TaxTMI 
TaxTMI 
1977 (10) TMI 123
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....arnataka and Ors.. The Indian Law Reports (Karnataka) 1976 (Vol. 26), 1478. For the sake . of convenience hereinafter in this judgment, reference to the High Court judgment wherever necessary will be made from the said report. FACTS 2. The broad and the common facts of the various cases are in a narrow compass and not in dispute. At the outset, we shall state them mostly from the High Court judgment. We were not concerned to go into the special facts of some cases in these appeals. They may have to be looked into, if necessary, by the High Court in the light of this judgment. The Karnataka State Road Transport Corporation (hereinafter called the Corporation) was established by the State Government of Karnataka on August 1, 1961 under Section 3 of the Road Transport Corporations Act, (Central Act 64 of 1950). The Corporation was a party respondent to the writ petitions and is an appellant before us alongwith the State of Karnataka. We are stating the facts mostly from Civil Appeal No. 1985 of 1976 arising out of Writ Petition No. 817 of 1976. The Corporation published in the Karnataka Gazette dated May 16, 1974 a draft scheme for nationalisation of Contract Carriages in the St....
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....filed in the High Court by the various contract carriages operators, financiers and others including those who had filed or succeeded in the earlier writ petitions. 3. The High Court has allowed all the writ petitions, struck down the Act as unconstitutional and has declared it null and void. The notifications have been quashed. The respondents in the writ petitions, namely the appellants before us, were directed to restore the vehicles with the relative permits and all other assets to the operators from whom they were taken over. Some consequential directives for determination of damages in some later proceedings were also given. 4. We now proceed to state the findings of the High Court on the various points argued before it not in the order as finally recorded in para 98 of its judgment at page 1530 but in the order the points were urged before us by Mr. Lal Narayan Sinha, learned Counsel for the appellants. They are as follows: (1) The acquisition is not for a public purpose. (2) The compensation or the amount provided for or the principles laid down in the Act for payment in lieu of the various vehicles, permits and other assets is wholly illusory and ar....
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....urces of the community are so distributed as best to subserve the common good and that the operation of the economic system does not result in the concentration of wealth to the common detriment . In view of the aforesaid it was considered necessary to acquire the contract carriages run by private operators." Accordingly the Karnataka Contract Carriages (Acquisition) Ordinance, 1976 was promulgated. The Bill seeks to replace the Ordinance. 8. The title of the Act indicates that it is "An Act to provide for the acquisition of contract carriages and for matters incidental, ancillary or subservient thereto." In the Preamble it is stated: Whereas contract carriages and certain other categories of public service vehicles are being operated in the State in a manner highly detrimental and prejudicial to public interest; And whereas with a view to prevent such misuse and also to provide better facilities for the transport of passengers by road and to give effect to the policy of the State towards securing that the ownership and control of the material resources of the community are so distributed as best to subserve the common good and that the operat....
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....uire the vehicles, permits and all rights, title and interest of the contract carriage operators in or over lands, buildings, workshops and other places and all stores, instruments, machinery, tools, plants etc. as mentioned in Sub-section (2) of Section 4 of the Act. It was not a case where some chattels or movables were merely acquired for- augmenting the revenue of the State or for its commercial purposes. Mr. Sen heavily relied upon some passages in the judgment of this Court in The State of Bihar v. Maharajadhiraja Sir Kameshwar Singh of Darbhanga and Ors. [1952]1SCR889 to strengthen his submission. The said decision was concerned with the vires of the Bihar Land Reforms Act, 1950 by which the Zamindaries or intermediaries' interest were acquired by the State. One of the provisions in the Act was for acquisition of arrears of rent due to the intermediaries from their respective tenants. This provision was struck down as being unconstitutional. And in that connection, Mahajan, J. as. he then was, said at page 944: It has no connection with land reform or with any public purpose. It stands on the same footing as other debts due to zamindars or their other movable pr....
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....cing a legal fiction as observed by the High Court but with the object of putting the challenge to the factum of public purpose beyond the pale of any attack. The use of the word "deemed" does not invariably and necessarily implies an introduction of a legal fiction but it has to be read and understood in the context of the whole statute. It may well be that the State is not authorised to compulsorily acquire any property merely to augment its revenue although in a larger sense one can say that augmentation of the coffers of the State is also for a public purpose. But it is not always correct to say that a property cannot be acquired merely for a commercial need of the Government. Under the Land Acquisition Act, 1894 land can be acquired for commercial purposes of the Government a Public Corporation or a Company. Why can't movables be acquired for commercial purposes if the exigencies of the situation so require ? A particular commercial activity of the State may itself be for a public purpose. Acquisition of property either movable or immovable may in such a situation be for a public purpose. 12. Mr. Sen referred to Section 19 of the Road Transport Corporations Act and spec....
