# STATE OF MADRAS v. D. NAMASIVAYA MUDALIAR AND OTIIERS - **Citation:** [1964] 6 S.C.R. 936 - **Court:** Supreme Court of India - **Decided:** 1964-03-03 - **Bench:** P. B. Gajendragadkar, K. N. Wanchoo, Shah, N. Rajagopala Ayyangar, s. M. SIKRI - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/state-of-madras-v-d-namasivaya-mudaliar-and-otiiers-3233 - **Pages:** 12 ## Headnote Madras Lignite (Acquisition of Land) Act (XI of 1953). ss. 2 and 3 -Acquisition of lignite lands-Compensation to be asse~sed on market value prel'ailing on April 28, 1947-Va/ue of nvn·agriculJ... tural improvements after that date not to be taken into consideration-Act passed before Constitution (Fonrth Amend1nent)- Validity of Ac:--Compensations now fixed-Constitution of India, Art. 31 PTior to the Constitution (Fourth Amend111e11t) Act, 1955. The respondents in the above appeals are owners of certain lands which are to be compulsorily acquired untler Madras Lignite (Acquisition of Land) Act, 1953. This Act came into force on August 20, 1953 before Art. 31 of the Constitution was amended by the Constitu· tion (Fourth Amendment) Act, 1955. By the saia Act substantially two provisions which are material to the present appeals were made. The first was that compensation for acquisition of lignite-bearing lands under the Land Acquisition Act is to be assessed on the market value of the land prevailing on August 28, 1947 and not on the date on which notification is,/issued under s. 4( 1) of the Land Acquisition AcL Secondly it was provided that in awarding compensation the value of non-agricultural improvements commenced since April 28, 1947 will no& be taken into consideration. In accordance with the above provisions, after issuing the notices u required under ss. 4(1) and 6 of the Land Acquisition Act the Land Acquisition Officer made awards regarding the lands of the respondents. The respondents thereupon filed petitions under Art. 226 of the Consti• tution before the High Court of Madras challenging the validity of tho award on the ground that the provisions of the i\ct relating to tho award of compensation violate Art. 31(2) of the Constitution [as ii stood before the Constitution (Fourth Amendment) Act. 1955]. Tho High Court upheld the contention. In appeal, Held: (i) The validity of the Act impugned in the present appeal has to be examined in the light of the provisions of Art. 31 of tho Coristitution as they stood before the Constitution (Fourth Amendment) Act, 1955. Chiranjit Lal Chuwdhuri ii. Union of India, [1950] S.C.R. 869, State of West Bengal v. Subodh Gopa/ Bose, [1954] S.C.R. 587, ao'd State of West Bengal v. Mrs. Bela Baneriee, [1954] S.C.R. 558, relied. ,. 6 S.C.R. SUPREME COURT REPORTS 937 (ii} The principle laid down in Bela Ban ;rjee's case, that the ceilj :1 ... on the compensation without reference to the value of the land at the time of the acquisition is arbitrary and cannot be regarded as due com .. pensation in letter and spirit \Vithin the reliuircrnent of Art. 31(2), would apply to the impugned Act. Fixation of compensation for C.:"·11pulsory acquisition of land notified many years after that date on the market value prevailing on the date on which lignite was discovereCl is wholly arbitrary and inconsistent with the letter and spirit of Art. 31(2) as it stood before the Constitution (Fourth Amendment) Act, 1955. (iii) Any principle for determination of compensation denying to the owner all increments in value between a fixed date and the date of issue of the notice under s. 4( 1) of the Land Acquisition Act must prilna facie, be regarded as denying him the true equiv:ilent of the land which is ex· propriatcd 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 viofo.tion of the Constitutional guarantee. In the present appeals no materials have been placed by the State which would support any such case. (iv) Denial of compensation for the value of non-agricultural im~ provements would be denying to him just compensation for the loss suffered by him on account of compulsory acquisition of his holding and would amount to infringement of Art. 31(2) of the Constitution. CIVIL APl'ELLATE JURISDICTION: Civil Appeals Nos. 6 to 12 of 1963. Appeals from the judgment and decree dated February 2, 1959 of the Madras High Court in Writ Petition ## Text 1961 March, 3 SUPREME COURT REPORTS STATE OF MADRAS v. D. NAMASIVAYA MUDALIAR AND OTIIERS (P. B. GAJENDRAGADKAR, C.J., K. N. WANCHOO, J. C, SHAH, N. RAJAGOPALA AYYANGAR AND s. M. SIKRI, JJ.) Madras Lignite (Acquisition of Land) Act (XI of 1953). ss. 2 and 3 -Acquisition of lignite lands-Compensation to be asse~sed on market value prel'ailing on April 28, 1947-Va/ue of nvn·agriculJ... tural improvements after that date not to be taken into consideration-Act passed before Constitution (Fonrth Amend1nent)- Validity of Ac:--Compensations now fixed-Constitution of India, Art. 31 PTior to the Constitution (Fourth Amend111e11t) Act, 1955. The respondents in the above appeals are owners of certain lands which are to be compulsorily acquired untler Madras Lignite (Acquisition of Land) Act, 1953. This Act came into force on August 20, 1953 before Art. 31 of the Constitution was amended by the Constitu· tion (Fourth Amendment) Act, 1955. By the saia Act substantially two provisions which are material to the present appeals were made. The first was that compensation for acquisition of lignite-bearing lands under the Land Acquisition Act is to be assessed on the market value of the land prevailing on August 28, 1947 and not on the date on which notification is,/issued under s. 4( 1) of the Land Acquisition AcL Secondly it was provided that in awarding compensation the value of non-agricultural improvements commenced since April 28, 1947 will no& be taken into consideration. In accordance with the above provisions, after issuing the notices u required under ss. 4(1) and 6 of the Land Acquisition Act the Land Acquisition Officer made awards regarding the lands of the respondents. The respondents thereupon filed petitions under Art. 226 of the Consti• tution before the High Court of Madras challenging the validity of tho award on the ground that the provisions of the i\ct relating to tho award of compensation violate Art. 31(2) of the Constitution [as ii stood before the Constitution (Fourth Amendment) Act. 1955]. Tho High Court upheld the contention. In appeal, Held: (i) The validity of the Act impugned in the present appeal has to be examined in the light of the provisions of Art. 31 of tho Coristitution as they stood before the Constitution (Fourth Amendment) Act, 1955. Chiranjit Lal Chuwdhuri ii. Union of India, [1950] S.C.R. 869, State of West Bengal v. Subodh Gopa/ Bose, [1954] S.C.R. 587, ao'd State of West Bengal v. Mrs. Bela Baneriee, [1954] S.C.R. 558, relied. ,. 6 S.C.R. SUPREME COURT REPORTS 937 (ii} The principle laid down in Bela Ban ;rjee's case, that the ceilj :1 ... on the compensation without reference to the value of the land at the time of the acquisition is arbitrary and cannot be regarded as due com .. pensation in letter and spirit \Vithin the reliuircrnent of Art. 31(2), would apply to the impugned Act. Fixation of compensation for C.:"·11pulsory acquisition of land notified many years after that date on the market value prevailing on the date on which lignite was discovereCl is wholly arbitrary and inconsistent with the letter and spirit of Art. 31(2) as it stood before the Constitution (Fourth Amendment) Act, 1955. (iii) Any principle for determination of compensation denying to the owner all increments in value between a fixed date and the date of issue of the notice under s. 4( 1) of the Land Acquisition Act must prilna facie, be regarded as denying him the true equiv:ilent of the land which is ex· propriatcd 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 viofo.tion of the Constitutional guarantee. In the present appeals no materials have been placed by the State which would support any such case. (iv) Denial of compensation for the value of non-agricultural im~ provements would be denying to him just compensation for the loss suffered by him on account of compulsory acquisition of his holding and would amount to infringement of Art. 31(2) of the Constitution. CIVIL APl'ELLATE JURISDICTION: Civil Appeals Nos. 6 to 12 of 1963. Appeals from the judgment and decree dated February 2, 1959 of the Madras High Court in Writ Petition Nos. 1, 2, 202, 203, 204, 309 and 373 of 1958. A. Rang1N1adham Chetty and A. V. Rangam, for the appellants (in all the appeals). R. Gopalakrishnan, for the respondent (in C.A. No. 11/63). S. V. Gupte, Additional Solicitor-Genera/ and R. H. Dhebar, for interveners Nos. 1 and 2. M. C. Setalvad, N. S. Bindra and R. H. Dlzebar, for intervener No. 3. G. C. Kasliwal, Advocate-General, Rajasthan, R. , H. Dhebar and B. R. G. K. Achar, for intervener No. 4. 1964 Stall of Madr"' • Y. D. N•111D1ivaya MudaliJJT 1961 .·State of Madra.r v. D. Namalivayo Mudaliar Shah /. SUPREME COURT REPORTS (1g64] March 3, 1964. The Judgment of the Court was delivered by SHAH, J.