Just compensation in compulsory acquisition cannot be fixed by an arbitrary valuation date or the lesser of two bases.

Under pre-amendment Article 31, compensation for compulsory acquisition had to be the fair and just equivalent of the property taken, ordinarily measured by market value at the date of acquisition. A valuation rule that fixed the date of requisition as the basis, when ownership continued until acquisition, was treated as arbitrary. A further requirement that compensation be assessed on the lesser of two alternative valuation bases was inconsistent with the constitutional demand for just compensation. On that reasoning, section 8(3)(b) of the Requisitioning and Acquisition of Immovable Property Act, 1952, including the words "whichever is less", was declared ultra vires Article 31 and void.

---

---

Issues: Whether section 8(3)(b), including the words "whichever is less", of the Requisitioning and Acquisition of Immovable Property Act, 1952, is unconstitutional as violating Article 31 of the Constitution of India by permitting compensation to be determined on an arbitrary date and on a basis that may yield less than just compensation.

Analysis: The statutory scheme provided for acquisition of requisitioned property and for compensation to be assessed either on the market value at the date of acquisition in the condition existing at requisition, or at twice the market value on the date of requisition, whichever was less. The Court applied the settled pre-Fourth Amendment principle under Article 31 that compensation for compulsory acquisition must be the fair and just equivalent of what is taken, ordinarily measured by market value at the date of acquisition. It held that fixing the date of requisition as the valuation date was arbitrary because requisition did not vest ownership in the State and ownership continued until acquisition. The Court further held that making the lesser of two alternative valuation bases obligatory demonstrated that the statute itself preferred a lower compensation figure, which could not satisfy the constitutional requirement of just compensation.

Conclusion: Section 8(3)(b), including the words "whichever is less", was held to be ultra vires Article 31 and void, and the petitioner succeeded.

Ratio Decidendi: For compulsory acquisition under the pre-amendment Article 31, compensation must represent the just equivalent of the property acquired, and a statutory rule that fixes an anterior valuation date or mandates payment of the lesser of two alternative valuation bases is unconstitutional.

---