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

2. The impugned Act was introduced in the Orissa State Legislature onand was passed by it onIt was reserved by the State Governor for consideration of the President and the President gave his assent onThe Act thus receives the protection of Arts. 31(4) and 31(A) of the Constitution though it was not and could not be included in the list of statutes enumerated in the ninth schedule to the Constitution, as referred to in Art. 31(B).3. The Act, so far as its main features are concerned, follows the pattern of similar statues passed by the Bihar, Uttar Pradesh and Madhya Pradesh Legislative Assemblies. The primary purpose of the Act is to abolish all zamindary and other proprietary estates and interests in the State of Orissa and after eliminating all the intermediaries to bring the ryots or the actual occupants of the lands in direct contact with the State Government. It may be convenient here to refer briefly to some of the provisions of the Act which are material for our present purpose. The object of the legislation is fully set out in the preamble to the Act which discloses the public purpose underlying it. Section 2(g) defines an "estate" as meaning any land held by an intermediary and included under one entry in any of the general registers ofree lands prepared and maintained under the law for the time being in force by the Collector of a district. The expression "intermediary" with reference to any estate is then defined and it means a proprietor,r. . .. ..thikadar,r and includes the holder of inam estate, jagir and maufi tenures and all other interests of similar nature between the ryot and the State.Section 3 of the Act empowers the State Government to declare, by notification, that, the estate described in the notification has vested in the State free from all incumbrances. Under S. 4, it is open to the State Government, at any time before issuing such notification, to invite proposals from intermediaries for surrender of their estates and if such proposals are accepted, the surrendered estate shall vest in the Government as soon as the agreement embodying the terms of surrender is executed. The consequences of vesting either by issue of notification or a result of surrender are described in detail in S. 5 of the Act. It would be sufficient for our present purpose to state that the primary consequence is, that all lands comprised in the estate including communal lands,lands, waste lands, trees orchards pasture lands, forests, mines and minerals, quarries, rivers and streams, tanks, water channels, fisheries, ferries, hats and bazars, and buildings or structures together with the land on which they stand shall, subject to the other provisions of the Act, vest absolutely in the State Government free from all encumbrances and the intermediary shall cease to have any interest in them. Under S. 6, the intermediary is allowed to keep for himself his homestead and buildings and structures used for residential or trading purposes such as golas, factories, mills, etc., but buildings used for office or estate purposes would vest in the Government.Section 7 provides that an intermediary will be entitled to retain all lands used for agricultural or horticultural purposes which are in his khas possession at the date of vesting. Private lands of the intermediary, which were held by temporary tenants under him, would however, vest in the Government and the temporary tenants would be deemed to be tenants under the Government, except where the intermediary himself holds less than 33 acres of land in any capacity. As regards the compensation to be paid for the compulsory acquisition of the estates, the principle adopted is that the amount of compensation ,would be calculated at a certain number of years purchase of the net annual income of the estate during the previous agricultural year, that is to say, the year immediately preceding that in which the date at vesting falls. First of all, the gross asset is to be ascertained and by gross asset is meant thethe rents including all cases payable in respect of the estate.From the gross asset certain deductions are made in order to arrive at the net income. These deductions include land revenue or rent including cases payable to the State Government, the agriculturalpayable in the previous year, any sum payable as chowkidary or municipal tax in respect of the buildings taken over as office or estate buildings and also costs of management fixed in accordance with a sliding percentage scale with reference to the gross income. Any other sum payable asm respect of any other kind of Income derived from the estate would also be included in the deductions. The amount of compensation thus determined is payable in 30 annual equated installments commencing from the date of vesting and an option is given to the State Government to make full payment at any, time. These in brief are the main features of the Act.

Court's reasoning:
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.