# [1984] 1 S.C.R. 725

- **Citation:** [1984] 1 S.C.R. 725
- **Court:** Supreme Court of India
- **Decided:** 1984
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/1984-1-s-c-r-725-8504
- **Pages:** 42

## Headnote

)
{
..
STATE OF'tAMIL NAi>U, ETC. ETC.
•
v.
'
L. ABU KAVUR BAI.AND ORS. ETC.
O~tober 31, 1983 ·
lY:v._CHANDARcHuD, c.J., s •. MmtTAZA FAzAL Au,.
V.D. TULZAPURKAR, 0. CHINNAPPA REDDY AND
A. VARADARA1AN, JJ.]
Constitution of India, 1950,.Articles 14, 19, 31, 39(b)and (c):
,.
Tamllnadu Stage ·Carriages and Contract -Carriages (Acquisition)
Act
1973-Nationalisation of stage car;iages Ond ·contract carriages- Vesting of
vehicles, workshop etc. In the government on·nationalisatfon-Whether. confiscatory
Jezis/atlon-Constitutionally Valid and permissible-Scope of Articles 39(b) an4
(c)-Whdt is, interpretarion of Statu_tes. ·
Words and Phrases : 11distribution"-" Material resourCt$'~-Mel,ning ofConstitution of fndla 1950, Article ·39(b).·
The transport industry can be nationalised by two methods : (i) where
the Government acts under Chapter IV-A, (section 68 (b) and (c) of the Motor
-VehicICs Act 1939), after formulating the scheme fof taking o"ver a· route Or
routes, 1and (ii) the more effective method, to taktp ·over the running of the
entire transport· services by nat.iODalising them, along with their units,
A
B
G
D·
E
(Vehicles,. workshops .etc.) either by ·one stroke of by stages spread over a ·
F
short time.
·
The Karnataka State adopled' the second method and the legislation vi_z.,
the Karnataka Contract Carriages (Acqui~ition) _Act, 1976 was upheld by this
Court in .State of Karnataka and .Anr. v. Ranganatha Reddy. and Anr:, [1978]
I S.C.R~ 641.
The Tamilnadu State passed, the Tamil Nadu Stage Carriages and Con~
tract Garriages (Acquisition) Ordinance, 1973 which later toOk the shape of the
Tamil Nadu Stage Carriages and Con~ract Carriage (Acquisition) Act, 1973 •
..
The intention of the Act was to start the nationalisation schen1e in one
district of the State first and then extend it to other districts .. Secti.on 1 provided
..
G
H
•
A
B
c
.o
;726
SUPREME COuR t REPORTS·
[ 1984) 1 S.C.)l.
tha! the policy of nationalisation shall come into force off the 14th January,
1973. Clause (iii) of sub-section (4) (b) of section J laid down that wit~ respect
to stage carriages in any other
dist~ct -in the State,~ the Act will come into
fore:e on_ such dates as the GOvernmCnt may by notification_ appoint. Section 2
codified one of the clauses of the preamble by enacting a declaration· that the
Act was meant for giving e!Iect to the policy of the State towards securing the
principles specified in clauses (b) and (c)- of. Ariicle 39 of the Constifution and
the acquisitiOn in respect of the_ stage carriages and contract carriages and
other properties i:C_ferred to in seCtion 4.
SectiOn 4, the pivot~!· section provided that on and from the date as
may be specified by the Government in respect of a·ny stage carriage Or contract
cartiage operator, the perinit issued to the operator shall vest in the Government absolutely free from all encuinbrances and stage carriages or contract
carriages whiCh vest in the Government, shall by fore~ of such ves.ting be freed
and discharged fi'om any trust, obligation and encumbrances etc. ,It was
further provided that any person interested shall have no clahn in relation to
such carriageS or contract carriages taken over by. the State in pur~qance of
the riationalisation Policy and the. clain1, if any, would be limited to the
- amount payable under the Act. Sub-section (3) of section·· 4 contained a declaration that the veSting of the stage carriage·s and other properiies ·shall be
de~med to have _been acquired for a public pu~pose and in pllblic interest.
'
SeCtiOn 6 provided for,a reasonable_ -amount or" cOmpensation to be paid 1
to the operators· on their properiies vesting in the Government. Where the
amount can be fixed by agreement, the same shall be detern1i11ed in accordance
· wi'th the agreement and in other cases .by an arbitrator appointed by the
E
Government. · Se.ftion 1-2 ·provided for "an appeal to the High Court against
the award of the.arbitrator .
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The schedule to the Act fixed the sc

## Text

_Characters 0–39,992 of 97,995. This is a partial read: ask again with offset=39992 for what follows._

)
{
..
STATE OF'tAMIL NAi>U, ETC. ETC.
•
v.
'
L. ABU KAVUR BAI.AND ORS. ETC.
O~tober 31, 1983 ·
lY:v._CHANDARcHuD, c.J., s •. MmtTAZA FAzAL Au,.
V.D. TULZAPURKAR, 0. CHINNAPPA REDDY AND
A. VARADARA1AN, JJ.]
Constitution of India, 1950,.Articles 14, 19, 31, 39(b)and (c):
,.
