# P. V. MUDALIAR v. DY. COLLECTOR

- **Citation:** [1965] 1 S.C.R. 614
- **Court:** Supreme Court of India
- **Decided:** 1964-10-05
- **Case number:** Writ Petitions Nos. 144, 227 and 228 of 1963
- **Bench:** K. SuBBA RAo, K. N. Wanchoo, M. HmAYATULLAH, B RAGllUBAR DAYAL, S. M. Sikri
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/p-v-mudaliar-v-dy-collector-3365
- **Pages:** 22

## Headnote

Constitution of India, A.rt. 31-A.-Wherf.er after amtndment applied only
ro ucquisition of "estates" for agrarian reform.-Article 31 (2)-Whether
after amendment compensation required to be "Just tquiva/ent"-WhctlJC a
lmv not providing for "} ust equivalent" a111ounted to fraud on powerWhether issue justiciable-Land Acquij·i1io1J (Madras An1end111e111) Act,
1961-Whether vio/alil'c of Art. 31 (2) or of Art. 14.
The petitioners' lands were notified for acquisition for the purpo:ie of
housing schemes and proceedings in respect of compensation payab1e !o
them in accordance with the provisions of the Land Acquisition ( Madnu
Amendment) Act, 1961. were pending.· The constitutional validity of
1his Act v.
1as challenged by them on the grounJ that
it infrin£C<,l
Arts.
14, 19 and 31 (2) oJ the Con>1i1u1ion.
It was contended on behalf of the respondents that the Ameoding Act
was protected by Art. 31-A and therefore its validity could not be queslioned
on the ground that it was hit by Arts. 14. 19 and 31; that after the
Constitution (Fourth Amendment) Act, 1955, tt.e expression "compciuation" carried a meaning different from that given to it
in
M"s.
B~la
Banerjee's ca'ic; and th:it after the said amendment the adequacy of compeno;ation for land :1cquired ceased to be ju-;ticiable.
HELD: (i) Article 31-A applied only to a law made for acquisition
hy the State of any "estate" or any rights therein or for extinguishment or ·
modification of such righlS, if such acquisition, etc., was connected with
agrarian reform. This continued to be the position even after the amendment of Art. 31-A by the Conslitution (Se-venteenth Amendment) Act 1964.
Under Art. 31 (2) and (2A) of the Constitution, the State was prohibited
from making a law for acquiring land unless it was for a public purpose
and unless it fixed the amount of compensation or specified principles for
determining the amount of compen."'1tion.
But Art. 3 !A lifled the bal> to
enable the State to implement pressing agrarian reforms and this objecl l!;
implicit in Art. 3 lA. This was a restricted excep1ion, as otherwise. the
State would be in a position to acquire the land of citizens without reference to any agrarian reform in derogation of their fundamental rights and
without payment of cpmpensation and thus deprive Art. 31 (2) practically
of its content. (621 H; 622 A-DJ.
The object of slum clearance for which the land was stated to have
~
acquired under the Amending Act could not be related to ~grarian
reform in its limited or wider sense. '[622 ~F].
K. K. Koch1mi v. Stare of Madras, [1960] 3 S.C.R. 887 and Ranjit
Singh v. Stat• of Punjab, [ 1965) 1 S.C.R. 82, considered and followed.
c
D
E
F
G
(ii) It was well-sellled before Art. 31(2) was amended in 1955 that a
pcnon whose land was acquired was entitled to compensation i;t., a "just
H
equivalent" of the land of which he w .. deprived. The amended Art. 31 (2)
.also contains the expressions "compensauon" and "principles .. and ther~
fore the legislature must be taken to have accepted the meaning givea to
A
B
c
D
E
F
G
H
P. V. MUDALIAR. V. DY. COLLECTOR
615
these expressions in Mrs. Bela Banerjee's case.
It follows therefore that
by vitrue of Art. 31(2), a legislature in making a Jaw of acquistion or
requisition must provide for a "just equivalent" of what the owner has
been deprived of or specify the principles for the purpose of ascertaining
such "just equivalent". [625 E-F, H; 626 A, D-F] .
. State of West Bengal v. Mrs. Bela Banerjee, [1954] S.C.R. 558 and
State of Madras v. Namasivaya Mudaliar, [1964] 6 S.C.R. 936, followed.
The effect of the amended Art. 31 (2) is that a question which pertains
to the adequacy of compensation is not justiciable. For determining compensation in respect of any property acquired, there may be many possible
modes or principles of valuation; where the adoption of one principle may
give a higher and of another, a lesser value, the Court cannot say thal
the law should have adopted one principle and not t

## Text

_Characters 0–39,819 of 56,642. This is a partial read: ask again with offset=39819 for what follows._

614
P. VAJRA VELU MUDALIAR
A
....
SPECIAL DEPUTY COLLECTOR, MADRAS & ANR.
