http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 5  

PETITIONER: BHAGAT RAM & ORS.

       Vs.

RESPONDENT: STATE OF PUNJAB & ORS.

DATE OF JUDGMENT: 02/12/1966

BENCH: SIKRI, S.M. BENCH: SIKRI, S.M. RAO, K. SUBBA (CJ) HIDAYATULLAH, M. BACHAWAT, R.S. SHELAT, J.M.

CITATION:  1967 AIR  927            1967 SCR  (2) 165

ACT: East  Punjab  Holdings  (Consolidation  and  Prevention   of Fragmentation)  Act (50 of 1948)-Scheme reserving  land  for income of Panchayat-If acquisition-If hit by second  proviso to Art. 31A(1) of the Constitution of India.

HEADNOTE: A  scheme under the East Punjab Holdings (Consolidation  and Prevention  of  Fragmentation Act) for consolidation  of  an estate was prepared in  1959. The petitioner, who held  land within  the ceiling limit, challenged it on the ground  that in so far as it makes reservation of land for the income  of the  Panchayat,  it was hit by the second  proviso  to  Art. 31A(1)    of the Constitution.      HELD (per Subba Rao C.J., Sikri and Bachawat, JJ.). The essential      difference between "acquisition by the State" on  the  one  hand and "modification  or  extinguishment  of rights"  on  the  other,  is that in  the  first  case,  the beneficiary   is  the  State  while  in  the   second,   the beneficiary is not the   State.   As the beneficiary in  the instant case was the Panchayat which falls   within      the definition  of  the  word  "State"  under  Art.  12  of  the Constitution,  the reservation in the scheme was contrary to the second proviso and must   be   modified   appropriately. [144 D-H]      The repartition under s. 21 of the Act would not amount to  "acquisition"  within the second proviso  to  Art.  31A, because,  under ss. 23A and 24 of the Act,  till  possession has  changed, the management and control do not vest in  the Panchayat and acquisition would not be complete.  Therefore, it could not be said that the acquisition had already  taken place     before the Seventeenth Amendment, which introduced the second proviso  to  Art.  31A(1), came into  force,  and that the scheme was not hit by that     proviso. [146 E-H]      Ajit  Singh  v. State of Punjab [1967]  2  S.C.R.  143, followed.      Per Hidayatullah and Shelat, JJ : Since the land of the petitioner was reduced to something below the ceiling  fixed by law, compensation at a rate which was not lower than  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 5  

market value must be paid to him. [147  C-F]

JUDGMENT: ORIGINAL JURISDICTION : Writ Petition No. 125 of 1966.      Petition under Art. 32 of the Constitution of India for the enforcement of fundamental rights. Hardev Singh and S. S. Khanduja, for the petitioners. K. L. Gossain, O. P. Malhotra and R. N. Sachthey, for the      respondents. The Judgment of SUBBA RAO C. J. and SIKRI and BACHAWAT JJ. was  delivered  by  SIKRI,  J.  The  separate  Judgment   of HIDAYATULLAHH and SHELAT, JJ. was delivered by HIDAYATULLAH. 166 Sikri,  J.  This  is  a  petition  under  art.  32  of   the Constitution  challenging the scheme made in respect of  the consolidation  of village Dolike Sunderpur.  We  have  today delivered  judgment in Ajit Singh v. State of Punjab(1)  and most  of  the  points  in this appeal  are  covered  by  the decision  in that case.  Two points remain to be dealt  with in this case. The first question that arises is whether the scheme ill  so far  as  it  makes reservations of land for  income  of  the Panchayat  is hit by the second proviso to art. 3 1  A.  The scheme reserves lands for phirni, paths, agricultural paths, manure  pits, cremation grounds, etc., and also reserves  an area of 100 kanals 2 marlas (standard kanals) for income  of the Panchayat.  We have already held in Ajit Singh’s(1) case that  acquisition for the common purposes such  as  phirnis, paths,  etc.,  is not acquisition by the  State  within  the second  proviso to art. 31A.  But this does not  dispose  of the  question whether the reservation of land for income  of the Panchayat is acquisition of land by the state within the second proviso to art. 31 A. We held in that case that there was  this essential difference between "acquisition  by  the State"  on the one hand and "modification or  extinguishment of  rights"  on  the  other  that  in  the  first  case  the beneficiary  is  the  State while in  the  latter  case  the beneficiary of the modification or the extinguishment is not the State.  Here it seems to us that the beneficiary is  the Panchayat  which  falls within the definition  of  the  word "State"  under  art.  12 of the  Constitution.   The  income derived by the Panchayat is in no way different from its any other  income.  It is true that s. 2(bb) of the East  Punjab Holdings  (Consolidation  and Prevention  of  Fragmentation) Act, 1948, defines ’common purpose’ to include the following purposes : ".  .  . providing income for the Panchayat of  the  village concerned for the benefit of the village community." Therefore,  the income can only be used for the  benefit  of the  village community.  But so is any other income  of  the Panchayat of a village to be used.  The income is the income of the Panchayat and it would defeat the whole object of the second  proviso if we were to give any  other  construction. The Consolidation Officer could easily defeat the object  of the second proviso to art. 3 1 A by reserving for the income of the Panchayat a major portion of the land belonging to  a person holding land within the ceiling limit.  Therefore, in our opinion, the reservation of 100 kanals 2 marlas for  the income  of  the Panchayat in the scheme is contrary  to  the second  proviso  and  the scheme must  be  modified  by  the competent authority accordingly. (1)  [1967]2 S.C.R. 143                             167