Tamllnadu Stage ·Carriages and Contract -Carriages (Acquisition)
Act
1973-Nationalisation of stage car;iages Ond ·contract carriages- Vesting of
vehicles, workshop etc. In the government on·nationalisatfon-Whether. confiscatory
Jezis/atlon-Constitutionally Valid and permissible-Scope of Articles 39(b) an4
(c)-Whdt is, interpretarion of Statu_tes. ·
Words and Phrases : 11distribution"-" Material resourCt$'~-Mel,ning ofConstitution of fndla 1950, Article ·39(b).·
The transport industry can be nationalised by two methods : (i) where
the Government acts under Chapter IV-A, (section 68 (b) and (c) of the Motor
-VehicICs Act 1939), after formulating the scheme fof taking o"ver a· route Or
routes, 1and (ii) the more effective method, to taktp ·over the running of the
entire transport· services by nat.iODalising them, along with their units,
A
B
G
D·
E
(Vehicles,. workshops .etc.) either by ·one stroke of by stages spread over a ·
F
short time.
·
The Karnataka State adopled' the second method and the legislation vi_z.,
the Karnataka Contract Carriages (Acqui~ition) _Act, 1976 was upheld by this
Court in .State of Karnataka and .Anr. v. Ranganatha Reddy. and Anr:, [1978]
I S.C.R~ 641.
The Tamilnadu State passed, the Tamil Nadu Stage Carriages and Con~
tract Garriages (Acquisition) Ordinance, 1973 which later toOk the shape of the
Tamil Nadu Stage Carriages and Con~ract Carriage (Acquisition) Act, 1973 •
..
The intention of the Act was to start the nationalisation schen1e in one
district of the State first and then extend it to other districts .. Secti.on 1 provided
..
G
H
•
A
B
c
.o
;726
SUPREME COuR t REPORTS·
[ 1984) 1 S.C.)l.
tha! the policy of nationalisation shall come into force off the 14th January,
1973. Clause (iii) of sub-section (4) (b) of section J laid down that wit~ respect
to stage carriages in any other
dist~ct -in the State,~ the Act will come into
fore:e on_ such dates as the GOvernmCnt may by notification_ appoint. Section 2
codified one of the clauses of the preamble by enacting a declaration· that the
Act was meant for giving e!Iect to the policy of the State towards securing the
principles specified in clauses (b) and (c)- of. Ariicle 39 of the Constifution and
the acquisitiOn in respect of the_ stage carriages and contract carriages and
other properties i:C_ferred to in seCtion 4.
SectiOn 4, the pivot~!· section provided that on and from the date as
may be specified by the Government in respect of a·ny stage carriage Or contract
cartiage operator, the perinit issued to the operator shall vest in the Government absolutely free from all encuinbrances and stage carriages or contract
carriages whiCh vest in the Government, shall by fore~ of such ves.ting be freed
and discharged fi'om any trust, obligation and encumbrances etc. ,It was
further provided that any person interested shall have no clahn in relation to
such carriageS or contract carriages taken over by. the State in pur~qance of
the riationalisation Policy and the. clain1, if any, would be limited to the
- amount payable under the Act. Sub-section (3) of section·· 4 contained a declaration that the veSting of the stage carriage·s and other properiies ·shall be
de~med to have _been acquired for a public pu~pose and in pllblic interest.
'
SeCtiOn 6 provided for,a reasonable_ -amount or" cOmpensation to be paid 1
to the operators· on their properiies vesting in the Government. Where the
amount can be fixed by agreement, the same shall be detern1i11ed in accordance
· wi'th the agreement and in other cases .by an arbitrator appointed by the
E
Government. · Se.ftion 1-2 ·provided for "an appeal to the High Court against
the award of the.arbitrator .
F
G
H
.,
The schedule to the Act fixed the sc3.le of compensation enunciated the
piil?-ciples ori , \Vhis;h it wks to be awarded and contained the guidelines for .
its payment.
The· operat6rs whose stage carfiages were taken' over by the State
Government.assailed the constitutional_ validitY"of the Act in their writ Petitions
in the ~ligh Court.
...
·The High Court held that the·Act was ultra vires Articles 14 and 19 of
the Constitution as it did not fciH within the scppe of Articles 31 C, and that
by viftue of~ the Act _the financiers who were the owners of .the stage or
contract carfiages would be compl.etely wiped out of their business and that
therefore Article· 19 was clearly· violated. It further held ihat the objects of
Article 39 (b) & (c) have not bee_n subserVed and, since the vehicles taken over
by . the State under ·the Act were moveable properties A.rticle 39 was not
applicable.
\
In appeals 'to this .COurt it was· .contended on beh~lf of thC State·that_ the
Act squarelY ·rell within the protective umbrella of Article 31C inasmuch as
. "
TAMIL NADU V. L. ABU
727
in pith and substance, the Act sou1Zht to subserve and· secure the objects
~
contained i~'ciauses·(b) and (c) of Article 39 and was, therefore, fully prote-
. A
· ctcd from· the onsiaught of Articles 14, 19 and 31.o1- The provisions of the Act
are almost in pori materia with the ·Karnataka ContraC~ Carriages (A_cquisition)
Act. 19 ,6, which has been upheld by this -Court._ On the other hand, it was
contended on behalf of the operators (ReSpondents · in the appeals arid petitioners in the writ petition) that the manner in_wh_ich _the transport services
had been nationalised under the Act did not fall within the ambit of Article
39 (b) and (c) as, the buses or the vehicles were nOt an integral part of the
ll ·
policy of nationalisation. If the Act had nationalised the transport services
..:without taking over the units and the workshops, etc, then the operators could
have had something to fall back upon to earn their livelihood. Complete
deprivation of livel1hood by the Act amouhted to a confisCatory piece of '
legislation and therefore void.
