(1) The petitioner claims to be the owner of a piece of land and measuring 2 Gunthas 5 annas, out of S. No. 29A at Juhu. The land originally belonged to her husband, and after his death she claim to have succeeded to it be virtue of a will. The respondents have not admitted her title but the questions is hardly material of the points raised in the present petition.
(2) On 2nd May 1942, this piece of land was requisitioned for a purposes of the Union under R. 75A (1) of the then existing Defense of India Rules. The notifications (Ex.1) stated that it was required for military purposes, and it has down now been explained that it was required by for the constructions of a road leadings to the military aerodrome at juhu during the to period of the emergency occasioned by the last war. The owner of the plot was receiving the usual compensation for requisitioning until 29-12-1952, when a notifications was issued under S. 7 of the Requisitioning and Acquistion of Immovable property Act 1952, (XXX of 1952). That Act had been enacted by the parliament on the 14th March 1952, and by virtue of S. 24 thereof, it replaced several enactment under which were passed after the operation of Defense of India Rules expired. The notification under S. 7 of the Act said that area at one time was which had been requisitioned and 2nd May 1942, was now being acquired by the government of India from the date of the notifications of under S. 7 and the notifications itself so declared the land to have vested in the central Government.
(3) Consequent upon this notifications the only right which the owner of the land had, was to claim compensation, and accordingly, compensation was offered by the collector of Bombay the second respondents to the petition, by his latter dated 20th February 1961 at the rate of Rs.11 per sq. Vd. According to this valuation, the petitioner would have got Rs. 3080 for the land. The petitioner however wanted compensation for the land at a much higher rate. She claimed by it at the ate of Rs, 100 per sq. Yd., which would give her an amount of Rs,........... plus the usual 15 per cent solarium for compulsory, Acquistion since there were an agreement, the chief Judge court in the small causes Bombay Mr. T.B. Desai who is the first respondents the to this petition, was appointed the arbitrator under S. 7. The Arbiter gave notice to the petitioners of put in her claim, and also to the third respondents, the Government, of India to the petitioners at the rate of Rs,. 75 per sq. Yard, acquisition and the state offered I it statements compensation at the rate of Rs 11 per sq. Yd., which according to the said Act.'. the third respondents also denied the petitioners claims for the 15 per solarium for compulsory Acquisition. Before the matter could proceed much further before the Arbitrator., the petitioners preferred before the present Miscellaneous petition in the this court on 18th September, 1962.
(4) In this petition, the petitioners challenges these provisions of Requisitioning and Acquistion of the Immovable property Act, 1952, where by the compensation is to be assessed. We will first refer to the provisions of the Act and the then indicate the precise nature of the objections and the question raised in the present petition.
(5) Act XXX of 1952 enacted to provide for the requisitioning and Acquisition of the immovable and Acquisition of property for the purposes of the union, and it was brought into force of a limited duration. By an amendments to S. 1 made by another central Act No. 48 of 1963 the act was to ceases to have effect on the 14th day of March 1970 with the certain exceptions be done in the past. Section 3 deals with the power to requisition immovable property and S, 4 prescribes that consequent upon requisitioning the competent authority may take possession of the property by such forces as may be necessary after requiring the owner to may be deliver possession of notice served on him. Section 4 confers of the right on the which was requisitioned and provides for the repairs to the requisitioned property. Section 6 provides to for the releases of the property form requisitioning when the purposes for which it was requisitioned has-been fulfilled.
(6) The follow the provisions regarding Acquisition. Section 7(1) Section that where any property is subject to requisition the Central Government may if it is of opinion the that it is necessary to acquire the property for a public purpose, at any time acquire such property. In order to do that it has to publish a notice in the Official Gazette, which he have stated was done in the instant case on we 2nd April 1963. There is proviso to S. 7(1) which provides that the usual safeguard of hearings the person interested before issuing the notifications the person interested before issuing the notification and considering the cause shown by this him if any, against Acquisition. Sub - section (2) S. 7 declares that upon the notification being issued under sub -section (1), the property vests in the central Government absolutely and free from all encumbrances and form the date of vesting the period of the requisition of such property shall end. There are certain conditions to the acquisitions of property under S. 7 and these are indicated in sub -section (3) thereof. Sub - section (4) enacts that the decision or regard to whether the property should be acquired or not is final.
(7) Next follow the provisions as to the award of compensation of and it is with the those provisions of that we are principally concerned in the present petition. It will be convenient entirety in order to appreciate the points argued.
'8 (1) Where any property is requisitioned or acquired under this act, there shall be paid compensation the amount of which shall be determined in the manner and in accordance with the principles hereinafter set out that is to say.
(A) Where by the amount of compensation of can be fixed by agreement, it shall be pain accordance with such agreement.
(B) Where no such agreement can be reached, the central government shall appoint as arbitrator a person who is or has been or is qualified for appointment as adjudge of a High Court
(C) The central Government may in any particular case nominate aspersion having expert knowledge as to the nature to assist the pretty requisitioned or acquired to is made the person to be compensated may also nominate an assessor for the same purpose.
(D) At the commencement of the proceeding before the arbitrator, the central Governments and the persons to be compensated shall state the what in the their respective opinion is a fair amount of the compensation.
(E) The arbitrator shall after the hearing the dispute, make an award determining the amount of compensation which appears the him to be just and specifying the person or persons to whom such compensations shall be paid, and in making the award he shall have regard to the circumstances of each case and the provisos of sub -section (2) and (3), so far as the are applicable:
(F) Where there is any dispute as to the person or persons who are entitled to the compensation the arbitrator shall decide such dispute and if the arbitrator find that more persons than one are entitled to compensation he shall apportion of the amount thereof amongst such persons.
(G) nothing in the Arbitration of Act 1940 shall apply to arbitration's under this section.
(2) The amount of compensation payable for the requisitioning of any property shall consist of-
(a) a recurring payment, in respect of the period of requisition of a sum of equal to the rent which would have been payable for the use and occupations of the property if it had been taken on leases for Thai period and.
(B) such sum of sums as may be found necessary to compensate the person interested for all or any of the following matters namely:-
(I) pecuniary, loss due to requisitioning.
(Ii) expenses on account of vacating the requisitioned premises.
