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The Problem of Interpretation and the Concept of Compensation Under Article 31(2) of the Indian Constitution
by M.P. Singh,
LL.M. (Luck.) Advocate, Lecturer-in-Law, Meerut College, Meerut

Cite as : (1970) 2 SCC (Jour) 24

"The problem of interpretation is a problem of meaning of words and their effectiveness as medium of expression to communicate a particular thought."1 But neither the words nor the language are so exact so as to convey one and the only one meaning and not any other. Sometimes the language may not be available to express the right and proper intention of the legislature. In such circumstances, irrespective of all precautions being used by the legislature or the enacting body, the courts are confronted with a problem to accept that meaning of expression which, out of the conflicting claims of the parties, goes nearest to the intention of the legislature. In this process, the court observes various rules of interpretation or construction, yet it is left with a margin of discretion which it may validly exercise. This unavoidable discretion of the court sometimes may lead to an interpretation of a statute which the legislature may have never intended or contemplated and in this way the entire purpose of enacting the law may be defeated. This indirectly means a power with the courts to change the legislative policy without even a power of judicial review over the legislation. The force of this statement has been illustrated by referring the power of interpretation as a limitation even upon the sovereignty of British Parliament.2 So great is the implication of the power of the courts to interpret the statues.

What has been said above with respect to statutes equally applies to the interpretation of a Constitution. The power of interpretation by the courts is more forcefully exerted in those countries where the Constitution is made as the supreme law of the land and where it cannot be amended except by a special amendatory procedure. From a historical point of view if we look to the constitutional developments in U.S.A., Australia and Canada, it may be said with all certainty that these Constitutions have at times been interpreted to give the meanings which their makers may have not even dreamt of. And the instances do not lack where the interpretation of constitutional provisions by the courts has caused much difficulties to the people and to those representatives of the people who run the government.3 The makers of the Indian Constitution knew all these facts and they tried their best to minimise the jurisdiction of the courts to judicially review the laws in a supreme Constitution. However, as the position emerged later later on, perhaps, they failed to convey their intention in the Constitution as it came before the courts for interpretation. A complete thesis may be developed in this point by substantiating it through wide range illustrations on different aspects of the Constitution. But for the present only one example has been selected to in furtherance of this view and it relates to the matter of compensation for the acquisition or requisition of property dealt with in Article 31(2) of the Constitution.

Constitutional Provisions

Article 31(2) of the Indian Constitution as it originally stood, was in the following words:

"No property, movable or immovable including any interest in, or in any company owning any commercial or industrial undertaking, shall be taken possession of or acquired for public purposes under any law authorising the taking of such possession or such acquisition, unless the law provides for compensation for the property taken possession of or acquired and either fixes the amount of the compensation, or specifies the principles on which, and the manner in which, the compensation is to be determined and given."

One other provision relevant to this and where also the word 'compensation' was used was Entry 42 of List III of Schedule VII which read:

"Principles on which compensation for property acquired or requisitioned for the purposes of the Union or of a State or for any other public purpose is to be determined, and the form and the manner in which such compensation is to be given."

Pre-Amendment cases

Although so many cases arose with respect to Article 31 of the Constitution but the question directly involving the interpretation of the term "compensation" used in Article 31(2) for the first time arose in the State of West Bengal v. Mrs. Bela Banerjee.4 In this case the validity of West Bengal Land Development and Planning Act, 1948 which provided for the acquisition of land after payment of compensation not exceeding the market value of the land on December 31, 1946, was challenged. The main challenge came on the ground of denial of "compensation" under the Act in violation of Article 31(2) of the Constitution in as much as the Act laid down a ceiling of the compensation at the market value of property on December 31, 1946, for all future acquisitions, in howsoever far future it was to be made. The State defended its law taking the line of argument that Article 31(2) read with Entry 42 of List III of the Constitution gave full discretion to the legislature "in determining the measure of the indemnity". The argument of the State was unanimously rejected by the Supreme Court.5 The opinion of the Supreme Court was expressed in the following words by Sastri, C.J.:—

"While it is true that the legislature is given the discretionary power of laying down the principles which should govern the determination of the amount to be given to the owner for the property appropriated such principles must ensure that what is determined as payable must be compensation, that is, a just equivalent of what the owner has been deprived of. Within the limits of this basic requirement of full indemnification of the expropriated owner, the Constitution allows free play to the legislative judgment as to what principles should guide the determination of the amount payable. Whether such principles take into account all the elements which make up the true value of the property appropriated and exclude matters which are to be neglected, is a justiciable issue to be adjudicated by the court."6

