Case: K.C. Gajapati Narayan Deo &amp; Others Vs. State of Orissa

Acts passed by the legislaures of other States, provides for payment of compensation on the basis of the net income of the whole estate. One result of the adoption of this principle, undoubtedly is, that no compensation is allowed in respect of potential values of properties; and those parts of an estate which do not fetch any income have practically been ignored. There is no doubt that the Act does not give anything like a fair or market price of the properties acquired and the appellants may be right in their contention that the compensation allowed is inadequate and improper; but that does not affect the constitutionality of the provisions. In the first place, no question of inadequacy of compensation can be raised in view of the provision of Art. 31 (4) of the Constitution and it cannot also be suggested that the rule for payment of compensation on rental basis is outside the ambit of Entry 42 of List III. This point is concluded by the earlier decision of this Court in - Suriya Pal Singh v. The State of U. P., AIR 1952 SC 252 (A), and is not open to further discussion. Mr. Narasaraju is not right in saying that the compensation for the private lands in possession of temporary tenants has been given only for the landlords interest in these properties and nothing has been given in lieu of the tenants interest. The entire interest of the proprietor in these lands has been acquired and the compensation payable for the whole interest has been assessed on the basis of the net income of the property as represented by the share of the produce payable by the temporary tenants to the landlord. It is true that the Orissa Tenants Protection Act is a temporary statute, but whether or not it is renewed In future, the rent fixed by it has been taken only as the measure of the income derivable from these properties at the date of acquisition.27. Mr. Narasaraju further argues that his clients are not precluded from raising any objection on the ground of inadequacy of compensation in regard to these private lands by reason of Article 31 (4) of the Constitution; as the provision of that Article is not attracted to the facts of the present case. What is said is, that the original Estates Abolition Bill, which was pending before the Orissa Legislature at the time when the Constitution came into force, did not contain any provision that the private lands of the proprietor in occupation of temporary tenants would also vest in the State . This provision was subsequently introduced by way of amendment during the progress of the Bill and after the Constitution came into force. It is argued, therefore, that this provision is not protected by Art 31 (4). The contention seems to us to be manifestly untenable. Article 31 (4) is worded as follows:"If any Bill pending at the commencement of this Constitution in the Legislature of a State has, after it has been passed by such Legislature, been reserved for the consideration of the President and has received his assent, then, notwithstanding anything in this Constitution, the law so assented to shall not be called in question in any Court on the ground that it contravenes the provisions of clause (2.)"Thus it is necessary first of all that the Bill, which ultimately becomes law, should be pending before the State Legislature at the time of the coming into force of the Constitution. That Bill must be passed by the Legislature and then receive the assent of the President. It is the law to which the assent of the President is given that is protected from any attack on the ground of non-compliance with the provisions of Cl. (2) of Art. 31. The fallacy in the reasoning of the learned counsel lies in the assumption that the Bill has got to be passed in its original shape without any change whatsoever, before the provision of Cl. (4), Art. 31, could be attracted. There is no warrant for such assumption in the language of the clause. The expression "passed by such Legislature" must. mean passed with or without amendments" in accordance with the normal procedure contemplated by Art, 107 of the Constitution. There can be no doubt that all the requirements of Art. 34 (4) have been complied with in the present case and consequently there is no room for any objection to the legislation on the ground that the compensation provided by it is inadequate.28. The last contention of the appellants is directed against the provision of the Act laying down the manner of payment of the compensation money. The relevant section is S. 37 and it provides for the payment of compensation together with interest in 30 annual equated instalments leaving it open to the State to make the payment In full at any time prior to the expiration of the period. The validity of this provision has been challenged on the ground that it is a piece of colourable legislation which comes within the principle enunciated by the majority of this Court in the Bihar case referred to above. It is difficult to appreciate this argument of the learned counsel. Section 37 of the Act contains the legislative provision regarding the form and the manner in which the compensation for acquired properties is to be given and as such it comes within the clear language of Entry 42, List III, Sch. VII of the Constitution. It is not a legislation on something which is non-existent or unrelated to facts. It cannot also be seriously contended that what S. 37 provides for, is not the giving of compensation but of negativing the right to compensation as the learned counsel seems to suggest. There is no substance In this contention and we have no hesitation in overruling it. The result is that all the points raised by the learned counsel for the appellants fail and the appeals are dismissed.