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....ts of the petitioners secured under Article 31(2)." 15. The history in relation to the provision of payment of compensation or the amount in Article 31(2) of the Constitution is interesting and clearly points out the difference in the approach to the question by this Court and the Parliament resulting in the amendments in the provisions from time to time as and when some important and leading judgment were handed down by this Court which according to the Constituent Body did not correctly lay down the law as it intended the Article to mean. The word used in the original Article 31(2) was 'compensation'. In The State of West Bengal v. Mrs. Bela Banerjee and Ors.: [1954]1SCR558 . compensation was held to mean a just equivalent of what the owner has been deprived of. Then came an amendment in the Article by the Constitution (4th Amendment), Act, 1955 stating in Clause (2) of Article 31 "......no such law shall be called in question in any court on the ground that the compensation provided by that law is not adequate." In spite of the amendment, this Court in some decisions-to with P. Vajravelu Mudaliar v. The Special Deputy Collector, Madras [1965]1SCR614 . and Union of Ind....
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.... law of acquisition cannot be wholly arbitrary and illusory. When we say so we are not taking into account the effect of Article 31C inserted in the Constitution by the 25th Amendment (leaving out the invalid part as declared by the majority). 16. Just to support the principle of law culled out above, we may refer to a few lines in some of the judgments in Kesavananda Bharati's case. Sikri C. J., has said at page 197: "Applying this to the fundamental right of property, Parliament cannot empower legislatures to fix an arbitrary amount or illusory amount or an amount that virtually amounts to confiscation, taking all the relevant circumstances of the acquisition into consideration." Shelat and Grover JJ., in addition to what they have said earlier categorically say at page 285:"...and further that the "amount" is neither illusory nor it has been fixed arbitrarily, nor at such a figure that it means virtual deprivation of the right under Article 31(2). The question of adequacy or inadequacy, however, cannot be gone into." Hedge and Mukherjee JJ., have observed at page 338: "Therefore, stated briefly, what the 25th Amendment makes non-justiciable is an enquiry into the question....
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....cing an argument before us which would take away the basis of the High Court Judgment in this regard. With respect to each and every relevant section on the question of payment of the amount in lieu of the property acquired he suggested such a reasonable, harmonious and just construction by the rules of interpretation that we found no difficulty in accepting his argument-rather, were glad to do so. The other side on the interpretation so put, which we are going to mention hereinafter, felt satisfied to a large extent. Mr. Sinha also advanced some argument with reference to the valid part of Article 31C read with Clauses (b) and (c) of Article 39 but very wisely did not choose to heavily rely upon it. On the interpretation of the statute as canvassed by him, there hardly remained any necessity of it. 18. Section 3 of the Act defines in Clause (a) 'acquired property' to mean the vehicles and other property vesting in the State Government under Section 4. The definition of 'contract carriage' is an inclusive one with reference to certain provisions of Motor Vehicles Act. Clause (h) runs thus: 'contract carriage operator' means an operator holding on....
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....rbitrator, the State Government and the person interested shall state what in their respective opinion is the amount payable: (e) the arbitrator shall, after hearing the dispute, make an award determining the amount which appears to him just and reasonable and also specifying the person or persons to whom the amount shall be paid; and in making the award he shall have regard to the circumstances of each case and the provisions of the Schedule so far as they are applicable; (f) where there is any dispute as to the person or persons who are entitled to the amount, the arbitrator shall decide such dispute and if the arbitrator finds that more persons than one are entitled to the amount, he shall apportion the amount, amongst such persons; (g) nothing in the Arbitration Act, 1940 (Central Act X of 1940), shall apply to arbitrations under this section. (2) Every award made by the arbitrator under Clause (e) of Sub-section (1) shall also state the amount of costs incurred in the proceedings before him and by whom and in what proportions such amount is to be paid. 20. A notice under Section 7 is to be given to all persons interested in. respect of th....