This view taken by the Supreme Court of the word "compensation" in Article 31(2) gave a heavy blow to the framers of the Constitution. It was very much different from what they had thought at the time of making the Constitution. If we refer to the Constituent Assembly debates we find Pandit Nehru saying:—

"The next clause says that the law should provide for compensation for the property and should either fix the amount of compensation or specify the principles under which or the manner in which the compensation is to be determined. The law should do it. Parliament should do it. There is no reference in this to any judiciary coming into the picture. Much thought has been given to it and there has been much debate as to where the judiciary comes in. Eminent lawyers have told us that on a proper construction of this clause, normally speaking, the judiciary should not and does not come in. Parliament fixes either the compensation itself or the principles governing that compensation and they should not be challenged except for one reason, where it is thought that there has been a gross abuse of the law, where in fact there has been a fraud on the Constitution."7

And referring further to the policies of the Indian National Congress he said:

". . . . Within limits no judge and no Supreme Court can make in itself a third chamber. No Supreme Court and no judiciary can stand in judgment over the sovereign will of Parliament representing the will of the entire community. . . it is obvious that no court, no system of judiciary can function in the nature of a third House, as a kind of Third House of Correction. . . . "8

This view of Pt. Nehru was shared even by other eminent lawyer-members of the Assembly.9 Although the Constituent Assembly debates cannot govern the interpretation of the clear words of the Constitution, yet in ambiguous cases they may 'guide the courts though in a very restricted manner.10 There was a specific purpose in not adopting the terminology used in other Constitutions which make the provisions for compensation a justiciable issue.11 Article 31(2) was modelled upon Section 299 of the Government of India Act, 1935.12 And by going through the enactment of that Section and reading the debates of the House of Commons13 one gathers the idea that the Section was drifting from the usual terminology which was used in the Constitution of the United States or which the same Parliament of England had given in the Constitution of Australia. The Supreme Court gave its decision in Bela Banerjee case without going into these aspects. Section 299 of the Government of India Act never came for interpretation before a lawcourt prior to the commencement of the Constitution and when an occasion arose to interpret it in 1964 the Supreme Court applied the Bela Banerjee law to that Section also as the provisions of Section 299 were found peri materia with the provisions of Section 31(2).14 The entire position was turned the other way around by taking a line of approach as if Section 299 was modelled upon Article 31 rather than vice versa.

Fourth Amendment and after

However, as the Supreme Court's view on the interpretation of compensation in Bela Banerjee case was contrary to the socialistic policies of the great leaders of the country it was thought to do away with its effect and soon after the decision in the case15 the Constitution (Fourth Amendment) Act, 1955 was moved in the Parliament which came into force on April 27, 1955 leaving Article 31(2) in the following form:

"(2) No property shall be compulsorily acquired or requisitioned save for a public purpose and save by authority of law which provides for compensation for the property so acquired or requisitioned and either fixes the amount of the compensation or specifies the principles on which, and the manner in which, the compensation is to be determined and given and no such law shall be called in question in any court on the ground that the compensation by that law is not adequate."

Subsequently by Seventh Amendment, Entry 42 of List III was amended as:

"42. Acquisition and requisition of property."

The basic changes which the amendments brought about were the introduction in Article 31(2) of the words underlined above and the deletion of the word 'compensation ' from Entry 42 of List III. Beyond that, however, nothing was made clear. The Amendment Act even omitted to give the Statement of Object and Reasons which is usually given with every statute including the Constitutional Amendment Acts. Nevertheless there is hardly any doubt that the amendment intended to set aside the effect of Bela Banerjee case16 and it is clear from the speech of the Home Minister who introduced the Amendment Bill in the Parliament. He said that the Constitution-makers had thought from the outset:

"that Parliament alone would have all the necessary material and data for determining the compensation in such cases. Large projects meant for the uplift of the community in general in fulfilment of the objectives which form part of the process of reconstruction of the new order in the country cannot come within the limited purview of courts and tribunals. That was the intention but the language did not fully convey the intentions that were behind it. The courts were in the circumstances unable to carry out the intentions of the authors. It became necessary, therefore, to amend the language so that the courts might be relieved of the embarrassing necessity of having to interpret the clause in a manner which did not quite conform to the wishes, intentions or objects of the authors of the Constitution."17

Similar view was expressed by the Select Committee which recommended the above amendment:

"The Committee feels that although in all cases falling within the proposed clause (2) of Article 31 compensation should be provided, the quantum of compensation should be left to be determined by the legislature, and it should not be open to the courts to go into the question on the ground that the compensation provided by it is not adequate."