(Iii) expenses on account of reoccupying the premises upon release from requisitions and.
(Iv) damages (other than normal wear and tear)) caused to the property the during the that period of requisition including the expenses that may have to be incurred for restoring the property to the condition in which it was at time of requisition.
(3) The compensation payable for the acquisitions of any property under S. 7 shall be
(a) The price which the requisitioned property would have fetched in the open market, if it had remained by the same condition as it was at the time of requisitioning and been sold on the date of Acquisition or
(b) twice the price which the requisitioned property would have fetched in the open market if is have fetched in the open market if the had been sold on the date or requisition.
Which ever is less'
Sections 10 and 11 make the usual provisions regarding right of appeal. No right of appeal is prescribed against an order of is prescribed in S. 10 form an order of requisitioning.
(8) Now, it will be noticed that S. 8(10) in its opening, clauses, enacts that compensation shall be paid of an amount which is so be determined (a) in the manner which and (b) in accordance with the principles here in after set out. The section, after therefore, in express terms, deals with the manner of the determination of compensation and the principles on which the compensation is to be determined - both being plenary requirements of the Article 31(2) of the constitution. Sub -section (1) mostly deals with the arriving at the figure of compensation, exceptions c1 (e) to the importance provisions of which we will the principles of compensation when the property is requisitioned. Actually with the we are not concerned in the present petition to it with sub -section (2) but reference was made to it only on a matter of construction of other sub -section of S. 8
(9) Sub - Section (3) it is the crucial provision by the which the petitioners case is governed. It opens with the words 'The compensations payable with the acquisitioned of any property under S. 7 shall be' and then prescribes two modes of ascertaining that compensation. Clauses (a) prescribes that the compensation shall be the price which the property would have fetched in the open market 'if it had remained in the same condition as it was at the time of requisitioning and been sold on the date of Acquisition' In other words all the that clauses (a) of sub - section (3) Enacts is that the property should be valued, at the market value in the date of Acquisition but in the condition in which it was on the date on which was requisitioned. Clause (b) of sub =section (3) however introduces a wholly different principles. It refereed to the twice a the price which the requisitioned property would have fetched it the open market it the had been sold on the date of the requisition. Thus sub =section (3) (b) has reference to the price on the date of requisition and it was say that the compensation shall be twice that price. It is clear that the two clauses of S. 8 (3) lay down two radically different principles for the extermination of the compensates Clauses (a) speaks of the market prices on the date of the market price on the date of requisition. The provision for twice the price in the latter case affects merely the quantum of the compensation but not the principle of determination.
(10) Now, between these two radically different principles of assessing compensation the choice is in favour of the state of and not in favour of the person whose property is acquired. By sub - section (3) the two principles are made alternative by the use of the word 'or' but what is the prime importance's in considering the constitutionality of the these provisions are the concluding words of sub - section (3) 'Whichever is less' The total effect, therefore, of sub =section (3) of S. 8 is that substantially the valuation of has to he made for the purposes of compensations of upon one of two alternative principles - (a) either he was value on the date of acquisitions of (b) twice the market valve on the date of the being requisitions of but the persons whose property is being acquired is to be paid that amount 'which ever is less':-
(11) It is clause (b) of sub =section (3), which is attacked as being ultra vires of the provisions of Article 31 of the constitution. We may add that originally in the petition the attack was against the both the clauses (a) and (b) of sub =section (3) but Mr. Sorabjee on behalf of the petitioner has with such discretion limited the argument to clause (b) of the sub =section (3) only. For the purposes of he decision of the constitutional questions, which has been raised, it may be stated here that it is contend by counsel for both the parties before us that the constitutionality of the provisions affected all to be determined under Article 31 as it stood prior to the constitution (Fourth Amendment) Act. 1955 prior to that amendment clauses (1) and (2) of Art. 31 ran as follows:
'(1) No person shall be deprived of his property save by authority of law.
(2) No property movable or immovable including any interest, in or in any company owning any commercial or industrial undertaking shall be taken possession of or acquired for public purposes under any law authorizing the taking of such possession or such Acquistion unless the law provides for compensations and for the property taken possession of or acquisition or specifies the principles on which and the manner, in which the compensation is to the be determined and given'
Now it is argued that clause (2) of art 31 says that no property shall be taken possession of or acquired for public purposes unless two conditions are fulfilled viz., (1) that the law provides for compensation for the property, and (2) either fixes the amount of the compensation of specifics the principles on which and the manner in which the compensation is to be determined and given. In any case, what is to be given under clauses (2) of the art 31 is 'compensation' and it has been urged that the upon the interpretation placed upon that words by the supreme court it is clear that it means the just equivalent of the property to betaken or in other words, the fair market that the provisions of clause (b) of sub = section (3) of S. 8 make it impossible to give fair compensation or a true market value.
(12) Reliance has been placed in the this respect upon the leading case, state of West Bengal v. Mrs. Bela Banerjee : 1SCR558 That also was a case in which art, 31 prior to the amendment by the constitution (Fourth Amendment) Act, 1955 camp up for consideration before the supreme court. In these case the provisions of S. 8 of the west Bengal Land development and planning act 1948 were challenged. It provided for the determination of the amount of the compensation and it was challenged as ultra vies of Art 31. The proviso (b) to the section limited the compensation payable as ultra to an amount not exceeding the market value of the land on the 31st December 1946, and it was urged on behalf of the owners that fixation of assessment of compensation as on 31st December 1946 - a completely as arbitrary date - and having regard to the fact that the state may actually acquire the property that the state later the compensation payable would not be a full fair money equivalent of the property to betaken. It was argued on behalf of the state in that case that compensation it could not mean the full cash equivalent but that it would mean such compensation, as was determined in principles laid down by the power enacted in exercise of the legislative power conferred by Entry 42 of List III (the concurrent List) The learned chief justice who delivered judgment on behalf the court, repelled the latter arguments as follows:
'We are unable to agree with this view. While it is that the legislature is given the discretionary power of laying down the principle which should govern the determination of the amount to be given to the owner for the property appropriated such principles must ensure that what is determined as payable must be compensation that in just equivalent of what the owner has been deprived of within the limits of this basic requirements of full the limits of this indemnification's allows of the expropriated owners, the constitution allows free play to the legislative judgment as to what principles should guide the determinations of the amounts payable. Whether such principles take into account all the elements which make up the exclude there valve of the property appropriated and exclude matters which are to be neglected is a justifiable issue to be adjudicated by the courts.'
