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PETITIONER: THE SUPREME COURT REPORTSK.C. GAJAPATI NARAYAN DEO AND OTHER

       Vs.

RESPONDENT: THE STATE OF ORISSA.

DATE OF JUDGMENT: 29/05/1953

BENCH: MUKHERJEA, B.K. BENCH: MUKHERJEA, B.K. BHAGWATI, NATWARLAL H. SASTRI, M. PATANJALI (CJ) DAS, SUDHI RANJAN HASAN, GHULAM

CITATION:  1953 AIR  375            1954 SCR    1  CITATOR INFO :  F          1954 SC 139  (6A)  RF         1954 SC 257  (7)  C          1954 SC 259  (7)  F          1956 SC 503  (21)  RF         1959 SC 308  (7)  F          1959 SC 648  (14)  APL        1960 SC 796  (3,6)  RF         1961 SC 459  (50)  R          1962 SC 137  (9)  R          1962 SC 458  (27)  R          1962 SC 594  (14)  R          1962 SC 723  (4)  R          1962 SC 821  (16)  R          1962 SC1912  (2,5)  R          1964 SC 381  (75)  R          1964 SC 925  (73)  R          1965 SC1017  (16)  RF         1966 SC 416  (16)  R          1966 SC 619  (6)  R          1966 SC1571  (7,13)  R          1967 SC 691  (15)  RF         1968 SC1138  (51)  R          1970 SC 508  (16)  RF         1973 SC2734  (35)  RF         1976 SC2118  (6)  RF         1978 SC1296  (68)  RF         1979 SC1550  (14)  RF         1980 SC1682  (27)  RF         1982 SC1107  (39)  R          1987 SC 579  (7)  RF         1991 SC1792  (6)

ACT:     Orissa  Estates Abolition Act, 1952, ss. 23, 26, 27,  37-  Orissa   Agricultural  Income-tax  (Amendment)  Act,   1950-  Validity  "Colourable legislation"-Tests of  validity-Effect  of  ulterior  motives-Provisions for vesting  buildings  and  private    lands   in   Government-Provision   for    paying  compensation in 30 Years Validity -Provisions introduced  in  Bill  after  coming into force of  new  Constitution-Whether  protected  by art. 31(4)-Constitution of India, 1950,  arts.

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31(2), 31(4); Sch.VII, List II entry 46, List III entry 42.

HEADNOTE:    The  Bill relating to the Orissa Estates Abolition  Act, 1952, was published in the Gazette on the 3rd January, 1950. It   contained  a  provision  that  any  sum   payable   for agricultural  incomes-Tax  for the previous year  should  be deducted  from the gross asset of an estate for the  purpose of  arriving  at  its  not income  on  the  basis  on  which compensation  was payable to the estate owners.  On the  8th January,  1950,  a  Bill to amend  the  Orissa  Agricultural Income-tax Act of 1947 so as to enhance the highest rate  of tax  from  3 annas in the rupee to 4 annas  and  reduce  the highest slab from Rs. 30,000 to Rs. 20,000 was published  in the  Gazette.   This  Bill was dropped  by  the  next  Chief Minister  who  introduced a revised Bill on the  22nd  July, 1950,  enhancing the highest rate to 12 annas 6 pies in  the rupee  and reducing the highest slab to Rs. 15,000 and  this was passed into law in August, 1950.  It was contended  that the  Orissa Agricultural Income-tax (Amendment) Act of  1950 was  a fraud on the Constitution and as such invalid  as  it was  a colourable legislation to effect a drastic  reduction in the compensation payable under the Estates Abolition Act:   Held"  (i)  that  the  question  whether  a  law  was   a colourable  legislation and as such void did not  depend  on the. motive or bona fides of the legislature in passing  the law but upon the competency of the legislature to pass  that particular  law,  and what the courts have to  determine  in such  cases is whether though the legislature has  purported to act within the limits of its powers, it has in  substance and  reality  transgressed those powers,  the  transgression being veiled by what appears, on proper,examination, to be a mere pretence or disguise.  The whole doctrine of colourable legislation  is  based  upon the maxim that  you  cannot  do indirectly what you cannot do directly. 2 (ii) The  impugned  Act was in substance and form a  law  in respect to the "taxing of agricultural income", as described in  entry  46  of List 11 of the  Seventh  Schedule  to  the Constitution and, as the State Legislature was competent  to legislate  on  this subject, the Act was not void,  and  the fact  that the object of the legislature was  to  accomplish another  purpose, viz., to reduce the  compensation  payable under  the Estates Abolition Act, cannot render this  law  a colourable  legislation  and void as such, as  the  ulterior object   itself  was  not  beyond  the  competence  of   the legislature. (iii)     Assuming  that in India there is no absolute  rule of  law  that whatever is affixed to or built  on  the  soil becomes  a part of it and is subject to the same  rights  of property  as the soil itself, there is nothing in law  which prevents the State Legislature from providing as part of  an estate  abolition  scheme that buildings  lying  within  the ambit of an estate and used primarily for the management  or administration  of the estate should vest in the  Government as  appurtenances  to the estate itself.   Such  acquisition would  come within article 31(2) of the Constitution and  if the  conditions laid down in clause (4) of that article  are complied with, it would be protected by that clause even  if the compensation provided for is not just and proper. (iv) The  provisions  in the Orissa Estates  Abolition  Act, 1950,  relating  to  private  lands  in  the  possession  of temporary tenants are not unconstitutional.  Merely  because

