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HIGH COURT OF ANDHRA PRADESH
MOHD.AHMED ANSARI,JAGANMOHAN REDDY, JJ.
Veernath
Versus
State of Hyderabad (Now Andhra Pradesh)
Writ Petns. Nos. 44, 50, 51, 58 and 59 of 1954
Decided On : 17-07-1957
HYDERABAD (ABOLITION OF CASH GRANTS) ACT, 1952 - CONSTITUTIONALITY - CASH GRANTS - PROPERTY - COMPENSATION - DISCRIMINATION - AMENDMENT OF ART. 31 - EFFECT.
Fact of the Case:
Five writ petitions challenged the constitutionality of the Hyderabad (Abolition of Cash Grants) Act, 1952, on grounds of discrimination and confiscation. The Act abolished cash grants specified in the Schedule without compensation, except for certain exemptions. Two petitioners held cash grants under Part B of the Schedule and challenged the compensation provided as illusory. Three petitioners held cash grants under Part C of the Schedule and received no compensation.
Finding of the Court:
1. Cash grants were held to be property within the meaning of Art. 31 of the Constitution, as they were heritable, enjoyed without rendering services, and subject to certain restrictions. 2. The abolition of cash grants without compensation under S. 3(1) of the Act violated Art. 31 as it stood before the Constitution (Fourth Amendment) Act, 1955. 3. The compensation provided for holders of cash grants under Part B of the Schedule was not illusory and satisfied the requirement of full and fair money equivalent. 4. S. 3(2)(b) of the Act, which abolished cash grants under Part C of the Schedule without compensation, was void under Art. 13(2) as it contravened Art. 31. The subsequent amendment of Art. 31 did not revive the provision because it was void from its inception.
Issues: 1. Whether cash grants were property within the meaning of Art. 31 of the Constitution. 2. Whether the abolition of cash grants without compensation violated Art. 31. 3. Whether the compensation provided for holders of cash grants under Part B of the Schedule was illusory. 4. Whether S. 3(2)(b) of the Act, which abolished cash grants under Part C of the Schedule without compensation, was void under Art. 13(2).
Ratio Decidendi: 1. The Court held that cash grants were property within the meaning of Art. 31, as they were heritable, enjoyed without rendering services, and subject to certain restrictions. The Court relied on its earlier decision in Venkat Mungabai v. Hyderabad State, where it held that abolishing cash grants without compensation was contrary to Art. 31. 2. The Court held that the abolition of cash grants without compensation under S. 3(1) of the Act violated Art. 31 as it stood before the Constitution (Fourth Amendment) Act, 1955. The Court relied on the Supreme Court decisions in State of West Bengal v. Subodh Gopal Bose and Dwarkadas Shrinivas v. Sholapur Spinning and Weaving Co. Ltd., which held that expropriation of property without compensation violated Art. 31. 3. The Court held that the compensation provided for holders of cash grants under Part B of the Schedule was not illusory. The Court noted that the compensation was based on a formula that took into account the amount of the grant and the number of years it had been received. The Court also noted that the grantees were subject to certain restrictions, such as a prohibition on alienation and a requirement to obtain permission for travel outside the Hyderabad State. 4. The Court held that S. 3(2)(b) of the Act, which abolished cash grants under Part C of the Schedule without compensation, was void under Art. 13(2) as it contravened Art. 31. The Court noted that the provision was void from its inception and was not revived by the subsequent amendment of Art. 31.
Final Decision: The Court allowed W.P. Nos. 44, 50, and 51 of 1954 and declared the stoppage of cash grants to the petitioners invalid. The Court dismissed W.P. Nos. 58 and 59 of 1954.
MOHD. AHMED ANSARI, J. :- These five writ petitions challenge the constitutionality of the Hyderabad (Abolition of Cash Grants) Act on the ground of its provisions being discriminatory and confiscatory.
2. The Act came into force from July 30, 1952 and has since been amended twice. It consists of five Sections. Act No. 23 of 1954 has amended Ss. 2 and 3 of the Impugned Act as well as its Schedule, which the amending Act has expanded and divided into Parts A. B and C. By the other amending Act No. 14 of 1956, provisos have been added to S. 3 exempting minors, widows and grantees incapable of earning from the operation of S. 3 (2). Along with these amendments the important provisions of the Impugned Act are S. 3 and the Schedule; but before giving their details we would mention the substance of what other Sections enact.
Section 2 provides that the Act shall apply to all cash grants specified in the Schedule except those that are subject to rendering of service to religious or charitable institutions. Section 4 confers power to make rules and S. 5 enables the Government to remove difficulties, should they arise. Section 3 (1) provides that all cash grants specified in Part A of the Schedule and which are payable or enforceable during the year commencing on April 1, 1952, and in any subsequent financial year, shall be discontinued and cease to have effect immediately on the commencement of the Act.
The aforesaid Part comprises 5 clauses of Rusums enjoyed by Sardeshmukhs, Sardeshpandyas, Desmukhs, Deshpandayas and Dastbandars; but we are not concerned with these in the present Writ Petitions. For, by the decision of a Division Bench of the Hyderabad High Court in Venkat Mungabai v. Hyderabad State, (S) AIR 1855 Hyd 44 (A), of which one of us was a party, abolishing without compensation four out of five such grants has been held to be contrary to Art. 31 of the Constitution, and, therefore, void. An appeal against the decision is now pending before the Supreme Court.
3. In these Writ Petitions we are concerned with S. 3 (2) which provides that all cash grants specified in Parts B and C of the Schedule, and which are payable or enforceable during the year commencing on the first day of April 1954, and in any subsequent financial year, shall be discontinued and cease to have effect on the 1st day of July, 1954. Provisions for compensation to holders of cash grants mentioned in Part B have been made by S. 3 (2) (a), which says that compensation amounting to a sum equal to six times the annual amount payable to each of the aforesaid grantees shall be paid in cash either in full or in annual instalments not exceeding twelve.
Two out of the five petitioners before us, Mirza Mohd, Ali Baigand Ishwarlal in Writ Petitions Nos. 58/5 and 59/5 of 1954, were holders of cash grants enumerated in Part B of the Schedule. They challenge the constitutionality of S. 3 (2) (a) on the ground of the compensation provided for being illusory, and. therefore, contrary to Art. 31 as it stood before the Constitution (Fourth Amendment) Act, 1955. The remaining three petitioners belong to the classes of cash grantees who are grouped in Part C of the Schedule, and S. 3 (2) (b) directs their grants to be discontinued and cease to have effect.
As these holders have not been given any compensation, exceptions against discontinuance have been made in favour of old persons, widows, minors or those incapable of earning livelihood. The proviso to S. 3 (2) (b) says that in respect of each of the cases specified in Col. 1 to it, the grant shall be continued subject to the conditions specified against such case during the period mentioned in column 2. The first column comprises 3 classes. Firstly are those who were not less than sixty years on April 1, 1954 and their grants are to continue till their deaths. The next group consists of those who were less than sixty years on April 1, 1954. In such cases if the grantee be a widow, the grant is to continue till her death
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