TaxTMI 
TaxTMI 
TaxTMI 
1962 (12) TMI 64
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....nstitution. In view of the importance of the questions raised in this litigation, notices were issued by this Court to all the Advocates- General of the States of India. In pursuance of that notice, the States of Assam, Bihar, Gujarat, Madras, Orissa, Punjab, Rajasthan and Uttar Pradesh have appeared, either through their respective Advocates General or through other Counsel. The National Coal Development Corporation Ltd., with its head office at Ranchi in Bihar, has also intervened in view of a pending litigation between it as one of the defendants and the State of West Bengal as the plaintiff. We have heard counsel for the parties at great length. The Plaint is founded on the following allegations. The plaintiff is a State, specified in the First Schedule of the Constitution,, as forming part of India' which is a Union of States. By virtue of Art. 294 of the Constitution, all property and assets in West Bengal, which were vested in His Majesty for the purposes of the Government of the Province of Bengal became vested in the State of West Bengal for the purpose of the State. The State of West Bengal, in exercise of its exclusive legislative powers, enacted the West Bengal Est....
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....and for increased production of coal in the public interest. The defendant will rely on documents a list whereof is hereto annexed." On those pleadings, the following issues were raised : 1. Whether Parliament has legislative compe tence to enact a law for compulsory acqui- sition by the Union of land and other properties vested in or owned by the State as alleged in para 8 of the plaint ? 2. Whether the State of West Bengal is a sovereign authority as alleged in para 8 of the plaint ? 3. Whether assuming that the State of West Bengal is a sovereign authority, Parliament is entitled to enact a law for compulsory acquisition of its lands and properties ? 4. Whether the Act or any of its provisions are ultra vires the legislative competence of Parliament ? 5. Whether the plaintiff is entitled to any relief and if so, what relief ? After the arguments on behalf of the plaintiff, and of the States in support of the plaintiff, had been finished, application was made for amendment of the plaint praying that the following paragraph may be added as paragraph 9A, which is as follows :- "Alternatively the plaintiff submits that the Coal Bearing Areas (Acquisition and Develop-....
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....and Reasons, set out at pages 16-17 of the Paper Book : "According to the Industrial Policy Resolution of 1956 the future development of coal is the responsibility of the State. All new units in the coal industry will be set up only by the State save in exceptional circumstances as laid down in the Resolution. The production of coal in India in 1953 was 38 million tons and the target for production for the Second Five-Year Plan has been fixed at 60 million tons per annum. It has been decided that out of the additional production of 22 million tons per annum envisaged. the public sector should produce an additional 12 million tons per annum, the balance being allocated to the private industry for production from existing collieries and immediately contiguous areas. Out of the additional 12 million tons in the public sector, the bulk (10 million tons per annum) will have to be raised by the development of new coal fields, such as Korba, Karanpura, Kathara and Jhilimili and Bisrampur. Very nearly all the coal bearing areas however are covered by mining leases held by private persons or prospecting licencees which carry a right to mining lease. Hence it is proposed to take power....
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....te, as passed by Parliament, is the expression of the collective intention of the legislature as a whole, and any statement made by an individual, albeit a Minister, of the intention and objects of the Act cannot be used to cut down the generality of the words used in the statute. It was then contended that the preamble of the Act was the key to the understanding of the scope and provisions of the statute. The preamble is in these words : "An act to establish in the economic interest of India greater public control over the coal mining industry and its development by providing for the acquisition by the state of unworked land containing or likely to contain coal deposits or of rights in or over such land, for the extinguishment or modification of such rights accruing by virtue of any agreement, lease, licence or otherwise, and for matters connected therewith." Particular stress was laid on the last two lines of the preamble, showing that only rights "accruing by virtue of any agreement, lease, licence or otherwise" were being sought to be extinguished or modified by the provisions of the Act. But this argument omits to take note of the words of the previous c....
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....land which is notified under s. 7 as the subject-matter of acquisition. Ordinarily, if a notification is made by the Central Government of its intention to acquire of the whole or any part of the land or of any right in or over land, notified under s. 4, it is open to any person interested in the land to object to the acquisition of the whole or any, part of the land or of any rights in or over such land. If any such objection is raised, an opportunity has to be given for hearing such an objection or objections, by the "competent authority." But under s. 9-A, the Central Government, if it is satisfied that it is necessary to acquire immediately the whole or any part of the land, or any rights in or over such land, may direct that s. 8 shall not come into operation, and, therefore, no proceedings thereunder would be entertainable. Section 10 lays down the consequences of the notification of declaration of acquisition under s. 9. On such a declaration the land, or the rights in or over the land, shall vest in the Central Government, free from all encumbrances, and under sub-section (2) where the rights acquired happen to have been granted under a mining lease by a State Gov....
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....intervened and have claimed that any property belonging to a State Government is outside the scope and effect of the Act. Bearing in mind that the words used in s. 4 are comprehensive and unrestricted and apt to include in their sweep lands "belonging to a State" and that the reference in s. 7 is to lands which are notified under s. 4 (1), we shall now turn to the arguments bearing upon the interpretation of certain specific provisions which are however claimed to suggest an opposite conclusion. Firstly, it is urged that "any person" used in s. 8 could not be interpreted as including a State. This argument is bound up with the other argument relating to the competence of Parliament to legislate in respect of property belonging to a State. It will, therefore, be convenient to deal with this argument along with that topic, It is enough to point out here that the explanation to s. 8 (1), and particularly the words "undertaken by the Central Government or by any other person' Would lend support to the argument of the learned Attorney General that the word "Person" has been used in the generic sense of including both a natural person and a juristi....
