TaxTMI 
TaxTMI 
2011 (8) TMI 1275
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.... situated in Pargana Chandpur, Tehsil Karan Prayag, District Chamoli, Uttarakhand (hereinafter referred to as "the property in question") which comprised of large tracts of forest spanning in and around 1600 acres. On the death of Shri P.N. Sarin in the year 1976 appellants succeeded to the property in question. By a Gazette Notification dated 21st December, 1977 under Section 4-A of the Kumaun and Uttarakhand Zamindari Abolition and Land Reforms Act, 1960 (hereinafter referred to as "KUZALR Act") as amended by the U.P. Act No. 15 of 1978, the rights, title and interest of every hissedar in respect of forest land situated in the specified areas ceased with effect from 01st January, 1978 and the same were vested in the State Government. A notice issued by the Assistant Collector, Karan Prayag, District Chamoli, under Rule 2 of the Kumaun and Uttrakhand Zamindari Abolition and Land Reform Rules, 1965 (hereinafter referred to as "the KUZALR Rules") framed under the KUZALR Act was served upon the appellants intimating them that effective from 1st January, 1978, the rights, title and interest of hissedar in respect of the property in question had vested in the State Government free from....
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....l be useful to throw some light on the relevant legal position which is intrinsically complex and requires closer examination. 8. The Uttar Pradesh Zamindari Abolition and Land Reforms Act, 1950 (hereinafter to be referred as "UPZALR Act") was enacted in the year 1950 and the UPZALR Act was made applicable to the whole of the State of U.P. except inter-alia the areas of Kumaon, Uttarakhand. The object of the UPZALR Act as quite evident from its statements and objects are to provide for the abolition of the Zamindari System which involves intermediaries between the tiller of the soil and the State in Uttar Pradesh and for the acquisition of their rights, title and interest and to reform the law relating to land tenure consequent upon such abolition and acquisition and to make provision for other matters connected therewith. 9. Subsequently, on 02nd August 1960 Kumaun and Uttarakhand Zamindari Abolition and Land Reforms Act, 1960 was enacted. The object of the KUZALR Act is to provide for the acquisition of the rights, title and interests of persons between the State and the tiller of the soil in certain areas of the Kumaun and Garhwal Divisions and for the introduction of land ref....
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.... forest for a period of twenty agricultural years immediately preceding the date of vesting;" xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx "19(1) (b) - in the case of a private forest, eight times of the amount of average annual income from such forest." 11. Kumaun and Uttarakhand Zamindari Abolition and Land Reforms Act, 1960, which is a State legislation received the assent of the President of India on 10th September, 1960. The amendment brought in 1978 through UP Act 15 of 1978 to the said Act also received the assent of the President on 26th April, 1978. 12. At the outset we would like to mention that there is no specific whisper of defence raised under Articles 31A, 31B and 31C of the Constitution in the Counter-Affidavit/Reply filed by the State of Uttarakhand to the writ petition filed by the appellants in the High Court nor even before this Court but an attempt was made to argue the case on those grounds on behalf of the respondents. As there is no mention of any of the aforesaid Articles of the Constitution in the arguments or specific pleadings by the respondents in the writ petition, the question of deciding the applicability of those provisions of the Constitution and conse....
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....on of alleged discrimination i.e. giving compensation to other owners and nil compensation to the appellants herein is concerned, it was contended by Learned Additional Solicitor General that merely because there may be two compensation laws, which may be applicable, one of which provides for a higher compensation than the other, would not by itself make the provisions discriminatory or violative of Article 14 of the Constitution. 17. It is settled law that Agrarian Reforms fall within Entry 18/List-II read with Entry 42/List-III of the Seventh Schedule of the Constitution. 18. In the instant case, it cannot be denied that KUZALR Act, 1960 is a statutory enactment, dealing with the agrarian reforms. Section 4 of the KUZALR Act provides that in respect of non-forest land, State Government may by notification take over the rights, title and interests of hissedar. The land so released is then dealt with by giving bhumidhari rights/asami rights to the tillers and thereby effectuating the purpose of agrarian reforms. 19. It is important to notice that Section 4A introduced in KUZALR Act by the UP Amendment Act 1978 does not require any notification but it specifies the date i.e. 01st....