According to the strict rules of interpretation the speech of the Home Minister cited above cannot be taken into consideration in interpreting the words as they came out after the amendment. So is the position with respect to the observations of the Select Committee. But the instances do not lack where the reports of the committees have been referred to understand the meaning of an ambiguous statute.18 The latest illustration is the Beswick v. Beswick19 where Lord Upjohn went through the proceedings of the Joint Committee of both Houses of British Parliament in construing the provisions of the Consolidating Act. Moreover, it can never be denied that "in the interpretation of statutes, the interpreter may call to his aid all those external or historical facts which are necessary for comprehension of the subject- matter, and may also consider whether a statute was intended to alter the law or to leave it exactly where it stood before."20 The circumstances which had led to the above amendment show that the amendment intended to take away the justifiability of the adequacy of compensation from the jurisdiction of the courts and to leave the matter for the determination of the representatives of the people.21 It was, however, not doubted that "the court would still have power to prevent a fraud on the Constitution by the Legislature if what it provided is an illusory amount or the principles which it provides are irrelevant for arriving at that amount.22 This remained a commonly accepted meaning of Article 31(2) for about a decade and no question directly arose for the interpretation of the amended Article 31(2) till the middle of sixties.

The cases which came up before the Supreme Court after the amendment may be divided into two categories. One category of cases relates to the validity of those laws which were passed before the Amendment Act of 1955 came into force and the other category relates to those laws which were passed after the enforcement of the above-mentioned amendment. The cases of the first category followed Mrs Bela Banerjee case, but they are hardly of any use for our present purpose inasmuch as they decided the constitutional position prior to the 1955 Amendment. The Amendment Act did not have any retrospective effect and, therefore, on the well-known doctrine of constitutional interpretation with respect to the competence of the legislature,23 impugned laws were tested by the Constitution as it stood on the date when they were passed.

Vajravelu and Metal Corpn. Cases

The amended Article for the first time directly came for interpretation before the Supreme Court in Vajravelu Mudaliar v. Special Deputy Collector.24 In this case the land of the petitioner had been acquired under the Land Acquisition (Madras Amendment) Act, 1961, for purposes of houses and he challenged the validity of the law under Article 31 and Article 14. The Act sustained its validity on the ground of compensation under Article 31(2) but it could not save itself from Article 14. Interpreting the amended Article 31(2) Justice Subba Rao went back to Mrs Bela Banerjee case which had been followed for testing the validity of the laws passed prior to the amendment and said:

"The fact that Parliament used the same expression, namely, 'compensation' and 'principles' as were found in Article 31 before the Amendment is a clear indication that it accepted the meaning given by this court to those expressions in Mrs Bela Banerjee's case. . . . It follows that a Legislature in making a law of acquisition or requisition shall provide for a just equivalent of what the owner has been deprived of or specify the principles for the purpose of ascertaining the 'just equivalent' of what the owner has been deprived of. . . ."25

Then justifying his above view even after the amendment the learned judge summarised the position of law as below:—

"If the legislature, though it ex facie purports to provide for compensation or indicates the principles for ascertaining the same, but in effect and substance takes away a property without paying compensation for it, it will be exercising power which it does not possess. If the legislature makes a law for acquiring a property by providing for an illusory compensation or by indicating the principles for ascertaining the compensation which do not relate to the property acquired or to the value of such property at or within a reasonable proximity of the date of acquisition or the principles are so designed and so arbitrary that they do not provide for compensation at all, one can easily hold that the Legislature made the law in fraud of its powers. Briefly stated the legal position is as follows. If the question pertains to the adequacy of compensation, it is not justiciable, if the compensation fixed or the principles evolved for fixing it disclose that the Legislature made the law in fraud of power in the sense we have explained, the question is within the jurisdiction of the court."26