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....se several alternative readings of this part of the section. Similarly the provisions of s. 10 (2) were pressed in aid of the construction suggested on behalf of the plaintiff and the other intervening States, that the interests of a State Government were not within the purview of the Act. This argument is based on the consideration that if rights or interests of a State Government were also within the purview of the Act, it would be meaningless to provide that the Central Government or a Government Company, as contemplated by s. II, should be deemed to be the lessee of the State Government in respect of the rights acquired. We are unable to acceeds to this construction. Sections 10 (2) and 11 have particular reference to those cases where the property acquired consists of rights under any mining leases granted by a State Government. Apart from the kind of property contemplated by ss. 10 (2) and 11 (2), as aforesaid, there may be other kinds of property acquired, e. g. coal-bearing land, in which the entirety of the interest is vested in a State Government. In such cases, there would be no question of the Central Government or a Government Company becoming or being deemed to become....
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....d against the plaintiff. Starting with the position that on a true construction of the relevant provisions of the Act, the rights and interests of a State Government in coal bearing land had not been excluded from the operation of the Act, either in express terms or by necessary implication, the next question that arises for consideration is the first issue which covers issues 3 and 4 also. The competence of Parliament to enact the Act has to be determined with reference to specific provisions of the Constitution, with particular reference to the entries in the Seventh ScheduleList I and List III. By Entry 42 in List III of the Seventh Schedule to the Constitution read with Art. 246 (3) power to legislate in respect of acquisition and requisition of property is conferrcd upon the Parliament as well as the State Legislatures, Prima facie, this power may be exercised by the Parliament in respect of all property, privately owened or State owned. But on behalf of the State of West Bengal and some of the intervening States it was submitted that the very nature of the right in property vested in the State for governmental purposes imposed a limitation upon the exercise of the Power of t....
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....milar power may also be exercised by the States in respect of Union property and even to re-acquire the property from the Union by exercise of the State's legislative power. The power under Entry 42 can therefore never be effectively exercised by the Parliament. (6) It could not have been the intention of the Constitution makers to confer authority upon the Parliament to legislate for acquiring property of the States and thereby to make the right of the State to property owned by it even more precarious than the right which individuals or Corporations have under Constitution to their property. Individuals and Corporations have the guarantee under Art. 31 (2) of the Constitution that acquisition of their property will be for public purposes and compensation will be awarded for acquiring property. Entry 42 must be read subject to Art. 31, and inasmuch as Fundamental rights are conferred upon individuals and Corporations against executive or legislative actions, and States are not invested with any fundamental rights exerciseable against the Union or other States, the right to legislate for -compulsory acquisition of State property cannot be exercised, (7) Unless a law expressly ....
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....s in respect of certain matters. He derived his authority from the British Crown, and was subject to the directions which the Central Government gave to carry into execution Acts of' the Central Legislature in the Concurrent List and for the maintenance of means of communication, and in respect of all matters for preventing grave menace to the peace or tranquility of India or part thereof. The administration continued to function as an agent of the British Parliament. By the Indian Independence Act, 1947 a separate Dominion of India was carved out and by s. 6 thereof the Legislature was for the first time authorised to make laws for the Dominion. Such laws were not to be void or inoperative on the ground that they were repugnant to the law of England or to the provisions of any existing or future Act of Parliament of the United Kingdom, or to any order, rule or regulation made under any such Act, and the powers of the Legislature of the Dominion included the power to repeal or amend any such Act, order, rule or regulation. The British Parliament ceased to have responsibility as respects governance of the territories which were immediately before that date included in British In....
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....he new entry regarding inter-State rivers (Entry 56), to the new Entry 33 in the Concurrent List to which it is transferred from List 11, and to the comprehensive provisions of Part XIII-which seek to make India a single economic unit for Purposes of trade and commerce under the overall control of the Union Parliament and the Union Executive. The result was a Constitution which was not true to, any traditional pattern of federation. There is no warrant for the assumption that the Provinces were sovereign, autunomous units which had parted with such power as they considered reasonable or proper for enabling the Central Government to function for the common good. The legal theory on which the Constitution was based was the withdrawal or restimption of all the powers of sovereignty into the people of this country and the distribution of these powers save those withheld from both the Union and the States by reason of the provisions of Part III between the Union and the States. (a) A truly federal form of Government envisages a compact or agreement between independent and sovereign units to surrender partially their authority in their common interest and vesting it in a Union and reta....
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....ns entitled to sue and liable to be sued in relation to their respective affairs. By Art. 299 contracts may be entered into by the Union and the States in exercise of their respective executive powers' and Art. 298 authorises in exercise of their respective executive powers the Union and the States to carry on trade or business and to acquire, hold and dispose of property and to make contracts. These provisions and the entrustment of powers to legislate on certain matters exclusive, and concurrently in certain other matters, and entrustment of executive authority coextensive with the legislative power form the foundation of the division of authority. In India judicial power is exercised by a single set of courts, Civil, Criminal and Revenue whether they deal with disputes in respect of legislation which is either State legislation or Union legislation. The exercise of executive authority by the Union or by the State and rights and obligations arising out of the executive authority are subject to the jurisdiction of the Courts which have territorial jurisdiction in respect of the cause of action. The High Courts have been invested with certain powers under Art. 226 to issue wri....