October 5, 1964
(K. SuBBA RAo, K. N. WANCHOO, M. HmAYATULLAH,
B
RAGllUBAR DAYAL AND S. M. SIKRI JJ.)
Constitution of India, A.rt. 31-A.-Wherf.er after amtndment applied only
ro ucquisition of "estates" for agrarian reform.-Article 31 (2)-Whether
after amendment compensation required to be "Just tquiva/ent"-WhctlJC a
lmv not providing for "} ust equivalent" a111ounted to fraud on powerWhether issue justiciable-Land Acquij·i1io1J (Madras An1end111e111) Act,
1961-Whether vio/alil'c of Art. 31 (2) or of Art. 14.
The petitioners' lands were notified for acquisition for the purpo:ie of
housing schemes and proceedings in respect of compensation payab1e !o
them in accordance with the provisions of the Land Acquisition ( Madnu
Amendment) Act, 1961. were pending.· The constitutional validity of
1his Act v.
1as challenged by them on the grounJ that
it infrin£C<,l
Arts.
14, 19 and 31 (2) oJ the Con>1i1u1ion.
It was contended on behalf of the respondents that the Ameoding Act
was protected by Art. 31-A and therefore its validity could not be queslioned
on the ground that it was hit by Arts. 14. 19 and 31; that after the
Constitution (Fourth Amendment) Act, 1955, tt.e expression "compciuation" carried a meaning different from that given to it
in
M"s.
B~la
Banerjee's ca'ic; and th:it after the said amendment the adequacy of compeno;ation for land :1cquired ceased to be ju-;ticiable.
HELD: (i) Article 31-A applied only to a law made for acquisition
hy the State of any "estate" or any rights therein or for extinguishment or ·
modification of such righlS, if such acquisition, etc., was connected with
agrarian reform. This continued to be the position even after the amendment of Art. 31-A by the Conslitution (Se-venteenth Amendment) Act 1964.
Under Art. 31 (2) and (2A) of the Constitution, the State was prohibited
from making a law for acquiring land unless it was for a public purpose
and unless it fixed the amount of compensation or specified principles for
determining the amount of compen."'1tion.
But Art. 3 !A lifled the bal> to
enable the State to implement pressing agrarian reforms and this objecl l!;
implicit in Art. 3 lA. This was a restricted excep1ion, as otherwise. the
State would be in a position to acquire the land of citizens without reference to any agrarian reform in derogation of their fundamental rights and
without payment of cpmpensation and thus deprive Art. 31 (2) practically
of its content. (621 H; 622 A-DJ.
The object of slum clearance for which the land was stated to have
~
acquired under the Amending Act could not be related to ~grarian
reform in its limited or wider sense. '[622 ~F].
K. K. Koch1mi v. Stare of Madras, [1960] 3 S.C.R. 887 and Ranjit
Singh v. Stat• of Punjab, [ 1965) 1 S.C.R. 82, considered and followed.
c
D
E
F
G
(ii) It was well-sellled before Art. 31(2) was amended in 1955 that a
pcnon whose land was acquired was entitled to compensation i;t., a "just
H
equivalent" of the land of which he w .. deprived. The amended Art. 31 (2)
.also contains the expressions "compensauon" and "principles .. and ther~
fore the legislature must be taken to have accepted the meaning givea to
A
B
c
D
E
F
G
H
P. V. MUDALIAR. V. DY. COLLECTOR
615
these expressions in Mrs. Bela Banerjee's case.
It follows therefore that
by vitrue of Art. 31(2), a legislature in making a Jaw of acquistion or
requisition must provide for a "just equivalent" of what the owner has
been deprived of or specify the principles for the purpose of ascertaining
such "just equivalent". [625 E-F, H; 626 A, D-F] .
. State of West Bengal v. Mrs. Bela Banerjee, [1954] S.C.R. 558 and
State of Madras v. Namasivaya Mudaliar, [1964] 6 S.C.R. 936, followed.
The effect of the amended Art. 31 (2) is that a question which pertains
to the adequacy of compensation is not justiciable. For determining compensation in respect of any property acquired, there may be many possible
modes or principles of valuation; where the adoption of one principle may
give a higher and of another, a lesser value, the Court cannot say thal
the law should have adopted one principle and not the other, for this
would relate 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 Art. 31 ( 2) . If a
law says that though a hoUse is acquired, it shall be valued as land; or
that though a house site is acquired, it shall be valued as agricultural land,
or that though it was acquired in 1950, its value in 1930 should be given,
or thongh 100 acres are required, compensation should be given only of
SO acres, the principles do not pertain to the domain of adequacy and in
such cases the validity of the principles could be scrutinised.
