1. Land acquisition under Requisitioning and Acquisition of Immovable Property Act, 1952 — Challenge to compensation principles under Section 8(3)(b) for violating Article 31(2) of the Constitution. (Para 1 , 2 , 5 , 6 )
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1967 Supreme(SC) 252
SUPREME COURT OF INDIA
K.N. WANCHOO, C.J.I., R.S. BACHAWAT, V. RAMASWAMI, G.K. MITTER AND K.S. HEGDE, JJ.
Union of India, Appellant
Versus
Kamalabai Harjivandas Parekh and others, Respondents.
Civil Appeal No. 1564 of 1966,
D/- 7-9-1967.
Advocates Appeared
Mr. G. N. Dikshit, Advocate, and Mr. S. P. Nayar, Advocate for Mr. R. H. Dhebar, Advocate, for Appellant, S. Sorabji, A. J. Rana and P. C. Bhartari, Advocates, and Mr. J. B. Dadachanji, Advocate of M/s. J. B. Dadachanji, and Co., for Respondent No. 1; Mr. I. N. Shroff Advocate, for Intervener No. 1; Mr. J. B. Dadachanji Advocate of Mrs. J. B. Dadachanji and Co., for Intervener No. 2.
Advocates:
A.J.RANA, C.N.DIXIT, I.M.SHROFF, J.B.DADACHAN, P.C.BHARTARI, R.H.Dhebar, S.P.NAIR, S.SORABJI
A.J.RANA, C.N.DIXIT, I.M.SHROFF, J.B.DADACHAN, P.C.BHARTARI, R.H.Dhebar, S.P.NAIR, S.SORABJI
Compensation for compulsory acquisition must be a "just equivalent." Statutory provisions that arbitrarily freeze property value at an anterior date, ignoring subsequent market appreciation without a rational basis, violate the constitutional guarantee of just indemnification.
Headnote:(A) Requisitioning and Acquisition of Immovable Property Act, 1952 - Section 8(3)(b) - Constitution of India - Article 31(2) - Compulsory acquisition of land - Quantum of compensation - The expression "compensation" in the context of the constitutional guarantee against expropriation of property means a "just equivalent" of what the owner has been deprived of. Any principle for determining compensation that denies the owner the true equivalent of the land, such as fixing the value based on an anterior date without a rational basis or relevant circumstances, is arbitrary and violates the requirement of full indemnification. (Paras 8, 9, 10, 13)
(B) Interpretation of Statutes - Section 8(1)(e) - Meaning of "have regard to" - Where a statute mandates an arbitrator to "have regard to" certain provisions, and those provisions prescribe a mandatory mode of valuation, the arbitrator is not granted discretionary power to ignore those modes to award what they personally deem just. If the prescribed mode of valuation is mandatory and arbitrary, the arbitrator is fettered by it. (Paras 14, 15, 18, 19)
(C) Writ Jurisdiction - Article 226 - Delay in filing petition - In cases involving the infringement of a fundamental right, mere delay in approaching the court does not necessarily affect the maintainability of the petition, especially when the actual dispute regarding the assessment of compensation arose shortly before the petition was filed. (Paras 23, 24)
Facts of the case:
A plot of land was requisitioned for military purposes in 1942 and subsequently acquired by the Central Government under a 1952 Act. A dispute arose between the owner and the government regarding the compensation amount. The statutory provision required the arbitrator to award compensation based on the lower of two values: the market value on the date of acquisition, or twice the market value on the date of requisition. The owner challenged the validity of the clause "whichever is less" as being unconstitutional.
Findings of Court:
The provision in the Act that limits compensation to twice the market value on the date of requisition, if that amount is less than the market value on the date of acquisition, is arbitrary. It fails to provide a just equivalent of the property, particularly given the significant rise in land prices post-war.
Issues: Whether the provision limiting compensation to the lower of the market value at the date of acquisition or twice the market value at the date of requisition is ultra vires the constitutional guarantee of just compensation.
Ratio Decidendi: The court ruled that the constitutional requirement of compensation necessitates a just equivalent. Freezing the value of the property at the date of requisition—which may be many years prior to the date of acquisition—without a rational basis is arbitrary. Since the statutory formula forced the arbitrator to ignore the actual market value at the time of acquisition in favor of a frozen anterior value, it denied the owner the true equivalent of the property.
Result: Appeal dismissed.