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....ms is payable to the employee directly, such part shall be paid to him directly. A monopoly is created in favour of the Corporation by the 20th section. 21. Then comes the Schedule spoken of in Section 6 which provides for principles for determination of the amount in relation to the various properties acquired under the Act. Para 1 deals with the principle and the manner of determination of the amount for the vehicles. The acquisition cost is to be determined first and then a certain percentage is to be deducted in accordance with the Table appended to Sub-para (1). The explanation says: For the purpose of this paragraph "acquisition cost" shall be the aggregate cost of the chassis as well as the body of the contract carriage as charged by the manufacturer of chassis and by the body builder. In respect of almost all other properties acquired the amount to be paid is by and large the market value of the property; vide paras 2, 3 and 4. Provisions have been also made for payment of the amount in respect of the workshops in para 5 and in respect of stores in para 6. Some compensation, has been provided in para 7 of the Schedule for every permit acquired under the Act, alt....
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.... estimate you may have regard to analogous cases." It is worthwhile to quote a few words from the judgment of Fletcher Moulton L.J. at page 458. Under the phrase" "Regard may be had to" the facts which the Court may thus take cognizance of are to be "a guide and not a fetter." "This Court speaking through one of us (Beg J., as he then was), has expressed the same opinion in the case of Saraswati Industries Syndicate Ltd. Etc. v. Union of India [1975]1SCR956 . Says the learned Judge at page 959: "The expression "having regard to" only obliges the Government to consider as relevant date material to which it must have regard." 24. The arbitrator, therefore, reading Section 6(1) as a whole is not obliged to fix the amount as specified in the Schedule. But he has to fix the amount which appears to him just and reasonable on the totality of the facts and circumstances keeping primarily in mind the amount mentioned in the Schedule. 25. Another apparent conflict was writ large on the phraseology of Sub-section (2) of Section 6 and the provisions contained in Sections 10 and 11. Section 10 provides for the deductions of the various amounts at the outset from the amount determined by t....
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....r. 27. On the interpretations aforesaid which we have put to the relevant provisions of the Act, it was difficult-rather impossible-to argue that the amount so fixed will be arbitrary or illusory. In some respects it may be inadequate but that cannot be a ground for challenge of the constitutionality of the law under Article 31(2). The respondents felt quite satisfied by the interpretations aforesaid and could not pursue their attack on the vires of the Act on that ground. Legislative Competence Re: Contract Carriages Plying on Inter-State Routes 28. The number of such carriages and such permits compared to the total number of vehicles acquired was very few. It was about 20 to 25 only. It is no doubt true that under the Ordinance contract carriages with Inter-State permits were not sought to be acquired. The Act, however, has done so and with a retrospective effect. Question is whether the State Legislature of Karnataka has gone beyond its powers and competence in making such a provision. In that regard it was also canvassed before us whether it was possible to read down certain provisions of the Act to save it from constitutional invalidity. If so, to what extent and i....
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....d the view of the High Court and held that the impugned section fell within the legislative power of the State under Entry 20 of List III of Schedule Seven of the Government of India Act, 1935 corresponding to Entry 35 of List III of the Seventh Schedule to the Constitution. The said decision has been followed by this Court in Tansukh Rai Jain v. Nitratan Prasad Shaw and Ors. 1965 S.C.R. 31. 31. Mr. Sen submitted that the portion of the Statute providing for acquisition of contract carriages running on Inter-State routes is in reality legislating on the subject of Inter-State trade and commerce. The State Legislature was not competent to do so. In support of his argument, learned Counsel referred to some of the American decisions viz. United States of America, Plff. in Err., v. Dan Hill 63 Law Ed. 337. Claude R. Wickard, Secretary of Agriculture of the United States etal v. Roscoe C. Filburn 87 Law Ed. 122. The Steamer Daniel Ball, Byron D. Ball and Jessie Ganoe, Claimants, Appit. v. United States 19 Law Ed. 999. In Dan Hill's case (supra) it was held that the transportation of intoxicating liquor from one State to another was in itself Inter-State commerce and the Congress ....
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....ny way violate or militate against the provisions of the Road Transport Corporation Act either, as argued by Mr. Sen. 33. Now we proceed to refer to some of the provisions of the Motor Vehicles Act, to repel Mr. Sen's arguments even with reference to that Act. But it cannot be rejected fully. A portions of it for the reasons to be hereinafter stated has got to be accepted. 34. Under Section 23, every owner of a Motor Vehicle has got to cause his vehicle to be registered by a registering authority in the State in which he has the residence or place of business where the vehicle is normally kept. Almost all the Inter-State vehicles (there may be a few exceptions) are registered in the State of Karnataka. They are normally kept there. If a vehicle registered in one State has been kept in another State for a period exceeding 12 months, then the registration has to be changed in accordance with Section 29. Under the second proviso to Section 45(1) if it is proposed to use a vehicle in two or more regions lying in different States, an application for a permit has to be made to the Regional Transport Authority of the region in which the appellant resides or has his principal pla....