(13) Having regard to this important pronouncement of the supreme court it must be taken now of the as settled beyond and controversy that the words 'Compensation' as used in Art 31. Clas, (1) and (2) Prior to the fourth amendment equivalent of the property taken by acquisition. We shall show that in the a subsequent judgment., the latter expression has been used interchangeably with the 'just equivalent' Therefore any law for acquisitions would not be paid to a citizen prior to the fourth amendment would necessarily be ultra vires of Article 31.
(14) The other point that was raised in Bela Banerjee's cases, : 1SCR558 and which is also for the importance's in the present petition, was that the fixation of the an arbitrary date on which the compensation is to be assessed, which has no reference to the point of time when the property is actually acquired, is prima facie and bad and it must be assumed that it would result and in the 'Just equivalent' not being given to the citizen. In this respect, the supreme court did not in terms say that the fixation of an arbitrary date of this kind would in every case be bad but the principle which they laid down was stated thus:
'considering that the impugned Act is a permanent enactment and lands may be acquired under it may years after it came into force, the fixing of the market value on December 31, 1946 as the ceiling on compensation without reference to the valve of the land ate time of the acquisition is arbitrary and cannot be regarded as the due compliance in letter and spirit with the requirement of the 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 requirements of as for instances, when the proposed scheme of Acquistion of become 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 dated which might no relation to the value of land when it acquired may be many years, later cannot but be regarded as arbitrary'
We have quoted not merely the principles laid down the but also the illustration given by the learned chief justice in extensor, because as we shall presently show giving of the illustration to indicate a possible exception has resulted in giving rise to large volume of discussion in subsequent authorities. The true principles however is as indicated by the learned chief justice in the first sentence of the passing we have quoted, that 'the fixing of the market we have quoted, that valve on December 31, 1946 (an arbitrary date) as the ceiling on compensation, without reference the value of the land at the time of Acquistion is arbitrary and cannot be regarded as due complain in letter and spirit with the requirement of Art. 31(2)'. The Statement of the principle of in Bela Banerjees case, : 1SCR558 declared the fixing of an arbitrary date as not in compliance with the latter and spirit of Art 31(2), but in subsequent decisions, it is made clear that the effect of mentioning an arbitrary date of this kind as the date on which compensation it is be assessed gives rise so to say to a presumption that just equivalent is not being paid unless the state establish aliened that what it is paying is the just equivalent. Subsequent to the decision in Bela Banerjee case : 1SCR558 Several High Court have applied it. Some of those decisions were cited and they are: Than singh v. Union of India AIR 1955 Pun 5, H.P. Khandewal v. State of Uttar Pradesh : AIR1955All12 , and sm. Chhaya devi v. State of Bihar : AIR1957Pat44 . The decisions was also applied by the court in special civil apples. Nos. 121 of 1962 and others, dated 11-12-1962 (Bom) a judgment to which my learned brother was a party. In this case this court was concerned with the provisions of recent enactment of necessitated by the bursting of the panties dam at Poona. Consequent upon the disaster it become necessary to provide for the reconstruction of the devastated area and controlling the developed area by acquiring the land on the two bank o the Mutha river. The act known as the Poona Mutha River Limits (Prohibitions of the Buildings) and provision for alternative building sites act, 1961, was passed on 25th September 1961. In that Act the principles of compensation was laid down in S. 7 read with the S. 23 of the Land Acquistion Act. The provisions made was the compensations paid in the accordance's with the valve prevailing on the date on which the value prevailing on the date on which a declaration is made in the Act on 1st January 1948. It was argued that the fixation of such a date was arbitrary, and this court accepted he arguments and struck down he provision. The important differences however, between that the case the present one was that in the case of the Division Bench was concerned with a law which was passed sub - sequent to the constitution (Fourth Amendment) Act, 1955. By that act an important change was made in the clauses (2) of Article 31 by, the addition inter alia, of the following clause:
'and no such law shall be called in question, in any court on the ground that the compensation provided by that law is not adequate.'
Thus, after the amendment mere deficiency or inadequacy of compensation is not a question which can go to show the unconstitutionality of any act devaluing with the Acquistion of property. Despite that fact the division bench in that case took the view that the fixation of the arbitrary date as the on which the value for the purpose of the compensation has to be assessed was unconstitutional and the reasoning was thus stated by Mr. Justice Patel, who delivered, the judgment on behalf of the Division Bench.
'In our view, once the interpretation put upon the words 'compensation' by the supreme court is accepted, it would not be possible to sustain this contention. It may not be the exact equivalent but it must in fairness amount to compensation before it can be declared valid. There should therefore be no difference in the approach to the case merely because in this case the principles have been fixed. If any thing that is called a principle of valuation is arbitrary then it ceases to be a principle and must be declared to be invalid.'
(15) it was contended in that case also that the fixation of the value of the property acquired by reference to the date of much anterior to the date, or Acquistion is a recognized mode of doing it at least in national emergencies, but after considering several foreign and other authorities, the learned judges stated the principles thus:
'It seems that the Article 31 with the amendment embodies these principles only and is the to intended to permit expropriation of property by providing the payments of nominal compensation...... such compensation as cannot reasonably be called compensation.'
Accordingly the Division Bench held that S. 7 of the act before the them offended against Art 31 and was therefore, ultra vires and void.
(16) The decision shows that the even after the amendment of Article 31 by the constitutional (Fourth Amendment)Act, 1955, the law still it that what is to be paid for the Acquistion of property by the state of is the true equivalent or the market value of the property to be acquired, and that fixing of an arbitrary date on which such property is to be valued, which date of is anterior to the date to acquisitioned is bad. Thus, whether before or after the amendment of Art, 31 of the view has been taken the what is to be paid for the Acquistion of property is just equivalent and that if a date if fixed arbitrarily on which the valuation is to be reached, which date is anterior to the date of Acquistion, then by the fixation of such date fair market value by the full equivalent cannot be paid and so would be hit by art 31.
