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SUPREME COURT OF INDIA
K. S. HEGDE, M. HIDDAYATULLAH (CJI), R. S. BACHAWAT, VAIDYNATHIER RAMASWAMI AND A. N. GROVER, JJ.
State of Madhya Pradesh
Versus
Ranojirao Shinde and Another
Civil Appeals Nos. 1730 and 1731 of 1966
Decided On : 21-03-1968
If section 3 read with section 2 (1) is held to be ultra vires of the Constitution, then whole of the Act falls to the ground as the remaining sections of the Act are merely subsidiary or incidental provisions.
There may be several kinds of cash grants. The abolition of some may be permissible, but the definition of cash grants given in section 2 (1) does not make any distinction between the various types of cash grants. Hence the said definition will have to stand or fall as a whole, there being no basis for severing some out of the several grants included therein.
It is impossible for the Court to re-write that clause and confine the definition only to such of the cash grants which the Legislature might be competent to abolish. [Para 4]
The Act is ultra vires Articles 19 (1) (f) and 32 (1) of the Constitution. 1964 JLJ 527 confirmed. (See page 51 of the Twelve Years' Digest) [Para 11]
(2) Constitutional Law - vires of an Act - doctrine of severability - when applicable.
The doctrine of severability is applicable only if it is possible to separate the legal from the unconstitutional portion of the provision. If it is not possible to do so, the entire provision has to be struck down as unconstitutional. AIR 1962 SC 1166 relied on. [Para 5]
(3) Abolition of Cash Grants Act, 1963 (M.P.) - S. 3 - Constitution of India - Arts.31 (2-A) & 31 (2) - rights of the grantee-whether transferred to the State ? - view of the High Court doubted, but the question left open.
It was contended before the High Court that the provisions of section 3 of the Act were completely saved by Article 31 (2) of the Constitution as there was compulsory acquisition of property for public purpose and as compensation was prescribed. The High Court repelled this contention opining that as the law in question cannot be considered as having transferred the rights of the grantee as provided in Article 31 (2-A), the State cannot seek the protection of Article 31 (2).
This conclusion is debatable. It is possible to view the discontinuance of the payment of cash grants under section 3 of the Act as a statutory transfer of rights of the grantee to the State. But there is no need to pursue this line of reasoning in this case 1964 JLJ 527 doubted on this point. (See pages 51 and page 920 of the Twelve Years' Digest) [Para 7]
(4) Constitution of India - Art 31 (2) - choses in action and money - cannot be acquired -public purpose - what is - enrichment of the coffers of the State - is not a public purpose -Abolition of Cash Grants Act, 1963 (M.P.) - Ss.2(1) & 3.
Choses in action and money could not be acquired under Article 31 (2). If it is held that State by the exercise of its power of eminent domain can acquire choses in action and money belonging to its citizens, by paying a fraction of the money taken as compensation, the Fundamental right guaranteed under Article 19 (1) (f) would be deprived of all its contents and that Article will cease to have any meaningful purpose. The power conferred under Article 31 (2) is not a taxing power. That power cannot be utilised for enriching the coffers of the State. It is true that the abolition of the cash grants would augment the resources of the State but that cannot be considered as a public purpose under Article 31 (2). If it is otherwise it would be permissible for the Legislatures to enact laws acquiring the public debts due from the State, the annuity deposits returnable by it and provident fund payable by it by providing for the payment of some nominal compensation to the persons whose rights are acquired as the acquisitions in question would augment the resources of the State. But nothing so bad can be said to be within contemplation of Article 31 (2). 1958 SCR 1122 and 1952 SC 885 referred to. [Para 8]
(5) Constitution of India - Art. 31 (2) - interpretation of - public purpose - compensation amount payable - colourable legislation - what is - Art. 19 (1)(f).
(6) Constitutional Law - colourable legislation - what is.
Article 32 (1) of the Constitution should be construed harmoneously with Article 19 (1) (f). If so construed, the public purpose contemplated by that Article does not include enrichment of the coffers of the State. The compensation referred to in Article 31 (2) is the just equivalent of the value of the property taken. If for every rupee acquired, fifty paisas or less is made payable as compensation the violation of Article 31 (2) would be patent and in these circumstances the exercise of the powers by the Legislature would be considered as a fraud on its powers and consequently the legislation will be struck down as a colourable piece of legislation. [Para 8]
There is no distinction when the Government proposes to take money that is in hands of others and where it abrogates its liability to pay. There is no difference in principle in these two sets of cases. 1964 JLJ 527 confirmed. (See pages 51 and 920 of the Twelve Years, Digest). [Para 9]
(7) Constitution of India - Art. 31 (1) - authority of law - law means valid law - Art. 19.
