Judgment Case ID: 197

Judgment:
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 C.J. 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 C.J. 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 Bengal	and 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 C.J. 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 31(2) 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 31(5)of 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 31(6) 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 31(5) 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 31(6) 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 31(2) 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 31(2) 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 31(2) 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 Commonwealth(1). 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 31	1946	 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 (i)inasmuch as article 31(2) 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 ; (ii)that 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 31(2) (iii)the Act is not saved by article 31(5) from the operation of article 31(2) as it was not certified by the President as provided for by article 31(6). 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 31(2) 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.