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compensation  was based on the produce rent payable  by  the tenants  it  cannot be said that the  landholder  was  given compensation  only for the landholder’s rights and  not  for the kudivaram (tenant’s) rights also. (v)  The expression "passed by such legislature" in  article 31(4)  of  the  Constitution means passed  with  or  without amendments  and  the fact that the  provisions  relating  to vesting of private lands did not form a part of the  Estates Abolition  Bill as originally introduced but were  added  to the  Bill  after the new Constitution had  come  into  force would  not  deprive those provisions of  the  protection  of article 31(4) of the Constitution. (vi) The  provision  contained in section 37 of  the  Orissa Estates Abolition Act, 1950, for payment of compensation  by 30   annual  instalments  is  not  a  piece  of   colourable legislation.   It comes clearly within entry 42 of List  III of Schedule VII of the Constitution. [The  question whether the provisions of the Madras  Estates Land  (Orissa  Amendment)  Act, 1947,  which  empowered  the Collector to settle and reduce rents were void because  they involved an improper delegation of legislative powers to the executive and contravened article 14 of the Constitution was raised, but with the consent of the counsel, their Lordships decided  to leave the question open as it did not relate  to the validity of the Orissa                                    3 Estates  Abolition  Act,  which was  the  subject-matter  in dispute in the present case]. State  of  Bihar  v. Maharajah Kameshwar  Singh  and  Others ([1952]  S.C.R. 889) distinguished.  Surya Pal Singh v.  The State of Uttar Pradesh ([1952] S.C.R. 1056) followed. Attorney-General  for  Ontario v.  Reciprocal  Insurers  and Others  ([1924] A.C. 328), Attorney-General for  Alberta  v. Attorney  General  for  Canada  ([1939]  A.C.  117),   Union Colliery  Co. of Br.  Columbia Ltd. v. Bryden  ([1899]  A.C. 580),  Cunningham  v.  Tomeyhomma   ([1903]  A.C.  151),  Be Insurance  Act of Canada ([1932] A.C. 41), Moran  v.  Deputy Commissioner for Taxation, New South Wales ([1940] A.C. 838) referred to.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 71 to 76 of 1953. Appeals  under article 132(1) of the Constitution  of  India from the Judgment and Order dated 30th January, 1953, of the Orissa  High Court in Original Jurisdiction Cases  Nos.  13, 14, 15, 16, 25 and 26 of 1952.  The facts of the case appear in the judgment. B.   Somayya  (K.  B.  Krishnamurthi,  with  him)  for   the appellant in Civil Appeal No. 71 of 1953. B.   Somayya (D.  Narasaraju and N. Y. Ramdas, with him) for the appellant in Civil Appeal No. 72 of 1953. D.   Narasaraju  and  A. Krishnaswami (N.  V.  Ramdas,  with them) for the appellant in Civil Appeal No. 73 of 1953. D.   Narasaraju (N.  V. Ramdas, wit him) :for the  appellant in Civil Appeal No. 76 of 1953. D.   V. Narasinga Rao for the appellant in Civil Appeal  No. 75 of 1953. R.   Patnaik  for  the appellant in Civil Appeal No.  74  of 1953. M.   C.  Setalvad, Attorney-General for India, and  Pitambar Misra, Advocate-General of Orissa (P.  A. Mehta, with  them) for the respondent.

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1953.   May 29.  The Judgment of the Court was delivered  by MUKHERJEA J. 4 MUKHERJEA  J.-These  six  appeals  arise  out  of  as   many applications,  presented to the High Court of Orissa,  under article  226  of  the Constitution, by  the  proprietors  of certain  permanently  settled estates within  the  State  of Orissa,  challenging  the  constitutional  validity  of  the legislation  known  as the Orissa Estates Abolition  Act  of 1952   (hereinafter  called  "the  Act")  and  praying   for mandatory  writs  against the State  Government  restraining them from enforcing the provisions of the Act so far as  the estates owned by the petitioners are concerned. The  impugned  Act  was  introduced  in  the  Orissa   State Legislature on the 17th of January, 1950, and was passed  by it  on  the 28th September, 1951.  It was  reserved  by  the State  Governor for consideration of the President  and  the President  gave his assent on 23rd January, 1952.   The  Act thus  receives the protection of articles 31(4) and  31A  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 article 31B. The Act, so far as its main features are concerned,  follows the  pattern of similar statutes passed by the Bihar,  Uttar Pradesh  and  Madhya Pradesh  Legislative  Assemblies.   The primary  purpose of the Act is to abolish all zemindary  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 of revenue-paying lands and  revenue-free 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 5 means a proprietor, sub-proprietor, landlord, landholder ... thikadar,  tenure-holder, under-tenure-holder  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 encumbrances.   Under  section  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  as  a  result of surrender are described  in  detail  in section  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,  non-ryoti  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

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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 section  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 kha’s  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 6 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 of  vesting falls.  First of all, the gross asset is  to  be ascertained and by gross asset is meant the aggregate of the rents including all cesses 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 cesses  payable  to  the  State Government,  the  agricultural ’income-tax  payable  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 as  income-tax  in 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 instalments  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. There  was a fairly large number of grounds put  forward  on behalf of the appellants before the High Court in  assailing the  validity of the Act.  It is to be remembered  that  the question  of  the  constitutional validity  of  three  other similar  legislative measures passed, respectively,  by  the Bihar,   Uttar  Pradesh  and  Madhya   Pradesh   Legislative Assemblies  had already come for consideration  before  this court and this court had pronounced all of them to be  valid with the exception of two very minor provisions in the Bihar Act.   In  spite of all the  previous  pronouncements  there appears  to have been no lack of legal ingenuity to  support the  present  attack upon the Orissa legislation, and  as  a matter of fact, much of the arguments put forward on  behalf of the appellants purported to have been based                             7 on the majority judgment of this court in the Bihar appeals, where two small provisions of the Bihar Act were held to  be unconstitutional. The  arguments advanced on behalf of the  appellants  before the  High  Court have been classified by the  learned  Chief Justice in his judgment under three separate heads.  In  the first  place, there were contentions raised,  attacking  the validity  of the Act as a whole.  In the second  place,  the

