendment Act for the interregnum period from 1997 to, we were referred to three judgments in Property Owners? Association v. State of Maharashtra. In the first of these judgments reported in (1996) 4 SCC 49 , this Court has referred the matter to five learned Judges on the vexed question as to whether Article 31-C survived at all in view of the declaration contained in Minerva Mills v. Union of India 1981 (1) SCR 206  to the effect that the amended Article 31-C was constitutionally invalid. As the aforesaid declaration would not revive the original Article 31-C, the Article became a dead letter. When the same case travelled to five learned Judges reported in (2001) 4 SCC 455 , this Court was of the opinion that the views expressed in Sanjeev Coke (supra) require reconsideration in view of the fact that Sanjeev Coke (supra) adopted the reasoning of Krishna Iyer, J. in State of Karnataka vs Shri Ranganatha Reddy (1977) 4 SCC 471  and not the reasoning of the majority judgment of Untwalai, J. who stated that he must not be understood to agree with all that has been said by Krishna Iyer, J. in his judgment. The Court, therefore, referred the matter to seven learned Judges. When the matter came up before the seven learned Judges, reported in (2013) 7 SCC 522 , this Court held that the statement made in Sanjeev Coke (supra), followed by several other judgments, that the ?material resources of the community? would include privately owned resources, would be prima facie incorrect and hence the matter was referred to nine learned Judges of this Court, which reference is still pending. We have not deemed it necessary to refer this case to be tagged along with the reference to nine learned Judges, as we will assume for the purpose of this case that Article 31-C, as originally enacted, continues to exist and that the ?material resources of the community? would include private property as well.Shri Divan next referred us to State of Tamil Nadu vs L. Abu Kavur Bai (1984) 1 SCC 515 , which held that the Tamil Nadu Stage Carriage and Contract Carriages (Acquisition) Act, 1973 was protected by Article 31-C of the Constitution of India. This was held on the footing that a nationalisation measure would fall within Article 39(b) as the word ?distribution? is a word of extremely wide import, which would include nationalisation of transport as a distributive process for the good of the community. This situation is far removed from the Amendment Act to the National Highways Act in the present case, which is not a nationalisation measure at all, but is a measure to speed up the acquisition process. Shri Divan then relied upon this Court?s judgment in Maharashtra SEB vs Thana Electric Supply Co. (1989) 3 SCC 616 , in which the Indian Electricity (Maharashtra Amendment) Act, 1976 was engrafted on to the Electricity Act, 1910, the effect of which was to substitute market value of the undertaking that was compulsorily acquired, with the concept of an ?amount?, which was the book value of the undertaking at the time of its delivery. Even as per this Act, by virtue of the compulsory acquisition of the undertaking, the licensee was given a solatium of 10% of such book value. Importantly, this Court, after holding that nationalisation would come within the expression ?distribution? for the purposes of Article 39(b), engrafted another test when legislation claims the protection of Article 31-C. The Court held that the protection of Article 31-C is accorded only to those provisions which are basically and essentially necessary for giving effect to the objects of Article 39(b) – See paragraph 43. This case is again distinguishable for the same reason as pointed out qua State of Tamil Nadu v. L. Abu Kavur Bai (supra) as this is a nationalisation measure far removed from the object of the 1997 Amendment Act to the National Highways Act. It is interesting to note that despite the fact that a challenge under Articles 14 and 31 were bound to fail in view of the protective umbrella of Article 31-C, yet the Amendment Act had still provided for 10% solatium as the legislature had correctly appreciated that solatium is a part of compensation given for the compulsory nature of acquisition of property.Shri Divan then referred us to Tinsukhia Electric Supply Co. Ltd. vs State of Assam (1989) 3 SCC 709 , in which the Indian Electricity (Assam Amendment) Act, 1973 and the Tinsukhia and Dibrugarh Electric Supply Undertakings (Acquisition) Act, 1973 were challenged. These being nationalisation measures, this Court held that these enactments were entitled to the protection of Article 31-C. This nationalisation statute, again, is very far removed from the Amendment Act, 1997 to the National Highways Act.It is well-settled that in order that a law avail of the protection of Article 31-C, it is not necessary that any declaration be made in that behalf. (See State of Maharashtra vs Basantibai Mohanlal Khetan (1986) 2 SCC 516  at 530). It is also important to remember that in order that a law be shielded by Article 31-C, the said law must have a direct and rational nexus with the principles contained in Article 39(b). (See Assam Sillimanite Ltd. vs Union of India 1991 Supp 3 SCR 273 atWhen we examine the Objects and Reasons which led to the 1997 amendment of the National Highways Act, we do not find mentioned therein any object relating to distribution of the material resources of the community. The object of the Amendment Act has no relationship whatsoever