Compensation fixed to an earlier date and excluding later improvements was unconstitutional under Article 31(2).

Compensation under the Madras Lignite (Acquisition of Land) Act, 1953 was held invalid because fixing market value by reference to 28 April 1947 bore no real relation to the date of acquisition and denied owners the benefit of later appreciation. Excluding non-agricultural improvements made after that date also improperly removed the value of superstructures and other improvements from the acquired interest. Applying Article 31(2) as it stood before the Fourth Amendment, the Court treated compensation as requiring a just equivalent for the property taken and found the challenged provisions arbitrary and unconstitutional.

---

---

Issues: Whether the provisions of the Madras Lignite (Acquisition of Land) Act XI of 1953, which fixed compensation for lignite-bearing lands by reference to market value on 28 April 1947 and excluded non-agricultural improvements made after that date, were invalid for violating Article 31(2) of the Constitution.

Analysis: Article 31(2), as it stood before the Fourth Amendment, required that compulsory acquisition laws provide compensation and that the principles of compensation ensure a just equivalent for the property taken. A law freezing compensation to an anterior date having no real relation to the date of acquisition was treated as arbitrary where it denied the owner the benefit of later appreciation in value. The exclusion of non-agricultural improvements made after the specified date also deprived the owner of the value of superstructures and other improvements included in the acquired interest. On the material before it, the fixed date and exclusions were held to be unrelated to any demonstrated scheme justifying the deprivation.

Conclusion: The challenged compensation provisions were invalid as infringing Article 31(2) of the Constitution, and the awards based on them could not be sustained.

---