The underlined portion of the above observation represents a view which does not go in line with the interpretation of the term 'compensation' adopted by the learned Judge. Even if it be accepted that 'compensation' means 'just equivalent' the closing part of Article 31(2) that "no such law shall be called in question in any court on the ground that the compensation provided by that law is not adequate" makes it clear that the consideration for the property taken cannot be judged by the court whether it is adequate or just equivalent or not. The court was emphasising more upon the literal meaning of the term 'compensation' in disregard of the mischief behind the Amendment.27 From the individual's point of view the approach which the learned Judge took in this case may be appreciated but in wider context of social justice it looks with great respect, a little apriori approach of the court.28 The court, however, left the position a little obscure by its concluding lines underlined above because it did not clearly related to the non-justiciable issue of inadequacy of compensation with the power of the court to judge whether the compensation is 'just equivalent' or not. That task, however, was completed by the learned Judge in Union of India v. Metal Corporation of India Ltd.29 In that case the validity of Metal Corporation of India (Acquisition of Undertaking) Act, 1965 was challenged. The Act provided for the acquisition of the Metal Corporation of India after providing the compensation for the sum total of the value of the properties and assets of the Corporation calculating on the basis of: (a) actual cost of the unused machinery and plant etc. and (b) written down value of the used machinery, etc. Citing Bela Banerjee, Namashivaya Mudaliar, Jeejeebhoy and Vajravelu decisions Chief Justice Subba Rao held the Act unconstitutional on the following proposition of law:

"The law to justify itself has to provide for the payment of a 'just equivalent' to the land acquired or lay down principles which will lead to that result. If the principles laid down are relevant to the fixation of compensation and are not arbitrary, the adequacy of the resultant product cannot be questioned in a court of law. The validity of the principles, judged by the above tests, falls within judicial scrutiny, and if they stand the tests, the adequacy of the product falls outside its jurisdiction. Judged by the said tests, it is manifest that the two principles laid down in the Act, namely: (i) compensation equated to the cost price in the case of unused machinery in good condition, and (ii) written-down value as understood in the income tax law is the value of the used machinery, are irrelevant to the fixation of the value of the said machinery as on the date of acquisition. It follows that the impugned Act has not provided for 'compensation' within the meaning of Article 31(2) of the Constitution and, therefore, it is void."30

Shantilal Decision

In the year 1969 the matter again came before the Supreme Court in State of Gujarat v. Shantilal.31 In this case the Supreme Court declared the observations of Justice Subba in Vajravelu case "as obiter and not binding" and also declared "that the Metal Corporation case was wrongly decided and must be overruled". Chief Justice Hidayatullah, who was also a member of the Bench that decided the Vajravelu case expressed his mistake in concurring with Justice Subba Rao in that case as Vajravelu — an after Fourth Amendment — and Jeejeebhoy — a pre-Fourth Amendment case — were decided on the same day and "Because of the close proximity of the decisions, it escaped me (Hidayatullah, C.J.) that the discussion was in the wrong case and the other merely followed it".32

In Shantilal's case the validity of the Bombay Town Planning Act, 1958, was challenged. The Act provided for the acquisition of land to implement the town planning schemes. The owner of the land was to be paid compensation "estimated at its market value at the date of the declaration of intention to make a scheme. . . ." The main challenge came on the ground that compensation within Article 31(2) means a just equivalent of the land expropriated and payment computed on the market value at a date many years before the date on which the land was acquired was inconsistent with the constitutional guarantee under Article 31(2). Rejecting the contention of the petitioners Chief Justice Hidayatullah said:

"It is certainly out of the question that the adequacy of compensation (apart from compensation which is illusory or proceeds upon principles irrelevant to its determination) should be questioned after the Amendment of the Constitution. The Amendment was expressly made to get over the effect of the earlier cases which had defined compensation as just equivalent. Such a question could not arise after the amendment."33

And further giving a detailed judgment on behalf of the court, Justice Shah observed:

"In our view, Article 31(2) as amended is clear in its purport. If what is fixed or is determined by the application of specified principles is compensation for compulsory acquisition of property, the courts cannot be invited to determine whether it is a just equivalent of the value of property expropriated."34

Justifying the provisions of the Act relating to the determination of compensation the learned Judge held:

"If what is specified is a principle for determination of compensation, the challenge to that principle on the ground that a just equivalent of what the owner is deprived is not provided, is excluded by the plain words of Article 31(2) of the Constitution."35

Explaining the meaning of the term 'specification of principles' he observed:

"Specification of principles means laying down general guiding rules applicable to all persons or transaction governed thereby . . . compensation determined on the basis of market value prevailing on a date anterior to the date of extinction of interest is still determined on a principle specified."36

And in this case market price of land in 1927 was held to be a good principle for payment of compensation in 1957 when the land was acquired. As regards the mode of payment the court said that the compensation need not be "in terms of money".

The unanimity of the Supreme Court in holding above views took the position exactly to the point which, to my mind, the Fourth Amendment meant to emphasise. The decision removed all the doubts which, with respect, the contrary observations made in Vajravelu and followed in Metal Corporation cases had created. In the light of the Golak Nath case37 and the broader perspective of a permanent constitutional structure of a socialistic era and in the land the people of which have pledged to establish a democratic socialism the decision gave right direction to this constitutional aspect by following a right and more reasonable interpretation of Article 31(2) of the Constitution.