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 5  

This takes us to the second question raised by the State, in the. alternative.  On behalf of the State it has been argued that   acquisition  had  already  taken  place  before   the Seventeenth  Amendment came into force, and, therefore,  the scheme  is not bit by the second proviso to art.  31A.   The relevant  facts  are contained in the affidavit  of  Jaswant Singh Bhutani, Officer on Special Duty, and are as follows :               "The  village was notified  for  consolidation               vide   Punjab  Government   Notification   No.               57/G/t7O4l-A  dated  1-9-1956 which  was  duly               published and a proper notice under rule 4  of               the  Consolidation Rules was issued which  was               also   published   in  the  village   in   the               prescribed manner.  The Scheme was prepared by               the  Consolidation  Officer under the  Act  in               consultation   with   the   rightholders   and               Advisory Committee of the village on 15-1-1959               and  the  rightholders were  invited  to  file               objections  under  section 19(1)  of  the  Act               against the draft scheme as required within 30               days of the said publication.  The  objections               were  tendered which were duly considered  and               after consideration of the same the scheme was               confirmed  under section 20(3) of the  Act  by               the   Settlement  Officer,  Consolidation   of               Holdings, on 11-3-1959.  The confirmed  scheme               was  also  published  in  the  village   under               section  20(4) of the Act on 25-3-1959.   That               an   area  meassuring  100  kanals  2   marlas               (standard) was reserved for the income of  the               Panchayat according to the requirements of the               village.   So far as the reservation  for  the               common purposes of the village was  concerned,               neither the petitioner nor any rightholders of               the  village filed any objections against  the               said  reservation.  In pursuance of the  same,               the  repartition of the land was  effected  on               30-4-59  and the plots of land were  allocated               to the rightholders as required under the Act.               There  were 90 objections against  repartition               under section 21(2) of the Act and all of them               have been disposed of.  In the meantime,  some               of   the   rightholders  in   village   Dolike               Sunderpur  went to the High Court and filed  a               writ  petition  No. 531/1959 and  the  Hon’ble               High Court by its judgment and order dated 25-               11-1959 quashed the scheme but upon a  Letters               Patent Appeal filed by the respondents herein,               the  High  Court  restored  the  scheme.   The               possessions  were not transferred in  view  of               the  stay orders obtained by the  rightholders               of that village from the High Court."               It   is   clear  from  this   affidavit   that               possession   has  not  been   transferred   in               pursuance  of  the repartition.   The  learned               counsel  for  the petitioners relies  on  this               fact and says that in view of s. 23A and               s.    24 the "acquisition" does not take place               till all the persons entitled               168               to  possession of holdings under the Act  have               entered  into  possession  ,of  the  holdings.               Sections 23A and 24 read as follows :               "23A.   As soon as a scheme comes into  force,               the  management  and  control  of  all   lands