-"Whether ss. 2 and 3 of the Madras Lignite (Acquisition of Land) Act XI of 1953 which ~eek to amend the Land Acquisition Act I of 1894 in their application to acquisition of lignite-bearing lands are invalid because they infringe the fundamental right under Art. 31 of the Constitution of owners of lands whose property is to be compulsorily acquired is the only question which falls to be determined in this group of appeals. Investigations conducted by the Geological Survey of India in 194 7 revealed deposits of lignite in the South Arcot District of the State of Madras, and exploratory mining operations were commenced by the Government of M2-dras. Discovery of deposits of lignite led to speculation in lands. On October 6, 1948, the Government of Madras issued a "Pres~-Note" announcing that the Government proposed to undertake legislation reserving power to compel any person who had purchased land on or after a date to be prescribed in 1947 in the !ignite-bearing areas to sell such lands to the Government at. the rate at which it was purchased. The Government also advised the owners of the lignite-bearing lands in the Vriddhachalam ancl Cuddalore taluks not to sell their lands to speculators. On January 7, 1953, the Government of Madras published a Bill to amend the Land Acquisition Act I of 1894 in certain respects. The Bill was duly passed by the State Legislature on June 2, 1953 and received the assem of the President. It was published as an Act on June 10, 1953 and came into force on August 20, 1953. By this Act substantially three provisions are made: · ( 1) that compensation for acquisition of lignitebearing lands under the Land Acquisition Act as amended, is to be assessed on the market value of the land prevailing on.April 28, 1947, and not on the date on which the notification is issued under s. 4 (1) of the Land Acquisition , Act; ,. 6 S.C.R. (2) SUPREME COURT REPORTS 939 power is reserved under s. 17 of the Land Acquisition Act to take possession in cases of urgency of lands for the purpose of working lignite mines in the areas in which the Madras Lignite (Acquisition of Land) Act XI of 1953 extends; and (3) in assessing the market value of the land on April 28, 194 7, value of any non-agricultural improvements on the land commenced, made or effected after that date are not to be taken into account, even if such improvements were made before the date of publication of the notification under s. 4 (1) of the Land Acquisition Act. l'ursuant to this Act, notifications under s~ 4( 1) of the Land Acquisition Act were issued between the months of January and May 1957 notifying for acquisition certain lands in Vriddachalam taluk of the South Arcot District. These notifications were followed by notifications under '· 6 of the Land Acquisition Act. Between the months of May and November 1957 the Land Acquisition Officer made his awards under s. 11 of the Land Acquisition Act assessing compensation on the basis of market value of the lands on April 28, 1947 and ignoring in the computation of compensation the value of houses built or other non11gricultural improvements made on the land since that date. The owners of the lands affected by these awards submitted petitions under Art. 226 of the Constitution to the High •Court of Judicature at Madras challenging the validity of ·the awards on the ground that the provisions of Madras Act XI of 1953 violated the fundamental right of the owners of the lands under Art. 31 (2) of the Constitution. They claimed that the Land Acquisition Officer was bound to award compensation for acquisition of their lands and buildings at the market value prevailing on the ·respective dates of the notifications under s. 4 (1), and that awards valuing the lands at the market rate prevailing on April 28, 1947, and excluding the value of buildings constructed after that date and trees thereon were without jurisdiction. The petitioners accordingly claimed that writs of mandamus be 1961 State uf Jillllru ... D. Ntlllfllliwt1c JludJJliar Sllllh /. 