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....above by and large the law is not invalid. But to maintain its constitutionality in full, on the well-known principles of law established and noticed in several decisions, such as, in The Hindu Women's Rights to Property Act 1937 and the Hindu Women's Rights to Property (Amendment) Act, 1938 and A Special Reference under Section 213 of the Government of India Act, 1935: [1941] F C R, 12. R.M.D. Chamarbaugwalla v. The Union of India 1957 S.C.R.931 and Gulabhai Vallabhbhai Desai etc. v. Union of India and Ors.: [1967]1SCR602 a reading down of some of the provisions is permissible. And that reading down will be only to this effect. Vehicles kept and registered in the State of Karnataka in respect of which initially the Inter State permit has been granted by this State have validly been acquired. The permit acquired in respect of those vehicles will be-the permit operative within the territory of the State of Karnataka. The counter-signed portion of the permit, which as pointed out above on the authorities of this Court is in substance and in effect a separate permit authorising the permit holder to ply the bus in another State, cannot be acquired. Such an acquisition will fall....
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....ny of the writ petitioners to file a petition in the High Court either in the same writ petition or a fresh one for adjudication and decision of the special facts of a particular case, if necessary, in the light of this judgment. It is hoped that since the matter has been considerably delayed by now, very early and expeditious steps would be taken for determination and payment of the amounts in respect of the acquired property to the persons interested in accordance with the Act in the light of this judgment. We shall make no order as to costs in any of the appeals. V.R. Krishna Iyer, J. 39. We go wholly with our learned brother Untwalia J. Then why a separate after word ? 40. Because, to put it simplistically, a legislation for the nationalisation of contract carriages by the Karnataka State, where provision has been made for fair compensation under present circumstances, has still been struck down by the High Court on the surprising grounds of absence of public purpose, illusoriness of compensation State take-over being beyond the orbit of Article 39(b) and the like and to express ourselves emphatically in reversal on the obvious, yet basic, issue we itemise below which ....
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....ose other benefits claimed to flow out of public ownership, social control, commitment to community, parliamentary accountability and vaster capability ? Does R. C. Cooper: [1970]3SCR530 . remain a legal tender even after demonetisation on the question of acquisition vis a vis compensation, by the 25th (Constitution) Amendment ? Can the theory of 'illusory compensation' be apocryphal or be exaggerated to apply to diminished compensation as a revised reincarnation of 'adequate compensation' still menacing projects of nationalisation ? How do we conceptualise 'material resources' and 'public purpose' in our current constitutional setting ? When cryptic phrases expressive of constitutional culture and aspirational future, fundamental to the governance of the nation, call for interpretative insight, do we merely rest content to consult the O.E.D. and alien precedents, or feel the philosophy and share the foresight of the founding fathers and their telescopic faculty ? Is the meaning of meanings an artless art? Holmes Towne V. Eigner, 245U. S..418: 62L.ed. 372 J. in lovely language, stated 'what oft was thought but never so well expressed': &nb....
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....er of the Constitution and its imperatives and the laws designed to inaugurate a Human Tomorrow, compels us in all humility and aware of inadequacy, to lend our pen to the reversal of the decision under appeal which de facto proceeds on fastidious societal values of vanishing validity in the changed setting and is partly founded on exotic juridical doctrines (eminent domain) incongruous with the legitimate realities of the emerging Indian Order as are writ into Article 31(2) and more unmistakably in Article 31C read in the manner of Keshavananda Bharati 1972CriLJ1526 along side of Article 39(b) and (c). 46. The social philosophy of the Constitution shapes creative judicial vision and orientation. Our nation has, as its dynamic doctrine., economic democracy sans which political democracy is chimerical. We say so because our Constitution, in Parts III and IV and elsewhere, ensouls such a value system and the debate in this case puts precisely this soul in peril. 47. Friedman has said in his 'Legal Theory and Social Evolution'. The lawyer cannot afford to isolate himself from the social process. His independence can never be more than relative and it is only a c....
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....rt, writes: The Renton Committee points out that the problem of obscure statute law is important to every citizen. There is hardly any part of our national life or of our personal lives that is not affected by one statute or another. The affairs of local authorities, nationalised industries, public corporations and private commerce are regulated by legislation. The life of the ordinary citizen is affected by various provisions of the statute book from cradle to grave. The committee might have added that the rule of law and parliamentary democracy itself are imperiled if laws are incomprehensible. They did say that it is of fundamental importance in a free society that the law should be readily ascertainable and reasonably clear and that otherwise it is oppressive and deprives the citizens of one of his basic rights. It is also needlessly expensive and wasteful. Reed Dicerson, the famous American draftsman, said it cost the government and the public "many millions of dollars annually. 52. It must be said in fairness to both sides that Shri Lal Narain Sinha whole-heartedly agreed with Shri Asoke Sen (they appeared on opposite sides) that the legislation ....