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validity  of the Act was challenged as far as it related  to certain  specified items of property included in an  estate, e.g., private lands, buildings, waste lands, etc.   Thirdly, the  challenge was as to the validity of certain  provisions in the Act relating to determination of compensation payable to   the   intermediary,  with  reference  either   to   the calculation of the gross assets or the deductions to be made therefrom for the purpose of arriving at the net income. The  learned  Chief  Justice in a  most  elaborate  judgment discussed  all  the  points raised  by  the  appellants  and negatived them all except that the objections with regard to some of the matters were kept open.  Mr. Justice Narasimham, the  other learned Judge in the Bench, while  agreeing  with the  Chief  Justice  as to other points,  expressed,,  in  a separate  judgment of his own, his suspicion about the  bona fides   of  the  Orissa  Agricultural   Income-tax   (Second Amendment)  Act,  1950,  and he was inclined  to  hold  that though  ostensibly  it  was a taxation measure,  it  was  in substance-nothing  else but a colorable device to  cut  down drastically  the  income  of the  intermediaries  so  as  to facilitate further reduction of their net income as provided in clause (b) of section 27(1) of the Act.  He, however, did not dissent from the final decision arrived at by the  Chief Justice,  the ground assigned being that whenever  there  is any  doubt regarding the constitutionality of an  enactment, the  doubt  should always go in favour of  the  legislature. The  result was that with the exception of the  few  matters that were kept open, all the petitions were dismissed.   The proprietors  have  now  come  before us  on  appeal  on  the strength  of  certificates granted by the High  Court  under articles 132 and 133 8 of   the  Constitution as well as under section 110  of  the Code of Civil Procedure. No  contention has been pressed before us on behalf  of  the appellants attacking the constitutional validity of the  Act as  a whole.  The arguments that have been advanced  by  the learned  counsel  for  the appellants  can  be  conveniently divided  under  three heads: In the first place,  there  has been  an  attack on the validity of the  provisions  of  two other  statutes, namely, the Orissa Agricultural  Income-tax (Amendment)   Act,  1950,  and  the  Madras   Estates   Land (Amendment)  Act,  1947,  in  so  far  as  they  affect  the calculation  of the net income of an estate for the  purpose of  determining the compensation payable under the Act.   In the  second  place,  the provisions of  the  Act  have  been challenged  as unconstitutional to the extent that they  are applicable   to   private  lands  and   buildings   of   the proprietors,  both  of which vest as parts  of  the  estate, under  section 5 of the Act.  Lastly, the manner of  payment of  compensation  money, as laid down in section 37  of  the Act, has been challenged as invalid and unconstitutional. Under the first head the appellants’ main contention relates to  the  validity  of  the  Orissa  Agricultural  Income-tax (Amendment)  Act  of 1950.  This Act, it is said, is  not  a bona fide taxation statute at all, but is a colorable  piece of  legislation, the real object of which is to  reduce,  by artificial  means, the net income of the intermediaries,  so that the compensation payable to them under the Act might be kept  down  to as low a figure as possible.   To  appreciate this contention of the appellants, it would be necessary  to narrate  a few relevant facts.  Under section 27  (1)(b)  of the  Act,  any  sum  payable in  respect  of  an  estate  as agricultural income-tax, for the previous agricultural year, constitutes  an item of deduction which has to  be  deducted

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from  the  gross  asset  of an estate  for  the  purpose  of arriving at its net income, on the basis of which the amount of compensation is to be determined.  The Estates  Abolition Bill was published in the local gazette on 3rd January 1950, As has been said                          9 already,  it  was  introduced  in  the  Orissa   Legislative Assembly  on the 17th of January following and it was passed on  the  28th September, 1951.  There  was  an  Agricultural Income-tax Act in force in the State of Orissa from the year 1947  which  provided  a progressive scale  of  taxation  on agricultural  income, the highest rate of tax being 3  annas in  the  rupee  on a slab of over  Rs.  30,000  received  as agricultural income.  On 8th January, 1950, that is to  say, five  days after the publication of the Abolition  Bill,  an amended  agricultural income-tax bill was published  in  the official  gazette.   At that time Mr. H. K. Mahtab  was  the Chief Minister of Orissa and this bill was sponsored by him. The  changes  proposed by this Amendment Act were  not  very material.   The highest rate was enhanced from 3 annas to  4 annas in the rupee and the highest slab was reduced from Rs. 30,000  to Rs. 20,000.  For some reason or  other,  however, this  bill was dropped and a revised bill was_ published  in the local gazette on 22nd July, 1950, and it passed into law on  10th of August following.  This new Act admittedly  made changes  of a very drastic character regarding  agricultural income-tax.   The rate of taxation was greatly enhanced  for slabs  of agricultural income above Rs. 15,000 and  for  the highest  slab the rate prescribed was as much as 12 annas  6 pies  in  the  rupee.  It was stated  in  the  statement  of objects  and reasons that the enhanced  agricultural  income was  necessary for financing various development schemes  in the State.  This, it is said, was wholly untrue for it could not be disputed that almost all the persons who came  within the  higher income group and were primarily affected by  the enhanced   rates  were  intermediaries  under  the   Estates Abolition  Bill  which was at that time  before  the  Select Committee  and was expected to become law very soon, and  as the legislature had already definitely decided to extinguish this  class of intermediaries, it was absurd to say that  an increased   taxation  upon  them  was  necessary   for   the development   schemes.    The   object   of   this   amended legislation,  according  to  the  appellants,  was   totally different from what it ostensibly purported 2 10 to  be  and the object was nothing else but to use it  as  a means of effecting a drastic reduction in the income of  the intermediaries, so that the compensation payable to them may be reduced almost to nothing.  This change in the provisions of  the Agricultural Income-tax Bill, it is further  pointed out,  synchronized  with  a change in the  Ministry  of  the Orissa  State.  The original amended bill was introduced  by the then Chief Minister, Mr. H. K. Mahtab, who was in favour of  allowing  suitable compensation to  expropriated  zemin. dars;  but his successor, who introduced the  revised  bill, was  said  to be a champion of the  abolition  of  zemindary rights  with little or no compensation to  the  proprietors. In these circumstances, the argument of the learned  counsel is that the agricultural income-tax legislation being really not a taxation statute but a mere device for serving another collateral  purpose constitutes a fraud on the  Constitution and  as such is invalid, either in its entirety, or  at  any rate  to  the extent that it affects  the  estate  abolition scheme.   We have been referred to a number of decisions  on