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.... or by any law made by Parliament upon the Union or authorities thereof. Exercise of executive authority of the States is largely restricted by diverse Constitutional provisions. The executive power of every State has to be so exercised as to ensure compliance with the laws made by Parliament and any existing laws which apply in that State, and not to impede or prejudice the executive power of the Union. The executive power of the Union extends to the giving of such directions to a State as may appear to the Government of India to be necessary for those purposes and as to the construction and maintenance of means of communication declared to be of national 'or military importance and for protection of railways. The Parliament has power to declare highways or waterways to be of national importance, and the Union may execute those powers, and also construct and maintain means of communication as part of its function with respect to naval, military and air force works. The President may also, with the consent of the Government of a State, entrust to that Government or to its officers functions in relation to any matter to which the executive power of the Union extends : Art. 258 (....
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....iament to legislate with respect to any matter in the State List if the Council of States has declared by resolution supported by not less than two-third of the members present and voting that it is necessary or expedient in the national interest that it Parliament should make laws with respect to any matter enumerated in the State List specified in the resolution. By Art. 252 power is conferred upon Parliament to legislate for two or more States by consent even though the Parliament may have no power under Art. 246 to make laws for the State except as provided in Art. 249 and 250. Such a law may be adopted by a Legislature of any other State. By Art. 253 Parliament has the power notwithstanding anything contained in Art. 246 to make any law for the whole or any part of the territory of India for implementing any treaty, agreement or convention with any other country or countries or any decision made at any international conference, association or other body. In case of inconsistency. between the laws made by Parliament and laws made by the Legislatures of the States, the laws made by the Parliament whether passed before or after the State law in matters enumerated in the Concurren....
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....tain grants-in-aid of the revenues of the States of Assam, Bihar, Orissa and West Bengal in lieu of assignment of any share of the net proceeds in each year of export duty on jute and jute products to those States may also be made. Union duties of excise except duties on medicinal and toilet preparations are collected by the Union but may be distributed in whole or in part among the States in accordance with such principles of distribution as may be formulated. By Art. 275 grants-in-aid of the revenue of such States as Parliament may determine to be in need of assistance may also be made. It is manifest that the States depend for financial assistance upon the Union, their own resources, because of their restricted fields of taxation, being inadequate. The power of borrowing is exercisable by the States under Art. 293, but the same cannot be exercised without the consent of the Government of India, if there is still outstanding any part of a loan which has been made to the State by the Government of India or by its predecessor Government, or in respect of which a guarantee has been given by the Union, or by its predecessor. In times of national political or financial emergency, th....
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....ere is no constitutional guarantee against alteration of the boundaries of the States. By Art. 2 of the Constitution the Parliament may admit into the Union or establish new States on such terms and conditions as it thinks fit, and by Art. 3 the Parliament is by law authorised to form a new State by redistribution of the territory of a State or by uniting two or more States or parts of States or by uniting any territory to a part of any State, increase the area of any State, diminish the area of any State, alter the boundaries of any State and alter the name of any State. Legislation which so vitally affects the very existence of the States may be moved on the recommendation of the President which in practice means the recommendation of the Union Ministry, and if the proposal in the Bill affects the area, boundaries or name of any of the States, the President has to refer the Bill to the Legislature of that State for merely expressing its views thereon. Parliament is therefore by law invested with authority to alter the boundaries of any State and to diminish its area so as even to destroy a State with all its powers and authority. That being the extent of the power of the Parliame....
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....er the Canadian and Australian Constitutions (vide Bank of Toronto v. Lambe (2), and Webb v. Outrim (3), and has practically been given tip even in the United State's. The following passage in the judgment of Lord Hob house in Lambe's case, though it dealt with the converse case of not reading limitations into provincial power might usefully be set out "The appellant invokes that principle to support the conclusion that the Federation Act must be so construed as to allow no power to the provincial legislatures under sect. 92, which may by possibility, and if exercised in some extravagant way, interfere with the object of the Dominion in exercising their powers under sect. 91. It is quite impossible to argue from the one case to the other. Their Lordships have to construe the express words of an Act of Parliament which makes an elaborate distribution of the whole field of legislative authority between two legislative bodies, and at the same time provides for the federated provinces a carefully balanced constitution, under which, no one of the parts can pass laws for itself except under the control of the whole acting through the Governor-General. And the question they ....
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....merica the authority of Congress to legislate on a majority of these matters was derived from the " Commerce Clause." The commerce clause is not regarded as so exclusive as to preclude the exercise of State legislative authority in matters which are local, in their nature or operation, or are mere aids to commerce. As observed in Cooley's Constitutional Limitations-8th Edition p. 1004 "Mr. justice Hughes, in delivering the opinion of the Supreme Court of the United States, in Simpson v. Shepard (1), said : "The grant in the Constitution conferred upon Congress an authority at all times adequate to secure the freedom of inter-state commercial intercourse from State control, and to provide effective regulation of that intercourse as the national interest may demand. The words 'among the several States' distinguish between commerce which concerns more States than one, and that commerce which is confined within one State and does not affect other States. 'The genius and character of the whole government, said Chief Justice Marshall, 'seems to be, that its action is to be applied to all the external concerns of the nation, and to those internal c....
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....ntrol over the coal mining industry and its development by providing for the acquisition by the State of land containing or likely to contain coal deposits or of rights in or over such land for the extinguishment or modification of such rights accruing by virtue of any agreement, lease, licence or otherwise, and for matters connected therewith. By Entries 52 and 54 of List I the Parliament is given power to legislate in respect of : (52) "Industries, the control of which by the Union is declared by parliament by law to be expedient in the public interest." (54) "Regulation of mines and mineral development to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to the expedient in the public interest." In exercise of powers under Entry 36 of the Government of India Act, 1935 which corresponds with Entry 52 of the Constitution the Central Legislature enacted the Minerals & Mining (Regulation &. Development) Act, 1948, (LIII of 1948). By s. 2 of the Act it was declared that it was expedient in the public interest that the Central Government should take under its control the regulation of mines and oil....