to the Directive Principle contained in Article 39(b), inasmuch as its limited object is to expedite the process of land acquisition by avoiding inordinate delays therein. The object of the Amendment Act was not to acquire land for the purpose of national highways as, pre-amendment, the Land Acquisition Act provided for this. The object of the Amendment Act was fulfilled by providing a scheme different from that contained in the Land Acquisition Act, making it clear that the stage of offer of an amount by way of compensation is removed altogether; vesting takes place as soon as the Section 3D notification is issued; and most importantly, the tardy Court process is replaced by arbitration. Obviously, these objects have no direct and rational nexus with the Directive Principle contained in Article 39(b). Article 31-C is, therefore, out of harm?stest of Article 31-C?s protection being accorded only to those provisions which are basically and essentially necessary for giving effect to the objects of Article 39(b) is lifted from Akadasi Padhan vs State of Orissa 1963 Supp. (2) SCR 691, where this Court held, with reference to Article 19(6), that qua laws passed creating a State monopoly, it is only those essential and basic provisions which are protected by the latter part of Article 19(6). This Court stated the testIn dealing with the question about the precise denotation of the clause ?a law relating to?, it is necessary to bear in mind that this clause occurs in Article 19(6) which is, in a sense, an exception to the main provision of Article 19(1)(g). Laws protected by Article 19(6) are regarded as valid even though they impinge upon the fundamental right guaranteed under Article 19(1)(g). That is the effect of the scheme contained in Article 19(1) read with Clauses (2) to (6) of the said Article. That being so, it would be unreasonable to place upon the relevant clause an unduly wide and liberal construction. ?A law relating to? a State monopoly cannot, in the context, include all the provisions contained in the said law whether they have direct relation with the creation of the monopoly or not. In our opinion, the said expression should be construed to mean the law relating to the monopoly in its absolutely essential features. If a law is passed creating a State monopoly, the Court should enquire what are the provisions of the said law which are basically and essentially necessary for creating the State monopoly. It is only those essential and basic provisions which are protected by the latter part of Article 19(6). If there are other provisions made by the Act which are subsidiary, incidental or helpful to the operation of the monopoly, they do not fall under the said part and their validity must be judged under the first part of Article 19(6). In other words, the effect of the amendment made in Article 19(6) is to protect the law relating to the creation of monopoly and that means that it is only the provisions of the law which are integrally and essentially connected with the creation of the monopoly that are protected. The rest of the provisions which may be incidental do not fall under the latter part of Article 19(6) and would inevitably have to satisfy the test of the first part of Article 19(6).? (at pageif the Amendment Act, 1997 be regarded as an Act to carry out the purposes of Article 39(b), the object of the Amendment Act is not served by removing solatium and interest from compensation to be awarded. It is obvious, therefore, that the grant of compensation without solatium and interest is not basically and essentially necessary to carry out the object of the Amendment Act, 1997, even if it is to be considered as an acquisition Act pure and simple, for the object of the said Amendment Act as we have seen is to obviate delays in the acquisition process of acquiring land for National Highways. On application of this test as well, it is clear that the grant of compensation without solatium and interest, not being basically and essentially necessary to carry out the object of the Amendment Act, would not receive the protective umbrella of Article 31-C and, therefore, any infraction of Article 14 can be inquired into by the22. Both, P. Vajravelu Mudaliar (supra) and Nagpur Improvement Trust (supra) clinch the issue in favour of the Respondents, as has been correctly held by the Punjab and Haryana High Court in M/s Golden Iron and Steel Forging (supra). First and foremost, it is important to note that, as has been seen hereinabove, the object of the 1997 Amendment was to speed up the process of acquiring lands for National Highways. This object has been achieved in the manner set out hereinabove. It will be noticed that the awarding of solatium and interest has nothing to do with achieving this object, as it is nobody?s case that land acquisition for the purpose of national highways slows down as a result of award of solatium and interest. Thus, a classification made between different sets of landowners whose lands happen to be acquired for the purpose of National Highways and landowners whose lands are acquired for other public purposes has no rational relation to the object sought to be achieved by the Amendment Act, i.e. speedy acquisition of lands for the purpose of National Highways. On this ground alone, the Amendment Act falls foul of Article 14.Even otherwise, in P. Vajravelu Mudaliar (supra), despite the fact that the object of the Amendment Act was to acquire lands for housing schemes