1964 stol• of Madraa ... D. Nan11uiwq11 Mudaliar Shl.h J. SUPREME COURT REPORTS issued directing the State of Madras and the Land Acquisition Officers to refrain from taking rpossession of the lands and buildings from the petitioners without payment of adequate compensation and for other appropnate 1elief. The High Court upheld the contention· of the petitioners. and declared that the awards made on the basis of the provisions of Madras Act XI of 1953 could not be sustained. Against the order passed by the High Court, these appeals have been preferred by the State of Madras, with certificate of fitness granted by the High Court under Art. 132 1Jf the Constitution. The Madras Act XI of 1953 makes an important departure from the scheme of the Land Acqui~ition Act I of 1894. Under the Land Acquisition Act I of 1894, a person interested in any land compulsorily acquired is entitled to the market value of his interest in the land at the date of the publication of the notification under s. 4 (1), and this compensation includes the value of all improvements agricultural and non-agricultural made in the land upto the date of the notification. By Ma:dras Act XI of 1953, compensation made payable for compulsory acquisition of.Jand is the value of the land on April 28, 1947, together with the value of any agricultural improvements ma•e thereon· after that date and before publication of the notification under s. 4( 1). The result of the Madras Act is therefore to freeze for the purpose of acquisition the prices of land in the area to which it applies, and the owners are deprived of the benefit of appreciation of land values since April 28, 1947, whenever the notification wider s. 4( 1) may be issued and also of non-agricultural improvements made in the land after April 28, 1947. Departure from the provisions of the Land Acquisition Act is challenged as illegal on the ground that it deprives the owner of the land of just compensation for cCJmpulsory acquisition of hii. property. Madras Act XI of 1953 was passed before the Constitution (Fourth Amendment) Act, 1955 was enacted, and we have to deal with the question of the validity of the Act in the light of the constitutional provisions contained in Art. 31 before ·the constitutional amendment. We may . " • ' • 6 S.C.R. SUPREME COURT REPORTS 941 ~ake it clear that for the purpose of this judgment, we 196! express no opinion on the question whether it is possible State al Mfidrtu by enacting legislation after the amendment of Art. 31 ( 2) Y • . by the Constitution (Fourth Amendment) Act, 1955 D. ~",;d~ (which is not given any retrospective operation) to provide that compensation for compulsory acquisition of land may SW .J. be fixed on the basis of market· value prevailing on a date ~terior to the date of the issue of the notification under :s. 4 (1) . Article 31 before it was amended by the Consti· t~ion (Fourth Amendment) Act 1955, by its els. ( 1) and (2) provided: "( 1) N0 person shali be depnved of his property save by authority of Jaw. (2) No property, movable or immovable, including any interest in, or in any company· owning, any commercial or industrial undertaking, .shall be taken possession of or acquired for public purposes under any law authorising the takmg 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 specifics the principles on which, and the manner in which, the compensation is to be determined and given." 1t wa.s hdd by this Court in Chiraniit Lal Clwwdhuri v. Union of India and others(') and The State of West Bengal v. S!1bhodh Go pal Bose and others( 2 ) that els. (1) aAu (2) of Art. 31 relate to the same subject of "eminent domain". By Art. 31 therefore every person was protected against deprivation of his property save by authority of law, and the law authorising taking possession or acquisition of property for public purposes had io fix the quantum of ·compensation, or to specify principles on which compensa· tion was to be determined for the property taken ·possession .of or acquired. Power to legislate in respect. of compensa· tion for acquisition and requisitioning of property was (I) [19SO) S.C.R. 869. (2) [19,4) S.C.R. S81. 19'1 Stld• .t Madr111 ... D. Nlll1WlYtr1• ltllldalilr Shoh J. 942 SUPREME COURT REPORTS contained in Entry 42 List ill of the Seventh Schedule and read as follows : "Principles on which compensation for iproperty acquired or requisitioned for the purpose of the Union or of a State or for any other public purpose is to be determined, and the form and the manner in which such compensation is to be given." The Constitution therefore conferred by Art. 31 (2) a fundamental right upon every person, protecting his property against compulsory acquisition otherwise than by authority of law, and without just indemnification for Joss suffered by him. In The State of West Bengal v. Mrs. Bela Banerjee and others ( ') this Court observed that when under Emry 42 List III the Legislature was given discretionary power to lay down the principles which should govern determination of the amount to be given to the owner of