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....to resort to all means for the exercise of a granted power which are appropriate and plainly adapted to the permitted end' United States v. Darby (312 U. S. p. 124) x x x Since the construction of this dam and reservoir is a valid exercise by Congress of its commerce power, there is no interference with the sovereignty or the State. United States v. Appalachian Electric Power Co. (311 U. S. 428). The fact that land is owned by a state is no barrier to its condemnation by the United States. Wayne Country v. United States, 53 Ct. cl. (F) 417, affirmed in 252 U. S. 574." Similarly it was held in The Cherokee Nation v. The Southern Kansas Railway Co. (2), that Congress has the power to authorise a Corporation to construct a railway through the territory of the Cherokee Nation, for the United States may exercise the right of eminent domain even within the limits of the several States for purposes necessary to the execution of powers granted to the general government by the Constitution. Power to effectuate its legislative authority which is entrusted in absolute terms being essential for carrying out of the powers, does not depend upon the consent of the States, and cannot be ....
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.... of the authority of the Union against private property or property of the State. In Attorney-General for British Columbia v. Canadian Pacific Railway (1),one of the questions which fell to be determined before the judicial Committee was whether power under s. 91 read with s. 92 of the British North America Act 1867 which secures to the Dominion Parliament exclusive legislative authority in respect of lines of steam or other ships, railways, canals, telegraphs, and other works and undertakings connecting any province with any other, or others could be exercised so as to authorise use of crown. lands in the province for a railway. The judicial Committee observed at p. 210 : "It was argued for the appellant that these enactments ought not to be so construed as to enable the Dominion Parliament to dispose of Provincial Crown lands for the purposes mentioned. But their Lordships cannot concur in that argument. In Canadian Pacific Ry. Co. v. Corporation of the Parish of Notre Dame de Bonsecours (1899 A. C. 367) (a case relating to the same company as the present) the right to legislate for the railway in all the provinces through which it passes Was fully recognised. In Toronto C....
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....ion to acquire the property of the State for the purpose of giving effect to its legislative powers. Therefore the power of the Union to legislate in respect of property situate in the States even if the States are regarded qua the Union as Sovereign, remains unrestricted, and the State property is not immune from its operation. Exercising powers under the diverse entries which have been referred to earlier, the Union Parliament could legislate so as to trench upon the rights of the State in the property vested in them. If exclusion of State property from the purview of Union legislation is regarded as implicit in those entries in List 1, it would be difficult if not impossible for the Union Government to carry out its obligations in respect of matters of national importance. If the entries which we have referred to earlier are 'not subject to any such restriction as suggested, there would be no reason to suppose that Entry 42 of List III is subject to the limitation that the property which is referred to in that item is of individuals or corporations and not of the State. In its ultimate analysis the question is one of legislative competence. Is the power conferred by Entry 42....
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....e do not desire to rest our decision on any such narrow ground.- Article 298 runs : "298. The executive power of the Union and of each State shall extend to the carrying on of any trade or business and to the acquisition, holding and disposal of property and the making of contracts for any purpose Provided that- (a) the said executive power of the Union shall, in so far as such trade or business or such purpose is not one with respect to which Parliament may make laws, be subject in each State to legislation by the States; and (b) the said executive power of each State shall, in so far as such trade or business or such purpose is not one with respect to which the State Legislature may make laws, be subject to legislation by Parliament." The argument was that the Constitution intended and enacted that property allotted to or vested in a State under the provisions of Art. 294 or 296 shall continue to belong to that State unless and until by virtue of the power conferred on the State by Art. 298 it chose to part with it, and that without a Constitutional amendment of these Articles such property cannot be divested from the State. We consider that this submission proceed....
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....h effected this distribution rat) "172. (1) All lands and buildings which immediately before the commencement of Part III of this Act were vested in His Majesty for the purpose of the Government of India shall as from that date-- (a) in the case of lands and buildings which are situate in a Province, vest in His Majesty for the purposes of the government of that Province unless they were then used, otherwise than under a tenancy agreement between the Governor-General in Council and the Government of that Province, for purposes which thereafter will be purposes of the Federal Government or of His Majesty Representative for the exercise of the functions of the Crown in its relations with Indian States, or unless they are lands and buildings formerly used for such purposes is fore, said, or intended or formerly intended to, be so used and are certified by the Governor-General in Council or, as the case may be, His Majesty's Representative, to have been retained for future use for such purposes, or to have been retained temporarily for the purpose of more advantageous disposal by sale or otherwise; just like s. 172 being the forerunner of Art. 294, as. 174 and 175 are phrase....
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....d was competently enacted by the Dominion Parliament, Sir John Simon appearing for the appellant-Province made two submissions : (1) That on a proper construction of the Railway Act, it could be held applicable only to Crown Lands vested in the Dominion and not to Provincial Crown Lands, relying for this purpose largely on the provision in s. 189 of the impugned Act for taking the consent of the Governor-General-in-Council., (2) By reason of Provincial Crown Lands being vested in the appellant by s. 109 of the Imperial Act, read with s. II 7, the Provinces were entitled to retain their respective property not otherwise disposed of by the Act, and that the purpose for which the Railways Act made provision did not fall within the last limb of s. 117 vesting in the Dominion Government a right to take property for certain limited purposes. For this reason, if the Act on its proper construction involved interference with Provincial Lands the same was unconstitutional. The agreement for the respondent--the Dominion-was that when s. 117 of the, British North America Act vested in the Dominion the power to take Dominion land for defence etc. it was a reference to executive and not legislat....