Allow'ing the appe.a1s and dismissing the writ petitions :
HELD : The Tamilnadu Stages Carriages and Contract· Carriages·
(Acquisition) Act 1973 is constitutionally valid. [766 A]
1. ·By and large ~he p~~visioris of the t~o Acts viz. -.the Karnataka Contract
carriage (Acquisition) Act, 1976 ·and the Tcimil ~adu Stages Carriages and
Cont_ract Carriages (Acquisition) Act, 1973 appear to be identical in many respCcts and the general structure and the fu0dameiltal features of the two- Acts are
almOst same. In view of the clear decision of this Court regarding the constitutional validity of the Karnataka Act, very little survives so far as the
arguments. in this case, advanced on behalf of the resporidents are concerne~.
Further the three important decision in Minerva Mills, U'aman Rao and Sanjeev
Coke Manufacturing cases, "reinforce and rejterate the conclusions reached in
the K.arnataka case .. [751 F, 752 D·EJ
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2. · (i) There.appears to be complete unani~ity of judicial opinion on
the point that although· .th.e directive principles are not eriforceable yet ·ti1e
court shbuld make a real attempt ~t harmonising and reconCiling the directive
principles and the fundamental rights and any collision between the twCJ should
F
be avoided as far as possible. [736 BJ
(ii) Whereas in the 2sth A:Uend111ent, the protective umbrella given by'
Constitution w~s restiicted to la,ws passed only to promote objects in Cls. (b) &
(c) or Art. 39, by virtue of the 42nd Amendment the limitations which were
confin.ed to Cls. (b) and (c) of Art. 39 \\ere taken away and the Article was
given· a much wider conn.otaiion by legislating. that Acts or laWs giVing effect
to all or any of the principles laid down in part IY of the· Constitution would
be protected by the umbrella contained in Art. 3 l C and would be immune from
. challenge on. the groun~ that they were violative of Art. 14 or· i"9. [738 c:D]
(iii 1 From a combined reading of Bharati's and Minerya Mills' cases as
also of the subsequent decisions,_ the undisputed position is that Art._ 31C, as
introduced by the 25th Amendment, is constitutiOnally valid in.all respects.
•
[738 G-Hl
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SUPilEME COURT REi>ORTs
(1984] t s.c.it.
3. An importa~t facet Of Act 31C, is that there sh"ou1d be a close nexus
.between the statute passed by the legis_lature and the twin ·objects mentioned in
clauses (b) and (c) of Art. 39. The doctrine of nexus cannot be extended to
suCh an extreme liniit that the very purpose of Art. 39 (b) and (c) is .defeated.
By requiring that thete should be nexus ~etween the law and .Art. 39 (b) what
is- meant is that there must be a reasonable connection between the Act passed
and the objects mentioned in Art .. 39 (b) and (o) before the said Article can
apply. If the nexus· is present in the law then pfotection.of A.rt. 31C becomes
coTplete and irrevocable. [739 F-740 A]
.
.
•
·State of Kera/a & Anr. v. N.M.· Thomas & Ors.. [1976] 1 S.C.R. 906 at 99~
to 996; His Holihess Kesavananda Bharati Sripadagafaveru v. Slate of Kera/a,
[1973] Supp. S.C.R. I; Minerva Mills Ltd., & Ors. v. Union of India & Ors.,
[1981] I S.C.R . .206 at 261; Waman Rao & Ors. etc. etc. v. Union of India & Ors.,
C
[1981] 2 S.C.R. I at 41; and Sanjeev Coke Manufacturing Co. v. M/s. Bharat
Coking, Coal Ltd. & Anr., [1983] I S.C.C. 147/160, referred to.
·
D
4. In a cas~ wheie Art.· 31C a~plies, Whether~compensatiOn is nece~sa;ily.
to be Siveti, has the following ~acets :-
'
(l\) if Art. 31Cis taken, to exclude Art. 31 (2). the.question of
compensation becomes ·irrelevant and otiose, [741 DJ
(b) nationalisation of transport service by the Stat(1 is unobjectionable and unexceptionable and can be accomplished in three
different fuethods :-
·
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(i). nationalisation of servi~es and· not units thereof: (741 EJ
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· (ii) nationalisation of the services <ilongwith the entire assets
. ··of the units, and· [741 FJ
(iii) nationalisation of the·services and part of the assets ·of
· · tlie units of the operators. [741 G
In the instant case, the State of Tamil Nadu has taken recourse t,o
method (iii) above, i.e.· it has n·Rtionilli~ed the' entire transport serviCe as also ·a
part of the entire assests oi the units thereof.· As nationalisation is a policY
decision, an enquiry·into the policy or' the legislature or the considerations
gove;ning the sanle, cannot be:made by the courts unless the policy· is so absurd
·as to violate the provisioris of the Constitution. In view of Art. 31C, the court
cannot strike down the Act-merely because the Compensation for taking over
the transport services or its.units is not provided for. ·The -reason for this is
.that Art. 3tc'was not merely a.pragm<\tic a:pproach to socialism but imbibed a
theoretical aspect by Which all means of production, key industries, mines,
minerals, public supplies, utilities <ind services may be taken gradually under
public ownership, ina.nagement and control.
(7~1 H-74i' BJ
Akadasi Padhan v. State, of Orissa [1963) ·Supp,(2) S.C.R. 691, referred
·.to.