the property appropriated, such principles must ensure that what i~ determined as payable must be a just equivalent of what the owner has been deprived of, and that subject to this basic limitation the Constitution allowed free play to the legislative judgment as to what principles should guide the determination of the amount payable. The Court therefore· held that the West Bengal Land Development and Planning Act, 1948, which was enacted primarily for the settlement of immigrants who had migrated into West Bengal due to communal disturbances in East Bengal and which by s. 8' provided that the compensation to be awarded for com· pulsory acquisition to the owner of the land was not to• exceed the market value on December 31, 1946, was 11/tra vires the Constitution and void under Art. 31(2) of the Constitution. It was observed at p. 564 : "Turning now to the provisions relating to compensation under the impugned Act, it will be seen that the latter part of the proviso to section 8 limits the amount of compensation so as not to exceed the market value of the land (I) [19S4] S.C.lt. HI. . ' , ' ' 6 S.C.R. SUPREME COURT REPORTS 943 on December 31, 1946, no matter when the land is acquired. Considering that the impugned Act is a permanent enactment and lands may be acquired under it many years after it came into force, the fixing of the market value on December 31, 1946, as the ceiling on compensation, without reference to the value of the land at the time of the acquisition is arbitrary and cannot be regarded as due compensation in letter and spirit with the requirement of article 31 ( 2)." That principle must apply in adjudging the validity of Madras Act XI of 1953. It may be assumed that April 28, 1947, was the date on which lignite deposits were discovered in the areas to which the Act is extended. But there fa no true relation between the acquisition of the lands in these cases and fixation of compensation based on their value on the market rate prevailing on April 28, 1947. Fixation of compensation for compulsory acquisition of lands notified many years after that date. on the market value prevailing on the date on which lignite was discovered is wholly arbitrary and inconsistent with the letter and ~pirit 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 expropriation of his property otherwise than for a just monetary equivalent, 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 time in future, must be regarded as infringing the fundamental right. Counsel for the State of Madras relying upon the following observation of Patanjali Sastri, CJ., in Mrs. Bela Banerjee's case(') at p. 564: "The fixing of an anterior date for the ascertainment of value may not, in certain circumstances, be (I) [19541 S.C.R. SSB. 1961 State of MadrtU· v. D. Namruiva1fll. MUllaliar Shah I. 1961 '1141• of MadrlU v. ;/J, Na'llltl8ivaya Mlldali4' ,.,,,,,. /. 944 SUPREME COURT REPORTS a violation of the constitutional requirement 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", submitt!!d that a law which merely fixes the market value on a date anterior to the da,te on which the owner is expropriated of his land, as determinative of the market value on which the compensation is to be based, cannot without further enquiry be regarded as infringing Art. 31 (2) of the Constitution. In our view this observation cannot assist the State of Madras in saving the provisions of Madras Act XI of 1953 from the vice of infringing the constitutional guarantee under Art. 31 (2) of the Constitution. The right which is guaranteed is undoubtedly the right to a just indemnification for loss, and appreciation in the m.arket value of the land because of the proposed acquisition may in assessing compensation be ignored. Even the Land Acquisition Act provides for assessment of C01111Jlcnsation ·on the basis of market value of the land noi on the date on which interest of the owner of land is extinguished under s. 16, but on the basis of market value prevailing on the date on which the notification under s. 4 (1) is issued. Whether this rule · in all ·cases irrespective of subsequent developments ensures just indemnification of the expropriat· ed owner so as to be immune from attack, does not call for comment in this case. But any principle for determination of compensation denying to the owner all mcrements in value between a fixed date and the date of issue of the notification under s. 4( l ), must prima facie, be regarded as denying io 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 ;m anterior date