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....ve power." Re. (3). Power to acquire land was vested under the Government of India Act, 1935, by Entry 9 in List II of the Seventh Schedule, exclusive. by in the Provinces. For any purpose connected with a matter in respect of which the Central Legislature was competent to enact laws the Central Executive could require the Province to acquire land on behalf of and at the expense of the Union. This however did not mean that incidental to the exercise of the right to legislate in respect of Railways, Ports, Lighthouses, power to affect the right of the citizens and corporations and of Provinces in land was not exercisable. As already observed even under Constitutions where a larger slice of sovereignty remains effectively vested in the (component unity) such as the United States of America power to legislate vested in the Central or national subjects includes the power to legislate so as to extinguish rights in State property. Under the Government of India Act, 1935 the Central Government could require the Province to acquire lands on behalf of the Union if it was private land, and to transfer it to the Union if it was the State land. The Provincial Government had manifestly n....
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....ination of the scheme of distribution of legislative power in regard to compulsory acquisition of property under the Government, of India Act discloses that though the power to compulsorily acquire property was exclusively vested in the Provinces, the Central Government could satisfy its requirements of property for Central purpose by utilising provincial machinery, and that it was in that context that a specific provision referring to the Provinces having at the direction of the Central Government to transfer provincial property was needed. It is therefore difficult to appreciate the ground on which the existence of a provision in the Government of India Act for assessment of compensation for land which the Provinces were bound to transfer on being so required by the Central Government and the deletion of that provision in enacting the Constitution may affect the exercise of the power vested in the Union Parliament. Re. (4): The Australian Constitution contains an express power authorising legislation by the Parliament of Australia for acquisition of State property But the Constitutions of the United States of America and Canada contain no such express provision. The power of th....
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....visaged even as a possibility. Article 254 also negatives the possibility of such conflicting legislation. By cl. (1) of that Article if a law made by the legislature of a State is repugnant to any provision of a law competently made by Parliament, the State lady is, subject to cl. (2), Vold, Clause (2) recognises limited validity of a State law on matters in the Concurrent List if that law is repugnant to an existing or earlier law made by Parliament, only it such law has' been reserved for the consideration of' the president, and has received his assent. By the proviso authority is reserved to the Parliament to repeal a law having even this lining validity. Assent of the President to State legislation intended to nulls a law enacted by Parliament for acquisition of State property for the purposes of' the Union lies outside the realm of practical possibility. Re. (6): The submission that Art. 31 has no application to the acquisition or requisition of property of a State is based on no solid foundation. This argument was based on three grounds:- (a) Fundamental rights are declared in favour or citizens and others against legislative or executive action of the Governm....
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....ve a concomitant positive content ; without such positive content they could be worthless. Relief may be claimed from the High Court or from this Court, against infringement of the prohibition, by any agency, unless the protection is expressly restricted to State action. There are still other Articles in the form not of rights but fundamental disabilities e. g. 18 (2), 18 (3), 18 (4). Again there are certain Articles e.g. 19(g), Part 11, 24 (2) which appear to recognise affirmative rights of the States. Article 31 is couched in negative form, but recognises the existence of at least one important power vested in every sovereign State, not by virtue of its Constitution, but springing from its very existence as a State viz, the power to acquire property for public purposes on payment of compensation which the American jurists call 'eminent domain'. Article 31 (2) enunciates the restriction subject to which this power of eminent domain is to be exercised. For the purposes of the present case it is unnecessary to consider whether Art. 31 (1) recognises the existence of the police power. Before Art. 31 was amended by the Constitution (Fourth Amendment Act, 1955), there was conf....
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..... 31, operate in the same field of legislation : the former enunciates the content of legislative power, and the latter restraints upon the exercise of that power. For ascertaining whether an impugned piece of legislation in relation to acquisition or requisition of property is within legislative competence, the two provisions must be read together. The two provisions being parts of a single legislative pattern relating to the exercise of the right which may for the sake of convenience be called of eminent domain the expression 'property' in the two provisions must have the same import in defining the extent of the power and delineating restraints thereon. In other words Art. 31(2) imposes restrictions on the exercise of legislative power under Entry 42 of List Ill. Property vested in the State may not therefore be acquired under a statute enacted in exercise of legislative power under Entry 42 unless the' Statute complies with the requirement of the relevant clauses of Art. 31. Re. (7) : In Director of Rationing and Distribution v. The Corporation of Calcutta ( ([1961] 1 S.C.R. 158)), it was held by this Court by a majority "The law applicable to India before th....
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....ion used by the Legislature the Court must have regard to the aim, object and scope of the statute to be read in its entirety. The Court must ascertain the intention of the Legislature by directing its attention not merely to the clauses to be construed but to the entire Statute; it must compare the clause with the other parts of the law, and the setting in which the clause to be interpreted occurs. Again in interpreting a Constitutional document provisions conferring legislative power must normally be interpreted liberally and in their widest amplitude. Vide-Navinchandra Mafatlal v. The Commissioner of Income-tax, Bombay City ([1955] 1 S.C.R. 829),Entry 42 in List III does not, prima facie, contain any indication that the expression "Property" therein is to be understood in any restricted sense : nor do the other provisions of the Constitution for reasons already stated suggest a restricted meaning. The ground of absolute sovereignty of the States which may not be interfered with by taking property vested in the States by Parliamentary legislation has no legal basis. Again denial of power to the Union Parliament to legislate on allotted topics of legislation, in a manner....