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 5  

             assigned  or reserved for common  purposes  of               the  village under section 18, shall  vest  in               the Panchayat of that village which shall also               be entitled to appropriate the income accruing               therefrom  for  the  benefit  of  the  village               community, and the rights and interest of  the               owners of such lands shall stand modified -and               extinguished accordingly.               24.(1)  As soon as the persons entitled  to               possession of               ’holdingsunder  this Act have  entered  into               possession of the               holdings,respectively allotted to them,  the               scheme shall be               deemed  to  have  come  into  force  and   the               possession  of the allottees affected  by  the               scheme  of consolidation, or, as the case  may               be,  by repartition, shall remain  undisturbed               until a fresh scheme is brought into force  or               a change is ordered in pursuance of provisions               of sub-section (2), (3) and (4) of section  21               or  an order passed under section 36 or 42  of               this Act.               (2)A   Consolidation   Officer   shall   be               competent to exercise all or any of the powers               of  a  Revenue Officer under the  Punjab  Land               Revenue  Act,  1887 (Act XVII  of  1887),  for               purposes of compliance with the provisions  of               sub-section (1)." It  seems  to  us  clear from  these  provisions  that  till possession  has  changed  under s. 24,  the  management  and control  does not vest in the Panchayat under s.  23A.   Not only does the management and control not vest but the rights of the holders are not modified or extinguished till persons have  changed possession and entered into the possession  of the  holdings  allotted  to  them  under  the  scheme.   Mr. Gossain,  the learned counsel for the State, tried  to  meet this point by urging that by virtue of repartition under  s. 21,  the  rights  to possession of  the  new  holdings  were finalised and could be ,enforced.  This may be so; but  this cannot  be  equivalent to "acquisition"  within  the  second proviso to art. 31A. In  the result we hold that the scheme is hit by the  second proviso  to art. 31 A in so far as it reserves 100 kanals  2 marlas for the income of the Panchayat.  We direct the State to modify the scheme to bring it into accord with the second proviso  as  interpreted by us, proceed  according  to  law. There would be an order as to costs. Hidayatullah,  J.  This is a petition under Art. 32  of  the Constitution  challenging the scheme made in respect of  the consolidation 169 of  the village Dolike Sunderpur.  We have in our  judgment, in the companion case, dealt with the second proviso to Art. 31A(1)  (a).  Here too land is reserved for  the  Panchayat. We have indicated in our judgment in the companion case that no  matter for what purpose the acquisition takes place,  if the  land  of a tenant cultivating the land  is  reduced  to something  below the ceiling fixed by law compensation at  a rate which is not lower than the market rate must be paid to him.   We have also indicated how this compensation must  be worked  out.  When the Constitution speaks of market  value, it is not possible to find compensation in advantages  which might accrue indirectly. Our brethren have held that the reservation of 100 kanals  2

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 5  

marlas  to  enable  the  Panchayat to  raise  an  income  is contrary  to the second proviso and that the scheme must  be modified  accordingly.   Our  approach  to  the  problem  is different.   We have shown in the judgment in the  companion case  that the test is the deprivation of land  which  makes the land of a cultivating tenant go below the ceiling  fixed for such land by law.  If this happens then compensation for the  acquisition  of land which brings down the  holding  to something below the ceiling must be paid at rates which  are not  below the market rate.  We would accordingly have  made the.  declaration  and left the party  concerned  to  demand compensation  for  land  by which his  ceiling  is  reduced. There  is  no question of looking to the end  to  which  the income may be used and to differentiate between  deprivation of  one kind and deprivation of another kind.  According  to us  the  ceiling  fixed  by law is  not  to  be  reduced  by acquisition by the State unless compensation at market  rate is paid.  No other compensatory factor can be taken note  of under the proviso.  Nor can it avail that the land of  which the tenant is deprived is to be put to some other use by the Panchayat    thereafter.    Such   acquisition   with    out compensation is unconstitutional and we cannot add a proviso of  our own to the proviso enacted in the Constitution.   We would accordingly allow the petition making a declaration on the  lines  indicated  and  leaving  the  party  to   demand compensation if his land is reduced below the ceiling. In the circumstances we would award no costs.                            ORDER The  scheme made in respect of the consolidation of  village Dolike Sunderpur is hit by the second proviso to Art. 31A of the  Constitution  in  so far as it reserves  100  kanals  2 marlas  for  the  income of the  Panchayat.   The  State  is directed  to modify the scheme to bring it into accord  with the   second   proviso  as  interpreted  in   the   majority judgment(1) in Civil Appeal No. 1018 of 1966 and to proceed V.P.S. (1) [1967]2 S.C.R.143. M19Sup CI/66-12 170