A law which authorises the State to deprive a person of his property must be a valid law. It must not violate Article 19 (1) (f) which means that it must satisfy the requirements of Article 19 (5). The word 'law' used by Article 31 (1) indicates its limitations and refers back to Article 19 and any law made under Article 31 (1) can be sustained only if the restrictions it imposes are reasonable and in the interest of the general public. The Act which empowers the State to appropriate some one else's property for itself solely with a view to augment the resources of the State, cannot be considered as a rssonable restriction in the interest of the general public. (1960) 3 SCR 887, 1958 SCR 1122 and 1952 SCR 889 relied on. 1964 JLJ 527 confirmed. (See pages 51 and 920 of the Twelve Years' Digest). [Para 10]
Judgment :-
Hegde, J.
In these connected appeals by certificates the question that arises for decision is whether the Madhya Pradesh Abolition of Cash Grants Act of 1963 (Act No. XVI of 1963) is ultra vires the provisions of the Constitution.
The respondents in these appeals were entitled to receive cash grants from the Government of Madhya Pradesh. The impugned Act abolished such grants but provided for the payment of certain compensation to the grantees. The respondents challenged the vires of the Act before the High Court of Madhya Pradesh in Miscellaneous Petitions Nos. 21 and 22 of 1963, on various grounds. The High Court rejected all the contentions advanced on behalf of the respondents excepting one, namely that the Act is ultra vires of Art. 19(1) (f) of the Constitution and is not saved by sub-Art. (5) thereof. After obtaining from the High Court Certificates under Art. 133(1)(c), the State of Madhya Pradesh has filed these appeals. The State is challenging the correctness of the decision of the High Court to the extent it went against it. The respondents on their part, in addition to supporting the findings of the High Court which are in their favour, relied also on the other pleas taken by them before the High Court. As we are of the opinion that the impugned Act is either violative of Art. 31(2) or, in the alternative, Art. 19(1) (f) of the Constitution, we have not thought it necessary to go into the other contentions taken on behalf of the respondents.
Before the impugned Act was enacted, the State of Madhya Bharat which forms part of the new State of Madhya Pradesh, purported to abolish the cash grants payable by it by means of an executive order. That order was unsuccessfully challenged by Madhorao Phalke and others before the High Court. But in appeal this Court in Madhorao Phalke v. State of Madhya Bharat([1961] 1 S.C.R.957) quashed the order in question, holding that the grants in question were recognised by the kalambandis of 1912 and 1935 issued by the Rulers of Gwalior and those' kalambandis are existing laws within the meaning of Art. 372 of the Constitution and consequently the same could not be abrogated by means of an executive order. It may be noted that in that appeal, the appellant challenged the order in question on two grounds, namely (1) that as his right to receive the cash grant had been statutorily recognised by the State of Gwalior, it was not open to the Government of Madhya Bharat to exiting that right merely by an executive order, and (2) that that right being property the same could not be divested , without payment of compensation under Art 31 of the Constitution. This Court allowed the appeal on the first ground and consequently it did not deal with the second. After the decision of this Court in that case, the impugned Act was enacted by the Madhya Pradesh legislature on April, 5, 1963. It received the assent of the President on July 25, 1963 and was published in the Madhya Pradesh Gazette Extraordinary on August 2, 1963. The Act comes into force on such date as the Government may by notification appoint. Even before that notification was issued, the petitions from which these appeals arise were instituted in the High Court. We are given to under stand that in view of those petitions, the Act has' yet been brought into force.The long title of the Act says that it is an Act to provide for the discontinuance of cash grants in Madhya Pradesh and to make provisions for other matters connected therewith. It contains twelve sections. Section 11 sets out their short title, extent and commencement of the Act. Section 2 defines some, of the expressions found in the Act. Section 3 is the most important section. it purports to abolish certain cash grants. Section 4 provides for statement of claims by the grantees. Section 5 provides the manner of determining the compensation payable. Section 6 prescribes that appeal, revision and review under the Act to be in accordance with Madhya Pradesh Act
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