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....plitude of the 'directive principle' in Article 39(b) and (c) in the context of nationalisation of public utilities ? 2(a) Can State monopoly by taking over private property be a modus operandi of distribution of ownership and control of the material resources of the community to subserve the common good, within the framework of Article 39(b) ? 2(b) Are distribution and nationalisation antithetical of overlapping ? 2(c) What is the connotation of the expression 'material resources'? Can private buses be regarded as material resources of the community ? 55. These and cousin issues are the legal-economic points canvassed before us and are sure to occupy the center of the stage when management and control of growth in effective measure for common weal expand the frontiers of public law with a view to implement the 'distributive justice' embodied in Articles 38 and 39 and, by Article 37, made fundamental in the governance of the country. Dr. Ambedkar, in words significant, said: In enacting this part (Part IV) of the Constitution, the Assembly is giving certain directions to the future legislature and the future executive t....
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....t for abdication of judicial power; for where Legislation is colourable, measures make-believe or orders mala fide, the judges are the masters of the situation and this Court, under Article 141, declares the law in that supreme spirit. But courts must be circumspect not to rush in where serious reflection will make them fear to tread nor to resort to adroit circumvention because of economic allergy to a particular legislative policy. 60. At this stage, a glance at the raw realities, to abolish which Article 31(2), Article 31C and Articles 38 and 39 have been enacted, is necessary. Poverty has, for ages, been the omnipresent reality of Indian life. Stark inequalities have been chronic and the 'hidden hunger' (to use Myrdal's phrase) of the people have pushed the Freedom Movement forward in the socialistic direction toward a better life. The fascicules of clauses in the Constitution we have referred to is calculated to prevent the revolution of rising expectations from becoming a revolution of rising frustrations. These compulsions must inform legal interpretation. For, in the words of Seton Pollock, The law itself, though of crucial social importance, is only one e....
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....rine and 'distributed to subserve the common good' should not reduce lofty constitutional considerations into 'hollow concepts, tea-cup debates and impotent ideas (which) debase modern jurisprudence' and are 'intellectually subversive', to use the indignant expressions of John Batt. Nietzsche once said: 'The great problems are in the streets'. Abraham Lincoln warned that 'the dogmas of the quiet past are no longer adequate to the stormy present.' Our legal doctrines, canons of interpretation and constitutional attitudes must therefore take not of this adaptational potential and response to realities. The scheme of the impugned statute 64. Coming now to the concrete provisions of the Act, tested on the anvil of Article 31(2) and 39(b) and (c), we have to get a hang of the legislative project. Its purpose is to acquire contract carriages from all private sources. The reason for this measure of nationalisation is set out in the 'whereas' paragraphs. In broad terms, it is.... that private contract carriages are being operated in the State in a manner highly detrimental and prejudicial to the public interest. It is further claimed th....
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.... purpose ?; and (b) If there is, what are the ways to fulfil that purpose ? The ends cannot be telescoped into the means. Once this perspicacity in thinking is present, it is unarguably obvious that the State Government's or the State Corporation's purpose is a public purpose. Putting aside the possible distortions, historically proved, of class domination of the State apparatus and assuming the values of our constitutional order, the State symbolizes, represents and acts for the good of society. Its concerns are the ways of meeting the wants of the community, directly or otherwise. The purpose of a public body to run a public transport service for the benefit of the people, operating it in a responsible manner through exercise of public power which is controlled and controllable by society through its organs like the legislature and, at times, even the court, is manifestly a public purpose. Does the purpose subserve some public use or interest or produce some public good or utility ? If it does, the purpose becomes public. 'Public' qualifies the object. Black's Legal Dictionary elucidates the expression: The term is synonymous with government purpose, ....
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....9;seized' for feeding a starving section of the community, it is a public purpose that is met but, if the same bread is desired for the private dinner of a political maharajah who may pro tern fill a public office, it is a private purpose. Of course, the thing taken must be capable of serving the object of the taking. If you want to run bus transport you cannot take buffaloes. 68. A public purpose is vastly wider than public necessity, even as a mere purpose is more pervasive than an urgency. That which one sets before him to accomplish; and end, intention or aim, object, plan, project-is purpose (Black's Legal Dictionary). A need or necessity is compulsive, urgent, unavoidable. In purpose, there is dires; in necessity, there is imperative demand. The presumption is that a use is public, if the legislature has declared it to be such and the decision of the legislature must be treated with the consideration due to a co-ordinate department of the government of the state'. Its effect is not conclusive but considerable. 'Public purpose' should be liberally construed, not whittled down by logomachy. 69. The concept of 'public purpose' has been considere....