Therefore
the Court would have jurisdiction to deal with the matter if the legislature,
though ex-fade purporting to provide for compensation or indicating the
princ:iples for its ascertainment, in fact and substance takes away property
without providing compensation, or proviaes for illusory compensation, or
for its ascertainment on arbitrary principles, for in that case the legislature
would be enacting a law in fraud of its p.ower under Art. 31(2). [6:!.7 B-H;
628 A-B; 629 B-E].
Gajpati Narayan Deo v. State of Orissa, [1954] S.C.R. I and Gullapalli
Nageswara Rao v. A.P. State Road Transport Corporation, [1959] Supp. 1
S.C;R. 319, referred to.
the impugned provisions of the Amending Act, which provide for
compensation on the basis of the value of the land at the date of publication of the Notification under s. 4( 1) ··of the Land Acquisititon Act, 1894,
or the amount equru to the average market value of the 1and during
5 years immediately preceding such date, whichever is less, for payment
of a solatium of only 5 per cent instead of 15 per cent under the Principal
Act and for the exclusion of any compensation by reason of the suitability
of the land for any use other than the use to which it was put, only
pertafo t.o the method of ascertaining the compensation and- do not constitute a fraud of power. The Amendng Act did not therefore offend Art.
31(2) of the Constitution,
[639 E-H; 631 A-DJ.
Sri Raja Vyricherla Narayana Gajapatraju Bahadui' Guru v. The Rcunue·
Divisional Officer, Vizianagram, I.L.R- [1939] Mad. 532, referred to.
(iii) A comparative stud:y of the principal Act and the Amending Act
showed that if land was acquired for a housmg scheme usder the Amending
Act,
the claimant would get a lesser value than what he would get for
the same or similar land acquked for some public ·purpose under the
Principal Act.
The discrimination between persons whose lands were
acquired for housing schemes and thO.e whose lands were acquired for other
public purposes was not sustained on the principle of reasonable classification founded on intelligible differentia which had a rational relation to
the. object sought to be achieved.
Although it was contended that the
Amending Act was passed to meet an urgent demand.so as to find a way
out to clear up slums, the Act as finally evolved was not confined to any·
L!Sup./6~14
616
SUPREME
COURT
REPORTS
(1965) I S.C.R.
such problem and land could be acquired under the Amending Act for
A
bowing schemes with other objectives. The Amending Act therefore clearly
infringed Art. 14 of the Constitution and was void. (633 B-E; 635 A-BJ.
ORIGINAL JURISDICTION : Writ Petitions Nos. 144, 227 and
228 of 1963.
Petition under Art. 32 of the Constitution of India for tke
enforcement of fundamental rights.
B
A. V. Vlswanatha Sastri, C. S. Prakasa· Rao and R. Gopalakrishnan, for the petitioner (in W. P. No. 144/63).
A. V. Viswanatha Sastri, G. A. Pias, T. N. Sambasivan anll
N. S. Mani, for the petitioners (in W. Ps. Nos. 227 and 228 of
1963).
c
A. Ranganadham Chetty, R. Viswanathan and A. V. Rangam,
for the respondents (in W. P. No. 144of1963).
R. Ranganadham Chetty and A. V. Rangam, for the re$pondents (in W. P. Nos. 227 and 228 of 1963).
S. S. Shukla, for the interveners (W. P. No. 144 of 1963).
D
C. K. Daphtary, Attorney-Genera/, N. S. Bindra, R. H. Dhebar
and B. R. G. K. A.char, for the Attorney-General (in W. P. No.
144 of 1963).
B. R. L. Iyengar, R. H. Dhebar and B. R. G. K. Achar, for the
Advocate-General, Gujarat (in W. P. No. 144/63).
E
C. K. Daphtary, Attorney-General, R. H. Dhebar and
B. R. G. K. Achar, for the Advocate-General, Maharashtra, (in
W. P. No. 144/63).
R. N. Sachthey and B. R. G. K. Achar, for the AdvocateGeneral, Rajasthan.(in W. P. No. 144/63).
F
I. N. Shroff, for the Advocate-General, Madhya Pradesh (in
W. P. No. 144/64).
The Judgment of the Court was delivered by
Subba Rao J.
These three petitions filed under Art. 32 of
the Constitution raise the question of the constitutional validity of G
the Land Acquisition (Madras Amendment) Act, 1961 (Madras
Act 23 of 1961), hereina(ter called the Amending Act.
We
shall briefly state the facts relevant to the question raised. The
petitioner in Writ Petition No. 144 of 1963, P. Vajravelu Mudaliar,
is the owner of lands bearing sorvey Nos. 4-2, 40-7 and 43-1 of
Peruakudal Village and of extents 1.82, 1.39 and 3.72 acres
H
respectively.
