Sambasiva Rao, J.
1. The eleven writ petitions arise out of land acquisitions made for purpose connected with Nagarjunasagar Project, which is a premier irrigation project undertaken in the State of Andhra Pradesh. Acquisition in all these cases is sought to be made under the Land Acquisition Act, 1 of 1894 as amended by the Nagarjunasagar Project (Acquisition of Land) Act, 32 of 1956. These wit petitions are filed for quashing the acquisition proceedings. In main the validity of the amending Act is questioned in these petitions.
2. It is necessary to briefly state the history of the Nagarjunsagar Project and some of the salient provisions of the Nagarjunsagar Project (Acquisition of Land) Act, 1956 , before we refer to the actual contentions that are raised before us. The Government of India, in their order dated 17th December, 1951, constituted a committee by name 'Khosla Committee to examine the feasibility of executing the Nagarjunasagar Project on the river Krishna. The Committee favored the execution of the Project and it recommendations were placed before the planning Commission on 8th December, 1952. The project was accepted by the Planning Commission and the Nagarjunsagar Project was taken up for execution. Large areas of private lands were acquired for excavation of canals, distributory channels and construction of other works necessary for the project. Thereupon the legislature passed the Nagarjunasagar Project (Acquisition of Land) Act, 1956, (Act No. 32 of 1956), which will he hereinafter referred to as the State act, to provide for the acquisition of the lands in the Nagarjunsagar Project area. The preamble of the Act declares the purposes of the Act in the following terms:-----
'Whereas the execution of the Nagarjunsagar Project has been taken up in order to conserve and utilise to the best advantage the waters of the Krishna River:
And whereas it is necessary to acquire lands for the execution of canals and distributaries, construction of buildings and other works required for the said Project;
And whereas it is necessary, in assessing the compensation to be paid for the lands acquired to disregard speculative purchases made in the expectation of the execution of the said project.' The Act extends to the Districts of Guntur, Kurnool, Nellore, Nalgonda and Khammam in the State of Andhra Pradesh. But, the Government was empowered to extend all or any of the provisions of the Act to any other Districts in the State. It empowers the Government to acquire any land in the project area for the project purposes, the 'project purpose' having been defined as 'any purpose connected with the Nagarjunsagar Project.' Sub-Section 3 (2) requires tat the acquisition shall be made in accordance with the provisions of the Land Acquisition Act, 1894, which will hereinafter be called the Central Act, subject to certain modifications. The most important of the said modifications are:
(1) Instead of clause first in subsection (1) of Section 23 of the Central Act, the State Act substituted the following:'first the market value of the land on the 1st July, 1953 and the value of any improvements to the land effected after that date and before the date of the publication of the notification under sub-section (1) of section 4 or the market value of the land on the date of the publication of the said notification, whichever is less.'
The following explanation was added to the above provision:
'The Government may, on the request of the landowner, agree to give in exchange any Government land the cost of which is, in their opinion, equal agree to ;pay the cost of a portion of the land acquired and for the remaining portion give government land the cost of which is in their opinion equal to the amount due.'
For Section 11 of the Central Act, the following section is substituted:----
'On the day so fixed, or on any other day to which the enquiry has been adjourned, the Collector shall proceed to enquire into the objections, if any, which any person interested has stated pursuant to a notice given under Section 9 to the measurement made under Section 8, into the market value of the land on the 1st July 1953 and the value of any improvements to the land effected after that date and before the date of the publication of the notification under sub-section (1) of Section 4, into the value of the land at the date. of the publication of the notification under sub-section (1) of Section 4, and into the respective interests of the persons claiming the compensation and shall make an award under his hand of
(I) the true area of the land;
(ii) the compensation which in his opinion should be allowed for the land; and
(iii) the apportionment of the said compensation among all the persons known or believed to be interested in the land, of whom, or of whose claims, he has information, whether or not they have respectively appeared before him.'
In the Statement of Objects and Reasons for the State Act, it was explained that, in order to ensure that the expenditure on the acquisition of land is not unduly heavy, it is considered necessary that, in assessing the compensation for the lands payable under the Central Act any increase in the market value of such lands through speculative dealings or otherwise, as a result of the commencement of the project, should be ignored. Since the planning Commission approved of the Khosla Committee's recommendations on 8th December, 1962, the statement stated, it is proposed to undertake legislation providing that, if the market value which is prevailing on the date of the publication of the notification under sub-section (1) of Section 4 of the Land Acquisition Act (Central Act) is more than market value on the 8th December 1952, the increase should be ignored and compensation should be assessed and paid at the lower of the two rates, together with the value of the improvement effected, if any, during the interval. The intention of the Government to enact such legislation was made known to the public in press Note No. 25, dated 29th June, 1956. It is in this background and with these objects, the State Act has been enacted by the State Legislature.
3. The following questions were raised by the learned counsel for the petitioners;
(1) In some of the cases the acquisitions are not for the purposes of the project or for public purposes.
(2) Section 17 (4) read with Sec. 17 (1) of the Central Act is unconstitutional.
(3) The State Act is unconstitutional as it violates the principles laid down in Articles 14, 19, 31(1) and 31(2).
4. Taking up the first point:---- The acquisition in Writ Petition No. 1042 of 1969 and some other writ petitions, are for construction of Camp Colony, workshop etc. It was asserted in the counter affidavits, for instance in writ petition No. 4729 of 1968 that the acquisition was made for the construction of sheds to workers and machinery yard at the instance of the Executive Engineer, Public Works Department, Nagarjunasagar Canals Division, Nadigudem. These acquisitions were obviously made for constructing camp colonies, workshops, machinery yards and sheds for workers working on the different items of work relating to Nagarjunsagar project. The State Act defines project purpose in Section 2 (3) as meaning 'any purpose connected with the Nagarjunasagar Project'. It cannot be disputed that all these are purposes and works connected with the Project. There is no gainsaying the fact that without camp colonies, workshops, machinery yards and sheds for workers, the project work cannot be carried on. They are undoubtedly project purposes. There is no dispute that all these lands are in the 'project area' and, therefore, the Government is authorised to acquire the concerned lands for (such?) purposes. Nagarjunasagar project is expected to benefit very extensive areas of the State of Andhra Pradesh and a very large number of people inhabiting the State. Indisputably, purposes relating to the construction and execution of the Nagarjunasagar project are public purposes within the meaning of the Land Acquisition Act. This point has, therefore, no substance at all.
5. The second point in dispute relates to the constitutional validity of Section 17 (4) read with Section 17 (1) of the Central Act. This contention has been raised because in all these cases, along with Section 4 (1) notification, a notification was made under Section 17 (4) of the Central Act dispensing with the enquiry under Section 5-A of the Act. The argument in this behalf runs as follows: If the appropriate Government is of the opinion that in the case of any land to which the provisions of sub-section (1) or sub-section (2) of Section 17 are applicable, then Government may direct that the provisions of Section 5-A shall not apply to the acquisition. When such direction is given, a declaration under Section 6 may be issued at any time after the publication of the notification under Section 4 (1). However, sub-section (1) of Section 17 concerns only with arable or waste lands. That means, lands other than arable or waste lands do not come within the mischief of sub-section (1) and therefore, the notification under Section 17 (4) cannot be made in respect of those lands, despite the existence of the need to take possession urgently. There is no reasonable between waste and arable lands in one side and the other lands on the other and this classification does not bear any nexus which the object that is sought to be achieve, viz., taking possession of the land urgently. These provisions are thus repugnant to Article 14 of the Constitution, which enshrines the principle of equality in the eye of law. The two provisions together lead to class legislation and class discrimination and they must be struck down. The next ground of attack is: Section 17 (4) confers on the executive the power of dispensing with the very valuable right of objecting to the acquisition and the consequential enquiry into the objection. Thus, essential legislative power is delegated to the executive.
6. Even at the outset, it must be remembered that all the acquisitions which are involved in these writ petitions are for purposes of an irrigation project. By Madras Act 21 of 1948, new provisions were added to Section 17 (2) of the Central Act and the newly added provisions are applicable in the State of Andhra Pradesh also. The materials portions of the newly added Section 17 (2) (b) are:
'Whenever in the opinion of the Collector it becomes necessary of acquire the immediate possession of any land:
(i) XX XX XX(ii) for the construction, extension or improvements of
(A) XX XX XX(B) XX XX XX(C) XX XX XX(D) any irrigation tank, irrigation or drainage channel or any well:
(E) XX XX XX The Collector may, immediately after the publication of the notice mentioned in sub-section (1) and with the previous sanctioned of the appropriated Government, enter upon and take possession of such land, which shall thereupon vest absolutely in the Government free from all encumbrances.'
Thus, by virtue of this provisions if the acquisition is for the construction, extension or improvement of any irrigation tank, irrigation or drainage channel, the Collector may enter upon and take possession of any such land, if it is immediately required. As far as the requirement for the purposes mentioned in clause (b) of Section 17 (2) is concerned, the power to take possession applies to any land irrespective of its nature, unlike the power under Section 17 (1) which is confined only to arable or waste land. The central part of the Nagarjunasagar Project is the construction of a huge reservoir. The water of the reservoir can be carried to all the lands in the ayacut only through irrigation channels. The lands are acquired in these cases to enable the concerned authorities to construct, extend or improve the said irrigation and distributory channels. These purposes are therefore, covered by Section 17 (2) (b) of the Central Act, whereunder any land irrespective of its nature can be taken possession of. The classification and the alleged discrimination between arable and waste land on one side and other varieties of the land on the other does not arises in the cases of acquisition coming under Section 17 (2) (b).
