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PETITIONER: THE STATE OF WEST BENGAL

       Vs.

RESPONDENT: MRS. BELA BANERJEE AND OTHERS

DATE OF JUDGMENT: 11/12/1953

BENCH: SASTRI, M. PATANJALI (CJ) BENCH: SASTRI, M. PATANJALI (CJ) MAHAJAN, MEHR CHAND DAS, SUDHI RANJAN HASAN, GHULAM JAGANNADHADAS, B.

CITATION:  1954 AIR  170            1954 SCR  558  CITATOR INFO :  R          1955 SC 504  (82)  E          1959 SC 648  (39)  R          1962 SC1753  (20)  RF         1965 SC 190  (4,5)  E&D        1965 SC1017  (7,14)  R          1965 SC1096  (8)  F          1967 SC 637  (8)  RF         1967 SC1643  (179,227)  RF         1968 SC 377  (8,13,16)  RF         1968 SC 394  (17)  R          1968 SC1138  (9,30,31,58)  R          1968 SC1425  (8)  D          1969 SC 453  (5,7)  RF         1969 SC 634  (18,33,35,36,38,40,43,47,49)  RF         1970 SC 564  (96,98,196,200)  RF         1973 SC1461  (601,706,707,1059,1175,1754,19  R          1978 SC 215  (15)  RF         1979 SC 248  (10,11)  RF         1980 SC1789  (97)

ACT:  The  West  Bengal Land Development and  Planning  Act,  1948  (West Bengal Act XX-T of 1948)-Provisions of s. 8-(i) Decla-  ration  under s. 6-Conclusive  evidence-Land-Subject  matter  ,of   declaration   needed   for   a   public   purpose-(ii)  Compensation  of land acquired under the Act not  to  exceed  market value of land as on December 31, 1946-ultra vires the  Constitution and void-Constitution of India, art. 31(2).

HEADNOTE: 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 s. 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

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to exceed the market value of the land on December 31, 1946, are ultra vires the Constitution and void 559 (i)inasmuch  as  art.  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 art. 31(2) (iii)the  Act is not saved by art. 31(5) from the  operation of  art. 31(2) as it was not certified by the  President  as provided for by art. 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, art. 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.

JUDGMENT: CiviL APPELLATE JURISDICTION: Civil 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. 1953.  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

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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.

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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

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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.  v.  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)  72 C.L.R. 269. 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.

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                                    Appeal dismissed. Agent for the appellant: P. K. Bose. Agent for respondents Nos. 1, 2 and 3: S. C. Banerjee. Agent for the intervener: G. H. Rajadhyaksha.