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....tate of West Bengal and the Union of India are sovereign authorities in their respective spheres allotted to them by the Constitution, and therefore it would be inconceivable that one sovereign authority could acquire the property of the other : they could do so only by mutual agreement. That apart, the argument proceeded, on a true construction of the relevant entry, i. e., entry 42 of List III, in the context of the scheme of the Constitution and particularly of Art. 31 thereof, it would be clear that the said entry could not be invoked by the Union to acquire the land of the State. Learned counsel appearing for the States of Madhya Pradesh, Orissa., Assam and Madras supported the Advocate- General of West Bengal. The Advocate-General of Punjab, while supporting the argument of the Advocate-General of West Bengal, also raised an alternative contention, namely, that if the acquisition of State property was necessarily incidental to the effective exercise of any of the powers conferred on Parliament under Lists I and III of the Seventh Schedule to the Constitution, it could make a law for acquiring such property, provided it did not interfere with the exercise of the governmental ....
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....asizes the exclusive power of the Union and the States to make laws in respect of the matters enumerated in the Lists in the Seventh Schedule and allotted to the Union or the States, as the case may be. Even in regard to the executive power, Arts. 73 and 162 mark out the respective fields of the Union and the States. Chapter 11 of Part XI provides for the control of the Union over the States in certain specified cases. Part XII deals with finance, property, contracts, rights, liabilities, obligations and suits; it distributes the revenues between the Union and the States, provides for the allocation between them of certain taxes collected by the Union, creates separate consolidated funds described as the consolidated fund of India and the consolidated fund of the State, and enacts certain exemptions, among others, of State properties from Union taxation and Union properties from State taxation and authorizes the Union as well as the States to borrow money on the security of their respective properties subject to certain limitations. Chapter III of part XII deals with acquisition of property, assets, rights, liabilities and obligations in certain cases; under Art. 294, "As from....
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....those events, subject to certain safeguards, the Centre is authorized to take over the administration of the State in whole or in part for a specified period. Article 368 provides for the amendment of the Constitution; and in regard to certain provisions thereof, such as the Lists in the Seventh Schedule, the representation of the States in Parliament, the amendment shall also require to be ratified by the Legislatures of not less than one-half of the States by a resolution to that effect passed by those Legislatures. Under the scheme of our Constitution, sovereign powers are distributed between the Union and the States within the' spheres allotted to them. The Union exercises the sovereign powers within its sphere throughout the territories of India, and the States exercise their sovereign powers within their respective territories in respect of their allotted fields. The Legislatures of the States as well as the Parliament are elected on adult franchise. The legislative field of the Union is much wider than that of the States; and in case of conflict in the common field allotted to them, the Union law generally prevails over the State law. In regard to Bills passed by a Legi....
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....appeals in other matters or to issue writs to enforce fundamental rights. But both the High Courts and the Supreme Court interpret the State and the Union laws and resolve conflicts, if any. An integrated system of judiciary has been accepted by the Constitution and the judicial control operates both ways, though the final word is with the Supreme Court. That cannot by itself affect the federal principle, as even in Australia an appeallies to the Privy Council, under certain circumstances, from the decisions of the High Court of the Common. wealth of Australia. In financial matters,, though the States and the Union have consolidated funds of their own, the sources allotted to the States are comparatively meagre and those allotted to the Union appear to be perennial; the States also depend upon the Union for allocation of funds from and out of the taxes collected by it and also for grants; though there is no direct control by the Union over the field of finance of the States, there will always be indirect pressure on the States in that field, The Union, being in charge of the purse strings, can always, to use an euphemistic term, pursuade the States to take its advice. In case of e....
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.... Indian Constitution with that of America, it is argued that none of the important criteria of a federation is present in the Indian Constitution. "Federalism in the United States embraces the following elements : (1) as in all federations, the union of several autonomous political entities, or "States", for common purposes ; (2) the division of legislative powers between a "National Government", on the one hand and constituent "States", on the other, which division is governed by the rule that the former is "a government of enumerated powers" while the latter arc governments of "residual powers"; (3) the direct operation, for the most part, of each of these centers of Government, within its assigned sphere, upon all persons and property within its territorial limits; (4) the provision of each center with the complete apparatus of law enforcement, both executive and judicial; (5) the supremacy of the "National Government" within its assigned sphere over any conflicting assertion of "state" power; (6) dual citizenship." The aforesaid elements are no doubt present in the American Constitution, but it is n....
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....s character. Some Constitutions show a marked bias towards the Federation and the others towards the States, but notwithstanding the varying emphasis they accept the federal principle as their basis. Though some authors, accepting the American Constitution as the yardstick for a federation, prefer to describe Constitutions with a bias towards Union as quasi-federations, I do not think it is inappropriate to describe all Constitutions which substantially accept the federal principle as Federations. Applying this test, I have no doubt that the Indian Constitution is a federation, as the units in normal times exercise exclusive sovereign powers within the fields allotted to them. A further distinction is sought to be made between the American Constitution and the Indian Constitution on the basis of the historical evolution of the two countries. While in America, the argument proceeds, the pre-existing sovereign States were brought together under a federation, in India the Constitution conferred certain powers on the existing administrative units or such units newly constituted. The status of a political entity Under a particular constitution does not depend upon its history but upon t....
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....make laws for such State or any part thereof with respect to any of the matters enumerated in List 11 in the Seventh Schedule (in this Constitution referred to as the State List"). The entries relevant to acquisition, as they stood before the Constitution (Seventh Amendment) Act, 1956. read as follows: Entry 33 of. List I. Acquisition or requisitioning of property for the purpose of the Union. Entry 36 of List II. Acquisition or requisitioning of property, except for the purposes of the Union, subject to the provisions of entry 42 of List Ill. -Entry 12 of List III. Principles on which compensation for property acquired or requisitioned for the purposes 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. After the said amendment, entry 33 of List I and entry 36 of List II were omitted; and entry 42 of List 111, as substituted by the Seventh Amendment reads: Acquisition and requisitioning of property". Article 31. (1) No person shall be deprived of his property save by authority of law. (2)...No property shall be compulsorily acq- uired or requisitioned save for a public....