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this point where the doctrine of colourable legislation came up  for discussion before courts of law; and stress is  laid primarily  upon  the pronouncement of the majority  of  this court  in  the  case  of The  State  of  Bihar  v.  Maharaja Kameshwar Singh and Others (1) which held two provisions  of the Bihar Land Reforms Act, namely, sections 4(b) and 23 (f) to  be  unconstitutional on the ground, among  others,  that these  provisions constituted a fraud on  the  Constitution. The  fact  that the provisions in the  amended  Agricultural Income-tax  Act were embodied in a separate statute and  not expressly  made  a part of the Abolition Act  itself  should not, it is argued, make any difference in principle.  As the question  is of some importance and is likely to be  debated in similar cases in future, it would be necessary to examine the precise scope and meaning of what is known ordinarily as the doctrine of "colourable legislation". It  may  be made clear at the outset that  the  doctrine  of colourable legislation does not involve any question (1)  [1952] S.C.R. 889. of bona 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( ’ (1).  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 the subject- matter  of  the  statute or in the method  of  enacting  it, transgressed the limits of its constitutional powers.   Such transgression may be patent, manifest or direct, but it  may also  be  disguised, covert and indirect and it is  to  this latter  class  of  cases  that  the  expression   "colorable 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 presence or disguise.  As was said by Duff J. in Attorney-General for Ontario v.   Reciprocal Insurers and Others(2), "Where 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 (1)  Vide  Cooley’s  Constitutional Limitations Vol.  I.  p. 379. (2)  [1924] A.C. 328 at 337. 12 for the purpose of determining what is that the  legislature is really doing." In  other  words,  it is the substance of the  Act  that  is material and not merely the form or outward appearance,  and if  the  subject-matter in substance is something  which  is

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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 authority(1).   For  the purpose of this  investigation  the court could certainly examine the effect of the  legislation and   take  into  consideration  its  object,   purpose   or design(1).   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 its powers.  It is  said by  Lefroy in his well known work on  Canadian  Constitution that even if the legislature avow on the face of an Act that it  intends thereby to legislate in reference to  a  subject over  which  it  has no jurisdiction, yet  if  the  enacting clauses of the Act bring the legislation within its  powers, the Act cannot be considered ultra vires(3). In  support of his contention that the  Orissa  Agricultural Income-tax  (Amendment) Act of 1950 is a colorable piece  of legislation  and  hence ultra vires  the  Constitution,  the learned  counsel for the appellants, as said  above,  placed considerable  reliance upon the majority decision  of  this- court  in  the case of The State of Bihar v.  Sir  Kameshwar Singh(4), where two clauses (1)  Vide   Attorney-General  for  Ontario   v.   Reciprocal Insurers and Others, [1924] A.C. 328 at 337. (2)  Vide Attorney-General for Alberta  v.  Attorney-General for Canada, [19391 A.C. I 17 at 130. (3)  See Lefroy on Canadian Constitution, page 75. (4)  [1952] S.C.R. 889.                     13 of   the  Bihar  Land  Reform  Act  were  held  to  be   un- constitutional  as being colourable exercise of  legislative power  under  entry 42 of List III of Schedule  VII  of  the Constitution.  The learned counsel has also referred us,  in this  connection,  to  a  number of  cases,  mostly  of  the Judicial Committee of the Privy Council, where the  doctrine of  colourable  legislation  came up  for  consideration  in relation   to  certain  enactments  of  the   Canadian   and Australian legislatures.  The principles laid down in  these decisions do appear to us to be fairly well settled, but  we do  not  think that the appellants in  these  appeals  could derive much assistance from them. In  the cases from Canada, the question invariably has  been whether the Dominion Parliament has, under colour of general legislation,   attempted  to  deal  with  what  are   merely provincial  matters,  or conversely whether  the  Provincial legislatures under the pretence of legislating on any of the matters  enumerated  in  section 92  of  the  British  North America  Act really legislated on a matter assigned  to  the Dominion Parliament.  In the case of Union Colliery  Company of British, Columbia Ltd. v. Bryden( ), the question  raised was  whether section 4 of the British Columbian  Coal  Mines Regulation Act, 1890, which prohibited China men of full age from  employment in under-ground coal working, was, in  that respect,  ultra  vires of the Provincial  legislature.   The question was answered in the affirmative.  It was held  that if  it was regarded merely as a coal working regulation,  it

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could certainly come within section 92, sub-section (10)  or (13),  of the British North America Act; but  its  exclusive application  to  Chinamen, who were  aliens  or  naturalised subjects, would be a statutory prohibition which was  within the  exclusive  authority of the Dominion  Parliament,  con- ferred by section 91, sub-section (25), of the Act.  As  the Judicial Committee themselves explained in a later  case(2), the  regulations  in  the British Columbian  Act  "were  not really  aimed  at the regulation of coal mines at  all,  but were in truth a device to deprive the Chinese, (1)  [1899] A.C. 580. (2)  Vide Cunningham v. Tomeyhomma [1903] A.C. 151 at 157. 14 naturalised  or not, of the ordinary rights of the  inhabit- ants  of  British Columbia and in effect to  prohibit  their continued  residence  in that province since  it  prohibited their earning their living in that province." On  the  other hand, in ReInsurance Act  of  Canada(1),  the Privy  Council  had to deal with  the  constitutionality  of sections 11 and 12 of the Insurance Act of Canada passed  by the  Dominion Parliament under which it was declared  to  be unlawful  for  any Canadian company or an alien,  whether  a natural  person or a foreign company, to carry on  insurance business  except under a licence from the Minister,  granted pursuant  to  the provisions of the Act.  The  question  was whether  a  foreign or British insurer  licensed  under  the Quebec  Insurance  Act  was entitled to  carry  on  business within that Province without taking out a licence under  the Dominion  Act?  It was held that sections 1 1 and 12 of  the Canadian Insurance Act, which required the foreign  insurers to  be  licensed, were ultra vires, since in  the  guise  of legislation as to aliens and immigration -matters admittedly within  the Dominion authority the Dominion legislature  was seeking  to  intermeddle  with  the  conduct  of   insurance business   which  was  a  subject  exclusively  within   the provincial authority.  The whole law on this point was  thus summed up by Lord Maugham in Attorney-General for Alberta v. Attorney-General for Canada(2): "It  is not competent either for the Dominion or a  Province under  the  guise,  or the pretence, or in the  form  of  an exercise  of its own powers to carry out an object which  is beyond  its powers and a trespass on the exclusive power  of the other." The  same principle has been applied where the question  was not of one legislature encroaching upon the exclusive  field of  another  but  of  itself  violating  any  constitutional guarantee  or prohibition.  As an illustration of this  type of cases we may refer to the Australian case of Moran v. The Deputy  Commissioner  of Taxation for  New  South  Wales(3). What happened (1)[1932] A.C. 41.                      (3) [1940]A.C.838. (2)[1939] A.C. 117 at 130.                        15 in  that case was that in pursuance of a joint  Commonwealth and  States  scheme to ensure to wheat growers  in  all  the Australian  States  "a payable price for their produce  "  a number  of Acts were passed by the  Commonwealth  Parliament imposing   taxes  on  flour  sold  in  Australia  for   home consumption,  so as to provide a fund available for  payment of  moneys  to wheat growers.  Besides a  number  of  taxing statutes,  which  imposed tax on flour, the  Wheat  Industry Assistance Act No. 53 of 1938 provided for a fund into which the taxes were to be paid and of which certain payments were to  be  made to the wheat growers in accordance  with  State legislation.  In the case of Tasmania where the quantity  of