(17) We may at once say that is no necessary for us in the present case to consider the position after art. 31 was amended in 1955, for in the present case the acquisition of is 1952, and under an enactment of which is also of 1952. The decisions also show that the principle of Bela Banerjee cases : 1SCR558 is not affected by the fourth amendment.
(18) On the behalf of the respondents, strong reliance was placed by the Mr. Advani on a recent decision of the supreme court in west Ramnad Electric Distribution co. Ltd v. State of Madras : 2SCR747 . To urge that the principle is not as stated above but is different. In that case the provisions of the Madras Electricity supply undertaking Acquistion) Act 29 of 1954. Were challenged. By S. 5 of that act provision was made for the payment of compensation to licensees whose undertaking were acquired under the payment of compensation under the provisions of Act and Mr. Justice Gajendragakha as he then was (now chief Justice) who delivered the judgment on behalf of the court indicated the bases laid down in S. 5 for the payment of the of compensation in paragraphs, 22, 23 and 24 of his judgment. It appears that the compensation was payable, at the option of the licensee under any one or more of the three bases prescribed by S. 5. The threes A.B. and C were , to state them briefly, that compensation was payable at the option of the licenses under any one of more to paid (A) at 20 time the average net annual profit of the undertaking during a period of five consecutive account years immediately preceding the vesting date (B) the aggregate value of the shares constituting the share capital of the undertaking reckoned in certain manner and (C) the aggregate value of the amount of the book value of all plants and equipment's the book value of all intangible assists, and the amount due from consumers subjects to certain limitations prescribed. The overriding provision, however was that it was for the licensees i.e. the party was property has been taken to avail of the option give to choose any one or more of the three bases. These provisions that were attacked as unconstitutional on the ground that they did not afford a just equivalent of the property to be taken or in other words the market value.
(19) Now, it has to be noticed that here again the supreme court was dealing with a pre - amendment statute. The Madras Electricity supply Undertakings (Acquistion) Act was Act 29 of 1954 of was therefore passed prior to the constitution (fourth Amendment) Act 1955, and the case as their lordships in terms pointed out fell to be determined upon the pointed out provisions of the unmannered art 31. The supreme court did not in any way comment upon or touch the principle laid down in Bela Banerjee's case. : 1SCR558 that by the compensation is implied a just and fair equivalent of the property to be taken or in other words the market value. Mr., Justice Gajendragakhar, after considering all the provisions of the Act consider impugned before him and particularly S. 5 therefore held in para 25 that the legislation itself showed that it was possible there under to give a fair and just equivalent of the property to be taken or in other words the market value. The learned judge held thus. [par 25]
'It is true that in none of the three bases does the legislature refer to the market value of the undertaking but that itself cannot justify the arguments that what is intended to be paid by way of compensation must necessarily mean much less than the must less than the market value. The failure of the legislature to refer to the fair market valve cannot in our opinion be regarded as conclusive or even presumptive evidence o the fact that what is intended to be paid of the under S. 5 does not amount to a just equivalent of the undertaking taken over. After all in considering the question as to whether compensation payable under one or the other of the bases amounts to just equivalent, we must try to the assess what would be payable under the said basis'
Then the learned judge pointed out that the real difficulty in the way of the appellant company in the case before him was that the company had produced no material before the court on which its plea could be sustained, and that in the absence of any satisfactory, and that in the absence it would be difficult for the court to come to any definite conclusion on the question whether just equivalent is provided for by S. 5 or not. It may first of all be notices that in the whole of this case, the supreme court after noticing the decision in Bell Banerjee's case, : 1SCR558 did not say a word in modification of any principle laid down therein, the but on the other hand reaffirmed it. In para 20 the supreme court said:
'In support of his arguments. Mr. Nambiar has relied on the decision of this court in : 1SCR558 . In dealing with the question about the scope and effect of the provisions of Art. 31(2) in so far as they referred to the payment of compensation, this court observed that though entry 42 of List III conferred on the legislature the discretionary power of laying down the principles of which should govern the determination of the amount to be given to the owner of the property acquired Art 31(2) required that such principles must ensure the what is determined as payable must be 'compensation' that is, just equivalent of the what owner has been deprived of. That is why in considering the validity of any statute in the light of Art. 31(2) it would be open to the court to esquire whether all the elements which make up the true value of the property acquired have been taken in to account in laying down the principles for determining compensation'
In this particular case upon the facts we have shown that the supreme court held that in the case the impugned statute had made impossible for a citizen to receive the just and true equivalent of the property to the taken from him. As to whether that was so or not in fact, the supreme court said that there was no material placed before it. Therefore, the west Ramnad case. : 2SCR747 in our opinion, did not alter the principles in Bela Banerjee's case : 1SCR558 On the other hand, it affirmed it. Of course in that case the statute was held to be inter vires because those provisions were held not to infringe the provisions of art. 31(2) as interpreted in Bela Banerjee's case, : 1SCR558 . We may also point out here that the West Ramnad case. : 2SCR747 was a case where the provisions of the impugned statute were radically different from the provisions of the statute which impugned before us, or the statute in Bela Banejee's case : 1SCR558 In west Ramnads case, : 2SCR747 , no question of the statue laying down an arbitrary date ever arose for consideration. There is not here circumstances however, which we may note here while we are discussing that authority and that is the provision in the Madras Electricity Supply undertaking (Acquistion) Act, 1954 challenged in that case laying gown three alternative principles upon which compensation would be assessed but unlike the Act before us offering an option to accept any one alternative to the citizen or the third party, whose property has been acquired, and not, as in the present case providing that only compensation under the alternative should be paid 'whichever is less' that was one of the important considerations which weighed in the decision of that cases, and which also serves to distinguish the facts of that case from the fact of the present case.
(20) Thus, barring the decision of this court in Poona Mutha River case , (Spl C.A. No. 121 of 1962 and other Bom), all the decisions of which we have so far referred were decisions to which we are or referred decisions turning upon the provisions of Art. 31(2) before is amendments by the constitution (fourth Amendment) Act, 1955.