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....ion,, before the Constitution (Seventh Amendment) Act, 1956, this power was divided and distributed between the Union and the States; the Union, by virtue of entry 33 of List I could acquire a property for Union purposes, and by virtue of entry 36 of List II a State could acquire a property for State purposes: the result was that a State could not acquire a property of a citizen for a Union purpose, and the Union could not acquire a property of a citizen for a State purpose. To avoid this difficulty entry 33 of List I and entry 36 of List II were omitted and the present entry 42 of List III has been substituted for the earlier entry 42 in the said List. Now both Parliament and the Legislature of a State can make a law providing for the acquisition and requisitioning of property for Union or State purposes. But the crucial point that is implicit in the power of acquisition by a sovereign is that it must relate only to the property of the governed, for a sovereign cannot obviously acquire its own property. This sovereign power of Eminent Domain under our Constitution is conferred on, or divided between, the Union and the States. Prima facie, therefore, entry 42 of List III can only m....
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....authority of law. That decision has no bearing on the construction of cl. (2) of the said Article vis-a-vis the question of acquisition of a State property. The fact that this Court held that the two clauses of the Article deal with two different subjects does riot mean that cl. (1) has no bearing on the interpretation of cl. (2) of the same Article. Clause (2) of Art. 31 reads "No property shall be compulsorily acquired or requisitioned save for a public purpose and save by authority of a law which provides for compensation for the property so acquired or requisitioned and either fixes the amount of the compensation or specifies the principles on which, and the manner in which, the compensation is to be determined and given; and no such law shall be called in question in any court on the ground that the compensation provided by that law is not adequate." Clause (2A) thereof reads "Where a law does not provide for the transfer of the ownership or right to possession of any property to the State or to a corporation owned or controlled by the State, it shall not be deemed to provide for the compulsory acquisition or requisitioning of property, notwithstanding that it ....
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....nent Domain and fits in squarely with the scheme of fundamental rights. But it is said that if a State cannot be a "Person", a corporation or a company will have to be excluded from its scope. There is no definition of the expression "person" in the Constitution; but it is defined in the General Clauses Act, 1897, as including any company or association or body of individuals, whether incorporated or not. Though this definition is an enlargement of the natural meaning of the expression "person", even the extended meaning does not include the State. Anyhow the question whether the said expression takes in a corporation or not, does not call for a decision in this case. 'In this context two decisions of this Court may usefully be referred to. In Director of Rationing and Distribution v. The Corporation of Calcutta (), it was held that "'the rule of interpretation of statutes that the State is not bound by a statute unless it is so provided in express terms, or by necessary implication, is still good law". Though that rule has been laid down in the context of a statute, there is no reason why a different principle should apply in the con....
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....9 of List 11, Section 299 of the Government of India Act, 1935, read : (1) No person shall be deprived of his property in British India save by authority of law. (2) Neither the Federal nor a Provincial Legislature shall have power to make any law authorising the compulsory acquisition for public purposes of any land, or any commercial or industrial undertaking, or any interest in, or in any company owning, any commercial or industrial undertaking, unless the law provides for the payment of compensation for the property acquired and either fixes the amount of the compensation, or specifies the principles on which, and the manner in which it is to be determined." Broadly, cls. (1) and (2) of s. 299 of the said Act correspond respectively to cls. (1) and (2) of Art. 31 of the Constitution, under the said Act, the Federal Legislature could not make a law acquiring the land of a Province for the simple reason that the subject of acquisition of land was exclusively a Provincial subject. But s. 127 provided for the contingency of the Federation requiring the land belonging to a Province. The section read : "The Federation may, if it deems it necessary to acquire any land situ....
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....36 of List II were deleted and Art. 298 was substituted by a new Article. The changes made in Art. 298 are not material for the present purposes. It is, therefore, manifest that under the Government of India Act, 1935, compulsory acquisition of land was a provincial subject, that tinder the Constitution, as it originally stood, Parliament could make a law for acquiring such a property, for the Union purposes and the State Legislature for the State purposes by virtue of different entries and that, after the amendment, both Parliament and State Legislatures could make a law for the acquisition of such a property by virtue of entry 42 of List 111. But if the Federation or a province under the Government of India Act, or the Union or the State under the Constitution wanted a property owned by the other, it could secure it only under an agreement and not otherwise. This scheme clearly demonstrates that a law whether made by Parliament or by a State Legislature cannot provide for the acquisition of property owned by the other. I, therefore, hold that Parliament cannot make a law by virtue of entry 44 of List 111 for the acquisition by the Union of the property owned by a State. Reliance....
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....ition of a State property by virtue of entry 97 of List 1. There would be many anomalies in the working of the Constitution if the contention of the Union was accepted. As the subject of "acquisition and requisitioning" is in the Concurrent List both Parliament and a State Legislature can make different laws for acquiring the property of the State or of the Union, as the case may be. Under the law made by Parliament, the State property can be acquired and on acquisition it becomes the Union property; then under the law made by tile State, the same property can be reacquired by the state as the Union property. It is said that this vicious circle cannot arise under the Constitution. Reliance is first placed upon Art. 31(3) of the Constitution, which says : "No such law as is referred to in clause (2) made by the Legislature of a State shall have effect unless such law, having been reserved for the consideration of the President, has received his assent." But I have held that Art. 31 (2) has no application to a law providing for the acquisition of a State property and if so, cl. (3) thereof will also not apply to such a law. Even if Art. 31(3) applies, there is ....