By a notification dated November 7, 1960, and
published in the Fort St. George Gai.ette, dated November 16,
P. v. ,MUDALIAR v. DY. COLLllCTOR (Subba Rao I.)
617
A 1960, the Government issued a. notification under s. 4 ( 1) of the
Land Acquisition Act (Act 1 of 1894), hereinafter called the
Principal Act, notifying that, among other lands, the said lands of
the petitioner were needed for a public purp0se, to· wit, for the
development of the area as "neighbourhood" in the Madras City
in accordance with the Land Acquisition and Development Scheme
B of the Government. On November 23, 1960, the Special Deputy
Collector for Land Acquisition issued a notification under s. 4 ( 1),
read with s. 17 ( 4), of the Principal Act, arid under the said
notification the first respondent was authorized to take possession
of the petitioner's lands.
The Madras Legislature subsequently
C enacted the Amending Act providing for the acquisition of lands
for housing schemes and laying down principles for fixing compensation different from those prescribed in the Principal Act. The
petitioner questions the validity of the Amending Act, inter alia,
on the ground that -it infringes Arts. 14, 19 and 31(2) of the
Constitution.
D
The petitioner in Writ Petitions Nos. 227 and 228 of 1963,
Most Rev. Dr. L. Mathias, Archbishop of Madras, owns lands
bearing survey Nos. 17-2-B-1 and 127/2B of extent 50.53 acres
and 0.62 acre respectively in Urur, near Madras City. By notification dated November 13, 1961, and published in the Fort St.
E George Gazette, the Government of Madras issued a notification
under s. 4 (1) of the Principal Act notifying, among other lands,
that the said lands of the petitioner were needed for a public
purpose, to wit, for the development of the area as the "neighbourhood" in Madras City in accordance with the Land Acquisition
and Development Schemes of the Government. It was also stated
F
in the notification that in view of the urgency, under s. 17 ( 4) of
the Principal Act, the applicl!tion of the provisions of s. 5 (a) of the
said Act was dispensed with, and that compensation in respect
of the said acquisition would be paid in accordance with the provisions of the Amending Act.
G
The said petitioner (W. P. No. 228 of 1963) also owns lands
bearing survey Nos. 153/1 and 154/2 at Thiruvanmiyar Village,
Chingleput District, of the extent 21.56 and 10.50 acres respectively totalling about 32 acres. The said lands were also notified
for acquisition and the petitioner was told that he would be paid
-::ompensation under the Amending Act.
H
The said petitioner in these two petitions questions the constitutional validity of the said Amending Act on the ground, inter
alia, that it offends Arts. 14, 19 and 31 (2) of the Constitution.
618
SUPREME
COURT
REPORTS
( 1965) I s .. C.R.
To the three petitions the Special Deputy Collector for Land
A
Acquisition, West Madras, and the Government of Madras are
made parties.
In their counters the respondents pleaded, among
others, that the said Act was saved under Art. 31-A of the Constitution and, therefore, its validity could not be questioned on
the ground that it infringes either Art. 14, Art. 19 or Art. 31 (2)
of the Constitution; and that even if Art. 31-A was not attracted,
B
the provisions of the Amending Act would not infringe any of the
said three provisions.
In these petitions some interveners are
represented by their counsel and this Court had also given notices
IQ the Advocates-General of various States. We have beard the
arguments advanced on behalf of the petitioners, interveners, and C
the State of Madras and the counsel on behalf of the AdvocatesGeneral of some of the States who supported the State of Madras.
Mr. A. V. Viswanatha Sastri, learned counsel for the petitioners, raised before us the following points : (i} As the Madras
State Housing Board Act, 1961, and the Madras Town-Planning D
Act, 1920, are special statutes providing for the execution of
housing and improvement schemes and town-planning schemes
respectively, property for the said schemes can be acquired ooly
after following the procedure prescribed thereunder and the
Government bas no power to acquire land for the said purpose ·
under the Amending Act in derogation of the provisions of the E
former Act.
(ii) The acquisition, though it purports to be for a
housing scheme, is really intended for selling the lands acquired
and raising revenue for the State and it is, therefore, a colourable
exercise of the State's power. (iii) The Amending Act offends
Arts. 14 and 19 of the Constitution. And (iv) the Amending Act
is also bad, because it does not provide for payment of compenF
sation within the meaning of Art. 31 (2) of the Constitution.
Mr. A Ranganadbam Chetty, learned counsel for the State
of Madras contends that, (i) the Government in its discretion
has the power to acquire land for housing purposes under any
one of the three Acts, namely, the Housing Board Act, the TownG
Planning Act and Amending Act; (ii) by reason of the Constitution (Seventeenth Amendment) Act, 1964, which is retrospective in operation, the petitioners are precluded from questioning
the validity of the Amending Act on the ground that it infringes
Art. 14, Art. 19 or Art. 31 of the Constitution; (iii) the Amending Act does not infringe either Art. 14 or Art. 19 of the Constitution; and (iv) after the Constitution (Fourth Amendment)
Act 1955, the expression "compensation". carries a meaning
H
P. v. MUDALIAR v. DY. COLLECTOR (Subba Rao J.)
619
A different from that given to it in Mrs. Bela Banerjee's case(1),
and thereafter the adequacy of the amount given for acquisition
of land ceased to be justiciable.