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'!'AMIL NAbU JI. L. ABU
129
5. From.a perusal of Bharati's a,s· alsO Karnalaka cases the following
'principles for assessing compensation after the amendment of Art'. 31 (2)' by
substitution of the wo!d 'amount', .emer~e :
(Ir that compensation~should Dot be arbitrary or illusory,
(2) that the amount. fixe4 · as compensation ·sboul? not be
uilprincipled,
(3) that the compensation songht to be paid should not be so
· arbitiary or illusory as to be unconscionably, shocking, an~
(4) it is not ne-ceSsary that compensation must represent ihe.actllal
. ma~ket value or b;e adequate for even if coμipensation: is
inadequate but not _illusory, the requirement of Art. 31 (2) is
fully compiled with, [755 E-H]
..
In the .instant case, on: the question of compensation the relevant sections
of the Act are completely io accordance with the prinCiples enunciated abo'e:
and hence the argument of the counsel for .the respondents that the compenA.
B
c
sation is wholly inadequate or illusory must be overruled. [756 A]
D
6.
(i) .The compensAti'on awarded QJ'. the· pri~Ciples ·.coDtained in the
various sections of the Act are not illusory but amount to 'a Just and sufficierit
compensation to the operators whose properties are taken away. In fact, it was
.to ineet s.ucb situations that Art. 31C was introduced so that any obstacie restilting iD evil consequence to the operators.or- persons Whose prOperti~s are taken
over is completely .removed• [757 BJ
•
Jn the inst3.nt Case,.the State ·has nationalised the stage and contract
carriages for the purpose of providing a general. and expeditious transport at,
reasonable rateS to the members of the public and such a policy is undoubtediy
i.n public.interest and involves a_n important public purPose .. [758 F]
(ii)' Art. 39 (b) does not mention either move'al;lle or ·immovable property.
The actual expression used is •material resources Of the commu-nity'. ''Material
resources" ·are wide eilough to cover' not only natural physical resources
but also moVeable or immoviible prope!ties. :[759 E}
7. (i) If the State chooses to monopo1ise trades in, certain f:Ssential
commodities or properties, th~ purposes mentioned in Art. ~9. (b) ·& \c), Art.
3l (2)" wou,Id -be completely ex-eluded;- otherwise no State monpoly is_ ever·
possible. It was for this reason that Parliament thought it advisable to prbtect
the ·objec\s cont~ined in. Article 39 (b) & ( c) from tfie purview of Art. 31 (2).
.
.
[761 D'.F].
(ii) Article 31 (2) by virtue· of the 25th Ame~dment omitted the word
'cotilpensation' and had -substituted the word 'ainount' which gives ample
. discretiori to. the State to fix a reasonable amount if the prOpei:f:y of an individual is taken over for a public purpose.
The court in such matters cannot
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730
SUPREME COUll.t REPORTS
[1984) 1 s.c.R.
interfere.with the amount so fixed unless it. is .shown to the court's satisfaction·
that the amount fixed is so monstrous as to shock~ its conscience. £761 G 4 762 A]
·8. The persons whose properties are taken over cannot be heard to
·complain that the compensation awarded to the1n should be according to the
market value which, if conceeded, would defeat the very purpose and objective
of.Article 39 (b) & (c). The principles that emerge are.
.
.
-
. .
. (I) that in view of the express provisions of Art. 31C which·
excludes Art. 31 _(2) also, where a property is acquired ,in_public
interest for the avow"ed purpose of giving effect
to the
principles enshfined in Art. 39 (b) & (c), ·no cofnpensation is
necessary and Art. 31 (2) is out of the harins way, and
(2) That even if the law provides fOr cOmpensation, the' courts
cannot go into the details or adequacy of the compensalion
and it is sufficient for the State to 'prove that the compensation
was reasonable and not monstrous or illusory so as· tO shock.
the conscience of the court. [762 E;·_C-DJ
In the instant casi:, both the conditions mentioned above are- fully
satisfied having regard to tlie proyision ~i the· Act.• f.'",'62 FJ
9. It Will not be correct to construe the word 'distribution• in a purely
literal sense so as io mean only division of a particular kind ·or , to particula_r
persons.
The words, apportionment, allotment,
~llocation, classification, ·
clearly fall within the broad sweep of the word 'distribution'. 'so construed,
the word 'distribution' as used in the Art. 39 (b) will include various facets,
aspects, inethods and terminology of a broad-based concept of distribution ..
The word 'distribUtion' does not merely mean·that Property of one _should be
taken oVer and distributed to others like land reforms where the lands from the ·
bi"g landlords are taken away and given to landless -labourers or for that matter
the_ various urban and rural ceiling Acts. That is only ·one of the modes of
.distribution but not the only mo<\e. [763 G-764 A]
In the instarit case, distriQution is undoubtedly there though in
a .
different shape. So far as ·the opefators were concerned they were n1otivated by
mal\ing huge profits and were most reluctant to go to villages or places where
the passenger traffic is low or the track is diffic.ult. This naturally ca"used serious
incO-nve:qience to the poorr-111em,bers of the Community who weie denied ·the
facility of visiting the towns or other areiis in a transport. By nationalising the
transport as also the units the vehicles would be able to go to the fafthest corner of the State and penetrate as deep as possible and provide better 3.n!i quicker and more efficacious facilities. This would undoubtedly be a distribution
for the common good of the pepple and would.be clearly covered by cl. (b) of
Art. 39. [764 B-C] .
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·TAMIL NADU V. L. ABU
731
JO. Once a poliCy of nationalisation is in public interest 3.nd for public
good, some losses, some dtlmages, SQme .prejudices and some harsh conse~
quences ·are bound to follow. but this does not mean that· the aforesaid
considerations should result in a stalemate of the pOlicy Or State monopoly ·or
nation~lisation. f756 HJ
C1v1L APPELLATE JURISD.!CTION : Civil Appeal Nos. 957-966(N)
of 1973 and 435-442 of 1976.