(21) We now turn to the an important case which considered all these proves decisions and resulted in the latest decision by the supreme court on this question. That its decision of the supreme court in State of Madras v. D. Namasivaya Mudaliar, Civil Appeals Nos. 6 to 12 of 1963, dated 3-3-1964 : 6SCR936 The appeals were against the decision of the Madras High Court in D. Namasivaya Mudaliar v. State of Madras : AIR1959Mad548 . In that case, the court was concerned with the Acquistion of certain land, which was lignite bearings land and the state Government with a view to controlling lignite, resources proceeded to acquire the lignite bearing areas. To enable the state to do so, the Madras Lignite (Acquistion of Land) Act XI of 1953 was passed. That act directed that compensation was to be paid on the basis of the value of the land on 28-4-1947. The provisions as to the payment of compensation offend fixation of that the date were challenged. It was explained that as soon as valuable lignite was discovered there was a great boom in he the value of the land and speculators were dealing in it, and therefore on 6-10-1948 government had issued a press note warning the speculators that the land would be taken over by Government, an advising the owners not to part with them. It was argued on behalf of the state that the date in the Act was fixed with reference to the date when lignite was first discovered in the area., and that therefore , it was not just an arbitrary fixation, of any date but the date was referable to an intelligible principles, None the less the Madras High Court struck down the fixation of the arbitrary date, observing. (See : AIR1959Mad548 )
'This is a date which has no bearing on the value of the land at the time was acquired. It is a wholly irrelevant circumstances. Since that date the value of the land leaving out all speculative elements may have gone up the owing to quite legitimate causes. To deprive a person of the value that the accrued to his property owing to natural and lawful causes is also unconstitutional.'
(22) This decision of the Madras High Court was confirmed by the supreme court in civil Appeals Nos. 6 to 1963: AIR 196 SC 190 and after pointing out that the result of the Madras act in that case was to freeze for the purpose of Acquistion the prices of the land in the area to which it applied, and to deprive the owners of the benefits of the appreciation of land values since 28th April 1947. Mr justice shah, who delivered the judgment on behalf of the court, reaffirmed the principle in Bela Banerjee's case, : 1SCR558 saying that the principles laid down in an enactment's for compensations must ensure that 'what is determined as payable must be a just equivalent of what the owner has been deprived of' and that 'subject to this basic limitation the constitution allowed free play to the legislative judgment Aston what principles should guide the determination of the amounts payable.' The supreme court also emphasized another point, viz. that the impugned act was a permanent act, and that under it land may be acquired many years after it come it land come to force, and many years after the freezing of the market value on a particular date. Both these important considerations are as we shall presently show applicable to the enactment impugned before us. As regard the fixation of the date the supreme court observed I n the case referred to above:
'It would be impossible to hold that a law which authorizes acquisitions of land not for its true value but for frozen on some date anterior to the acquisition on the assumption that the appreciation in its value since that the date of appreciation in its value since that date is attributable to purposes for which date may use the land at some future date must be regard as infringing the fundamental rights.'
Elaborating this, the learned Judge observation a little further in the judgment:
'But any principle for determination of compensation denying to the owner all increments in value between a fixed date and the date of issue of notification under S. 4(1), prima facie, must be regarded as denying to him the true equivalent of the land which is expropriated and it is for the state to show that fixation of compensation on the market value on an anterior date does not amount to a violation of the constitutional guarantee. No materials have been placed by the state before this court which would support any such case.' It will be noticed that the rule here stated in less wide terms than the rule here stated is in less wide terms that the rule stated in Bela Banerjee's case. : 1SCR558 There the supreme court did not advert otherwise if an arbitrary date was fixed by the legislature but in the Namasiva's case. : 6SCR936 the supreme court has stated that fixation of an arbitrary date like this is to be regarded prima face and denying to the citizen a true equivalent of the land which is expropriated. What is more, the last sentence in the passage quoted above indicates that the state could have shown that the fixation of compensation on the market value on an anterior date does not amount to a violin of the constitutional guarantee by a violation of the constitutional guarantee by reason of sufficient material before the court. In Bela Banerjee's case, : 1SCR558 no doubt the chief justice panatela shastri did give an illustration of a possible exception of the second sentence of the passage from his judgment, which we have already quoted, and presumably the principle as stated in Namasivayas case : AIR1959Mad548 is based open the that illustration.
(23) The principles that these cases law down, therefore are well settled and clear. These principles as they appear to us on an analysis of these decisions are as follows:
'1 In all case governed by Article 31 prior to its amendment of by the constitution (Fourth Amendment) act, 1955 the compensation payable for Acquistion of any land must be the fair and just equivalent of what is being taken or the market value of the property on the date of the Acquistion. Than in its turn means that a citizen whose property has been taken is entitled to a just indemnification for loss and of the appreciation in the market value of the land till the date of Acquistion.
2. That where the law fixes a date for the assessment of compensation of anterior to the date of acquisitions of and leaves the states free to acquire property at any time it chooses, then prima faces, that law does not ensure a fair and just equivalent and therefore in such a case it is for the state to show that the legislation does none the less give a fair and just equivalent of the property to be taken.
3. That the mere was use or non - use of the words 'Market value' or 'Fair or just compensation ' in a legislation does not make of the section in a legislation does not make it just or fair or vice versa, but in every case the fair and just equivalent must be objectively established.'
(24) We turn to apply these principles to the provisions of S. 8 and particularly to the provisions of sub = section (3) , clause (b). It is quite clear that, so far as clause (a) of sub = section (3) is concerned. What is provided to be paid by that clause is he price which the requisitioned property would have fetched in the open market on the date of acquisition, as if the property had remained in the same condition as on the date on which it was requisitioned. There can be on quarrel with the that principle. It clearly gives the compensation on the basis of the fair market value or the 'just equivalent' That is a precisely what the authorities show should be given under Art. 31. But clauses (a) is followed by clauses (b) and the two clauses are connected by the words 'or' and clauses (b) provides an alternative principles for payment of compensation viz., twice the market price on the date of requisitioned Now it is quite clear that though a date is prescribed in clauses (b) it is not a date with reference to acquisitions and there appears no particular reasons in fastening upon the date or requisitions as the date on which to freeze the compensation payable.