The Banks' Nationalisation Case

Hardly a year had passed to the Shantilal case that the Supreme Court by a Special Bench of eleven judges, including Justice Shah, gave a landmark opinion on February 10, 1970 by a majority of ten to one in the famous Bank Nationalisation case.38 In this case the validity of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1969 was challenged. On 19th of July, 1969, the President of India issued an ordinance nationalising the 14 Indian Banks having a deposit of Rs 50 crores or more each on the last Friday of June 1969. The ordinance was later on passed by the Parliament into an Act on 9th of August under the title given above. The Act in its Section 6 read with Schedule II laid down the principles for determination and payment of the compensation to the Banks. In brief, the compensation was to be provided on the net assets of a bank calculated in the manner provided in the Schedule II of the Act which separately mentioned each component of the assets of a Bank. The amount of compensation could be arrived at by agreement failing which the matter could be referred within three months to a Tribunal to be created under the Act. The compensation was to be paid in the form of bonds or securities, etc. One of the challenges to the Act was that it did not fulfil the condition of compensation as required by Article 31(2) inasmuch as (a) the principles for determining the compensation were irrelevant for arriving at the compensation, and (b) some of the assets of the Banking Companies, particularly intangible assets such as goodwill and unexpired leases for premises, etc. were not taken into consideration in computing the compensation and hence no compensation for them.

Speaking for the majority of the Court Justice Shah accepted both the contentions of the petitioners. He referred to the dictionary meaning of the word "compensation" and came to the conclusion that Article 31(2) before and after it was amended guaranteed a right to compensation for compulsory acquisition of property and that by giving to the owner, for compulsory acquisition of his property, compensation which was illusory, or determined by the application of principles which were irrelevant, the constitutional guarantee of compensation was not complied with. Referring to the Vajravelu and Shantilal cases he said that there was not much difference between the two opinions. The legislature according to both the decisions was not the final authority with respect of compensation under Article 31(2).

Some of the observations of the learned judge, however, detract the legal position away from Shantilal case and bring it nearer to Vajravelu case or even a little ahead of it. The following points of novelty are easily discernible from the opinion.

(1) Till now the courts insisted upon the relevancy of the principles to the determination of compensation and if the principles were relevant the resultant could not be challenged. But here the court went a little further by laying down that "The principles specified must be appropriate to the determination of compensation for the particular class of property sought to be acquired."39 If however, "several principles are appropriate and one is selected for determination of the value of the property to be acquired, selection of that principle to the exclusion of other principles is not open to challenge, for the selection must be left to the wisdom of the Parliament".40

(2) The principle of taking into consideration the potential value of the property was evaded in Vajravelu case.41 In their judgment, however, the Supreme Court boldly laid down that —

"The broad object underlying the principle of valuation is to award to the owner the equivalent of his property with its existing advantages and its potentialities. Where there is an established market for the property acquired the problem of valuation presents little difficulty. Where there is no established market for the property, the object of the principle of valuation must be to pay to the owner for what he has lost, including the benefit of advantages present as well as future, without taking into account the urgency of acquisition, the disinclination of the owner to part with the property, and the benefit which the acquirer is likely to obtain by the acquisition."42

(3) As a natural corollary to the point set out above the court lay down a new point which, perhaps, was agitated for the first time before the court and it was held that in category of assets of an undertaking "the goodwill and the value of the unexpired period of long-term leases" is also to be taken into account for the purpose of determining the compensation.43

(4) The court laid down an unexhaustive list of six methods of determining the compensation for any property acquired and held that "Normally an aggregate of the value of different components will not be the value of the unit."44

(5) On the form of compensation the court held that "compensation may be provided under a statute, otherwise than in the form of money: it may be given as equivalent of money, e.g. a bond. But in judging whether the law provides for compensation, the money value at the date of expropriation of what is given as compensation must be considered . . . if the law seeks to convert the compensation determined into a forced loan, or to give compensation in the form of a bond of which the market value at the date of expropriation does not approximate the amount determined as compensation, the court must consider whether what is given is in truth compensation which is inadequate, or that it is not compensation at all".45

After striking down the scheme of compensation provided under the Act on all the points stated above, viz., the principles were inappropriate, potential value of the property and various components such as goodwill and unexpired leases were not taken into consideration, the various components were taken separately and that the giving of bonds as compensation, the court rejected Attorney-General's argument that all these matters related to adequacy of compensation and held:

"The Constitution guarantees a right to compensation — an equivalent in money of the property compulsorily acquired. That is the basic guarantee. The law must therefore provide compensation, and for determining compensation relevant principles must be specified; if the principles are not relevant the ultimate value determined is not compensation."46

There may be little doubt that on the facts of the case the Supreme Court rightly invalidated, a law, but with great respect to Their Lordships the obscurity on the point of compensation which had been removed by the Shantilal opinion has been reimposed leaving a field for further complication and intricacies. To define compensation in terms of "an equivalent in money of the property compulsorily acquired" is to fall back on Vajravelu and Metal Corpn. cases the remarks and decisions respectively of which had been declared as obiter and overruled in Shantilal case. The definition of compensation in terms of 'just equivalent' was clearly rejected in that case47 and to insist upon the same definition with omission of the term "just" seems to amount to the implied overruling of Shantilal case and reaffirming the Metal Corpn. case and the obiter in the Vajravelu case. Similarly on the point of determination of the principles for arriving at the compensation the court has gone far beyond what was implied from Shantilal case. The computation of the potential value of the property and of the assets like goodwill shall give chance for more speculations. The court by devising its own methods of determining the compensation seems to limit the legislative discretion in that field.

The pronouncement of the court in this case has elevated the position of an individual whose property is expropriated by the State. It also asserts and strengthens the confidence in the independence of the judiciary. But at the same time it has renewed the controversy raised since the Golak Nath decision to authorise the Parliament to amend the fundamental rights as it could do prior to that decision. The present decision may accelerate that process in a land where a large majority of the people hope for the implementation of the Directive Principles of State Policy enunciated in Articles 38 and 39 of the Constitution48 and there are very few who are likely to derive substantive benefit from the guarantee under Article 31. This does not mean overlooking legal position in view of extraneous considerations. However, it is an assertion of the principle of balancing of interests and in Pound's words that of 'social engineering' through judicial process.

To get rid of the decision in the Bank Nationalisation case the President again issued an Ordinance and the same has been passed into an Act of the Parliament. Keeping in view the objections raised by the Supreme Court in that case the new Act has eliminated those provisions of earlier Act which laid down the principle for determining the compensation and has, in their place, provided a very simple provision fixing a specified amount to be given to each of the fourteen Banks. No challenge has yet been made or mooted of the new Act. Does it go to suggest that if Parliament instead of providing the principles for determining of compensation fixed the amount of compensation, the law cannot be challenged "on the ground that the compensation provided by that law is not adequate", howsoever, illusory the amount of compensation may be? If it is so then, though the Parliament may be burdened with the work of passing separate laws for taking different properties, yet the government may be relieved from the condition of providing compensation which is "just equivalent". It would mean, however, giving double meaning to the word "compensation" in Article 31(2) which seems absurd. The question then is what is the way our to get rid of this problem?


It may be submitted here that whatever may be the meaning of the word compensation, the inclusion of the words that "no such law shall be called in question in any court on the ground that the compensation provided by that law is not adequate" at the end of Article 31(2) was definitely intended to change the meaning of the word as it had been given in the Bela Banerjee case. It has been fully demonstrated in the foregoing pages. To bring the same conception again into Article 31(2), with respect, seems a misuse of the power of judicial review. Moreover, it goes against the principles of constitutional interpretation. The very use of the word "adequate" at the end of Article 31(2) introduces the idea of inadequate compensation. What was the sense of debarring the court from judging the 'adequacy' of compensation if the compensation was always meant the "just equivalent"? That was the position even prior to the amendment. According to the basic principles of interpretation every word used by the law-making body in statute must be given its meaning. For the Legislature is always presumed to have used every word with some purpose and if meaning can be given to it, it should be given irrespective of consequences. If that be taken the position of law then to revert back to Bela Banerjee case would amount to the nullification of the words added at the end of Article 31(2) by the 4th Amendment. That aspect was considered by Justice Subba Rao in Vajravelu case but the whole matter was so mixed up and confused that when it was ultimately clarified in Metal Corporation case the entire position was changed. Thanks to Shantilal case that the Metal Corporation case was overruled and the position in Vajravelu was clarified.