7. In any case the position that Section 17 (4) read with Section 17 (1) does not suffer from the vice of unreasonable classification and does not offend against equal protection clause contained in Article 14 of the Constitution, is now well settled. The Gujarat High Court considered this aspect of the matter in Ishwarlal v. State, ILR (1967) Guj 620 = 1967 Guj LR 729. Discussing the validity of Section 17 (4) in conjunction with Section 5-A. Bhagwati, J., who spoke for the Division Bench, observed in paragraphs 6 and 7 at pages 738 to 740 of the Judgment:
'While considering this question it is necessary to bear in mind that Section 17, sub-section (4) was introduced in the Act at the same time as Section 5-A. Section 5-A no doubt conferred a valuable right on the owner to object to the acquisition of land on limited grounds but at the time of conferring this right, the Legislature made it clear that this right should not be available if the Government on being satisfied that there was urgency and that the land was waste or arable land directed that the provisions of Section 5-A shall not apply in respect of the land and the reasons for enacting Section 17, sub-section (4) was obvious. The object of the Act being to provide for acquisition of land for a public purpose or for a company and as pointed out by me in Gandalal v. The State, : AIR1963Guj50 the purpose of a company would also be a public purpose, it was quite possible that in a given case where the acquisition of the land was urgent, the procedure set out in Section 5-A might operate to cause delay and the implementation of the purpose might be retarded if not defeated. The Legislature, therefore, while conferring the right of objecting on the owner of land under Section 5-A thought that in a case of urgency, this right should not be available to the owner and for that reasons provided in Section 17, sub-section (4) that if in the opinion of the Government there was emergency and the land was waste or arable land, the Government would dispense with the inquiry under Section 5-A. Section 17, sub-section (4) thus on the face of it made a classification between lands of which acquisition was urgent and lands of which acquisition was nor urgent and this classification of lands on the basis or urgency of acquisition was based on an intelligible differentia which had a reasonable relation to the object sought to be achieved by the Act, namely, acquisition of land for a public purpose for compliance with the provisions of Section 5-A might well impede the urgent acquisition of land. Section 17, sub-section (4) therefore, satisfies the test of permissible classification and would clearly fall within the first category of cases set out in Ramkrishna Dalmia v. Justice Tendolkar, : 1SCR279 . But even if the view be taken that Section 17, sub-section (4) does not on its face make a classification but leaves it to the discretion of the Government to select lands for applying the provisions of the sub-section, we are satisfied that there is a policy or principle laid down by the legislature for the guidance of the exercise of the discretion by the Government in the matter of selection of land for applying the provisions of the sub-section. The principle or policy is furnished by the requirement that there should be urgency in regard to acquisition of land. It is by reference to this standard furnished by the Legislature that the Government would have to decided whether or not to apply the provisions of Section 17, sub-section (4) to any particular land and it is not possible to say that Section 17, sub-section (4) provides for the delegation of arbitrary or uncontrolled power to the Government so as to enable it to discriminate between owners of lands similarly situate. Section 17, sub-section (4) would, therefore, in any even fall within the fourth category of cases set out in : 1SCR279 and must be held to be outside the inhibition of Article 14.
But it was contended on behalf of the petitioners that the question whether there was urgency or not in any given case was left to the subjective determination of the government and it was, therefore, open to the Government to select any particular land for discriminatory treatment under Section 17, sub-section (4) by deciding in the exercise of its discretion that there was urgency and this rendered the differentia or principles of classification incapable of regulating or controlling the discretion of the Government in the exercise of its power under Section 17 sub-section (4) and did not save Section 17, sub-section (4) from the vice of conferring unguided and uncontrolled discretion on the Government in the exercise of power under that sub-section. This contention plausible though it may seem is wholly unsustainable. It is defective in that it overlooks several important considerations which must weigh with us in determining the question of constitutionality of Section 17, sub-section (4) with reference to Article 14. It must be remembered that the object of the Legislature in enacting Section 17, sub-section (4) was to enable the Government to dispense with the inquiry under Section 5-A in a case where urgent acquisition of land is necessary. As is evident from Section 5-A the inquiry under Section 5-A would be likely to take a fair amount of time and the Legislature, therefore, thought it necessary to give power to the Government to eliminate this inquiry in case of urgent acquisition of land. Now urgency may arise in innumerable ways and many different and diverse factors may enter into the determination of the question of urgency and quite often it may be a matter of policy decision and, therefore, the Government would be the authority best fitted for the purpose of deciding whether acquisition of land in any particular case is urgent. In the tempo of prevailing conditions in modern society events occur which were never foreseen and it is impossible for the Legislature to anticipate all events or to provide for all eventualities and it cannot possible lay down conditions determining urgency and it must, therefore, leave the question of urgency to the determination of the Government. Moreover it must be remembered that the power of acquisition for a public purposes is the power of eminent domain as the American Jurists call it and is a power which is the necessary concomitant of sovereignty and the decision that the acquisition of land in a particular case is urgent so as to dispense with the inquiry under Section 5-A may reasonable be left to the determination of the Government. If the question of urgency was not left to the determination of the Government but the existence of objective fact of urgency was made a condition precedent to the exercise of the power under Section 17 sub-section (4) the action of the Government under Section 17, sub-section (4) would be liable to be subjected to the scrutiny of the Court in legal proceedings and such a procedure would in many cases hold up the acquisition proceedings and the Government would be means of protracted urgent acquisition of land and the purpose for which the power is conferred under Section 17, sub-section (4) would be defeated. Merely because the decision of the Government on the question of urgency is not made justiciable it does not mean that Section 17, sub-section (4) is discriminatory. Furthermore it must be remembered that the power to decide whether there is urgency or not is conferred on the Government and not on a red on the Government and not on a minor official. 'It has to be borne in mind' as observed by the Supreme Court in Matajog Dobe v. H. C. Bhari, : 28ITR941(SC) 'that a discriminatory power is not necessarily a discriminatory power and that abuse of power is not to be easily assumed where the discretion is vested in the Government and not in minor official.' Vide M/s. Pannala Binjraj v. Union of India, : 1SCR233 , and : 1SCR279 . We may repeat what was said by S. R. Das, C. J. in Ram Krishna Dalmia's case, : 1SCR279 that 'if this law is administered by the Government with an evil eye and an unequal hand or for an oblique or unworthy purpose the arms of this Court will be long enough to reach it and to strike down such abuse with a heavy hand.' Section 17, sub-section (b) does not, therefore, offend against that equal protection clause contained in Article 14 and if the validity of Section 17, sub-section (4) cannot be attacked on the ground of violation of Article 14, the attack against the validity of Section 17, sub-section (1) must also fail on the same ground.'
This decision was carried in appeal to the Supreme Court in Ishwaralal v. State of Gujarat, : 2SCR267 , wherein the Supreme Court gave its seal of approval to the view taken by the Gujarat High Court. Dealing with this aspect of the matter in paragraph 26 of the judgment. Hidayatullah, J., as he then was, said:
'Finally there remains the question of the constitutionality of sub-sections (1) and (4) of Section 17. On this point very little was said and it is sufficient to say that the High Court judgment under appeal adequately answers all objections.'
It must, therefore, be held that the contention that Section 17 (1) and Section 17 (4) are repugnant to Article 14 must be rejected.
8. If was next contended that Section 17 (4) suffers from the vice of excessive delegation. It is said that essential legislative power is transferred under this provision to the executives, in that the concerned authority can, under Section 17 (4) dispense with the procedure laid down under Section 5-A of the Central Act. The learned counsel relied on Jalan Trading Co. (Pvt.) Ltd. v. Mill Mazdoor Sabha, : (1966)IILLJ546SC in this behalf. It was a case wherein Section 37 of the Payment of Bonus Act, 1965, was assailed as being vitiated by the vice of excessive delegation. That provision empowers the Central Government to make orders as may be necessary or expedient to remove any difficulty or doubt and also makes such orders final. The majority of the Supreme Court upheld the objections. Shah J., speaking for the majority observed in paragraph 21:
'The section authorises the Government to determine for itself what the purposes of the Act are and to make provisions for removal of doubts or difficulties. If in giving effect to the provisions of the Act any doubt or difficulty arises, normally it is for legislature to remove that doubt or difficulty. Power to remove the doubt or difficulty by altering the provisions of the Act would in substance amount to exercise of legislative authority and that cannot be delegated to an executive authority.'