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.... clearly brings out that the vesting of forest land under the KUZALR Act are directly linked with the agrarian reforms, as the land as also the forest are managed by the Goan Sabha or any local authority dealing with the rights of villagers for betterment of village economy. So, where the land acquired by the State is to be transferred to a Goan Sabha/Village Panchayat for its management and use of land leading to betterment of village economy, the legislation is in the nature of agrarian reforms. 22. The aforesaid conclusions arrived at by us find support from the Constitution Bench decision of this Court in Ranjit Singh and Others Vs. State of Punjab and Others reported in [1965] 1 SCR 82. In the said decision, the Constitution Bench has stated thus:- "..........The scheme of rural development today envisages not only equitable distribution of land so that there is no undue imbalance in society resulting in a landless class on the one hand and a concentration of land in the hands of a few on the other, but envisages also the raising of economic standards and bettering rural health and social conditions. Provisions for the assignment of lands to village Panchayat for the use of....
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....um. 26. However, per contra the Learned Additional Solicitor General appearing for the respondents contended that the issue of repugnancy does not arise at all in the instant case as there is in fact no repugnancy between the Central Act i.e. the Indian Forest Act, 1927 and KUZALR Act in as much as the Central Act and KUZALR Act in pith and substance operates in different subject matters. 27. It was submitted by Learned Additional Solicitor General that once the pith and substance of the aforesaid two legislations viz. KUZALR Act and the Indian Forest Act, 1927 is examined, the following picture would emerge: firstly, the KUZALR Act is an enactment under Entry 18/List-II, i.e. "land" read with Entry 42/List-III of the Seventh Schedule of the Constitution. It was further submitted that at the highest, it can be said that KUZALR Act is relatable to Entry 18 of List II and 42 of List-III of the Seventh Schedule of the Constitution and if at all, only incidentally trenches in the legislative field of Entry 17A/List-III of the Seventh Schedule of the Constitution; and secondly, the Indian Forest Act, 1927 on the other hand, is in pith and substance a legislation under Entry 17-A/Lis....
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....n the competence of the State Legislature. 30. As and when there is a challenge to the legislative competence, the courts will try to ascertain the pith and substance of such enactment on a scrutiny of the Act in question. In this process, it would also be necessary for the courts to examine the true nature and character of the enactment, its object, its scope and effect to find out whether the enactment in question is genuinely referable to a field of the legislation allotted to the respective legislature under the constitutional scheme. In the aforesaid context we now proceed to examine the nature and character of the KUZALR Act and examine and scrutinize the same in the context of the Central Act, namely, the Indian Forests Act, 1927. 31. As noted hereinbefore, Section 4A was introduced in KUZALR Act by an amendment in the year 1978 as a part of agrarian reforms and not by a separate enactment, as was done in the case of the UP Private Forests Act, 1948. Significantly, the agrarian reforms introduced by the UPZALR Act were not brought about by amending the UP Private Forests Act, 1948. It is to be noticed that the Indian Forest Act, 1927 and the UP Private Forests Act, 1948 th....
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....UZALR Act relates to agrarian reforms and therefore it deals with the "land"; however, the Central Act i.e. the Indian Forests Act 1927 deal with "forests" and its management, preservation and levy of royalty/fees on forest produce. KUZALR Act further provides for statutory vesting, i.e., statutory taking over of property of hissedar, which happens to be 1st January 1978, i.e. the statutorily fixed date. Therefore, this forest land becomes the property of the State Government and is dealt with like land, which is acquired under Section 4A of KUZALR Act. This emerges from a reading of Rule 41 of the KUZALR Rules itself. Further, the acquisition under the KUZALR Act is a case of "taking" upon payment of an amount, which is not intended to be the market price of the rights acquired. On the other hand, the power of acquisition under Section 37 of the Indian Forests Act 1927 i.e. the Central Act is an acquisition based on the principles of public purpose and compensation. 35. Thus, not only do the aforesaid Acts relate to different subject matters, but the acquisitions mentioned therein are conceptually different. The Central Act i.e. the Indian Forests Act 1927 mainly deals with the m....
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.... the same subject. 39. Repugnancy in the context of Article 254 of the Constitution is understood as requiring the fulfillment of a "Triple test" reiterated by the Constitutional Bench in M. Karunanidhi v. Union of India, (1979) 3 SCC 431 @ page 443-444, which reads as follows:- "24. It is well settled that the presumption is always in favour of the constitutionality of a statute and the onus lies on the person assailing the Act to prove that it is unconstitutional. Prima facie, there does not appear to us to be any inconsistency between the State Act and the Central Acts. Before any repugnancy can arise, the following conditions must be satisfied: 1. That there is a clear and direct inconsistency between the Central Act and the State Act. 2. That such an inconsistency is absolutely irreconcilable. 3. That the inconsistency between the provisions of the two Acts is of such nature as to bring the two Acts into direct collision with each other and a situation is reached where it is impossible to obey the one without disobeying the other." 40. In other words, the two legislations must cover the same field. This has to be examined by a reference to the doctrine of pith and su....