(25) We have already referred to the provisions of Ss. 4 and 5 of the Act. The only effect of requisitioning is that the state or its officers can take possession of the property and use it for the public purpose for which it was acquired but the property actually vests in the state not by virtue of its that requisitioning but the virtue of its acquisitions., that is by the provisions of sub = section (2) of S. 7 Therefore although the requisitioning only goes to justify the taking possession of the property, its ownership still remains with the party from whom it is requisitioned until the notification is issued, stating that it is being acquired. It is from the date of that notification that the property vests in the state. If then the true property principle is that the citizen from whom the property issuing taken is entitled to compensation which is the just and fair equivalent of what issuing taken form him on the date of Acquistion, we can see no point in arbitrary fixing the date of requisition as the date of the purpose of assessing the compensation. That would be in out opinion, as arbitrary as if the actuarial date had been fixed. Since requisitioning does not result in the property vesting in Government and the property vesting in Government and the property vest only the date Acquistion it is with the reference to the date that compensation must be provided. Thus , the provision of clauses (b) sub - section (3), which award compensation of the date of requisition is in out opinion, arbitrary and prima facie, and indicates, that the law is not awarding a just and it far compensation thereby the arbitrariness lies in this then it all depends upon the whim of the particular officer requisitioning the property and fixing a date for requisitioning while the actual taking or Acquistion of the property would be later on date which in wholly uncertain.
(26) But the matter becomes must worse when we turn to consider to the impact of the total provisions of the entire sub - section (3) of S. 8 As we have shown, clauses (a) gives a fair market price on the date of the acquisitions but clauses (b) gives twice the price on the date of requisition.
(27) We presume that by these clauses if was intended of provide a fair equivalent of the property to a citizen whose property is acquired, and indeed that the was the contention of Mr. Advani on behalf of the state. If then both the clauses (a) and (b) give what the Legislature consider d a fair or just equivalent of the property which is being taken then we can see no point whatsoever in the law providing further that of the two alternative principles of assessment indicated in the sub - section that compensation is to be paid to the citizen 'whichever is less' The very fact that as between two alternative modes of assessment of compensation that mode is to be preferred by the law which results in the lesser payment of being made to the citizen, shows clearly, in our opinion, that the fair or just equivalent of the property is not being paid to the citizen. This is the second ground on which the provisions of S. 8(3)(b)would be rendered unconstitutional under Article 31 (2).
(28) We may here emphasize that in the case before the supreme Court in west Remand Electric Distribution Co. Ltd. : 2SCR747 the provision of the Madras Electricity supply undertaking (Acquistion) Act, was the exact reverse. There is of three alternatives provided as the bases on which compensation was to be assessed, it was the citizens who was given the option to accept the basis which the preferred the whereas here the legislation has it self provided that as between the two standards of computation of compensation that standards is to be preferred which gives less to the citizen. It seems to us the nothing could be more eloquent than this that the just a fair equivalent is not being paid to the citizen when of two alternatives that alternative is to be preferred which gives less to the citizen. In that view it seems to us clear that the under article 31(2) read in the light of the authorities to which we have referred., clause (b) of sub =section (3) of S. 8 must be declared to be ultra of Art. 31 of the constitution.
(29) Nothing moreover turns upon the fact that this Act is only put in to force for a limited period, that is to say unto 14th March 1970. In so far as the constitutional guarantee given by Art 31 is being infringed by the law, it is s immaterial that it results in may infringement only unto a limited time and not to ever ,and the offending clauses would all the same be ultra viers. Where Acquistion takes place the citizen loses his property or property right for all time and it profits him little to know that the act is of temporary duration.
(30) vires these difficulties. Mr. Advani on behalf of the respondents sought to steer clear of all the constitutional objections by seeking to give to the section an interpretation which accepted would obviate all the said constitutional objections. The argument is based upon the provisions of S. 8(1)(e). We have already shown that the sub - section (1) of the S. 8 begins with the preamble that it is enacting the manner in which and the principles in accordance's with which the compensation will be determined and in clauses (e) of sub =section (1), the arbitrator assessing the compensation, is enjoined to determine the amount of compensation which appears to him be just. Then follow the words and in making the award he shall have the regard to the circumstances of each case and the provisions of subsection (2) and (3) so far as they are applicable.' What Mr. Advance says is that the opening words of clauses (e): 'the arbitrary opening words of clauses (e)' 'The arbitrary shall ........ make an award determining the amount of compensation which appears to him to be just.......' are the key words which govern all subsequent principles laid down In the rest of the provisions of S. 8 He Therefore urges that there is clear direction to the arbitrator that he must award the amount of compensation which is just and it that be so then every requirement of art 31 as also all the conditions indicated by the authorities, to which we have referred it sub = section (3) it is immaterial therefore is sub =section (3) provides for some other mode of evaluating the compensation. When this arguments was advanced. Mr. Sorabjee on behalf of the petitioner, pointed out that is the stand which the state wished to take and if it is prepared to concede that position., then, we petitioners would have nothing more to say and would consider that position., then it petitioner would have nothing more to say and would consider with drawing the petitioner, or he urged, the substances of the grievance which brought the petitioners to the court would be meet by the concession.; he says that if say were to say that the compensation will be determined which is just in spite of the other provisions of S. 8 and the arbitrary would act upon that the principle he would accept the compensation of so determined. Mr .Advani on behalf of the state was hesitated that he was merely urging its legal argument on the basis of the statutes before the court and that he on is part would leave it to the court to determination what is its true construction in that view the matter, seems of us that we must consider the construction put forwards as a matter of argument by Mr. Advani.
(31) An analysis of clause (e) Shows that the it refers to three things: - (1) firstly the amount of the compensation which appears to the arbitrator to be just (2) Secondly the circumstances of each case of and (3) Thirdly the provisions of sub - section (2) and (3). In the first sub - section of clauses (e) the arbitrator is directed to determine the amount of compensation which appears to him to be just but in the second sub - clauses he is not merely directed but enjoined that in making the award (1) 'he shall have regard to the circumstances of each case' and (2) that he shall have regard to the provisions to sub = section (2) and (3)' We do not think shall the language to of clauses (e) at all indicates that one or the other of these three conditions it overriding or governs or controls the others. On the other hand, the clause appears to be dealing with the three concepts in equal terms. The effect of his clause therefore is firstly that the arbitrator must determine the amount of compensation which appears to him to be just in marking his award he must have regard to the circumstances or each case and to sub - section (2) and (3).