But, there is vital difference between Section 17 (4) of the Land Acquisition Act and Section 37 of the Payment of Bonus Act. The Government can dispense with the procedure under Section 5-A only when it comes to the opinion that the provisions of sub-section (1) or sub-section (2) are applicable and those sub-sections can be invoked only if the Government are of the opinion that taking of the possession of the land is urgently needed. It is not doubt true that the opinion of the Government in this regard is subjective. But, Courts have always held that the said opinion of the Government is justiciable and can be challenged on the grounds that the Government never the applied its mind to the matter, or that the action of the government is malafide, or that there were no grounds at all to form the opinion, or that the grounds on the basis of which such opinion is formed are wholly irrelevant to the subject. Section 37 of the Payment of Bonus Act, however, conferred blanket powers on the Central Government in giving effect to the provisions of the Act. As pointed out by the Supreme Court, power to remove doubts or difficulties arising out of the provisions of the Act would, in substance, amount to exercise of legislative powers and such power cannot obviously be delegated to the Executives. Therefore, the decision in : (1966)IILLJ546SC bears no analogy to Section 17(4) of the Land Acquisition Act. The power conferred on the Government under Section 17(4) is neither unbridled or unguided, since the Government is obliged to form an opinion in relation to the purpose for which the acquisition is sought to be made and also in the light of the several provisions of the Land Acquisition Act. Section 17 itself lays down sufficient guidelines for forming an opinion about the urgency in taking possession. In every case, the Government would be called upon to consider whether facts and conditions exist that would not brook any delay in taking possession of the lands. In such circumstances, the decision of the Government can never be arbitrary and it is not a substitute to any legislative function. We have, therefore, no hesitation to hold that no legislative action has been delegated to the executive under Section 17 (4).
9. We are supported tin this view by our very recent decision in Rangayya v. State of Andhra Pradesh, W. P. No. 3119 of 1969, D/- 27-1-1970 (Andh Pra). We therefore, hold that this objection has no substance.
10. The next and the main attack was mounted against the Nagarjunasagar Project (Acquisition of land) Act, 1956 (Act 32 of 1956). Broadly analysed, the said attack is two-pronged one. Firstly, the Act was attached on the grounds that the compensation provided by the Act is wholly illusory; the principles guiding the determination of the compensation are irrelevant, vague and indefinite; and the date fixed as the relevant date for determining the compensation, viz. 1-7-1953 is arbitrary. The State Act is thus opposed to Articles 19 91(f), 31(1) and 31(2) of the constitution of India. Secondly, the Act is highly discrimination in nature, in such as the lands acquired for the Nagarjunasagar Project receive compensation only according to the values prevailing on 1-7-1953. On the other hand, if the acquisitions are made under the Central law of Acquisition, the State would have been obliged to pay compensation at the market value as in vogue on the date of Section 4(1) notification. There are two enactments for acquisition which are now in force, i.e. the State and the Central Acts and the compensation that is provided under the State Act is much lower than the one that is provided by the Central Act and, therefore, the State Act offends against the rule of equality before the law stated in Article 14 of the Constitution.
11. We have already set out the materials alternations which the State Act brought about in the law of acquisition relating to the Nagarjunasagar Project. It replaced clause first of Section 23 (1) of the Central Act with a new provision. Section 23 of the Central Act enumerates the matters to be considered in determining the compensation. The first of those matters is the market value of the land at the date of the publication of the notification under Section 4, sub-section (1). It is this consideration that is replaced by the State Act. Under the State Act what should be taken into consideration is the market value of the land on 1-7-1953 and of any improvements to the land effected after that date till the date of the publication of Section 4(1) notification, or the market value of the land on the date of the publication, of such notification, whichever is less. Under the explanation to the new proviso, the Government is also empowered to give to the owner some other land in exchange for the land acquired. Consequently, a charge is effected also in the inquiry to be conducted by the land Acquisition Officer under Section 11. The enquiry now to be made is for finding out the market value of the land on 1st July, 1953, the value of any improvements to the land effected between that date and the date of the publication of Section 4 (1) notification and also the value of the land as on the date of the publication of the notification under sub-section (1) of Section 4. This later change is only a consequential amendment brought about by the change in the consideration that has to be taken into account in determining the compensation. These newly introduced provisions govern only the acquisitions of lands made in the Nagarjunasagar Project area for the purpose of that Project. Excepting in these specified matters, the provisions in the Central Act continue to govern all the acquisitions made for the purpose of the project. That means that all the other matters stated in Section 23 (1) determining the compensation will continue to be applied to the acquisitions made for the Nagarjunasagar Project also, in addition to the payment of solatium of 15 per cent. on the value determined as provided in sub-section (2) of Section 23. The impugned State Act was made in the year 1956, received the assent of the President on 29th October, 1956 and was published in the Gazette of Andhra Pradesh dated 8th November, 1956. The Notifications under Section 4 (1) and also under Section 17 (4) of the Central Act were, however, made long thereafter. For instance, such notification in Writ Petition No. 1042 of 1969 is dated 14th May, 1968 and was published in the Gazetted dated 25th May 1968. The substance of the petitioner's criticism, therefore is that while that lands are being acquired in May, 1968 compensation therefor is going to be determined on the basis of the values that obtained on 1-7-1953.
12. The first objection that the State Act and the acquisitions thereunder are opposed to Article 19(1)(f) and Article 31(1) need not detain us for long. The Supreme Court settled the law on this point in Smt. Sitabati Debi v. State of West Bengal, : 2SCR949 . In that case, the Supreme Court was dealing with the conflict between the decisions in The State of Bombay v. Bhanji Munji, : 1SCR777 ; Kavalappara Kochuni v. State of Madras, : 3SCR887 and Babu Barkya Thakur v. State of Bombay, : 1SCR128 and the scope of the Constitution (Fourth Amendment) Act, 1955. The Supreme Court finally laid down that the Fourth amendment to the Constitution brought about the disseverance between the contents of Article 31(1) and Article 31(2) and that Article 31(2) applies to all laws relating to acquisition or requisition. It further decided that the validity of an Act relating to the acquisitions or requisitions cannot be questioned on the ground that it offends Article 19(1)(f) and need not be decided by the criterion in Article 19(5). This rule has been reiterated by the Supreme Court in State of Gujarat v. Shantilal, : 3SCR341 .
13. The only question, therefore, is whether the impugned State Act violates the principles enshrined in Article 31(2). This provisions puts an embargo on compulsory acquisition or requisition of property, except for a public purpose and by authority of law. That law should, however, provide for compensation of the property so acquired or requisitioned by either fixing the amount of the compensation. or specifying the principles in accordance with which the compensation is to be determined and given. At the same time, it declared that no such law shall be impugned in any Court on the ground that the compensation provided by that law is not adequate. Thus, the clause itself contemplates and postulates the existence of law providing for acquisition or requisition of property by providing compensation.
14. It is also necessary to note that clause (2) of Article 31 was amended by Section 2 of the constitution (Fourth Amendment) Act, 1955 which came into effect on 27-4-1955. Before the amendment Clause (2) was as follows:
'No property, movable or immovable, including any interest in, or in any company owing, any commercial or industrial undertaking, shall be taken possession of or acquired for public purpose under any law authorising the taking of such possession or such acquisition unless the law provides for compensation for the property taken possession of or acquired and either fixes the amount of the compensation or specifies the principles on which, and the manner in which the compensation is to be determined and given.'
It is no be noted that the principle change which the Fourth Amendment brought about in Article 31(2) is to make the adequacy of compensation non-justiciable.
15. There cannot be any doubt as to the competency of the State legislature to enact this law, amending the Central Act to some extent. To start with, acquisition and requisition of property were included in entry 33 of list (1) and Entry 36 of List II empowering the Union Parliament and the State Legislatures to make laws in this behalf. However, by virtue of the 7th Amendment which came into force on 1-11-1956, the said two entries were deleted from Lists I and II and Entry 42 was substituted in List III. In its present form, it reads: 'Acquisition and requisitioning of property.' Article 246(2) of the Constitution enables the Parliament and the State Legislatures to make laws with respect to any to the matters enumerated in List III of the Seventh Schedule. Thus, the State Legislature has enough power to pass the amending Act.
16. The learned counsel for the petitioners endeavoured to impugn the Act by contending that the matters prescribed in the Act in accordance with which compensation for the acquired land has to be determined are irrelevant, vague and indefinite and the date, viz., 1-7-1953 fixed as the relevant date for determining the compensation is highly arbitrary, resulting in paying compensation which would be wholly illusory. In other words what is provided by the State Act by way of compensation is no compensation at all.
17. The law on the point is now well established, though in its growth and development, it has passed through certain vicissitudes. it is not necessary for this purpose to wade through the entire gamut of case law on this point. It would be sufficient to refer to a few important decisions of the Supreme Court dealing with this aspect of the matter.
18. In State of West Bengal v. Mrs. Bela Banerjee, : 1SCR558 dealing with the measure of compensation and scope of legislative discretion as provided under Article 31 (2), the Supreme Court said at page 172:
'While it is true that the legislature is given the discretionary power of laying down the principles which should govern the determination of the amount to be given to the owner for the property appropriated, such principles must ensure that what is determined as payable must be compensation, that is, a just equivalent of what the owner has been deprived of. Within the limits of this basic requirement of full indemnification of the expropriated owner, the Constitution allows free play to the legislative judgment as to what principles should guide the determination of the amount payable. Whether such principles take into account all the elements which make up the true value of the property appropriated and exclude maters which are to be neglected, is a justiciable issue to be adjudicated by the Court. This indeed, was no disputed.' The Court further observed at p. 173:---'The fixing of an anterior date of the ascertainment of value may not, in certain circumstances be a violation of the constitutional requirements as, for instance, when the proposed scheme of acquisition becomes known before it is launched and prices rise sharply in anticipation of the benefits to be derived under it, but the fixing of an anterior date, which might have no relation to the value of the land when it is acquired, may be, many years later cannot but be regarded as arbitrary.'