The position on the other hand is that whether we should be so optimistic about the propriety of the intentions of the Legislature that whatever it gives for the acquisition of property should in all cases by accepted as fulfilling the condition of Article 31(2). Should the judiciary not extend its hands to save a person from injustice to him if it can help him within constitutional fold? It is submitted that the judiciary must come in the way if it can. And in Article 31(2) that can well be done if the concluding remarks of Justice Subba Rao in Vajravelu case are adopted:

"If the compensation is illusory or if the principles prescribed are irrelevant to the value of the property at or about the time of its acquisition, it can be said that the Legislature committed a fraud on power and, therefore, the law is bad."49

This has been accepted as a more sound and correct view of Article 31(2).50 "But the line dividing 'illusory' from 'inadequate compensation' is not easy to draw and in any event, compensation ranging from 40 to 50 per cent of the value of property acquired could not be called illusory without an abuse of language".51 Moreover, since a relationship has been established between Articles 19(1)(f) and 31(2) by the Bank Nationalisation case a too a low compensation may be declared as imposing unreasonable restriction upon the right of a citizen under Article 19(1)(f) read with clause (5) of that Article.

The solution herein suggested would satisfy the social needs of the country keeping a balance with the individual's right to property. It may put down the stir raised on the one hand by those who are more socialistic and press for the abolition of the right to property as a fundamental right and also on the other hand by those who are protagonists of a laisser-faire theory and individual rights. The judiciary it is hoped would do its best to keep the balance between the conflicting interests of the two sides in the light of the social structure of the country and its needs towards prosperity with the democracy.