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....ntral Act, will give way to the State Act only to the extent of inconsistency between the two, and no more. In short, the result of obtaining the assent of the President to a State Act which is inconsistent with a previous Union law relating to a concurrent subject would be that the State Act will prevail in that State and override the provisions of the Central Act in their applicability to that State only. The predominance of the State law may however be taken away if Parliament legislates under the proviso to clause (2). The proviso to Article 254(2) empowers the Union Parliament to repeal or amend a repugnant State law, either directly, or by itself enacting a law repugnant to the State law with respect to the `same matter'. Even though the subsequent law made by Parliament does not expressly repeal a State law, even then, the State law will become void as soon as the subsequent law of Parliament creating repugnancy is made. A State law would be repugnant to the Union law when there is direct conflict between the two laws. Such repugnancy may also arise where both laws operate in the same field and the two cannot possibly stand together: See Zaverbhai Amaidas v. State of Bom....
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.... exclusive power of the State Legislature to make a law with respect to a matter enumerated in the State List. 11. With respect to matters enumerated in List III (Concurrent List), both Parliament and the State Legislature have equal competence to legislate. Here again, the courts are charged with the duty of interpreting the enactments of Parliament and the State Legislature in such manner as to avoid a conflict. If the conflict becomes unavoidable, then Article 245 indicates the manner of resolution of such a conflict." Thereafter, this Court, in para 12, held that the question of repugnancy between the parliamentary legislation and the State legislation could arise in the following two ways: (SCC p. 220) "12. ... First, where the legislations, though enacted with respect to matters in their allotted sphere, overlap and conflict. Second, where the two legislations are with respect to matters in the Concurrent List and there is a conflict. In both the situations, parliamentary legislation will predominate, in the first, by virtue of the non obstante clause in Article 246(1), in the second, by reason of Article 254(1). Clause (2) of Article 254 deals with a situation where th....
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....e entire field. 49. In a Full Bench decision of this Court in the case of State of Maharashtra v. Bharat Shanti Lal Shah, (2008) 13 SCC 5, this Court observed as follows at page 23 : "48. Article 254 of the Constitution succinctly deals with the law relating to inconsistency between the laws made by Parliament and the State Legislature. The question of repugnancy under Article 254 will arise when a law made by Parliament and a law made by the State Legislature occupies the same field with respect to one of the matters enumerated in the Concurrent List and there is a direct conflict in two laws. In other words, the question of repugnancy arises only in connection with subjects enumerated in the Concurrent List. In such situation the provisions enacted by Parliament and the State Legislature cannot unitedly stand and the State law will have to make way for the Union law. Once it is proved and established that the State law is repugnant to the Union law, the State law would become void but only to the extent of repugnancy. At the same time it is to be noted that mere possibility of repugnancy will not make a State law invalid, for repugnancy has to exist in fact and it must be show....
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....eh lands is, more or less, an empty formality. It does not help the Custodian to implement the provisions of the Central law but, it excludes the benign operation of the State law. 14. The line of reasoning of our learned Brother, Chinnappa Reddy, affords a satisfactory solution to this constitutional impasse, which we adopt without reservation of any kind. The pith and substance of the Punjab Act of 1953 is "Land" which falls under Entry 18 of List II (State List) of the Seventh Schedule to the Constitution. That Entry reads thus: "18. Land, that is to say, rights in or over land, land tenures including the relation of landlord and tenant, and the collection of rents; transfer and alienation of agricultural land; land improvement and agricultural loans; colonisation." Our learned Brother has extracted a passage from a decision of a Constitution Bench of this Court in Ranjit Singh v. State of Punjab3 which took the view that since, the Punjab Act of 1953 is a measure of agrarian reform, it would receive the protection of Article 31-A. It may be recalled that the Act had received the assent of the President as required by the first proviso to that article. The power of the Sta....
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....ht if, there is any special reason for doing so. If the assent is sought and given in general terms so as to be effective for all purposes, different considerations may legitimately arise." Thus it is clear that this Court did not intend to hold that it is necessary that in every case the assent of the President in specific terms had to be sought and given for special reasons in respect of each enactment or provision or provisions. On the other hand, the observation clearly indicates that if the assent is sought and given in general terms it would be effective for all purposes. In other words, this Court observed that the assent sought for and given by the President in general terms could be effective for all purposes unless specific assent is sought and given in which event it would be operative only to that limited extent." 55. Further, in the case Kaiser-I-Hind (P) Ltd. v. National Textile Corporation (Maharashtra North), (2002) 8 SCC 182, this Court made it clear that it was not considering; whether the assent of the President was rightly or wrongly given?; and whether the assent given without considering the extent and the nature of the repugnancy should be taken as no asse....