19. In State of Madras v. D. Namasivaya, : 6SCR936 , the Supreme Court was considering the provisions of the Madras Lignite (Acquisition of Land) Act, 1953 which provided for payment of compensation for acquisition, on the basis of value on some prior date anterior to acquisition. This Act was passed before the Fourth Amendment of the Constitution and the Supreme Court was considering the validity of the Act in the light of the constitutional provision contained in Article 31 before the Constitutional amendment. Under the impugned Madras Act, the compensation made payable for compulsory acquisition of land was the value of the land on 28th of April, 1947, together with the value of agricultural improvements made therein after that date and before the publication of the notification under Section 4(1). It appears that the date of 28th of April, 1947 was taken as the crucial date, because the lignite deposits were supposed to have been discovered in that area on that day, Shah J., speaking for the Court observed at page 193:---
'Fixation of compensation for compulsory acquisition of lands notified many years after the date, on the market value prevailing on the date on which lignite was discovered is wholly arbitrary and inconsistent with the letter and spirit of Article 31(2) as it stood before it was amended by the Constitution (Fourth Amendment) Act, 1956 (it should be 1955). If the owner is by a constitutional guarantee protected against, expropriation of his property otherwise than for a just monetary equivalent it would be impossible to hold that a law which authorises acquisition of land not for its true value, but for value frozen on some date anterior to the acquisition, on the assumption that all appreciation in its value since that date is attributable to purposes for which the State may use the land at some future date, must be regarded as infringing the fundamental right.'
Then, reference was made to the passage in Bela Banerjee's case : 1SCR558 relating to the fixation of an anterior date for the ascertainment of value and the learned Judge stated that the said observation in Bela Banerjee's case, : 1SCR558 supra, could not assist the State in saving the provisions of the Madras Act from the vice of infringing the constitutional guarantee under Article 31(2). It was further observed:
'The right which is guaranteed is undoubtedly the right to a just indemnification for loss, and appreciation in the market value of the land because of the proposed acquisition may in assessing compensation be ignored. Even the Land Acquisition Act provides for assessment of compensation of the basis of market value of the land not on the date on which interest of the owner of the land is extinguished under Section 16 but on the basis of market value prevailing on the date on which the notification under Section 4 (1) is issued. Whether this rule in all cases irrespective of subsequent development ensures just indemnification of expropriated owner so as to be immune from attack, does call for comment in this case. But any principle for determination of compensation denying to the owner all increments in value of land between a fixed date and the date of issue of the notification under S. 4 (1), prima facie, 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.'
Thus, in Namasivaya's case, : 6SCR936 also, the Supreme Court continued the rule that just or true equivalent value of the land should be paid as compensation.
20. Jeejeebhoy v. Asst. Collector, Thana, : 1SCR636 is another case where the Supreme Court was dealing whit an enactment relating to land acquisition passed before the 4th amendment. The Act that was considered in the case was the Land Acquisition (Bombay Amendment) Act of 1948. The impugned Act was thus an enactment which was passed not only before the Fourth Amendment, but also before the Constitution itself. It should, however, be noted that Section 9 of the Government of India Act, 1935 and Article 31(2) of the Constitution before the Fourth Amendment were in pari materia. In the impugned Act, the compensation was payable on the basis of the value of the land as on 1-1-1948. Relying on Bela Banerjee's case, : 1SCR558 Subba Rao, J. (as he then was) delivering the judgment of the Court, stated the principles in the following terms at page 1100:-----
'The expression 'compensation' in Article 31(2) of the Constitution means 'just equivalent' of what the owner has been deprived of; (2) the principles laid down by the Legislature shall be only for the determination of the compensation so defined; (3) whether the principles have been taken into account the relevant elements to ascertain the true value of the property acquired is a justiciable issue; and (4) the fixation of an anterior date for the ascertainment of the value of the property acquired without reference to any relevant circumstances which necessitated the fixing of an earlier date for the purpose of ascertaining the real value is arbitrary. In our view, the principles laid down in this judgment directly govern the situation arising under Section 299 of the Government of India Act. 1935. In the context of the payment of compensation and prescribing of principles for ascertaining the amount of compensation, we cannot discover any relevant distinction between the two provisions so as to compel us to give a meaning to the expression 'compensation' under Section 299 of the Government of India Act, 1935, different from that given to that expression in Article 31(2) of the Constitution by this court.'
21. Then we come to Vajravelu's case reported in Vajravelu v. Special Deputy Collector, : 1SCR614 . This was dealing with a law which was made subsequent to the Fourth Amendment. In that case the Land Acquisition (Madras Amendment) Act, 1961 was assailed. It sought to prescribe certain principles for ascertaining the value of the property acquired for the purpose of enabling the State to clear slums and to develop housing scheme, in the place of the considerations prescribed by the Central Land Acquisition Act. Mainly it substituted clause first of sub-sec. (1) of Section 23 with a new provisions to the effect that the market value of the land at the date of the publication of the notification under Section 4 91) or an amount equal to the market value of the lands during the five years immediately preceding such date, whichever is less, could be paid as compensation. It further reduced the solatium from 15% to 5%. This manner of arriving at the compensation was assailed, but the State endeavoured to argue that the question of adequacy of consideration was not justiciable in a court of law in vie of the amendment made to Article 31(d) by the Fourth Amendment to the constitution. After referring to the Bela Banerjee's case, : 1SCR558 Subba Rao J., (as he then was) delivering the judgment of the Court said at page 1023.:
'A scrutiny of the amended Article discloses that it accepted the meaning of the expressions 'compensation' and 'principles' as defined by this court in Mrs. Bela Banerjee's case (Supra). It may be recalled that this Court in the said case defined the scope of the said expressions and then stated whether the principles laid down take into account all the elements which make up the true value of the property appropriated and exclude matters which are to be neglected, is a justiciable issue to be adjudicated by the Court. Under the Amended Article, the law fixing the amount of compensation or laying down the principles governing the said fixation cannot be questioned in any court on the ground that the compensation provided by that law was inadequate. It the definition of 'compensation' and the question of justiciability are kept distinct, much of the could raised will be dispelled. Even after the amendment, provision for compensation or laying down of the principles for determining the compensation is a condition for the making of a law of acquisition or equitation. A legislature if it intends to make a law for compulsory acquisition or requisition, must provide for compensation or specify the principle for ascertaining the compensation. The fact that Parliament used the same expressions, namely 'compensation' and 'principles' as were found in Article 31 before the Amendment is a clear indication that it accepted the meaning given by this Court to those expressions in Mrs. Bela Banerjee's case (supra). It follows that a Legislature in making a law of acquisition or requisition shall provide for a just equivalent of what the owner has been deprived of or specify the principles for the purpose of ascertaining 'just equivalent' of what the owner has been deprived of. If Parliament intended to enable a Legislature to make such a law without providing for compensation so defined, it would have used other expressions like 'price' 'consideration' etc....... .......... ......... ....... ......... ......... .......... The said two expressions in Article 31(2) before the Constitution (Fourth Amendment) Act, have received in authoritative interpretation by the highest Court in the land and it must be presumed that Parliament did not intend to depart from the meaning given by this Court to the said expressions.'
Thereafter, dealing with the scope of ouster of jurisdiction of the Court in regard to the adequacy of compensation contained in Article 31(2), the learned Judge proceeded to observe at P. 1024:---
'It will further be noticed that the clause excluding the jurisdiction of the Court also used the word 'compensation' indicating thereby that what is excluded from the court's jurisdiction is the adequacy of the compensation fixed by the Legislature. The argument that the word 'compensation' means a just equivalent for the property acquired and, therefore, the court can ascertain whether it is a 'just equivalent' or not, makes the amendment of the Constitution nugatory. It will be arguing in a circle. Therefore, a more reasonable interpretation is that neither the principles prescribing the 'just equivalent' nor the 'just equivalent' can be questioned by the Court on the ground of the inadequacy of the compensation fixed or arrived at by the working of the principles. The illustrate' a law is made to acquire a house; its value at the time of acquisition has to be fixed; there are many modes of valuation, namely, estimate by an engineer, value reflected by comparable sales, capitalisation of rent and similar others. The application of different principles may lead to different results. The adoption of one principle may lead to different results. The adoption of one principle may give a higher value and the adoption of another principle may give a lesser value. But nonetheless they are principles on which and the manner in which compensation is determined. The court cannot obviously say that the law should have adopted one principle and not the other, for it relates only to the question of adequacy. On the other hand, if a law lays down principles which are not relevant to the property acquired or to the value of the property at or about the time it is acquired, it may be said that they are not principles contemplated by Article 31(2) of the Constitution. If a law says that though a house is acquired, it shall be valued as a land or that though it is acquired in 1950 its value in 1930 should be given, or though 100 acres are acquired compensation shall be given only for 50 acres, the principles do not pertain to the domain of adequacy but are principles unconnected to the value of the property acquired. In such cases the validity of the principles can be scrutinized. The law may also prescribe a compensation which is illusory; it may provide for the acquisition of a property worth lakhs of rupees for a paltry sum of Rupees 100/-. The question in that context does not relate to the adequacy of the compensation for it is no compensation at all. The illustrations given by us are not exhaustive. There may be many others falling on either side of the line. But this much is clear. If the compensation is illusory or if the principles prescribed are irrelevant to the value of the property at or about the time of its acquisition, it can be said that the Legislature committed a fraud on power and, therefore, the law is bad. It is a use of the protection of Article 31 in a manner which the Article hardly intended.'