From the Judgment and Order ·dated the Z4th April, 1973 and
19th Ap~il, 1973 of the High Court of Madras in Writ Petition Nos.
1647, 1900, 1466, 1557, 1559, 1527, 1256, 1488, 1584 and 1585/73
and 741, 157, 132, \23, 288, 1486,l528 and 876/1973 respectively.
'
AND
•
Writ Petition Nos. 8818 of 1982 and 312-313 of 1979.
(Under article 32 of the Constitution) -
S.S. Ray, R.K. Garg and A. V. Rangam for the Appcllailts.
Vineet Kumar fer the respondent No. I in CA. Nos. 965, 966,
437 & 439.
· G.L;Sanxhi and Miss Lily Thomas for the respondent No.
in
CAs. 957 & 962 & W.P. No. 8818/82.
-
K.K. Venugopal; A.K. Sen, A.T.M. Sampath, M.N. Ranga'chari,
S~ Srinivasan and Mahabir Singh for the respondent No. I in CAs.
959, 960-961, 963, 964 &.Respd No. I in CAs. 435-42/76.
.
.
· 1
J. Ramamurthi for the respondent No. 1 in C.A. No. 438.
A.T.M. Sampath for th,e petitio_ners in WPs. 312 & 313/79.
K.G. Bhagat Additional Solicitor General Miss A. Subhashinl,
T. V.S. Narasihma Chari and C. v. Subba for the interveners. (For.
· -Att. Gen!).
A. V. Rangam for Eherran Transport .
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732
SUPREME COURT REPORTS
(1984] l S.C.R.
.
.
A.TM. Sampath, M.N. Rangachari, S. Srinl1•asan and Mahabir
Singh for K.A. Kanappa Chetty & T.R . .Subhraj.
B. Parthasarthy for Adv. Genl. Orissa and Cherran Trarisport
Employ.ees Union ..
Ashak Grover for Adv. Genl. J & K.
A.K. Sen, A.il'.M .. Sampath and[(. Ram Kuinar for D. Kannia
Pillai, M/s. Sundaram Finance 'P.T. Krishnan an"d S.K. Nandy for
State of Assam.
·'
·
The Judgm~nt of the Court was delivered by.·
. .
FAZAL Au, J. One of the planks of building an egalitarian
society in order to achieve socio·economic emancipation is the policy
of nationalisation of industries. Easy, cheap and dependable lrans·
port is a prime social necessity. Unfortunately, no State has beeb.
able to achieve 1his goal so far .by a full-fledged nationalisation.
Reliance is largely placed on schemes framed under Chapter IV·A
of the Motor Vehicles Act.
Perhaps Karanataka was the only State wliich having become
'sadder and wiser' took the lead in enunciating the bold step of
complete nationalisation of the entire transport industry but, unfor·
lunately, ii .has not yet been able to implement it fully.
There are two methods by which the transport industry can
·be nationalised :--
. .
(l) where the Government acts under Chapter IV A (s.68 (b)
&(c) of the Motor Veliic!es Act) and after due pub!i~ation formu· ·
!ates a scheme for taking over route or routes and invites objections
, thereto. After the objections .have been received they are decided
G
and :ultimately processed. This method ·however is dilatory and
involves a time consuming process which leads to delaying tactics
. adopted. by the operators. Even so, after the objections have .been
decided,· the operators or the persons concerned are not satisfied
but go up in appeals to the law courts: · These delaying tactics
H
have resulted in most . cases in. an: indefinite postponement Or the
, scheme of nationalisation. Moreover, normally this process is
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TAMIL NADU ~- L. ABU (Fazal 'A.Ii, 1.)
733
applied to a. route or routes selected by the Government and is
accomplished by stages which also takes a long time .
. (2) Another method which is the· more effective one is to take
A
. over 'the running of the entire transport services by nationalising
them, alongwith their units (vehicles, workshops, etc.) either by one
strok-e.or by stages·. spread· over· a short time. This cours~ is clearly
permissible under els. (b) & (c) of Art. 39 of. the Constitution· as
· B
would be discussed in a later part of the judgment.
.
.
.
.
The Karnataka State tried th.e second method and succeeded, .
to some extent, but ran into difficulties for one reason or the other.
The Tamil Nadu State following the Karqataka 'pattern passed the
impugned Ordinance, which later took the shape of the Tamil Nadu
Stage C11rriages and Contract Carriages ·(Acquisition) Act, 1973
. (hereinafter referred to as the 'Act') to nationalise the State transport
industry by stages.
The Madras High' Court sta~ed the operation
of the Ordinance as also the Act and declared void all Its ptovisions,
-As a result, nationalisation of transport became a still-born child
and its progressive policy was stifled the day ·it was put into action.
It is this judgment of the High Court which is the subject
· matter of appeals and writ petitio~s . before us. The Madras. High
C0urt declared the Act ult1a vires as being violative of Arts. 14 and
19 of the Constitution as it did not fall within the protective
umbrella contained in Art. 31C and on a number of other grounds
which-would be examined hereafter.
It is manifest that the attempt of the Tamil Nadu legislature
to·give effect to the principles enshfined in-Art.39(b)&(c) would have
.secured the socialist objective aimed by the Constitution in order to
build up an egalitarian society. By virtiie of complete nationalisation the numbers of the public or the community would. have got
much better and greater facilities than afforded to them by tbe
private operators runnfog vehicles ·under permits. Secondly, the
efficiency and· efficacy of ihe· services would ·undoubtedly m~ke a
'marked· improvement in the manner and method of running ,the
vehicles as compared to the Services run by private . operators:
Thirdly, prior to the passing of the Act, the entire services were
actually run behind the screen through - varioqs financiers in ·the
name of the operators with whom they had entered into hirepurchase agreements. This obviously led to concentration of wealth
in the .hands of a few.