Legal Category Hierarchy
- constitutional law
- administrative law
- practice and procedure
Table of Contents
2. Validity of Section 8(3)(b) — Whether compensation based on the lower of market value at acquisition or twice the value at requisition constitutes just equivalent. (Para 3 , 14 , 20 )
3. Compensation must be a just equivalent; fixing value at an anterior date without rational basis is arbitrary and fails to indemnify the owner for true loss. (Para 7 , 8 , 9 , 10 , 11 , 12 , 13 , 15 , 16 , 17 , 18 , 19 , 21 , 22 )
4. Compensation principles denying increments in value between a fixed anterior date and acquisition date without rational justification violate the constitutional guarantee of just equivalent. (Para 16 , 17 , 22 )
5. Appeal dismissed — Section 8(3)(b) of the Requisitioning and Acquisition of Immovable Property Act, 1952 declared ultra vires Article 31(2) of the Constitution. (Para 4 , 25 )
6. What constitutes compensation under Article 31(2) of the Constitution prior to the 1955 amendment?
Compensation must be a just equivalent of the property of which the owner is deprived, ensuring full indemnification. While the legislature has discretion in determining the principles for calculation, those principles must ensure the final amount is a just equivalent of the loss sustained. (Para 8 , 12 , 13 )
7. Is the fixation of an anterior date for determining compensation for acquired land legally permissible?
Fixing an anterior date may be valid if there are relevant circumstances, such as preventing price spikes due to anticipated acquisition. However, fixing a date with no rational relation to the value at the time of acquisition is arbitrary and violates the constitutional guarantee of just equivalent. (Para 9 , 10 , 11 , 16 )
8. How should the phrase have regard to be interpreted when directing an arbitrator's determination of compensation?
The phrase must be interpreted based on the context and subject matter. Where the statute prescribes mandatory modes of valuation, the arbitrator is bound to follow those modes rigidly and cannot use the phrase as a license to ignore the statutory formula. (Para 14 , 15 , 18 , 19 )
9. Does delay in filing a petition under Article 226 bar relief in cases of fundamental rights infringement?
Mere delay does not necessarily affect the maintainability of a petition when a fundamental right is infringed. Courts may condone such delay, especially when the legal points raised are of significant importance. (Para 23 , 24 )
Judgement
MITTER, J. :-This is an appeal by a certificate under Art. 133 (1) (c) of the Constitution granted by the High Court of Bombay against the judgment of that court dated August 7, 1964 in Miscellaneous Petition No. of 1962 declaring cl. (b) of sub-s. (3) of S. 8 of the Requisitioning and Acquisition of Immovable Property Act, 1952 (Act 30 of 1952) including the word, "whichever is less" ultra vires Art. 31 (2) of the Constitution and as such void.
2. The facts are as follows. On May 2, 1942 a plot of land bearing S. No. NA-29-A of Juhu, Bombay, was requisitioned for the purposes of the Union of India under R. 75-A (1) of the Defence of India Rules for military purposes. It is common case that this plot of land was acquired for the construction of a road leading to a military aerodrome at Juhu during the last war. The land originally belonged to the husband of the first respondent who claims to have succeeded to it by virtue of a will. The owner of the plot was receiving compensation for the requisition until December 29, 1952 when a notification was issued under S. 7 (1) of the Requisitioning and Acquisition of Immovable Property Act enacted on March 14, 1952, hereinafter referred to as the Act. The notification was to the effect that the land was being acquired by the Government of India, Ministry of Works, Housing and Supply, that it would vest in the Government from the date of the notification and there was a declaration of vesting in the notification itself. As a result of the notification, the owner of the land became entitled to claim compensation. The second respondent, hereinafter referred to as the Collector of Bombay, offered compensation at the rate of Rs. 11/- per sq. yard on February 20, 1961. The petitioner, the first respondent herein, claimed at the rate of Rs. 100/- per sq. yard plus the usual l5 solatium for compulsory acquisition. In the absence of an agreement between the, parties the Chief Judge, Court of Small Causes, Bombay was appointed as arbitrator under S. 8 of the Act. The arbitrator gave notice to the petitioner to put in her claim and also to the Government of India to put in its statement of valuation. The petitioner claimed compensation at the rate of Rs. 75/- per sq. yard plus 15 solatium for compulsory acquisition while the offer of the State was only Rs. 11/- per sq. yard without any solatium. Before the arbitrator could make much headway in the matter, the first respondent preferred a petition in the High Court of Bombay on September 18, 1962 wherein the main prayers were (1) a declaration that the provisions of S. 8 (3) of the Act were unconstitutional as infringing Arts. 31(2), 19 (1) (f) and 14 of the Constitution of India, and (2) the issue of an appropriate writ directing the arbitrator to forbear from awarding compensation on the principles laid down in S. 8 (3) of the Act and commanding him to award just and proper compensation in accordance with law.
3. The Union of India filed an affidavit in opposition affirmed by an Executive Engineer of the Bombay Aviation Division wherein many and diverse objections were raised to the petition. Before the High Court, counsel for the petitioner confined the challenge to the validity of S. 8 (3) of the Act to d. (b) only. The arguments advanced on behalf of the Union of India were: (1) that S. 8 (3) of the Act did not infringe any of the Articles of the Constitution mentioned in the petition and (2) that the petitioner was entitled to no relief because of the delay in presentation of the petition to the High Court.
4. The High Court negatived the contentions put forward on behalf of the Union Of India and allowed the petition holding that cl. (b) including the words "whichever is lass of sub-s. (3) S. 8 of the Act was ultra vires Art. 31 of the Constitution and as such void. The court gave a direction that the assessment of compensation would have to be made subject to this declaration. Hence the appeal.
5. In order to appreciate the contentio