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]9. It may be made clear at the outset that the doctrine of colourable legislation does net involve any question of bond fides or mala fides on the part of the legislature. The whole doctrine resolves itself into the question of competency of a particular legislature to enact a particular law. If the legislature is competent to pass a particular law, the motives which impelled it to act are really irrelevant. On the other hand, if the legislature lacks competency, the question of motive does not arise at all. Whether a statute is constitutional or not is thus always a question of power. Vide Cooleys Constitutional Limitations, Vol. 1, p. 379. A distinction, however, exists between a legislature which is legally omnipotent like the British Parliament and the laws promulgated by which could not be challenged on the ground of incompetency, and a legislature which enjoys only a limited or a qualified jurisdiction.If the Constitution of a State distributes the legislative powers amongst different bodies, which have to act within their respective spheres marked out by specific legislative entries, or if there are limitations on the legislative authority in the shape of fundamental rights, questions do arise as to whether the legislature in a particular case has or has not, in respect to theof the statute or in the method of enacting it, transgressed the limits of its constitutional powers. Such transgression may be patent, manifest on direct but it may also be disguised, covert and indirect and it is to this latter class of cases that the expression "colourable legislation" has been applied in certain judicial pronouncements. The idea conveyed by the expression is that although apparently a legislature in passing a statute purported to act within the limits of its powers, yet in substance and in reality it transgressed these powers, the transgression being veiled by what, appears, on proper examination, to be a mere pretence or disguise. As was said by Duff, J. infor Ontario v. Reciprocal Insurers, 1924 A C 328 at p. 337 (B)the law making authority is of a limited or qualified character it may be necessary to examine with some strictness the substance of the legislation for the purpose of determining what is that the legislature is reallyother words, it is the substance of the Act that is material and not merely the form or outward appearance, and if thein substance is something which is beyond the powers of that legislature to legislate upon, the form in which the law is clothed would not save it from condemnation. The legislature cannot violate the constitutional prohibitions by employing an indirect method. In cases like these, the enquiry, must always be as to the true nature and character of the challenged legislation and it is the result of such investigation and not the form alone that will determine as to whether or not it relates to a subject which is within the power of the legislative authorityVide 1924 A C 328 at p. 337 (B). For the purpose of this investigation the court could certainly examine the effect of the legislation and take into consideration its object, purpose or designl for Alberta v.for Canada, 1939 A C 117 at p. 130 (C). But these are only relevant for the purpose of ascertaining the true character and substance of the enactment and the class of subjects of legislation to which it really belongs and not for finding out the motives which induced the legislature to exercise itsagree with the learnedthat if the appellants are right in their contention, they can raise these objections if and when the gross assets are sought to be computed on the basis of the rents settled under the above provisions. If the provisions are void, the rents settled in pursuance thereof could not legitimately form the basis of the valuation of the estate under the Estates Abolition Act and it might be open to the appellants then to say that for purposes "of S. 26, Estates Abolition Act, the rents payable for the previous year would be the rents settled under the Madras Estates Lend Act, as it stood unamended before 1947.The learned counsel for the appellants eventually agreed with the views of theon this point and with the consent of both sides we decided to leave these questions open. They should not be deemed to have been decided in theserelevant section is S. 37 and it provides for the payment of compensation together with interest in 30 annual equated instalments leaving it open to the State to make the payment In full at any time prior to the expiration of the period.The validity of this provision has been challenged on the ground that it is a piece of colourable legislation which comes within the principle enunciated by the majority of this Court in the Bihar case referred to above. It is difficult to appreciate this argument of the learned counsel. Section 37 of the Act contains the legislative provision regarding the form and the manner in which the compensation for acquired properties is to be given and as such it comes within the clear language of Entry 42, List III, Sch. VII of the Constitution. It is not a legislation on something which isor unrelated to facts. It cannot also be seriously contended that what S. 37 provides for, is not the giving of compensation but of negativing the right to compensation as the learned counsel seems to suggest. There is no substance In this contention and we have no hesitation in overruling it. The result is that all the points raised by the learned counsel for the appellants fail and the appeals are dismissed.