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....already vests in the Parliament. Article 3 only enables the Parliament to make a law for the formation of anew State, alteration of boundaries of any State, increase or decrease of the area of any State or alteration of the name of any State. Such a power is expressly given to the Parliament and, therefore, it can function under that Article. But that has nothing to do with a power to acquire the property of a State. Thirdly, when the Constitution created legal entities and distributed the sovereign powers between them, it is unreasonable to construe the ambiguous provisions of the Constitution in such a way as to create conflicts between them or to make one a creature of the other. It is said that if such a power is not conceded to the Union, the States may not cooperate with the Union, in the implementation of the policies conceived in the interest of the whole country. This argument may have some relevance in America or in Australia where the States are powerful under their respective Constitutions, but absolutely none under our Constitution whereunder the States are practically beholden to the Union in many ways. It was necessary in America to evolve implied powers to implement....
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....ged to the zamindars, the reversion in the said estates was with His Majesty and subsequently with the State. This is contrary to the principles of permanent settlement, for under the permanent settlement the British Government granted to the zamindars a permanent hereditary property in their lands for all times to come and fixed a moderate assessment of public revenue on such lands, which could not be increased under any circumstances. The sannads granted under the permanent settlement regulations did not reserve any reversionary right to the Government. As I have held that, even if any interest had vested in the State, it could be divested by an Act of an appropriate Legislature if the requisite power was conferred on it by the Constitution,' I do not propose to express my final opinion on this question. The constitutional validity of the impugned Act is next sought to be sustained on the basis of entry 52 and entry 54 of List I of the Seventh Schedule to the Constitution. They read : Entry 52 of List I : Industries, the control of which by the Union is declared by Parliament by law to be expedient in the public interest. Entry 54 of List I: Regulation of mines and mineral ....
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....erty of a State, entry 52 of list I cannot be relied upon for such a purpose. Reliance is also placed upon the Coal Mines (Conservation and Safety) Act, 1952 (Act XII of 1952) in support of the contention that the declaration contained therein gave vitality to entry 54 of List I and that the impugned Act could be sustained under that entry. Section 2 of that Act says : "It is hereby declared that it is expedient in the public interest that the Central Government should take under its control the regulation of coal mines to the extent hereinafter provided." The simple answer to this argument is that the declaration was limited to the control and regulation of coal mines to the extent provided by that Act, and such a declaration, with its limited scope, could not be taken advantage of to sustain the impugned Act. Further, under the entry "'regulation of mines" a law cannot be made for the acquisition of coal bearing lands themselves, particularly when there is a specific entry for acquisition. Nor can the Mines and Minerals (Regulation and Development) Act 1957 (Act 67 of 1957) be successfully invoked in this case, for that Act, which contains a declaration ....
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.... not prevent the exercise by the Federal Government of its power of eminent domain for flood control purposes, merely because the State boundary would be obliterated by the flooding of the land taken. It was observed therein "Since the construction of this dam and reservoir is a valid exercise by Congress of 'its commerce power, there is no interference with the sovereignty of the State............................. The fact 'that land is owned by a state is no barrier to its condemnation by the United States.................... Nor can a s tate call a halt to the exercise of the eminent domain power of the federal government because the subsequent flooding of the land taken will obliterate its boundary." It does not appear from the report, though the phraseology used is wide, that what had submerged or obliterated was State owned property or the State territory. Assuming that the State property had submerged because of the operation of the Federal law, this decision can be understood to have laid down only the limited proposition that the Congress in exercise of its commerce power can make a law incidentally encroaching upon the State property. The decision in Th....
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....nment and the latter may acquire the property of a state or one of its agencies or sub-divisions." "Although the federal government has the power to acquire such property, the relative positions of the federal and state governments are such that it would seem that the United States could not for the sake of mere convenience, take the property of a state which was devoted to the public use the loss of which would seriously cripple the state in carrying on its functions................................. In case of necessity, as distinguished from mere convenience, the State would have to yield in any event." The said passage makes a distinction between a State property and a property devoted by a State for a public purpose-the former can be acquired and the latter ordinarily cannot be acquired by the federal government. These principles arc not based upon any particular power conferred upon the Congress, but appear to have been envolved on a pragmatic approach to concrete problems arising in that country. Such an approach cannot have any relevance to our Constitution' where the powers have been described with particularity. The-passage in ,Willoughby on the Cons....
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.... the appeal were whether under s. 108 the river was transferred to the Dominion, and whether the Dominion could make a law under s. 91 affecting fisheries and fishing rights in the river. The Privy Council held that the proprietary rights in the river vested in the Province on the date of the British North America Act, 1867 and that s. 108 by transferring rivers and lake improvements did not transfer the proprietary rights in the rivers. On the second question, it held that s. 91 empowered the Dominion to make a law taxing the right to fish in the rivers. Lord Herschell recognized a broad distinction between proprietary rights and legislative jurisdiction and observed that the fact that such jurisdiction in respect of a particular subject-matter was conferred on the Dominion Legislature afforded no evidence that any proprietary rights with respect to it were transferred to the Dominion. It is observed at p. 730 : "If, however, the Legislature purports to confer upon other proprietary rights where it possesses none itself,. that 'in their Lordships' opinion is not an exercise of the legislative jurisdiction conferred by s. 91., If the contrary were held, it would foll....