Mr. Palkhivala, appearing for some of the interveners elaborated the contention of Mr: A. V.. Viswanatha Sastri based upon
B the meaning of the expression "compensation" in Art. 31(2) of
the Constitution. We shall consider his argument in the relevant
context in the course of our judgment.
The first question need not detain us, for though Mr. Viswanatha Sastri raised the point that the Government can only
acquire the lands for housing schemes in conformity with the
C provisions cif either the Madras Town·Ptanning Act, 1920, or
the Madras State Housing Board Act, 1961, but not under the
provisions of the Amending Act, he did not pursue the matter
in view of the following two decisions of this Court : Patna
Improvement Trust v. Smt. Lakshmi Devi(~), and Nandeshwar
Prasad v. U. P- Government('). Therefore, nothing more need
D be said about this.
Mr. A. Ranganadham Chetty relied upon the Constitution
(Seventeenth Amendment) Act, 1964, and contended that Art.
31 cA, as amended, precluded the petitioners from ·questioning the
validity of the Amending Act on the ground that it infringed
E Art. 14, Art. 19 or Art. 31 of the Constitution. By the said
amendment, in the definition of the expression "estate" sub-cl. (a)
of cl. (2) was substituted by a new sub-clause defining the said
expression.
The material part of the amended sub-cl. (a) of
cl. (2) reads~
F
"the expression "estate" shall, in relation to any
local area, have the same meaning as that expression
or its local equivalent has in the existing law relating
to Land tenures in force in. that area and shall also
include-
(ii) any land held under ryotwari settlement."
G From the material on record we cannot definitely hold whether
the lands in question are held under ryotwari settlement. But
~nming for the purpose of these petitions that the said lands
are held under ryotwari settlement, the question arises whether
the impugned \aw provides for acquisition by the State of any
"estate" or any rights therein or the extinguishment or modificaH
tion of any such rights. The scope of this provision fell to be
(I) (1954] S.C.R. 558.
(2) [1963] Supp. 2 S.C.R. 81.2.
(3) A.l.R. 1964 S,C. 1217.
620
SUPREME
COURT
REPORTS
[ 1965] I S.C.R.
considered by this Court in K. K. Kochuni v. The State of A
Madras(
1). There it was held that th~>Ugh the impugned Act
dealt with an estate, it was not saved by Art.
31-A of the
Cons~tution, as the Act had nothing to do with agrarian reform,
but sunply conferred on junior members of the tarawad joint
rights which they had not got before in the sthanam properties.
Mr. Ranganadham Chetty criticized this decision on the ground
B
that the said view was based only on a part of the statement of
"objects and reasons" and that the omitted part thereof supported
a wider construction of the provisions so as to include acquisition
of a land for slum clearance or other such social purposes. I The
omitted part of the statement reads thus :
" (ii) The proper planning of urban and rural
areas require the beneficial utilisation of vacant and
waste lands and the clearance of slum areas."
c
It is true that in the said decision the statement of objects and
reasons relevant to the question raised therein was extracted; but 0
it was made clear that it was referred to only for the limited purpose of ascertaining the conditions prevalent at the time the Bill
was introduced in
Parliament and the purpose for which the
amendment was made.
It is commonplace that a court cannot
construe a provision of the Constitution on the basis of the statement of ''objects and reasons", and this Court did not depart from
E
the said salutary rule of construction. The real basis of that decision is found at p. 900 and it is :
"The definition of "estate" refers to an existing law
relating to land tenures in a particular area indicating
thereby that the Article is concerned only with the land
tenure described as an "estate". The inclusive definition of tho rights of such an estate also enumerates the
rights vested in the proprietor and
hi~ subordinate
tenure-holders. The last clause in that definition, viz.,
that those rights also include the rights or privileges in·
respect of land revenue, emphasizes the fact that the
Article is concerned with land-tenure. It is, therefore,
manifest that the said Article deals with a tenure called
"estate" and provides for its acquisition or the extinguishment or modification of the rights of the landholder or the various subordinate tenure-holders in
respect of their rights in relation to the estate. The contrary view would enable the State to divest a proprietor
(I) [t960J 3 S.C.R. 887, 900.
F
G
H
P. v. MUDALIAR v. DY. COLLECTOR (Subba Rao/.)
621
A·
of his estate and vest it in another without reference
to any agrarian reform."
This judgment, therefore, in effect, held that Art 31-A (i) (a)
should be confined to an agrarian reform and not for acquiring
property for the purpose of giVi:ng it to another. This Court in
Ji
Ranjit Singh v. The State of Punjab(') considered the scope of
the said decision.