With the coming into force of the total
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[1984) 1 S.C.R.
nationalisation scheme,. this device of concentration of wealth would
l;>e completely nipped in· the bud resulting in an equal distribution
of wealth and services among the people of the country. Fourthly,
the private services run by. the operntors mainly inspired. by profit
making motive neither had the will nor the capacity to penetrate as
deep as possible into areas so far iaaccessible to the travelling public
and would confine their running of tb,e services only to serve important points.
\Vhen the State takes over the entire transport services,
it WQUld ·undoubtedly be its duty to see that the vehicles reach the
most distant part or corner oft.he State and serve as many travelling
public as possible so that nobody is· caused any inconvenience. These
are.some of the in\tial advantages of a total na.tion.alisation scheme,
which would be brought to the fore and provide an ideal service
for the members of the community at large.· Jt.may be that in this
process some financiers would suffer loss and some operators may
also be wiped out of the Jiusiness but this cannot be helped as the
scheme of our Constitution is that Individual rights or benefits must
yield to the larger benefits and good of the entire community. Some
of ihese points were very elaborately d~ali with in the case of State·
. of Karn at aka & Anr. etc. v. Ranganatha Reddy & Anr. · etc.(1) (for
facility, hereinafter referred to as 'Karnataka case').
The Act wa' for the purpose of carrying out and impleuienting ·
the objects specified in Art.39(b)&(c) and was,. therefore; immune
from ·challenge on the ground that the Act or its provisions were
violative of Art. 14, 19 or 31. This was accomplished by virtue· ~f
Art.31 C, introduced by the '25th Constitution Amendment, which.
gave ~ protective umbrella to such acts so as lo exclude them from
the operation of Arts.14; 19 or 31. Before dealing ·with the provisions of the Act we might give a resume of the importance and
significance of the directive principles contained in Art.39(b)&(c).
which may be extracted thus :
·
,,
"39. The · State shall, in particular,' direct its policy
towards securing-
•
(b) that .the ownership and control of the material
resources of the community are so distr'ibuted as best
to subserve the common good;
(1) , (1978] I SCR 641.
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TAMIL NADU v. L; ABU (Fazal Ali, J.)
(c) that the operation of the economic system does nof
result in the concentration of wealth and means. ·.of
production to the common detriment."
735
We would not like to tread on the difficult and delicate ground
as to whether or not the directive principle or the fundamental rights·
have primacy over one or the other. Nevertheless, it would appear
that right from 1959 uptooate this ·Court has stressed and emphasised the importance of directive principles in a numb~r of cases,
some of which may be listed below :
(a) Mohd. Hanif Quareshi & Ors.
v. State oJ Bihar
(1959 SCR 629 at 648)
(b) In Re the [(lira/a Educatiol} Bill, -1957 (1959 SCR'
995 at 1020, 1022)
,
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(c) I.C. (iolak Nath. & Ors. v. State of Punjab & Ors.
_D
(1967 (2)SCR 762 a! 789-790)
(d) - Chandra Bhavan Boarding & Lodging, Bangalore v.
The. State of Mysore & Ani'. · (1970 · (2) SCR 600 .
at 6J2) .
·
·
(e) His Holiness Kesavananda · Bharati Sripadagalaveru
v. State of Kera/a (1973 Supp. SCR 1)
In State of Kera/a & Anr. v. N.M. Thomas & Ors.(1) one of us
.(Fazal Ali, J) reviewed the earlier cases and has collected the ratio
of all the decisions on this point at one place1
In recent decisions on the. subject the view that has crystallised·
is that the courts should attempt to give a harmonious interpretation
to the directive principles contained in part IV of the Constitution
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even though not enforceable. Attempt should, therefore, be made
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to reconcile the two ·important provisions rather than to arrive at
conclusions which -bring into collision these two provisions-one
contained in part III and the other in part IV.· We must appreciate
tliat the reason why the -foundinK ·fathers of our Constitution' did
not advisedly make these· principles· enforceable was perhap~ due to
H
tlie "vital 'considerat.ion' of giving the Gover!'menf sufficient latitude.
. .
(I) [1976] I SCR 906 at 993 to 996 •.
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SUPREME COURT REroRTS
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•
· to implement these principles from time to time according to
capacity, situations· and cfrcunistances that may arise .
. . On a c~reful c.onsideration of the legal and historical aspects·
·
of the directive principles aii.d lhe fundamental rights, there' appears .
,. ·~,
: ·to he complete unanimity of judici~I opinion of t]1e various decisions
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of this Court on the point that although the directive prlncipies are.
\- .•
-nQt enforceable yet the court should make a· real. atiempt at harmo·
nising and reconciling the directive p(inciples and the fundamental
rights and any collision between the two ·should be.avoided as far as
possible.
·
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In ti)e instant case, we are really concerned with the. ~econd
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· limb of the Constituti<:m, · viz., the Importance and significance of
"\ •
. the directive principles contained in part IV. We now propose to
discuss the purport,
signific~uce, scope, ambit and rationale of
Art.31 C, which may be extr~cted thus ::
"31C. Saving of laws giving effept to certain directive principles
· Notwithstanding anything contained in article 13,
no law ·giving effect to ihe policy'• oi' the .State towards
securing all or.any of the principles la,id down in part IV
shall be (jeemed to be v'o-id on the ground that it is.