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wheat grown was relatively small but the taxes were  imposed as  in  the  other States, it was agreed as a  part  of  the scheme and was provided by section 14 of the Wheat  Industry Assistance  Act  that  a special grant  should  be  made  to Tasmania,  not subject to any federal  statutory  conditions but intended to be applied by the Government of Tasmania, in paying  back to Tasmanian millers, nearly the whole  of  the flour tax paid by them and provision to give effect to  that purpose was made by the Flour Tax Relief Act No. 40 of  1938 of  the State of Tasmania.  The contention raised  was  that these Acts were a part of a scheme of taxation operating and intended to operate by way of discriminating between  States or  parts  of  States  and as  such  were  contrary  to  the provisions of section 51(ii) of the Commonwealth  Australian Constitution  Act.   The matter came  up  for  consideration before  a full court of the High Court of Australia and  the majority  of  the Judges came to the  conclusion  that  such legislation was protected by Section 96 of the Constitution, which empowered the Parliament of the Commonwealth to  grant financial  assistance  to  any  State  on  such  terms   and conditions  as  the Parliament thought fit.  Evatt J.  in  a separate  judgment  dissented from the view  and  held  that under the guise of executing the powers under section 96  of the  Constitution, the legislature had really  violated  the constitutional  prohibition laid down in section  51(ii)  of the  Constitution.  There was an appeal taken to  the  Privy Council.  The Privy Council 16 affirmed the judgment of the majority but pointed out that " cases  may be imagined in which a purported exercise of  the power  to grant financial assistance under section 96  would be  merely  colourable.   Under the guise  and  pretence  of assisting a State with money, the real substance and purpose of  the  Act  might simply be to  effect  discrimination  in regard  to taxation.  Such an Act might well be ultra  vires the Commonwealth Parliament." We  will  now come to the decision of the majority  of  this court  regarding two clauses in the Bihar Land  Reforms  Act which  seems  to  be the sheet  anchor  of  the  appellants’ case(1).  In that case the provisions of sections 23(f)  and 4(b)  of the Bihar Land Reforms Act were held to be  invalid by  the  majority of this court not on the ground  that,  in legislating  on  these  topics, the  State  legislature  had encroached   upon  the  exclusive  field  of   the   Central legislature,  but that the subjectmatter of legislation  did not at all come within the ambit of item No. 42 of List III, Schedule VII of the Constitution under which it purported to have  been enacted.  As these sections did not  come  within entry  42, the consequence was that half of the  arrears  of rent  as well as 12’% of the gross assets of an estate  were taken away, otherwise than by authority of law and therefore there  was a violation of fundamental rights  guaranteed  by article  31  (1) of the Constitution.  This was  a  form  of colourable  legislation  which made these  provisions  ultra vires the Constitution. It  may  be stated here that section 23 of  the  Bihar  Land Reforms Act lays down the method of computing the net income of  an  estate or a tenure which is  the  subject-matter  of acquisition  under the Act.  In arriving at the  net  income certain  deductions are to be made from the gross asset  and the  deductions  include, among others,  revenue,  cess  and agricultural income tax payable in respect of the properties and  also the costs of management.  Section 23 (f)  provided another  item of deduction under which a sum representing  4 to 121 % of the gross asset of an estate was to be

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(1)  Vide The State of Bihar v. Sir Kameshwar Singh,  [1952] S.C.R. 889. 17 deducted as "costs of works for benefit to the raiyat".  The other provision contained in section 4 (b) provides that all arrears  of  rent  which  had already  accrued  due  to  the landlord  prior  to the date of vesting shall  vest  in  the State and the latter would pay only 50% of these arrears  to the landlord.  Both these provisions purported to have  been enacted  under  entry  42 of List III Schedule  VII  of  the Constitution  and that entry speaks of" principles on  which compensation for property acquired is to be -determined  and the  form  and manner in which that compensation  is  to  be given." It was held in the Bihar case(1) by the majority  of this  court  that  the item of  deduction  provided  for  in section  23(f)  was a fictitious item  wholly  unrelated  to facts.  There was no definable pre-existing liability on the part  of the landlord to execute works of any kind  for  the benefit  of  the  raiyat.  What was attempted  to  be  done, therefore, was to bring within. the scope of the legislation something  which  not being existent at all could  not  have conceivable relation to any principle of compensation.  This was, therefore, held to be a colourable piece of legislation which  though  purporting to have been made under  entry  42 could not factually come within its scope. The  same  principle  was  held  applicable  in  regard   to acquisition  of arrears of rent which had become due to  the landlord  prior to the date of vesting.  The net  result  of this  provision was that the State Government was given  the power  to appropriate to itself half of the arrears of  rent due  to  the landlord without giving  him  any  compensation whatsoever.   Taking the whole and returning the half  meant nothing more or less than taking the half without any return and this, it was held, could not be regarded as a  principle of  compensation  in  any sense of the word.   It  was  held definitely by one of the learned Judges, who constituted the majority,  that  item  42 of List III was  nothing  but  the description  of a legislative head and in deciding the  com- petency  of the legislation under this entry, the  court  is not concerned with the justice or propriety of the (1)  [1952] S.C.R. 889. 3 18 principles  upon  which the assessment  of  compensation  is directed  to  be  made;  but  it  must  be  a  principle  of compensation,  no matter whether it was just or  unjust  and there  could  be  no principle of  compensation  based  upon something which was unrelated to facts.  It may be mentioned here  that  two of the three learned Judges who  formed  the majority did base their decision regarding the invalidity of the  provision, relating to arrears of rent, mainly  on  the ground  that  there  was  no  public  purpose  behind   such acquisition.  It was held by these Judges that the scope  of article  31(4)  is  limited to  the  express  provisions  of article  31(2) and although the court could not examine  the adequacy of the provision for compensation contained in  any law which came within the purview of article 31(4), yet that clause  did not in any way debar the court from  considering whether  the acquisition was for any public  purpose.   This view  was  not taken by the majority of the  court  and  Mr. Narasaraju,  who argued the appeals before us, did not  very properly  pursue  that line of reasoning.   This  being  the position,  the  question  now arises  whether  the  majority decision of this court with regard to the two provisions  of the Bihar Act is really of any assistance to the  appellants

