Property rights under government contracts cannot be taken away without compensation when the law effectively transfers them to the State.

Rights created by government orders and contracts to tap, collect, transport, process and deal with resin were treated as property protected by the Constitution. The Court applied the principle that transferable beneficial interests and contractual interests may amount to property, and held that the impugned provisions went beyond regulation because they destroyed existing rights and vested the subject matter in the State and its company. As no compensation was provided, the deprivation amounted to compulsory acquisition. Article 31(2A) did not save the statute because the effect was not mere extinguishment without transfer, but vesting of rights in the State.

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Issues: Whether the rights created in favour of the petitioners under government orders and contracts constituted property protected by the Constitution, and whether the impugned provisions extinguishing those rights without compensation were constitutionally valid.

Analysis: The rights granted to the petitioners to tap, collect, transport, process and deal with resin were treated as interests in property. The Court applied the settled principle that government largesse, contractual interests and other transferable beneficial interests may amount to property protected by the constitutional guarantee. The impugned provisions did not merely regulate the activity but destroyed existing rights and transferred the subject matter of those rights to the State and its company. Since the Act provided no compensation, the deprivation was held to amount to compulsory acquisition. Article 31(2A) did not save the statute because the effect of the provisions was not a mere extinguishment of rights without transfer, but a vesting of those rights in the State. The plea based on estoppel was noted, but the statute was struck down on the ground of unconstitutional deprivation of property without compensation.

Conclusion: The rights created by the government orders and contracts were property, and the provisions of the Act taking them away without compensation were unconstitutional.

Ratio Decidendi: A law that extinguishes existing property rights and, in substance, transfers those rights to the State without providing compensation is void as an unconstitutional compulsory acquisition.

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