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....asons for having such law despite the enactment by Parliament. (b) The word "assent" used in clause (2) of Article 254 would in context mean express agreement of mind to what is proposed by the State. (c) In case where it is not indicated that "assent" is qua a particular law made by Parliament, then it is open to the Court to call for the proposals made by the State for the consideration of the President before obtaining assent. 3. Extending the duration of a temporary enactment does not amount to enactment of a new law. However such extension may require assent of the President in case of repugnancy." 57. If it is to be contended that Kaiser lays down the proposition that there can be no general Presidential assent, then such an interpretation would be clearly contrary to the observation of the Bench in Para 27 itself where it states that it is not examining the issue whether such an assent can be taken as an assent. 58. Such an interpretation would also open the judgment to a charge of being, with respect, per in curium as even though while noting the Jamalpur case - (1985) 3 SCC 661, it overlooks the extracts in the Jamalpur case dealing with the aspect of general assen....
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....ate interest, will be amenable to judicial review. In last sixty years, though the concept of public purpose has been given quite wide interpretation, nevertheless, the "public purpose" remains the most important condition in order to invoke Article 300A of the Constitution. 62. With regard to claiming compensation, all modern constitutions which are invariably of democratic character provide for payment of compensation as the condition to exercise the right of expropriation. Commonwealth of Australia Act, a French Civil Code (Article 545), the 5th Amendment of the Constitution of U.S.A. and the Italian Constitution provided principles of "just terms", "just indemnity", "just compensation" as reimbursement for the property taken, have been provided for. 63. Under Indian Constitution, the field of legislation covering claim for compensation on deprivation of one's property can be traced to Entry 42 List III of the Seventh Schedule of the Constitution. The Constitution (7th Amendment) Act, 1956 deleted Entry 33 List I, Entry 36 List II and reworded Entry 42 List III relating to "acquisition and requisitioning of property". The right to property being no more a fundamental right....
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....Act, 1950 is provided in Section 39(1) (e) in respect of forests. The said section provides for two methods for computation of compensation, namely, the average annual income of last 20 to 40 years as provided in Section 29(1) (e) (i) and the estimate of annual yield on the date of vesting as provided in Section 39(1) (e) (ii). It was further argued that in respect of KUZALR Act, the same U.P. Legislature which had the example of Section 39(1)(e) deliberately dropped the second sub-clause and limited the compensation only to the average annual income of the last 20 years. From this it was argued that where there is no annual income, there would be no compensation. 66. It had been further argued that since the expression "average annual income" under Section 39(1) (e) (i) has already been judicially interpreted in the case of Ganga Devi v. State of U.P. (1972) 3 SCC 126 to mean "actual" annual income and not an estimate, therefore, if the forest land is not earning any income, then in the statutory formula set out in KUZALR Act, it would not be entitled to any compensation. 67. The Government is empowered to acquire land by exercising its various statutory powers. Acquisition of l....
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....quisition and taking possession of private property for public purpose. It does not require payment of market value or indemnification to the owner of the property expropriated. Payment of market value in lieu of acquired property is not a condition precedent or sine qua non for acquisition. It must be clearly understood that the acquisition and payment of amount are part of the same scheme and they cannot be separated. It is true that the adequacy of compensation cannot be questioned in a court of law, but at the same time the compensation cannot be illusory. 69. Further, it is to be clearly understood that the stand taken by the State that the right, title or interests of a hissedar could be acquired without payment of any compensation, as in the present case, is contrary to the express provisions of KUZALR Act itself. Section 12 of the KUZALR Act, 1960 states that every hissedar whose rights, title or interest are acquired under Section 4, shall be entitled to receive and be paid compensation. Further, Section 4A of the KUZALR Act makes it clear that the provisions of Chapter II (Acquisition and Modifications of existing rights in Land), including Section 12, shall apply mutati....
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....t land which was vested on the State by operation of law cannot be said to be non-productive or unproductive by any stretch of imagination. The property in question was definitely a productive asset. That being so, the criteria to determine possible income on the date of vesting would be to ascertain such compensation paid to similarly situated owners of neighboring forests on the date of vesting. Even otherwise, revenue authority can always make an estimation of possible income on the date of vesting if the property in question had been exploited by the appellants and then calculate compensation on the basis thereof in terms of Sections 18(1) (cc) and 19(1) (b) of KUZALR Act. We therefore find sufficient force in the argument of the counsel for the appellants that awarding no compensation attracts the vice of illegal deprivation of property even in the light of the provisions of the Act and therefore amenable to writ jurisdiction. 71. That being so, the omission of the Section 39(1) (e) (ii) of the UPZALR Act 1950 as amended in 1978 is of no consequence since the UPZALR Act leaves no choice to the State other than to pay compensation for the private forests acquired by it in acco....