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in  the cases before us.  In our opinion, the question  has, got to be answered in the negative. In  the  first place, the line of reasoning  underlying  the majority decision in the Bihar case(1) cannot possibly  have any  application  to  the facts of the  present  case.   The Orissa  Agricultural Income-tax (Amendment) Act of  1950  is certainly a legislation on " taxing of agricultural income " as described in entry 46 of List II of the Seventh Schedule. The State legislature had undoubted competency to  legislate on agricultural income tax and the substance of the  amended legislation  of  1950 is that it purports  to  increase  the existing rates of agricultural income-tax, the highest  rate being  fixed at 12 annas 6 pies in the rupee.  This  may  be unjust  or  inequitable,  but  that  does  not  affect   the competency  of the legislature.  It cannot be said,  as  was said in the Bihar case(1), that the legislation purported to be based (1)  (1952) S.C.R. 889. 19 on something which was unrelated to facts and did not  exist at  all.   Both  in form and in substance  the  Act  was  an agricultural income-tax legislation and agricultural income- tax  is  certainly  a  relevant item  of  deduction  in  the computation  of  the  net income of an  estate  and  is  not unrelated to it as item No. 23(f) of the Bihar Act was  held to  be.  If under the existing law the agricultural  income- tax was payable at a certain-rate and without any  amendment or  change  in  the  law, it was  provided  in  the  Estates Abolition   Act  that  agricultural  income-tax  should   be deducted from the gross asset at a higher rate than what was payable under law, it might have been possible to argue that there  being no pre-existing liability of this character  it was  really  a  non-existing  thing  and  could  not  be  an ingredient in the assessment of compensation.  But here  the Agricultural  Income-tax  (Amendment)  Act  was  passed   in August, 1950.  It came into force immediately thereafter and agricultural  income-tax  was realised on the basis  of  the amended  Act in the following year.  It was,  therefore,  an existing  liability in 1952, when the Estates Abolition  Act came  into  force.   It  may be  that  many  of  the  people belonging  to  the higher income group did  disappear  as  a result  of  the Estates Abolition Act, but even  then  there were people still existing upon whom the Act could operate. The  contention  of  Mr. Narasaraju really  is  that  though apparently  it  purported to be a  taxation  statute  coming under  entry 46 of List II, really and in substance  it  was not  so.   It was introduced under the guise of  a  taxation statute  with  a  view to accomplish  an  ulterior  purpose, namely, to inflate the deductions for the purpose of valuing an estate so that the compensation payable in respect of  it might  be  as small as possible.  Assuming that it  is  so.. still  it cannot be regarded as a colourable legislation  in accordance  with the principles indicated above, unless  the ulterior purpose which it is intended to serve is  something which lies beyond the powers of the legislature to legislate upon.  The whole doctrine of colourable legislation is based upon the maxim that you cannot do indirectly what you cannot do 20 directly.   If  a  legislature is competent to  do  a  thing directly,  then the mere fact that it attempted to do it  in an  indirect  or  disguised  manner,  cannot  make  the  Act invalid.  Under entry 42 of List III which is a mere head of legislative power the legislature can adopt any principle of compensation in respect to properties compulsorily acquired.

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Whether  the  deductions  are large or  small,  inflated  or deflated  they  do  not affect the  constitutionality  of  a legislation under this entry’ The only restrictions on  this power,  as -has been explained by this court in the  earlier cases,   are  those  mentioned  in  article  31(2)  of   the Constitution  and  if in the circumstances of  a  particular case  the  provision  of article 31(4)  is  attracted  to  a legislation,  no objection as to the amount or  adequacy  of the  compensation can at all be raised.  The fact  that  the deductions are unjust, exorbitant or improper does not  make the  legislation invalid, unless it is shown to be based  on something  which is unrelated to facts.  As we have  already stated, the question of motive does not really arise in such cases and one of the learned Judges of the High Court in our opinion  pursued a wrong line of enquiry in trying  to  find out  what  actually  the motives  were  which  impelled  the legislature  to  act  in  this manner.   It  may  appear  on scrutiny that the real purpose of a legislation is different from  what  appears  on the face of it, but it  would  be  a colourable  legislation  only if it is shown that  the  real object   is   not  attainable  to  it  by  reason   of   any constitutional  limitation  or  that  it  lies  within   the exclusive field of another legislature.  The result is  that in   our   opinion  the   Orissa   Agricultural   Income-tax (Amendment)  Act of 1950 could not be held to be a piece  of colourable  legislation,  and as such  invalid.   The  first point  raised  on behalf of the  appellants  must  therefore fail. The  other  point  raised by the  learned  counsel  for  the appellants under the first head of his arguments relates  to the  validity  of certain provisions of the  Madras  Estates Land  (Orissa  Amendment)  Act of 1947.   This  argument  is applicable only to those estates which are 21 situated in what is known as ex-Madras area, that is to say, which formerly belonged to the State of Madras but became  a part of Orissa from 1st April, 1936.  The law regulating the relation of landlord and tenant in these areas is  contained in  the  Madras Estates Land Act of 1908 and  this  Act  was amended with reference to the areas situated in the State of Orissa  by the amending Act XIX of 1947.  The provisions  in the amended Act, to which objections have been taken by  the learned counsel for the appellants, relate to settlement and reduction of rents payable by raiyats.  Under section 168 of the  Madras  Estates Land Act, settlement of  rents  in  any village  or  area  for which a record  of  rights  has  been published  can  be  made either on the  application  of  the landholder or the raivats.  On such application being  made, the  Provincial  Government  may  at  any  time  direct  the Collector  to settle fair and equitable rents in respect  of the lands situated therein.  Sub-section (2) of section  168 expressly  provides  that  in  settling  rents  under   this section, the Collector shall presume, until the contrary  is proved,  that  the  existing  rate  of  rent  is  fair   and equitable,   and  he  would  further  have  regard  to   the provisions  of  this Act for determining the rates  of  rent payable by raiyats.  Section 177 provides that when any rent is  settled under this chapter, it can neither  be  enhanced nor  reduced  for a period of 20 years,  except  on  grounds specified  in  sections 30 and 38 of the  Act  respectively. The amending Act of 1947 introduced certain changes in  this law.   A new section, namely, section 168-A was.  introduced and  a  further provision was added to section 177  as  sub- section  (2)  of that section, the  original  section  being renumbered as sub-section (1).  Section 168-A of the amended