at a low price, yet the Amendment Act was struck down when it provided for solatium at the rate of 5% instead of 15%, that was provided in the Land Acquisition Act, the Court holding that whether adjacent lands of the same quality and value are acquired for a housing scheme or some other public purpose such as a hospital is a differentiation between two sets of landowners having no reasonable relation to the object sought to be achieved. More pertinently, another example is given – out of two adjacent plots belonging to the same individual one may be acquired under the principal Act for a particular public purpose and one acquired under the Amending Act for a housing scheme, which, when looked at from the point of view of the landowner, would be discriminatory, having no rational relation to the object sought to be achieved, which is compulsory acquisition of property for public purposes.Nagpur Improvement Trust (supra) has clearly held that ordinarily a classification based on public purpose is not permissible under Article 14 for the purpose of determining compensation. Also, in para 30, the Seven-Judge Bench unequivocally states that it is immaterial whether it is one Acquisition Act or another Acquisition Act under which the land is acquired, as, if the existence of these two Acts would enable the State to give one owner different treatment from another who is similarly situated, Article 14 would be infracted. In the facts of these cases, it is clear that from the point of view of the landowner it is immaterial that his land is acquired under the National Highways Act and not the Land Acquisition Act, as solatium cannot be denied on account of this fact alone.A contention was taken by Shri Divan in that Article 31-A second proviso would make it clear that compensation at a rate which shall not be less than the market value would be payable only in the circumstances mentioned therein and not otherwise. For this reason, the Nagpur Improvement Trust case is distinguishable, as one of the instances given therein is that it would not be possible to discriminate between landowners who are similarly situate by giving one landowner compensation at let us say 60% of the market value and the other owner 100% of the market value.The Nagpur Improvement Trust case has to be read as a whole. Merely emphasising one example from the passages that have been extracted above (supra) will not make the ratio of the said judgment inapplicable. Besides, the second proviso to Article 31-A deals with persons whose lands are acquired when such person is cultivating the same personally. The reason for awarding compensation at a rate which is not less than market value is in order that a farmer, who is cultivating the land personally, gets other land of equivalent value, which he can then cultivate personally. As such farmer is at the centre of agrarian reform legislation, such legislation would be turned on its head if lands were to be acquired without adequately compensating him instead of from absentee landlords whose lands are then to be given to the landless and to such persons if they personally cultivate lands less than the ceiling area under State Agricultural Ceiling Acts. We think that any reference to the second proviso of Article 31-A is wholly irrelevant to the question before us and cannot under any circumstance be used in order to distinguish a judgment which otherwise applies on all fours.However, it was argued that a line of judgments have distinguished P. Vajravelu Mudaliar (supra) and Nagpur Improvement Trust (supra) and that this line of judgments should be followed in preference to the aforesaid two judgments.For our purposes, it is enough to state that the line of judgments under the 1952 Act and the Defence of India Act, 1971, which contained a two-step process, namely, requisition which may be followed by acquisition, are wholly distinguishable for the reasons stated in those judgments. As was stated in Chajju Ram (supra), the object of a Requisition Act is completely different from an Acquisition Act. In a Requisition Act, private property is taken for public purposes only temporarily – when the reason for requisition ends, ordinarily the property is handed back to the owner. This being the case, in requisition statutes handing back of the property is the rule and acquisition of the property the exception, as property can only be acquired for the two reasons set out in Section 7 of the 1952 Act and Section 30 of the Defence of India Act, 1971. Also, as has been pointed out in Hari Krishnan Khosla (supra), what gets acquired is only rights as to ownership, possession having been taken over by requisition. In addition, the owner has already received compensation for remaining out of possession during the period when the property is under requisition. For all these reasons, the aforesaid judgments are wholly distinguishable from the acquisition measure in thisAmit Sibal, learned Senior Advocate, on the other hand, has argued, referring to Sections 3(b), 9 and 31(1) of the Land Acquisition Act that easementary rights are compensated even under the Land Acquisition Act and in point of fact the sum of 10% payable under Section 3G(2) of the National Highways Act is really in the nature of a cap beyond which no further compensation can be granted. Even otherwise, according to the learned Senior Advocate, granting of compensation under Section 3G(2) would have no bearing on interest and solatium that is payable