·inconsistent with, or takes away or . .,bridges any or' the
rights' conferred by article 14 or article 19; and no law
containing a ·declaration· that it is for giving effect to ·.
such policy shall be· called in question in any court on ·
the ground that it doe_s not give effect to such policy :
· Provided that where such law is made by the legislature. of a St~te, the. provisions of this article shall not
apply thereto unless such law, having been reserved for
the consideration of the President,. has. received his
.assent."
· A brief setiing and origin of this Article is contained in the.
Obj~cts and Reas(mg of the Con.stitution (25th Amendment) Act, ·
1971, .,;hich show that· the amendment was introduced with the
main. objective of getting over· the difficulties· placed in the wP.y of
$ivin(l effect to the c:ljrective prinCiples of Stat~ policy~
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TAMIL NADU V:'L, ABU (FtizalA/i, J.)
.737
It is manifest from- a bare re.ading of the newly added .Art.3\C
· that any law effectuating the policy of the State in· order to secure·
or.comply with the directive principles specified in clauses (b) and
(c) of Art)9 would not be deemed to·be void even if it is inconsisA '
.----1' . tent with or vi0Jates Arts. 14, 19 or ·31. It wasfnrthe« provided·
,
)
r·
that any law which contains a declaration that it was put on the
statute book for giving effect to such a policy, the same coyld not
be called. into qu·estion in any court on the ground that the new·
law does n_ot give effect to the. policy. In other words, the_ position.
was that once Art.31C was put' on the statute book, the question of.
any law being in . violation or infraction Of the fundamental rights
B.
I contained in part III (Arts.14, 19 and 31) ' ceased t~ be justiciable.
· Art.31C further provided ihat where a ·1aw is inade by the legislature
. · C
. of a State, the pr~visions of this Article would . apply only if the law
had received the assent of -the President of India. We might mention
·here that it is undisputed in the instant case that the impugned law
.
had received the assent · of the Presihent and is, therefore, fully ·
enforceable in -the State of Tamil . Na du if it fulfils the conditions
of Art. 3 t C, whfoh it doubtless does.
A . ~ubstantial part of . this
amendment appears to have ·been held to be valid by.a majority of
7:6 in His Holiness Kesavan_anda Bharti· Sripadaga/averu v. State of
Ketala(') (he~einafter referred to as 'Bharti's case'), but a portion. of
Art.3 IC was held to be invalid.
·
·
While-consdering the scope,' ambit and cons.titutional. validity
of Art.31C, the majority judgment 'in Bharati's case (supra) held
that the first part of Art. 31 C was valid but the second part, vi~ .• ·
'.'and no· iaw containing a declaratipn that if is for giving effect to
such policy shall be called in questio!' in any court on the ground
that it does not give effect.to. such"policy" was held to be Invalid .
.In other· wotds, so far as the . present aspect of the case before us
is concerned, the majority judgment clearly held that while Art.3 lC .
permitted Parliament to make .any law giving effect t~ the policy. of
· the State towards securing the principles contaitted}n els. (b) and
(c) of Art.39, such . law could not be declared· void even if such a
c!lurse of action violates or. abridge any of the . rights conferre9. by
Art.' 14, 19 or 31.
·
·
Anolher cr'ucial- stage in the history of Art.31C arose when
the famous 42nd amendment of the Constitution was passed by the
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Parliament. By virtue of this arriendinent a complete, irrevocable
and impregnable constitutional' protection was given to Jaws passed
. not only to implement die principles· specified in els. (b) & (c) of
Art.39 bnt also the principles contained in all the clauses of Art.39.
However, to put the record straight and to complete the history of
Art.31 C we may briefly indicate the distinction between the .25th
and 42nd amendments thus :
Whereas in the 25th amendment, the protective. umbrella given
:·by the Constitution was restricted to Jaws passed only to promote
objects in els. (b) & (c) of Art.39, by virtue of ihe 42nd amendment
tbe limitations which were confined to . els. (b) and (c) of Art.39
were taken away and the Article was given a much wider connotation by legislating that Acts or laws given effect to all or ·any of
the principles laid down in part IV of the .Constitution would be
protected by the umbrella contained in Art.31C and would be
immune from challenge on the ground· that they were violative· of
Art.14 or 19.
Even so, in Minerya Mills Ltd. & Ors. v. UniOn of India &
Ors.,(') one of us (Chandrachud, CJ) while referring to the ratio of
Bizarati's case on the unamended Art.31C observed as foJlows:
~'Indeed, if there 'is one topiC on which all the
· 13 Jud~es.in Kesavananda Bharati were agreed, it is thiS:
that the only question open to judicial review under the
unamended' Art.3/C was whether there is 'a direct and
reasonable nexus
betwee~ the . impugned laiv and the
pro.visions of Art.39(b) and (c). Reasonableness is regarding the nexus and not regarding the law."
•
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(Emphasis ours) t
•
Thus, it would appear from a combined· reading of Bharati' s
and Minerva Mills cases as also of the subsequent decisions·. that the
undisputed position is that Art.3 lC, as. inti:oduced by the 25th
amendment, is constitutioryally valid in all respects .and has survive\\
the stormy decision of Bharati's case.
•
(1) {198.lJ I SCR ;!06 at 261,
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'i'AMiL NAOU v. L. ABU (Fazal Aii, J.)