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....t was explicitly stated that 'the State will progressively assume the predominant and direct responsibility from setting on new industrial undertakings and for developing 'transport facilities'. Indeed, the State was to become the agency for planned national development and the socialistic pattern of society as the national objective required that all industries, of basic and strategic importance, or in the nature of public utility services should be in the public sector'. There was a division and distribution, in a broad manner, of industries and utilities between the private and the public sector. Stress was laid on the need to improve the living and working conditions of workers as well as their efficiency and a schedule in which road transport figures (Schedule B) was appended setting out those categories which would be progressively State-owned and in which the State would therefore generally take the initiative in establishing new undertakings. 71. When we ascertain the content of 'public purpose', we have to bear the above factors in mind which mean that acquisition of road transport undertakings by the State will undoubtedly be a public purpose. I....
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....sities of the State' cannot cut back upon the ambit of the concept. 74. It is significant that Das J. (as he then was) has in Kameshwar, observed: We have been referred to some American authorities for ascertaining the meaning and implication of 'public use' an expression which obviously is of a more limited import than the expression 'public purpose used in our Constitution. 75. The learned Judge explains that the notion of 'public use' is-rapidly changing in America, for in the modern view, 'public use' means 'useful to the public' 76. It is right to remember, what has been mentioned in Shri Justice Das' judgment, that modern conditions and the increasing inter-dependence of the different human factors in the progressive complexity of the community make it necessary for the government to touch upon and limit individual activities at more points than formerly. In Corpus Juris the meaning of the term is stated to be flexible and varying with time and circumstances. All that can be said is that it embraces public utility, public advantage, public interest or object. It is thus quite clear that a fresh outlook whi....
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....rective Principles, that 'it represents not the temporary will of a majority in the Legislature but the deliberate wisdom of the nation'. Shri Justice Mathew explained this idea at the Second Kerala State Lawyers' Conference thus: ... State is not an end in itself, but only an instrumentality, to be evaluated in terms of its contribution to the welfare of the political community. The concept of the laissez faire of the nineteenth century arose from a philosophy that general welfare is best promoted when the intervention of the State in economic and social matters is kept to. the lowest possible minimum. The rise of the welfare State proceeds from the political philosophy that the greater economic and social good of the greater number requires greater intervention of the Government and the adoption of public measures aimed at general economic betterment. Today, people cry for intervention of Government when anything goes wrong in any front. They demand interjection of Government in every aspect and sphere of life. Will 'public purpose' run riot ? 80. The consternation that if anything can be acquired compulsorily for a public purpose everything wil....
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...., go the way world history has blown away gross mis-rule. The court is not the only sanctuary in a democracy against caprice dressed in 'little brief authority. If the act becomes so shockingly iniquitous to violate the law of life, the Court will have enough reserve power under the Constitution to speak for law and to save the government from itself! These extreme lurid, recondite picturisations cannot be transformed into probabilities and realities, especially in a case where we find little to complain in fairness of procedure or delivery of the end product. Of course, in a 'radical change' situation, certain classes, invoking varnishing values, may cry 'wolf' and in any welfare legislation stray injustice is unavoidable. Perfection is God's property, to aim at its is human progress. We find no legal flaw in the measure under attack. 81. We think it is a fallacy to deny the presence of public purpose merely because its satisfaction by readily available private purchase is possible in the circumstances. It is for the State to decide whether it should pay market price and buy or resort to Article 31(2) and pay an amount which may be administratively feasi....
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....e a law for acquisition of private property if the taking over has no relation to State necessity. Such a legislation will be ultra vires of the powers of the State Legislature. There is material in the Act itself to show that the Legislature was conscious of the fact that the acquisition under Section 4 is not for a public purpose....When the purpose of the acquisition is 'deemed' to be a public purpose, the only meaning possible is that whereas the purpose of the acquisition is not in reality a public purpose, the State Legislature requires the purpose to be treated as if it were a public purpose. It is rather an admission on the part of the Legislature that the purpose of the acquisition is not a public purpose. (pp. 1515-16) 82. If this were good law and logic, the States' operations might shrink into midget size with large spaces for laissez faire economics. The flaw and fallacy of the law and the fetter on the State in this constitutional interpretation goes far beyond this Act and to mortality. We have no hesitation in visualising a wider horizon of public purpose as outlined by us earlier and consequentially to overrule the view of the High Court. Th....