But this decision, the Supreme Court continued the doctrine of 'just equivalent' and laid down the scope of judicial scrutiny of the matters prescribed by law for computing the compensation payable for any acquisition or requisition of property. The Supreme Court held that the jurisdiction of the Court is not taken away to examine whether the matters prescribed for ascertaining the value are really relevant, pertinent and germane to the property sought to be acquired, its nature, quality and time of acquisition. It is also possible for the Court to examine whether the compensation prescribed is illusory. It was laid down in this case that in such cases the compensation indicated under the law would be no compensation at all.
22. The next case in which this question arose before the Supreme Court is Union of India v. Metal Corporation of India, : 1SCR255 . The law that was impugned in this case was the Ordinance issued by the President of India and the Act passed by the Parliament providing for acquisition of the Metal Corporation of the India Ltd., Compensation was prescribed to be reckoned on the cost price in the case on unused machinery in good condition and the Written-down value as understood in the Income-tax law for the used machinery. On behalf of the Metal Corporation, it was contended that the impugned Act did not provide for 'compensation' within the meaning of Article 31(2) of the Constitution and, therefore, the Act was void. Subba Rao. C. J., speaking for the Court, held that the law to justify itself has to provide for the payment of a 'Just equivalent' to the and acquired or lay down principles which will lead to that result. If the principles laid down are relevant to the fixation of compensation and are not arbitrary, the adequacy of the resultant product cannot be questioned in a Court of law. The validity of the principles, judged by the above tests, falls within the judicial scrutiny, and if they stand the tests, the adequacy of the product falls outside its jurisdiction. Applying these principles to the facts and circumstances of the case before the Court the judgment proceeded to state:
'It is common knowledge that there has been an upward spiral in prices of the machinery in recent years. The cost price of a machinery purchased about ten years ago is a consideration not relevant for fixing compensation for its acquisition in 1965. The principles must be such as to enable the ascertainment of its price at or about the time of its acquisition. Nor the doctrine of written-down value accepted in the Income-tax law can afford any guide for ascertaining the compensation for the used machinery acquired under the Act. Under the general scheme of the Income-tax Act the income is to be charged regardless of the diminution in the value of the capital. But the rigour of this hard principles is mitigated by the Act granting allowance in respect of depreciation in the value of certain assets such as machinery, buildings plaint, furniture etc. These allowances are worked out on a notional basis for giving relief to the income-tax assessee. This artificial rule of depreciation evolved for income-tax purposes has no relation to the value of the said assets.'
In the result, the learned Judges held that the Act did not provide for compensation and was therefore, unconstitutional.
23. The next important land-mark in the development of the law of compensation is the decision of the Supreme Court in : 3SCR341 . A bench of five learned Judges heard this case. They overruled the earlier decision of the Court in the Metal Corporation's case. : 1SCR255 and distinguished Vajravelu's case, : 1SCR614 .
In Shantilal's case, : 3SCR341 the court was considering the validity of Sections 53 and 7 of the Bombay Town Planning Act of 1955. The Bombay High Court held that the two provisions were repugnant to Article 31(2) of the Constitution and hence the State of Gujarat preferred the appeal before the Supreme Court. Under the impugned provisions of Section 53, all lands required by the local authority were declared to absolutely vest in that authority free from all encumbrances and it was further provided that all rights in the original plots which had been reconstituted shall determine and the reconstituted plots shall become subject to the rights settled by the Town Planning Officer. Under Section 67, it was provided that each of the plots should be estimated at its market value at the date of the declaration of the intention to make a scheme or the date of notification under sub-section (1) of Section 24 and without reference to the improvements due to the alteration of its boundaries. The principles argument before the Supreme Court assailing the two provisions was that when a plot a smaller area was given to the owner and the remaining area was utilised for public purpose, the area so utilised vests in the local authority for a public purposes, and since the Act did not provide for giving compensation which has a 'just equivalent' of the land expropriated at the date of extinction of interest, the guaranteed right under Article 31(2) was infringed. Great stress was laid before the Supreme Court on the fact that the market value of the land of which the owner was deprived at the date of declaration of intention to make a scheme determines the amount of intention to make a scheme was made in 1927 and the final scheme was published in 1957 after a lapse of 30 years. It was, therefore, argued that the provision for payment of market value prevailing in the year 1927 was not a provision for compensation. In support of that contention reliance was placed upon Vajravelu's case, : 1SCR614 and Metal Corporation's case, : 1SCR255 Supra. This argument was repelled by the learned Judges. It was an unanimous decision of the Court. While Shah. J. spoke for the Court, Hidayatullah, C. J. who had been a member of the Benches which decided both Vajravelu's case, : 1SCR614 Supra, and Jeejeebhoy's case, : 1SCR636 only added a few explanatory remarks. Referring to the scope of Court's enquiry into the principles relating to the payment of compensation contained in any Land Acquisition enactment Shah J., observed in paragraph 46:
'Reverting to the amendment made in Clause (2) of Article 31 by the Constitution (Fourth Amendment) Act, 1955 it is clear that adequacy of compensation fixed by the Legislature or awarded according to the principles specified by the legislature for determination is not justiciable. It clearly follows from the terms of Article 31 92) as amended that the amount of compensation payable if because the challenge in such a case, apart from a plea of abuse of legislative power, would be only a challenge to the adequacy of compensation. If compensation fixed by the Legislature and by the use of the expression 'compensation' were mean what the legislature justly regards as proper and fair recompense for compulsory expropriation of property and not something which by abuse of legislative power though called compensation is not a recompense at all or is something illusory is not justiciable, on the plea that it is not a just equivalent of the property compulsorily acquired, is it open to the Courts to enter upon an enquiry whether the principles which are specified by the Legislature for determining compensation do not award to the expropriated owner a just equivalent. In our view, such an enquiry is not open to the courts under the statutes enacted after the amendments and in the Constitution by the Constitution (Fourth Amendment) Act. It is quantum of compensation fixed by the Legislature is not liable to be canvassed before the Court on the ground that it is not a just equivalent, the principles specified for determination of compensation will also not be open to challenge on the plea that compensation determined by the application of those principles is not a just equivalent. The right declared by the Constitution guarantees that compensation shall be given before a person is compulsorily expropriated, of his property for a public purposes. What is fixed as compensation by statute, or by the application of principles specified for determination of compensation is guaranteed it does not mean however that something fixed or determined by the application of specified principles which is illusory or can in no sense be regarded as compensation must be upheld by the Courts, for, to do so, would be to grant a charter of arbitrariness, and permit a device to defeat the constitutional guarantee. But compensation fixed or determined on principles specified by the Legislature cannot be permitted to be challenged on the somewhat indefinite plea that it is not adjust or fair equivalent. Principles may be challenged on the ground that they are irrelevant to the determination of compensation, but not on the plea that what is awarded as a result of the application of those principles is not just or fair compensation. A challenge to a statute that the principles specified by it to do not award a just equivalent will be in clear violation of the constitutional declaration that inadequacy of compensation provided is not justiciable.'
The learned Judge further added in paragraph 48:
'In our view, Article 31(2) as amended is clear in its purport. If what is fixed or is determined by the application of specified principles is compensation for compulsory acquisition of property. the Courts cannot be invited to determine whether it is a just equivalent of the value of the property expropriated. In P. Vajravelu Mudaliar's case, : 1SCR614 the Court held that the principles laid down by the impugned statute were not open to question. That was sufficient for the purpose of the decision of the case, and the other observations were not necessary for deciding that case, and cannot be regarded as a binding decision.'
Hidayatullah, C. J. fully agreed with this view that the remarks Vajravelu's case, : 1SCR614 supra should be treated as obiter and not binding on the Court.
24. Turning to the Metal Corporation's case, : 1SCR255 Shah J., expressed the Court's disagreement with the view taken by the Supreme Court in that case that the two principles laid down in the impugned Act viz. (I) that compensation was to be equated to the cost price in the case of unused machinery in good condition and (ii) written-down value as understood in the Income-tax law was to be the value of the used machinery were irrelevant to the fixation of the value of the machinery as on the date of acquisition. Shah J, observed in paragraph 50:---
'We are unable to agree with that part of the judgment. The parliament had specified the principles for determining compensation of the undertaking of the company. The principles expressly related to the determination of compensation payable in respect of unused machinery in good condition and used machinery. The principles were set out avowedly for determination of compensation. The principles were not irrelevant to the determination of compensation and the compensation was no illusory. In our judgment, the Metal Corporation of India Limited's case, : 1SCR255 was wrongly decided and must be overruled:.'