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Act runs as follows:-- (1)   Notwithstanding  anything contained in  this  Act  the Provincial  Government  may,  on being  satisfied  that  the exercise of the powers hereinafter mentioned is necessary in the  interests  of public order or of the local  welfare  or that  the rates of rent payable in money or in kind  whether commuted, settled or 22 otherwise  fixed  are  unfair  or  inequitable  invest   the Collector with the following powers:- (a)  Power to settle fair and equitable rents in cash; (b)  Power,  when settling rents to reduce rents if  in  the opinion  of  the Collector the continuance of  the  existing rents would on any ground, whether specified in this Act  or not, be unfair and inequitable. (2)  The  power  given  under  this  section  may  be   made exercisable within specified areas either generally or  with reference to specified cases or class of cases." Sub-section  (2) which has been added to section 177  stands thus:-- "  2(a)  Notwithstanding anything in sub-section  (1)  where rent  is settled under the provisions of section 168-A,  the Provincial   Government   may  either   retrospectively   or prospectively  prescribe the date on which  such  settlement shall  take  effect.   In giving  retrospective  effect  the Provincial Government may, at their discretion, direct  that the  rent so settled shall take effect from a date prior  to the   commencement  of  the  Madras  Estates  Land   (Orissa Amendment) Act, 1947." The   appellants’  contention  is  that  by  these   amended provisions  the  Provincial  Government  was  authorised  to invest the Collector with power to settle and reduce  rents, in  any  way he liked, unfettered by any of  the  rules  and principles   laid  down  in  the  Act  and  the   Provincial Government was also at liberty to direct that the  reduction of  rents  should  take effect  retrospectively,  even  with reference to a period for which rents had already been  paid by  the  tenant.   Under section 26 of  the  Orissa  Estates Abolition  Act,  the  gross  asset of an  estate  is  to  be calculated on the basis of rents payable by raiyats for  the previous  agricultural year.  According to  the  appellants, the  State  Government  made use of the  provisions  of  the amended Madras Estates Land (Orissa Amendment) Act to reduce arbitrarily the rents payable by raiyats and further to make the  reduction  take  effect retrospectively,  so  that  the diminished rents could be reckoned                         23 as  rents  for  the previous year  in  accordance  with  the provision  of  section 26 of the Estates Abolition  Act  and thus  deflate  the basis upon which the gross  asset  of  an estate was to be computed. It  is  conceded by the learned counsel for  the  appellants that  the amendments in the Madras Estates Land Act  are  no part of the Estates Abolition Act of Orissa and there is  no question of any colourable exercise of legislative powers in regard   to   the  enactment  of  these   provisions.    The legislation,    however,    has    been    challenged,    as unconstitutional, on two grounds.  First of all, it is urged that by the amended sections mentioned above, there has been an   improper  delegation  of  legislative  powers  by   the legislature  to the Provincial Government, the latter  being virtually empowered to repeal existing laws which govern the relations  between landlord and tenant in those areas.   The other  ground  put forward is that these  provisions  offend against  the equal protection clause embodied in article  14

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of the Constitution.  It is pointed out that the  Provincial Government  is  -given unfettered discretion to  choose  the particular areas where the settlement of rent is to be made. The  Government has also absolute power to direct  that  the reduced  rents  should take effect either  prospectively  or retrospectively in particular cases as they deem proper.  It is  argued that there being no principle  of  classification indicated in these legislative provisions and the discretion vested in the Government being an uncontrolled and unfetter- ed  discretion  guided by no legislative  policy,  the  pro- visions  are  void as repugnant to article 14  of  the  Con- stitution. In  reply  to these arguments it has been contended  by  the learned  Attorney-General  that, apart from the fact  as  to whether  the contentions are well-founded or not,  they  are not  relevant  for  purposes  of  the  present  case.    The arguments  put forward by the appellants are not grounds  of attack on the validity of the Estates Abolition Act,  which, is the subject-matter of dispute in the present case, and it is  not  suggested  that  the  provisions  of  the   Estates Abolition Act relating to 24 the computation of gross asset on the basis of rents payable by  raiyats  is in any way illegal.  The  grievance  of  the appellants in substance is that the machinery of the amended Act  is being utilised by the Government for the purpose  of deflating  the gross asset of an estate.  We agree with  the learned Attorney-General that 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 section  26 of the Estates Abolition Act, the rents  payable for  the previous year would be the rents settled under  the Madras Estates Land Act, as it stood unamended before  1947. The  learned  counsel for the appellants  eventually  agreed with  the  views of the Attorney-General on this  point  and with  the  consent of both sides we decided to  leave  these questions open.  They should not be deemed to have been  de- cided in these cases. The  appellants’  second head of arguments  relates  to  two items  of property, namely, buildings and private  lands  of the intermediary, which, along with other interests, vest in the State under section 5 of the Act. There  are  different  provisions in the Act  in  regard  to different  classes of buildings.  Firstly,  dwelling  houses used  by  an intermediary for purposes of residence  or  for commercial  or  trading  purposes remain  with  him  on  the footing of his being a tenant under the State in respect  to the sites thereof and paying such fair and equitable rent as might be determined in accordance with the provisions of the Act.   In  the  second place, buildings  used  primarily  as office  or  kutchery for man agement of the estates  or  for collection of rents or as rest houses for estate servants or as golas for storing of rents in kind vest in the State  and the  owner is allowed compensation in respect  thereof.   In addition  to these, there are certain special provisions  in the Act                              25 relating  to buildings constructed after 1st January,  1946, and used for residential or trading purposes, in respect  to which the question of bona fides as to its construction  and