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....he Round Table Conference, while dealing with the issue of compensation: If the national government comes to the conclusion that the step is necessary no matter what interests are concerned, they will be dispossessed and they will be dispossessed. I might tell you, without any compensation because if you want this Government to pay compensation, it will have to rob Peter to pay Paul and that would be impossible. He reminded the British masters again: I have in mind many things I would have to do in order to equalise conditions. I am afraid that for years together India would be engaged in passing legislation in order to raise the down-trodden, the fallen, from the mire into which they have been sunk by the capitalists, by the land-lords, by the so-called higher classes and then, subsequently and scientifically by the British rulers. If we are to lift these people from the mire then it would be the bounden duty of the National Government of India in order to set its house in order, continually to give preferences to these people and even free them from the burden under which they are being crushed. And if the landlords, zamindars, monied-men an....
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....that any parliament representing the entire community of the nation will certainly not commit a fraud on its own Constitution and will be very much concerned with doing justice to the individual as well as the community. (p. 123, Krishna Shetty, supra) When complications arose on account of judicial interpretation of Article 31 not being in accord with what the framers of the Constitution fancied, amendments to the Constitution came in. Shri Jawaharlal Nehru, speaking on the 4th Amendment, which has since been upheld by this Court, said in Parliament: If we are aiming, as I hope we are aiming and we repeatedly say we are aiming, at changes in the social structure, then inevitably we cannot think in terms of giving what is Called full compensation. Why? Well, firstly because you cannot do it, secondly because it would be improper to do it, unjust to do it and it should not be done even if you can do it for the simple reason that in all these social matters, laws etc., they are aiming to bring about a certain structure of society different from what it is at present. In that different structure, among other things that will change is this, the big difference between the h....
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....the parliamentary debates and so we excerpts portions thereof. Wrote the Commission: Reverting then, to Clause 2 of the Bill, it would be noticed that Sub-clause (a) of this clause deletes the word 'compensation' and introduces in its place the word 'amount' in order to avoid any controversy about the adequacy of the amount which Parliament may direct to be paid in the manner specified by the clause, where property belonging to a citizen is compulsorily acquired or requisitioned. It also provides, as did Article 31(2) in the unamended form, that a law passed by virtue of the powers conferred by Article 31(2) shall not be called in question in any Court on the ground that the amount so fixed or determined is not adequate; and it adds that the said law cannot also be challenged on the ground that the whole or any part of such amount is to be given otherwise than in cash. Sub-clause (b) of Clause. 2 of the Bill inserts Clause (2B) after Clause (2A) in the existing Article and it lays down that nothing in Sub-clause (f) of Clause (1) of Article 19 shall effect any such law as is referred to in Clause (2): In other words, an additional safeguard has bee....
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....rective Principles enshrined in Clause (b) and (c) of Article 39 in Part IV of the Constitution, and, in that sense, the clause under consideration can be appropriately described as historic. After it is adopted, Parliament will have heralded a new era in the pursuit of the goal placed before the nation by the Constitution to establish social and economic justice in this country. The Commission is in full agreement with this object of the clause. In the two decades after the Constitution was passed, the inter-relation between the Directive Principles and Fundamental Rights have been often considered by the Supreme Court. The Directive Principles enshrined in Part IV are, in terms, declared to be non-justiciable and yet, Article 37, which makes this declaration, emphatically adds that the said principles are nevertheless fundamental in the governance of the country and it ordains that it shall be the duty of the State to apply these principles in making laws. In the Directive Principles, however, one finds an even clearer statement of the social revolution. They aim at making the Indian masses free in the positive sense, free from the passivity engendered by centur....
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....roperty, under Article 31, consists of three things: one, the property shall be acquired by or under a valid law; second, it shall be acquired only for a public purpose; and, thirdly, the person whose property has been acquired shall be given an amount in lieu thereof, which, as I have already said, is not arbitrary, illusory or shocking to the judicial conscience or the conscience of mankind. (196-197 pp) The payment may be substantially less than the market value, the principles may not be all-inclusive, but the court would not, because it could pot, upset the taking save where the principles of computation were top arbitrary and illusory to be unconscionably shocking. 91. Shri Justice Shelat, with the concurrence of Shri Justice Grover, put his viewpoint thus: It is significant that the amount can be determined in ' accordance with specified principles, if it is not fixed by the ' law itself. Moreover, its adequacy cannot be questioned in a court. The use of the word 'principles' and the question of inadequacy can only arise if the amount has some norm. If it has no norm no question of specifying any principles arises nor can there be any occasi....