The question that arose in that cue was
whether the East Punjab Holdings (Conservation and Prevention
of Fragmentation) Act, 1948 (Act 50 of 1948) , as amended
by the East Punjab Holdings (Consolidation and Prevention of
Fragmentation) (2nd Amendment and Validation) Act,. 1960
C
(Act 27 of 1960), was protected by Art. 31-A against an attack
on the ground that the said Act. infringed the fundamental rights
under Arts. 13, 14, 19 and 31 of the Constitution; This Court
considered the earlier. deeisions of this Court, including the decision In K. K. Kochuni v. State of Madras(').
Adverting to
Kochuni' s case, Hidayatullah J., speaking for the Court,
D observed:
"But that was a special case and we cannot apply
it to cases where the general scheme of legislation is
definitely agrarian: reform and under its . provisions
something
ancillary thereto in the interests of rural
E
economy has to be undertaken to give full effect to the
reforms."
Apropos the Act before it, this Court observed :
"The scheme of rural development today envisages
not only equitable distribution of land so that there is
F
no undue imbalance in society resulting in a landless
class on the one hand and a concentration of land in the
hands of a few, on the other, but envisages also the
raising of economic standards and bettering rural
health and social conditions."
That judgment, therefore, accepts the view that Art. 31-A was
G enacted only to ·implement agrarian reform, but has given a
comprehensive meaning to the expression "agrarian reform" so ·
as to include provisions made for the development of rural
economy.
Under Art. 31 (2) and (2A) of the Constitution a State is
H
prohibited from making a law for acquiring land unless it is for
a public purpose and unless it fixes the amount of compensation
II) [1965] I S.C.R. 82.
(2) [1960J 3 s.c.R. 887.
~22
SUPREME
COURT
REPORTS
( 1965] I S.C.R.
or specifics the principles for determining the amount of comA
pensation.
But Art. 31-A lifts the ban to enable the State to
implement the pressing agrarian reforms. The said object of the
Constitution is implicit in Art. 31-A. If the argument of the
respondents be accepted, it would enable the State to acquire
the lands of citizens without reference to any agrarian reform in
derogation of their fundamental rights without payment of comB
pcnsation and thus deprive Art. 31 (2) practically of its content.
If the intention of Parliament was to make Art. 31 (:) a deadIetter, it would have clearly expressed its intention. Tiiis Court
cannot by interpretation enlarge the scope of Art. 31-A.
On the
other hand, the Article, as pointed out by us earlier, by necessary
C
implication, is confined only to agrarian refonns.
therefore,
we held that Art. 31-A would apply only to a law made for
acquisition by the State of any "estate" or any rights therein or
for extinguishment or modification of such rights if such acquisition, extinguishment or modification is connected with agrarian
refonn.
D
Mr. Ranganadham Chetty contended that
acquisition for
housing under the Amending Act is for slum clearance and for
relieving congestion of housing accommodation and that acquisition for such a purpose would be in connection with agrarian
reform in the enlarged sellJie of that expression accepted by this E
Court. Even· accepting the argument of the learned counsel that
the Act was conceived and enacted only for the purpose of slum
clearance which became an urgent problem for
the city of
Madras, we cannot hold that such a slum clearance relates to an
agrarian reform in its limited or wider sense.
That apart, the
Amending Act in its comprehensive phraseology takes in acquisiF
tion for any housing scheme, whether for slum clearance or for
creating modern· suburbs or for any other public purpose. The
provisions of the Amending Act are not confined to any agrarian
refonn and, therefore, do not attract Art. 31-A of the Constitution.
If Art. 31-A of the Constitution is out of the way, Mr. ViswaG
natha Sastri, learned counsel for the petitioners contended that the
Act is bad as it docs not provide for compensation i.e .. a "just
equivalent" for the land acquired under the Amending Act and,
therefore, it offends Art. 31 (2) of the Constitution. This aspect
is elaborated by Mr. Palkhivala, who appeared for one of the
interveners in the petitions. He narrated the following four
H
situations; {i) when the law provides for adequate ·compensation but there is difference of opinion as to the adequacy of it
•
P. v. MUDALIAR v. DY. COLLECTOR (Subba Rao!.)
6~3
A in a given case; (ii) where the Jaw provides for partially inadequate consideration based on valid principles related
to
the
property at the time of acquisition; (iii) where it fixes arbitrarily
the compensation based on principles unrelated to the property or
to the time of acquisition or to both;_ (iv) where the compensation fixed is illusory; and contended that in the first situation
B compensation is paid, that in the second it is a moot question
whether the question of adequacy of compensation is justiciable
or not, and that in the third and fourth . situations, the said
question
is
clearly justiciable. Mr.
Rahganadham Chetty,
appearing for the State, on the other hand,
argued that the
C question of adequacy of consideration, however it arose, was not
justiciable in a court of Jaw. To appreciate the contentions it is
necessary to consider the following questions: (i) what was the
scope of the relevant part of Art. 31 (2) of the Constitution before
the Constitution (Fourth Amendment) Act, 1955? (ii) why
was that amendment brought about ? (iii) what was the change
D the amendment introduced ? and (iv) what was the effect of the
amendment?