739
Similar observations were inade in Woman Rao & Ors. etc.
v. Union of India & Ors.,(1) where one of us (Chandrachud, CJ)
observed thus :
·
"Article 31 is now out of harm's way.
In fact, far
from damaging ·the basic structure of the Constitution,
laws passed truelY and bona fide for giving 'effect ti) dire• • ·
ctive principles. contained in clauses (b) and (c) of Article
39 will fortify that struciure."
·
•
(E!i:nphasis supplied)
In the latest Constitution Bench ·decision of this Court in
Sanjeev Coke Manufacturing Co. v. M/s. Bharat Cokinz Coal, Ltd.
& Anr.,(') it has 'been emphasised that the constitutional. validity
Of-Art.31C is now beyond challenge and in this 'connection one of
us (Redd;y, J.)
speaking for the C,ourt made the folio.wing
· obser~ations .:
"In the second place, the question of the.constitu·
tional validity of Art.31C appears to us to be concll!ded
by the ·decision of' the Court in Kesavananda Bharati
case."
In view of t~e aforesaid decisions, it is not necessary for ·US
to dilate further on the question of the constitutional validity of
Art.31C.
Another important facet of Art.31C which has been empha·
sised by this Court is that there should be a close nexus· between
the statute passed by the legislatur~ an'd the twin objects .mentioned
in clauses (b) and (c) of Art.39. In approaching this problem and
considering the question· of nexus a narrow approach ought ·not to
be made because it is well.settled that the 'courts should interpret
a constitutional provision in order to suppress tile mischief and
advance the object' of the Act.
The · doctrine of nexus cannot be .
extended to such a:n extreme limit that the very purpose of Art.39
(b)&tc) is
d~feated. By requiring that there · should be qexus
- . between the law· and Art.39(b)&(c) w):tat is ment is that there must
be a reasonable connection between the Act passed arid the objects
(!) [1981] 2 SCR 1 at 41.
c2> [1983] 1 sec 141/160.
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. mentioned ill Art.39(b)&(c)before'the said· Artfole can apply. If the
· neimsis present'in the law then. the protection of Att.31C becomes
complete and irrevocable. .
F.utJ1ermore, the fact that there is. a declaration in the Act ·
regarding the purpose mentione in Art.39(b)&(~) may generally be -·· \
·evicjence of the μexus between the law and the objects of Art.39(b)
'
&(c). : In this connecti9n, Iyer,J., in the Karnataka case observed.·
'• thus·:
'·
"The requisite declaration co~temp1ated. in Article
31 C is thus made iri'the preamble as well as in section 2
of the Act...... . •..
T.he. nexus between . the taking of
··property and the public purpose springs necessarily into .
. existence if the former is capable of answering the latter."
· There iS no particular magical tinsel or .ritualistic formula in
Jhe term 'nexus' . which 'may be closed in .a strait·jac~et. Even a
nationalisation scheme meant for. the purpose of distribution or
· preventing co.ncentration ·of wealth, as in this case, would be suffi.,.
cient nexus to· attract the. operation of Art.39(b)&(c). On this
aspect oftlie matter,· lyer,J. in the.Karnataka case further observed
thus :
·
t
·
"The next . question is whether natronalisation ·can
have nexus with distribution .......... To.'di.stribute'; even
in its simple dictionary meaning, is to, ·allot, to divid.e
into classes or into groups' . and 'distrilmtion' embraces
··'arrangement,
classification,
placeme11t,
disposition,
apportionment, the way in which items, a quantity, or
· the like, is divided or apportion~d; the ;ystem· of dispers-·
ing. goods· throughout a community.''.
. In a 1aier decision in.Sanjay. Coke Manufacturing Co.'s case
(supra), adverting to tills very point, one of u·s (Reddy; J.) made the . f· .
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following observations :
H
· "We ate firmly of the opinion that where Article· 31C
. comes i.n Ar.ticle 14 goes out.·
There is no· scope for
_bringing in Article 14 by a side wind as it were, that 'is,
by equating the rule of equality before the law. of Article
· . • ·
14 with the broad egalitarianism· of Article 39 (b) or by
treating the principle of Article 14 as included in the
principle.of Article 39 (b)."
·
·'
,
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741
We might. no.w mention in passing · some important facets
of Art. 31C which we shall discuss in detail when we deal with the
var~ous provisions of the Act in the light of the reasons given· by. the·
High Court and· ihe contentions adv.ariced before us.
At this stage,
suffi~e it to say that on a proper and true construciion of Art. 31C· in
the light ,of the decisions of this Court, the question of compensation
becomes totally irrelevant. If, once the conditions mentioned in Art.
3 lC are fulfilled by the law,. no question of compensation arises
because. the said Article expressly excludes not only Arts. 14 and :19
but also 31 which, l:iy virtue of the 25th amei\dment, had· replaced
the word 'amount' for·tbe word 'compensation( ·in Art. 31 {2). As
already extracted, Chandrach11d, CJ. in· Waman .Ra<>'s case has
observed that once Art. llC is;attracted, Arts. 14, 19 and 31 are out.·
of harm's.way.
'
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The question whether in. a case where Art. 31C applies,
compensation is necessary to be given, has the following facets ;..,-
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(a) •if Art. 31C is taken, as it must be, tci exclude Art.
3 i "2), the question of compensation bec<imes · irrele- .
(b)
vant al\d otiose, .
·
nationalis_ation. of transport services by the State is .
unobjectionable and· unexceptionable ·and ·c~n be
accomplished iri three' different methods;.....
~
(i) nationalisation of the services and not · the units
_thereof,
(ii) nationalisation of the services alongwith.