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....o great weight. It will be for the aggrieved party to clearly satisfy the Court that the basis adopted by the legislature has no reasonable relationship to the value of the property acquired or that the 'amount' to be paid has been arbitrarily fixed or that the same is an illusory return for the property taken. So long as the basis adopted for computing the value of the property is relevant to the acquisition in question or the amount fixed can be justified on any such basis, it is no more open to the court to consider whether the amount fixed or to be determined is adequate. But it is still open to the court to consider whether 'amount' in question has been arbitrarily determined or whether the same is an illusory return for the property taken. It is also open to the court to consider whether the principles laid down for the determination of the amount are irrelevant for the acquisition or requisition in question. To put it differently, the judicial review under the amended Article 31(2) lies within narrow limits. The court cannot go into the question whether what is paid or is payable is compensation. It can only go into the question whether the 'amount' i....
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....ly, that though it is not open to the court to question a law under Article 31(2) on the ground that the amount fixed or determined is not adequate, Courts would have the power to question such a law if the amount fixed thereunder is illusory; if the principles, if any are stated, for determining the amount are wholly irrelevant for fixation of the amount, if the power of compulsory acquisition or requisition is exercised for a collateral purpose; if the law offends constitutional safeguards other than the one contained in Article 19(1)(f); or, if the law is in the nature of a fraud on the Constitution. I would only like to add, by way of explanation, that if the fixation of an amount is shown to depend upon principles bearing on social good it may not be possible to say that the principles are irrelevant. (p. 993) (emphasis added) 93. It is regrettable that two significant points made by brother Chandrachud J. have slipped out of the scrutiny of the High Court and we have emphasized them for identification. Are the principles wholly irrelevant ? Do the principles bear on social good ? In the present case, few will agree that the principles are wholly irrelevant or not ....
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....e economic order. Each word in the article has a strategic role and the whole article is a social mission. It embraces the entire material resources of the community. Its task is to distribute such resources. Its goal is so to undertake distribution as best to subserve the common good. It re-organizes by such distribution the ownership and control. 96. 'Resources' is a sweeping expression and covers not only cash resources but even ability to borrow (credit resources). Its meaning given In Black's Legal Dictionary is: Money or any property that can be converted into supplied ; means of raising money or supplies; capabilities of raising wealth or to supply necessary wants; available means or capability of any kind. And material resources of the community in the context of re-ordering the national economy embraces all the national wealth, not merely natural resources, all the private and public sources of meeting material needs, not merely public possessions. Everything of value or use in the material world is material resource and the individual being a member of the community his resources are part of those of the community. To exclude ownership of pri....
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....andate to the state with a message of transformation of the economic and social order. Firstly, such change calls for collaborative effort from all the legal institutions of the system: the legislature, the judiciary and the administrative machinery. Secondly and consequentially, loyalty to the high purpose of the Constitution, viz., social and economic justice in the context of material want and utter inequalities on. a massive scale, compels the court to ascribe expansive meaning to the pregnant words used with hopeful foresight, not to circumscribe their connotation into contradiction of the objectives inspiring the provision. To be Pharisaic towards the Constitution through ritualistic construction is to weaken the social-spiritual thrust of the founding fathers' dynamic faith. 99. An American political scientist, Benjamin Twiss, commented with jarring exaggeration upon the conservative perspective of the lawyer in the United States of the slump years in the 'thirties:' It is not surprising that lawyers' fame is evanescent Allied with those who are pre-occupied with production and profits to the exclusion of standards of consumption and general well-....
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....deavouring to secure those interests that are within the limits defined.' (Quoted from the Law in America- Bernard Schwartz-p. 34) We have recognised that rights and obligations of long ago do not acquire a static validity in our galloping age and a decent oblivion must put- them back into forgotten antiquity if we, as a nation, are to run on the rails of the rule of law and so we have nullified the attempt to drift back from Bharati to Cooper on 'compensation'. A blend of law as a set of responses to the new needs of expanding society and of Daniel Chapman's advice that 'the known certainty of the law is the safety of all', has played upon our approach. We are aware that in constitutional construction, a limited judicial law making is inevitable 'juristic chemistry', to borrow Roscoe Pound's expressive phrase. "The chemist does not make the materials which go into his test tube: He selects them and combines them for some purpose and his purpose gives form to the result.' Our Constitution makers have had due regard to the felt necessities of the time and the philosophical and political theories about what would best serve the country's pr....