25. Dealing with the contention that payment of a market value at a date which were many years before the date on which the title of the owner was extinguished was unreasonable, it was observed in paragraph 52.:
'Again the validity of the statute cannot depend upon whether in a given case it operates harshly. If the schemes came into force within a reasonable distance of time from the date on which the declaration of intention to make a scheme was notified, it could not be contended that fixation of compensation according to the scheme of Section 67 per se made the scheme invalid. The fact that considerable time has elapsed since the declaration of intention to make a scheme, cannot be ground for declaring the section ultra vires. It is also contended that in cases where no reconstituted plot is allotted to a person and his land is wholly appropriated for a public purpose in a scheme, the owner would be entitled to the value of the land as prevailing many years before the extinction of interest without the benefit of the steep rise in prices which has taken place all over this country. But, if Section 71 read with Section 67 lays down a principle of valuation it cannot be struck down on the ground that because of the exigencies of the scheme, it is not possible to allot a reconstituted plot to an owner of land covered by the scheme.'
Hidayatullah, C. J. in his explanatory remarks also observed that:
'It is certainly out of the question that the adequacy of compensation (apart from compensation which is illusory or proceeds upon principles irrelevant to its determination) should be questioned after the Amendment of the Constitution. The Amendment was expressly made to get over the effect of the earlier cases which had defined compensation as just equivalent. Such a question could not arise after the amendment.
Thus, this puts an end to the principle that compensation should be just 'equivalent'. It was laid down on the other hand that by 'compensation' it is meant what the legislature justly regarded as proper or fair recompense for compulsory expropriation of property. Unless it could be said that by abuse of legislative power the legislative provided a compensation which is not a recompense at all but is something illusory, the principles laid down by a law for paying compensation are not justiciable on the ground that such compensation is not 'just equivalent' . ON the question whether the payment of market value at a date which is many years before the date on which the title of the owner is extinguished is unreasonable, the Supreme Court expressed the view that the validity of the statute will not depend upon whether in a given case it operates harshly. If the actual acquisition is within a reasonably distance of time from the declaration of the intention, it could not be contended that fixation of compensation was unreasonble or based on irrelevant grounds. It cannot be a ground for declaring the provisions ultra vires.
26. The latest pronouncement by the Supreme Court on the subject is in Rustum Cavosjee Cooper v. Union of India, W. P. Nos. 222 of 1969 etc. D/-10-2-1970 = (reported in : 3SCR530 ) and batch of writ petitions. This is popularly known as Bank Nationalisation Case. All the Honourable Judges of the Supreme Court excepting the Chief Justice decided this case. By a majority of ten to one, the Supreme Court struck down Ss. 4, 5 and 6 read with Sch. (2) f the Banking Companies (Acquisition and Transfer of Undertakings) Ordinance 8 of 1969 and Act 22 of 1969 bearing the same name which replaced the Ordinance, as being void on the ground that they impair the Fundamental guarantee vender Article 31(2). Shah J., who spoke for the Court in Shantilal's case, : 3SCR341 Supra, himself pronounced the majority view in this case. Under the impugned Ordinance and Act, 14 Banking Companies were taken over by corresponding new Banks. The Chairmen and Directors of the Banks taken over were deemed to have vacated their offices on the date on which the Ordinance was promulgated. To the named banks, survived only the right to receive compensation to be determined in the manner prescribed. Compensation, unless settled by agreement, was to be determined by the Tribunal and was to be given in marketable Government Securities. The taken over Bank had thereafter no assets, no business, no managerial administration or other staff and was also incompetent to use the word 'Bank' in its name. The Act departed from the Ordinance in certain matters including the provisions for determination of compensation and the manner of payment. One of the grounds on which the ordinance and the Act was questioned before the Supreme Court was that by enacting the law. Fundamental Rights of the petitioners guaranteed by the Constitution under Articles 14, 19(1) (f) and (g) and 31(2) were impaired.
27. In so far as the objection based on Article 31(2) is concerned, it was pointed out that two questions arose for determination. They are (1) what is the true meaning of the expression 'compensation' and (2) what is the extent of the jurisdiction of the Court, when the validity of a law providing for compulsory acquisition of property for a public purpose is challenged.
28. Dealing with these questions, Shah J., reviewed the law including the decisions referred to by us above. It was then pointed out that there was apparently no dispute that Article 31(2) before and after it was amended guaranteed a right to compensation for compulsory acquisition of his property, compensation which was illusory, or determined by the application of principles which were irrelevant, the constitutional guarantee of compensation was not complied with. Then the difference of opinion between Vajravelu's case, : 1SCR614 and Shantilal's case, : 3SCR341 in regard to the payment of a 'just equivalent' of the property was pointed out. Thereupon, Shah J., observed.
'Both the lines of thought which converge in the ultimate result, support the vie what the principle specified by the law for determination of compensation is beyond the pale of challenge,. if it is relevant to the determination of compensation and is a recognition principle applicable in the determination of compensation for property compulsorily acquired and the principle is appropriate in determining the value of the class or property sought to be acquired. On the application of the view expressed in P. Vajravelu Mudaliar's case, : 3SCR341 the Act, in our judgment, is liable to be struck down as it fails to provide to the expropriated banks compensation determined according to relevant principles. Section 4 of the Act transfers the undertaking of every named bank to and vests it in the corresponding new bank, Section 6 (1) provides for payment of compensation for acquisition of the undertaking, and the compensation is to be determined in accordance with the principles specified in the Second Schedule. Section 6 92) then provides that though separates valuations are made in respect of these several mattes specified in Schedule II of the Act. the amount of compensation shall be deemed to be single compensation. Compensation being the equivalent in terms of money of the property compulsorily acquired, the principle for determination for compensation is intended to award to the expropriated owner the value of the property acquired. The science of valuation of property recognises several principles or methods for determining the value to be paid as compensation to the owner for loss of his property; there are different methods applicable to different classes of property in the determination of value to be paid as recompense for loss of his property. A method appropriate to the determination of value of one class of property may be wholly inappropriate in determining the value of another class of property. If an appropriate method or principle for determination of compensation is applied, the fact that by the application of another principle which is also appropriate, a different value is reached, the Court will not be justified in entertaining the contention that out of the two appropriate methods, one more generous to the owner should have been applied by the legislature.
We are unable to hold that a principle specified by the Parliament for determining compensation of the property to be acquired is conclusive. If that view be accepted, the Parliament will be invested with a character of arbitrariness and by abuse of legislative process, the constitutional guarantee of the right to compensation may be severely impaired. The principle specified must be appropriate to the determination of compensation for the particular class of property sought to be acquired. If several principles are appropriating and one is selected for determination of the value of the property to be acquired, selection of that principle to the exclusion of other principles is not open to challenge, for the selection must be left to the wisdom of the Parliament.'
In the light of the above observations, the learned Judge proceeded to test the method adopted under the Ordinance and the Act for the valuation of the Banking undertakings and found that important items of assets had been excluded. Some of the principles applied were irrelevant, and some principles applied were irrelevant, and some principles which were not recognised where adopted. The ultimate result was found to be that guarantee of compensation given under Art. 31 (2) was impaired by the provisions of the Act. Since the provisions that were invalid were not severable from the rest of the Act, the Act in its entirety was declared void. We do not think that in this latest case, the Supreme Court made any significant departure from the rule stated in Shantilal's case, : 3SCR341 .
29. We must also refer to a recent decision of a Full Bench of this Court, to which one of us. viz., Kumarayya, C. J. was a party, in Pithana Appear v. State of Andhra Pradesh, W. P. No. 364 of 1964 and batch D/- 31-12-1969 = : AIR1970AP318 (FB). In these writ petitions, the main attack was on the validity of the Andhra Pradesh Slum Improvement (Acquisition of Land) Act, 1956. It may be Stated here that the Act impugned before us and the Act questioned before the Full Bench were passed by the State legislature practically at the same time. That Act was questioned before the Full bench not only under Art. 31 (2) but also under Art. 14 of the Constitution, as the present Act was done before us. In that Act Acquisition of land for Slum improvement was provided for. The method under which compensation was sought to be determined was based on the principle of capitalisation of rentals. This was sought to be assailed before the Full Bench. Our learned brother Gopalrao Ekbote, J., said in his judgement that a law coming under Art. 31 (2) is no longer open to attack in a Court of law on the ground that compensation provided by the legislature is inadequate. As soon as the legislature fixes the amount of compensation or specifies the principles on which compensation is determined., it has discharged its duty and the aggrieved owner is not now entitled to challenge the constitutionality of allow on the ground that compensation provided is not adequate. The only question which continues t be justiciable is whether the law under which the Acquisition or requisition is made, does not provide for compensation at all or lays down principles, which in effect provide for payment of no compensation, or in either case provides for illusory compensation. While agreeing with this view, Chinnappa Reddy, J. contended himself by saying that the Act adopted a well-known principle of capitalisation on the basis of rentals, a principles which cannot be said to be irrelevant for the purpose of assessing compensation and that was sufficient to hold the provisions regarding determination of compensation as valid.
30. The above consideration of the law on the point yields the following conclusions as to the meaning of the word 'compensation' contained in Article 31(2) and the scope of the Court's scrutiny of the law providing for acquisition or requisition.:
(1) 'Compensation' being itself incapable of any precise determination, no definite connotation could be attached there by calling it, 'just equivalent' or 'full indemnification'. It should, however, be fixed by the law itself or should, be determinable in accordance with the principles indicated therein.