  1. Principles of Statutory Interpretation, G.P. Singh, (1966), p. 3. Return to Text
  2. "Constitutional Law", Wade and Phillips, (1965), pp. 52-54. Return to Text
  3. It may be well illustrated from the New Deal Legislation of President Roosevelt and the application of 'due process' in the American Constitution during 1930s-by the Supreme Court of America. Return to Text
  4. AIR 1954 SC 170. Return to Text
  5. Same was done by the High Court at that stage. See AIR 1952 Cal 554. Return to Text
  6. Op. cit. p. 172. Return to Text
  7. Constituent Assembly Debates, Vol. IX, p. 1193. Return to Text
  8. Ibid., p. 1195. Return to Text
  9. e.g. Shri Alladi Krishnaswami Ayyar: "On the one side it has been urged that the expression 'compensation' by itself carries with it the significance that it must be equivalent in money value of the property on the date of the acquisition, i.e. its market value. On the other side, it has been urged that taking the clause as it is which refers to the law specifying the principles on which and the manner in which the compensation is to be determined, it gives a latitude to the Legislature in the matter of formulating the principles on which and the manner in which the compensation is to be determined. . . it is necessary to note that the language employed in Section 299 (Government of India Act, 1935) and that employed in Article 24 (Article 31) is not in pari materia with the language employed in corresponding provisions in other Constitutions referring to the compulsory acquisition of property on payment of just compensation. The expression 'just' which finds a place in the American and in the Australian Constitutions is omitted in Section 299 and in Article 24 (Article 31). . . . The principles of compensation by their very nature cannot be the same in every species of acquisitions. Of course, if the legislation is a colourable device, a contrivance to outstep the limits of the Legislative power . . . the court may pronounce the legislation invalid or ultra vires." Ibid., pp. 1271-72.
          "Shri K.M. Munshi:
          But Parliament, . . . is the sole judge of two matters. First, . . . of the propriety of the principles laid down, so long as they are principles. Secondly, it has been authoritatively laid down. . . that principles may vary as regards different classes of property and different object for which they are acquired. . . . Parliament is to judge in each case as to what is fair and equitable and whether the principles laid down are calculated to yield compensation, fair and equitable in the light of such circumstances." Ibid., pp. 1299-1300. Return to Text
  10. See A.K. Gopalan v. State of Madras, AIR 1950 SC 27 at p. 73. Return to Text
  11. Constitution of the U.S.A. Fifth Amendment provides:
          "Nor shall private property be taken for public use, without just compensation."
    Section 51(31) of Australian Constitution runs as:
          "acquisition of property on just terms. . . ."
    Article 21 of Japanese Constitution 1946 provides:
          "Private property may be taken for public use upon just compensation therefor." Return to Text
  12. Section 299 of the Government of India Act, 1935 read as:
          "(1) No person shall be deprived of his property by authority of law.
          (2) Neither the Federal nor 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, 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.
          (3) . . . . . . . . ." Return to Text
  13. (1935) 300 HC Deb, 1071-90. Return to Text
  14. Jeejeebhay v. Assistant Collector, Thana, AIR 1965 SC 1096. Return to Text
  15. There were two other cases also which necessitated the amendment but they affected other parts of Article 31: Dwarkadas v. Sholapur Spinning Co., (1954) SC 132 and State of W. Bengal v. Sibodh Gopal, AIR 1954 SC 92. Return to Text
  16. The view may be supported from the following observation of Seervai also:
          "When the Supreme Court judgment in Bela Banerjee case ran counter to the opinion given by eminent lawyers about 'compensation', . . . two courses were open to Parliament . . . one was to 'reform' the Supreme Court the other was to disarm it by amending the Constitution, and the second course was adopted by enacting the Constitution (4th Amendment) Act, in order, inter alia to nullify (that decision). . . . At the end of Article 31(2) a proviso was inserted which made the adequacy of compensation non-justifiable."
    Constitution of India, (pp. 530-31). Return to Text
  17. Rajya Sabha Debates, Vol. IX, 1955, Column 5100, April 19, 1955. Return to Text
  18. See Romesh Chander Sanyal v. Hiru Mandal, 17 C 852 (860); R. v. Kartick Chunder Das, 14 C 730; Assam Railways & Trading Co. v. Inland Revenue Commissioner, 1935 AC 445; Biswick v. Biswick, (1967) 2 All ER 1197. Return to Text
  19. Ibid. Return to Text
  20. Maxwell on the Interpretation of Statutes, 12th Edn., (1969), p. 48. Also see Seervai: Constitutional Law of India, p. 45. "The reasons for the amendment are matters of common knowledge and within recent memory, if they have not passed into history: the amendments were designed to remedy the deficiencies of the existing law." Return to Text
  21. See Basu, Commentary on the Constitution of India, 5th Edn., Vol. 2, p. 183. Seervai, Constitutional Law of India, (1968), pp. 530-31; Setalvad, M.C., The Indian Constitution, (1950-1965) (1967), p. 135. Return to Text
  22. Ibid., Setalvad, p. 135. Return to Text
  23. State of Madras v. D. Namasivaya Mudaliar, AIR 1965 SC 190; Union of India v. Kamlabai Harjjivandas Parekh, AIR 1968 SC 377. Return to Text
  24. AIR 1965 SC 1017. Return to Text
  25. AIR 1965 SC 1017, p. 1024. Return to Text
  26. Ibid., p. 1025. Return to Text
  27. See ibid., p. 1024. Return to Text
  28. For an appreciation and criticism see Mr Justice Subba Rao and Property Rights, 9 JILI, p. 568 by T.S. Rama Rao; Mohd. Ghouse, 8 JILI, p. 274; Rajendra Nayak, 8 JILI, p. 212; Upendra Bakshi, 9 JILI, p. 323 at 392-94. Return to Text
  29. AIR 1967 SC 634. Return to Text
  30. AIR 1967 SC 634. Return to Text
  31. 1969(1) SCC 509; AIR 1969 SC 624. Return to Text
  32. Ibid., p. 637. Return to Text
  33. Ibid., p. 637. Return to Text
  34. AIR 1969 SC 634, p. 652. Return to Text
  35. Ibid., p. 653. Return to Text
  36. Ibid., p. 645. Return to Text
  37. L.C. Golaknath v. State of Punjab, AIR 1967 SC 1643. Return to Text
  38. R.C. Cooper v. Union of India, 1970 (2) SCC 298. Return to Text
  39. R.C. Cooper v. Union of India, 1970 (2) SCC 298. Return to Text
  40. R.C. Cooper v. Union of India, 1970 (2) SCC 298. Return to Text
  41. AIR 1965 SC 1017 at 1026. Return to Text
  42. AIR 1970 SC 609. Return to Text
  43. AIR 1970 SC 609, p. 611. Return to Text
  44. Ibid., p. 610. Return to Text
  45. Ibid., pp. 614-15. Return to Text
  46. Ibid., p. 614. Return to Text
  47. See AIR 1969 SC 637, p. 652. Return to Text
  48. Art. 38. State to secure a social order for the promotion of welfare of the people-The State shall strive to promote the welfare of the people by securing and protecting as effectively as it may a social order in which justice, social, economic and political, shall inform all the institutions of the national life.
    Art. 39. Certain principles of policy to be followed by the State-The State shall, in particular, direct its policy towards securing —
          "(a) that the citizens . . . have the right to an adequate means of livelihood;
          (b) that the ownership and control of the material resources of the community as so distributed as best to subserve the common good;
         (c) that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment;
    (d) X X X
    (e) X X X
    (f) X X X." Return to Text
  49. AIR 1965 SC 1024. For similar view see Justice Ray's dissenting opinion in AIR 1970 SC 564 at p. 638. Return to Text
  50. See Seervai, op. cit., p. 559. Return to Text
  51. Ibid., p. 559. Return to Text
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