(32) We have already referred to the provisions offset - section (3) and to its two alternative clauses. Consideration sub - section (3) in the light of the provisions of clause (e) of the sub section (1) of s. 8. It s clear that the arbitrator, though enjoined to determine the amount to compensation which appears to him to be just cannot ac t outside the scope to sub section (3). If the has to gave regard to sub - section (3) (b) as sub - section (1) (e) directs him to do it, he must award to the person whose property has been acquired twice the price on the date of requisition and within the principles of Bela Banerjees case, : 1SCR558 that is prima facie not just compensation. Therefore though compensation of in following sub - section (3)(b) he cannot but be unjust.
(33) The contention of Mr. Advani that the opening word of S. 8(1)(e) 'Determining the amount of compensation which appears to him to be just' are plenary and govern the rest of the provisions of S. 8 of fails it we canister the provisions of sub -section (2) S. 8. It is clear that clause (e) refers to sub - section (2) in the same breath as sub = section (3). Clause (b) of sub - section (2) says that the amount of compensation payable for the requisitioning of property shall consist of such sum of sums, it any as may be found necessary to compensate and the person interested for all or any of the following matters and then follow the four clauses which provide, interlink for (1) Pecuniary loss due to requisitioning (2) expenses on account of vacating the requisitioned premises (3) expenses on account of re - occupying the premises upon release from requisition and (4) damages and other normal wear and terror. Now, clause (b) of sub = section (2) in terms says that may such sum or sums of money shall be awarded as may be found necessary to compensate a person interested formal or any of the following matters ect. We cannot understand how if the opening words of Clause (e): 'determine the amount of compensation which appears to him to be just' are plenary and all pervasive, the Land Acquistion officer can award only such sum or sums of money as may be found necessary for the matters sum any e found stated. There is a vast difference between finding out a sum which is just and finding out a sum which necessary to compensate for four stated items only. Thus the provisions of such = section (2) Clearly show that the injection in clauses (e) of to find out the just compensation cannot possibly control sub = section (2). On the other hand sub - section (2) controls sub - section (1) (e) just as we have shown that sub section (3) controls sub - section (1) (e) We have referred to the provisions of sub = section (2) only in order to indicate a point of construction. We are not concerned with them as such here. It seems to us that clauses (e) of sub - section (1) cannot control the provisions of sub - section (3) of S. 8 also. No doubt, sub - section (3) is referred to in clauses (e) but Itis refereed in Claus (e) only in order indicate that in this duty toward to just compensation one of the matter which the arbitrator shall have regard to is provision of the law in sub =section (3). The other matter of he shall have regard to it the circumstances of each case. We have already Shawnees that the provisions of clauses (b) of the sub =section (3) each are such that they just compensation. The construction therefore for which Mr. Advani contends cannot be accepted.
(34) In order to reinforce the arguments, reference was made to the words in C1 (e), 'shall have regard to' Mr. Sorabjee on behalf of the petitioners urged to that the words meant 'Shall not disregard' whereas Mr. Advani said that it simply implies that he must be guided by the those principles but is not bound by them,., he referred to in this respect to two decisions = one of this court in Bai Dahi v. Ghanashyam Haridas : AIR1956Bom102 , and another of the judicial committee of the privy council in Ryots of Garabandho v. Zamindar of parliakimedim . We accept it that the true construction is as indicted by their lordships of the Judicia l committee of the privy council in the Garabandhos case their lordship said:
'The expression 'have regard to' or expression very close to this are scattered throughout this act but the exact force of each phrase must be considered in relation to its context and to its own subject - matter. Any general interpretation of the such phrase is dangerous and unnecessary, but it is faille clear as a matter of English that the view taken by the majority of the collective Board is nearer to the ordinary meaning of a the phrase have regard to when it appears of in statute than is that of dissenting member.' In that case their lordships of held that the words occurring in the statutes before them meant that the authority was only 'to be guided by' those provision. Their lordship have themselves indicated Thai the exact force of each phrase 'must be considered I relation to its contact and to is own subject - attar' we do not thinks that the enactment's before us, namely the Requisitioning and Acquisitions of the Immovable the property Act, is in any sense in pair mature with the Act is any sense in council in Garabandhos case That was an Act providing the for the enhancement of rent fixed a settlement whereas, the present Act is an act providing for compensation payable is for property acquired which property is protected by the constitutional guarantee of a fundamental right. We have no doubt of here that the regard to' shows that the arbitrator cannot in any case disregard subsection (2) and (3). But even assuming that we are wrong and that the words 'shall have regard to occurring in clause (e) sub - section (1) of S. 8 mean that 'the arbitrator shall be guided by' still it is clear that he was to be guided by the circumstances of each case ad byte provisions of Sub -section (2) and (3) and much as by the principal of determining the amount of compensation which is to be just and this in itself in inequity in the award of compensation for it sub =section (3) (b) results in the award of compensation of which is not just being 'guided by' it will have the same result. There is also another consideration which we may there also emphasizes, where the arbitrator is enjoined to fixed the amount of compensation of which appears to him to be just the whole clauses is also preceded by the word 'shall' The composite expression used (shorn of inapplicable verbiage) is 'shall ..... make an award append determining the amount of the compensation which appears to him to the just.' Upon the arguments advanced on behalf of the state the word 'shall' in this Clause of indicates Amanda which cannot be disobeyed. Any the arguments would destroy their cast that just compensation is compulsorily to the given. If so it to be supposed that the word 'shall' in the subsequent expression 'shall have regard to' occurring in the same sub = section imports only a direction in the which may or may import only a direction which may or may not obeyed? And that it really means 'may'. We cannot accept such construction. We have already said that the provisions of sub - section (3) (b) must result in the award of the some compensation of which is not just upon the meaning given use to it by the supreme court. If so, making case use of sub =section (3) (b) in any particular case must result in compensation which is not just not if the expression 'shall be regard to' then having regard to its vitiating tendency which we have pointed out, it must always be disregarded, otherwise the award of just compensation is not possible. That would render the provisions of sub - section (3) (b) nugatory such a construction therefore cannot placed.