(2) The compensation fixed or the principles specified by the law for determination of compensation are beyond the pale of challenge, if such compensation is not illusory; if the principle is relevant to the determination of the compensation and is a recognised principle applicable in the determination of compensation for property compulsorily acquired, and the principle is appropriate in determining the values of the class of property sought to be acquired.
(3) The fixing of a date anterior to Section 4 (1) notification, in relation to which compensation has to be reckoned, is not per se invalid, unless it is shown that such date has no relevancy to the fixation of the value of the property acquired or to the method prescribed by the law to be followed in determining such value.
31. Now we will examine whether the impugned State Act conforms to the requirements above stated. The method adopted by the said Act for fixing compensation is one of the methods usually accepted for paying compensation, viz, the market value. There cannot be any doubt that payment of compensation on the basis of market value is the most satisfactory manner of paying compensation. According to the impugned amendment, the market value of the property on two dates has to be estimated; one as on 1-7-1953 and the other as on the date of Section 4 (1) notification. Besides, the value of any improvements to the land affected after 1-7-1953 and before the date of the publication of Section 4 (1) notification has to be determined. The market value of land on 1-7-1953 and the value of the improvements are added and the total amount forms one unit. The value as on Section 4 (1) notification is taken as the other unit. Whichever amount is less is payable as compensation. This method has no ambiguity about it and is clearly based on the principle of market value. What is, however, objected to is the dating back the relevant date on 1-7-1953. It is said that that date was arbitrarily fixed. We can not agree with this contention. We have already stated the brief history of the Nagarjunasagar Project. The Khosla Committee's recommendations of the Project were placed before and accepted by the Planning Commission on 8th December, 1952. Such acceptances was immediately published with the result that everybody came to know immediately thereafter that the project was going to be constructed and that large areas of land would be required for its execution. Therefore, right from that time, there was a strong possibility for the artificial rise in the values of the concerned lands, on account of the impending project. The date of 1-7-1953 which was near to the time of the announcement that the project was going to be taken up for construction thus becomes relevant. There is thus nothing unreasonable or arbitrary in adopting 1st July, 1953, as a crucial date. It was from about that time speculation in the land in the project area would naturally commence.
32. The State Act was passed in 1956 adopting 1-7-1953 as the material date. It cannot be said that time of legislation was far too distant from 1-7-1953. Extensive lands had to be acquired and as the preamble to the Act states, it became necessary to disregard speculative purchases made in the expectation of the execution of the said Project. If those speculative purchases were not disregarded, the State would have been obliged to pay not a fair price or the natural market value or the land, but an artificial value which had been boosted up by speculative purchases. At the same time, care was taken to see that all improvements made to the land between 1-7-1953 and the date of Section 4 (1) notification are evaluated and paid to the owner along with the market value of the land on 1-7-1953. Thus the evaluation of compensation is based on a clear and appropriate method of valuation.
33. It was next contended that the steep rise in the general values of the lands from 1953, apart from the reason for the Project, is totally ignored. it was, therefore, argued that one of the relevant principles is not taken into consideration by the State Act. It is difficult for us to uphold this objection. The State Act clearly provides for the inclusion of the value of all improvements to the land, effected upto the date of Section 4 (1) notification, in addition to the market value of the land as on 1-7-1953. That should lead to the payment of a fair compensation, whenever the land is acquired. In any case, the cardinal principle of the amended Art. 31 (2) is that adequacy of compensation is not justiciable. It is not, therefore, open to the owner of the land to contend that the compensation awardable under the State Act is inadequate. The important consideration is whether the law has laid down clear and relevant principles, in accordance with which the compensation should be reckoned. In this case, as we said there is no possibility for any such doubts.
34. It was also submitted that the provision that, whichever is less of the market values as on 1-7-1953 including the value of improvements on the one hand, and as on the date of the publication of Section 4 (1) notification on the other, leads to payment of illusory compensation and is a fraud on legislative power. We fail to see how the method prescribed by the State Act leads to the payment of illusory compensation. In either case, it is the market value of the land and its improvements that are taken as the basis for compensation. It may be in some cases, as pointed out by the Supreme Court in Shantilal's case, : 3SCR341 (supra), law compensation may become payable on account of long lapse on time between the crucial date and the actual acquisition. But that is no ground for striking down the section itself, since it is based on a relevant principle and an appropriate method.
35. It was sought to be argued that accepting the lessor of the two amounts is not relevant to the purpose sought to be achieved by the Act. We are afraid that this contention is devoid of any force. The purpose of the State Act is not only to acquire land for the Nagarjunasagar Project, but also to pay compensation for such acquisition after disregarding speculative purchases made in the Project area in anticipation of the execution of the Project. That was clearly declared in the preamble of the State Act itself. Therefore, choosing between the market value as on the date of Section 4 (1) notification and the value as on 1-7-1953 with the value of improvements, is quite relevant to the purpose of acquisition of land for the Project. Nor could it be said that such choice would be tantamount to a fraud on the Constitution. The Constitution itself confers the power to make law of acquisition on the legislature and Art. 31 (2) which confers the right on the owner of the property to receive compensation for the acquisition excludes such law from judicial scrutiny on the ground of inadequacy of compensation. Once such law lays down a relevant principle for fixing the compensation, it is impossible to say that it perpetrates a fraud on the Constitution.
36. We have already pointed out that excepting in regard to the manner of arriving at the market value, the State Act does not interfere with the other provisions of the Central Act. In consequence, along with the market value as arrived at under the provisions of the State Act, solatium and interest are payable to the owners of the lands.
37. To our mind the explanation to the amendment to clause first of Section 23 introduced by the State Act is significant. Under it, the Government, on the request of the land owner may agree to give in exchange any Government land, the cost of which is in their opinion equal to the cost of the land acquired or agree to pay a portion of the compensation in money and the other portion in the form of land. The land owner may make this request in this behalf. There is no doubt that the land that is to be given in lieu of and as compensation for the land acquired would also be valued in the same manner as the land acquired is valued. Therefore, whatever may be the fluctuation in the values of the land, if the land owner is so inclined, he can get alternative land. This circumstance would clearly show that the compensation that is provided for under the State Act is not and cannot be illusory.
38. We must also take notice of another submission made by Sri P. A. Chowdary, who appeared for some of the petitioners. He laid some stress on the words 'provided by' in the last portion of Art. 31 (2). He maintained that what is excluded from the consideration by the Court is only the actual amount of compensation fixed by within the purview of such bar. It is not possible to construe the exclusion in such wide and general terms. Reading the entire Ci. (2) together it is clear that what is barred from consideration by the Court is not merely the adequacy of the amount it any, fixed by the Act but also the adequacy of the resulting amount of compensation that would be arrived at by the application of the principles specified by the law, so long as they are not illusory. At the same time, there is no bar against the Court considering the relevancy and appropriateness of the principles specified in the law. We think that such is that reasonable construction of the last portion of C1. (2). That is also the well-settled construction laid on that provision.
39. Thus, we find no substance in any of the grounds on which the counsel for the petitioners sought to attack the State law from the perspective of Article 31(2). On the other hand, we find that the impugned Act has laid down a clear and appropriate method for ascertaining the compensation. It cannot, therefore, be assailed as infringing the right under Art. 31 (2).
40. This takes us to the next attack on the State Act made by the petitioners on the basis of Art. 14 of the Constitution. The argument in this behalf is that there are two enactments, viz., the Central Act and the State Act for acquisition of land, in force. While lands acquired for the project purposes get obviously low compensation under the State Act, similarly situated lands in the same area, if acquired under the Central Act. will get compensation at the market value as on the date of S. 4 (1) notification. The classification made between the two categories of lands is unreasonable and arbitrary. It is not doubt true that if land acquired for Nagarjunsagar Project, compensation has to be paid as per the provisions of the State Act and if acquisition of land is made for other purposes. compensation will have to be paid under the Central Act. The two amounts of compensations may or may not agree, because the principles on which calculations of compensation are to be made under the two Acts are at variance. But, that does not make the classification of the lands into two categories unreasonable or arbitrary. The Nagarjunasagar Project has been the dream of the Telugu people for a very long time. The waters of the River Krishna running waste into the nearby Bay of Bengal were sought to be diverted into the arid and dry areas of the Telugu Country, so that those areas which have been for ages suffering from scarcity and famine may also reap the benefits of modern agriculture and its fruits. On the acceptance by the Planning Commission of the feasibility of the Project, as recommended by the Khosla Committee, the dreams of the Telugu people have come true. However, that would be achieved only by spending very large amounts of money and acquiring extensive areas of land for the purposes of the Project. Acquisition of land for such a purpose certainly stands in a special category. Naturally, on the announcement of the impending execution of the Project by the Planning Commission by the end of 1952. Speculative purchases of land in the Project area became very rampant, steeply pushing up the values of such lands. At the same time, it became essential for the state to acquire land for the Project purposes. Therefore, it was decided by the State Legislature that such acquisitions should not be mulcted and burdened with the high prices rocketed up by speculative purchases. It was, therefore logical and reasonable that the acquisition for the Nagarjunasagar Project was classified separately. If that were not done the compensation that the State would have been liable to pay, on the basis of the speculative prices, would have been astronomical, and in all probability, it could not have been possible for the State to acquire all the land and execute the Project. In the circumstances the legislature was well justified in treating the acquisition for the Project as a separate class and providing distinctive method of awarding compensation for acquisitions for its purpose:
41. The State Act itself makes this position clear. The preamble says that it became necessary to disregard speculative purchase made in the expectation of the execution of the Project, in assessing the compensation to be paid for the lands acquired for purposes of the Project, since the benefit of the Project was then expected to extend to the District of Guntur. Kurnool, Nellore, Nalgonda and Khammam in the State of Andhra Pradesh, the operation of the Act was confined to those Districts. The Government was, however, empowered t extend the provisions of the Act to any other area in the State. 'Project area' is expressly stated in Section 2 (2) as 'the area to which the Act extends' and 'Propose connected with project'. The acquisitions under the State Act can be done, as per the provisions of Section 3 (1), only in the Project area, and for a project purpose. Thus, the provision of the Act and the modifications it introduced in the Central Act are strictly limited to the project area for the project purpose. To state it otherwise the modified method of compensation is reserved only for the class of acquisitions that are made for the Nagarjunasagar Project. Acquisitions for any other purpose do not come within the purview of the State Act and are, outside it. Thus, the distinctive nature of the acquisitions under the Act is made very clear.