under the Land Acquisition Act and not under the National Highways Act.Section 3G(2) makes it clear that rights of user and rights in the nature of easement being valuable property rights, compensation must be payable therefor. It is obvious that there is no double payment to the owner on this score as the owner and/or any other person has to prove that a right in the nature of an easement has also been taken away. Obviously, the right of user being subsumed in acquisition of ownership, the owner cannot get a double benefit on this score. The right of user is, therefore, referable only to persons other than the owner, who may have tenancy rights, and other rights of license on land which is acquired under the National Highwaysreading of these Sections shows that a person who is interested in an easement affecting land can claim compensation therefor under the aforesaid provisions of the Land Acquisition Act. Under both the Land Acquisition Act and the National Highways Act, such claims have to be proved in accordance with law, the difference being that under the Land Acquisition Act actuals are payable, whereas under the National Highways Act, a fixed amount of 10% of the amount determined by the competent authority is payable. It is, therefore, wholly incorrect to state that extra amounts are payable to the owner under the National Highways Act, which are not so payable under the Land Acquisition Act. Also, both Acts contemplate payment of compensation to persons whose easementary rights have been affected by the acquisition. In any event, this contention cannot possibly answer non-payment of solatium and interest under the National Highways Act, which has been dealt with in extenso in thisis thus clear that the Ordinance as well as the notification have applied the principle contained in Nagpur Improvement Trust (supra), as the Central Government has considered it necessary to extend the benefits available to landowners generally under the 2013 Act to similarly placed landowners whose lands are acquired under the 13 enactments specified in the Fourth Schedule, the National Highways Act being one of the aforesaid enactments. This being the case, it is clear that the Government has itself accepted that the principle of Nagpur Improvement Trust (supra) would apply to acquisitions which take place under the National Highways Act, and that solatium and interest would be payable under the 2013 Act to persons whose lands are acquired for the purpose of National Highways as they are similarly placed to those landowners whose lands have been acquired for other public purposes under the 2013 Act. This being the case, it is clear that even the Government is of the view that it is not possible to discriminate between landowners covered by the 2013 Act and landowners covered by the National Highways Act, when it comes to compensation to be paid for lands acquired under either of the enactments. The judgments delivered under the 1952 Act as well as the Defence of India Act, 1971, may, therefore, require a re-look in the light of this development. (The Defence of India Act, 1971, was a temporary statute which remained in force only during the period of operation of a proclamation of emergency and for a period of six months thereafter – vide Section 1(3) of the Act. As this Act has since expired, it is not included in the Fourth Schedule of the 2013 Act.) In any case, as has been pointed out hereinabove, the case of Chajju Ram (supra), has been referred to a larger Bench. In this view of the matter, we are of the view that the view of the Punjab and Haryana High Court is correct, whereas the view of the Rajasthan High Court is not correct.We were also referred to the judgment of a learned Single Judge of the Karnataka High Court reported as Lalita vs Union of India AIR 2003 Karnataka 165, as well as a judgment of the Division Bench of the Madras High Court in T. Chakrapani vs Union of India, both of which distinguished the Requisition Act cases and relied upon Nagpur Improvement Trust (supra) in order to reach the same conclusion as the Punjab and Haryana High Court. Both these judgments are also correct.There is no doubt that the learned Solicitor General, in the aforesaid two orders, has conceded the issue raised in these cases. This assumes importance in view of the plea of Shri Divan that the impugned judgments should be set aside on the ground that when the arbitral awards did not provide for solatium or interest, no Section 34 petition having been filed by the landowners on this score, the Division Bench judgments that are impugned before us ought not to have allowed solatium and/or interest. Ordinarily, we would have acceded to this plea, but given the fact that the Government itself is of the view that solatium and interest should be granted even in cases that arise between 1997 and 2015, in the interest of justice we decline to interfere with such orders, given our discretionary jurisdiction under Article 136 of the Constitution of India. We therefore declare that the provisions of the Land Acquisition Act relating to solatium and interest contained in Section 23(1A) and (2) and interest payable in terms of section 28 proviso will apply to acquisitions made under the National Highways Act. Consequently, the provision of Section 3J is, to this extent, violative of Article 14 of the Constitution of India and, therefore, declared to be unconstitutional. Accordingly, Appeal @ SLP (C) No. 9599/2019 is dismissed.