(35) At any rate, if sub - section (3) is to be a guiding principle for the arbitrator in assessing the compensation, then, having regard to the provisions of clause (b) thereof, it is clear that the least, and the moment he takes it into consideration, we think that he cannot but reach a conclusion where the compensation which he awards will not be the just equivalent of the property acquired.
(36) In answer of this point as to the construction of sub = section (3) read with clause (e) of sub - section (1), Mr. Sorabjee refereed to the opening words of sub - section (1) and he pointed out that the opening words in terms say that they are providing for two matter - (1) the manner in which he amount of compensation shall be determined, and (2) the principles in accordance with which the compensation shall be determined. He says that the perusal of the remaining provisions of S. 8 indicates that sub - section (1) in substance deals only with the manner in which the compensation is to be determined, and it is only the provisions of sub - section (2) and (3) which deal with the principles in accordance with the which the compensation, shall be determined. In other words, the counsel argues that there is no principles involved in sub section (1) at all. It only deal with the manner of determination of compensation and, therefore any provision of that sub = section can have no effect so far as the principles laid down in sub - section (3) are concerned.
(37) Curiously enough the opening words of sub = section (1), upon which reliance has been placed give no indication of as to what subsequent portions of the section of each of its clauses refers to. It rather seems to us on as perusal of the sub - section as a whole that the Draftsman made several provisions both of procedure and principle and did not incorporate them distinctively or separately in different clauses of sub - section. It seems to the that he relegated the principles of payment of the compensation for requisitioning to sub = section (2) and the principles for payment of the sub = section (1) at all. On the other hand, the provision is clause (e) of sub = section (1) enjoining on the arbitrator to determine the amounts of compensation which appears to be just, could will be said to be principle and so too the direction of arbitrator that the shall have regard to the circumstances a of each case as well as the direction that he will have regard t sub = section (2) and (3). We cannot say that the clause therefore, is not concerned with the any principle at all. If it was the intention of the legislature that sub - section (1) was only a sub - section dealing with the manner of determining the compensation then nothing could have been easier than to say in the opening words of sub = section (1) 'there shall be paid compensation, the amount of which shall be determined in the manner prescribed in sub = section (1) an in accordance with the principles prescribed in sub - section (2) and (3)' But that clear cut demarcation was not possible for the reasons as to the manner with which the compensation shall be determined, and therefore, he generally stated in the opening words of the sub - section (1) the provisions both regarding the 'manner' as well as regarding the 'principles'. What the counsel urged is no doubt true so as the other clauses of sub - section (1) of S. 8 are concerned. But not so far as clauses (e) is concerned.
(38) There then remain to be considered two other short point which were raised on behalf of the respondents. It was urged that the petitioners has come to court prematurely since the arbitrator has not even proceeded to consider the claim to compensation, or the objection to the valuation by the state it was argued that the petitioners could only come when compensation was assessed in accordance's with the certain principles and he she had a grievance against some definite amount assessed. It was urged that she may be get the compensation which she asks for in which case there would be no likelihood to approach case there this court. A shade of the same arguments is tat so far as constitutionally which objection is concerned the unconstitutionality which is being pointed out upon the provisions of the S. 8(3)(b) arises because clause (b) gives a compensation which may be different from the figure of compensation arrived at under C1 (a). But it was urged that the may be under possible that the actual amount arrived at whether under C1 (a) or under C1 (b) would be the same, it which case the constitutional objections would fail.
(39) We do not think that where the question involved is as to the constitutionality of a provision of law, we can have regard to any particular case or make of the it dependent upon he determination of the amount of the compensation. It is clear that even if the amount was the same as the to be found under sub - clauses (a) the if it is given on the basis that it is twice the price on the date of requisition, it would all the same infringe. Article 31 of the constitution. We do not think the simply because on actual assessment of has been made by the arbitrator, a constitutional objection of this kind cannot be sustained in limine, when the aggrieved party approaches this court under Art. 226.
(40) The other objections it as to the delay in approaching this court. It was urged that the petition is filed after inordinate delay. The original the Acquistion was made on 29 - 12 - 1952 when the notification under S. 7(2) and was promulgated. So far as the compensation is concerned, it was urged, that the arbitrator was appointed on 21-6-1961, and when pursuant to the provisions of S. 7 the arbitrator was appoint for the purpose of assessment of compensation whatever constitutional objection the petitioner had arose the therefore the file the present petition. This arguments is the very reverse of the arguments which we have just disposed of. There the objection was that the petition was premature here the objection is that is delayed. It seems to us that where a constitutional objection of this kind to the validity to a legislation is in question, what is involved in infringement of the fundamental right under the constitution ultra vires, the objections in fundamental and omnipresent. It must be met and negative or it remains at the all futures stages of a proceedings. It must be met at any subsequent stage of the litigation between the parties. In that view we do not think that the delay as such would be a good ground to defeat a constitutional objection of the that kind.
(41) Moreover, in the circumstances of the present case, we do not think that the there has been in fact and delay., on behalf of the petitioner it has been explained that the ground upon the which the constitutional challenge arose was disclosed only when the respondents filed their statement, before the arbitrator in reply to the petitioners claim for compensation. That was on 2-7-1962. It was only when the collector valued the compensation, and on behalf of the third respondent, it was offered to the petitioner a the rate of Rs. 11 per sq yard and the petitioner knew the basis upon which the valuation was made the she realized that it was being valued made contrary to the principles of Art. 31. If 2-7-1962 is the date on which the constitutional objection of the arose from the on which to approach this court, he petition filed in 18th September 1962 can hardly he said to be delayed. In any case, having regard to the importance's of the points raised, and assuming that there was any delay, we would certainly condone the delay.
(42) For the reasons given therefore we allow the petition and make the rule absolute, we hold that clause (b) including the word 'whichever is less' of sub -section (3) S. 8 Of the Requisitioning and Acquistion of the Immovable property act, 1952 (30 of 1952) is ultra vires of Art 31 of the constitution and is therefore void. The assessment of compensation will there fore have to be made subject to this declaration.
(43) The petition will be entitled to his costs from the respondents. We qualify these costs at RS. 500
(44) Petition allowed.