-Article 31(2) before the said amendment read as follows:
"No property . . . . . . .... shall be taken possession
of or acquired for public purposes. . . . . . . . . . unless
E
the law provides for compensation for
the property
taken possession of or either fixes the amount of compensation or specifies the principles on which and the
manner in which the compensation is to be determined
and given."
In Mrs. Bela Banerjee's(') case this Court was called upon to conF sider the question whether compensation provided for under the
West Bengal Land Development and Planning Act. 1948, was
in compliance with the provisions of Art. 31 (2) of the Comtitution.
Under the said Act lands could be acquired many years
after it came into force. but it fixed the market value that prevailed on December 31, 1946, as the ceiling on ·compensation
G without reference 'to the value of the land at the time of acquisition.
In that context this Court considered the provisions of
Art. 31 (2) of the Constitution and came
to
the
following
conclusion, at p. 563-564 :
"While it is true that the legislature is given the
H
discretionary power of laying
down
the
principles
which should govern the determination of the amount
(I) [1954] S.C.R. 558_
624
SUPREME
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[196)] I S.C.R.
to be given to the owner for the property appropriated,
such prmc1ples 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 detcnnination of the amount payable.
Whether such principles take into account all the clements which make up the true value of the property
appropriated and exclude matters which
arc
to be
neglected. is a justiciable issue to be adjudicated by
the court."
By applying the said principles this Court held that the proYisions of the said Act fixing a ceiling on compensation without
reference to the value of the land was arbitrary and, therefore,
was not in compliance with, in law and spirit, the requirement
of Art. 31 (2) of the Constitution.
This decision lays down
three points, namely, (i) the compensation under Art. 31 (2)
shall be a "just equivalent" of what the owner has been deprived
of: (ii) the principles which the Le,:islature can prescribe are
only principles for ascertaining a "just equivalent" of what the
owner has been deprived of; and (iii) if the col1lpcnsation fixed
was not a "just equivalent" of what :he nwncr ha·; heen deprived
of or if the principles did not take into account all relevant
clements or took imo account irrelevant elements for arriving
at the just C{)Uivalcnt, the question in regard thereto is a justici:
able issue.
This Court.
therefore,
authoritatively
interpreted
Ar!. 31 (2) of the Constitution and laid down its scope.
This
view was reiterated bv this Court in Stme of Madras v. Namasivaya Mu(folior('). There the question was whether ss. 2 and 3
of the Madras Lignite ( AcQui~ition of Land) Act XI of 1953
which sought to amend the Land Acquisition Act 1 or 1894
were invalid because they infringed the fundamental right~ under
Art. 31 of the Constitution of owners of lands whose proocrty
was to be compulsorily acquired. Under that Ace comnemation
made payable for coml'ulsory acquisition of land wa• the value
of the land on April 28. 1947. together with the v~lue 0( anv
agric~ltural impro;,ements-made th~reon after that d8.te and
before uublication or th, nntification under s. 4 ( 1). The rc~ult
of that Act was to freeze for the purpose of acquisition the prices
• •f land in the area to which it applied and the owners were
tll [t%4j 6 S.C.R. 936.
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1-1
P. v. MUDALIAR v. DY. COLLECTOR (Subba Rao J.)
625
deprived of the benefi: of appreciation of land values since April
28, 1947, whenever the notification under s. 4(1) might be
issued and also of non-agricultural improvements made in the
land after April 28, 1947.
That Act was passed before the
Constitution (Fourth Amendment) Act, 1955, was enacted and,
therefore, the question fell to be considered on the Article as it
existed before the amendment. After noticing the relevant provisions and the case-law on the subject, Shah J., speaking for the
Court, said :
"Fixation of compensation for compulsory acquisition of lands notified many years after that date, on the
market value prevailing on the date on which lignl'te
was discovered is wholly arbitrary and inconsistent with
the letter and spirit of Art. 31 (2) as it stood before
it was amended by the Constitution (Fourth Amendment) Act, 1955. If the owner is by a constitutional
guarantee protected against exprnpriation of his property otherwise than for a just monetary equivalent, a
Jaw which authorises acquisition of land not for its true
value, but for value frozen on some date anterior to the
acquistion, on the assumotion tbt all appreciation in
its value since that date is attributable to purposes for
w'iich the State may use the land at sometime in future,
must be regarded as infringing the fundamental right."
It may, therefore, be taken ag settled law that under Art. 31 (2)
of the Constitution before the Constitution (Fourth Amendment)
Act, 1955, a person whose land was acquired was entitled to
compensation i.e., a "just equivalent" of the land of which he
was deprived.