42. It is thus plain that the classification made by the State Act of the lands that are to be acquired for the Project purpose in the Project area is based upon reasonable grounds, intended to serve the community at large. Such classification was made on valid grounds and it bears reasonable nexus with the purpose that is sought to be achieved. viz, acquisition of land for the Project purposes in the Project area disregarding speculative purchases. The requirements of the Nagarjunasagar Project are separate and distinct from the requirements of ordinary acquisition under the Central Act. Both the acquisitions are not similarly situated. We do not, therefore, see any discrimination and unreasonable classification between the acquisitions made under the State Act on the one hand and the acquisitions made under the Central Act on the other, Art. 14 of the Constitution has no application to the circumstances of the case.
43. Great stress was placed by the learned counsel for petitioners on Vajravelu's case, : 1SCR614 . While pointing out that the Land Acquisition (Madras Amendment) Act 1962 suffers from the vice of discrimination, the learned Judges of the Supreme Court pointed out that if a land is acquired for a housing scheme under the Amending Act, the claimant gets a lesser value than he would get for the same land or a similar land if it is acquired for a public purpose like a hospital under the Principal Act. At the same time, the Supreme Court pointed out that the housing scheme contemplated by the Amending Act need not be confined to slum clearance; the idea phraseology used in the Amending Act permits acquisition of land for housing the prosperous section of the community as well. It need not necessarily cater to a larger part of the population in the City; it can be confined to a chosen few. Therefore, it were pointed out that the land could have been acquired for all the said purposes under the principal Act, after paying the market value of the land. Later, it was point out that the distinction made between different lands on the extent, quality and the suitability of the lands had relation the suitability of the lands had relation to the object of the Amending Act. Against, under the Act impugned in the Vajravelu's case, : 1SCR614 the State Government could have recourse to either of the two laws, viz., the Central Land Acquisition Act or the Madras Amending Act for acquisition of land and it contained no guidance as to which statute should be resorted as to which statute should be resorted to in a given case of acquisition., In that event, power could be exercised by the acquiring authority arbitrarily. It was for these reasons the Supreme Court held that discrimination was writ large on the Amending Act. But such is not the case here in the State Act. The concerned authority is bound to acquire land for the Project purpose in the Project area under the State Act. There are sufficient indications in the Act which guide the concerned authority in applying that Act in acquiring land for Project purposes. As we also said, the classification made by the Act is eminently reasonable and bears reasonable connection with the object sought to be achieved by the act. Thus, the State Act before us is vitally different from the impugned Act in the Vajravelu's case, : 1SCR614 , and, therefore, that decision does not have any bearing in the context of the impugned Act.
44. In Shantilal's case, : 3SCR341 the Supreme Court distinguished Vajravelu's case, : 1SCR614 on the same grounds. IN that case, a similar argument as has been attempted before us, was raised before the Supreme Court. However, that was rejected on the ground that the method of determining compensation in respect of lands which were subject to the Town Planning scheme was prescribed in the Town Planning Act. It was pointed out that there was no option in the Act to acquire the land either under the Land Acquisition Act or under the Town Planning Act. Land required for any of the purposes of a Town planning scheme cannot be acquired otherwise than under the Act. the learned Judge pointed out that it was a settled rule of interpretation of statutes that when power is given under a statute to do a certain thing in a certain way, the thing must be done in that way or not at all. The same is the case with the State Act impugned before us. It has to be taken that for all project purposes, land will be acquired form the project area only under the State Act. Therefore the State Act does not suffer from the vice of arbitrary classification and discrimination.
45. The same rule has been reiterated by this Court in the Full Bench decision in W. P. No. 364 of 1964 and batch D/- 31-12-1969 = (reported in : AIR1970AP318 ) (FB).
46. It is not necessary to pile up authority on this aspect of the matter. it suffices us to complete our discussion on this point, to refer to the recent pronouncement of the Supreme Court in the Bank Nationalisation Case, W. P. No. 2222 of 1969 and batch D/- 10-2-1970 = (reported in : 3SCR530 ). After referring to the leading decisions of that court, the Court once again reiterated the tests of permissible classification and then said:
'The Courts recognize in the Legislature some degree of elasticity in the matter of making a classification between persons, objects and transactions. provided the classification is based on some intelligible ground, the Courts will not strike down that classification, because in the view of the Court it should have proceeded on some other ground or should have included in the class selected for special treatment some other persons, objects or transactions which are not included by Legislature. The legislature is free to recognise the degree of harm and to restrict the operation of the law only to those cases where the needed is the clearest. The legislature needed not extend the regulation of a law to all cases it may possibly reach, and may make a classification founded on practical grounds of convenience.'
This affords a complete answer to the objections raised by the petitioners based on Art. 14 of the Constitution. We are, therefore, clear in our minds, that the State Art does not infringe the equality clause. This argument of the petitioners, therefore, must fail.
47. Thus, were find no substance in any of the contentions raised by the petitioners in their petitioners. This concludes our discussion on the general and Constitutional objections raised in the several petitions. We will now take up special points that were raised in some of the petitions.
48. In W. P. No. 1042 of 1969 the acquisition was made for construction of camp colony, workshop etc. It was argued that this was no an acquisition for purposes of the Act. This contention is wholly untenable. 'The Project purpose' is defined in the State Act and it means any purpose connected with the Nagarjunasagar Project. There cannot be any denial of the fact that camp colonies. work shops etc, are purposes connected with the Project. Therefore, this contention should be rejected.
49. In W. P. No. 635 of 1969, it was pointed out that the lands sought to be acquired for laying out a channel. It is alleged that originally the channel was proposed to be laid on a different route, but now on the influence of one Punnayya the route has been changed so that the channel passes through the petitioner's land. It was, however, maintained by the respondents that Punniah, who is alleged to have influenced the change in the route of the channel has no land on the route of the original alignment and could not, therefore, have any interest in having the course changed. Whatever that be, excepting making the bald allegation, there is nothing placed before us to substantiate this allegation of mala fides. It is open to the concerned authorities to fix the course of the channel and if necessary, to change it. That depends largely upon the actual benefit that is derived by the course of the channel and also by the financial implications. In the absence of any material in support of the allegation, we cannot hold that the change in the course of the channel was improperly made.
50. In W. P. Nos. 5306 and 5364 of 1968 it was argued that the purpose for which the lands are being acquired is to build a colony for the project purposes but it is not a bona fide requirement since there is already a colony built in the town of Ongole. Simply because there is one other colony in Ongole town it does not follow that another colony in the acquired lands is not necessary. That depends upon the requirements for the purpose of the Project. It cannot be presumed that the authorities are prepared t waste a large amount of money on building a useless new colony, just to spite the petitioners by acquiring their lands. This point is therefore unacceptable.
51. In Writ petition Nos. 4729 of 1968 and 862 of 1969 lands are sought to be acquired for constructing houses for workers in mechanical workshop and for digging channels. In regard to the land belonging to the first petitioners in W. P. No. 4729 of 1968 it is stated in the counter affidavit that its acquisition is being withdrawn. In regard to other lands what was contended by the learned counsel for petitioners is that these lands are outside the Project area and, therefore, cannot be acquired for the purpose of the Project. Actually this arguments suffers from an error. These lands are certainly within the Project area as defined in the State Act. Therefore, it cannot be said that they are outside the Project areas and for that reason cannot be acquired under the State Act. It was, however, suggested by the learned counsel that these lands are outside the area which is going to be benefited by the flow of water from the Nagarjunasagar reservoir; in other words, it is said to be outside the actual ayacut of Nagarjunasagar Project. Since the lands are not going to be benefited by Project, the argument runs that the lands should not be acquired under the State Act. This argument is without any force. It is not possible in all cases to acquire land within the ayacut of the project. According to the exigencies and requirements of the Project, the lands to be acquired may be outside the ayacut area. What is important is that the lands should be within the Project area, viz, within the those Districts mentioned in the Act. There in those districts and are, therefore, in the Project area. There is thus no bar for acquisition of these lands under the State Act.
52. No other point has been raised. We see no merits in any one of the contentions argued before us. The Writ Petitions, therefore, fail and are dismissed with costs. Advocate's fee Rs. 50/- in each case.
53. Petitions dismissed.