The first and second provisos to Sub-section (1) of Section 7 of the Resettlement of Displaced Persons (Land Acquisition) Act, 1948, were ultra vires Section 299(2) of the Government of India Act, 1935, as they violated the constitutional guarantee of compensation.

R.S.Narula, J.

1. The only question that has ultimately to be decided in this case is about the vires of the first and second provisos to Sub-section (1) of Section 7 of the Resettlement of Displaced Persons (Land Acquisition) Act, 40 of 1948 (hereinafter referred to as the Act).

2. The facts giving rise to this appeal may first be set out. The land in dispute was purchased by Chandu Lal for Rs. 6,001-15-0 on 27-12-1941. Barkat Ram and others, appellants acquired the property from Chandu Lal by a registered deed on December 17, 1950 for Rs. 24,500. Notice under Section 3 of the Act was issued on 19-12-1952. The Government offered to pay Rs. 23,890 as compensation to the appellants. They declined to accept the same. The land in dispute measures 1333.76 square yards comprised in plot No. 1, Block No. 54, Karol Bagh, New Delhi. The appellants claimed compensation amounting to Rs. 1,65,525 at the rate of Rs. 125 per square yard for the same besides interest at the rate of 6 per cent per annum on the amount of compensation with effect from 19th of December, 1952 till the date of payment. The appellants having declined to accept the amount of compensation offered to them the compensation could not be fixed by agreement. The Government, therefore, appointed Shri K.S. Sidhu as an arbitrator under Section 7 (1) (b) of the Act to determine the amount of compensation to which the appellants were entitled. By his award dated January 31, 1961 the learned arbitrator has held that the appellants case fell within the second proviso to Clause (e) of Sub-section (1) of Section 7 of the Act inasmuch as the land in question had been held by the predecessor-in-interest of the appellants under a purchase made by him between the 1st of September, 1939 and 1st of April, 1948 and that, therefore, the compensation payable to the appellants under that proviso is the price actually paid by Chandu Lal on the 27th of December, 1941. On that basis it has been held that the appellants would have been entitled to only Rs. 6,001-15-0. In the alternative it has been found that if the first proviso was to be applicable the appellants would be entitled to Rs. 7469.5 nP., after adding 40 per cent permissible under the proviso, to the price of the land in 1941, i.e., Rs. 6001-15-0. On that basis, the arbitrator made an award in- favour of the appellants for the admitted sum of Rs. 23,890 which the Government had offered to the appellants as compensation. In addition to that, the appellants have been allowed interest at the rate of 4 per cent per annum on the amount of compensation with effect from 19-12-1952 to the date of the actual payment.

3. Mr. Hardayal Hardy, the learned counsel for the appellants has raised only one single point in this case. He has argued that both the provisos to Clause (e) of Sub-section (1) of Section 7 of the Act are ultra vires Section 299 of the Government of India Act and are, there fore, liable to be ignored. The Act was passed by the Central Legislature in September, 1948 when the powers, authority and jurisdiction of the Legislature were governed by the Government of India Act, 1935. Section 299 (2) of the 1935 Constitution Act was in the following terms:

"(2) Neither the Federal or a Provincial Legislature shall have power to make any law authorising the compulsory acquisition for public purposes of any land, or any commercial, or industrial undertaking, or any interest in, or in any company owning, any commercial or industrial undertaking, unless the law provides for the payment of compensation for the property acquired and either fixes the amount of the compensation, or specifies the principles on which, and the manner, in which, it is to be determined."

4. Any law passed during the time when Sub-section (2) of Section 299 of the 1935 Act was in force, which does not provide for payment of compensation for the property acquired, has to be struck down. "Compensation" in Section 299 of the Government of India Act has been