The Constitution
(Fourth Amendment)
Act,
1955, amended Art. 31 (2) and the amended Article reads :
"No property shall be compulsorily
acquired or
requisitioned save for a public purpose and save by
authority of law which provides for compensation for
the property so acquired or requisitioned and either
fixes the amount of compensation or specifies
the
principles on which and the manner in which, the compensation is to be determined and given; and no such
Jaw shall be called in question in any court on the
ground that the compensation provided by that l:iw i~
not adequate."
A scrutiny of the amended Article discloses that it accepted the
meaning of the expressions "compensation" and "principles" as
626
SIJPREME
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[1965] I S.C.R.
defined by this Court in Mrs. Bela Banerjee's case ( 1). It may
A
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 !aw fixing the amount
8
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. If
the definition of "compensation" and the question of justiciability
are kept distinct, much of the cloud raised will be dispelled.
C
Even after the amendment, provision for compensation or laying
down of the principles for detennining the compensation is a
condition for the making of a law of acquisition or requisition.
A Legislature, if it intends to make a Jaw for compulsory acquisition or requbition, must provide fnr compensation or specify
the principles for ascertaining the compensation. The fact that D
Parliament used the same expressions, namely, "compensatiQn"
and "princinles" as were found in Art. 31 before the Amendment
is a clear indication thai it accepted the meaning given by this
Court to thme exoressions in Mrs. Bela Baner;ee's case('). It
follows that a Lc8islature in making a law of
acquisition or
requisition shall provide for a just equivalent of what the owner
E
has been deprived of or specify the principles for the purpose of
ascertaining the "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 exoressions like "price", "consideration"
etc.
Jn Craies On Statute Law, 6th Edn., at p. 167, the relevant
F
principle of construction is stated thus :
"There is a well-known principle of construction,
that where the legislature used in an Act a legal term
which has received judicial interpretation, it must be
assumed that the term is used in the sense in which it
has been judicially interpreted unless a contrary intention appears."
The said two expressions in Art. 31 (2). before the C<'~stitution
(Fourth Amendn1ent) Act, have received an authoritative interpretation by the highest court in the land and it must be presumed
that Parliament did not intend to depart from the meaning )!ivcn
by this Court to the said expressions.
(t) (1954) S.C.R. 558.
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P. v. MUDALIAR v. DY. COLLECTOR (Subba Rao J.)
627
The real difficflty is, what is the effect of ouster of jurisdic--
tion of the court to question the law on the ground that tlte
"compensation" provided by the law is not adequate 1 It will
be noticed that the law of acquisition or requisition is not wholly
immune from scrutiny by the court. But what is excluded from
the. court's jurisdiction is that the said law cannot be questioned
B on the ground that the compensation provided by that law is not
adequate. 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 equiC valent 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
D "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. To 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· <:omparable sales, capitalisation
E of rent and similar others. The application of different principles
may lead to different results. Tlie 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
F one principle and not the other, for it relates only to the questiOll'
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 Art. 3 I (2) of the
Constitution. If a Jaw says that though a house is acquired it
G shall be valued as a land or that though a house site is acquired
it shall be valued as an agricultural land or that though it is
acquired in I 950 its value in I 930 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
H
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
628
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lakhs of rupees for a paltry sum of Rs. 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 tl;e propeny 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 cif th~ protection of Art. 31 in
a manner which the Aniclc hardly intended.
This leads us to the consideration of the question of the
scope of the doctrine of fraud on power. In Gajapati Narayan
Drm v. The State of Orissa(' ), Mukherjee J., as he then was,
explained the doctrine thus :
"It may be made clear at the outset that the
doctrine of colourable legislation does not involve any
question of bona {ides or ma/a {ides on the part of the
legislature. The whole doctrine resolves itself into the
question of competency of a particular legislature to
enact a particular law. If the legislature is competeut
to pass a particular law, tile motives which imocllcd it
to act arc really irrelevant. On the other hand, if the
legislature lacks competency, the question of
motive
does not arise at all. Whether a statute is constitutional
or not is thus always a question of power."
The learned Judge described how the Legislature may transgress
the limits of its constitutional power thus :
"Such transgression may be patent,
manifest
or
direct, but it may also be disguised, covert or indirect
and it is to this latter class of cases that the expression
"colourable legislation" has been applied
in
certain
judicial pronouncements."
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This Court again explained the said doctrine in Gu/lapal/i NagesG
wara Rao v. Andhra Pradesh State Road Transport Corporat;n,,(') thus:
'The legislature can only make laws
within
its
legislative competence.
Its legislative field
may be
circumscribed by specific legislative entries or limited
by fundamental rights created by the Constitution. The
II
legislature cannot over-step the field of its competency,
(ll [t954)S.C.R.1, IO·tl.
(2) [1959J Supp. I S.C.R. 319, 329.
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P. v. MUDALIAR v. DY. COLLECTOR (Subba Rao J.)
629
directly or indirectly.