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use  might  be  raised and investigated  by  the  Collector. There  are separate provisions also in respect to  buildings constructed  before  1st January, 1946, which  were  not  in possession  of the intermediary at the date of  coming  into force  of the Act.  The questions arising in regard to  this class of cases have been left open by the High Court and  we are  not  concerned with them in the  present  appeals.   No objection has been taken by the appellants in respect to the provisions  of  the  Act  relating  to  buildings  used  for residential or trade purposes.  Their objections relate only to  the  building used for estate or office  purposes  which vest  in  the State Government under the provisions  of  the Act. In  regard to these provisions, it is urged  primarily  that the  buildings  raised on lands do  not  necessarily  become parts  of  the land under Indian law  and  the  legislature, therefore, was wrong in treating them as parts of the estate for  purposes  of  acquisition.   This  contention,  we  are afraid, raises an unnecessary issue with which we are not at all concerned in the present cases.  Assuming that in  India there is no absolute rule of law that whatever is affixed to or built on the soil becomes a part of it and is subject  to the  same  rights of property as the soil itself,  there  is nothing  in  law which prevents the State  legislature  from providing  as  a part of the estates abolition  scheme  that buildings,  lying  within the ambit of an  estate  and  used primarily  for management or administration of  the  estate. would vest in the Government as appurtenances to the  estate itself.   This is merely ancillary to the acquisition of  an estate  and forms an integral part of the abolition  scheme. Such  acquisition  would come within article  31(2)  of  the Constitution  and if the conditions laid down in clause  (4) of  that  article  are complied  with,  it  would  certainly attract   the   protection   afforded   by   that    clause. Compensation  has  been pro. vided for  these  buildings  in section 26(2) (iii) of the 4 26 Act and the annual rent of these buildings determined in the prescribed  manner  constitutes  one  of  the  elements  for computation of the gross asset of an estate.  The contention of  the appellants eventually narrows down to this that  the effect of treating the annual valuation of the buildings  as part of the gross asset of the estate in its entirety, leads to  unjust results, for if these buildings were  treated  as separate  properties,  the  intermediaries  could  have  got compensation  on a much higher scale in accordance with  the slab  system  adopted in the Act.  To  this  objection,  two answers  can  be  given.   In  the  first  place,  if  these buildings  are  really appurtenant to the estate,  they  can certainly  be valued as parts of the estate itself.  In  the second  place,  even if the compensation  provided  for  the acquisition  of  the buildings is not just and  proper,  the provision  of article 31 (4) of the Constitution would be  a complete answer to such acquisition. As  regards  the  private  lands  of  the  proprietor,   the appellants have taken strong exception to the provisions  of the Act so far as they relate to private lands in possession of temporary tenants.  In law these lands are in  possession of  the proprietor and the temporary tenants cannot  acquire occupancy  rights therein, yet they vest, under the Act,  in the  State Government on the acquisition of an  estate,  the only exception being made in cases of small land-holders who do  not  hold more than 33 acres of land  in  any  capacity. Section  8(1)  of the Act gives the  temporary  tenants  the

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right to hold the lands in their occupation under the  State Government  on  the same terms as they held them  under  the proprietor.  Under the Orissa Tenants Protection Act,  which is  a temporary Act, the landholder is not entitled  to  get contractual  or  competitive  rents  from  these   temporary tenants  in possession of his private lands and the rent  is fixed  at  two-fifths of the gross produce.  It  is  on  the basis  of  this  produce  rent  which  is  included  in  the computation of the gross asset of an estate under section 26 of  the  Act,  that the  land-holder  gets  compensation  in respect  to  the private lands in  occupation  of  temporary tenants.   The appellants’ main contention is that  although in these lands                              27 both the melvaram and kudivaram rights, that is to say, both the  proprietor’s  as  well as the  raiyat’s  interests  are united  in  the  land-holder,  the  provisions  of  the  Act indicated  above have given no compensation  whatsoever  for the  kudivaram or the tenant’s right and in  substance  this interest has been confiscated without any return.  This,  in our opinion, is a wrong way of looking at the provisions for compensation made in the Act.  The Orissa Act, like  similar Acts  passed by the legislatures 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 ignorned.  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 article 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 Ill.   This  point is concluded by the earlier  decision  of this court in Raja Suriya Pal Singh v. The State of  U.P.(1) 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 landlord’s interest in these properties and  nothing has been given in lieu of the tenant’s 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 (1)  [1952] S.C.R. 1056. 28 rent fixed by it has been taken only as the measure of  tile income  derivable  from  these properties  at  the  date  of acquisition. 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

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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 article 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 clause (2)  of  article  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 clause (4) of article 31 could  be  attracted. There is no        29 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  article  107  of   the Constitution.    There  can  be  no  doubt  that   all   the requirements of article 31(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. 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  section 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 of List III,  Schedule  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 section 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.   Having  regard  to  some important  constitutional questions involved in these  cases

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which  needed clearing up, we direct that each party  should bear his own costs in these appeals.                  Appeals dismissed. 30 Agent for the appellant in Civil Appeal Nos. 71, 72, 73,  75 & 76: M. S. K. Sastri. Agent for the appellant in Civil Appeal No. 74: R.C. Prasad. Agent for the respondent: G. H. Rajadhyaksha.